Delay recovery depends on the contractual route, not just the delay event.
Delay is often discussed as a question of causation and loss. Has the contractor delayed the works? Has the employer suffered financial consequence? Does the contract provide a mechanism for recovery? Those questions matter, but they are not enough where the contract makes recovery dependent on a prior procedural step. If the contract requires a notice, report, certificate, warning or other formal mechanism before a remedy can be used, the right to recover may depend as much on procedural compliance as on the underlying delay. A party may be able to prove delay in fact, but still fail to recover if the contractual route to recovery has not been preserved.
Disclosure and Barring Service v Tata Consultancy Services Ltd was not a conventional building project dispute. It concerned a major IT services agreement. Its relevance to construction lies in the Court of Appeal’s treatment of contractual machinery and the commercial effect of condition precedent wording. The issue was whether the employer’s right to recover delay payments depended on first issuing a non-conformance report under the contract. The Court of Appeal held that it did. The absence of that step prevented the delay payment remedy from being used. The construction lesson is direct. Where a contract makes procedure part of entitlement, parties cannot safely separate delay recovery from the mechanism that creates, preserves or unlocks the right.
Why the decision matters
The decision matters because it reinforces a point that is highly relevant to complex construction contracts: a remedy may exist in principle, but still be unavailable if the contractual route to that remedy has not been followed. Parties often assume that if delay is real, and financial consequence can be demonstrated, recovery should follow. That assumption can be unsafe. The court will look at the wording of the clause, the structure of the contract and the relationship between the procedural step and the remedy being claimed. If the contract makes the procedural step part of the gateway to recovery, failure to comply may be decisive. The commercial result can be significant. The dispute is no longer simply about whether delay occurred or what loss flowed from it. It becomes a dispute about whether the contractual mechanism was operated at all.
That point matters because construction contracts frequently contain layered procedural regimes. Delay, extensions of time, liquidated damages, loss and expense, compensation events, defects, payment deductions, set-off, termination and performance remedies may all depend on notices or other contractual steps being taken in the correct way. The practical point is not that every notice clause is automatically fatal if missed. The point is more disciplined. The consequence of non-compliance depends on the actual contract. Some provisions operate as strict conditions precedent. Some are evidentially important. Others create contractual obligations without necessarily extinguishing the remedy. But no contractor should assume the distinction is obvious during a live project. It must be identified before the issue becomes contentious.
Application to construction risk
Construction projects create repeated points at which procedure can affect entitlement. A contractor may need to give notice of delay within a specified period, submit particulars, identify the likely effect on completion, update the assessment as consequences develop, notify loss and expense, give early warnings, notify compensation events, preserve variation entitlement or support payment applications with prescribed information. Employers and main contractors may also need to follow procedural steps before levying delay damages, deducting sums, applying set-off, rejecting work, relying on default provisions or moving toward termination. Those mechanisms are not administrative background. They are part of the commercial allocation of risk. They decide who must act, when they must act, what they must say and what happens if the step is not taken.
The danger for contractors is that live project teams often focus on the facts and leave the procedure until later. That is understandable. Project teams are trying to maintain progress, manage relationships, resolve design or access issues and keep the works moving. But it is also dangerous. The project team may know why the works were delayed. The commercial team may know that cost has been incurred. The employer may have been aware of the problem. None of that necessarily substitutes for operating the contractual machinery. A strong factual position can therefore be weakened by a weak procedural record. A contractor may have a legitimate grievance, but if the contractual pathway has not been followed, the recoverable position may be less secure than the underlying facts suggest.
The contractor’s commercial risk
For contractors, the risk cuts both ways. Where the contractor is claiming time or money, it must preserve its own route to recovery. A delay event, instruction, variation, disruption issue or compensation event should be tested immediately against the relevant notice and substantiation provisions. The question should not be left until the final account, when the procedural opportunity may already have passed. The same discipline applies defensively. Where the contractor is facing delay damages, deductions or set-off, it should test whether the employer or main contractor has complied with the contractual route for imposing that remedy. A deduction may be commercially asserted, but that does not mean it has been contractually established. The contract may require notice, certification, assessment, timing, particulars or other steps before the remedy can be relied upon.
That is why procedural compliance should be treated as both a recovery tool and a defence tool. It protects the contractor’s own claims, but it also helps the contractor challenge deductions or remedies that have not been properly operated. The contractor that understands the machinery of the contract is better placed to preserve entitlement, resist unsupported deductions and maintain leverage during negotiation, final account resolution or adjudication.
Review the gateways before signing
The first Legalbuild point is that procedural gateways should be identified before the contract is signed. Contract review should not focus only on headline commercial terms such as price, programme, liquidated damages rates, liability caps, payment periods and termination rights. Those matters are important, but they do not tell the full risk story. The contract must also be reviewed for the route by which rights are preserved, exercised or lost. Particular attention should be given to clauses that connect entitlement, payment, relief, deduction, delay damages, loss and expense, extensions of time, compensation events, set-off or termination to prior notice, reporting, certification, assessment or substantiation. Mandatory and conditional wording should be treated carefully. The issue is not whether the clause looks administrative. The issue is whether the clause controls access to the remedy.
If the contract imposes strict procedural requirements on the contractor but gives the employer broader flexibility, that imbalance should be understood before the contract is accepted. A contractor should know, before signing, whether it is taking on a regime where entitlement can be lost through missed notices, incomplete particulars or failure to operate a prescribed reporting process.
Convert the contract into a live control system
The second Legalbuild point is that the contract must be converted into a live control system at mobilisation. It is not enough for the contract to be reviewed once and then filed away. The project team needs a practical operating map that identifies the trigger event, the relevant clause, the deadline, the required content, the recipient, the method of service, the person responsible for drafting, the person responsible for review and the place where proof of issue is stored. This should be connected to the project’s commercial rhythm. Delay events, instructions, design issues, access restrictions, defects, variations, disruption events, payment disputes and potential deductions should be reviewed regularly against the contract. The purpose is to ensure that the project team recognises when a contractual step has been triggered and takes it before the opportunity is lost.
For higher-risk projects, this should be managed through a live entitlement and notice tracker. That tracker should not be treated as administration. It is a commercial protection tool. It allows the contractor to see which issues have been preserved, which require further particulars, which may affect programme, which have cost consequences and which may later need to be used in negotiation, adjudication or final account resolution.
Prove the route as well as the facts
The third Legalbuild point is that procedural compliance must be capable of proof. In a later dispute, the question will not only be what happened on site. It may also be what notice was issued, when it was issued, who received it, what it said, whether it contained the required information and whether follow-up particulars were provided. That means contractors should keep proof of service, correspondence records, revised particulars, programme updates, meeting minutes, RFIs, instructions, site diaries, labour allocation records, plant records, photographs, cost reports and valuation material in a structure that supports the contractual route. The evidence should show what happened, what contractual step was triggered, what notice or response was issued, and how the record connects the event to time, money or the remedy being relied upon. Without that structure, the contractor may still have a legitimate commercial complaint, but the recoverable contractual position may be weaker than it should be. In a dispute, the party with the clearer procedural record will usually be better placed to explain its position, defend its entitlement and challenge unsupported assertions from the other side.
Legalbuild’s view
For Legalbuild, DBS v Tata reinforces a core principle of construction risk management: recovery depends on both entitlement and route. A party may be right about the facts and still vulnerable on the mechanism. Delay may have occurred. Cost may have been incurred. A milestone may have been missed. A deduction may seem commercially justified. But if the contract makes the remedy dependent on a procedural step, the party relying on that remedy must be able to show that the step was taken. That is directly relevant to construction. Contractors should not assume that entitlement can be reconstructed at the end of the project from general correspondence, commercial memory and after-the-event analysis. The stronger position is built during delivery, while notices can still be issued, particulars can still be updated, programme consequences can still be recorded and cost can still be linked to the event relied upon.
Delay recovery is not only about proving delay. It is about proving that the contract permits the remedy to be used. Legalbuild’s advice is therefore practical: identify the procedural gateways before signing, translate them into a live project control system, allocate responsibility during delivery, preserve proof of compliance and test both claims and deductions against the machinery of the contract. The party with the stronger procedural record will usually have the stronger commercial position. In negotiation, final account resolution or adjudication, that discipline can be the difference between a claim that is merely arguable and a claim that is recoverable.
Case reference: Disclosure and Barring Service v Tata Consultancy Services Ltd [2025] EWCA Civ 380.
