PENALTIES AND BONUSES 161 



adopted by which the question whether the contractor is to be 

 held liable for delay can be decided. All questions could, of 

 course, be settled by proceedings at law or by arbitration, out 

 the vicissitudes of business require that minor questions which 

 continually arise shall be decided with the minimum of delay 

 and expense. 



It thus comes about that the enforcement of what is known 

 as the penalty clause is left to the engineer. His position, 

 which will be further dealt with later on, is practically that of 

 an arbitrator between the person who employs him, whom it 

 will be convenient to refer to as " the employer," and the manu- 

 facturer or contractor who has undertaken the work in question. 

 It frequently rests with him to say whether and under what 

 conditions an extension of time for the completion of the work 

 is to be allowed. In the exercise of his discretion he has only 

 one duty which is to act fairly and honestly ; and so long as he 

 does this, he is under no liability to anyone in so far as he is 

 acting in a quasi- judicial position or as arbitrator. 



In treating of the penalty clause and the interpretation 

 which has been put upon it by the Courts, it is necessary to 

 refer to several cases which relate, not to engineers and con- 

 tractors, but to architects and builders. For our present 

 purpose, however, it is sufficient to say that the law which 

 applies to architects applies with equal force to engineers, and 

 the principles upon which the penalty clause in a building 

 contract has been interpreted can be adopted in the case of a 

 contract for the erection of machinery, for the building of a 

 ship, or for the construction of a harbour or other works. 



With a view to protecting himself from the consequences of 

 delay on the part of a sub-contractor, whose failure to do his 

 part of the work may impede progress altogether, the con- 

 tractor should be careful to see that the sub-contract contains 

 a penalty clause equal in severity to that entered in the head 

 contract. As to the liability of a sub-contractor for delay, see 

 Chap. XVII., 10, post. 



2. Legal effect of the penalty clause. In relation to the 

 penalty clause, a legal question of considerable nicety sometimes 

 arises. It has long been decided that the Courts will relieve 

 against a penalty if it is considered to be too severe a punish- 

 ment for the party breaking a contract. It is not proposed to 

 consider all the cases relating to this matter, for the question 



L.A.B. M 



