The English Courts clarify what constitutes a ‘default’ in the context of ‘disallowed cost’ in a target cost construction contract

Herbert Smith Freehills' Tokyo office has written an article on the recent case of Network Rail Infrastructure Limited v ABC Electrification [2019] EWHC 1769 (TCC) in which the English Courts adopted the natural meaning of ‘default’ in the definition of ‘Disallowed Costs’ in a contract modelled on the ICE Conditions of Contract, Target Cost version. This strict interpretation was adopted despite the impact this had on the parties’ respective liability for cost overruns in a contract that is, otherwise, broadly intended to provide for shared pain/gain.

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