Cases - British Glanzstoff Manufacturing Co Ltd v General Accident, etc, Ltd

Record details

Name

British Glanzstoff Manufacturing Co Ltd v General Accident, etc, Ltd

Date

[1913]

Citation

AC 143

Keywords

Construction contracts - liquidated damages - guarantee - failure to complete - suspension of works by contractor - employer engaged alternative contractor to complete works - whether liquidated damages payable if contract not completed but suspended by employer

Summary

The case before the House of Lords concerned an action between the appellant employer under a building contract and the respondent insurance company, who had guaranteed 'all loss and damage which the appellants might sustain through the failure of the contractors to carry out their contract.' During the works, the contractor ran into financial difficulty and suspended works. The employer engaged third party contractors to complete the works. The question before the House was whether the appellant could recover liquidated damages against the insurer as a result of the delays to completion occasioned by the contractor's suspension and demobilisation. The House held that they could not, stating that upon a proper construction of the contract, the liquidated damages provisions applied only where the contractors had completed the contract and 'did not apply where the control of the contract had passed out of their hands'.