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International Construction Law Review

THE DEVELOPMENT OF THE PREVENTION PRINCIPLE IN ENGLISH AND AUSTRALIAN JURISDICTIONS

ELLIS BAKER

Solicitor (England and Wales) Partner and Head of the Construction and Engineering Practice Group, White & Case, London

JAMES BREMEN

Solicitor (Queensland, New South Wales, Western Australia, High Court of Australia, England and Wales) Associate, Construction and Engineering Practice Group, White & Case, London

ANTHONY LAVERS

Barrister (England and Wales) Professional Support Lawyer, Construction and Engineering Practice Group, White & Case, London and Visiting Professor of Law, Oxford Brookes University

I. INTRODUCTION

The concept of the “prevention principle” is reasonably simple: if the contractor is prevented by the owner from performing its obligations by the contractual completion date, the owner will not be entitled to exact liquidated damages for delay, as he otherwise could have done. However, and equally simply, this may be very disadvantageous to the owner, who will, for example, expect to be able to order variations in the work, which will usually have some effect on time. The prospect of then losing the right to liquidated damages would be likely to be unacceptable, just as having to pay them to the party responsible for the delay would be unacceptable to the contractor.
The modern history of the prevention principle in the courts can be summarised as the success or failure of owners trying to retain the protection of liquidated damages and of contractors trying to avoid paying for delays which they did not cause. It is probably fair to say that the issue was especially problematic in earlier times when the courts were more hostile to liquidated damages provisions which could be characterised as penal. In Wells v. Army and Navy Co-Operative Society Ltd ,1 the Court of Appeal refused to allow the deduction of liquidated damages where late completion was partly caused by variations and employer delay in giving possession and information. The fact that the courts have become less hostile to liquidated damages provisions


[2005
The International Construction Law Review

198

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