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Shawton Engineering Ltd v DGP International Ltd (t/a Design Group Partnership)

Language: English Publication details: 2005Subject(s): Online resources: Summary: [2005] EWCA Civ 1359 18 November 2005. Considered whether S was entitled to claim damages against D for breach of contract on the grounds that D failed to complete subcontract design work within a reasonable time. S subcontracted five packages for design work for a nuclear waste plant to D, under lump sum fixed price contracts with fixed completion dates. After variations were made, D became obliged to complete its work within a reasonable time. S terminated the contracts on the basis that D had not done so, and claimed the costs of having to employ another design contractor to complete the work. D had taken much longer than originally agreed, and at date of termination, had completed only 48% of the drawings. 'Held' (1) The variations had rendered the original fixed dates inoperable so the obligation was to complete within a reasonable time. S could terminate the contracts for delay either by giving reasonable notice making time of the essence or if D's failure to complete amounted to a fundamental breach depriving S of substantially the whole benefit it expected from the contract. Where time was not of the essence, and the party in breach was still trying to perform the contract, it was difficult for the other party to establish fundamental breach. (2) The question of what was a reasonable time had to be judged in relation to all relevant circumstances. In this case, the variations agreed were significant, and S had not insisted on early completion of the work. S had not laid down any stipulations as to time until sending the letter of termination. The reasonable time for completion was therefore undefined, and the letter could only be regarded as the start of negotiations for its definition. Since D was not in breach for delay at the time of the letter, it did not make time of the essence. (3) If time was not of the essence, there was no delay which could be regarded as repudiatory.
Holdings
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Law report Virtual Online ONLINE PUBLICATION (Browse shelf(Opens below)) 1 Available 131718-1001

[2005] EWCA Civ 1359 18 November 2005. Considered whether S was entitled to claim damages against D for breach of contract on the grounds that D failed to complete subcontract design work within a reasonable time. S subcontracted five packages for design work for a nuclear waste plant to D, under lump sum fixed price contracts with fixed completion dates. After variations were made, D became obliged to complete its work within a reasonable time. S terminated the contracts on the basis that D had not done so, and claimed the costs of having to employ another design contractor to complete the work. D had taken much longer than originally agreed, and at date of termination, had completed only 48% of the drawings. 'Held' (1) The variations had rendered the original fixed dates inoperable so the obligation was to complete within a reasonable time. S could terminate the contracts for delay either by giving reasonable notice making time of the essence or if D's failure to complete amounted to a fundamental breach depriving S of substantially the whole benefit it expected from the contract. Where time was not of the essence, and the party in breach was still trying to perform the contract, it was difficult for the other party to establish fundamental breach. (2) The question of what was a reasonable time had to be judged in relation to all relevant circumstances. In this case, the variations agreed were significant, and S had not insisted on early completion of the work. S had not laid down any stipulations as to time until sending the letter of termination. The reasonable time for completion was therefore undefined, and the letter could only be regarded as the start of negotiations for its definition. Since D was not in breach for delay at the time of the letter, it did not make time of the essence. (3) If time was not of the essence, there was no delay which could be regarded as repudiatory.