Time bar clauses are common in engineering, procurement and construction (EPC) contracts.
At Else, our team of construction solicitors are often asked if time bar clauses are an effective way to manage contractors’ claims for time extensions and additional payments.
In this article we clarify the true advantages of time bar clauses and highlight challenges that they can cause.
What Is A Time Bar Clause?
Nearly every construction contract will contain a section that allows the contractor to extend the project completion date if certain specified events occur.
The same section will usually contain terms enabling the contractor to claim additional payment for costs caused by those specified events.
Additionally, the EPC contract may stipulate a set date by which the contractor must notify the employer, or contract administrator, of any claim for time or money.
The time bar clause does not allow the contractor to claim for time or money past this set date.
Why Are Time Bar Clauses Used?
Time bar clauses are designed to improve the administration and management of construction contracts.
Setting a claims deadline for the contractor ensures that the employer is notified at an early stage of a claim. This gives the employer time to evaluate the claim and take steps to reduce the delay.
Time bar clauses should stop a build-up of claims during a project. A build-up of claims can lead to expensive legal disputes between employers and contractors.
Else’s expert construction solicitors recommend that every employer add time bar clauses to all their EPC contracts and agreements.
These clauses encourage contractors and employers to operate with transparency and tackle issues quickly and efficiently.
Will My Time Bar Clause Be Effective?
Condition Precedent
Typically, English courts have taken the view that time bar clauses in EPC contracts are directory and not mandatory.
This means that contractor may not lose their entitlement to claim, unless the contract states that they will lose their rights to additional time or money if they are non-compliant.
However, most EPC contracts will usually contain the necessary elements of a condition precedent.
The Contractor’s Notice
What information must the contractor give to the employer when providing notice of a claim?
Some EPC contracts specify exactly what details must be provided, but not all do. Contractors will often find such conditions challenging.
English courts generally consider that the contractor should only have to provide the best information they reasonably can if no set requirements are specified in the contract.
‘Prevention Principle’ Argument
A contractor may seek to avoid application of a time bar clause, and damages, by arguing that a delay has been caused by an event which was employer’s responsibility.
The contractor may use this argument, irrespective of their own non-compliance with the provision.
What Does This All Mean?
Time bar clauses are a useful tool for employers as they ensure transparency of time and costs in construction projects.
The clauses should not be an overly demanding obligation if the contractor is properly aware of the requirements of the clause.
Time bar clauses can help contractors to efficiently manage and agree time and money extensions when incidents occur.
Ultimately, time bar clauses should work to the advantage of all parties. They ensure the early notification of potential claims and encourage a cooperative approach.
If you would advice about EPC contracts, contact one of our construction solicitors in Burton on Trent on 01283 526200. Alternatively, you can send us a message and we will get in touch at a time that suits you.