Construction Law/Extension of Subcontractor’s Time for Completionh
I am working with one of the well-known MEP sub-contractor in UAE. Our Contract is based on FIDIC – Conditions of subcontract for works of Civil Engineering Construction (1st Edition 1994) with little amendments. Our Main Contract is based on FIDIC 1987 reprinted in 1992.
We have some issue with EOT and the Main Contractor is interpreting the clause 7.2 and 8.2 in different ways. I want to know what is the relief for the Sub-Contractor
m/c – Main Contractor
s/c – sub Contractor
TFC – time for completion
LD – Liquidated damages
EOT – extension of Time
1. What if the s/c is delayed by m/c more that the EOT granted to m/c?
2. Sometimes EOT to m/c will be 100 days while the s/c Time for completion (TFC) will only be 50 days, how will m/c decide how much EOT to grant to s/c?
3. What if there is enough float in the m/c programme and s/c delays beyond the s/c TFC, but it does not delay the m/c and m/c does not suffer a LD, will m/c apply a penalty on s/c?
4. What happens when ‘the extension shall not in any event exceeds the extension of time to which the Contractor is entitled under the Main Contract’?
5. If m/c negotiates a penalty with the employer and succeeds in reducing it, will he pass on the reduction to the s/c?
6. If m/c is delayed by s/c and is liable for 10%CP penalty and 10%CP is >= CP of s/c, how much will m/c recover?
7. What if s/c is delyed by m/c does he get EOT & cost from m/c?
8. Delays in ordering material, advance payments, Bill of Lading/LC issue. Who is responsible for these delays
7.2 Extension of Subcontractor’s Time for Completion
If the Subcontractor shall be delayed in the execution of the Subcontract Works or if applicable, any Section thereof by any:
a) circumstances in regard to which the Contractor is entitled to receive from the Engineer an extension of his time for completion of the Main Works under the Main Contract,
b) instruction pursuant to Sub-Clause 8.2 to which paragraph (a) of this Sub-Clause does not apply, or
c) breach of the Subcontract by the Contractor or for which the Contractor is responsible,
then in any such event the Subcontractor shall be entitled to such extension of the Subcontractor's Time for Completion of the Subcontract Works or such Section thereof as may in all the circumstances be fair and reasonable.
Provided that the Subcontractor shall not be entitled to such extension of time unless he has submitted to the Contractor notice of the circumstances which are delaying him within 14 days of such delay first occurring together with detailed particulars in justification of the extension of time claimed in order that the claim may be investigated at the time and, in any case to which paragraph (a) of this Sub-Clause applies, the extension shall not in any event exceed the extension of time to which the Contractor is entitled under the Main Contract.
Provided also that, where an event has a continuing effect such that it is not practicable for the Subcontractor to submit detailed particulars within the period of
14 days referred to in this Sub-Clause, he shall nevertheless be entitled to an extension of time provided that he has submitted to the Contractor interim particulars at intervals of not more than 14 days and final particulars within 14 days of the end of the effects resulting from the event.
8.2 Instructions under Subcontract
Subcontractor shall take instructions only from the Contractor. The Contractor shall have the like authority in relation to the Subcontract Works to give instructions as the Engineer has in relation to the Main Works under the Main Contract. The Subcontractor shall have the like obligations to abide by and comply therewith and the like rights in relation thereto as the Contractor has under the Main Contract. The said authority of the Contractor shall be exercisable in any case irrespective of whether the Engineer has exercised like authority in relation thereto under the Main Contract.
Thanks & Regards
ANSWER: Dear Dan,
Thank you for your question and i will try to answer your points as far as possible within the parameters of provided data. To begin with, it appears to be a contract not on back to back basis with the main contract except for specified aspects.Am i right? Now i will come to the points raised one by one.
(1). I am not considering that s/c contract and m/c contract are back to back arrangements, it has to be in accordance with provisions made in the sub-contract. The sub-contract provides for notice of the circumstances which are delaying him within 14 days of such delay along with dtailed particulars in justification. Has this been done for all delay events under the sub-contract? As per my understanding above, this aspect has no linkage with the main contract and has to be decided on its own merit under the sub-contract.
(2). As in (1) above.
(3). The EOT is granted on the basis of delay likely to occur in the completion of the project under the sub-contract and hence S/c TFC will only be relevant.
(4). Same as (3) above as it is similar consequence.
(5). As the s/c and m/c contracts are to be interpreted independently, the referred reduction has no relevance to this.
(6). I am not clear about CP. please clarify.
(7). it depend upon provisions in the contract but normally if s/c has been delayed due to action of m/c, he has to be compensated.
(8). Delays in ordering materials etc if require approval and that has not not been communicated timely, it is m/c fault and as a result m/c has to compensate in time and money to s/c unless otherwise provided in the contract.
---------- FOLLOW-UP ----------
QUESTION: Dear Mr. Liqat Hayat
Thanks for the detailed and very clear response
My question is
If the Main Contractor is delayed by Sub-contractor and is liable for 10%of the Contract Price (maximum penalty) and
10% of the Contract Price is greater than or equal to the Contract Price of the Sub-contractor, in that case how much will the Main Contractor will recover?
Thanks & Regards
Dear Mr. Dan,
Thank you for another question and appreciate your comments on my earlier response although it contains some typing errors.
As discussed earlier, the two contracts (s/c & m/c) are to be dealt with independently unless both contain like provisions for some aspects. I am, therefore, of the opinion that the liability of m/c remains unchanged with no linkage with the liability of the sub-contractor in respect of referred penalty.
Regards and best wishes,