Reed Smith Client Alerts

The English Court of Appeal has recently, and for the first time in 50 years, considered and provided guidance on the meaning of practical completion, which is useful to both employers and contractors alike. Absent any express contractual provisions as to when practical completion occurs, a practical approach must be taken: are the works complete and free from patent defects, other than those to be regarded as trifling? Whether a matter is trifling or not is a question of fact and degree to be measured against the intended purpose of the works. The mere fact that there is an irremediable breach does not, by itself, prevent practical completion.

Autoren: Shareena Edmonds Elinor Crowther

Background

Practical completion is said to be easier to recognise than define.1 In practice, whether the works are practically complete or not is an important – and often contentious – issue, because the achievement of practical completion signifies a change in the parties’ roles and responsibilities. For example, the risk of loss or damage to the works passes from the contractor to the employer, the contractor is no longer liable for liquidated damages, the defects liability period begins to run, and retained funds are released. It is generally accepted that practical completion does not mean that every aspect of the works must be complete and defectfree and that minor outstanding works or defects can be completed or remedied after practical completion. But where should the line be drawn as to those matters which prevent practical completion until they are completed, and those which do not and can be completed later? And what happens if defects exist which are irremediable; does this mean practical completion can never be achieved?