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Berwin Leighton Paisner Christmas quiz 2009

Practical Law UK Articles 4-501-0134 (Approx. 5 pages)

Berwin Leighton Paisner Christmas quiz 2009

by Berwin Leighton Paisner LLP
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Questions and answers for the the Berwin Leighton Paisner construction law Christmas quiz 2009.
Questions and answers
This article sets out the questions and answers for the Berwin Leighton Paisner construction Christmas quiz 2009.
The answers are revealed by clicking on the note below each question.

1. The LDEDC Act 2009

Which of these statements is true (there may be more than one)?
a. Third parties may give section 110A payment notices.
b. If the payer fails to give a timely section 110A payment notice the payee may give a payment notice at any time before the final date for payment.
c. The payer is not obliged to give a "withholding notice" if the payee goes insolvent before the date upon which the payer is required to give such withholding notice.
d. Third parties may give section 110A notices, but only on the third day of Christmas.
Note: Answer to question (1) The LDEDC Act 2009
Close Drafting Note

Answer to question (1) The LDEDC Act 2009

Only (a) is true.
In (b), if the payer fails to give a timely section 110A payment notice the payee may give a payment notice at any time. The final date for payment is simply pushed back by the number of days the payment notice is delayed.
In (c), the payer is only let off giving a withholding notice where:
  • the contract provides that, if the payee becomes insolvent, the payer need not pay any sum due in respect of that payment; and
  • the payee becomes insolvent after the prescribed period before the final date for payment.
The payer is still obliged to give a "withholding notice" if the payee goes insolvent before the date upon which the payer is required to give such withholding notice.
For more information on the LDEDC Act 2009, see Practice notes:

2. Retention of title

Which of these statements is true (there may be more than one)?
A well-drafted retention of title clause gives the seller:
a. A right to recover goods stored at the buyer's premises which are identifiable as the seller's.
b. A partridge in a pear tree.
c. A right to recover goods that have been incorporated into the land.
d. A right to assert ownership of any new product arising out of the manufacturing process.
e. A right to the proceeds of sale where goods are sold on to a third party.
f. A right to enter the buyer's premises without trespassing.
Note: Answer to question (2) Retention of title
Close Drafting Note

Answer to question (2) Retention of title

3. Extensions of time

A construction contract provides that the employer can issue directions to the contractor under clause X and issue variations under clause Y.
The contractor is entitled to be granted an extension of time if it is delayed in carrying out the works due to:
a. variations issued by the employer pursuant to clause Y of the contract; and/or
b. an act of prevention by the employer.
The extension of time provision does not expressly entitle the contractor to an extension of time if the employer issues directions under clause X, compliance with which delays the contractor.
The employer issues directions to the contractor under clause X which vary the work and delay completion (which he is allowed to do). Does this constitute an "act of prevention" under the extension of time provision?
Note: Answer to question (3) Extensions of time
Close Drafting Note

Answer to question (3) Extensions of time

4. NEC3 Option C

Which one of the following statements about assessment of amounts due to the contractor under the NEC3 Option C contract is true?
a. The project manager comes bob bob bobbin' along.
b. The project manager carries out a valuation of the work carried out by the contractor at the assessment date.
c. The employer carries out a valuation of the work carried out by the contractor at the assessment date.
d. The project manager forecasts the cost which will have been paid by the contractor before the next assessment date.
e. The employer forecasts the cost which will have been paid by the contractor before the next assessment date.
Note: Answer to question (4) NEC3 Option C
Close Drafting Note

Answer to question (4) NEC3 Option C

5. Set-off, abatement and withholding

True or false:
a. The right of equitable set-off allows you to set-off debts which are both unliquidated and unconnected.
b. An employer can abate an amount invoiced by the contractor by an amount equal to delay damages payable by the contractor for late completion.
c. An interim certificate has been issued under the contract. Defects have become apparent in the work since the certificate was issued. The paying party has failed to serve a withholding notice within the agreed period. The paying party is entitled to abate the certified amount in respect of these defects.
d. In the bleak midwinter frosty wind made moan.
Note: Answer to question (5) Set-off, abatement and withholding
Close Drafting Note

Answer to question (5) Set-off, abatement and withholding

Answer (a) is false. Equitable set-off allows you to set off debts which are unliquidated but they must be closely connected.
Answer (b) is false. Abatement is a mechanism for reducing the sum payable to a contractor for work carried out. The theory is that where work is worth less than the price agreed, the payer can 'abate' the price to reflect the lower value of what he gets. Claims for delay therefore do not feature in abatement.
Answer (c) is false. The defence of abatement can be raised in respect of defective work but not in a contract which has a certification process and where a withholding notice has not been given. The authorities say that where a sum has been certified you cannot abate that sum unless you have given a withholding notice. So in essence, the certification procedure coupled with a failure to operate the withholding notice mechanism operates to exclude your right to abate the amount in that particular certificate. (See Rupert Morgan Building Services (LLC) Ltd v Jervis, 12 November 2003 (Court of Appeal), referred to in Legal update, Payment of money due on interim certificate where no notice of intention to withhold payment served.)
However, the position is different if the contractor has simply claimed the money in an application for payment and no interim certificate has been issued. If the employer argues the application for payment is overstated (for example, the work was not done at all or there are defects in the works), the employer may have an abatement defence and no withholding notice will be necessary. An abatement defence denies that money is due or owing and, if successful will reduce or defeat the amounts claimed by the contractor. In KNS Industrial Services (Birmingham) Ltd v Sindall Ltd [2001] 17 Const LJ 170, the judge said that "one cannot withhold what is not due".
Answer (d) is true, at least according to the poet, Christina Rossetti.
For information on:
How did you score?
0 points: Ho ho hopeless.
1-2 points: Who can't tell their Santa Claus from their Romalpa clause?
3-4 points: An elfy score.
5 points: Perfect! There's snow room for improvement.
End of Document
Resource ID 4-501-0134
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Published on 16-Dec-2009
Resource Type Articles
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