Construction Law/Breach of Contract

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Question
QUESTION: Dear sir,

I am a Contractor, having a Government Project under FIDIC General Conditions of Contract. The Contract Period was 12 months and Possession of site was taken by Contractor after lapse of 1 year after Letter of Acceptance. When possession of site taken by Contractor, facing abrupt delays in Interim Payments. Further no Mobilization Advance was given by Employer, whereas Contract mentioned the applicable clauses. Employer says, that we have not enough funds to give Contractor Mobilization Advance. Furthermore, due to delay in payments and delay in possession of site, the contract period extended by the Engineer almost 1 year, but the work is still behind around 65% and the Interim Payments not received by Employer since 6 months.

Therefore, please advise me that will it possible to terminate the Contract as per the provisions of conditions of contract? If possible, please specify the relevant clauses.

ANSWER: Dear Ahmer,

You do not mention whether you are using the FIDIC 4, 1987, or FIDIC 99 version of the General Conditions of Contract.  

Both forms of contract allow the Contractor to terminate the Contract if the Employer does not pay the IPC's on time, FIDIC 4 - Clause 69, FIDIC 99 - Clause 16.  

---------- FOLLOW-UP ----------

QUESTION: My contract is in accordance with the FIDIC 1987, your reply was very much clear and helpful for me. In continuation to my question in the light of your reply, please advise me, if the Employer failed to pay Mobilization Advance as per the provisions of Conditions of Contract, and Contractor continue the project without Mobilization Advance, what shall be compensation against this or Contractor can claim?

ANSWER: Dear Ahmer,

You are entitled to your extra costs arising from the lack of a mobilisation advance.  However, it could be very difficult to prove actual extra costs.  If you borrowed money to replace the promised advance, then you could claim the financing costs.  If progress was delayed, then you could claim an extension of time, but again proving the actual effect of the lack of finance could be difficult.  

---------- FOLLOW-UP ----------

QUESTION: Will you please advise me the applicable clauses from the FIDIC 1987 against mobilization advance not paid by the Employer.

Answer
Dear Ahmer,

I guess we are getting to the stage where you need to employ me or someone to give you detailed advice.  The clause for the non-payment of the mobilisation advance is the same as the one for non-payment of the IPC, clause 69, because the request for the mobilisation advance should have been presented as the first IPC.  If you did not present that IPC, then you have a problem.  

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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.

Experience

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)
"We are too poor to buy something cheap"
.Romanian Proverb 2002
A lean compromise is better than a fat lawsuit. George Herbert (English poet 1593-1633)
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
Match your presentation to the reader!
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')

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

Education/Credentials
B Sc(Hons) in Civil Engineering

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