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Construction Law/Fidic Clause 60.10 of GCC (red book 4th Edition)


Will you please explain the "Valid Reason to pay compensation of 8% per annum if employer fail to pay within time"?

" Clause 60.10 - "Time for Payment" of GCC (of Red Book for works of Civil Engineering Construction - 4th Edition reprinted 1988 with editorial amendments) is substitute in 'Particulare Condition of Contract' with the following
" The amount due to the Contractor under any Interim Payment Certificate issued by the Engineer pursuant to this clause, or any other terms of Contract, shall subject to Clause 47 of GCC, be paid by the Employer to the Contractor within 28days after such IPC has been delivered to the Employer, or in the case of Final Certificate referred to in Sub Clause 60.8 of GCC, within 84days after such Final Payment Certificate has been delivered to the Employer. "In the event of the Failure of the Employer to make payment within the times stated without any Valid Reason". The Employer shall pay to the Contractor compensation at the rate of 8% per annum................."

As per clause 60.10 of Particular condition of contract we claim for compensation at 8% per annum to the Employer but the Employer respond to us that
"The main reason for the Employer's failure to make payment within time is the late disbursement of funds from the Federal Government. As it was beyond the control of Project Director, it becomes valid reason for the Employer's failure to make payment in time". In such case, the claim for compensation at the rate of 8% per annum becomes unjustified and therefore cannot be entertained"

Dear mr. zafar,
Thanks for your question.
I can respond in simple words that who is to compensate the contractor for his loss on account of failure to make  payment to contractor? Some contract do provide award of EOT only in such cases .The contractor is not privty to the financing arrangements discribed and as such federal govt through PD is responsible .The contractor can therefore take measures as per contract for breach of contract including action as per clause 67
Regards-liaqat hayat

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Liaqat Hayat


I can answer questions based on FIDIC 4 and FIDIC 1999 [design-build] with particular reference to time extension , price adjustment and disputes. I am in particular more inclined for response to points pertaining to how claims should be framed and put up in case of technical or other contractual shortcomings. Regarding procurement matters I have spent over 5 years as procurement specialist for highway authority and dealt with numerous claims and disputes in the capacity of "The Engineer" .

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