2020-02-17
Legal Articles

What is practical completion and partial possession?

Home / Knowledge base / What is practical completion and partial possession?

Posted by Michael Hiscock on 28 April 2015

Michael Hiscock - Construction Lawyer
Michael Hiscock Partner - Head of Construction

Whether and/or when building works have achieved practical completion is a common question which arises during the course of a project and one which often results in a dispute. 

Practical completion

Practical completion is not defined in the standard JCT suite of building contracts. Still, the works are generally considered to be practically complete when there are no outstanding defects (except for minor items or snagging), and the building can be put to its intended use.

Both contractually and practically the date of practical completion is important as it typically means that:

  • the contractor no longer has exclusive possession of the site;
  • the contractor's obligation to ensure the works comes to an end;
  • the contractor's liability for liquidated damages for delay ends;
  • time starts running in respect of the rectification period;
  • the contractor becomes entitled to part (often half) of the retention.

Partial possession

If an employer wants back part of the site before practical completion either to occupy a part of the site early or to sell off a part of it, then often the contract is drafted to provide for sectional completion.

Sometimes, however, it is not possible to predict this need and an employer may instead elect to take partial possession of the site. In JCT terms the part of the site taken into possession is known as the 'relevant part'.

This has consequences; however, for the relevant part in the same way that practical completion would have on the works as a whole. An employer and contractor must be alive to the fact that in relation to the relevant part, the contractor's obligation to ensure that part comes to an end, liquidated damages are reduced by the same proportion as the value of the relevant part has to the contract sum, the rectification period commences in respect of the relevant part, and the employer regains exclusive possession of the relevant part.

If an employer wants use of or to occupy the site or the works early, then the JCT provides for an option for this too. Crucially, the "early use" by an employer does not have the same monetary relief for a contractor as partial possession. 

Not surprisingly, therefore, the question of whether or not an employer has taken early use or partial possession is a fertile ground of dispute. While some authorities on the matter may suggest that to answer that question one must look at whether or not the employer's physical possession was "exclusive" or whether it has a lesser presence, others point to the need for a definite handover – e.g. by way of a notice. 

Applying the latter approach if a contractor does not issue the relevant notices, then even if the nature of the employer's use of the site/works which might otherwise arguably amount to that part of the works being practically complete the lack of clear intention of that may lead to the pre practical completion risks remaining with the contractor. 

The need for certainty at the time cannot be underestimated. For example, a contractor who relies on the incorrect assumption that partial possession has occurred and duly cancels its insurance for that part of the works, such an error could prove fatal.

For both employers and contractors alike suitable amendments to standard form contracts such as the JCT forms of contract which are tailored to the project and which cater for the anticipated needs of the employer and the contractor during the course of the works will be of vital importance. This includes providing clear consequences for the employer's use or occupation and appropriate definitions of what constitutes partial possession. It is then up to the parties to ensure that they apply the terms of the contract strictly.

About the author

Michael Hiscock

Partner - Head of Construction

Michael is a specialist in construction and engineering procurement, advising on a wide variety of works contracts.

Michael Hiscock

Michael is a specialist in construction and engineering procurement, advising on a wide variety of works contracts.

Recent articles

30 July 2020 Rethinking the landlord / tenant relationship

We have been following the travails of the high street for over 12 months where changing shopping habits, business rates and rent increases have been contributing to a growing strain on many landlord / tenant relationships. The Covid-19 pandemic has not only turned a bad situation critical for many retailers and hospitality venues but has also turned the spotlight on the wider commercial sector too. Almost all businesses operating across the country have suffered financially to a greater or lesser extent as result of the economic downturn precipitated by the imposition of lockdown in March.

Read article
30 July 2020 Bankrupts fail in claim to have interests in land revested in them

The claim by Mr and Mrs Brake (Brake v Swift), heard in the High Court in May, to have a cottage and adjacent land revested in them under Section 283A of the Insolvency Act 1986, was set against a background of convoluted litigation extending over a number of years, described by Matthews HHJ as ‘complex’. The claimants had been made bankrupt in 2015 and the matter before the Court concentrated on whether or not the property concerned was, indeed, the claimants’ principal residence at the time of the bankruptcy.

Read article
29 July 2020 Remote witnessing of wills – a sign of the times

The law governing how a will is witnessed dates back to 1837 and for good reason. The requirement for two people (neither of whom can inherit from the will they are witnessing) to be physically present at the signing of a will is designed to, among other things, prevent fraud and the exercise of undue influence. That is, until the Covid-19 pandemic struck.

Read article
Contact
How can we help?
01926 732512
CALL BACK