South African contractors and employers must ensure understanding of PBA clauses and consequences

The PBA is a widely used standard form contract in South Africa’s construction industry. It governs the relationship between the employer, contractor, and principal agent.

Clause 23 of the PBA is particularly significant as it outlines the procedures for contractors to claim extensions of time or additional payment. Time bar provisions, such as those in clause 23, are designed to ensure that employers are promptly informed of potential delays or cost increases, enabling them to take corrective action. Some sub-clauses impose strict consequences, while others do not. It is vital that each sub-clause is interpreted within the broader context of the PBA’s purpose and structure.

Practical purpose of time periods, forfeiture and flexibility

Clause 23 provides a clear procedural roadmap for addressing delays in construction projects, emphasising timely communication and accountability.

Under sub-clause 23.4.2, contractors are required to notify the principal agent of any delay within 20 working days of becoming aware of it. Failure to do so may result in the forfeiture of the claim. Sub-clause 23.5 further mandates that a detailed claim must be submitted within 40 working days from the point at which the delay can be quantified, or within an extended period if granted by the principal agent. However, this sub-clause does not include forfeiture provisions, offering some flexibility.

Once a claim is submitted, sub-clause 23.7 obliges the principal agent to respond within 20 working days, either granting, reducing, or refusing the claim, providing clear reasons and references. If the principal agent fails to respond within this timeframe, sub-clause 23.8 deems the claim refused, allowing the contractor to initiate dispute resolution proceedings under clause 30.

This structured approach ensures transparency and encourages proactive management of project timelines.

Consequences of non-compliance with notice provisions

Implications of missing deadlines under clause 23 vary significantly across its sub-clauses, reflecting a nuanced approach to time management in contractual claims.

Sub-clause 23.4.2 is a strict time bar provision, explicitly stating that failure to notify the principal agent within 20 working days results in forfeiture of the claim. In contrast, sub-clause 23.5 does not contain forfeiture language, again, signalling a more flexible stance.

This omission marks a deliberate departure from earlier editions of the PBA, which did impose strict time bars in this clause. Furthermore, the absence of a deeming provision – unlike the one found in sub-clause 23.8 – reinforces the interpretation that sub-clause 23.5 is not intended to automatically bar late claims. Its open-ended nature, where the 40-day period only begins once the delay can be quantified further supports this view, offering contactors a more reasonable window to prepare and submit their claims.

Purpose of non-penal time periods, legal interpretation and case law

The 40-day period in sub-clause 23.5 serves a practical purpose – it encourages timely submissions to maintain project momentum and facilitate cash flow. It ensures that claims are addressed while the project is ongoing, allowing for more accurate evaluation of cause and effect. The clause also allows the principal agent to extend the deadline, reinforcing its flexible, non-punitive nature.

The goal is to avoid indefinite delays in claim resolution and to enable informed decision-making during the contact period.

Practical implications

If a contractor submits a claim late under sub-clause 23.5, the principal agent may reject it if this delay impairs their ability to assess the claim within the 20-day window. This could force the contractor into dispute resolution under clause 30 to pursue any entitlement, which is time-consuming and costly.

Employers often argue that 23.5 is a time bar clause, but this interpretation lacks support in the clause’s wording and intent. The clause is designed to aid the principal agent, not penalise the contractor.

Legal interpretation

The legal interpretation of time bar clauses underscores the need for caution and fairness in their application. In the landmark case of Barkhuizen v Napier, the South African Constitutional Court held that such clauses must be reasonable and fairly applied, introducing a two-step test: first, whether the clause is inherently unreasonable, and second, whether it should be enforced in light of the circumstances that prevented compliance.

Similarly, in Arab Lawyers Network Company Ltd v Thomason Reuters, the English Commercial Court emphasised that time bar clauses must be clearly and unambiguously worded, with an ambiguity resolved in favour of the claiming party.

Legal commentary reinforces that only clauses with explicit forfeiture wording qualify as time bars. Even if the clause lacks express consequences, it may be still enforceable if the parties’ intent is clear – but this is not the case with sub-clause 23.5.

The clause’s purpose is to promote timely resolution and informed decision-making, not to penalise contactors. Understanding these distinctions is crucial for both contractors and employers when assessing risks and obligations under the contract.

Co-written by Brendan Whyte of Pinsent Masons.