If you are a contractor, you may encounter a time bar clause in your contractor agreements. This may also be known as a condition precedent. A time bar clause requires you, as the contractor, to enforce certain contractual rights within the time specified. If you fail to enforce the contractual right within the specified period, you may be prevented from the entitlements you could have recovered had you provided notice per the contract. This article outlines what a time bar clause is, when you can use it and how they work in practice.
What is a Time Bar Clause?
A time bar clause limits the time within which you, as the contractor, can enforce certain contractual rights against your counterparty.
Accordingly, a party may include a time bar clause:
- where adherence to a timeframe is important, in particular, in construction projects; or
- to limit the scope of a party’s liability against a contractor by including a time and form in which the other party must make a claim.
Time Bars in the Context of Constructions Contracts
Time bar clauses are very common in construction contexts. This ensures the principal is immediately aware of an event or situation that has the potential to delay work. As construction projects are usually time-sensitive, contractors must typically provide notice within the time specified in the contract.
Typical time bar clauses for an extension of time may be similar to the example below:
“The Contractor will only be entitled to an extension of time if the Contractor provides the Principal with notice of a delay within three days of becoming aware of a delay, or of the likely occurrence of an event which could cause a delay”
The above time bar clause means that if you fail to provide notice within three days of becoming aware of a delay, or an event which could cause a delay, you could be unable to seek an extension of time. In some cases, your failure could also be considered a breach of contract.
Continue reading this article below the formTime Bars in the Context of Other Contractor Contracts
A time bar clause can also be used in a range of contexts (outside of construction) to limit a party’s liability against a claim by their contractors.
A time bar clause to limit liability may be similar to the examples below:
“You agree to notify us in writing of any claim that you may have against us within 10 business days of the date on which the event or circumstances arise. You agree that we will not be liable for any liability for which you have not provided us written notice in accordance with this clause.”
In this case, your failure to notify the counterparty of a claim within 10 business days will be taken as your acceptance that they are not liable in relation to the claim.
“Any dispute on the fees indicated in the invoice which is not reported and settled in fourteen days will be considered indisputable.”
The above clause excludes your right to dispute the fees if you do not settle the dispute within fourteen days.
What if My Contractor Agreement Includes a Time Bar Clause?
Depending on your bargaining power in the contract, you may be unable to negotiate out of a time bar clause. This is particularly the case where the inclusion of the time bar is standard (for example, in construction contracts). As such, you must pay extra attention to clauses in your contract that:
- include a time period to action a particular right or obligations (especially in the context of seeking an extension of time, making a claim against the counterparty, or disputing a payment);
- specify the form of notice you must make to seek the right in the contract; and
- flag and clarify any time bar clauses which are unclear, and that could be subject to misunderstanding.
Key Takeaways
In summary, as a contractor, it is very important to understand any time bar clauses included in your contractor agreement. Thus, you must enforce contractual rights in the specified time period and the required form. Accordingly, if you fail to do so, you risk being unable to rely on that right. Furthermore, you may even be in breach of the contract.
If you need help with a time bar clause, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
A time bar clause limits the time a party can enforce certain contractual rights against your counterparty.
Parties may include a time bar clause to limit their liability. Furthermore, in the construction industry, where projects are time-sensitive, the time bar clause ensures the principal is made aware of any delays as soon as possible.
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