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Home » Awareness » Managing contracts » Costly disagreements: Part 3


Costly disagreements: Part 3

 Delays

 Delays in delivery of goods or performance of services can happen for a variety of reasons  and are a common focus of disputes, additional costs and delays to payment. The causes of delays can be grouped into those caused by:-

  •  the customer
  •  you
  •  events outwith the control of the parties 

Looking at each of these in turn:- 

Delays caused by the customer 

The delay could be caused by changes requested by the customer (see previous article), in which case a good changes clause in the contract will prevent the negative consequences. However delays are often caused by the failure of a customer to make a decision in time or to provide or do something which you require in order to be able to make progress.  This is one of the “what if” scenarios which should be thought about in advance and addressed in your contract. The contract should identify everything you need the customer to do or provide in sufficient detail that there can be no doubt - and when. Then you should ensure the inclusion of a clause clearly setting out your right not only to be paid more if the work is delayed in such circumstances, but also to whatever other changes to the contract between you – particularly on any agreed programme timescales or service level agreement – result from the customer’s failure. 

If the contract is for goods rather than services, there should be a storage or warehousing clause allowing you to store (at the customer’s expense) goods which are ready to be delivered as agreed but the customer is not ready to receive. 

Delays caused by you 

Firstly, there should be a ‘liquidated damages’ clause specifying events outwith your control for which you will not be liable (see below). For events which are under your control there are certain steps which can be taken to minimise the cost and risk. It is unlikely that you will be able to exclude liability entirely for failure to deliver timeously however the following can be considered:- 

  • if possible qualify any delivery times as  ‘estimates only’, ‘approximate’, or similar terms
  •  ensure it is clearly stated in the contract that time is ‘not of the essence’ for any of the delivery times
  • include a liquidated damages provision which fixes the maximum liability for delay, sets out how payments are to be calculated and identifies the onset point (ie after how many days/weeks/months of delay it kicks in)
  • make sure you have ‘wriggle room’ in any delivery dates you sign up to  

Delays caused by events outside the parties’ control 

There should always be a ‘force majeure’ clause in any contract, which specifies that parties will not be liable non-performance due to events outwith the control of the party or parties concerned. Examples of such events would normally be specified, such as acts of God, fire, lightening, explosion, war, disorder, accidents, flood, industrial dispute and others. Consider also including specific events for your particular market sector. It can also be a good idea to specifically exclude liability for delays due to third parties not within your control, particularly where these are to be instructed or arranged by the customer.

Nothing in this awareness article is intended as legal advice. If you have a specific legal requirement or query you should consult a solicitor directly.