Limitation Clauses

You may be aware of the recent case of Inframatrix Investments Ltd v Dean Construction Ltd, for those unfamiliar with it, the case is a useful reminder that limitation provisions in contracts are enforceable. 

The contract between contractor and employer contained a limitation  which stated no action or proceedings could be brought against the contractor after the expiry of one year from Practical Completion of the Services or if that did not arise then after one year from the date the contractor last performed the Services for the project.

There were problems with the project following the contractor having dealt with snagging items. Subsequently meetings to discuss the way forward and avoid litigation occurred with an offer from the contractor to return to site to do remedial work which was rejected by the employer. 

The employer sued the contractor, the contractor defended on the basis the employer was too late to do so because of the time deadline for issuing an action or proceedings.

The Court determiend the employer was too late and its claim was struck out. The Court concluded the meetings were not part of the contractor's Services, its last work on site was well over a year before it was sued and so the employer had left it too late.

The key point is that if there is a limitation in a contract whether it is time based or financial it will be enforced by the Courts.

This is a timely reminder that all limitations of whatever nature need to carefully drafted and the consequences understood and agreed before they are signed off. You can imagine that Inframatrix Investments might be kicking themselves. 



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