Construction Law/Extension of Subcontractor’s Time for Completionj
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
Thank you for your question. Please find below my answers.
01. What delays where considered in that EoT?
Delay due to Employers default, MC or both?
What is the reason for MC delaying the SC?
Was it because of MCs default, Employer or both?
If SC is delayed by MC’s fault , SC shall be entitled to any EoT under the Subcontract provided that SC gives notice and submit his detailed particulars to MC within 14days. This is covered by item (c) of subclause 7.2. This means that the MC is responsible to the Subcontractor for delay made by him (MC) under the Subcontract. (please refer to the last sentence of subclause 11.2)
For delay due to Employers default that affects the Time for Completion of both MC and SC, both MC and SC are entitled to EoT under the Main Contract. Such EoT is covered by the contract between MC and the Employer (in your case under FIDIC 1987). Any EoT granted under MC that will affect the SC, MC shall notify the SC in accordance with subclause 7.3 and grant him (the SC) any reasonable and fair EoT.
In your question its possible that EoT granted to MC does not included EoT entitled to SC due to MCs default under the subcontract ( that’s why I ask you what is the reason for SCs delayed by MC). In that case, first paragraph of my answer applies. You need to claim to MC pursuant to subclause 7.2 and 11.2
02. EoT is based on the logic and sequence of the programme of both MC and SC and their relationship together.
EoT granted to MC under his contract to the Employer shall be used to compute for any EoT entitlement to SC and it’s impact to Time for Completion of SC’s programme. It does not follow that if MC is granted 100 days (EoT), SC shall be granted also 100.(although it may happen in some case). Your question depends largely on the construction programme of SC and its relation and link to that of MC.
03. This depends on the reason for SCs delay and the Conditions of Contract. Nevertheless the SC shall finish the subcontract works on the right time and right manner as prescribed by the subcontract. Applying penalty to SC for delay to Time for Completion depends on what is written in the subcontract.
04. This means that the Employer shall be liable only for any EoT caused by delay claimable under the Main Contract ( delays made by Employer). This applies to item (a) of subclause 7.2
05. It depends on the conditions of subcontract (shared risk of both SC and MC) and also the reason for such penalty.
If MC is penalized due to late Completion of the Works (Main Work) due to delay caused only by MC, then there’s no reason that SC shall be penalized, therefore any negotiation of penalty will not affect the SC.
Another case is that when SC have already completed (timely) the subcontract work in accordance with the subcontract , then penalty is no longer applicable to SC.
For delays made by both MC and SC then applied penalty and any other successful negotiation and reduction of penalty shall be based on the conditions of subcontract and the reasons for all delays that impacted the Time for Completion.
06. Again this depends on the terms of subcontract. Please review.
07. Any EoT granted and successful cost claim received by MC from the Employer, the MC shall pass on to the SC and give any reasonable and fair proportion pursuant to subclause 11.2.
Now, the computation of EoT and cost to be given to SC depends largely on the construction programme and the delays considered in that EoT.
08. No exact answer to this. You need to consider the reasons for such delays and apply the conditions of contract before you can point out the responsible party.
I hope the above made things more clear and you can rate me. Good Luck.
Jonathan L. Peralta