Do you want to lose your rights to claim for damages?
Do you want to lose your rights to claim for damages when your contractor or sub-contractor breach the contract and then shortly after falls into administration?
Of course not! So how do you protect your rights?
In the recent Hackney Empire v Aviva Insurance case the courts had to decide if there was a right to recovery of damages under a performance bond due to Hackney Empire’s contractor entering into administration.
In that case, the court found that Hackney Empire’s contractor was in breach of the contract as it was no longer able to continue work on site in a meaningful way and had no possibility of being able to do so in the future; and also found that this breach occurred before an Administrator was appointed in respect of Hackney Empire’s contractor.
Under the contract between Hackney Empire and its contractor it was made clear that the termination clauses were ‘without prejudice to any other rights and remedies Hackney may possess’. This therefore meant that Hackney Empire would, in the normal course of events, be able to claim damages from its contractor for a breach of contract, irrespective of the fact that the breach in question may have been relied upon to terminate the contractor’s contract in the first place.
Obviously, because Hackney Empire’s contractor ceased trading it was not possible for Hackney Empire to recover the damages from the contractor, and, rather than simply be added to an unsecured creditors list with the administrator, sought to recover the damages through the performance bond in place.
Hackney Empire successfully argued to the court that as the bondsman (Aviva Insurance) was aware of the right of Hackney Empire to recover damages in the event of a breach of contract by Hackney Empire’s contractor, being a breach that also caused Hackney Empire to evoke the termination clauses, the said damages were recoverable through the performance bond.
The court agreed with Hackney Empire in respect of this matter, even though an earlier court case (Perar BV v General Surety) found that the recovery of damages relating to termination clauses was not allowed. The court in the Hackney Empire case decided that the Pera BV case was not relevant as in that earlier case the wording used in respect of this matter only related to one termination clause, and that particular termination clause had not been relied to terminate the contract.
Based upon the above background, it is clear that it is vital that you are properly protected in respect of the recovery of damages in a case where a contractor breaches the contract which results in you evoking the termination clauses, and where that contractor subsequently ceases trading, and where you have a performance bond in place.
Therefore, if you are considering using bespoke or amended contracts along with the use of a performance bond, and are unsure if your rights are protected in the event of termination of the contractor, then you need to contact us (i.e. Melbury Construction Consultants Ltd) to find out how this may affect your contractual and/or legal rights and/or obligations.
Of course not! So how do you protect your rights?
In the recent Hackney Empire v Aviva Insurance case the courts had to decide if there was a right to recovery of damages under a performance bond due to Hackney Empire’s contractor entering into administration.
In that case, the court found that Hackney Empire’s contractor was in breach of the contract as it was no longer able to continue work on site in a meaningful way and had no possibility of being able to do so in the future; and also found that this breach occurred before an Administrator was appointed in respect of Hackney Empire’s contractor.
Under the contract between Hackney Empire and its contractor it was made clear that the termination clauses were ‘without prejudice to any other rights and remedies Hackney may possess’. This therefore meant that Hackney Empire would, in the normal course of events, be able to claim damages from its contractor for a breach of contract, irrespective of the fact that the breach in question may have been relied upon to terminate the contractor’s contract in the first place.
Obviously, because Hackney Empire’s contractor ceased trading it was not possible for Hackney Empire to recover the damages from the contractor, and, rather than simply be added to an unsecured creditors list with the administrator, sought to recover the damages through the performance bond in place.
Hackney Empire successfully argued to the court that as the bondsman (Aviva Insurance) was aware of the right of Hackney Empire to recover damages in the event of a breach of contract by Hackney Empire’s contractor, being a breach that also caused Hackney Empire to evoke the termination clauses, the said damages were recoverable through the performance bond.
The court agreed with Hackney Empire in respect of this matter, even though an earlier court case (Perar BV v General Surety) found that the recovery of damages relating to termination clauses was not allowed. The court in the Hackney Empire case decided that the Pera BV case was not relevant as in that earlier case the wording used in respect of this matter only related to one termination clause, and that particular termination clause had not been relied to terminate the contract.
Based upon the above background, it is clear that it is vital that you are properly protected in respect of the recovery of damages in a case where a contractor breaches the contract which results in you evoking the termination clauses, and where that contractor subsequently ceases trading, and where you have a performance bond in place.
Therefore, if you are considering using bespoke or amended contracts along with the use of a performance bond, and are unsure if your rights are protected in the event of termination of the contractor, then you need to contact us (i.e. Melbury Construction Consultants Ltd) to find out how this may affect your contractual and/or legal rights and/or obligations.
posted by Melbury at
09:40
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