Ice Examiners Report 2009

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Registered charity number 210252 - 1 -Charity registered in Scotland number SC03862

ICE Civil Engineering

Law and Contract Management Examination

Examiners Report 2009

Monday 8th and Monday 22nd June 2009


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Examination in Law and Contract Management

Contents

Title Page

Moderators Report 3

Examiners Report:

Module 1

Module 2 NEC

Module 2 ICE

Module 3

7

11

16

18

Module 1 Question Paper

Module 1 Points for Answer

22

29

Module 2 ICE Question Paper

Module 2 ICE Points for Answer

37

45

Module 2 NEC Question Paper

Module 2 NEC Points for Answer

55

61

Module 3 Question Paper

Module 3 Points for Answer

69

77


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Moderators Report

General

The Report last year commented on the importance for Engineers to have a good knowledge of Law and

Contract in order to maintain control of construction projects. In present economic circumstances this

becomes more not less important.

There continue to be more candidates opting for Modules based on the NEC conditions rather than the

ICE. Some answers for Module 2 and certainly some for Module 3 showed a lack of understanding of the

different principles underlying these conditions. Those more familiar with the one or the other apply the

principles they are familiar with, rather than the proper contract terms and consequently reach the wrong

conclusions.

This difficulty reinforces the importance for candidates in their professional life to ensure that theyunderstand and apply the correct contract whether standard or bespoke. It is one reason why the

committee considers it important, especially at Module 3 level, to include both forms of contract.

For candidates whose main objective is to improve their professional skills as Engineers, it is important

that, whether they have opted for NEC or ICE and passed, they do not let their success result in

complacency when applying different forms of contract.

For candidates who aspire to join one of the dispute resolution lists maintained by the ICE, it is especially

important that they can distinguish between the terms and principles of different contracts.

Module 1

The overall standard this year was pleasing. The syllabus covers a broad spectrum of law relevant to

Engineers. It is clear that a lot of hard work was put into assimilating it. However, some answers lacked

structure and clarity. Engineers are good at logical and structured thought, and should strive to apply this

to the law. In particular, candidates should avoid jumping to conclusions, as the reasons are an essential

part of the answer.

Module 2

The Examiners for Module 2 NEC noted a tendency for candidates to list every clause in the contract that

could possibly relate to the question. This may be an aide memoir for preparing an answer. However, it is

not a substitute for understanding the Contract and presenting a logical answer.

There were insufficient candidates for Module 2 ICE to reach any general conclusions. It is hoped that the

Examiners comments are of assistance to future candidates.

Module 3

There were insufficient candidates for Module 3 to reach any general conclusions. This is a demanding

examination but it should be within the grasp of good professional Engineers who wish to demonstrate

their competence in contract management. Again, it is hoped that the Examiners comments are of

assistance and that more candidates take up the challenge next year.


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Examiners Report

Modules 1 and 2

The pass mark was set at 40% for Module 1 and 50% for Module 2.

Total Number of Candidates and % Passing eachModule

With ICE Conditions of Contract

Year Module 1 Module 2 Modules 1 & 2

Nr % Nr % Nr %

2009 0 0 2 100 0 0

2008 2 100 2 100 2 100

2007 1 0 1 0 1 0

2006 21 67 21 100 21 67

2005 15 87 14 86 13 77

2004 40 98 40 70 40 70

2003 41 82 32 65 30 63

2002 30 87 30 63 30 63

2001 36 82 24 55 24 55

2000 14 23 23 37 22 24

1999 28 57 28 56 23 47

1998 42 69 28 46 25 41

1997 44 56 54 71 38 47

1996 47 81 47 73 47 68

1995 85 53 85 62 85 47

1994 50 61 50 60 43 52

1993 84 48 85 61 84 42


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Total Number of Candidates and % Passing eachModule

With NEC Contracts

Year Module 1 Module 2 Modules 1 & 2

Nr % Nr % Nr %

2009 46 83 44 80 39 70

2008 43 83 42 86 42 86

2007 25 72 25 52 25 52

2006 25 76 25 76 25 64

2005 38 71 37 73 37 62

2004 9 89 9 78 9 78

2003 7 85 7 85 7 85

2002 7 100 7 71 7 71


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Modules 1 and 3

The pass marks were set at 40% for Module 1 and 65% for Module 3.

Total Number of Candidates and % Passing each Module

Year Module 1 Module 3 Modules 1 & 3 Module 3 Only

Nr. % Nr % Nr % Nr %

2009 0 0 2 0 0 0 2 0

2008 0 0 2 0 0 0 2 0

2007 2 100 2 0 2 0 3 33

2006 1 100 3 33 1 100 2 0

2005 3 100 5 0 3 0 2 0

2004 2 100 3 33 2 50 1 0

2003 2 100 0 0 2 0 7 86

2002 4 100 4 50 4 50 6 17

2001 4 100 1 25 1 25 4 50

2000 3 25 2 18 2 18 2 17

1999 6 50 1 8 0 0 1 12

1998 6 40 3 20 3 20 0

1997 2 33 2 33 1 17 2 40

1996 15 80 15 33 15 38 8 50

1995 13 85 13 54 13 54 6 33

1994 11 79 5 36 4 40 10 91

1993 10 60 10 60 10 50 6 17


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A certificate is issued to a candidate who passes Module 1, 2, or 3

Copies of the current curriculum, the two case lists and a revised reading list are all available on the ICEwebsite www.ice.org.uk/law or contact the Management Procurement and Law Department, Institution of

Civil Engineers, One Great George Street, London SW1P 3AA t +44 (0)20 7665 2243, f +44 (0)20 7222

1403 or e [email protected]

Module 1, Section 1

General comments

Generally, the overall standard of the answers to this section was slightly improved from last year.

Although there was again a wide range in the marks awarded, the majority of this years candidates again

demonstrated a sufficient knowledge and understanding of the basic principles of contract law to pass.

It was evident that many of the candidates had difficulties with managing their time during the exam,

spending too long on one question and not leaving enough to complete all the parts of the second. This

obviously meant that they lost marks on the second question.

As with the previous couple of years, the other common failings were that there was a tendency to be too

quick to give an answer without explanation or analysis of the factual events in the question and without

setting out the relevant legal principles involved, and many candidates failed to read the whole of the

question properly and either discussed points that were unnecessary, did not answer what the question

asked or did not take into account the number of marks allocated to the question in considering the detail

of answer required. These can possibly partly be explained by pressures of time but may also indicate notadopting good basic exam technique.

However, there were also some very good, well-reasoned answers backed up with a clear explanation of

the relevant legal principles and case law.

Question 1

This was the second most popular question, attempted by approximately three-quarters of the candidates.

On the whole it was answered relatively well, with a wide spread of marks although there were

proportionately more poor answers for this question than for the others.

1(a) Most of the candidates correctly analysed the status of the DFCs tender as an invitation to treat and

not an offer but then failed to follow this up with an explanation as to this meant that DFC did not have a

claim against Andrew. There was also a general lack of proper analysis of the situation if Andrew had

stated that he would be bound by the lowest offer. While many candidates stated that DFC would have a

claim against Andrew in this situation, they did not explain the basis of this claim (i.e. that there was a

contract of which Andrew was in breach) or advise on DFCs entitlement to recover damages for loss of

profit.

1(b) The marks awarded for this question ranged from very low to very high. Almost all the candidates

correctly recognised that this question concerned contractual damages for breach of contract. However,
http://www.ice.org.uk/mailto:[email protected]:[email protected]://www.ice.org.uk/


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very few candidates identified the various breaches of contract present in the question or set out the legal

principles behind contractual damages. Instead they simply went straight into giving figures of damages.

Overall, the candidates showed a reasonable understanding that liquidated damages may be

unenforceable if a penalty but did not then consider Andrews entitlement to general damages.

1(c) As with part (a), most candidates correctly addressed the first part of this question but then did not

consider the second part. It was not clear whether this was due to lack of time or lack of understanding of

the effect of termination has on FCLs entitlement to payment and the entire contracts rule.

Question 2

This was the most popular question and attracted the highest average mark.

2(a) The marks awarded for this question ranged from low to very high. Most candidates correctly

identified when a contract was formed but some failed to set out an adequate analysis of how theyreached this conclusion. Marks were lost by a few candidates who did not answer the question and set out

the terms of the contract. Very few candidates considered whether the exclusion/limitation clauses had

been incorporated.

2(b) There was a great divergence in the quality of answers for this question. Most candidates identified

that Clauses 10 and 20 were exclusion/limitation clauses to which special considerations apply and

expressed an opinion as to whether they were effective, but failed to set out their analysis or reasoning for

reaching this conclusion. Many candidates also unnecessarily considered whether these clauses were

incorporated in the contract (which is stated in the question). There also seemed to be some confusion

between the Unfair Contract Terms Act and the Sale of Goods Act.

2(c) This was the best answered question in the paper. The majority of the candidates demonstrated a

good understanding of the principles relating to consideration and provided well-reasoned answers

backed up by case law. Many candidates also discussed estoppel, thus gaining higher marks.

Question 3

This was the least popular question and answered the least well in terms of average marks.

3(a) The range of marks for this question indicates that the candidates either answered it well or poorly

with little middle ground. The good candidates analysed each of the losses within the context of relevant

contractual principles, although generally did not set out these principles in any particular detail. Inparticular, while many candidates considered that Swift Motors would have had knowledge of Jamess

antique business, they did not explain why it was relevant. The poorer answers contained little analysis.

One common error was to confuse the test of remoteness in tort with that in contract.

3(b) This question was generally answered poorly with very few candidates properly identifying that it

involved both intention to create legal relations and certainty of terms. However, there were also some

very good and complete answers.

3(c) This question was also not answered at all well, with a general lack of analysis or explanation as

when a person is entitled to terminate a contract at common law. Most candidates considered that James

would be entitled to terminate the contract on the basis of SCL failing to deliver the van at the end of the 7-


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day period with no consideration as to the importance of time being of the essence in these

circumstances. In addition, very few candidates considered Jamess liability to SCL if he was not entitled

to terminate the contract.

Module 1, Section 2

Question 4

This question was answered by a majority of candidates, and produced a wide variety of answers. These

ranged from impressive to disappointing.

Part (a) was generally well done, with all candidates identifying Lord Sinks potential negligence.

However, too many failed to identify why he was negligent, or indeed the elements of the tort.

Part(b) was also generally well done in the main, with most candidates identifying that Kate was

contributorily negligent. However, very few examined why this defence would apply, i.e. very few

considered whether and if so how Kate caused the accident, preferring instead to baldly state her

negligence.

Parts (c) and (d) were often confused by candidates, and the examiner therefore accepted relevant points

made in either section as generating marks. However, many candidates failed to get to grips with the

salient points in either part of the question. Very few applied Wagon Mound principles to consider whether

the wheel falling off the car was foreseeable. Most candidates identified Dr Sloths potential liability, but

too many were unable to articulate why he could so be held liable. The defence of novus actus

interveniens was rarely mentioned by name. The Bolam test was also missed by a surprising number of

candidates. Those that did consider the effect of the article in Bad Doctors Monthly generally did sofairly well, although a surprising number thought that the article would be enough to exonerate Dr Sloth

from liability, without having analysed the effect of the article being discredited elsewhere.

However, a significant number of candidates did answer this question well, and overall the standard was

more than acceptable.

Question 5

This was also a popular question, again attempted by the majority of candidates. Once more, the

standard of answers was wildly variable. Most candidates correctly identified the appropriate statutes,

although a number either got them mixed up or gave them the wrong dates. Most candidates alsocorrectly identified that Gomez and Morticia are occupiers, with a number providing reasoning for this.

Part (a) of the question was on the whole well done. Most candidates correctly identified Annabel as a

visitor, although by no means all identified the purposes for her visit, nor that this might be important.

Many candidates wrote out large parts of the applicable statute, but did not go on to apply this correctly.

Some very good candidates considered whether Annabel had exceeded the limits of her permission,

reaching differing answers but which were on the whole well-argued. Many also identified the possibility

of contributory negligence on the part of Annabel. A small number thought that Gomez should claim

against Morticia a surprising response to the question.


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Part (b) caused a few more difficulties for the candidates. The question of whether Steve could be a

visitor or a trespasser caused a few headaches, with a few taking the view that a child could never be a

trespasser. Most however correctly identified the differential treatment of children by the legislation. Very

few candidates appreciated that property damage cannot be claimed for under the 1984 Act; those that

did were rewarded appropriately.

Generally, candidates were able to cite the appropriate sections of the Act, but often did not reach a

conclusion as to any liability and potential defences. However, overall this was the question which of the

three in this section attracted the highest quality responses.

Question 6

This question was attempted by very few candidates, and was on the whole very poorly done. A couple of

candidates provided excellent answers, dealing with difficult aspects of the Rylands v Fletcher rule, and

were rewarded accordingly.

A surprising number of candidates attempting this question made either no or only a very cursory

reference to the Rylands rule, making it very difficult to award points to such candidates. Those who did

identify the rule often failed to apply all of its elements, simply assuming it applied. Very few discussed

whether the water or the earth had caused the damage, and whether anything turned on this.

Most identified the thin skull rule, but some did not, holding that Tony himself was at fault for going to

look at the damage with a bad back. Very few dealt with the different types of damage and whether they

were recoverable, with almost no mention of remoteness and foreseeability.

Overall, this was a disappointing response to the question; however this should not detract from thecouple of excellent answers which were provided.


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Module 2, Section 1 NEC

General comments

Many candidates seemed to adopt an approach based on finding, and then often copying out, as many

clauses in the ECC as they could that included what they thought were the important words in the

question. This does not impress, and it usually does not answer the question; candidates should realise

that the Examiners are likely to have a pretty good idea of what the contract says. The questions are

intended to encourage candidates to work out the contractual solution to a problem, which requires them

to explain which clauses are relevant, why they are relevant, and how they lead to the answer.

I want candidates to think themselves into the position of the Project Manager or the Contractor; what

would they really do? This contract is for managers, not for a forensic examination after the event!

In some questions the information provided is not complete; this is deliberate, because it reflects reality. Iwould hope that candidates recognise this; they should not be afraid of pointing it out, and then stating the

assumptions on which will base their answer.

Question 1

This question was intended to allow candidates to show their broad understanding of the differences

between the Main Options and the variety of Secondary Options, and the circumstances in which their use

might be appropriate. Only 8 of the 44 candidates attempted the question, and sadly most of those did so

rather badly; scores ranged between 7 and 17, with an average of 11.8.

Two contracts were being considered one for road and footway improvements, with design by theEmployer, and the other for the design and construction of a stadium. For most road contracts, unless

they are in green-field sites, Option B is probably the best Main Option; all roadworks contracts will suffer

many changes, mostly minor, because of what you find as soon as you start work, so you need a contract

that can deal smoothly with such changes. As these are generally of the amount of work rather than of

the type of work, a bill of quantities payment method is generally the simplest and probably allocates risks

most sensibly.

However, bills of quantities are not appropriate for design and build contracts; the risk of changes of

quantities must lie with the Contractor, not the Employer, if the Contractor is responsible for the design of

the works. So Option A or C is the appropriate choice. Choosing between them depends on the

Employers attitude to risk; Option A gives the most obvious cost certainty, although by fixing the

Contractors share carefully an Option C contract can be given a guaranteed maximum price.

Although these are considered to be the better options, what was important was the candidates ability to

decide what was in the Employers best interests in each case and to argue their case. Generally this was

lacking!

Part (b) asked how the Employer could ensure that his favoured subcontractor for part of the work on the

stadium was used by the Contractor. Nobody gave the correct and quite simple answer make it a

requirement of the Works Information, when it becomes a restraint on how the Contractor Provides the

Works.


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Question 2

This was the most popular question in Part 1; 36 candidates answered it. It was also the question with

highest scores (maximum, minimum and average).

Almost all the answers to part (a) were good. This concerned late issue of design information by the

Employer, which the Contractor appeared not to have noticed until a few weeks after he should have

done. Most candidates pointed out that had notice been given a Risk Reduction meeting could have been

held with the designers present, and it would probably have been possible to find a way of eliminating, or

at least reducing, the delay.

Answers to part (b), about assessing the delay to the Completion Date, varied widely. Some candidates

clearly do not understand the difference between planned completion and the Completion Date in this

regard. Several thought that the assessment method of Clause 63.5 should apply whether or not the

Project Manager had given notice under Clause 61.5.

Most of the answers to part (c), about delayed access, were reasonable, though some candidates

appeared not to have read the question. Several missed the important point that although the Employer

originally promised access to the western end of the site after 30 weeks, the Accepted Programme

showed work starting there in week 52. Nobody suggested relaxing the only work on one third of the

length at a time rule as a means of possible reprogramming the work.

Some referred to possible acceleration under Clause 36, but not all those who did so understood it.

Question 3

35 of the 44 candidates answered this question, and there was a wide range in the quality of the answers;

the best scored 23, the poorest only 5.

One or two candidates showed an alarming failure to understand fairly basic principles of the ECC (e.g.

the basis of payments to the Contractor under Option C, and that the Contractor has no right or obligation

to correct any Defects listed in the Defects Certificate). Many answers lacked clarity and over-complicated

the issues.

In dealing with part (a), about an out of tolerance floor screed, some debated about whether this was a

Defect or whether the Supervisor should instruct the Contractor to search. A few realised that the design

might be at fault rather than it being a construction error.

Most candidates correctly pointed out in answering part (b) that the costs of remedying the Defect would

be Disallowed Cost under Clause 11.2 (25).

Part (c) was about the time for the correction of Defects. The most common error was a failure to realise

the effect of Clause 43.4. The Employer will have taken over the building after Completion, and so the

Project Manager will have to make arrangements with him for the Contractor to have access to correct

Defects; the defect correction period starts when access is given.

Part (d) the question of what happens about Defects after the issue of the Defects Certificate seemed

to induce some kind of panic in many candidates, and as a result the quality of the answers varied widely.


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Three candidates scored the maximum 5 points for full and accurate answers, but nineteen scored either

0 or 1. Many grasped the overall principle (that the Contractor should pay the Employer) but failed to

differentiate between the rules in Clauses 45.1 and 45.2; others seemed to think that Clause 44 was the

only clause that could be applied, or that the defect correction period actually started when the Defects

Certificate was issued.

Question 4

This was a question intended to test the candidates understanding of two issues the provisions about

subcontracting and the design of Equipment with a third point about programmes. It was not a

complicated question, and I was surprised that only 9 candidates answered it.

The first part, about the approval of Subcontractors, provoked a greater than average flood of contractual

quotations. I would have preferred to have a simple statement that answered the question; Clause 26 is

neither long nor complicated, and anyone understanding it could answer almost all of part (a) of the

question. The one small trick question element is that one of those listed as potential Subcontractors

the ready mixed concrete man is a supplier rather than a Subcontractor.

Part (b), which concerns the Project Managers suspicions about the performance of a proposed

Subcontractor, produced some good clear thoughtful answers and some rather vague ones. The Project

Manager probably should not go straight to non-approval in these circumstances; he should discuss the

issue with the Contractor.

Part (c) was intended to make sure that candidates realised that an ECC programme includes method

statements. Sadly only one candidate made this connection; others thought that the answer lay in the

Activity Schedule, and several simply did not give a coherent answer.

If the Project Manager wants to check the design of a temporary cofferdam he needs to instruct the

Contractor accordingly; a temporary cofferdam is Equipment, and Clause 23 applies. Several candidates

missed this simple but basic point in their answers to part (d), many failing to realise the distinction

between the Contractors design of the works (covered by Clause 21) and his design of Equipment.

Part (e) asked who is responsible for obtaining the approval of the Environmental Agency before work

starts in the river (a requirement set out in the Works Information). The answer is simple; it is the

Contractor, as stated in Clause 27.1. Almost all candidates realised this.

Module 2, Section 2 NEC

General comments

There were 44 candidates sitting this module, up slightly from 42 last year.

The average mark went down from 15.3 last year to 13.8 this year, which was disappointing.

It was again noticeable how many candidates scored fairly similar marks for both questions ie they

answered both questions good, bad or average.


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Candidates as always do need to carefully read the question in front of them and answer accordingly. If

candidates slowed down a little, understood fully what was being asked, where the marks were

concentrated, made a few notes of matters to be addressed, quickly read the applicable parts of the

contract, they would be halfway there.

There was a fairly even distribution of candidates across the 3 centres, which is good.

Question 5

Only 6 candidates attempted Question 5. which was disappointing as I considered this to be probably the

easiest of Questions 5 to 8. The average mark of the 8 candidates for this question was the equal highest

of this section at 60%.

The first part of the question was simply asking what the purpose of retention is, which as you would

expect was well answered.

The second part of the question really just asked for an explanation of how secondary Option X16

operates, looking for a description of what does the retention free amount is for and where it is detailed;

how the retention is calculated above the retention free amount; that there are no releases of retention for

sectional completion; when retention is actually released. This was well answered generally.

The next part of the question was not well answered the money has already been paid so address this

along with interest in the next certificate. Some candidates said stop the payment and correct it, but it had

already been paid!

Most candidates scored poorly in the fourth part of the question. The issues that needed to be drawn outwere that interest was due on the late payment (whenever made), that the Contractor may exercise his

right under statute to initiate suspending of performance, and if he does so it will be a compensation event

and finally the Contractor may terminate if the amount was subsequently not paid within the stipulated

period.

Question 6

This was a bit more of a tricky question but this didnt stop 35 of the candidates attempting it! Very wide

ranging marks occurred on this question. Of the 4 questions in this section the equal highest average

mark of 60% was recorded.

The first part of the question was just asking the candidates to recognise there was an inconsistency

within the Works Information and issue an instruction to remove the inconsistency.

The next part of the question was generally well answered. The change to the Works Information is a

compensation event and the Contractor gets the benefit of the doubt in terms of what he is deemed to

have allowed for, as the contract states. The assessment would be made using forecast/actual Defined

Cost plus the Fee, as is the default basis for assessing compensation events regardless of main Option

used.

The third part of the question was generally answered on a moral basis rather than what the contract

actually says, many candidates did not pick up many marks here.


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The fourth part of the question was either answered well or poorly! This time the benefit of the doubt goes

to the Employer and there is no additional Defined Cost as a result.

Question 7

All candidates had to do to secure good marks in this question was to demonstrate they had a good

knowledge of how Completion is determined and what the contract provides in terms of take over. A few

minutes reading these provisions in the contract first would have been far more beneficial. Some

candidates talked about payment provisions, which had nothing to do with this question at all. 20

candidates attempted this question and the average mark was 55%.

The first part of the question was simply about Completion is a core clause, a defined term, that this

definition has a default position if the Works Information is silent on what needs to be done in order to get

Completion and that it is for the Project Manager to determine when completion occurs and certify

accordingly. The role of the Activity Schedule was wrongly threaded into a number of candidates

answers.

The second part of the question was generally not answered well, a varied collection of answers were

written. The roundabout was simply a part of the parts, not a section nor the whole, the notification was

not valid and Completion has not occurred. A possible argument for take over of that part of the works

could be made but this was unlikely. The answers were quite disappointing here.

The next part of the question tested candidates knowledge of the take over provisions of the contract and

again this was not generally well answered. Take over is detailed in the contract; the Employer has the

right to use and therefore take over any part of the works before Completion has occurred but this will

generally lead to a compensation event occurring; the Project Manager should certify the date of take

over. Again, a quick read of the provisions in the contract would have greatly helped.

The final part of the question was searching for candidates to constructively think about solving the

problem, notifying an early warning, calling a risk reduction meeting and making sure that part of the

works could be safely and properly taken over with minimal impact on the Contractor. The Project

Manager certifies the take over date and a compensation event arises; the responsibilities of subsequent

loss of or wear or damage to such parts taken over could then be discussed. Most candidates did just

enough to answer this question.

Question 8

27 candidates attempted this question and again some fairly easy marks were available if the candidates

could demonstrate a good knowledge of the search for a Defect and early warning provisions. Again, most

disappointing therefore that this question had the lowest average mark in this section of some 48%.

The first part of the question was looking for candidates to note the supervisor had powers to instruct the

Contractor to search for a Defect and explain the various routes the contract takes you depending upon

what is found during the search. This was not generally well answered with candidates missing many of

the search, obey, correct principles the contract spells out.


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The next part of this question was testing knowledge of the communications provisions, the timescales etc

and as one would expect, was generally well answered.

The third part of the question was looking for general knowledge of the early warning process and usingthis in a practical way to solve the particular problem presented here. The theory and practical application

surprisingly did not seem to be present in all cases.

The final part of the question dealt with the question of payment for correcting a Defect in a cost

reimbursable contract. Candidates needed to know the list of Disallowed Costs and implications where the

work was subcontracted and this was not well answered at all.

Module 2, Section 1 ICE

General comments

Only two candidates sat Module 2 ICE.

Question 1

Detailed information on method related charges was provided in the question to allow candidates to

demonstrate their knowledge of the valuation of variation orders. The question was split into four parts,

and required an understanding of the various mechanisms available under clauses 51(1), 51(2), 52(3)(a),

52(4), and of Method Related Charges both Fixed Charges and Time Related Charges.

Part a Candidates were required to provide a correct analysis of the basis for payment of a variation

order. Higher marks were given if a Candidate provided information on the impact of the Engineers

instruction on the Method Related Charges.

Part b Candidates were required to consider the impact of the change in quantities and applied the

correct contractual clauses. Higher marks were given if a Candidate applied the information provided in

the question to the impact of the change in quantities to the anticipated programme.

Part c Candidates were required to identify exceptional adverse weather as a reason to entitle the

contractor to an extension of time.

Part d Candidates were required to explain that the Adjustment Item is fixed and not subject to change

(see CESMM note 6.4). The Contractor benefits in this case, as he does not credit the saving on the

increased quantity.

Question 2

The question is about the CDM Regulations 2007, and their application in the ICE Conditions of Contract.

The question was divided into three parts. Candidates were expected to be aware of the CDM

Regulations 2007 and their difference from the earlier 1994 Regulations, including the replacement of the

Planning Supervisor with the CDM Co-ordinator and the necessary amendments to Clause 71 in the ICE

Conditions of Contract including the contractual analysis for seeking payment. Equally Candidates

needed to demonstrate an understanding of Clause 38 and the entitlement of the Contractor to extra

payment.


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Question 3

No candidate answered this question.

Question 4

This question was answered reasonably well by those who attempted it. The question was split into two

parts.

Part a Candidates provided a correct analysis of design responsibility under the contract and where

design responsibility lies if the Engineer accepts a proposal from the Contractor to amend the design.

Part b Candidates provided an analysis of the action of the contractor under clause 12, however some

candidates lost marks by failing to explain the responsibilities of the Engineer under this clause.

Module 2, Section 2 ICE

General Comments

The answers were very pedestrian.

Question 5

The question was designed to elicit candidates' understanding of method statements under Clause 14 and

the responsibilities of Contractor, Employer and Engineer when method statements transpire to be

inadequate, wrong, or both. The question required the candidate to draft an Engineers letter to the

contractor. There was no attempt to draft the sought for Engineer's letter to the Contractor rejecting the

clauses relied upon by the Contractor..

Question 6

The question called for an understanding of method statements and a basic understanding of insurances

called for under the Contract. The question sought to distinguish between insurances in respect of the

Works, and insurances in respect of damage caused to the Employer's property which is not part of the

Works. The candidates found the question difficult, as was reflected in the marks awarded.

Question 7

No candidate answered this question.

Question 8

This question required a grasp of the Contractor's obligations to construct (and design when required

under the Contract); the duties of the Engineer in respect of quality of work and materials, and in certifying

payment and completion; and how an Engineer can become exposed to professional negligence claims.

This was found to be a difficult question. The issues of the Engineer's certifications and his failure to

oversee the Contractor's workmanship and materials were not mentioned in the answer.


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Module 3, Section 1

General comments

Two candidates sat Module 3. This paper requires a high level of preparation in order to obtain a pass

mark. The Examination Module indicates the allocated marks out of 25 for each part answer. Candidates

do not appear to take this into account and fail to include a proportionate amount of text and detail in their

answers.

Question 1

No candidate reached the required standard. This question dealt with the potential conflict sometimes

faced by the Engineer when exercising his obligation of impartiality towards both parties in the Contract

given that he is acting as the agent of the Employer and employed and paid by him.

The question was in four parts. The candidates misunderstood the question or took the wrong approach

when answering the first part and so their answers to the remaining parts were incomplete or mistaken.

One candidate suggested the Engineer should revisit the agreement he had reached with the Contractor

about the errors in the Bill of Quantity that had been identified and agreed. The other candidate omitted

to discuss how to overcome the problems caused by the Employers refusal to act on the Engineers

impartial decision and instead suggested that the Contract should either be abandoned or revised to a

reduced scope of work to match the available funding.

Question 2

No candidate attempted this question.

Question 3

No candidate attempted this question.

Question 4

Both candidates attempted this question. Marks were readily available for a good discussion of the five

parts.

The first part of the question related to the contractual effect of a letter of intent and whether or not the

Contractor was either entitled to payment based on the retrospective effect of the Contract terms and

Conditions or on a quantum meruit basis. The question was closely based on the Trollope & Colls Ltd v

Atomic Power Constructions Ltd [1963] case where it was found that, irrespective of when the contract

between the parties was signed, it did relate back so as to apply to what had been performed. In that

case the court found that at the date a formal contract came into existence, there had been an intention to

make a contract, there was agreement on all essential terms and a sufficiently clear acceptance of the

offer, and that, therefore, a term should be implied to give business efficacy to the agreement to the effect

that the terms applied retrospectively. Instead both candidates referred to the British Steel Corporation v

Cleveland Bridge and Engineering Co Ltd [1984] case where the Judge said that it was clear that the

parties never agreed the precise and necessary terms of the contract. The court therefore concluded that


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there was no binding contract between the parties (either an "if" contract as the work was being done

pending a contract being concluded or, an "executory" contract as material terms remained to be

concluded). The result was that there was simply a legal obligation upon Cleveland to pay to British Steel

a reasonable sum (i.e. quantum meruit) for the work they had carried out.

The second part of the question related to the meaning of liquidated damages, penalties and the

expression time at large. The answers to the meanings of liquidated damages as a genuine pre-estimate

of loss, penalties and time at large were disappointing.

The third part of the question concerned the Employers right to deduct liquidated damages and the

Contractors entitlements to extensions of time when a variation order is issued with the Contractor in

culpable delay. Although one candidate had correctly referred to the relevant case law [Balfour Beatty

Building Ltd. v- Chestermount Properties Ltd. (1993)] he failed to answer correctly and the other

candidate offered no explanation.

The fourth part of the question was to assess the candidates knowledge of court decisions related to

entitlement to extensions of time for weather delays and strikes even when a Contractor is in culpable

delay. The answers were disappointing.

The answers to the fifth part of the question were also extremely disappointing. One candidate referred to

payment on a quantum meruit basis with no reference to the fact that there was no contract in place and

therefore (i) no extension of time could be awarded or (ii) liquidated damages levied.

Module 3, Section 2

General comments

It appears candidates answered the NEC section last and under time pressure. The general grasp

demonstrated of the NEC contractual mechanisms was not great. There was a tendency to concentrate on

the risk management process or the concepts behind the contract rather than the sometimes, onerous

NEC procedural requirements. The questions invited clear and methodical answers on the contractual

obligations of the PM and Contractor. The answers did not demonstrate this approach.

Question 5

The aim of Question 5 was to identify the Project Managers responsibility concerning design and

responding to the Contractors design and delay; delay damages; and issues to do with the Contractorsprogramming and early warnings. The candidates had a grasp of the withholding procedure for Delay

Damages but not the period for reply and associated contractual obligations of the PM, and their

relationship with the Accepted Programme; especially the contractors control over it. The answers to this

compulsory question appeared to suffer due to a lack of time.

In 5a.1, neither candidate identified that the PM must respond to the design within the period for reply, or

issue a compensation event, although they did identify that the Contractor and PM should have used the

early warning system to resolve the matter sooner.


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In 5a.2, the candidates identified the need for the PM to control the completion date but did not look at the

implications of failure to notify a compensation event and the restrictions on the Contractor once the

Clause 61.3 notification period has been missed.

In 5a.3, both candidates identified the lack of discretion of the PM in levying delay damages, although

there was some confusion between the system for this and the early warning system.

5b sought an review of how the Contractor should have reacted including maintenance of his accepted

programme, early warning for obvious delays, notification of Compensation Events and his difficulties in

failing to do so. Both candidates correctly identified that the contractors position was difficult.

In 5c the candidates ignored the fact that the Employers role is restricted to not interfering with the PM.

They also missed the important role of the Employer in correctly assessing what liquidated damages are

as a pre-estimate of his loss at the pre-contract stage.

Question 6

Question 6 examined the risk reduction process, defects, disallowed costs and subcontracting in a target

cost contract. One candidate answered this question and did so relatively well. The PM is obliged to

attend the early warning meeting although whether or not the subcontractor can be forced upon him is a

moot point and should be subject to agreement rather than an obligation. The Project Manager is obliged

to co-operate and a better answer would explore the difficulties of opposing rather than attending a

meeting and the PMs obligation to provide reasons for a rejection in accordance with Clause 13.

Question 6 (b) looked at all the various issues which may arise. In addition to the purely contractual

aspects a good answer should consider the possible compensation event arising from changed physical

conditions under Clause 60.1(12) and the necessary precursors under Clause 60.1(12) and 60.3.

The use of an Option B subcontract would result in limited impact on the cost plus arrangement under theOption D contract, unless it was a CE.

The implications of carrying out repairs in the defects correction period are significant for the contractor as

the correction of defects after that date is disallowed costs. If it is not a compensation event then it would

be a defect and he would not receive any additional money for it.

Question 7

This question considers insurance, delay damages and set-off including Y(UK)2. It was answered by only

one candidate. The first part of the question required the candidate to identify that the Contractor is

responsible for Subcontractors actions and that the events were not compensation events but

Contractors risk events which did not affect the Price for Work Done to Date. The question also required

consideration of the Employers role in properly identifying his losses, the sequence for withholdingpayment and the possibility of damages being too remote.

Question 7b concerned the implication of an adjudicators decision. It changes the completion date

whether or not the contractors accepted programme indicates he will improve on it.

The question as a whole was answered well.

Question 8

This question was not attempted


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Institution of Civil Engineers

Examination in Civil Engineering Law and Contract Management 2009

Paper 1 (England and Scotland)

Monday 8 June 2009

Time permitted: 14:00 to 17:20 (3 hours 20 minutes)

There are three questions in Section 1 and three questions in Section 2.

Answer any two questions from each section; a total of four questions.

Please answer questions from Section 1 in an answer book provided (Yellow book) and

answer Section 2 questions in a separate answer book provided (Yellow book).

All questions carry equal marks

Only un-annotated copies of statutes and Statutory Instruments may be taken in to the

Examination

References to Cases and Acts should be quoted where possible.

Please indicate on the outside of the Answer Booklets whether your answers will be in

respect of Scots Law.

Section 1

Question 1

Andrew has recently bought an old house, which he intends to convert into two flats. He invites

two local contractors, D. Fective Contractors Ltd (DFC) and Franklin Construction Ltd (FCL) to

tender for the work. The tender includes the following conditions:

2. Each of the flats shall have 3 bedrooms.

14. The work shall be completed such that the flats are ready for occupation by 31 July 2009.5,000 shall be payable for each weeks delay thereafter until all the flats are ready for

occupation.

15. Payment on completion.

23. The carpets are to be Agate Blue from the supplier named in the attached annex.

DFC submit a tender price of 80,000. However, Andrew prefers FCL because he knows that

they are a reputable company. FCLs tender price was 100,000. DFC, knowing that they

submitted the lowest bid, are very disgruntled to find out that the contract has been awarded to

FCL and instruct their lawyers to write to Mr Andrews claiming their full tender price.


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Andrew and FCL sign a contract containing the conditions that were included in the tender. On

28 August 2009, four weeks late, FCL inform Andrew that they have completed the work. The

work has in fact not been finished and will take another week. On inspection, Andrew also

notices that in one of the flats FCL have not used the specified carpet but have used a cheaper

alternative which is a slightly different colour. In the other flat, FCL have built only 2 bedrooms.

FCL refuse to change the carpet or to add the extra bedroom because this would require the

work on that flat to be started all over.

Andrew is furious. He obtains a quote from Charles, a local decorator, to replace the carpet with

that specified at a cost of 5,000. However, Andrew is slightly cheered up by the fact that the

market rate for rent on each of the flats has rocketed since FCL started work. At the time of the

tender, he could only have expected to receive 500 per flat per week, now he can get 2,500

per flat per week. Andrew is not sure what to do.

a. Advise DFC on their claim against Andrew. Would it make any difference

if Andrew had stated in the tender documents that he would be bound by

the lowest bid?

[6 marks]

b. If Andrew allows FCL to complete the further weeks work and engages

Charles to replace the carpet, advise FCL as to their liability to Andrew.[10 marks]

c. Is Andrew entitled to terminate his contract with FCL? If so, advise

Andrew as to whether FCL are entitled to any payment.[9 marks]

Question 2

Pride Beer Ltd (PBL) approach the Big Tank Company (BTC) for a quotation to supply and

install a new tank and associated pipework in their brewery.

BTC send a fax to PBL offering to do the work within four weeks for 20,000. This quotation is

stated to be subject to BTCs standard terms, which contain the following clauses:

Clause 9 BTC agree that the goods provided and any associated work carried out under

this contract shall be of satisfactory quality.

Clause 10 BTCs liability for defects in goods supplied and for defective workmanship shall

be limited to 500.

Clause 20 BTC shall have no liability whatsoever for any losses caused by negligence of its

employees.

However, BTC do not provide a copy of their standard terms with the quotation. PBL respond

saying that they would like the tank to be installed as soon as possible and ask whether BTC

would be prepared to do the work in a period of 3 weeks for 25,000. BTC then send PBL an

Order Confirmation which states the work will be completed in three weeks for 30,000. Again,

this is stated to be subject to BTCs standard terms, a copy of which is, this time, enclosed but is

illegible. PBL fax back a copy of the Order Confirmation, with a handwritten note that amends


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the price to 25,000, signs it in acceptance and states Subject to this change, we are happy for

you go ahead. Please start as soon as possible. However, BTC do not read this fax and simply

assume that PBL are happy with their previous terms.

The next day, BTC arrive at the brewery and start to install the new tank and pipework. After

two weeks, it appears to PBL that BTC will not complete the work within the three-week period.

As a result, PBL agrees to pay BTC an additional 5,000 if they complete the work on time.

BTC duly complete the work on time. However, on the final day, one of BTCs employees

crashes the boom of a crane through one of the walls of the brewery, causing the roof to fall in

and injuring two of PBLs employees. The following day, the new tank and pipework suffer

irreparable damage due a build-up in pressure caused by a defect in a valve installed by BTC.

BTC agree to give PBL 500 in compensation but deny any further liability, pointing to Clauses

10 and 20 of their standard terms. In addition, BTC demand payment of the additional 5,000.

a. Was a contract formed between PBL and BTC and, if so, on what terms? [10 marks]

b. On the basis that BTCs standard terms were incorporated in a contract

between PBL and BTC, are they effective to limit and/or exclude BTCs

liability as they contend?

[8 marks]

c. Are BTC entitled to payment of the additional 5,000? [7 marks]

Question 3

James Careful has a small delivery business and owns a van which he uses for this purpose.

On the side of his van is painted: James Careful Deliveries careful by name, careful by

nature. He also occasionally deals in antiques.

James normally uses Swift Motors to service his van. It is always a term of his agreements with

Swift Motors that they will exercise reasonable care and skill when carrying out this work.

While James is out on deliveries, one of the front wheels comes off his van due to faulty

workmanship by Swift Motors. This causes 5,000 worth of damage to the van. An antique

sideboard, worth 50,000, that was in the back of the van is also destroyed. James is

distraught, not only because of the damage to the sideboard, but also because he had a

particularly lucrative contract to deliver some spare parts. If he had delivered them that day he

would have been paid 5,000. He usually makes only 250 profit a day.

That day, James decides to buy a replacement van from Slow Coach Ltd (SCL) for 20,000.

SCL agree to deliver the new van within seven days.

James has a full order book for the foreseeable future and so contacts a local hire company to

see if he can hire a replacement van until the new one is delivered. They quote him 250 per

day. James decides it is not worth it because he would not make any money.


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As it happens, Jamess brother, Michael, owns a van which he is not using for the next two days.

He therefore agrees to let James borrow it for half the going rate.

Seven days later, SCL contact James to say that the new replacement van is still not available.James informs them that he must have it within the next two days or else he will buy the van

from somewhere else. Three days later, SCL deliver the new van to James but he tells them

that he does not want it because he has just bought another van for the same price elsewhere.

SCL demand 20,000 from James.

a.Advise James as to his entitlement to recover damages from SwiftMotors, with specific reference to the following:

(i) Cost of repairs to the van.(ii) Loss of the antique sideboard.

(iii) Loss of profit on the delivery of the spare parts.(iv) Loss of profit on deliveries until he has bought a replacement

van.

(v) Cost of the replacement van.

Michael demands 200 for hiring the van. Advise James as to hisobligation to pay.

[13 marks]

b. [5 marks]

c.Advise James as to his liability to SCL.

[7 marks]


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Section 2

Question 4

Lord Sink is driving on a quiet country road in his vintage car, within the speed limit. Lord Sink

reaches for a sweet, but drops it and takes his eyes off the road to search for it.

Kate and Ben are waiting to cross the road. Ben sees Lord Sinks car and tells Kate to wait for it

to pass. However, Kate ignores this advice, saying she can get across the road in time.

Unfortunately, Kate misjudges the speed of Lord Sinks car. Lord Sink looks up just in time to

see Kate, but not in time to swerve. Kate is struck by the car, hitting her head and hurting her

leg.

The collision causes a wheel to fall off the car, which rolls to the side of the road where Ben is

still standing, and knocks him over causing a large gash in his lower right leg.

Both Kate and Ben are taken to hospital. Kate is treated by Doctor Wright, a senior surgeon,

who concludes that Kate has got concussion and a broken leg. He sets the leg in plaster and

washes out the head wound before stitching it up.

Ben is treated by a different doctor, Doctor Sloth, who concludes that Bens leg wound is

superficial, although some grit from the road has become embedded in the wound. Doctor Sloth

however fails to wash the wound before stitching it, with the result that it becomes infected,

leading to the amputation of the bottom half of Bens leg. Doctor Sloth has recently read an

article in the Bad Doctors Monthly which states that washing a wound can introduce chemicals

into the blood stream and so should be avoided. This view has however been widely discredited

by other medical journals as extremely dangerous.

a. Advise Kate as to who may be liable for her injuries. [7 marks]

b. Advise Kate as to any defences which may operate to limit or extinguish

her claims.

[4 marks]

c. Advise Ben as to who may be liable for his injuries. [8 marks]

d. Advise Ben as to any defence which may operate to limit or extinguish his

claims.

[6 marks]


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Question 5

Gomez and Morticia are the freehold owners of a large estate in Yorkshire, Haunted Hills.

Haunted Hills has become somewhat run down, and although the boundaries of the estate are

fenced off, there are some large gaps in the fencing through which it is possible to access the

estate. There are signs at regular intervals around the boundaries of the estate which say

Private Property, Keep Out. Haunted Hills consists of a main house and some outbuildings,

with a drive leading from the main road, and extensive gardens. The gardens are overgrown,

although the drive is in good condition.

Morticia is hosting a meeting of the local Womens Institute (the WI) in the main house at

Haunted Hills. On her way up the drive to the main house, Annabel, the president of the WI,

sees a plant which she likes the look of. Annabel strays from the driveway to go and examine

the plant, and in doing so, falls over a spade which had been left lying in the long grass, hurting

her leg and breaking her arm.

Annabels fall causes a lot of commotion. Steve, a child from the local village, uses the

opportunity to sneak through one of the gaps in the fences in order to try to steal some apples

from the garden. However, in his haste, he fails to notice a loose plank of wood which has fallen

from the broken fence. Steve treads on one end of the plank, which flips up and hits him in the

face, breaking his nose. A large splinter from the plank also rips Steves jacket. Gomez has

previously caught Steve attempting to steal apples from the garden.

a. Advise Gomez and Morticia as to their liability for the injuries to Annabel;

and as to any defences which might be open to them.

[15 marks]

b. Advise Gomez and Morticia as to their liability for the injuries to Steve;

and as to any defences which might be open to them.

[10 marks]

Question 6

Richard is redesigning his large garden to incorporate a Japanese water feature. This involvesdigging out large amounts of earth. However, Richard wants to build up another part of his

garden into a fake hill, and so instead of disposing of the earth, he simply piles it up into a

mound.

Due to the large extent of the redevelopment works, the only place he can put the earth where it

will not interfere with his plans is right at the edge of his property, where it adjoins the garden of

his neighbour, Tony.

Over the course of the works, the pile of earth becomes larger and larger. On a couple of

occasions, Tony asks Richard to consider either moving it, or disposing of the earth entirely, as


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he is worried it may collapse onto his land. Richard says he will think about it, but takes no

action.

One night, there is a particularly heavy rainstorm, causing a pool of water to collect behind thebank of earth. Richard does nothing to get rid of this water. A week later, the weight of the

water causes the earth to collapse onto Tonys property. The earth falls into Tonys pond, killing

his expensive koi fish. When Tony goes to survey the damage, he slips on the wet earth and

aggravates an existing back problem. In addition, Tony later discovers that the water had been

seeping through the earth, and into an outbuilding which Tony had been using to store his art

collection. Many paintings have been damaged by the water.

Advise Tony as to any claims he may have against Richard for the damage he

has suffered; and as to any defences which Richard may raise against him.[25 marks]


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Points for answer

Question 1

(a) As to the first part, DFC do not have a binding contract with Andrew and so have no claimagainst him. An invitation to tender is normally an invitation to treat and not an offer tocontract with a party submitting the most favourable tender (Spencer v Harding (1870)).DFCs tender is an offer which Andrew is free to reject, as he did.

However, these general principles will not apply if specific conditions are attached to theinvitation, e.g. that the tenderer will accept the lowest bid. In this situation, the tender canamount to a unilateral contract to award the work to the lowest bidder (see HarvelaInvestments Ltd v Royal Trust Co. of Canada [1986]). If Andrew had stated in the tenderdocuments if he had been bound by the lowest bid, he would be bound to accept DFCstender and thus be in breach by awarding the contract to FCL.

Higher marks will be awarded to candidates who identify that DFCs losses are loss of profiton the contract for the work and not the contract sum and also that a this situation would giverise to two separate contracts, a tender contract (to accept the lowest bid) and a contract forthe work.

(b) FCL are in breach of their contract:

(i) by not using the specified carpet in one of the flats;

(ii) by only building two bedrooms in the other flat.

(iii) by failing to complete the work by 31 July 2009;

This question concerns Andrews entitlement to damages. Generally, contractual damagescompensate the innocent party for the loss which he has suffered as a result of the breach ofcontract, so long as they are not too remote. The injured party is also under a duty tomitigate his losses (British Westinghouse Co. v Underground Electric Railways Corp. ofLondon [1912])

In respect of the carpet, this could be described as defective work, the usual measure ofdamages for which is the cost of reinstatement but only if appropriate (Ruxley Electronics Ltdv Forsyth [1995]). The candidates should consider whether it is appropriate to awarddamages in the cost of reinstatement (as opposed to diminution in value). One factor infavour of an award for the cost of reinstatement is that Andrew intends to have the carpetchanged (Radford v De Froberville [1978]). The candidates should also discuss whetherAndrew has taken reasonable steps to mitigate his loss by only apparently obtaining onequotation for the work.

Similar issues should be considered in respect of the missing bedroom. From the question,it seems that Andrew has not suffered any loss in respect of rental income but will probablyhave suffered loss in actual value of the flat. It will also probably be quite expensive forAndrew to have the work redone to include the extra bedroom. The candidates shouldanalyse the situation and reach their own conclusion.


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In respect of the 5 weeks delay, the candidates should consider whether Andrew is entitledto the liquidated damages set out in the contract, or whether this clause is unenforceable forbeing a penalty. On the facts, the level of liquidated damages appears to be excessive and

not a genuine pre-estimate of the loss the injured party would suffer from the specifiedbreach and thus this clause may be unenforceable (Dunlop Pneumatic Tyre Co Ltd v NewGarage & Motor Co Ltd [1915]). The critical issue is whether this was a genuine pre-estimate of loss that was made at the time that the contract was concluded and so theincrease in market rate may not be relevant, unless Andrew was aware that there was likelyto be a sharp increase in market rate.

Higher marks will be awarded to candidates who discuss the consequences of the liquidateddamages clause being unenforceable. Higher marks will also be awarded to candidates whoconsider whether Andrew would be able to obtain an order for specific performance for FCLto carry out the necessary work so that there are three bedrooms (Ryan v Mutual TontineAssociation (1893)).

(c) This question has two parts: (i) is Andrew entitled to terminate the contract with FCL? and (ii)if so, what are the consequences in terms of payment and damages?

Andrew will be entitled to terminate the contract if FCL are in breach of a condition, asopposed to a warranty. The candidates should therefore analyse each of the terms in thequestion and decide whether they are conditions or warranties. Given the inclusion of aliquidated damages clause for delay, time is likely not to be of the essence and thus the timefor completion not a condition. The specification for the carpet is also unlikely to be acondition but a warranty. On the other hand, it could certainly be argued that therequirement for three bedrooms in each flat is a condition, breach of which entitles Andrew toterminate. Andrew must communicate his decision to terminate the contract for it to be

effective.

On the basis that Andrew is entitled to terminate, the candidates should consider whether theentire contracts rule might apply (Cutter v Powell (1795)) because payment is stated to bedue on completion and, if so, whether any the exceptions to this rule might apply such thatthe obligations are severable, substantial performance is sufficient or there has beenacceptance of part of the works (Ritchie v Atkinson (1808); Hoenig v Isaacs [1952]; Sumpterv Hedges [1898])).

Candidates should consider the application of these rules and the different options availableto Andrew. It is certainly arguable that the entire contracts rule applies such that FCL wouldnot be entitled to any payment. On the other hand, Andrew might accept performance, paythe full amount and set-off against this sum his losses.

Higher marks will be awarded to candidates who comment on the potential relevance of thepayment provisions of the Housing Grants, Regeneration and Construction Act 1996.

Question 2

(a) This question concerns offer and acceptance and the incorporation of terms. This situationcan be described as a battle of the forms where the last shot doctrine applies (ButlerMachine Tool Co. Ltd v Ex-Cell-O Corporation (England) Ltd [1979]). The parties exchangeseveral responses which amount to counter-offers, which have the effect of destroying

previous offers (Jones v Daniel (1894); Hyde v Wrench (1840)). Even though BTCs


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standard terms were illegible, they were probably incorporated into the contract throughPBLs signature even though this was related to a counter-offer (LEstrange v Graucob[1934]). The test for agreement is an objective one. By starting work, BTC have probably

accepted PBLs offer through conduct (Brogden v Metropolitan Railway (1877)).

Candidates also however need to consider whether the exemption and limitation clauseswere actually incorporated given their special nature. This depends on the extent of noticethat PBL had of them (Thornton v Shoe Lane Parking Ltd [1971]; Chapelton v Barry UDC[1940]). Here it is relevant whether PBL were previously aware of BTCs standard terms andwhether these terms were unusually wide or onerous (as they are).

Candidates should reach a conclusion as to the express terms, and identify the terms inrelation to price and time.

(b) Exclusion, and to a lesser extent, limitation clauses are regulated by common law and by the

Unfair Contract Terms Act 1977 (UCTA). Firstly, they will be interpreted contraproferentem (Baldry v Marshall [1925]). The courts adopt a more strict approach wheninterpreting exclusion clauses than limitation clauses, particularly when it purports to defeatthe purpose of the contract (Photo Production Ltd v Securicor Transport Ltd [1980]). Theterms are probably sufficiently clear to cover the damages incurred.

It is then necessary to consider the application of UCTA. In this case, UCTA will renderunenforceable the attempt to exclude liability for negligence which causes personal injury (s.2(1)). The attempt to exclude liability for negligence causing other loss or damages will besubject to the test of reasonableness (s. 2(2)). As the parties have contracted on BTCsstandard terms, section 3 will also apply in respect of the attempted limitation of liability forbreach of contract and, again, will apply a test of reasonableness. Higher marks will be

awarded to candidates who discuss the test of reasonableness in more detail.

The candidates should reach their own conclusion as to whether these clauses areenforceable.

(c) BTCs entitlement to the additional 5,000 will depend on whether PBLs agreement to paythis sum is supported by fresh consideration. Performance of an existing contractualobligation is not new consideration (Stilck v Myrick (1809)) unless the exception in Williams vRoffey Bros & Nicholls (Contractors) [1991] applies. This depends on whether PBL hasobtained any additional practical benefit from this agreement. Higher marks will be awardedto candidates who also consider whether the doctrine of promissory estoppel could applyhere or whether there is a collateral contract.

Question 3

(a) This question concerns the principles of contractual damages to determine Jamessentitlement for Swift Motors clear breach of the term to use reasonable care and skill. Theobjective of contractual damages is to place the injured party in the position that he wouldhave been in had the contract been properly performed, so long as the damage is not tooremote Hadley v Baxendale [1854]) and the injured party has taken all reasonable steps tomitigate his loss (British Westinghouse Co. v Underground Electric Railways Corp. of London[1912]).


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Under the principles laid down in Hadley v Baxendale an innocent party can recoverdamages for its losses:

1. arising naturally from the breach; and

2. which were in the reasonable contemplation of the parties at the time of thecontract as the probable result of the breach.

Damages falling with the second limb require special knowledge of both parties.

The candidates should apply these principles to each of the losses identified in the question.Issues of particular relevance are whether carrying an expensive antique in the van andJamess particularly lucrative contract were within the reasonable contemplation of theparties; whether by deciding not to hire a van James has failed in his duty to mitigate hislosses; and whether the cost of purchasing a new van amounts to a loss flowing from the

breach.

(b) There are two issues in this question relating to whether a legally binding contract beenformed between James and his brother. Intention to create legal relations is an essentialelement of a contract. This is normally assessed objectively but can be proved by evidenceof clear intention. There is a legal presumption that it exists in a commercial context (Roseand Frank Co v Crompton Bros Ltd [1915], but in a social or domestic situations there is apresumption that it does not exist (Balfour v Balfour [1919]). Therefore, it could be arguedthat there was an absence of intention to create a contract. The second issue relates tocertainty of terms, and in particular the meaning of half the going rate. This statementrelates to a fundamental term of the potential contract, namely price, and thus the contractmay be void for uncertainty (Scammell v Ouston [1941]).

(c) James has decided to buy the van from another company and so can avoid paying SCL if hewas entitled to terminate his agreement with them. This depends on whether time was of theessence. The facts are comparable to those in Rickards (Charles) Ltd v Oppenhaim [1950]and James is probably entitled to refuse delivery. The candidates should neverthelessconsider SCLs entitlement to damages if James is not entitled to refuse delivery. The keypoint here is the extent of SCLs losses: are they the full asking price, the profit on this saleor have they suffered no loss? This will depend on the demand for the van and whether theyare able to sell it to another vendor (W.L. Thompson Ltd v Robinson Gunmakers Ltd [1955]).

Section 2

Question 4

(a) Advise Kate as to who may be liable for her injuries:

This question is concerned with negligence causing personal injury; and issues as tocausation.

Lord Sink is prima facie negligent here, as he was not paying enough attention to theroad when driving.

(b) Advise Kate as to any defences which may limit or extinguish her claims:


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However, Lord Sink may be able to claim that Kate was at least partly to blame for theaccident, by raising contributory negligence: the Law Reform (Contributory Negligence)Act 1945. Candidates should consider how much to blame Kate was for the accident.

This will involve considering whether Kates actions were a cause of the accident, andsuggesting an appropriate reduction in damages accordingly.

(c) Advise Ben as to who may be liable for his injuries:

This question is concerned with negligence causing personal injury; and issues as tocausation.

Lord Sink is prima facie negligent here, as he was not paying enough attention to theroad when driving.

As regards Ben, candidates should first consider the foreseeability of the way in which

his injuries were caused i.e. was it a foreseeable result of the collision that a wheelwould fall off the car and injure a bystander; or is that consequence too remote? Thisinvolves an application of the Wagon Mound (No 2) (1967) principles.

It is not beyond the realms of contemplation that a motor accident would cause wreckagefrom the vehicle to spread over the surrounding area, and so Bens injury is probably nottoo remote, and so Lord Sink may in principle be liable for his injuries.

(d) Advise Ben as to any defences which may limit or extinguish his claims:

However, the next question to consider is whether the actions of Dr Sloth constitute anovus actus intervenienssuch as to break the chain in causation and thus excuse LordSink from liability.

It seems that Bens initial injury was not too serious, and that had it been treatedproperly, there would have been no lasting problems. The courts are reluctant to find adefendant liable for wrongdoing committed by others, and so may well find that Dr Slothsactions constitute a break in the chain of causation.

As for Dr Sloths own possible negligence, health professionals must act as thereasonable health professional would act in that situation. However, the test is whether asignificant number of fellow professionals would judge Dr Sloths conduct as adequate,even if most competent professionals would disapprove: the Bolam test(1957).

Candidates should therefore consider whether Dr Sloths actions, and his justification forthem (i.e. the article in Bad Doctors Monthly) fall within the Bolam test, and thus whetherDr Sloth could be held to be negligent.

The points required to be identified to obtain a pass on this question are:

o Recognising that Lord Sinks behaviour is prima facie negligent;

o Recognising that Kate may have been contributorily negligent (candidates puttinga figure on the reduction in her damages would be rewarded with a higher mark);


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o Discussing whether Lord Sink could be liable for Bens injuries (better candidateswill canvass more fully the foreseeability and remoteness test);

o Recognising that Dr Sloth may have broken the chain of causation (bettercandidates would go on to discuss the effect that this would have on Lord Sinksliability);

o Recognising that Dr Sloth may himself have been negligent (candidates engagingin a fuller discussion of the application of the Bolam test would receive a highermark).

All other points as outlined above would go to award a candidate a higher mark.

Question 5

(a) Any liability of Gomez and Morticia towards Annabel; and any defences:

This question concerns occupiers liability.

Gomez and Morticia are clearly occupiers, as they own and live at Haunted Hills.

The first question is whether either Annabel or Steve is a visitor for the purposes of the1957 Occupiers Liability Act.

It seems clear that Annabel is a visitor, as Morticia has invited her to Haunted Hills for thepurposes of a WI meeting.

The duty owed under the 1957 Act is a general duty of care to ensure that visitors arereasonably safe for the purposes for which they have been invited: s 2(2). The burden ofproof is on the claimant (i.e. Annabel) to show that this duty has been broken.

The visitor is also expected to take care: s 2(3). There could therefore be a defence ofcontributory negligence, if Annabel should have seen the spade and avoided it.

Here, Gomez and Morticia could argue in their defence that Annabel was using the landin a way different from that for which permission was granted: i.e. in wandering off thedriveway. We are told that Morticia invited the WI for a meeting in the main house; andalso that the driveway was well-kept whereas the garden was overgrown. It could beargued that Gomez and Morticia did not grant Annabel permission to enter the garden,but to stay on the driveway.

(b) Any liability of Gomez and Morticia towards Steve; and any defences:

Steve is classed as a trespasser he has no permission to be on the Haunted Hillsestate and is not a lawful visitor. Any liability owed to him by Gomez and Morticia willtherefore be governed by the 1984 Occupiers Liability Act.

This duty is a duty of common humanity. The duty is owed to a trespasser only if threeconditions are satisfied (s1(3)):

o

The occupier knows of the danger, or has reasonable grounds to know it exists;


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o The occupier knows the trespasser is, or may in the future, come into the vicinityof the danger, or has reasonable grounds to know it; and

o It is reasonable to expect the occupier to offer some protection to the trespasseragainst the risk.

The question then becomes how much Gomez and Morticia knew. We are told thatGomez had previously caught Steve stealing apples, and that the fencing has fallen intodisrepair. A judgment needs to be made as to whether this justifies the imposition ofliability upon Gomez and Morticia for Steves injuries.

It seems that a restrictive scope will be given to this duty: however, it seems that asunder the 1957 Act, an occupier must be prepared for children to be less careful thanadults (s 2(3)(a) of the 1957 Act): Ratcliff v McConnell[1999] 1 WLR 670. Steves agehas not been specified in this question: the older he is, the more care he could be

expected to have taken. A defence of contributory negligence may therefore be availablehere.

There is case-law that attractive or tempting items on the land may tempt children toenter; although the mere fact of apples being in a garden may not be enough to qualifyfor this purpose: British Railways Board v Harrington(1972).

We are also told that Steves clothing is ripped by a splinter from the plank. Section 1(8)of the 1984 Act provides that the duty does not extend to cover damage to thetrespassers property.

As for the notice, it now seems to be accepted that a general notice disclaiming allresponsibility, as in this case, will not be effective to protect the occupiers from liability.The position would be different if the notice had warned against either of the specificdangers to which the claimants fell victim.

In order to obtain a pass, I would expect candidates to make the following points:

o Identify whether the two injured parties are visitors or not;

o Identify the correct statute to govern each case;

o Identify the correct duty to be applied under each statute;

o Identify the possibility of a defence of contributory negligence.

The remaining points outlined above are those necessary to obtain a higher mark. Bettercandidates would consider whether Annabel had exceeded the limits of her permission toenter the premises; whether Steves age will affect the duty to be owed to him; andwhether Gomezs knowledge that Steve had previously tried to enter the grounds to stealapples affects liability.

Question 6:

This question is concerned with private nuisance and the rule in Rylands v Fletcher

(1868).


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Tony has an interest in the land (as owner) and so has standing to bring an action.

The first point to note is that this may be a simple case of private nuisance, as the facts

are very similar to those in Leakey v National Trust(1980): Richard knew of the dangerand unreasonably did nothing about it, despite warnings and requests from Tony.

Private nuisance is moving more towards a negligence (as opposed to a strict) liabilitybasis, and so on this basis, Tony is likely to have to prove that it was unreasonable forRichard to have acted in the way he did.

It would therefore benefit Tony to show that Richard is liable under the strict liability rulein Rylands v Fletcher. This involves discussion of the following:

o What has caused the damage?

o Was it dangerous?

o Was there an escape onto Tonys land?

o Are there any defences open to Richard?

The damage has been caused by both the earth and the water, in different ways. Bettercandidates will therefore consider whether Richards liability may diffe

Ice Examiners Report 2009

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