Forfeiture Clauses in Construction Contract

4506 Words Dec 6th, 2010 19 Pages
In building and engineering contracts it is usual to insert a provision empowering the employer to forfeit certain rights or property of the contractor on the occurrence of certain events. “Forfeiture clause” is a loose term usually used to describe a clause in a written building contract giving the employer the right upon the happening of an event to determine the contract or the contractor’s employment under it, or to eject the contractor from the site, or otherwise to take the work substantially out of his hands. In standard form building contracts it is usually referred to as ‘determination of employment’ or termination. In this sense JCT SBC 05 clauses 8.4 and 8.9 which relates to termination by employer and contractor respectively …show more content…
Notice of termination of the Contractor’s employment shall not be given unreasonably or vexatiously. 2. Such termination shall take effect on receipt of the relevant notice 3. Each notice referred to in this section shall be given in writing and given by actual, special or recorded delivery. Where given by special or recorded delivery it shall, subject to proof to the contrary, be deemed to have been received on the Second Business Day after the date of posting.

Also Clause 8.3 of the JCT 05 states:

1. The provisions of clauses 8.4 to 8.7 are without prejudice to any other rights and remedies of the Employer. The provisions of clauses 8.9 and 8.10 and (in the case of termination under either of those clauses) the provisions of clauses 8.12, are without prejudice to any other rights and remedies of the contractor. 2. Irrespective of the grounds of termination, the contractor’s employment may at any time be reinstated if and on such terms as the parties may agree

The requirements of the contract must be properly complied with, for the courts construe forfeiture clauses strictly[6], and a wrongful forfeiture by the employer or his agent normally amounts to a repudiation on the part of the employer[7]. There must be some definite unqualified act showing that the power has been exercised, although writing or other formality is not necessary unless expressly required. The
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