Construction Law/Advance Payment Delay
I have a situation where the Employer's representative under a FIDIC 99 YB COC, has delayed the release of the Advance Payment for 8 months due to the project Insurances & Securities having minor corrections highlighted by the Rep.
The formal Insurances and Securities were submitted almost as contracted to do so (with some minor delay from the 21 days stated) however they were taken out and paid for. However during a course of 8 months they were rejected and re-sent, and this process continued.
No Advance Payment was released for these reasons.
Is this fair, reasonable and logical under FIDIC contracts? Or any contract for that matter.
ANSWER: Hi Craig
It is absolutely essential for both the Contractor and the Employer that the insurance policies are completely watertight.
In the first instance therefore the Rep is doing his duty to ensure that there are no loopholes in the policies that will allow the insurers to void a claim.
That being said it is possible that he is fabricating excuses for non approval - and since there is no benefit for him personally he is probably being encouraged by the Employer.
I would suggest a number of strategies.
1. Get a respected local insurance broker (not the insurer or the broker you normally use) to review the case and give an opinion as to whether the the policies are properly valid or not.
2. If NOT VALID then get it sorted immediately as you could be due for LAD's.
3. If VALID then write to the Employer saying that his Rep is improperly witholding the advance payment and therefore delaying the works. You will be claiming an EoT and costs plus interest OR you could declare that the works have been suspended.
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I agree that especially with Insurances, such documents of importance should be watertight as you put it.
The Securities & Insurances have been valid since the first day submitted (they may not have been 'agreed by the Employer' however, they were rejected for what I would call 'technicalities'. A word is missing here, this coma needs to be here no there and so on. Not the bonds are rejected because they are not by a local bank or do not mention the required parties.
I like you strategy however and thanks for your response.
Missing words and misplaced commas can be the death of an agreement as the court looks at the printed text not the intention behind the words - believe me it is not trivial.
I once had a case which hinged on the true meaning of the word "and".
This is a classic example:
A woman, without her man, is useless.
A woman, without her, man is useless.