Construction Law/Delay Payment
i want to ask Sub Clause 14.8 in the fidic Red book /1999
1- When the Employer is causing delays and costs to the contractor he should grant costs and profit , my question is
why is the contractor Entitled the profit ?
2- if the late payment caused the contractor to suspend progress unless and until tha contractor has received the payment certificate , or Employers Financial Arrangement , my question is
if the "Government" is owner of the project , is the contractor entitled to suspend the work ? because the government has the financial arrangement ....
1. When it is a breach of the Contract by the Employer, and the Employer is causing, therefore, delays and costs to the Contractor, the FIDIC Contract’s principle is that the Employer should pay cost and profit. If the Contractor was delayed and had supplementary costs by other causes than his own fault or Employer’s own fault, but the cause is an event that is in the Employer’s risk (see, also, the Sub-clause 17.3), such as was, rebellion, munitions of war, any operation of the forces of nature…, but was not caused directly by the Employer (as in the points f) and g) from 17.3, i.e. occupation of the Permanent Works by the Employer, design of any part by the Employer… ), then the Contractor is entitled to costs, without profit. This is the FIDIC principle.
2. The FIDIC Contract makes no difference between different kinds of Employers, be they private or public, or governments. The principle is that everybody should be treated in the same way and the rights and responsibilities are the same for everybody, irrespective of being a small company, o huge company or a government.
Though, in case of non-payment or non-issuance of the IPC, or other cases, as per the Sub-clause 16.1 from FIDIC 1999, the Contractor is entitled, not obliged to suspend the works. Suspending the works is a management decision that the Contractor should make, and he might have another approach to the Contract than to use all his rights against the Employer.
Hope my answers help.