Issues of Time Bar Clauses

South African Forum of Frikkie Oosthuizen

Civil Engineering Contractors Executive: Contractual Affairs
and Support Services

14 October 2016
 Frikkie Oosthuizen
Issues of Time Bar Clauses

Contents
Page

1. Introduction 3

2. What are the issues? 3

3. The application of “time bars” in standard forms of construction contracts 5

3.1. FIDIC 5

3.2. GCC 6

3.3. JBCC 6

3.4. NEC3 7

4. Summary 8

Bibliography and References 9

The standard forms of construction contracts referred to in this assignment are:

FIDIC: Conditions of Contract for Construction for Building and Engineering Works designed by the
Employer (“Red Book”, 1999) published by the International Federation of Consulting Engineers.

GCC: General Conditions of Contract for Construction Works (Third Edition 2015) published by the South African
Institution of Civil Engineering.

JBCC: Principal Building Agreement (Edition 6.1, March 2014) published by the Joint Building Contracts Committee
in South Africa.

NEC3: Engineering and Construction Contract (April 2013) published by the Institution of Civil Engineers
(United Kingdom).

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1. Introduction

This critical discussion of time bars and the application of it, is not to express any disapproval for
having notice requirements. Expressing such criticisms would be futile, as notice provisions today
are critical elements for having commercially successful projects. Thus, the critique originating from
this discussion is to consider aspects surrounding notices and time bars. It is determining the
constituent components of the concepts to get behind the strengths and weaknesses of notice
provisions.

Champion (2007) puts the rational for notice requirements simply as to “encourage prompt
resolution of claims”. Jones (2009) has a more convincing explanation for needing notice
provisions in construction contracts. He says that a notice for a claim will provide a “proper
opportunity” for the parties to consider the best way to deal with the issue in the interest of the
project (Ibid, p.7). Also notice provisions are not just for the benefit of employers; at the same time
contractors benefit from a process that is “orderly, timely and disciplined” (Ibid).

2. What are the issues?

Notice provisions are agreed to by the parties, and thus can have significant implications should
certain stipulations be present. The Courts in the United Kingdom have ruled that where the
specified time period was not adhered to for giving a notice for a claim, the claiming party can be
prevented from pursuing such claim1. This interpretation is applicable when (1) the time for giving
such notice is clearly indicated, and (2) the parties expressly agreed that failing to notify within that
time, the claiming party will lose its rights to such a claim (Glover & Hughes, 2011, p.378).

The aforementioned is also known as a “condition precedent” that simply means where there is “no
notice”, there is “no claim” (Binnington, 2012). This interpretation is also supported in the South
African Courts, whereby it was confirmed in Barkhuizen v Napier2, that time bars will be upheld
where the notice period is clear and reasonable (Ibid). Time barring of a contractor’s claim, i.e.
disallowing or not accepting it, is the concept that where a notice for a claim was not provided
(contrary to the provisions of the contract), the Employer, being the other party, may use it as a
defense against that claim.

The Contractor, as the claiming party, can be further impacted by notice provisions, with respect to
the “prevention principle” being not applicable which is generally not viewed as an absolute rule of
law (Lal, 2007). As a result of the actions of the Employer, the Contractor can be delayed, and
should Contractor not submitted a notice for an extension of time, the Contractor will have no
recourse to claim compensation for the time and money lost (Binnington, 2012). The implication

1 Bremer Handelgesellschaft mbH v Vanden Avenne Izegem P.V.B.A. [1978] 2 Lloyd’s Rep. 113.
2 Barkhuizen v Napier (CCT72/05) [2007] ZACC 5; 2007 (5) SA 323 (CC); 2007 (7) BCLR 691 (CC) (4 April 2007)
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being that penalties can be still deducted for late completion even for the delays caused by the
Employer. However, the impact as a result of the requirements for notices to claims, for such
claims to be considered, is much wider.

Both parties, being the Contractor and the Employer as well as the supervising agent, are impacted
by the requirement for notices for claims to proceed, or to be heard by the other party. Contractors
are being impacted by having to be aware all the time of potential issues that may, or may not,
become a claim sometime in the future (Champion, 2007, p.7). The supervising agent (Engineer,
Project Manager and the like) is also impacted as to (1) whether or not notices to claims should be
responded to, and (2) to also comply with the specified of time limits of such notice provisions (Ibid,
p.9).

The impact on the Employer can arise from uncertainties as to whether time bars can be enforced,
or not; several jurisdictions have shown that notice requirements may not be enforceable at all; for
example, in the UK is the Unfair Contract Terms Act to be considered, and in the United States, a
non-claiming party may not have suffered any prejudices for not receiving claims notices (ibid,
p.11).

The point that has to be made is that the requirements for having notices are used as defenses
against claims, and not for the intended purpose. As highlighted in the opening paragraphs, the
intention of notices is to deal with situations early on so that preventive and corrective actions will
still be possible. In Sub-clause 8.3 of Fidic, the Contractor is required to inform the Engineer by
way of a notice of situations that may adversely affect the project. Glover and Hughes (2011,
p.188) presume that this requirement is for the Contractor and Engineer to work together. In the
NEC3, the requirement for cooperation between the Contractor and Project Manager is made much
more explicit with Sub-clause 61.1 requiring both to give early warning.

A further aspect of the concept of giving notice is proffered by Binnington (2007) who elevates the
reasons contractors failing do to so. Ignorance, conflict avoidance, intimidation and being
influenced not to submit notices for claims are all motivations for neglecting this important
requirement. However, it could also be that contractors don’t understand what a notice is. Giving
notices will become much easier for the contractors should they understand that a notice is
basically a letter with a couple sentences advising of a situation (Lal citing Seppälä, 2007, p.3).

Many times confusion may also arise as to when a notice should be given. This can be due, as
pointed out by the Court in the Obrascon-case3, to the possibility of more than one point in time to
give notice. Initially the Contractor “may become aware” of a situation that can lead to a claim,
which at that point in time is referred to as a “prospective delay” (Binnington, 2014). There is also
the “retrospective delay” which is the point when the delay actually occurs (Ibid). This ruling is

3 [2014] EWHC 1028 (TCC)

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significant in that many times the origins of a situation (the cause), and the eventual effect
(symptom) may be far apart in time. This may impact on the abilities of the parties to resolve and
avoid project adversities earlier.

3. The application of “time bars” in standard forms of construction contracts

It is only recently that the notice provision, as a condition precedent, was introduced into standard
forms of contraction contracts, i.e. Fidic 1999 and NEC3 (Champion, 2007). Previously, it was
largely found in bespoke contract forms for major projects (Ibid). In main, the “condition precedent”
feature makes it possible to “time bar” claims, which now has been firmly established in standard
forms of contracts used in South Africa.

With this in mind, the four mentioned contract forms, each with its own unique peculiarities, are
analysed and discussed below:

3.1. FIDIC

There are a number of instances in Fidic (1999, the Red Book) where the Contractor is required to
give notice; some are not detrimental, but others fatal for the contractor’s cause. The only notice
that has forfeiture attached to it, if not given, is found in Sub-clause 20.1 of the Conditions of
Contract. Should the Contractor consider an extension of time or additional compensation is due,
and a notice was not given in the prescribed period of 28 days4, the Contractor (can) lose all rights
to it.

For not adhering to the other time requirements with respect to notices, the contractor escapes from
being time barred. For example, there is no sanction against the Contractor for not submitting claim
particulars in the 42-day period as stated in the above mentioned sub-clause; this of course is not
the case in the Fidic Gold Book of 2008 where the rule is that the Contractor loses all rights to a
claim if the 42 days for submission was not adhered to. There is also no penalty for not submitting
interim details (or late) at monthly intervals, or at the end (within 28 days) after the issue causing
the claim, has expired. The reason for this is that the contract is silent in this regard.

Similarly, is not giving of notices in terms of Sub-clauses 1.9 [Delayed Drawings or Instructions] and
8.3 [Programming] fatal to the contractor’s ability to submit clams. Provided, the notice
requirements as per sub-clause 20.1 [Contractor’s Claims] are since complied with. The purpose of
such clauses, as mentioned earlier, is presumed that issues will be identified earlier so that parties
can work together for the benefit of the project (making time barring unneeded). Also, the principles
of the Obrascon-case previously quoted, may provide relief to the Contractor as to when notices
are due.

4 In Fidic, a “day” means a calendar day (Sub-clause 1.1.3.9).

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3.2. GCC

The GCC (2015, 3rd ed) is very modest in its approach to the concept of “early warning”. Sub-
clause 5.9.3 [Contractor to give notice timeously] does require the Contractor to advise the
Employer’s Agent, via an “adequate written notice”, of any shortcomings in the information
provided. However, non-adherence in this regard cannot be fatal as the provisions contained in this
clause are silent on the non-action of the Contractor.

A peculiar methodology of the GGC can be seen in the conflict between the provisions of Sub-
clause 2.2.4 [Contractor’s right to claim], and the consequence for failing to give a notice for a claim
as contained in Sub-clause 10.1.4 [Contractor’s failure to comply with notice period]. The last
mentioned sub-clause makes it plain that the Contractor loses all rights to continue with a claim in
terms of Sub-clause 10.1.1 [Contractor’s claim]. It is also good to note that a “notice” for a claim is
not initially required; the claim should simply be submitted within the 28-day timespan5. Only when
the circumstances giving rise to the claim is of an ongoing nature, should a claim notice be
submitted.

However, as per provisions of Sub-clause 2.2.4, where in terms of Sub-clause 2.2.1 [Adverse
physical conditions], notice is due “as soon as the Contractor becomes aware” (with no specific
timespan stated), the Contractor’s entitlement (time or cost) is only permissible from the date of the
notice. The understanding is, that a Contractor’s claim in terms of Sub-clause 2.2.1 cannot be time
barred in the usual sense, but is limited to the extent of the notice given. Another debate can also
be whether a non-specific timespan will pass the test as laid out in Barkhuizen v Napier.

Another unusual concept of the GCC is providing for two types of claims, i.e. a contractor’s claim
(10.1.1) and dissatisfaction claims. The latter claim can be made by either the Contractor, or the
Employer, in terms of Sub-clause 10.2.1 [Dissatisfaction claim]. Time barring made very clear in
this clause that the late submission of dissatisfaction claims (beyond 28 days from the cause of
dissatisfaction), by any of the parties, would have “no further rights”, notwithstanding that a notice
for such claims, not a contractual requirement6.

3.3. JBCC

The JBCC (6.1) makes it very easy by indicating with “asterisks” on Page 2 of 32 of the document,
that if no notice is given, the opportunity for a claim is forfeited. In particular, Sub-clauses 23.4.2
and 26.5 require that notices are to be given for extensions of time and additional monies claimed.

5 The timespan in GCC is interrupted by non-special working days (refer Sub-clause 5.1), meaning that the stated 28 days, can
actually be much longer due to public holidays and builder’s breaks if such days indicated in the Contract Data.
6 There is also no “notice” requirement for Sub-clause 10.2 dissatisfaction claims; a dissatisfaction claim should be submitted

within the 28-day timespan; else no claim will exist.

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The twenty (20) working days, within which to give notices, would likely be found acceptable in
terms of the Barkhuizen V Napier case, albeit much less than the 28-day requirements in Fidic and
GCC, and the eight weeks in NEC3.

The JBCC appears to be more lenient on when the claims documents are to be submitted. The
requirement for submitting claim submissions, being detailed and substantiated, is within 40
working days from the date of the notice with respect to monies (26.6). But, for time claims, the 40
working day period is only commencing from the date the Contractor is able to quantify the delay.

Nevertheless, as to late claim submissions, unlike the GCC, cannot be time barred should the
Contractor breach these rules. In such circumstances, the Employer will only be able be to seek
relief under Common Law. Time bars are also not applicable for the Contractor to submit notices of
disagreement in case claims failed, which are described in Sub-clauses 23.8 and 26.8 for time and
money issues respectively.

The aforementioned principle of no time barring as to the submission of notices for disagreements
is confirmed in Sub-clause 30.1 under the dispute resolution provisions. Where, further to the
resolution of disputes; the only time constraint, is the requirement to proceed with Arbitration,
should disputes not be referred to Adjudication within 10 working days after the period for resolving
disputes have expired (30.3). The latter period, also 10 working days, which is to be taken from
the date of receiving the notice of disagreement (30.2).

3.4. NEC3

The NEC3 (2013) contract forms operates on the basis of mutual trust and co-operation (Sub-
clause 10.1). Thus, the incorporation of an “early warning” concept (16.1), being an explicit
contractual obligation on both the Contractor and the Project Manager (the representative / agent of
the Employer). The negative aspect of this requirement is that contractual remedy is not clearly
spelled out, should either of the parties fail to provide such a warning-notice.

It would appear that the remedy (for the Employer) is to be implied from reading sub-clauses 61.5
and 63.5, where only the Contactor is reprimanded. Costs and time will be assessed based on the
time when early warning could and should have been given7. From this it follows that the
Contractor’s remedy, should it have been the Project Manager’s responsibility for an early warning,
sits in longer times and higher costs being claimed.

What is very clear is that Sub-clause 61.3 provides solid ground for time barring of claims should
the required notice for compensation events not be submitted within the 8-week notice period. The
submission of additional costs and time claims, as per Sub-clause 61.4, are to be made within 1

7 The expectation is that the cost and time claimed will be less had an early warning been given.
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week (or longer as agreed). However, it would appear that there is no “penalty” for the Contractor
should such details not be submitted in time. But, the Project Manager can proceed with assessing
the compensation event, without the Contractor’s input, which by implication can be a disadvantage
(64.1).

To live up to its intention of seeking mutual trust and co-operation, the NEC3 provides a unique
feature that the Project Manager can be “time barred”, in case compensation events (64.4) and
quotations (62.6) being not approved or assessed in timely manner. The silence of the Project
Manager to be taken as approval8. This is in contrast to “silence” in Fidic and GCC, which is to be
taken as non-approval or rejection of the Contractor’s claim submission.

Time barring also impacts the dispute resolution process [Option W1] typically used in South Africa.
The provisions contained in Sub-clause W1.3(2) makes it clear that neither party can refer disputed
issues to the Adjudicator or Tribunal (i.e. Arbitration or Litigation) when the notification of disputes
(4 weeks), or referrals to the Adjudicator (between 2 and 4 weeks), are not being adhered to. The
opportunity to pursue such claims is then lost.

4. Summary

The giving of a notice should be seen as a signal; for the project team to stop and look at the issues
alluded to by the claiming party – typically this will be the contractor. More so, during this period the
parties must gather and review information regarding the claim that will be submitted (Champion,
2007, p.13). Ultimately, the goal must be to achieve a balance between the notice period, and the
time to submit claims. As such, much longer notice periods, and periods to submit claim
submissions, are needed.

The forfeiture of claims due to short and strict time limits must be reviewed as it places the concept
of cooperation and trust, so badly needed in the construction industry, in jeopardy. This argument
made clear by Glover & Hughes (2011, p.380), and quote: “The general point being that it is
somehow wrong that a party who genuinely suffered a loss might be prevented from brining a claim
in respect of that loss for a technical procedural breach”.

8 The Employer can, in terms of Option W1.3(1) and arising from Sub-clauses 62.6 and 64.4 if in disagreement, notify a dispute.
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Bibliography and References:

Binnington, C. (2002). The importance of giving notice. BCA Website.

Binnington, C. (2007). The intricacies of notice provisions. BCA Website.

Binnington, C. (2012). Do you know the difference between a Notice and a Time Bar? BCA Website.

Binnington, C. (2014). Time bars revisited. BCA Website.

Champion, R. (2007). Variations, time limits and unanticipated consequences. Society of Construction Law.

Glover, J. & Hughes, S. (2011). Understanding the Fidic Red Book: A clause-by+clause commentary (2nd
ed). London: Sweet & Maxwell Ltd.

Jones, D. (2009). Can prevention be cured by time bars? Society of Construction Law.

Lal, H. (2007). The rise and rise of time-bar clauses for contractor’s claims: issues for construction
arbitrators. Society of Construction Law.

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