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Construction Law/Mobilization Advance

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Question
Dear Sir!

We are working under EPC FIDIC 1999. The Contract Clause 14.2 " An interest free Mobilization Advance upto 15% of Contract price will be given to the Contractor on submission of the Guarantee......" The Contractor submitted the Guarantee equivalent to 15%. But the Employer is paying 10% and saying that it is not mandatory to pay full 15%. He is saying it may be upto max 15%. Plz comment.

Answer
Dear M Ishaq,

Thank you for this question.

This is an example of poor drafting as the amount of an advance needs to be certain. The standard FIDIC Clause (which seems to have been modified in your case) requires that the amount of the advance is stated in the Appendix. Although the contractor should have queried this at the pre-contract stage and sought a clarification, I think that the Employer will be held most accountable.

The potential ramifications are wide. At the extreme it may be possible for the Contractor to argue that its tender was based upon a misrepresentation by the Employer and the contract should be avoided. The Employer might also argue that the terms of the advance are vague and, therefore, no advance payment is due.

My suggestion, if the Parties are unable to agree and to execute a variation to record and accommodate that agreement the matter should be raised as a dispute and the contractual dispute resolution mechanism initiated.


I hope that this assists you.

Kind regards,
John Dowse

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John Dowse

Expertise

Legal; contract interpretation; quantum; delay analysis. Practitioner in arbitration, adjudication and mediation.

Experience

Thirty-three (33) years experience in building and construction, at all levels both within contracting and consulting organisations. Practising arbitrator, adjudicator, and mediator. Faculty approved trainer for the Chartered Institute of Arbitrators. Lecturer on construction contract forms and dispute resolution practices.

Organizations
Chartered Institution of Civil Engineering Surveyors Chartered Institute of Arbitrators Institute of Directors Society of Construction Arbitrators

Publications
Various UK and International construction and legal publications.

Education/Credentials
LLB (Hons), Pg Dip (Legal Practice), MCInstCES MCIArb MIOD Barrister

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