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Construction Law/Extension of Subcontractor’s Time for Completionm

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Question
Hi
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
Dan

Answer
Dear Dan,

This question is rather longer and more detailed than some on this site but here goes:-

1. What if the s/c is delayed by m/c more that the EOT granted to m/c?  This situation is rather common.  It depends on who caused the delay and the s/c's justification for a longer EoT than the 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?  It depends on the justification for the EoT.  Perhaps the s/c will get nothing.  The s/c must justify his request for an EoT.

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? Quite probably because the m/c could have extra costs due to the s/c delay.  You are referring only to critical items for contract completion, but what about delays to following tasks that involve extra storage etc.

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’?  It happens as stated, but why sign a contract with this clause in it.  The s/c could be delayed by the m/c's actions, or those of his other s/c'c, and that delay is not due an EoT 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?  Depends on the relevant clauses of the two contracts.  There is some case law on the decisions of m/c regarding claims and the effect or otherwise on subcontractors.

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?  Don't understand CP

7. What if s/c is delyed by m/c does he get EOT & cost from m/c? Depends on the relevant clauses.

8. Delays in ordering material, advance payments, Bill of Lading/LC issue. Who is responsible for these delays? Depends on who is responsible for the delays and the relevant clauses in the Contract.  Normally, if the m/c is responsible for ordering materials, then delays are his responsibility.  If the s/c is responsible for ordering materials, then delays are his responsibility.  

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Peter M. Elliott

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First response to queries regarding extensions of time, variations orders, site instructions and payment using FIDIC and other forms of Conditions of Contract, based on English Law, and derivatives only. Anyone who needs advice about EoT should download and study the SCL Delay & Disruption Protocol www.eotprotocol.com before submitting a question.

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It's unwise to pay too much, but it's unwise to pay too little. When you pay too much you lose a little money, that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing you bought it to do.
The common law of business balance prohibits paying a little and getting a lot. It can't be done. If you deal with the lowest bidder, it's well to add something for the risk you run.
And if you do that, you will have enough to pay for something better.
. . . John Ruskin (1819 - 1900)
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I said it in German and Greek:
But I wholly forgot (and it vexes me much)
That English is what you speak!" Hunting of the Snark - Lewis Caroll
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Comments and observations leading to improvements in the translation of FIDIC Red & Yellow books into Romanian prior to approval by FIDIC (reference 'Preface to the Romanian edition')

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