Time bars prevent a party from exercising a right under a contract outside a prescribed timeframe. The general rule is that time bars are enforceable, although there can be exceptions.
A typical construction contract will require the contractor to complete an agreed scope of works for an agreed price within an agreed period of time.
It will also contain provisions that will allow the contractor to claim adjustments where circumstances change. Classic examples include variations, delays caused by the Principal and the discovery of latent conditions.
To ensure potential adjustments are promptly brought to the principal's attention, most modern contracts contain provisions that require a notice or claim to be given within a specific period of time. (For example, under AS 4000, a notice of delay must be given 'promptly' and a claim for an extension of time must be made within 28 days.)
A time bar is typically an additional clause that bars or invalidates a claim made outside the prescribed timeframe.
Clause 37.2 of AS 4000 is as follows:
A party becoming aware of anything which will probably cause delay to the work...shall promptly, and in any event, within 5 business days, give...written notice of that cause and the estimated delay.
This clause is effectively the opposite of a time bar. Although the contractor is required to give notices and make claims within a prescribed timeframe, the practical effect of this drafting is that a claim will not be barred unless the principal has suffered a loss because of the delay. An example is where the principal would have behaved differently, had it been aware of the claim.
In contrast, a typical time bar will look something like this:
If the Contractor does not give to the Superintendent, within the requirements of the contract, any claim or notice within 14 days of the Contractor becoming aware of the circumstances giving rise to the claim or notice, the Contractor shall not be entitled to the claim or to any claim arising from those circumstances.
The key features of a time bar are that:
The general rule is 'yes'. However it will always depend on the terms of the contract and the circumstances that have arisen.
CMA Assets Pty Ltd v John Holland is a recent example of a fairly extreme set of facts where a time bar was enforced.
In this case, the contractor had to submit an EOT claim every 5 days after the first occurrence of the delay. Further, the contract stated that the contractor would have no entitlement if:
In this case, the contractor did not give the notices required by the contract. It tried to argue that it did not have to give the notices because the principal, John Holland, was aware of the delay. (In fact, not only was John Holland aware of the delay, it was also found to have caused it.)
The court found that, because the notice requirements had not been satisfied, the time bar applied. The judge said:
There is no doubt that the strict application of cl 10.12 and cl 10.13 is harsh. But I am not satisfied that it is without purpose and absurd, so that an alternative construction must be given, notwithstanding apparently clear words.
Exceptions
The CMA case is not an isolated one, and it provides a clear warning to contractors. From a contract administration perspective, the assumption should always be that the time bar will be applied according to its terms.
That said, there can sometimes be exceptions. For example, depending on the terms of the contract and the surrounding circumstances:
There may also be other avenues for relief, depending on the circumstances.
Even though there may be ways of negating the effect of time bars, the key point remains. In administering the contract, contractors should assume that a time bar will be enforced according to its terms, no matter how harsh the outcome may seem. Accordingly, careful attention needs to be paid to the terms of the contract to ensure all relevant requirements are satisfied.