Under English law, the prevention principle attempts to address circumstances in which one party’s actions (or inactions) impact on the other party’s ability to perform its obligations under a contract and thereby a party may benefit from its own behaviour (or breach) under a contract. Over time, the prevention principle has emerged which is closely (but not exclusively) associated with the construction industry.
While it has been suggested that the origins of the prevention principle are not entirely clear, it is accepted that the principle’s earliest recorded applications in the construction field was in the first half of the 19th century in the case of Holme v Guppy . In Holme, delays occurred and various payments were withheld by the defendants, who relied on the fact that the express completion date under the contract had been surpassed, and sought to recover liquidated damages but the Court considered that this prevention of access was critical, holding that:
“ if the party be prevented by the refusal of the other contracting party from completing the contract within the time limited he is not liable in law for the default...the plaintiffs were therefore left at large. Consequently, they are not to forfeit anything for the delay.”
Case law has developed from this point, not least due to concerted efforts of the construction industry, backed by the weight of public policy. The principle has steadily evolved over some time to address these dynamics and, correspondingly, drafters of standard forms of construction contracts have responded by incorporating terms, (in particular, provisions for events giving rise to extensions of time), as a means to directly neutralise the prevention principle and what flows from it.
Consequently, new legal questions have had to be answered that stem from these mechanisms. For instance, the ‘extension of time’ type of provisions can now be found in, some form or other, in most (if not all) modern construction contracts. The expression ‘extension of time’ itself is arguably a ubiquitous phrase used and understood, at least in its most basic form, throughout the construction industry. Despite all this, it is arguable that the uncertainty has shifted from the “acts of prevention” to the adequacy of the machinery incorporated into construction contracts specifically to address matters or events (including breaches) that give rise to prevention or "time at large".
The introduction and adequacy of these extension of time mechanisms raises the question as to whether the prevention principle (and ‘time at large’) is still relevant as ‘good law’ and, if so, why are the courts struggling to recognise it?
In this series of posts, the relevance of 'time at large' and the prevention principle will be explored in detail.