Construction Law/Extension of Subcontractor’s Time for Completionk
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
We have the following comments/suggestions on the question:
1. S/C is entitled to receive EOT for reasons beyond the granted EOT to m/c provided by the condition that s/c EOT is not tied –up with the EOT of the m/c.
We passed through a contract where, an employer (power project) had an agreement with m/c and the power purchaser. EOT for the m/c was dependent on the grant of EOT from the power purchaser. Completion time for m/c’s contract was 30 months and contract with the power purchaser IT was 36 months. Contractor requested for five months EOT, the m/c was granted EOT for three months without compensation due to concurrent delays of both the parties and at the same time employer’s pursuit for L/D's was turned-out due to concurrency as well as the delay still remained within the stipulated time with power purchaser and employer never exposed to LD situation under the power purchase agreement..
2. EOT to s/c will be granted for 50 days.
3. No, m/c will not be able to impose LDs on the s/c.
4. S/C is entitled EOT beyond the m/c’s EOT. This situation was arose due to the reason that the m/c delayed the s/c’s work whereas it may not have any liability/default of the employer.
5. The apportionment of the LDs between the m/c and s/c depends on the many if & buts, however, it shall be split-up in proportion as per the obligation/contribution of either party.
6. LD imposition shall proceed as per the contract agreement between the m/c and s/c in any case the s/c liability shall never go beyond the limit specified in the contract between m/c & s/c
7. Yes, the sub-contractor shall receive the EOT and cost as per his contract, but not beyond the m/c
8. This question is an open question.
- Ordering of material as per the responsibility under the contract,
- Advance payment (to sub-contractor), as per the contract
- Bill of lading and, arrangements and subsequent works as per the responsibility provided under the contract.
Akhtar Hussain Mayo