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oralIo!r ( I 853) 22 L.1:x.~ I?.r>i!<$ii ri!i<l Norllr W<. (3) 'I'« piciciirc and pay for all labour and materials out of rlic iiii>iicytli. P. 1~. 'I' ' "' I:' ''I 1'' I)r». ( 1. I 5 l l .. N<. l x .ilh /<V... .C 1.1'.). 11i. IJ<ri. 694 695.nrioir (1853) 22 L.l<. Barler (1884) 26 Ch. aftcr coiiiplctioii OS Ilic works. 1p1. V...rcli V.<ilioii(IXS3) 22 I .'IIIIII. 518. Iiiiiiliiir o. 510 (C.I0 'I'o roiii~)lclc works the ( I ) I'o complete the works or to employ some other person so Io du. . p:iyiiig Tor ihcm the amount fixed by the architect. Newitt (1881) 16 Ch.n.. 89. '"Stadharr1 V. rlH. 364. /.CJ~IY~<I l ) 11.~. PP.tpra.~Icr.I1.znsr. Of>O IIIICI lV#~ll~.n. V . 80. IV~ilhr... 522 (C. l. r11.il~'.tl<.A. Re Walker. paying for the same out of any money due to thc hiiildcr on account of the c0ntract. I 8 . ~/?I'.rIi~r(IHH. (IK41) 10 L. nrid SCC 1 1V I I ' . (c.!!1#. I I ..l<. Arnzilr~ze (1839) 4 M. (1876) 1 C. rrr/>i. T I U . /. 358. 297.s V.<r Coi'l.~r 11.ir. /Ji<iii/. this usually mcans no mare IIi.) (Inn 522 / < ~ ~ l ~V.rcl.iIs.~'~ B ' (I) 10 kccp tlie rnoncy due or accruing due to the builder. it may be a question exactly what moneys are forfeited under the clause. ( ' l ~ .0 LISC :ind scll ilic s~irplusiii~ilcri./ll. I<. examples of contracts in which that form of words was used. v( ' ~ ~ ~ ~ ~ t ~ ~(1870) !. ~ ~. 688.:. ) .A. aud to set on morc hands aiid dcduct the cost from the contract price. ~ ) .t . IJ<ii.sli. S?.llx.24 The following American cases illustrate the difficblties which may arise. ~ .vr. ~ r l . Such clauses may be held to be penalties.llH7111 I~L~ I Hi* <i~ilr. 2 L?q..I1.. and consequently of no effect without actual proof of damage. .iii " voi<l:ihli.ll.?ll V..'" '1'0 scixe iiioncy in hand coiilr:iclor. I .1)." Sco siqra. where work has been done but is not yet due Sor certification at the date of the forfeiture.<i.iiisr'. l > . 297.I>. against tlie builder (C) Void at the option of the employers as far as relates t o the works or maintenance remaining to be done. Sc" .. i~ I Aliiliiiii V. Sii. I 7.<ir.] (3) What Sums are Included in Forfeiture j I Forfeiture clauses sometimes contain provisions forfeiting any moneys due to the contractor at the time of the forfeiture.).r<. I l i r M ~ . A power to forfeit retention money as such does not. ii.. l i .D.i (1871~) ('./pp V.l 19'.>or.~ (5) 'l'o hccoiiic posscsscd «f thc malcrials absolutely (lenving opcii LIic i~ucstio~i dainages agairist thc contractor) 5 or oi" (11' 1111: inaicri:Lls arid plant.. 11. include money due and payable under certificates already given but not paid.S~ilIihrrry i i "' "' & S.. 696. ex p .. lir. v / o ~ 5 (' ~ v I<o.i.111dLlic pl:itit.I>.l'i7: /<I* Iliilk.l. 4-17. 12. I . . NWIII.(4) '1.1>.rir I*. ~ . l ( . (1841) 10 l. illustratcd s. I<!. & W..il may thcii be due or that may become due to thc I' 1' I'' 11 'jl Agreement void or voidable on re-entry The agreement upon re-entry to be: (a) Void absoIutely (h) Void at the option of the employers. without prejudice to any right of action by tlie employers.I. .V.R.iqui~l:~lc~l z~ I>.< V . 1 ( ~ 0 v r ~ t ~ l l 1 8 H l ) ' I I . the contractor will have iio right to receive payment for it.< i l l u ~ l r ~ ~ l e ~ l( ' l b 8 1 1 1 .lS cillicr by a condition that " the amount already paid to the buildcr by the ernployers shall be considered to be the full v:iluc of the works executed by the builder up to the time when such notice shall have expired. l ' 7 I I I lliil scu I i 1 . in each case. Generally. Alolr~tuV. Re Gnrrud.~).n (2) 'l'o iakc possession of the works and to pay whatever number ol'iiicnmay bc left unpaid by the builder. :. to rccover the excess from the b~ildci.d. I<<. 687. ~ Ilury l .22 [Note: The cases cited above do not necessarily turn upon the application of the form of words with which they appear." I3 (2) '1'0 hrfcit Sor breach of contract named sums of money as :isccrl:iiiied damages for the non-fulfilment of the contract.iiI<!. e x p .310.~Iot! .P. I<ri..i <hi/!rii.tl bV. 297.23 But where valid. 518. l'c~~:~ltiosn c l l.J. W<~lk<.vrrpr... . it would seem.D. but should not be taken as authority for any general propositions of law.r Sii8.v V. Evcn wlici-c tlic word "void " is used.>i. /<I*.i. (1866) L. Lee (1863) 3 B.I1.i.I I H H i I ) r i I . ('II:II>.il.t. V.i. 018 <*I. I» rccoup Ioss.I<. lirc<rlkVi.l. (1876) 1 ('.11 (7) To hccoii~c posscssed absolutely of the materials and plant. A . but are.r Lorirlori and Norlh Western Ry.D.lr." l 4 or by a condition tliat " the builders shall not be entitled to claim from the cinployers any payments wbatsoever for any work done or Iabour or materials provided or used since the accrual of any tlicii preceding instalment. ~ l>'Jlv. IJ.V 1. I I I I I ~ I ~ ~ .ttrd Novllt 1 I ' ~ ~ ~ v l ~ ~ r ~ i I ( ' ..sIvi.ln (6) ' 1 0 bccoiiic posscssed of thc materials and things on tlie site :ibsolutcly as and for liquidatcd damages.11h (IH801 I . 310 ( < ' . r .l.. l.ivh.I) !b c ' l ~ l ) ..A. rV...111~1.ri/Niirr1r I l .LI?~:IRC!?. haiids. (.o <'.J. :11i<1if llic cosi to Llic clnploycrs shall excccd tlic b:il:iiicc i i i ilicii.Q.is~.o!. \ ~ .
A I ~ ? . H.~ whose acts are jealously s c r ~ t i n i s e d but as against the contractor and those claiming under him. 13 (4) Position of Employer Completing after Forfeiture Where the employer enters under a forfeiture clause on default by the contractor and completes. niost modcrn forms of forfeiture clausc coiitaiii i. :la' ./lr»i V.2G (3) In a contract for the construction of a railroad there was a condition that upon forfeiture " the unpaid part of the value of the work done " should be " forfeited by the said contractors to the use of the employers " in the nature of liquidated damages at the time of the forfeiture.J.I. r>rovisioiis rcgulating the adjustment of accouiils Iiciwicii tlic pnriics upon forfeiture.28 (5) 1. ~ < i r i ~ i (1885)/4 i~~~ I . the value of which was not to be ascertained by the enginee1". The employers had power to terminate the contract if they were dissatisfied witli the rate of Progress. all of . complain if the work be carried on in an uneconomical mauner .38 Thus. of the payiiicnls to be retained and forfeited in case of A's breach of contract.c. 'I'lic coiilract provided that a percentage was tobe retained as security li)r tlie periormance of the contract.. in case the contractor did not observe his contract. Jack (1903) 23 N. 382." 38 " It would be wholly inconsistent with the whole spirit and scope of the contract to suppose that contractors might file a bill in this court to have the whole accounts of the contract taken. and empowered the engineer..C.3~Whether the building owner is under a n obligatiou to account t o the builder after deducting the cost of completing the works must depend upon the particular clause.L. (18731 !. the employer is not in the position of a mortgagee in possession.I.2" v. Ii«wcvci.32 "The contractor cannot.R. :'I (1) An engineering contract provided for 15 per cent.C. of Course. that C coiil<lnot claim the retention money: Lara v. Held. contracted to construct a canal for the Government..) 207. ~ ~ Building contracts in the past not infrequently contained provisions foifeiting to the building owner any moneys due t o the builder at the time of termination. V. Great Western Railway /<<i. Greely (1885). siiiiru. assignees of retention money. 'liJ>. :I" Sc0 . to declare the contract at an end. .3~ These Statements refiect the basic principle of mitigation of damage-namely that only clearly unreasonable conduct will serve to reduce the damages otherwise recoverable by the innocent p a r t ~ . I?. W.R. H. Fai~banks(1855).27 (4) A agreed to do certain work for B. ßilloit V.yaii United States (1883). every allowance should be made in considering the conduct of the employer for the position in which the default of the contractor has placed him. i11 . (1854) 5 I4. and the clause empowers him to deduct the cost of completion from all moneys due from him to the contractor. :"' lidlron V.Z.ll. Ky. and in s~ichcascs practic:il tlilliciillics o i tliis kiiid a1.~. Doinw<~ll(1885) N.(S.704 FORFEITURE DETERMINATION AND ILLUSTRATIONS [CHAP. S l ~ ~ ~ r .g. could not maintain an action for any of the retentioii Iliat iiioiicy.' I'vr Jii!~tcx I .~li.i." In a case of unliquidated damages. 10 per cent. I>ririiii. if the Government had been damnified to a greater extent: Il<rtiitc.l<~.. 72. although he may be bound to account to the ~ o n t r a c t o r . retention money. 610.Z. the employer had in hand the 15 per cent.r~rr G. e.: Geiger V. :I:' I'cr Williiiiiia . that this clause only applied to the 10 per Cent. ( ?.(S.R. Railivay V. S. and provided that any sum dne to the contractor was then to be forfeited to the employer. abandoned the contract.ll. in Ranger V.Y. V.i'.1. 'I.~soii. .c iiiilikcly to arisc. and not to instalments which had been certified for: Riclcer V. the employer.Strt#lti. and that the contractor was entitled to it subject to any damage snstained by the employers by reason oF the default. Western Maryland Xailway (1 874). 11<~1<1. l i i I:ict. that the retention was by way of indemnity and not of forfeiture. because through their own default the company were obliged to take possession of the plant.L. Hoivaud (1851). Ifeld. ' l l l l l ~ . Held. <:coiitracted with A to do the work on the terms stipulated between A niid B. retention money.'I. ~ ~ ~ /<.C.Z. . iii I. Held. 4 I.trt l'~i!d/o S1J7. 1 9 . 547. etc. and in addition was indebted to the contractors in a certain amount on account of the monthly estimates. ~ ' is allowed a reasonahle discretion in the way in which he completes. negligence or misconduct of the contractor: Philadelphia etc. but only the 15 per cent..irlIoii V . in the ahsence of fraud or extreme negligence. of the value of the estimated work done.25 (2) An engineering contract provided for payment at the rate of 90 per cent.) 207.. or to recover the cost of completion from the contractor after giving credit for what would be done under the contract.~ll . I i i clcarly must do so. C failed to do the work and A completed it. 8 ( ' I I . and also the question whether it can he construed as a provision for liquidated damages. N. retention money.ihly clcai.I<.L. that the latter amonnt was not intended to be inclnded in the Iorfeiture.
Thus the prc-1963 R. inakc :iiiy ~>rovisioii llic rccovcry of demigcs for dclny i n coinplction. and omissions. tlic cinployer on forfeiture will be entitled to damages asscssctl iiiidcr llic gcncral law. ßut tlic ciiiploycr is iiot ohligcd L o o iicco~iiil iill il' LIic forrciturc is hcld to bc iii thc iinlurc ol'1iquid:itcd nl iIiiillii~cs. and that the employer would be at liberty 10 :idd lo. however. iiiitl Iic was IIicrc iiiiy iii Iicld L lic ciititlcd 10 iiri nccoiinl. dcspitc the omission of the forfeiture clause to providc s~icciliciilly lhcm.1/<. ('IIIIIL 1 I . though the usual common Iiiw consequences will. . the most important respect in wliicli it diffcrs from the usual specific remedies in building and ciigiiiccriiig cotitrncls is that it coiifcrs iio right to scize or use plant "' /1. aud that.il'icr takiiig possession. Wlictlier liquidated daniiigcs nrc recoverable on deteriiiinalioii iindcr a forfciturc clausc has alrcady been considered. I ' I ~ N i Ni ~ ( ' I I A I ~ 1. forms of coiitrncl for iliil iiol. iiltliough the fourteen days had not run out. i i i tlic iibsciicc ofniiy cxlircssctl iiitciiiioii 11) cxchidc sucli dniiiiigcs. Mere action.&' unless the employer's action can be rescued by being shown to be justified under the general law. he must kccp 11 slricl ." 4 2 'l'hough the common law right to damages confers substantial prolcciioii oii the innoccnt party. Furthcr. cominenced working on the ship within the fourteen days allowed. therefore. follow.I. aller or omil parts of the works only if and so far as therc wiis power rcscrvcd by the contract to add to or alter or omit. llicrc wiis iiii obligtrlioii oii tlic porl ol' tlic Iiiiiltlcr 10 iiiiikc ~oocl ~Icliciciicy tlic cost ol'coiiiplclioii. Even if. lhcy woiiltl bc rccovcriiblc iii ndditioii 111 Ilic tliiiiii~pcs slicciliciilly ~~roviilcd i i i llic tlitcriiiiiiiilioii cliiiisc. the power may only be exercised after the expiration of the notice and a failure to rectify the default within the time. and D. It is a criticism of thc iiiotlcrri standard forms that they do not make any provision for this ~iossibililyby enabling the employer to sue for damages immediatcly ii~ioii dctcrmination should he so elect. . .iiid thereby. or from the builder to him. so that any sum duc of l'roiii hiin to thc builder. in the absence of exprcss provisioii. wliicli will iiicludc the additional cost of completion and damiigo tliic io delay in completion. to Cover the employer's positioii wlicrc Iic does not wish to complete the works. SI<" <1>1Vi Soclit~t~ I ~ I I ~ H H . But even if he had authority so t o do. there is no satisfactory ividcncc of his having communicated to the [employers] any h e d iiitciition on his part not t o complete tbe ship. and in such a case thc ciiiploycr inay need to rely on ordinary damages rather than upon thc sliccilic rcmedies conferred by the clause. ~ I U ~ ) . but B. allowing a time in which to rectify the default. Such ii cliiusc iiiay iiol be apt. prevented a resumption of work by the Iiiiildcrs or those claiming under them. .c 2 (2).A. oii nn cmploycr's dctcrmination. in our opinion. in so far iis ilicy :irc tlicii applicable. . an accepted repudiation can be inferred under the general law. and D. oii tlic ground that the receiver had in fact refused to go on. I. however. it would seem that complction mcans ~oiiiplcliotiiiiidcr and subject to thc terms of the contract. II' liir Ilic dclcriiiii~iilioiiwas biiscd 011filcls justirying rcscission iiiidcr IIic ficiicriil Iiiw..~ccoriiit any additions. " It was argued that B.l i l i 633-635. Scciio~~ WIIQI<L~ N I I ~ ~ C C I 111t11. othcr heads of damage assessed in this way may hc rccovcriihlc. since any rights outside the general law specifically provided for in the clause cannot be enforced. under a forfeiture clause conditioned on progrcss may not automatically involve a common law repudiation. liir 'I'lic 1003 fiiriiiri IIi' I i i i v i hccii iiiiiciiiictl iii I I i i ciiililoycr's iiiIci~cs1 iii fl* this respccl. while providing for tlic rccovcry or llic cost «r coinplction froin thc contractor.as and under which no difficulty would iirisc i i i Lakiiig account of omissions or additions in the work actuiilly <1011c.3 . On either view. Siiiiiliirly.rir/~rlr. il is subinitlcd Llial. notice has to be given to the party in default. if the forfeiture is justified under thc geiicriil Iiiw. (1X54). Wlicrc Ilic clausc provides that the employer shall complctc the works . this still may not entirely rescue an improperly exercised forfeiture. I1 sliould not be forgotten that. of Course. by the tcrms of the contract.. can jnstify the conversion under the ' Liser ' clause as arising on the cesser for working for fourteen days.iinincnt.'0 (1) When Forfeiture is Wrongful A power of forfeiture will be wrongfully exercised if one of the events upon whicb it is conditioned has not occurred. 'I1111nu 25 ( 1 ) (<I). It was iudeed suggested that llic rcceiver had declared his intention of not further prosecuting the work.7011 ~ ' i i i < i ~ i i l ' i ~ l 1 A~ i I I ~ > I ~ I I I I ( M I N A . . . there was every reason 10 bclieve the work would never be recommenced. may be capalilo ol' iisccr1. if. Iliis i~ 1'11lly<liwlisscd.B.
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