The Discretionary EOT Clause Nobody Reads Until It's Too Late
Most extension of time clauses are read as a hurdle: notify within a set number of days, in a set form, or lose the entitlement. Far fewer people read the clause sitting quietly beside it.
This is the one that gives the principal or head contractor a discretionary power to grant an extension of time even where no valid claim has been made at all. Probuild Constructions (Aust) Pty Ltd v DDI Group Pty Ltd [2017] NSWCA 151 is the case that shows exactly why that second clause matters more than most people assume.
The facts
Probuild was head contractor for the refurbishment of the Tank Stream Hotel in Sydney. It subcontracted ceiling and wall plasterboard installation to DDI Group, with a date for practical completion of 5 January 2015. Probuild directed DDI to carry out variations after that date had passed. DDI did not, within the contractual time frames, submit a formal claim for an extension of time in respect of the delay caused by those variations.
On the strength of that missed notice, Probuild treated DDI as having no entitlement to additional time, and sought to set off liquidated damages of $15,000 per day against DDI's payment claim of around $2.175 million. DDI took the matter to adjudication, then to the courts, ultimately succeeding before the New South Wales Court of Appeal.
Why a missed notice was not fatal
The subcontract, like most standard forms, gave DDI a mechanism to claim an extension of time. But it also gave Probuild, under clause 41.9, a separate and discretionary power to grant an extension of time notwithstanding that DDI was not entitled to, or had not claimed, one. The Court of Appeal held that Probuild was obliged to consider exercising that discretionary power, and to do so honestly and fairly, because of the underlying rationale of the prevention principle.
The prevention principle is, at its core, a simple idea: a party cannot insist on the other party meeting a contractual obligation if it is itself the reason that obligation could not be met. Where a head contractor directs variations after the completion date, and those variations genuinely cause delay, it is the head contractor's own conduct standing between the subcontractor and on-time completion. The Court found that Probuild's unilateral power to extend time existed precisely to deal with situations like this and that simply ignoring it because no formal claim had been lodged was not open to Probuild.
Honesty and fairness, not just process
The Court went further than simply confirming the discretion existed. It held that the requirement to exercise that discretion honestly and fairly could be grounded either in the established prevention principle case law, or, if necessary, in an implied duty of good faith in how the discretionary power was exercised. Practically, this meant Probuild could not simply rely on DDI's procedural miss and treat the matter as closed, it was required to turn its mind to whether an extension was warranted on the substance of what had happened, even without a compliant claim sitting in front of it.
This does not mean a contractor's notice obligations are optional. Where a contract removes or substantially restricts the unilateral power to extend time the analysis in Probuild v DDI may not assist a party that has genuinely missed its own notice deadlines. The case turned on the presence of that discretionary clause; it is not a general licence to ignore notice provisions.
The commercial lesson
For contractors and subcontractors, the practical takeaway is not to relax about notice deadlines — a valid, timely claim remains the strongest and most reliable path to an extension of time, and should always be the default. The lesson is narrower and more specific: before assuming a missed notice is fatal, check whether your contract contains a discretionary EOT power similar to the one in Probuild v DDI, and if it does, understand that the other party's failure to turn its mind to that discretion, in circumstances where its own conduct caused the delay, can itself be a live issue.
For principals and head contractors, the lesson runs the other way. A discretionary EOT clause is not a dead letter that can be left unused while liquidated damages are deducted on the basis of a missed notice alone. Where your own instructions or variations are part of the reason for the delay, that discretion needs to be genuinely considered, and the file needs to show that it was.
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Most EOT clauses are read as hurdles but there’s one that is often missed, and it gives the principal or head contractor a discretionary power to grant an EOT even where no valid claim has been made at all.