Construction Law

Julian Bailey

Document

CHAPTER 9 BREACH CONTRACT AND TERMINATION

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Breach of contract

(i) Definition

9.01 A breach of contract is a failure by a party to fulfil its contractual promise. What a party has promised to do (or not do) is to be ascertained from the terms of the particular contract. A contractor’s express obligation is almost invariably to carry out and complete the works described in the scope of works, not merely to exercise reasonable skill and care to ensure that the works are done, or to exercise reasonable or best endeavours to complete the works. This means that a contractor

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will usually be in breach of contract if it fails to complete the works, even if with the exercise of skill and diligence it would have been unable to complete them.1 A contractor’s promise to perform certain works is absolute in nature, unless qualified by the terms of the contract itself.2 A breach of contract may therefore be committed irrespective of fault or negligence.3 Hence, by way of illustration, where a main contractor has undertaken to build a structure that meets a certain specification, and the structure as built fails to comply with the specification, it is no excuse for the main contractor vis-à-vis the owner that the critical deficiency in the structure arose because a specialist subcontractor engaged by the main contractor failed to design the structure correctly, even if the subcontractor appeared to be perfectly competent, and the main contractor had no reason for doubting the adequacy of the subcontractor’s design; that is, it cannot be said that the main contractor did anything “wrong”.4 It is only if the breach of contract was caused by a matter for which the counterparty was legally responsible that a party who is notionally in breach of contract will be excused from performance.5 The position may be different where a contractor agrees to build a structure to a particular specification, and duly does so, yet the structure as built fails to comply with statutory regulations or other legal requirements. In such cases, the contractor may have complied with the letter of the contract, and may therefore, in one sense, not be regarded as being in breach of contract, but there may nevertheless be legal consequences that flow to it (and/

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or the owner) due to the non-compliance of the structure with the applicable legal requirements.6

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