WHEN DO THE CONTRACT BE COMPLETELY DISCHARGED

RJM

In the Law of Limitation Act CAP.89 the issue of commencement of period of limitation in relation to building contracts is explained in Sec 26. Effects of fraud or mistake.

26. Where in the case of any proceeding for which a period of limitation is prescribed-
(a) the proceeding is based on the fraud of the party against whom the proceeding is prosecuted or of his agent, or of any person through whom such party or agent claims;
(b) the right of action is concealed by the fraud of any such person as aforesaid; or
(c) the proceedings is for relief from the consequences of a mistake, the period of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake, or could, with reasonable diligence, have discovered it:

Therefore in building contracts, where we normally have what we call latent defects, the limitation shall only begin to run after the defect is detected.

RJM

Thank you for the good question - Can parties to a Contract raise claims against each other after a contract has been discharged?

YES!

One good example is the Arbitration between the Revolutionary Government of Zanzibar and Cogefar Impresit in respect to defects in the Malindi Wharfs Zanzibar Port. In this case, the respondents argued that the claimant had accepted the works and had even released the Performance Security and therefore the respondent was exonerated from any liability (Infact the final acceptance of the works was certified on September 1991 but the arbitration proceedings started in 2004). Dispite this arguement, the Arbitral Tribunal decided in favour of the government of Zanzibar. The lesson is that a contract may come to an end but some rights and obligations remain in force.

Usually a construction contract is considered discharged after issuing of the Performance Certificate. However, taking an example of the FIDIC Conditions of Contract for Construction 1999 clause 11.10 there is what is refered to as unfulfilled obligations "After the Performance Certificate has been issued,each Party shall remain liable for the fulfilment of any obligation which remains unperformed at that time. For the purpose of determining the nature and extent of unperformed obligations, the contract shall be deemed to remain in force".

The reason is that at the time when the Performance Certificate is issued the Employer may not have made all the payments due under the contract. There is also the issue of latent defects. The conditions of contract do not put a limitation to liability. This is normally prescribed in the applicable law. Therefore we may say that beyond the contract period, the applicable law takes over.

The defect liability means that your contractor should be obliged/liable for rectifying defects in their work. The defect liability period is therefore to be considered only if it is a defect that the contractor was repairing. Is the delay incompleting the project caused due to the contractor repairing his defects? If the answer is no then i don’t see how the defect liability period could apply.
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There are several way that a Contract can be Discharged, to mention only few include Discharge of Contract by Mutual Agreement, Discharge of Contract by Subsequent Impossibilily, the most common to me is Discharge of Contract by Performance where all parties of the contract has performed or fulfillment to satsfaction of the parties rights and obligations.
NOW the later discharge [perfomance] the contract should be within CONTRACT COMPLETION PERIOD, any thing beyond this period it is assumed that the contract is not valid, eg. if you want to effect payments. if that is the case question comes DOES THE DIFFECT LIABILITY PERIOD QUALIFY THE CONTRACT TO BE VALID, WHICH IS BEYOND CONTRACT COMPLETION PERIOD.