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Construction Law/Notice to demobilize vs Notice of contract termination


Mr. Testro,

Subcontractor committed a breach of contract. Client issued a notice to demobilize 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? Construction Setting: KSA
Thank you.

Hi Bryan
Firstly it has to be a fundamental breach for a sub-contract to be terminated. Something that goes to the heart of the agreement which cannot be remedied by future conduct.
Now to the mess that has been created - A notice to demobilise is similar to a suspension of the works.
The sub-contract has not been terminated and the terms and conditions are still running even if the works are stopped.
Therefore the sub-contractor is correct in his current stance.
It would appear that he is positioning himself for a settlement negotiation and my advice is to get the best deal from him to get him off the site and continue with someone else.
If this goes to court in KSA the Client will be in a very week and embarassing situation.
Best regards
Mike T.

Construction Law

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Mike Testro


Anything related to extensions of time and delay analysis.


45 years in the Construction Industry 15 Years as a consultant delay analyst - I now hold myself to be expert in this field.

Society of Construction Law Adjudication Society ex Planning Engineers Organisation

6 articles on the relevance of the India Contract Act 1872 and its relevance to modern construction in India. Waiting Publication

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Currently employed in India by Punj Lloyd as expert delay analyst. Engaged in ongoing arbitrations and EoT claims. Prior an Indepenent consultant in delay analysis.

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