Construction Law/Termination

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Question
I am Contacting you to inquire about an issue related to Defects Liability Guarantee in the case of Termination by  Contractor as clause 16.2 in Fidic 1999 Red book in this case ،
The Employer substantially fails to perform his obligations under the Contract in Financial Arrangements as clause 16.2.a , So the Contractor notice to the Employer to terminate the Contract , The two parties ( The Employer and The Contractor ) agreed to Termination the Contract and Calculate all the works Executed , to be paid at contract prices ,
The Question is ,
Does the contractor is required to Submit the Defects Liability Guarantee of these works Executed , for one year from the date of Taking Over of the Works .
Best Regards

Answer
Hi, Shadi,
I understand that the Employer failed to provide information about his financial arrangements, according to 2.4, so the Contractor terminated the Contract according to 16.2 a).
The Clause 16.4, that refers to payment after termination by Contractor, says that the Performance Security is to be released to the Contractor. This guarantee (security) is a guarantee for the Employer that the Contractor will fulfil all his obligations under the Contract and is meant to be in force up to after the Final Taking Over, so after the Defect Notification Period. From the obligation to release the Performance Security after the termination by Contractor results that the Contractor has no liability after this termination and, consequently, there is no reason of having or providing a Defects Liability Guarantee after.
In the General Conditions of FIDIC Red Book 1999 there is no provision regarding such a Liability Guarantee, anyway, but I presume it is in your Particular Conditions.  
Hope it helps.
Best regards,
Alina

Construction Law

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Alina Valentina Oprea

Expertise

I can answer to questions regarding FIDIC 1999 contracts, including practical use of these conditions of contract, as well as to questions regarding dispute boards, both from theoretical and practical point of view. I cannot answer to questions related to other kind of contracts or to procurement process, except to some (limited) extent.

Experience

Implementation of works contracts (FIDIC 1999) financed by different financial institutions, including European Union; claims and disputes; dispute boards See more on www.alinaoprea.com

Organizations
Dispute Resolution Board Foundation

Publications
see http://alinaoprea.com/publications/ ; DRBF Forum Newsletter; Drumuri si Poduri; Revista Constructiilor; SIDiR Newsletter

Education/Credentials
Graduated the University of Civil Engineering Bucharest, Faculty of Railways, Roads and Bridges (1985-1990); Trained under Mr. Gwyn Owen’s pupilage program for arbitrators/adjudicators under FIDIC mentoring program (2006 – 2007)

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