Construction Law/Payment delay


Marcel Dube wrote at 2015-04-21 16:53:39
While I agree with Peter's analysis, I felt compelled to add a few insights to clarify a few points for Tamer. Firstly, I would like to state that I wish all those who present questions would at all times mention what Contract Form they are using as it makes it a whole lot easier for the expert to give a more appropriate advice.

In most contract forms, a distinction is made between events leading to an entitlement to an EOT and events leading to an entitlement to Additional Payments. An entitlement to an EOT does not necessarily mean an automatic entitlement to Additional Payment. In this particular case, it sounds a bit perculiar that a Delay in Payment would directly be linked to an EOT. Most contract clauses are constructed in such a way that the contractor is entitled to exercise a right to delay progress and/or cease work altogether until payment is made. It is, in essence, the delay and disruption to physical progress caused by this rightful progress delay (or go slow as the case maybe)that the contract would be attempting to compensate the contractor for, and not just a mere payment delay in itself.

So, in the event that the contractor continued to work at normal pace in the face of delayed payments, then he suffers no Delay Damages.He would then only be entitled to Finance Charges, which most contract forms provide for. Contract law rarely compensates for damages that have not been suffered, even if liability can be established.

The way Tamer has phrased is question mis-leads one to proceed with his analysis on the basis that the contract recognises a direct link between Delayed Payment and Delayed Physical Progress which cannot be right, for how then can the alleged delay be calculated? and on what basis?, on the basis of the number of days the Payment has been delayed? I cannot begin to think that can be right.

To answer Tamers last question as to 'WHAT then....if the notice requirement is exceeded by a mere 2 days' I agree with Peter that Notice Requirement privisions are intended to allow the Employer or his representative to control costs and budget before its too late. While most contract forms (except may be the NEC's Early Warning Provisions) do not specifically deny payment altogether for 'Notice Requirement' reasons,quite a number and a few unscrupulous employers would want to use this as an opportunity to deny payment.

What then is the answer to Tamer's question: Of course the contractor would still be entitled to additional payment but only to the extent that the employer has not been prejudiced finacially or otherwise by the lack or lateness of the Notice in question. This is when good relations and negotiating skills are called for; the contractor will present his justification and substantiation for additional payment and the employer will counter some of it by demonstrating the savings he would have made had it not been for the late notice. Again, I agree with Peter on his strategy to forfeit the 2 days on the claim for the EOT.

I hope the above plus Peter's narrative will answer Tamre's question FULLY.  

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Peter M. Elliott


First response to queries regarding extensions of time, variations orders, site instructions and payment using FIDIC and other forms of Conditions of Contract, based on English Law, and derivatives only. Anyone who needs advice about EoT should download and study the SCL Delay & Disruption Protocol before submitting a question.


Value . . .
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Institution of Civil Engineers, Association of Chartered and Certified Accountants, Society of Construction Law, Dispute Resolution Board Foundation

B Sc(Hons) in Civil Engineering

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