Construction Law – The nature of on-demand guarantees

1.  In construction contracts, on-demand guarantees or unconditional performance bonds are a means of guaranteeing the performance of the contractor to its employer.  2.  On-demand guarantees are similar to letters of credit or promissory notes payable on demand. 3.  In Lombard v Landmark & Others  the following was held: “… The guarantee creates an obligation to pay upon …

Construction Law – The Binding Nature of Interim Adjudication Awards

In the matter of Stefannuti Stocks vs S8 Property the Court reconfirmed the enforceability of an adjudicator’s decision by court prior to final arbitration.  It also confirmed that an agreement between the parties that a decision is binding and shall be given effect to without delay, unless and until it is revised, requires immediate implementation. …

Construction Law – Demand Guarantees and the Fraud Defence

Guardrisk Insurance Company Ltd v Kentz (Pty) Ltd The law underlying the avoidance by a Guarantor of its obligations to make payment to a beneficiary under a demand guarantee is clarified and reaffirmed by the most recent ruling by the Supreme Court of Appeal in the case of Guardrisk Insurance Company Ltd vz Kentz (Pty) …

Construction Law – Calling up Guarantees…or are they Suretyships?

Insurers, guarantors, contractors and employers should take note of two recent judgments from the Supreme Court of Appeal developing the law governing Construction Guarantees. The first, Dormell Properties 282 Cc V Renasa Insurance Co Ltd And Others is a matter where the employer made a claim on the guarantee against the guarantor, following upon the …

Construction Law – Final Certification and Defences thereto

The issuing of a final certificate in terms of a building contract carries with it certain legal consequences for Employers and Principle Agents (normally Architects, Quantity Surveyors or Engineers). In the case of Ocean Diners (Pty) Ltd V Golden Hill Construction the Court clarified the legal position. These consequences depend in the first instance on …

Insurance Law – Removal or Weakening of Support, Collapse or Cracking of Structures

In the case of Hypercheck (Pty) Ltd v Mutual And Federal Insurance Company Ltd the Court assessed the liability of an insurer under a property protection policy to indemnify against accidental, physical loss resulting from “any cause” but not for loss resulting from settlement, bedding down, or cracking It was specifically provided that the policy …

Construction Law – Time-Barring Clauses…What is Reasonable and Fair?

In the construction and engineering industry time-barring provisions are often included as part of the standard terms in construction agreements. These provisions often require “strict” compliance with time periods and hold significant sanction which may impact adversely on claims or other entitlements under such agreements.  Contracting parties often query the fairness and reasonableness of such provisions once …

Construction Law – Substance is key in Notifications of Claims

The leading role in the execution of the contract as “Engineer” (under the GCC) or “Principle Agent” (under the JBCC) requires frequent decisions and rulings on the activities on site.   This function is also often underestimated and can attract significant liabilities. Professionals in the construction and engineering industry are often appointed as the Engineer …

Construction – Considering Prescription – The Construction Law Perspectve

INTRODUCTION As in all legal disputes, extinctive prescription is an important factor to be considered when evaluating the merits of a claim and formulating a defence. Construction law cases, in many instances, involve not only complex contractual relationships, but also difficult technical aspects. Determining the date on which prescription starts to run involves careful factual …

Insurance Law – Rejection of Claims…The Design Standard

Construction claims, the formulation of Insurance claims and the rejection thereof by Insurers have become one of the oldest battles in the Engineering and Construction industry.  This conflict has, to some extent, been the result of the difference between the risks being insured against in terms of Insurance contracts on the one hand, and the …

Construction Law – Does Adjudication Work?

In the government white paper on Creating an Environment for Reconstruction Growth and Development in the Construction Industry in 1999, it was argued that the conventional mechanisms and procedures for final dispute resolution (normally arbitration or litigation) are too costly and time consuming. In March 2001 government published a draft code of practice, entitled “Adjudication …