construction contract law

Ans:  In an American case Mundy v. New York, 27 N.Y.S. 469 (1894), it was held that while a flood was outside the control of the party, the flood delay was inexcusable because similar flooding had occurred previously and was thus foreseeable. These principles also form the basis of the UNIDROIT principles and are thus, universally accepted.

Ans:  Obrascon Huarte Lain SA v Her Majesty’s Attorney General for Gibraltar, [2014] EWHC 1028 (TCC). In Obrascon, it was held that an experienced contractor must make its own assessment of all available data and come to its own conclusions, rather than to ‘slavishly’ accept the information from the employer. Failure to carry out an independent assessment of grounds conditions would disentitle a contractor from claiming damages, and would entitle the employer to terminate the contract for delay on the part of the contractor attributable to ground conditions.

Ans:  Simplex Concrete Piles v. Union of India, CS(OS) No. 614A/2002, judgment dated 23.02.2010 (Delhi High Court): Any exclusionary clause itself is contrary to law and the public policy of India, and therefore, any such clause would be void initio. Moreover, under section 54 of the Indian Contract Act, 1872, if a defaulting party has derived `any advantage under a contract, the party in breach cannot retain the benefit and would have to compensate the non-defaulting party. It is relevant to note that the Supreme Court of India in Central Inland Water Transport Corporation v. Brojo Nath Ganguly, AIR 1986 SC 1571 had held that the courts will not enforce and will strike down an unfair and unreasonable contract/clause entered into between parties who are not equal in bargaining power (followed in Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan, Civil Appeal No. 12238 of 2018, judgment dated 02.04.2019).

Ans: Asian Techs Ltd. v. Union of India, (2009) 10 SCC 354 (SC): Exclusionary clauses would not be binding on any judicial authority, and would only prohibit the employer from entertaining an

Ans:  x N. Sathyapalan v. State Of Kerala, (2007) 13 SCC 43 (SC):   If a delay is attributable solely to the employer, and is also significant, then a contractor would be entitled to damages, notwithstanding an exclusionary clause.

Ans:  General Manager, Northern Railways v. Sarvesh Chopra, AIR 2002 SC 1272 (Supreme Court of India (SC)): A contractor (the non-defaulting party) would be entitled to claim damages provided that at the time of acceptance of ‘extension of time’ for performance of the contract, the contractor gives notice of his intention to claim damages for the delay.

Ans: In case of indivisible contract, the amount will be paid if the work is completed and the amount will not be paid if the work is done partly.  x

Ans:  A supplies tiffin every day and takes Rs 300 per meal for 5 days. Thus , A is entitled to get Rs 1500 for 5 days in case of divisible contract. The quantum merit for A will be for 5 days. 

Ans: In case of act preventing the completion of contract. C asked P to write a series of 10 articles for Rs 1000. P wrote 3 articles and C told P to stop writing,  P can recover money from C of 3 articles. If P has done some extra research, P can also recover money for his extra research provided P is able to prove it. x

Ans: In case of non- gratuitous act A leaves goods by mistake at the house of B and if B use some part of goods, B is entitled to pay for that part of goods in case of non gratuitous act. x

Ans: In case of non- gratuitous act A leaves goods by mistake at the house of B and if B use some part of goods, B is entitled to pay for that part of goods in case of non gratituous act. x

Ans: Quantum merit is as much as is earned. If the party cancels the agreement, the another party will demand for the money as much as the another party has earned. Quantum merit in case of void agreement or contract that becomes void. For instance: If A and B contracts for a horse and A pays Rs 50,000 as advance to B and a horse died, it is the bilateral mistake or mutual mistake and A will have to refund the amount of Rs 50,000 to B.

Ans: Thus, the law of quantum meruit means a promise to pay a reasonable fee for the labour and materials provided even if there is no explicit contract. x

Ans: Misrepresentation is defined under section 18 of the Indian Contract Act, 1872 . A fraudlent misrepresentation is a false statement of a material fact completed by one party which affects the other party's decision in related to a contract. 

Ans:  Rattan Lal Ahluwalia v Jai Janider Parshad Relevancy with our case: Thus to make delay in work is active concealment and it is also a promise without the intention of carrying it out and thus it is considered as fraudulent under section 17 of Indian Contract Act, 1872. Thus, an arbitration award must be set aside under section 34 of arbitration and conciliation act,  1996. x

Ans:  Additional payment is granted to the contractor based on the construction contract. If the construction done is outside the constructor’s expressed or implied obligations then the contractor shall be granted an additional payment for such work. The extra work done by the constructor should be on the demand of the employer then only additional payment can be granted and the employer agreed expressly or impliedly for additional payment for such extra work. The work done by the contractor should not be performed gratuitously as mentioned under section 70 of Indian Contract Act, 1872.  x

Ans: Additional work usually comes within the terms of contract and therefore it does not amount to additional payment. It is significant to take into account whether the work done is outside the scope of the construction contract and therefore whether it falls within the ambit of extra work or not. The object and purpose of the construction contract, terms and conditions of the contract and intention of the parties is important to determine whether extra work done by the contractor amounts to an additional payment to the contractor or not. x

Ans: Vishal Engineers & Builders vs Indian Oil Corporation Limited on 30 October, 2011. The appellant was awarded the work of internal roads earth filling, drains and pipe culverts at L.P.G. Bottling Plant, Farrukhabad, U.P. vide order No.LPG/ENG/1564 on 2.9.1994. The stipulated date of completion of the work was 1.4.1995 but the work was completed by the appellant only on 15.5.1996. It is the say of the appellant that the non-availability of WBM and soling stones, because of agitation in Uttarakhand as also non-availability of regular transport and non-availability of bitumen on account of closure of refinery in the months of March-April, 1996, led to the delay. The respondent also recovered liquidated damages to the extent of 10 per cent of the contract value amounting to `4,59,992.00 on account of delay in completion of the work by the appellant.  Section 73 of the Contract Act, thus, contemplates award of damages for losses suffered by breach of contract by the opposit...

Ans: Lis alibi pendens is the situation in which the same action between the same parties is brought before two different national courts. This presupposes that the two courts have equal jurisdiction. x

Ans: Pendente lite means a pending legal suit in court or pending lawsuit. It is a temporary comfort and in pendente lite,  the court awards to the parties to suit.  x

Ans: In Rajesh Kumar Choudhary v. United India Insurance Co. Ltd, (2005), the party did not disclose that they applied for insurance for their property on similar grounds but had been rejected by the same company. The Gawahati high court held that this non-disclosure was held as a suppression of a material fact and is considered to be a fraud. x

  Ans: In Dambarudhar Behera v. State of Orissa (1980), the plaintiff rescinded the contract due to misrepresentation of facts by the other party. The plaintiff claimed damages as the expenditure occurred in the formulation of the contract and the loss of earnings till the time the plaintiff got to know about the misrepresentation. The Court awarded damages to him and held that the damages given for fraudulent misrepresentation should not surpass the losses which would have occurred had the facts not been misrepresented.

Ans:  P. Sarojam vs L.I.C. Of India on 9 August, 1985 In P. Sarojam v. L.I.C of India (1985), the Kerela high court held that when wrong answers are given in a life insurance policy, the policy would be voidable irrespective of the fact that the officer of the corporation certified the policy.  Relevancy with our case:  Thus , in our case, the party has given wrong commitment and not competed the project on time due to which we have to suffer damages and thus , the arbitration award should be set aside.

Ans:  P. Sarojam vs L.I.C. Of India on 9 August, 1985 In P. Sarojam v. L.I.C of India (1985), the Kerela high court held that when wrong answers are given in a life insurance policy, the policy would be voidable irrespective of the fact that the officer of the corporation certified the policy.  Relevancy with our case:  Thus , in our case, the party has given wrong commitment due to which we have to suffer damages and thus , the arbitration award should be set aside. x

Ans:  In R.C. Thakkar v. Bombay Housing Board (1972), incorrect estimates were given in a tender. The contractor, in the belief that the estimate was correct, reduced the costs. The court held that the representations made in the tender amounted to misrepresentation. The defendants could not take the defence that the plaintiff could have deduced the actual costs by reasonable efforts. 

Ans:  Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstance of the case is such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence, in itself is, equivalent to speech.   Illustration –  A sells by auction to B a horse, which A knows to be unsound, A says nothing to B about the horse’s unsoundness. This is not fraud in A. x x x

Ans:  Jackie Kukubhai Shroff vs Ratnam Sudesh Iyer on 18 January, 2022 The Bombay High Court last week set aside an award passed by a sole arbitrator against actor Jackie Shroff and noted that conclusions arrived at by the arbitrator are not just wrong, but "exhibit an unmitigated perversity and is shocking to the conscience of the court." The arbitrator held that the petitioner had committed breach of the deed of settlement as his wife had referred to the respondent as a forger in an email. Also, the deed of settlement was not terminated and continued to be valid and subsisting between the parties,yet the arbitrator awarded damages of USD 3.5 million to the respondent. The impugned award, thus, does not measure up to the minimal judicial scrutiny even within the parameters of Section 34 of the Act. It is completely unreasonable, impossible, and I dare say, perverse. It is partly based on no evidence, partly on non-application of mind, and partly, by a wholesale misapplicatio...

Ans:  Renusagar Power Co. Ltd vs General Electric Co on 7 October, 1993 In Renusagar Power Co. Ltd. v. General Electric Co, the Supreme Court considered Section 7(1) of the Arbitration (Protocol and Convention) Act, 1937 which inter alia provided that a foreign award may not be enforced under the said Act, if the Court dealing with the case is satisfied that the enforcement of the award will be contrary to the public policy.

Ans:  Associate Builders vs Delhi Development Authority on 25 November, 2014 . The honourable Supreme Court held that any arbitral award must be fair, rational, and impartial in order for it to be upheld by the courts. The Supreme Court laid down the grounds of public policy as follows: The 'fundamental policy of India' would include: Disregarding the orders of Superior courts Judicial approach Natural justice principles Decision of arbitrator cannot be irrational to the extent that no rational person can reach a similar conclusion. The Supreme Court described "Indian interest" as everything that has to do with India's place in the world community and its ties with other countries. 

Ans:  Venture Global Engineering Llc vs Tech Mahindra Ltd & Anr Etc on 1 November, 2017 . In Venture Global Engineering LLC and Ors. v. Tech Mahindra Ltd. and Ors[37]., The Court interpreted that violation of the provision of the Foreign Exchange Management Act (FEMA) will be considered as patent illegality, and therefore a breach of public policy, based on the Associate Builders case.  As a consequence, the application filed by the Venture (appellant herein) under Section 34 of the AAC Act, out of which these appeals arise, is allowed. As a result thereof, the entire arbitral proceedings including the Award dated 03.04.2006 passed by the sole Arbitrator is set aside as being against the public policy of India under Section 34(b)(ii) read with Explanation I(i)(ii) and (iii) of the AAC Act. Relevancy with our case:  Public policy is a system of laws, regulatory measures, guidelines, and funding priorities identified by governments or their representatives to fulfil pub...

Ans: The Arbitration Act of 1940, which was abolished, provided three ways to challenge an award: modification, remission, and setting aside. Whereas the Arbitration and Conciliation Act of 1996 divided these remedies into two categories (i.e., modification and setting aside). The remedy has been given to the parties, and the tribunal was intended to correct mistakes. Returning the award to the tribunal for correction of errors has been modified as the remedy for setting aside. A court may set aside an arbitral award on the grounds listed in section 34 of the Arbitration and Conciliation Act, 1996. These factors include: Incapacity of parties Invalidity of agreement Notice not given to parties Award beyond the scope of reference Illegality of arbitral procedure Award against public policy

Ans: Maula Bux vs Union Of India on 19 August, 1969 In every case a party must prove the extent of the loss suffered by it. The exception, however, was for cases where the damage was difficult or impossible to prove and in such cases the requirement to prove the extent of loss was dispensed with.  In Maula Bux v Union of India, the Supreme Court explained that the expression is intended to cover different classes of contracts. In case of breach of some contracts it may be impossible for the court to assess compensation arising from the breach. It is in these circumstances that the sum named by parties may be taken into consideration as the measure of reasonable compensation, provided it is a genuine pre-estimate and not in the nature of a penalty. Where loss in terms of money can be determined, the party claiming compensation has necessarily to prove the loss suffered and in such instances, the courts are bound to assess the reasonableness of compensation claimed. It is while doing...

Ans: Section 73 of the Contract Act provides that the party who suffers from the breach is entitled to compensation for any loss or damage caused to him thereby. The right to compensation as well as its quantum will however depend on who is at fault for the delay. In case where the contractor fails to complete the work on time owing to faults on his part the employer is entitled to claim damages and vice-versa.

Ans: S.55 of the Contract Act further says that if from the intention of the parties it is clear that time is not of essence of the contract, the party affected by the delay is only entitled to compensation for any loss occurring to him as a result of the delay. Therefore, even in construction contracts where time is not intended to be of essence, delays are not always excusable. x

Ans: Section 55 of the Indian Contract Act, 1872 says that when a party to a contract promises to do a certain thing at or before a specified or stipulated time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, provided the intention of the parties was that time should be of the essence of the contract. Thus the question, in the context of construction contracts, narrows down to whether time is generally intended by the parties to be of essence. x

Ans: Every contract is a set of reciprocal or mutual or corresponding promises. Most often at one end of these is the obligation on one of the parties to do or get done a certain thing on a specified date or in a specified time period. Failure to adhere to or comply with the prescribed time may or may not be fatal to the entire contract depending on whether time is of essence in the contract. Construction contracts being extremely dynamic in nature as well as dependent on several unforeseeable or unpredicted or unforseen and unpredictable circumstances, delay in completing the works is not unusual. However, disputes arising from such delays are also not scarce. The issue of delay in construction contracts has time and again come before our courts of law, giving rise to varied legal positions. x x

Ans:  Every contract is a set of reciprocal promises. Most often at one end of these is the obligation on one of the parties to do or get done a certain thing on a specified date or in a specified time period. Failure to adhere to the prescribed time may or may not be fatal to the entire contract depending on whether time is of essence in the contract. Construction contracts being extremely dynamic in nature and dependent on several unforeseeable and unpredictable circumstances, delay in completing the works is not unusual. However, disputes arising from such delays are also not scarce. The issue of delay in construction contracts has time and again come before our courts of law, giving rise to varied legal positions.