Mace Construct Ltd v Baltic Investment Holdings Ltd: A case highlighting the risk of including tender clarifications and schedules of derogations in building contracts

A recent decision from the Technology and Construction Court (Mace Construct Ltd v Baltic Investment Holdings Ltd [2026] EWHC 976 (TCC)) tackles an issue commonly seen in building contracts: the inclusion of tender clarifications and schedules of derogations which, by their very nature, have the potential to create a conflict with the main terms and conditions of the building contract.  

The case involved Part 8 proceedings brought by Mace Construct Limited (Mace) seeking declarations on the proper construction of an amended JCT Design and Build Contract 2016 (the Contract). In summary, the Court found that:

• The Tender Clarifications and Schedule of Derogations were incorporated into the Contract;
• Mace’s design responsibility for specified items was limited in accordance with the design responsibility provision in the Schedule of Derogations;
• The Schedule of Derogations supplemented (and did not override) the amended standard form conditions (the finding was made in principle, but the exact wording and formal grant of the requested declaration remained unresolved at the time of the judgment);
• An adjudicator and/or court can fix a completion date earlier than the one previously set in an extension of time under paragraph 20 of the Scheme for Construction Contracts (England and Wales) Regulations 1998 (as amended) (the Scheme).

What is the background to Mace v Baltic?

Baltic Investment Holdings Limited (Baltic) engaged Mace to refurbish the Baltic Exchange Building in London, a listed building in a prominent City location.

Under clause 2.17 of the Contract, Mace was "fully responsible and liable in all respects" for the design of the works. However, the Contractor's Proposals incorporated a Schedule of Derogations providing that Mace was not responsible for certain listed items until they were concluded, approved and formal instructions received. This appeared to conflict with clause 1.3(ii) (as amended), which provided that nothing in any other Contract Document shall “override or modify the Agreement or these Conditions or the Schedule of Amendments".

On 24 December 2024, the Employer's Agent granted extensions of time totalling 7 weeks and 5 days for delays arising from design changes and the need to obtain further planning and listed building consents. In an adjudication brought by Baltic, the adjudicator reduced these to zero. Mace then brought Part 8 proceedings.

What was the decision in Mace v Baltic?

The Tender Clarifications and Schedules of Derogations were incorporated into the Contract, thereby limiting Mace’s design responsibility

The significance of incorporation was twofold:

• The Schedule of Derogations contained express language limiting Mace’s design responsibility for listed items until they were concluded, approved and formal instructions received; and
• Clause 1.3(iv) provided that in the event of any discrepancy between the Schedule of Derogations and the Employer’s Requirements, the Schedule of Derogations would prevail.

Without incorporation, Mace would have been bound by the broad, unqualified design warranty in clause 2.17.

The Schedule of Derogations supplemented the Contract, they did not override it

Baltic had argued that Mace’s design responsibility for the items listed in the Schedule of Derogations should not be limited in the way described by the Schedule of Derogations, relying upon clause 1.3(ii) of the Contract.

The JCT Forms have contained similar wording to clause 1.3(ii) since at least 1939, and that the courts have wrestled with this wording on a number of occasions, generally concluding that effect can and should be given to the entirety of contractual documents notwithstanding such clauses.

Therefore, the Court rejected Baltic’s argument, finding that the Schedule of Derogations “explains and supplements” the Contract by clarifying how Mace was to perform its design obligations in relation to the listed items rather than overriding or modifying the main terms and conditions of the Contract.  Clause 1.3(ii) was therefore not engaged.

An Adjudicator and/or the Court may revise a completion date previously set by an Employer’s Agent

In what was described as a novel issue, Mace argued that an extension of time granted under clause 2.25.1, however incorrect, could not be reviewed by an adjudicator or the Court. The core of this submission appeared to be that an adjudicator or the Court would never be in a position to carry out the prospective exercise required by clause 2.25.1 but would be looking at the matter retrospectively, knowing how matters had turned out.

The Court rejected this argument, finding that, under paragraph 20 of the Scheme, an Adjudicator can "open up, revise and review” any decision or certificate unless stated to be final and conclusive. The adjudicator must "stand in the shoes" of the Employer's Agent and carry out the same prospective assessment, which presents evidential and procedural challenges but is not prohibitive in principle.

What are the practical implications of this decision?

Questions of contract interpretation are typically fact sensitive.  However, this case highlights the risk of including tender clarifications or schedules of derogations which, on the face of it, appear to conflict with the main terms of the contract.  

All too often, tender clarifications and schedules of derogations can be put forward for inclusion in the building contract at the eleventh hour.  Where possible, the intent of the parties’ clarifications or derogations should be flushed out and any adjustments to the contract terms duly made.  Admittedly, it can be challenging when there is pressure on the parties to complete the building contracts and commence works.

It will not come as a surprise that an adjudicator can "open up, revise and review” a decision or certificate unless stated to be final and conclusive and an extension of time to the completion date is not insulated from subsequent challenge.