Construction Law/FIDIC 1999 - claims

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Question
Hello Daniel,

You have been a great help to me in the past and I appreciate your responses. FIDIC 1999 Red book

The Client has initiated termination under clause 15.2 with the required notices and a valuation is underway under Clause 15.3. The Client will look to have the works completed himself and the relevant costs (if any) deducted from payment due to the Contractor.

Question:

Clause 15.4 states"...until the costs of execution, completion and remedying any defects...have been established" This says to me that if the Client takes a further 6 months to complete the works, only then, can the Contractor actually be paid since the final cost of the works will only be known at this time. Is this right?

Also:

Under Clause 4.2 the Client can claim under the Performance bond for monies due (d-termination). What would happen though if the Performance bond expires before a claim could be made? It doesn't make sense for an extension of the validity especially since the termination clause is in effect.

Thanks for your input.

Regards,
Richard

Answer
Dear Richard,

1. Yes that is right as the Employer shall deduct the actual cost from the Contractor the actual cost can only be known after completion. However if there is a new contract sign and there is a contract amount there Employer may deduct or hol this amoun from the contractor until final actual cost is known.

2. As there is a termination in place extention of Performance Bond is not applicable. First alternative is to claim from Performance bond based on contract amouont or claim total amount of Performance bond after termination and hold the amount until the actual cost is clear.

Regards

Daniel Kazado

Construction Law

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Daniel Kazado

Expertise

I can answer questions related with FIDIC contracts.

Experience

10 years as Contract Manager for FIDIC contracts.

Education/Credentials
Mechanical Engineer
Contract Management - Basic Principles Certificate. Construction Contracts and Dispute Resolution Certificate. Contract Administration - FIDIC Certificate.

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