City Inn Ltd v Shepherd Construction Ltd [2001] ScotCS 187 (17 July 2001)

City Inn Ltd v Shepherd Construction Ltd [2001] ScotCS 187 (17 July 2001)

Clause 13.8.5 is not a penalty clause; it is a condition precedent to entitlement to extension of time. Non-compliance with clause 13.8.1 does not convert liquidated damages into a penalty for breach of that clause. The contractor's obligation under clause 13.8.1 is triggered by the formation of the opinion specified, not merely by receipt of instruction.

Citation
[2001] ScotCS 187
Parties
Pursuer: City Inn Limited; Defender: Shepherd Construction Limited
Jurisdiction
Scotland
Judgment Date
17 July 2001
Procedural Posture
Commercial Construction Contract Dispute / Outer House, Court of Session, Debate on Relevancy of Pleadings
Outcome
Defenders' averments in answer 8(i) regarding penalty clause are irrelevant and excluded from probation; clause 13.8.5 is enforceable.
Legal Topics
Penalty Clauses, Extension of Time, Liquidated Damages, Interpretation of Contractual Terms
Contract Law Construction Law Penalty Clauses Extension of Time Liquidated Damages Interpretation of Contractual Terms

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Parties

City Inn Limited

Pursuer

Shepherd Construction Limited

Defender

Procedural Posture

Commercial Construction Contract Dispute / Outer House, Court of Session, Debate on Relevancy of Pleadings

Legal Issues

  1. 1 Is clause 13.8.5 of the contract a penalty clause and thus unenforceable?
  2. 2 What triggers the contractor's obligation under clause 13.8.1?
  3. 3 Does failure to comply with clause 13.8.1 disentitle the contractor to extension of time?

Ratio Decidendi

Clause 13.8.5 is not a penalty clause; it is a condition precedent to entitlement to extension of time. Non-compliance with clause 13.8.1 does not convert liquidated damages into a penalty for breach of that clause. The contractor's obligation under clause 13.8.1 is triggered by the formation of the opinion specified, not merely by receipt of instruction.

Court Disposition

Defenders' averments in answer 8(i) regarding penalty clause are irrelevant and excluded from probation; clause 13.8.5 is enforceable.

Orders

  • Clause 13.8.5 is not a penalty clause and is enforceable.
  • Defenders' pleadings on penalty clause excluded from probation.