June, 2020 - High Court limits use of the “Prevention Principle”
What is the ‘prevention principle’?
The basis of the prevention principle is that a party to a contract cannot benefit from its own wrongdoing. In the construction context, this principle has become relevant in relation to project delays. For example, a yard may be able to rely upon it to excuse a delay with the project if it can show that the delay was caused by the actions of the buyer.
This was helpfully summarised in Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board [1973]
1 W.L.R. 601 at 607:
“ It is well settled that in building contracts - and in other contracts too - when there is a stipulation for work to be done in a limited time, if one party by his conduct - it may be quite legitimate conduct, such as ordering extra work - renders it impossible or impracticable for the other party to do his work within the stipulated time, then the one whose conduct caused the trouble can no longer insist upon strict adherence to the time stated.
He cannot claim any penalties or liquidated damages for non-completion in that time.” Yards have on numerous occasions sought to invoke the prevention principle to avoid liability for liquidated damages under the shipbuilding contract, or to preclude the buyer from terminating the contract for excess delay, by arguing that the delays were caused by the buyer.