What is loss and expense?
Loss and expense is a contractual remedy for events that would often otherwise be claimed as damages for breach of contract. They are often viewed with suspicion, so it is important that they are made on strong grounds and are properly prepared.
How we can help
CCC has provided assistance to many parties in making and dealing with loss and expense claims at all stages of projects, including drafting related correspondence, and preparing formal claims. It might be that a robustly prepared and presented loss and expense claim will result in a negotiated settlement, but CCC also provides representation in formal dispute resolution procedures such as adjudication.
What events or circumstances give an entitlement to loss and expense?
A loss and expense clause will set out the grounds for claiming loss and expense. JCT contracts call these grounds Relevant Matters, and they frequently include:
- Variations
- Instructions
- Suspension
- Any impediment prevention or default by the Employer (or by the Employer or Contractor under the sub-contracts)
The last of those grounds, any impediment, prevention, or default, is a ‘sweep-up’ provision which covers other defaults or breaches of the contract which are not separately listed. For example, late provision of information might constitute an impediment, prevention, or default, depending on the circumstances.
How do I apply for loss and expense?
You must give notice as soon as you realise that you are likely to suffer additional loss and expense, setting out what is causing the loss and expense, as well as your valuation of the loss and expense that has been or is likely to be incurred. If it is not practicable to include this valuation with the notice, it should be provided as soon as possible afterwards.
It is extremely important that notices are given strictly in compliance with your contract as the proper giving of notices is often a condition precedent to entitlement to extension of time. In other words, if the proper notice is not given at the right time, then you might lose all your entitlements, even if you would otherwise be entitled to an extension of time. CCC can help you draft these notices, just as we have helped many others.
How you apply for loss and expense will depend on the specific provisions of your contract. When giving any notice, check:
- Is it being given to the correct person?
- Is it being given by the correct method? Remember that sometimes contracts require notices to be given via a document portal or even in writing by special or recorded delivery.
- Is it being given at the correct time? Often contracts will be amended to require notices of delay and claims for extension of time to be given within a certain number of days of an event occurring.
- Does the notice include everything that the contract requires it to include? For example, under an unamended JCT contract a notice of loss and expense should typically include the cause or causes of the loss and expense, and identify the contractual grounds for entitlement to it (i.e., which of the Relevant Matters apply). The JCT contracts generally require the initial notice to be followed up with particulars of the loss expense (i.e., the detail of the loss and expense incurred). They also require any material change in the particulars to be notified if or when they arise.
You should also consider giving a notice of delay where delay has occurred, as you are likely be entitled to additional time for any associated delay.
You should update your valuation of the loss and expense at monthly intervals until all information has been supplied, and you should include your loss and expense in your payment applications.
Depending on the terms of your contract, the other party usually has a defined number of days from the date of receipt of your initial assessment to notify you of their valuation of the loss and expense.
What can I do if I have not applied for loss and expense in accordance with the contract?
This will depend on the terms of your contract and what has in fact happened. There are often ways that your position can be improved, even if it is not as strong as it would be had action been taken sooner.
Free initial enquiry
All initial enquiries from new clients are free of charge, so please do not hesitate to contact us by phone, email or using our contact form for a free initial consultation to discuss how we can help you in relation to loss and expense.
