Extension of Time

Those sides agree to create extension of time clauses, which mostly focus on two things. The first relates to the kinds of causes leading to the delayed project completion. The second point touches upon the extra time that some parties need to deliver their tasks due to certain reasons. Let’s dive deeper below!

What is an extension of time?

An extension of time is an aspect of a business contract that allows a party, often a contractor, to have more time to fulfil its tasks after unexpected events. As hinted above, the incidents can be from nature or humans. Examples of nature-based events are severe weather, earthquakes, massive floods, and others.  

Clearly, when those natural disasters occur, all business operations will cease. People will choose their health and safety above all else. As a result, ongoing projects will fail to meet the deadlines. Those working on the projects will discontinue their tasks for a while. The resources for the projects, such as the raw materials, will be disrupted.

In some business contract types, man-made factors are possible. In software business deals, late provision of key data by the client is among the instances. Another reason relates to technical issues that emerge unexpectedly. All of these make extension of time clauses a must for all relevant parties.

Benefits of the extension of time

Talking about the extension of time clauses involves the contractor or service provider, the owner or the employer, and the legal counsellor from each side. Usually, it’s the contractor who initiates the clause, as this party knows well the common obstacles that may occur when it carries out the tasks.

The employer will review the clauses and then approve or disapprove. The legal advisors check them to ensure they are tailored to the project that the parties will work on together. Besides, legal experts explain the rights and obligations and give legal advice when a dispute arises. When properly done, the parties will reap benefits from the clauses as follows.

• Risk mitigation

Extension of time offer clear and transparent provisions for all sides of a business contract. They can know and grasp the risks that may occur when unforeseen circumstances emerge. This protects them from facing unfair penalties, such as paying high fees for not delivering the services on time.

• Healthy business bond

A sound business tie is the basis for a mutually beneficial contract. This requires flexibility from both sides. When the client grants the extension of time, this shows their willingness to adapt and collaborate. From the contractor’s side, this maintains their positive business bond. The provider will work even better for future projects because of the mutual trust between the two parties.

• Dispute prevention

When natural disasters or man-made issues emerge, these impact the entire contract execution. One of the effects relates to the delayed service delivery. This sort of impact should be stated in the clauses of the contract. Otherwise, disputes may arise over the financial losses that the client has to bear.

• Organised process

The extension of time clauses documents all steps, such as in production and operation, when delays happen. The file details the time needed to complete the tasks due to the delays. This leads to the new schedules for service delivery. All parties are aware of the changes and what to expect after that.

Key aspects of the extension of time clauses

Extension of time clauses are popular in construction, software, technology, and service agreement sectors. These are the industries with complex projects involving multiple sides. Unexpected project delays are a usual fact for those working in the sector. In the construction sector, for instance, an earthquake postpones a structure's progress for months.

In the service agreement field, one of the top issues relates to getting permits from the authorities. When the approvals come too late, the provider will miss the first deadline. There are five areas in the clauses that need to be written in the business deal. Here is the list.

1. Specifying the causes of the delay

Besides natural disasters, the extension of time clause should detail and limit the kinds of factors that make the provider unable to fulfil its promise. These may include changes to the project scope from the client itself. In the case of a project involving a third party, delays from that side can also be crucial for the entire project.

2. Notice requirements

This information explains the timeframe for a party to notify the other stakeholder of the delay if it wishes to do so. It should use written formats, such as via email or letter. Inside the timeframe, the party states the exact factor beyond the delayed work delivery. Later, it mentions the new deadline for completing every task within the project.

3. Evidence

The party proposing the extension of time clauses should add documents to support its action. The types of files are diverse, depending on the factors leading to the delayed task. In the case of severe weather, the party inserts media news about the impacts of the weather conditions on the construction projects.

Common problems in extension of time clauses

Issues in the clauses come from both the contractor and the client. Sometimes, the problems from the contractor’s side are due to their own poor planning and mismanagement. When one of these problems occurs, most likely, the client won’t grant the request to extend the time for completing the obligation.

The client may “contribute” to the delayed project operation. This relates to overly frequent or unrelated changes to the project scope from the client. This leads to the service provider asking for extension of time clauses. To solve the issues, the parties involved have to sit together and address them while drafting the clauses.