Construction Law: requirement to progress construction works

The timing of works carried out by sub-contractors often has huge implications for whether or not a main contractor is able to complete a construction project on time.  Construction contracts will usually therefore make provision for how works are to be progressed by the sub-contractor and the consequences of any delay or failure.

However, in the recent case of Leander Construction Ltd v Mulalley & Company Ltd, the Technology and Construction Court (TCC) was asked to consider what the position was where the sub-contract only gives the main contractor the right to terminate where the sub-contractor fails to progress the works.

In this case, Mulalley employed Leander.  During the course of the works, Mulalley contended that Leander was in breach of an implied duty to proceed with the works regularly and diligently and sought to deduct £131,000 (in respect of losses it claimed to have incurred) from interim payments that were due to Leander.  Arguing that there was no such implied term, Leander issued proceedings in the TCC.

Mr Justice Coulson was of the view that, in determining whether there was an implied term that Leander must proceed regularly and diligently, the test to be applied was whether it was necessary to imply that term “to make the contract work”.  In this case, he held that it was not; Leander was obliged merely to complete the works by a single date and it was unnecessary and unhelpful to impose other interim progress obligations. 

Therefore, unless there are specific contractual obligations as to the progress of the works prior to the final completion date, it appears that sub-contractors will be free to plan and carry out the works at their own pace.  If a sub-contractor falls behind during the course of the works there may not be any adverse consequences for it, provided it still meets the final completion date and provided all other contractual terms are met. It is essential, therefore, that contractors ensure that their contracts clearly set out all stages of progress which are to be achieved during the course of the works.

Holmes & Hills has solicitors specialising in Construction Law and advising on resolving construction contract disputes.