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Construction Law/Does Notice of demobilization to subcontractor tantamount to notice of Contract termination?


Mr. Elliott,

Subcontractor committed a breach of contract. Client issued a notice of demobilization instead of a notice of termination of the subcontract to the subcontractor. During the meeting for the final settlement, Subcontractor claims that no notice of termination has been made therefore the latter is still entitled to payment for the idle time up to the present time. Now, contractor claims that the notice for demobilization already tantamount to notice of contract termination due to the subcontractor's breach. Does Notice of demobilization to subcontractor tantamount to notice of Contract termination? Thank you.

Dear Bryan,

I am not sure that I have understood your question correctly.  I do not have details of the subcontract so the following comments are general in nature.

Why did Client, rather than the Contractor, issue notice of demobilization to the subcontractor, or have you used non-contractual terms?  Notice of demobilisation is not a notice of termination, even if the subcontractor was in breach of contract.  There are many breaches of contract which do not warrant a termination notice.  Depending on the words in the sub-contract, the sub-contractor could be due to some recompense, such as extra demobilisation costs from site, standing time for plant labour and materials.  The sub-contractor could claim that he was demobilised due to the Contractor's programming requirements, another supplier in delay(?), and that he was expecting to remobilise at a later date, so he kept his team on standby.  It will be expensive and time consuming to counter his arguments if you cannot reach an amicable agreement.  

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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.


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