The conclusion of most construction contracts is termed 'practical completion'. Practical completion triggers the release of any retained funds or 'retention', and the risk of loss or damage to the works transfers from the contractor to the employer. At this point the contractor is no longer liable for liquidated damages, and the defects liability or 'rectification' period begins.
The precise legal definition of practical completion remains uncertain, and definitions include 'nearly but not quite complete' to 'complete for practical purposes'. In standard form construction contracts most refer to practical completion without providing a clear definition.
In most of the JCT standard forms of contract there is no definition of practical completion and the contract administrator must determine whether the works are practically complete.
Case law deals with practical completion under JCT, and possible indicators of practical completion are:
- the construction work must be complete;
- there must be no apparent or 'patent' defects.
However, practical completion is possible if there are hidden or 'latent' defects or if minor work remains.
There is therefore useful guidance, but no unambiguous definition of practical completion. This is not surprising as it is an issue which depends on the facts in each project. A simple solution is to define completion at the beginning of the project.
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