IACCM Contract Management Forum

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2017-08-23 09:33:18


Dear House, How can a Party demonstrate WILLFUL MISCONDUCT of the other (defaulting) Party. What are the evidences required to make recovery for damages accruing from willful misconduct of a Party under the Agreement.
 •  GR Infraprojects ltd  •   2017-08-25 12:45:34
Well, WILLFUL MISCONDUCT is clearly a breach of the agreement. Almost all of the contracts includes "The Contractor shall discharge its obligations in accordance with good industry practice" clause..
Willful misconduct clearly violates that, and i believe unless the Contract has such provision, the party cannot levy any kind of damages on the defaulting party.
Though the affected party by notice may ask for the substantial explanation of the defaulting party in this regard.
In case the affected party is the Authority, He may always holds the right to terminate the default party at any phase of the project.
Hope this helps.
 •  Bell Gully  •   2017-09-02 08:42:19
Hi there, it depends on what legal jurisdiction you are operating in. In some jurisdictions "wilful misconduct" will have an established legal meaning. In others where it doesn't (including mine) it is actually sensible to flesh out the concept in your contract in order to (attempt to) mitigate any future uncertainty. These formulations will usually reference the party's intention, i.e., the party in question intended to commit the act or omission in question and knew/should have known that it was going to cause the other party to incur the loss. This is different from negligence (obviously) where you only have to show a duty of care. Whether your claim is for wilful misconduct or negligence, you will have still have to take the concept/test and "fit" it to the facts. Unfortunately it's never a binary kind of test.

As with any claim in tort you will then have to show causation i.e., (the wilful misconduct caused your loss) and that the loss wasn't too remote/excluded, e.g., if the other party excluded its liability for loss of revenue/profits and your loss = loss of revenue then you won't be able to claim damages. (Although it is actually pretty common for suppliers to agree that any liability caps/exclusions won't apply in the case of wilful misconduct).
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