You are here:

Construction Law/Fidic 87 Red Book - Resumption after prolonged suspension under 69.4

Advertisement


Question
QUESTION: Hi
We signed a contract (Fidic Red Book 97 4th Ed) with the Employer (GOVT); and in Nov 2013 we suspended works for non payment of an interim certificate.
The extended contract completion date was Jan 2014.
The Employer paid the certificate in Nov 2014. At a Management Meeting held in Feb 2015 the Employer stated and recorded in the minutes that there were no funds available for completing works remaining in the contract and none budgeted for yet.
We subsequently applied for Cert 11 whcih is for works done by the dte we suspended but the Employer says he cannot process the certificate in the absence of an extension of time
Subsequently now the Employer is demanding that we return to site under 69.5 and  resume works
My performance guarantee is expiring upon receipt of completion certificate and today the employer has given me a notice under clause 39.2
I fear he is hoping to cash my guarantee
What do I do? - Shall I give Notice of Default under 69.1(d) as he stated he has no money to pay
Since there has been no extension of time given can he still give me notices under the conditions of contract - is not the time at large
I would like to revise the rates as we tendered in Feb 2011 and now more than 4 years have passed
Please help me

ANSWER: Dear Vicky

Thanks for your question. I have reviewed your case in details and would require following clarifications from you so as to provide an adequate advise. Is Form of Contract FIDIC 87 4th Edition?

Clarifications required:

i) I presume that your suspension was well documented and agreeable as per the CoC. Please confirm.
ii)"The Employer paid the certificate in Nov 2014"...which one ? Is it PC No. 10?
iii) PC No. 11 - You mentioned that this pertains to the Work done until Suspension date. If yes, then which PC you are referring in "The Employer paid the certificate in Nov 2014"? Is it PC No. 10?-- Which Period?


Unfortunately PB can be encashed without any counter questions from the Bank. You may however use power of the Court stop such encashment. There are case laws wherein the Employer was not having any bona fide legal rights.

You may issue notice of default as from your explanation one would suspect that you have a case against the Employer.



---------- FOLLOW-UP ----------

QUESTION: Dear Manish

Many thanks for your response herewith some clarifications

1) Yes it  is the 87 Red Book 4th Edition (not 97)
2) We suspended the works for non payment of Cert 10 and the employer paid certificate No 10 in Dec 2014 (12 months late)
3) Cert No 11 was only raised after we had a Management Meeting in Feb 2015 and is for works done between Cert 10 and the suspension date on Nov 2014

The Employer has been demanding that we go back to site - we do not mind doing so but are uncomfortable if there is no EOT since the completion date still stands at Jan 2014 so we have made and submitted an application for EOT and are asking the Employer to grant one - using this as grounds to justify needing insurances etc so cannot mobilize

By the Employer's admission that they have no funds budgeted to complete the works we would be keen to know if we can contractually interpret that as the Employer being in breach of contract (69.1) and if so then can the Employer give us a Notice of Breach under 39.2 if he is the entity putting me in a circumstance of breach by being in breach himself?

Please advise

Answer
Dear Vicky

My apologies for late response.

As per your description of this scenario, you may prove that the Time is at Large since there is not approved EOT from the Engineer/Employer side.

It is highly subjective to prove "Breach of Contract". As they say two wrongs wont make a right, it is suggested that you should keep requesting the Employer for EOT approval .....

If EOT is not granted, Time at Large can be easily proved, the Employer will loose his right to impose LDs.

On the other hand, as a Contractor , do you consider that you are also in delay (dominant or concurrent?)

Please do let me know if you have already tried Time at Large appproach?

Best Regards

Manish Gupta  

Construction Law

All Answers


Answers by Expert:


Ask Experts

Volunteer


Manish Gupta

Expertise

I can answer questions related to Cost Planning, Contract Administration, Construction Law & Other Post Contract QS related areas.

Experience

7 Years with Contractors 12 plus Years with Owners & Consultants

Organizations
Calgary Project Consultants, Jacobs International, Turner International, J Ray McDermott Inc. Hindustan Construction Company

Education/Credentials
MRICS, MCIArb, BE (Civil), PGDCM LLM-Constuction Law in Arbitration and Adjudication

©2016 About.com. All rights reserved.