SBEQ2523 LOSS & EXPENSE

1. What is the main objective of awarding loss and expense under construction contracts?

• A) To penalize the employer

• B) To ensure early completion

• C) To restore the contractor to the financial position they would have been in but for the delay

• D) To cover all contractor’s profit margins

2. Which law in Malaysia codifies the principle on damages as outlined in Hadley v Baxendale?

• A) Arbitration Act 2005

• B) Contracts Act 1950, Section 74

• C) Specific Relief Act 1950

• D) Evidence Act 1950

3. What was held in Fateh Construction v Maharani Specialist Hospital regarding loss claims?

• A) Contractors are entitled to claims without evidence

• B) Contractors must prove actual loss and demonstrate mitigation

• C) Employers are not liable for prolongation cost

• D) Claims can be based on estimated figures alone

4. Under which standard form clause can a contractor claim for loss and expense in PAM 2006?

• A) Clause 44

• B) Clause 20

• C) Clause 24

• D) Clause 10

In Sunissa v Kerajaan Malaysia, what did the court emphasize regarding notice?

• A) Late notice is acceptable

• B) Verbal notice is sufficient

• C) Notice is not required

• D) Timely written notice is mandatory as a condition precedent

6. What must a contractor prove to succeed in a prolongation cost claim?

• A) Delay only

• B) Financial loss only

• C) Both critical delay and associated financial loss

• D) Early completion and loss of opportunity

7. In Croudace v London Borough of Lambeth, the court held that:

• A) The employer can reject a claim without consequences

• B) The architect's failure to assess a valid claim can make the employer liable

• C) Only arbitration can resolve disputes

• D) Contractors cannot claim claim-preparation costs

8. What is the principle of mitigation in construction loss claims?

• A) Contractor must stop work after a delay

• B) Contractor must reduce the loss where reasonably possible

• C) Employer should mitigate the delay

• D) Architect must approve all changes

9. Which of the following is a typical example of a direct loss and expense claim?

• A. Additional site overheads due to delay

• B. Loss of company reputation

• C. Liquidated damages

• D. Future profit estimates on other projects

10. In PSI Incontrol v Ircon, the court accepted that:

• A) A general reservation was sufficient as notice

• B) Contractors could rely on implied terms only

• C. No notice was required for loss claims

• D. Clear written intention to claim satisfied the notice requirement