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Construction Law/Request for replacement of Contractor

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Question
Dear Sir,
we are working as Engineer on a Project.
The Contractor, before we give them notice the Commencement Date, asked the Employer to be entitle to let the Works be executed by a Company of which they are the majority shareholder, owning approx. 95% of the shares.
The Employer asked us to support them in deciding if they can accept the Contractors request and how they should answer.
Moreover, if they accept, in the name of who (the Contractor or its owned Company) the Advance Payment Guarantee and Performance Guarantee must be drawn up?

Thank you very much for your help.
Best Regards,

Enrico Odorisio

Answer
Dear Enrico,


Thank you for your question.

It is not a matter of Conditions of Works Contract, but of procurement procedures/ law. If that allows to actually "novate" the contract.

If the procurement allows it, Employer will need to contact a local lawyer for the proceedings.

But coming back to the procurement procedures, you must check if that is possible or not.

If it's public procurement, most probably not.

If yes, contract must be novated/ or assigned to the other entity and then, that entity becomes the Contractor and takes over all rights and obligations, i.e. will take the Advance Payment and will issue the Performance Guarantee.

But sure enough, don't give any advance until clarified who remains the Contractor.

Hope that helps.

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Florin NICULESCU

Expertise

Questions related to Civil Engineering Contracts, using FIDIC or other Conditions of Contract, concerning Procurement procedures and documents (pre-qualification, tendering and contracting) and Services/ Works Contracts implementation matters including Determinations, Payments, Time Extensions, VOs, Claims/Disputes. Additionally, questions related to dealing with International Financing Institutions. Can also answer questions in Romanian. Can not answer improperly formulated questions.

Experience

Over 20 years of experience in the field of design, works supervision, construction, management of aid funds and technical assistance for various types of contracts implementation, including severe conflictual contractual situations leading to Claims and disputes. Claims/ Contract management, Disputes adjudication, Arbitration.

Organizations
Member of Romanian Professional Association of Roads and Bridges; Listed on President's List of Adjudicators of Romanian Association of Consulting Engineers www.aric.org Former member of the Disputes Resolution Board Foundation (DRBF) of United States – nominee on DRBF President’s Disputes Board Members List www.drb.org and of DRBF Chapter for Eastern Europe http://dabdrb.googlepages.com Former member of Polish Association of Consulting Engineers (SIDiR) – nominee on SIDiR President’s Disputes Board Members National List http://www.sidir.pl/sidir/index.php?action=czlonkowie&a2=r Member of “AllExperts.com” volunteers pool http://www.allexperts.com/user.cgi?m=4&expID=85358&catID=914 Member of the "Constructions Disputes Resolution Services” International Panel of Construction ADR Specialists" of United States www.constructiondisputes-cdrs.com

Education/Credentials
- Graduate in 1994 the Construction Institute - Graduate of several FIDIC,Procurement and other courses - Graduate of first Disputes Board Members Mentoring Scheme (http://www1.fidic.org/resources/adjudicators/pupilage.html) - FIDIC Accredited Adjudicator

Past/Present Clients
- Several State organisations/Ministries , such as Ministry of Transport, National Admistration of Roads, Ministry of Regional Development (former Ministry of European Integration), Public Works and Housing, Central Contracting and Financing Unit in Romania and also in Turkey, Croatia and Macedonia - Numerous Western based private consultancy companies - full CV and other relevant information available at www.abinitio.ro

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