Construction Law/Payment after termination
QUESTION: I have question about the payment and % of deduction after the termination. My first question is: when the payment should be done ( after the evaluation of the remaining works or after the agreement with the new contractor for completion of remaining part of the works???)
2nd question is: I am confused in the percentage of deduction. What you suggest, is this so called percentage counted from whole the contract amount or from balance amount of the contract to be paid ( with initial rate) or the estimated amount for the completion of remaining part of the work(actual amount with new rate which would be needed to complete the remaining part of the works by new contractor)
ANSWER: Dear Vijay
After the termination decisions are taken and notice served to the contractor, the Engineer shall determine the value of the works due to the contractor. Other values shall be added such as delivered goods to site, liabilities, and cost of clearing the site. All such monies shall be due to the contractor and paid with the settlement. Please note that some monies or guarantees might be required to provide for the contractors obligation under the contract until the maintenance period is over. At that time all monies and guarantees shall be returned to the contractor.
Your second question is not clear to me but it seems that the amount of deductions is the valuation of the undone works and the % shall be that amount over the contract price.
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QUESTION: 2nd question is related with the clause of contract - payment upon termination which says "If the contract is terminated because of a fundamental breach of contract by the contractor. The project manager shall issue a certificate for the value of the work done and materials ordered less advance payments received up to the date of the issue of the certificate and less the percentage to apply to the value of the work not completed as indicated in the PCC Additional liquidated damage shall not apply. If the total amount due to the contractor, the difference shall be a debt payable to the employer."
In above clause you can see the phrase "....percentage to apply to the value of work not completed...... This sentence confused me how to get this percentage. Is it percentage of remaining amount of the contract or of estimated amount of the contract in new rate or agreed amount by the new contractor for the remaining works. I need the amount which would be the applicable for the deduction. Thanks
You are right. the said statement is not clear. the only thing I could suggest is to take the complete paragraph to mean that the contractor will be paid all his expenses and the not done works will not be paid. allow for the retentions for the sake of works guarantees and maintenance.