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Construction Law/EXTENSION IN PERFORMANCE BOND UNDER DISPOSSESSION OF SITE BY EMPLOYER RISK EVENT

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Question
Sir, I would appreciate your opinion on a FIDIC 4th Edition, 1987 reprinted 1992 based Contract.

The Employer is asking to extend the validity of Performance Bond when the Time of Contract is at large due to Employer's dispossession of Site and no Variation Order issued/agreed to extend the Performance Period and no revision of Contract Rates/Prices agreed with the Contractor so far, since the prices were valid till the Performance Period.  Initial Contract Period was 18 months + 12 months DLP.  After 12 months performance, the Site was dispossessed and it remained dispossessed for 20 months.  The Employer & Engineer recognize it as employer risk event.  The Contract has not been terminated by either Site.

Usman

Answer
Dear Usman Sarwar,

Clause 10.2 is relevant.  The Performance Security must be extended until the Defects Liability Certificate has been issued.  Just because time is at large and other matters remain unresolved, it does not mean that the Contractor can evade his obligations. The cost of extending the Performance Security is part of the costs of overcoming the Employer's Risk.  

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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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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')

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

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B Sc(Hons) in Civil Engineering

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