In North Midland Building v. Cyden Homes, the English Court of Appeal reviewed the apportionment of risk between a contractor and employer where delays were caused by both the contractor and the employer, concurrently. The court upheld the contract under which the contractor assumed 100% of the risk of such delays. As a result, the contractor had to pay liquidated damages of £5,000 per week of delay to the employer.
Although the case deals with a construction dispute, it is relevant to any contract that seeks to apportion risk for delays.
The judgement is helpful in that it clarifies the ability of parties to apportion risk. It also serves as a reminder that the courts will not easily rewrite clear English law contracts in the absence of obvious exceptions, such as illegality or public policy.
In this article, I discuss what can be learnt from the case to improve risk allocation clauses.