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Construction Law/non-repayment of advance payment


Hi,we are under the FIDIC Contract 1999
and we wonder whether we can trade-off employer's debt of interim payment with the balance of advance payment repayment payable without being demanded the guarantee amount under advance payment bond.

The Employer's debt of interim payments has been certified by the Engineer, so we believe there is any disputes(such as the Employer's denial to admit their debt) over the amount of
unpaid interim payments

We have submitted advance payment bond in the form similar
to the FIDIC 99 sample form.

Thank you.

Dear Ro,

If both parties agree, anything is possible, provided that it does not conflict with the applicable law, the regulations of both parties, and, possibly, the rules of the funder.  

In this instance, I see little advantage to the Contractor.  He will get his advance payment bond returned which will improve his credit facilities, and possibly a small payment for the reduction in the cost of the bond.  However, what he needs at this time is cash to pay his suppliers and employees.  The Contractor could use the provisions of clause 16.1 to slow down or suspend activities, or even terminate the Contract.  

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Peter M. Elliott


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 before submitting a question.


Value . . .
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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.Romanian Proverb 2002
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I said it in Hebrew, I said it in Dutch,
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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The joy of food lasts but an hour, of sleep but a day, of a woman, but a month, but the joy of a building lasts a lifetime. Syrian proverb.
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')

Institution of Civil Engineers, Association of Chartered and Certified Accountants, Society of Construction Law, Dispute Resolution Board Foundation

B Sc(Hons) in Civil Engineering

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