Construction Law/Advance Payment

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Expert: - 2/8/2012


Question
Hi Florin,

FIDIC 87' variant.

I am the Main Contractor. We were late in submitting our requisite deliverables under the Contract in relation to Advance Payment, i.e Advance Payment Guarantee.

The Subclause states "The Employer will make an advance payment to the Contractor with such advance payment being made following the presentation by the Contractor of an advance payment guarantee with this clause to the Employer."

We did present the APG (all be it late). Now that we have completed this requirement the Employer is interpreting the Contractor Payment (Interim Payments) Clause to suit their non provision of this payment to us.

I believe this to be a fundamental breach of the Contract.
Aside from that, the Employer is hammering us for lack of progress-despite the fact that they have not issued the advance payment.

What are your thoughts?

Marc

Answer
Dear Marc,


Thank you for your question. Glad to hear from you, but regret to learn you're facing such problems.

Based on provided information, as long as there is no other unfulfilled prerequisite, the Employer should pay that advance, otherwise, he is indeed in breach of Contract.

If you were late with the APG, you can not comment about the period when you were late, but from the point onward, or whatever payment deadline you have in the Contract, the Employer is late with his payment and related Contract Clauses should apply.

I do not know if there are any major modifications in the Particular Conditions, but suggest you start filling claims, as otherwise Employer will always have the chance to demonstrate you are late.

As well, make sure you write the right letters, at the right times.

Good luck!

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Florin NICULESCU

Expertise

Question related to Civil Engineering Contracts, using FIDIC or other Conditions of Contract, concerning Procurement procedures and documents (pre-qualification, tendering and contracting) and Services/ Works Contracts implementation matters including Determinations, Payments, Time Extensions, VOs, Claims/Disputes. Additionally, questions related to dealing with International Financing Institutions. Can also answer questions in Romanian. Can not answer improperly formulated questions.

Experience

Some 15 years of experience in the field of design, works supervision, construction, management of aid funds and technical assistance for various types of contracts implementation, including severe conflictual contractual situations leading to Claims and disputes.

Organizations
-1. Fellow of Romanian Professional Association of Roads and Bridges; Fellow of Romanian Inter-Ministerial Council for Road Safety Fellow of the Disputes Resolution Board Foundation (DRBF) of United States – nominee on DRBF President’s Disputes Board Members List www.drb.org and of DRBF Chapter for Eastern Europe http://dabdrb.googlepages.com Currently supporting establishment of Global Road Safety Partnership Romania Fellow of Polish Association of Consulting Engineers (SIDiR) – nominee on SIDiR President’s Disputes Board Members National List http://www.sidir.pl/sidir/index.php?action=czlonkowie&a2=r Member of “AllExperts.com” volunteers pool http://www.allexperts.com/user.cgi?m=4&expID=85358&catID=914 Member of the "Constructions Disputes Resolution Services” International Panel of Construction ADR Specialists" of United States www.constructiondisputes-cdrs.com

Education/Credentials
- Graduate in 1994 the Construction Institute - Graduate of several FIDIC,Procurement and other courses - Graduate of first Disputes Board Members Mentoring Scheme (http://www1.fidic.org/resources/adjudicators/pupilage.html)

Past/Present Clients
- Several State organisations/Ministries , such as Ministry of Transport, National Admistration of Roads, Ministry of Development, Public Works and Housing, Central Contracting and Financing Unit in Romania and also in Turkey and Croatia - Numerous Western based private consultancy companies

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