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Failure to comply with conditions precedent for extension of time (“EOT”)

Failure to comply with conditions precedent for extension of time (“EOT”)

Can a contractor claim EOT if it fails to comply with contractual conditions precedent? This was one of the main issues decided in KL Eco City Sdn Bhd v Tuck Sin Engineering and Construction Sdn Bhd [2020] MLJU 2457 involving the PAM 2006 Form of contract.

Background Facts

The KL Eco City Project was a major unified development which included a link bridge connecting the project to Mid Valley City. Tuck Sin Engineering was the main contractor for the project and the original completion date was set on 2.6.2016. There were two applications for EOT by Tuck Sin which were granted, extending the completion date until 20.7.2016. Subsequently, the Architect issued a Certificate of Non-Completion (“CNC”), resulting in KL Eco City imposing liquidated damages of RM1,050,000 against Tuck Sin.

Condition precedent for EOT

Clause 23.1 of the PAM Form required the contractor to give notice within 28 days from the commencement of the delay event, as well as furnish particulars within 28 days upon the end of the delay event. For both EOT applications by Tuck Sin, the contractor failed to issue the notice within 28 days.

Nevertheless, the Architect proceeded to consider the EOT applications. Tuck Sin claims that such conduct means the Architect has waived the requirement for the contractual conditions precedent.

However, the Court held that waiver on the part of the Architect would not exempt the contractor from its requirement to comply with the contractual conditions precedent because the Architect does not have the right to waive the contractual rights on behalf of the Employer unless the Employer accepts and/or ratifies the waiver.

However, as KL Eco City did not seek to invalidate the EOT granted by the Architect, the Court therefore held that the Employer in this case had accepted the waiver of the conditions precedent.

Lessons from this case:

  1. Be careful to strictly comply with the contractual conditions precedent.
  2. Contractual conditions precedent can be waived by conduct, although the Court would look into the actual conduct of contracting parties as opposed to the conduct of the consultant.
  3. There was no argument on the prevention principle in this case, and how that may interplay with any failure to comply with contractual conditions precedent.

 

Authored by:

Aaron Aiman Thangarajoo ([email protected])

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