Loss and Expense Claims
Get advice from specialist construction claims consultants
GET A FREE CONSULTATION TODAYWhat 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.
Checklist for loss and expense claims
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 and requesting an extension of time where delay has occurred, as you are likely be entitled to additional time for any associated delay.
Updating loss and expense claims
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.
Assessment of loss and expense
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.
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We offer a free one hour consultation to new clients , so please do not hesitate to contact us by phone, email or using our contact form for a to discuss how we can help you in relation to loss and expense.
Contact us about a Loss and Expense Claim
This is entirely dependent upon what the contract says. Contracts tend to have their own procedures for claiming loss and expense (if they have one at all) and often they must be followed strictly or you will lose your rights. Most of those procedures require you to give notice to the person who can grant you loss and expense as soon as you are aware you have incurred or are likely to incur loss and expense. That notice should set out: the cause of the loss and expense, whether that cause is a relevant matter, and you will usually be required to give details of the amount of loss and expense claimed and provide evidence of the loss and expense. Loss and expense should also be claimed in your applications for payment. If you do not give notices to the right persons at the right time and containing the right detail, you may lose the right to loss and expense.
“Loss and expense” is a contractual remedy for additional costs or losses incurred due to specific events or delays during a construction project. These are often costs that might otherwise be claimed as damages for breach of contract, but are instead dealt with through express contract provisions.
The right to claim loss and expense depends on the terms of your contract. In JCT contracts, certain defined events known as Relevant Matters give rise to entitlement. These include:
- Variations
- Architect’s or Employer’s instructions
- Suspension of works
- Impediment, prevention, or default by the Employer
The final category acts as a catch-all provision and may cover situations such as the Employer failing to provide necessary information on time.
An extension of time claim seeks to adjust the project completion date due to delays, preventing the contractor from incurring liquidated damages or other delay damages. In contrast, a loss and expense claim is for financial compensation for additional costs incurred due to employer-related or caused delays or disruptions. Many construction contracts treat them differently and have separate notification requirements.
To make a valid claim:
- Check what your contract says. Strict compliance with contractual notice requirements is usually a condition precedent – meaning if you miss a deadline or get the process wrong, you may lose your entitlement entirely, even if your claim is otherwise valid.
- Issue a notice as soon as you’re aware of the potential for loss or expense.
- Describe the cause of the loss and expense.
- Include a valuation of the amount incurred or likely to be incurred. If that’s not immediately possible, provide it as soon as practicable.
While it depends on the contract, a strong notice should usually include:
- The cause(s) of the loss and expense
- The contractual basis for entitlement (e.g., which Relevant Matter applies)
- An initial valuation of the loss and expense
- Any known delay to the works, along with a request for extension of time if applicable
- Follow-up particulars are typically required, and any material changes to the initial submission must be updated promptly
Review your contract and check:
- Is the notice being sent to the correct person?
- Is it being submitted by the correct method (e.g. post, portal, email)?
- Is it being submitted within the required timeframe?
- Does it include all required information, such as cause, contractual grounds, and supporting detail?
Yes. You should update your valuation until final figures are known. The JCT usually requires this to be done on a monthly basis. These updates should be included in your payment applications and communicated clearly to the other party. Your contract may require you to issue this information in other formats too, such as in contractor reports.
Your options will depend on:
- The terms of your contract
- The circumstances of the delay
- Whether the other party has waived any procedural failures
Even if you haven’t followed the process perfectly, you may still have a case. Legal advice can often help improve your position, especially if action is taken promptly.
Contractors and sub-contractors can strengthen their claims by:
- Keeping meticulous and contemporaneous records of all project activities and costs.
- Ensuring timely and proper notification to the employer (or contractor) about events leading to loss and expense.
- Providing clear and detailed documentation that links the employer’s (or contractor’s) actions to the additional costs incurred.
- Seeking professional advice to prepare and present the claim effectively.
No. While both involve recovering costs due to disruption or delay, a loss and expense claim is based on contract rights, whereas a damages claim arises from a breach of contract. Contracts like JCT provide structured pathways to make loss and expense claims which differ from claims for damages.
Claims for concurrent delays – where both the contractor and employer are responsible – are complex. Entitlement to loss and expense in such cases depends on the specifics of the contract and the circumstances surrounding the delays and expense. Advice is particularly important where there are issues relating to concurrent delay.
If a claim is disputed, the parties may engage in negotiation, mediation, adjudication, or arbitration or go to court to resolve the issue, depending on the dispute resolution mechanisms outlined in the contract.
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