PROFESSIONAL

PRACTICE
Termination of contract
1. Defects liability period
2. Latent and patent defects
3. Liquidated and un-liquidated damages
4. Extension of time, delays and penalty
5. Non tendered items, extras, extra work,
additional works, variations, rate analysis
6. Architect’s role in certification of variations
Defects liability period (DLP)

• It’s a time in which contractor is responsible for

making good any defects detected in newly
completed construction work.
• Typically, its 365 days, may vary depending on
project to project
• Starts with handing over of the project
• Handing over the project to client will be done in
present of architect and engineers, who in turn
need to check the work if it is completed in all the
aspects and as per contract terms or not.
• Architect need to issue completion certificate after
checking the work for its extent and quality
Defects liability period (DLP)
Example of a DLP clause
Defects liability period (DLP)

• Any kind of defect means loss for an

owner
• Detrimental for the project
• Long term damages to the building.
Defects liability period (DLP)
Example of a litigation
Defects liability period (DLP)
Example of a litigation
Defects liability period (DLP)
Real Estate (Regulation and Development) Act, 2016 (RERA)

“In case any structural defect or any other defect in workmanship, quality or provision of
services or any other obligations of the promoter as per the agreement for sale relating to
such development is brought to the notice of the promoter within a period of five years by
the allottee from the date of handing over possession, it shall be the duty of the promoter to
rectify such defects without further charge, within thirty days, and in the event of promoter’s
failure to rectify such defects within such time, the aggrieved allottees shall be entitled to
receive appropriate compensation in the manner as provided under this Act”.
Defects liability period (DLP)
Examples of defects as per The Haryana RERA Rules, 2017
actual physical damage/ defects to the designated load-bearing elements of the building
like faults, breakage or cracks which can affect the strength and stability of the
apartment or the building

1. defects due to design attributes of reinforced cement concrete (RCC) or structural

mild steel (MS) elements of an engineered (structurally designed) building structure;
2. defects due to faulty or bad workmanship of RCC or MS work;
3. defects due to materials used in such RCC or MS work;
4. major cracks in masonry work that are induced as result of failures of RCC or MS
work;
5. Any defect which is established to have occurred on account of negligence, use of
inferior materials or non-adherence to the regulatory codes of practice by the promoter.
Defects liability period (DLP)
Real Estate (Regulation and Development) Act, 2016 (RERA)

Promoter is not liable for -

1. Equipment (lifts, generator, motors, STP, transformers, gym equipment etc.,) which carry
manufacturer’s guarantees for a limited period.
2. Fittings related to plumbing, sanitary, electrical, hardware, etc., having natural wear and
tear
3. Allowable structural and other deformations including expansion quotient
4. The works like painting etc., which are subject to wear and tear.
Defects liability period (DLP)

Heavily negotiated clauses – especially in large and complex projects

It provides relief to the owner/s
and acts a deterrent to the contractors against doing sub standard work
Latent and patent defects

Defect – something is not correct or the way one expects – abnormal, imperfect, lacking
Duty of Care – Universally accepted convention; to be good to others, not to cause harm or
loss

Patent defect – defect which is clearly seen during the inspection

Latent defect - existing, but not yet very noticeable, active or well developed. One that is
hidden or concealed
Latent and patent defects

Examples of patent defect –

• Cracks in the walls/ tiles.
• Leaking plumbing pipes
• Loose fitting of plumbing fixtures
• Uneven coloring of wall/ surface
• Honeycomb in concrete
• Gaps between door/ window frames and wall

These defects need to be rectified before architect gives completion certificate

Latent and patent defects

Examples of latent defect –

• Leakages through roof/ walls/ openings
• Structural cracks due to faulty workmanship
• Plinth floor sinking/ cracking due to settlement in sub strata of plinth

These defects need to be rectified during defects liability period

Liquidated and un-liquidated damages

• Liquidated damages - Provision for the contractor to pay to the client if the contract is
breached.
• It’s a pre-agreed amount of money that is set out in advance in the contract, that fixes
the sum payable as damages if the contractor breaches the contract - typically by
failing to complete the construction works on time as set out in the contract.
• Liquidated damages are typically calculated on a daily or weekly basis.

• Unliquidated damages - amount which has not been agreed. The amount to be paid
as compensation and is determined after the breach occurs by a court.
Liquidated and un-liquidated damages

• Liquidated damages (or an agreed damages clause)- damage must either be proven or
admitted
• there is no need to prove the actual loss, because the clause stipulates a pre-
assessment or pre-estimation of damages
• Charges on daily basis – deterrent for contractor against delaying the work
Arbitration

• Resolving disputes with help of seniors.

• Arbitrations conducted as per provisions of
I. Arbitration Act of 1996 &
II. Contract Act of 1872
Arbitration

• Experts in the field are chosen

• Legal formalities are cut short & relatively saves time

• Saves cost

• Time, date & place of proceedings can be chosen

• Hearing is private-privacy can be maintained

• Award is final
Arbitration

Process-

• Making an agreement to arbitrate

• Initiate a process/ demand for arbitration

• Appoint an arbitrator (s)

• Pre arbitration meeting

• Arbitration hearing

• Post arbitration memorandum

• Decision and award

Arbitration

POWER AND DUTIES OF ARBITRATOR

• To appoint presiding arbitrator in case of joint arbitrators

• To examine witness appearing on oath & hear parties

• To seek opinion of the court on law point

• To decide on cost of award & proportion with which parties have to bear

• To correct clerical mistakes in the award

• To decide upon measurements & valuation of work

• To decide upon with-holding of certificate by the architect

Arbitration &conciliation act of 1996

• Came into effect on 25-1-1996

• Supersedes the act of 1940
It consolidates the laws relating to
-Domestic arbitration
-International commercial arbitration & Enforcement of foreign arbitral
awards.
-Conciliation which is an alternative
Method of resolving dispute
Arbitration &conciliation act of 1996

This is based on “un”-model law adopted by united nations commission on international

trade law (uncitral)

Main objectives are:

-To consolidate and amend the laws relating to the above fields

-To make provision for fair and efficient arbitral procedure

Arbitration &conciliation act of 1996

-To ensure that the arbitrators

• Give reasoned awards

• Remain within jurisdiction

• Use mediation, conciliation and other means to resolve disputes

• To reduce supervisory role of the courts

• To enforce arbitral award same as court

• decree
ARBITRATION UNDER IIA CONDITIONS OFCONTRACT
Sole arbitration by architect on excepted (excluded from arbitration) matter
Parties agree in the absence of mistakes or fraud
EXCEPTED MATTERS (condition no. 55)
· Drawings and specifications and their interpretations
· Architects' instructions regarding variations
· Contractors field organizations ,equipment, office accommodation, tools and
plants etc.
Arbitration &conciliation act of 1996

Sole arbitration by architect on excepted (excluded from arbitration) matter

Assignment or subletting
Intimation of architect not to employ certain employee or sub contractor whom architect
or employer (owner) objects to
Materials and workmanship to be of relevant code of Bureau of Indian Standards.

Permission for using equivalent material

Extension of time

Termination of contract by owner due to default of contractor (bankruptcy of contractor

or any malpractice)
ARBITRATION PROCEDURE (CONDITION NO. 56)

Refer all disputes to architect first

Within 28 days of decision, parties write to each other about areas of dispute

· Either agree for sole or joint arbitrators

· In case the arbitration is in the middle of the ongoing work and when matter is

pending with arbitrator contractor to proceed with the work and owner to make

payment. Work should not be stopped.

QUALIFICATIONS OF AN ARBITRATOR
Expert in the branch of profession to which dispute relates

He must be honest, disinterested & independent of parties

Un biased

He cannot be a witness as well as arbitrator