NECA LEGAL WA CASE STUDY
1
NECA LEGAL WA Unit 18-20, 199 Balcatta Road, Balcatta WA 6021 PO Box 782, Balcatta WA 6914 T: (08) 6241 6129 E: [email protected] W: necawa.asn.au Contractor ordered to pay $1m+ in damages. NECA LEGAL WA CASE STUDY Contractor ordered to pay $1m+ in damages for a delay that was not its’ fault. Generally, a party cannot insist on the performance of a contractual obligation by the other party if it is the cause of the other party’s non-performance. This is known as the Prevention Principle. However in the case of CMA Contracting Pty Ltd v John Holland Pty Ltd, the Supreme Court of WA found that the application of the Prevention Principle must be considered in the context of the particular contract. Strict compliance In this case, CMA was engaged by John Holland as subcontractor to perform part of the works on Port Hedland Harbour. CMA was delayed in performing the works due to certain failures on John Holland’s behalf. Under the contract, CMA was required to comply with specific contractual requirements relating to requesting an extension of time. The contract provided that a failure to comply with those requirements would result in CMA not being entitled to an extension of time. Ordered to pay damages The end result was that although John Holland caused the delay, it argued that CMA had not complied with the contractual requirements regarding an extension of time and consequently CMA was ordered to pay John Holland more than $1 million in liquidated damages. This decision highlights the importance of having contractual obligations reviewed before you sign a contract so you are aware of your obligations and true consequences of not complying with them. Ensure you don’t fall victim to unfair contract terms! Call NECA Legal WA on (08) 6241 6129 or email [email protected] to find out how to protect your business from potentially expensive litigation.
Transcript of NECA LEGAL WA CASE STUDY
NECA LEGAL WA Unit 18-20, 199 Balcatta Road, Balcatta WA 6021PO Box 782, Balcatta WA 6914
T: (08) 6241 6129 E: [email protected]: necawa.asn.au
Contractor ordered to pay $1m+ in damages.
NECA LEGAL WA CASE STUDY
Contractor ordered to pay $1m+ in damages for a delay that was not its’ fault.Generally, a party cannot insist on the performance of a contractual obligation by the other party if it is the cause of the other party’s non-performance. This is known as the Prevention Principle.
However in the case of CMA Contracting Pty Ltd v John Holland Pty Ltd, the Supreme Court of WA found that the application of the Prevention Principle must be considered in the context of the particular contract.
Strict compliance
In this case, CMA was engaged by John Holland as subcontractor to perform part of the works on Port Hedland Harbour. CMA was delayed in performing the works due to certain failures on John Holland’s behalf. Under the contract, CMA was required to comply with specific contractual requirements relating to requesting an extension of time. The contract provided that a failure to comply with those requirements would result in
CMA not being entitled to an extension of time.
Ordered to pay damages
The end result was that although John Holland caused the delay, it argued that CMA had not complied with the contractual requirements regarding an extension of time and consequently CMA was ordered to pay John Holland more than $1 million in liquidated damages.
This decision highlights the importance of having contractual obligations reviewed before you sign a contract so you are aware of your obligations and true consequences of not complying with them.
Ensure you don’t fall victim to unfair contract terms!Call NECA Legal WA on (08) 6241 6129 or email [email protected] to find out how to protect your business from potentially expensive litigation.
