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Construction Law/Termination of contract for convenience of Employer under FIDIC 1987

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Question
The work was awarded in February 2013 and Employer terminated the contract just after 2 months in April 2013 under subject provision in contract without giving any reason or holding any prior meeting. There was no change of circumstances in 2 months period and appears to be not in good faith. Can you please advise how this can be proved and also can per-contract period charges of tendering preparation and procurement expenses be claimed?

Answer
Dear Muneeb,

Thank you for this question.

You have not stated which contract form, terms and conditions governing the project and those may have a bearing; however in principle the Employer can cancel the project without reason, although that should not be done vexatiously or arbitrarily.

Subject to knowledge of the prevailing facts, the Contractor is entitled to compensation for the costs it reasonably incurred from the date of award to the date of termination. If fault can be found with the Employer's action of termination the Contractor will also be entitled to damages. For example if the Employer engages another contractor or pursues the project through another means, the Contractor may be entitled to loss of profit on the project.

You have not stated the location of the project or the governing law; this will be of importance not only for guiding on entitlement but also for determining whether there is a legal right to enquire of the Employer to disclose the reasons for termination.  



I hope that this assists you.

Kind regards,
John Dowse

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Construction Law

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John Dowse

Expertise

Legal; contract interpretation; quantum; delay analysis. Practitioner in arbitration, adjudication and mediation.

Experience

Thirty-three (33) years experience in building and construction, at all levels both within contracting and consulting organisations. Practising arbitrator, adjudicator, and mediator. Faculty approved trainer for the Chartered Institute of Arbitrators. Lecturer on construction contract forms and dispute resolution practices.

Organizations
Chartered Institution of Civil Engineering Surveyors Chartered Institute of Arbitrators Institute of Directors Society of Construction Arbitrators

Publications
Various UK and International construction and legal publications.

Education/Credentials
LLB (Hons), Pg Dip (Legal Practice), MCInstCES MCIArb MIOD Barrister

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