The Prevention Principle in Construction Contracts

What is the Prevention Principle?

The prevention principle is a legal maxim which prevents a party from insisting on the compliance of a contractual obligation when it has itself prevented the other party from complying.

This is most relevant in construction contracts where the employer requires a contractor to complete its works by a fixed completion date, but the employer acts in a way that prevents the contractor from carrying out the works as planned, for example, by instructing a change to the works.  In these circumstances, the employer cannot then insist that the contractor completes the works by the date originally agreed, nor can they claim liquidated damages for the contractor’s delay in completion.  

If the contract does not include a mechanism to grant the contractor an extension of time for the employer’s prevention, the agreed date for completion is effectively disregarded, setting “time at large”.   This means that the work must be completed within a reasonable time, rather than by the agreed date.

When will the Prevention Principle be Applied?

The courts provided useful guidance on the prevention principle in Multiplex Constructions (UK) Limited v Honeywell Control Systems Limited (No.2), confirming that:

• Actions by the employer which are perfectly legitimate under a construction contract may still be characterised as prevention if those actions cause the delay beyond the contractual completion date.
• Acts of prevention by an employer do not set time at large if the contract provides for an extension of time in respect of those events.
• Insofar as the extension of time clause is ambiguous, it should be construed in favour of the contractor.

In other words, legitimate employer actions can be labelled as acts of ‘prevention’ if they lead to the delay of the original date set for completion. The most obvious example is the instruction of variations, which occurs in the majority of projects.  This emphasises the importance of clear and specific contract terms to address any events that cause delay in order to avoid the prevention principle being applied and time being set at large.

Shortcomings of the Prevention Principle

The prevention principle has been described as a principle of antiquity and in Balfour Beatty v Chestermount, the judge criticised this principle with the following remarks:

‘The remarkable consequences of the application of this principle could therefore be as if … the contractor fell well behind the clock and overshot the completion date … if the architect then gave an instruction for the most trivial variation, representing perhaps only a day’s extra work, the employer would thereby lose all right to liquidated damages for the culpable delay … what might be a trivial variation instruction would destroy the whole liquidated damages regime’

Therefore, a contract that does not expressly allow for an extension of time can have draconian and disproportionate consequences for an employer whereby even a minor variation could result in the invalidation of an employer’s entire claim for liquidated damages.

Can the Prevention Principle be Excluded?

The prevention principle is not an overriding rule of public or legal policy and in North Midland Building Ltd v Cyden Homes Ltd, the judge stated that ‘If the parties do not stipulate that a particular act of prevention triggers an entitlement to an extension of time, then there will be no implied term to assist the employer and the application of the prevention principle would mean that, on the happening of that event, time was set at large’.

In essence, the judge affirmed that the prevention principle operates by way of an implied term but can be negated by express provisions negotiated by the parties under a contract. It is therefore paramount for an employer in protecting its interests to ensure there is an express mechanism for extending time to avoid the effect of the prevention principle when its own actions result in a delay of the original completion date.

The Importance of the Contract

If an employer has agreed a date for completion in a construction contract, then it is its interests to ensure that the contract is clearly drafted to avoid any suggestion that the prevention principle applies and thereby set ‘time at large’.  This can be achieved by proper drafting of extension of time provisions, or relying on the drafting that appears in all the major standard form construction contracts used in the UK.

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