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Construction Law/FIDIC Sub-clause 60.10 of Part-II – Particular Conditions of Contract

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We refer to the response submitted vide your letter Nos.2909/24/NTD-04/240 dated 7-10-2015, 2909/2.4/RCC/NTD-08/244 dated 9-10-2015 and 2909/2.4/RCC/RCD-05/245 dated October 3, 2015 with respect to the claim for compensation on account of failure of Employer of making payment to the Contractor within 28 days after delivery of such notice pertaining to the execution of Contract Package LDMSP-GB-BSFC-SBBD Labano, LDMSP-SLB-RCC-NTD-08 and LDMSP-SLB-RCC-RCD-05 – Zour Minor respectively. In this connection we submit interpretation of Sub-Clause 60.10 of Part I – General Conditions of Contract as under.

(1)   In all cases, the same reason causing delay for payment has been advanced as valid reason without any evidence and supporting documents. For rejection of the aforesaid claim for compensation, it has become very simple on the part of Engineer to advance such reason in all cases. Such reason as advanced in each case has made this clause redundant, dormant and ineffective, which is against the genuine sprit of the provision of the clause.

(2)   The sprit of Sub-Clause 60.10 under General Conditions of Contract – Part-I has been altered by incorporating “valid reason” under sub-clause of Part-II – ‘Particular Conditions of Contract” without defining degree of valid reason anywhere in the documents. As such, true spirit of the provision of this clause can neither be ascertained by the Contractor and nor by the Engineer due to which your interpretation of this Clause seems to be superfluous and ambiguous.

(3)   It may be noted that the contractor is not privy to financial arrangement and lagging behind in getting the necessary fund on time from the source is default on the part of Employer. Hence, the claim for compensation on account of late payment be considered for payment.

Subsequent to the dispute between parties arising out of Contract as stated above we hereby refer the dispute to you pursuant to Sub-Clause 67.1 of Part I – General Conditions of Contract.

In the light of the same decision taken by the Engineer in connection with the compensation for delayed payment in respect of three Contracts as stated above, a letter was drafted to convey to Engineer for settlement of dispute pursuant to sub clause 67.1 of Part-I 'General Conditions of Contract'.

Submitted this draft for your perusal and comment please.

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Dear mr.Zafar,
Thanks for the question relating to the draft letter shown therein.
If I am you,I will delete interpretation (1) and (2) and keep (3) only and submit.You can Keep (1) and (2) for later discussions in the mid-process discussions  for Engineer's decision
Good luck
Regards-liaqat hayat

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Liaqat Hayat

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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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