Case Study: Excusable Delay in Australian Corporation Law Contracts

This case study examines a corporation law issue concerning a delay in contract performance by Gary, who was contracted to supply metal frames for a construction project but faced unforeseen circumstances, including being forced to vacate his factory. The analysis applies Australian Contract Law principles, focusing on excusable delays and the implications of time being of the essence in a contract. It cites relevant legal rules, including the right of cessation due to delays, and exceptions for excusable delays beyond a contractor's control, referencing cases like Thiess Watkins White Construction Ltd v Commonwealth and Armstrong Construction v Council of the Shire of Cook. The study concludes that Gary's delay is excusable, entitling him to compensation and a time extension, with potential damages based on lost project use or profits, as per the court's discretion. The owner is liable to compensate the contractor for extra expenses incurred due to the delay. The analysis considers the contractor's good faith, adherence to dispute resolution procedures, and fair handling of claims in determining the contract's outcome.

Running head: Corporation law
Corporation law

Corporation law 1
Contents
Issue...................................................................................................................................................................... 2
Rules..................................................................................................................................................................... 2
Application............................................................................................................................................................3
Conclusion............................................................................................................................................................3
References...........................................................................................................................................................4

Corporation law 2
Issue
The issue pertains to delay in performance of the contract by Gary due to circumstances
beyond his control. He had won a contract to supply metal frames to be used in the
construction of a high rise apartment. The contract for the supply of metal frames is to be
initiated in six months. There would be work for 18 months and the entire project shall last for
two and a half years approximately.
But Gary has to vacate his factory within six months as per the terms of the lease. It has been
acquired by the state government one month before the first orders were due. Gary would be
able to set up his new factory in three to six months.
Rules
As per the Australian Contract Law, delay in performance of contract leads to the right of
cessation by the other party. If the contract specifies a time element for its performance, then
a question arises that if time can be considered as a condition to the performance of a
contract. Here time is to be considered as an essential element. If time is the essence and
one party does not perform its obligations as per the contract within the specified time, then
the other party has the right to cease the contract (Cartwright, 2016).
The other party has the right to cease the contract due to the delay with the help of a notice
procedure.The notice must state a reasonable time for completion and specify that time is the
essence for performance of the contract. It must also indicate that failure to comply with the
conditions shall result in the termination of a contract. However, there are certain exceptions
to this. If the conditions of the contract have not been fulfilled due to excusable delays which
are beyond the power of the contractor, then time can be extended. In some cases, the
contractor can be eligible for recovering the costs of a delay from the owner (Keane and
Caletka, 2015).
Those delays which are beyond the control of the contractor and those which were
unanticipated at the time of executing the contract by the parties would be considered
excusable by the courts according to Thiess Watkins White Construction Ltd v
Commonwealth. Thus the contractor is exempted from the liability of the delays which are
caused beyond the control of the contractor. If it is determined by the arbitrator or court that
the postponement is justifiable according to the terms of the agreement, then the contractor
shall not pay damages for its delayed completion. Time can be extended in order to complete
the contract as per Kaltoft v. Nielsen.
Furthermore, these delays can be compensated by the owner as of the conditions causing
delay were not foreseeable when the contract was executed. The contractor has the burden
to prove that the delays were caused due to circumstances beyond his control as held in R.P.
Wallace, Inc. v. U.S. In this case, the damages shall be awarded by the court as the worth of
lost use of project or the loss in the profits caused due to delay because of unforeseeable
circumstances . So, the owner is liable to indemnify the losses borne by the contactor in order
to cover the extra expenses incurred due to the delay of the contract. He is also eligible for an
extension of time.

Corporation law 3
The following three points should be considered by the innocent party in deciding whether the
contract should be terminated or not. Firstly, whether the contractor has fulfilled his
contractual obligations in good faith. Secondly, he has complied with all the contract dispute
resolution procedures. Thirdly, he has timely considered the contractual claims in a fair and
just manner.
Application
As per the above-mentioned provisions of Australian Contract Law, the delays have done by
Gary come in the category of excusable delays. He shall be liable to be compensated by the
owner as of the conditions causing the delay were beyond his control as held in Armstrong
Construction v Council of the Shire of Cook. So, the time should be extended in this contract.
In this context, the damages shall be awarded by the court as the value of lost use of a
project or the loss of profits caused due to delay because of unforeseeable circumstances.
Additionally, the three conditions should also be considered while deciding whether the
contract should be terminated or not. It should be assessed if he has fulfilled his contractual
obligations in good faith. Secondly, it should also be evaluated if he has abide by the rules of
the contract dispute resolution procedures. Thirdly, if he has considered all the contractual
claims in a fair and just manner( Dougherty, 2015).
Conclusion
The case is to be concluded by stating the fact that Gary has delayed the performance of the
contract due to circumstances beyond his control. So, the delay caused by him is of
excusable nature. The contract shall not be terminated by the other party. The owner shall
even compensate Gary for the delay caused in the performance of the contract. He is eligible
for claiming the extension of time as the situations causing delay were beyond his control.
The court shall also award him damages on the basis of lost use of project or loss in profits
caused due to circumstances beyond his control.

Corporation law 4
References
Armstrong Construction v Council of the Shire of Cook (unreported, White J, QLD SC 25
February 1994)
Cartwright, J.( 2016) Contract law: An introduction to the English law of contract for the civil
lawyer. U.K.: Bloomsbury Publishing. Pp. 1-10.
Dougherty, J.M.( 2015) Claims, disputes and litigation involving BIM. U.K.: Routledge. Pp. 1-
10.
Kaltoft v. Nielsen, 106 N.W.2d 597 (1960)
Keane, P.J. and Caletka, A.F.( 2015) Delay analysis in construction contracts. U.S.A: John
Wiley & Sons. Pp. 1-100.
R.P. Wallace, Inc. v. U.S., 63 Fed.Cl. 402, 409
Thiess Watkins White Construction Ltd v Commonwealth (unreported, Giles J, NSW Supreme
Court, 23 April 1992)