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Construction Law/Termination of contract

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Dear Daniel Kazado
hello
I have two contracts which are terminated by the client under clause 15.2 of MDB FIDIC1999 pink book.
1. in one contract agreement ,contract was signed on 29.06.2011 for the period of 18 months to complete the project and date of commencement was 19.07.2011. After expiry of contract period progress was in terms financial  54% .The Engineer has served various notices as per clause 15.1 to the contractor but no improvement has noticed for the acceleration of progress.Finally Engineer has recommended action of termination under clause 15.2(a) &(c)(i) termination of contract. Employer has terminated the contract as per recommendation of Engineer and exercise to invoke the Bank guarantees of Mobilisation advance and of Performance security by giving the notice of 14 days.

2.In another contract agreement, contract was signed on 29.06.2011 for the period of 24 months to complete the project and date of commencement was 27.07.2011. After expiry of 96% contract period progress was in terms financial 32% .The Engineer has served various notices as per clause 15.1 to the contractor but no improvement has noticed for the acceleration of progress.Finally Engineer has recommended action of termination under clause 15.2(a) &(c)(i) termination of contract. Employer has terminated the contract as per recommendation of Engineer and exercise to invoke the Bank guarantees of Mobilisation advance and of Performance security by giving the notice of 14 days.

Contractor has claimed that action of termination as well as the action to invoke the bank guarantee is against the contract agreement.
My questions are that;

1. Action of termination taken by the authority. Does has the right to invoke the bank guarantees given by the contractor against payment of Mobilisation advance and for Performance security before expiry of notice period of 14 days?
2. Can you clarify that notice of !4 days is necessary or not to terminate the contract under clause 15.2?
3. How the contractor can claim under the contract agreement, the action to invoke the bank guarantee is against the provisions of contract agreement?

Thanks and regards are in advance.I hope an early reply in this matter.

Sanjay

Answer
Dear Sanjay,

When the Employer terminate the contract under the clause of Default of Contractor, they have to give 14 days prior notice. They on the other hand have right to invoke the any bank guarantee and withhold any payment until the final account settlement.

Regards

Construction Law

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Daniel Kazado

Expertise

I can answer questions related with FIDIC contracts.

Experience

10 years as Contract Manager for FIDIC contracts.

Education/Credentials
Mechanical Engineer
Contract Management - Basic Principles Certificate. Construction Contracts and Dispute Resolution Certificate. Contract Administration - FIDIC Certificate.

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