'Proceed with due diligence': what does it mean in construction contracts and development agreements?

By Simon Wain

The Technology and Construction Court examined this issue in a recent case — Sabic UK Petrochemicals Limited v Punj Lloyd Ltd — and found that the contractor was in breach of the obligation.

The case arose out of the construction of a petrochemicals plant in the north east of England. The parties entered into an engineering procurement construction (EPC) contract for delivery of the plant.

The purchaser, Sabic UK, considered that the contractor, Simon Carves, was not proceeding with due diligence as required by the EPC contract. Having issued a warning notice under the contract, Sabic terminated the contractor’s employment. Among other issues, the court was asked to examine whether the contractor was in fact in breach of contract in not proceeding with due diligence…

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