Procurement & Contract Practice

Simon UBLMRT-30-2 – Semester Two

Brennan

Scott
Week 2: Possession
Silbereis

After today’s lecture, you should:

• Recognise some of the key contract

issues arising regarding possession of a
site.

• Recognize some of the wider practical

implications.

Two “Health Warnings”

• Principles explained in lectures and
tutorials in the coming weeks generally
refer to traditional procurement with JCT
contracts (usually JCT SBC) unless:
ootherwise stated
o or if it should have been otherwise stated but I
forgot to state otherwise!
• Main value in SFCs is precedent. But:
o2016 forms  Legacy changes from
previous language --< scope for new
case law

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Contract analysis by obligations
• Five essential obligations
oPay/Build
oDesign/Follow design
oInstruct/Obey
oSet deadlines/Meet deadlines
oGive possession/Take possession

Possession
• What is “possession” of land?
oOwnership?

• Who owns the land?

o HM Queen Elizabeth II
o Compulsory Purchase
o the Crown has first dibs on all coal, oil, silver, gas and
gold found on public or private property

• Estates in Land - is an interest in real property that

allows possession either now or sometime in the future for a specific
or unlimited duration

Possession
• What are the estates in land?
oFreehold
̶ “the estate fee simple absolute in possession”
̶ equivalent to an absolute owner
̶ A freehold estate is one where the duration
of ownership is indeterminate
oLeasehold
̶ Right to exclusive possession for a fixed term
(usually in exchange for an annual ground rent fee)

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• How else can you be on land?

o Easement

o Licence

o Trespass / Adverse possession

• Access versus possession…

There is an implied obligation that the principal must
make the site available to the contractor to perform the
work. When contracting, some consideration should be
given to whether the contractor is provided with
possession of the site, or only access to the site. This is
important because possession gives the contractor an
exclusive right whereas access gives the contractor a
non-exclusive right.

Possession
• The contract gives Contractor a licence, but…

• What is “possession”?
o A copy set of keys?
o Permission?
o “Exclusive possession”?
o Occupation?

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Why does possession matter?
• The obvious – to build it!
• Tells us when to “start the clock”

oLate starting?
– Employer pays Contractor
oStart on time and late finish?
– Contractor pays Employer

Why does possession matter?

• The obvious – to build it!
• Tells us when to “start the clock”
• Responsibility for the site

Obligation to insure
“Occupation”  Occupier’s Liability Acts

• Liability for Trespassers

Some Examples:

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Non Construction Example 1
• Adult dives in to shallow lake on land he had
trespassed and suffered severe head injuries.
But signs had been erected all around the
lake, some advising that swimming was
dangerous and others simply warning: 'No
swimming'. Despite this, Mr Tomlinson dived
in and received his injury.

o Who is liable?

Non Construction Example 1

John Tomlinson V Congleton Council and Cheshire
County Council:

• The House of Lords decided against Mr Tomlinson

“accident did not arise 'because of the state of the
premises. ……. but rather because the claimant had
chosen to indulge in an activity which is inherently
dangerous‘
• Landowners and occupiers are not required to spend
excessive sums of money in fencing or landscaping
large parts of open land under their ownership or
control

Non Construction Example 2

• A 14-year-old boy injured by a small boat
which had been abandoned in the grounds of
a block of flats owned by the local authority.
The council knew about the boat but failed to
remove it.
• The boy was playing on and around the boat,
which had been propped up on bricks, when
it fell on top of him, inflicting severe injuries

• Who is Liable?

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Non Construction Example 2

• Jolley v Sutton London Borough Council (2000).

The House of Lords found the ingenuity of children in

their play made it likely that they would be attracted
to the boat and that there would be a risk of serious
injury.
It therefore found in favour of the claimant and
decided the local authority was liable.

Construction Example

Must do what is reasonable / proportionate

………………….…….…… but what is reasonable???

• to take such care as in all the circumstances of the case is

reasonable to see that the visitor will be reasonably safe in
using the premises for the purposes for which he is invited
or permitted by the occupier to be there.

• Additionally occupier owes a duty towards a trespasser if:

 They are or should be aware of the danger; and knows or
should know that people may in practice be exposed to the
danger; and can reasonably be expected in all the
circumstances to offer them some protection from it.

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What if…
…the Employer doesn’t give possession?

1. Breach of Contract
 Condition or Warranty?

= Repudiatory Breach

Contractor can elect to end contract

(terminate) and claim damages.

What if…
…the Employer doesn’t give possession?
2. Deferment
 “Pause” the clock
̶ Default in SBC 2016: Up to 6 weeks

̶ Contractor gets extension of time to

complete the build
̶ Contractor also gets paid costs of delay

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How does JCT deal with Possession
• Differently!!!!

o JCT Intermediate 2016

o JCT Minor Works 2016

 Doesn’t Refer to Possession:

 Implied

What if…
…the Employer gives possession of part?

• Key question:
oPlanned & agreed (“sections”)
or
oForced & imposed?

• If planned & agreed, fine!

What if…
…the Employer gives possession of part,
without having agreed it first?

• Effect similar to deferment

oContractor gets more time and costs of
delay
̶ Whittal Builders v Chester-le-Street DC
(1987)
• How much of the site is needed?
o 60%? 90%? 95%? 99% 99.99%? 100%?

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What if…
…the Employer wants possession partially
returned?
• Project nearing completion, Employer wants
to move into the finished part
o If contract doesn’t provide for it, huge risk
(English Industrial Estates v Wimpey (1973))
o JCT SBC 2016 allows it, but logistic issues re
access, insurance, valuing part-complete
work, etc
o Alternative: JCT “Use or Occupy”

What if…
…all parties want to proceed, the
Contractor is ready to move on site and
the Employer ready to give possession
BUT
the Contract is not yet signed.
• What can they do?

• What can they do?

oTake a huge risk and start,
o“Letter of Intent”, or
oDo nothing until the Contract is signed.

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Letters of Intent
• Generally not advisable
• But commercial reality sometimes
means…

• What and Why?

(…and Who? and When? and Where? and How?)

oLet’s discuss in the tutorial…

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