Module 11:  Corruption dilemmas

Dilemma 1:  Submitting a contract claim for delay - Answer

In submitting the claim, you are making a representation to the NRA as to the additional time that Buildwell is due.  The amount of additional time that you are given will have a financial consequence (the amount of any damages payable, and amount of any additional payment). 

It is likely to constitute the criminal offence of fraud if you make a representation which you know is false, or which you know may be false, in order to gain some financial advantage for yourself or another person or organisation. 

In the circumstances of this claim:

  • You honestly believe that 30 days delay is caused by the NRA.
  • You know that it would be a false representation to claim that the 30 days delay caused by the supplier was caused by the NRA. 
  • You are not sure what caused the remaining 40 days delay. Therefore, if you make a representation to the NRA that the 40 days delay was caused by the NRA, you know that this may not be true.  While it is possible that it could have been caused by the NRA, you are aware that it could have been caused by the supplier, or by a combination of these causes, or by other causes.

Consequently, if you submitted this claim to the NRA alleging that it caused all 100 days delay, then you personally, the Commercial Director and Buildwell, could all be liable for fraud.  

The correct and safe approach is always to state in a claim only what you honestly believe to be true and to acknowledge where there are areas of uncertainty.  Therefore, the correct approach in relation to this claim to the NRA would be to:

  • claim from the NRA the 30 days variation delay
  • accept responsibility for the 30 days supplier delay
  • notify the NRA of the uncertainty regarding the 40 days.

Dealing with the 40 days will depend on the applicable law and terms of the contract, and the reasonableness of the NRA.  Ideally, there should be some mechanism in the contract for apportioning the 40 days on a fair and reasonable basis, or for a third party adjudicator to apportion the responsibility.  If the contract only allows an extension of time if the contractor can actually prove the cause of delay, this may result in the contractor bearing the responsibility for the remaining 40 days, as the cause is uncertain.  This may seem to be an unfair outcome, but it is what the parties have contractually agreed.  You should not attempt to correct an agreed contractual outcome (even if you perceive it to be unfair) by undertaking a criminal act.

If you make an honest mistake in your claim, this is very unlikely to be a criminal act.  So, if, for example, you honestly believed that 30 days delay was caused by the NRA’s variation, but it turned out that you had made a mistake, and it was only 25 days delay, then this is an honest mistake, and not a criminal act.  However, if you do later discover such a mistake you should promptly notify the NRA of the mistake, otherwise you are allowing a false representation to remain live after you have discovered it was false.  

The suggested approach above may not in the short term be the most commercially profitable approach, but it is the one that is more ethical and the one which avoids criminal liability, and is therefore the best long-term approach.  Do not, for the sake of your organisation’s profitability, or to earn praise from your superiors, allow yourself to be drawn into committing a criminal act.

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January 2025
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