AboutPeter M. Elliott Expertise 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.
Experience Value . . .
It's unwise to pay too much, but it's unwise to pay too little. When you pay too much you lose a little money, that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing you bought it to do.
The common law of business balance prohibits paying a little and getting a lot. It can't be done. If you deal with the lowest bidder, it's well to add something for the risk you run.
And if you do that, you will have enough to pay for something better.
. . . John Ruskin (1819 - 1900)
"We are too poor to buy something cheap"
.Romanian Proverb 2002
A lean compromise is better than a fat lawsuit.
George Herbert (English poet 1593-1633)
I said it in Hebrew, I said it in Dutch,
I said it in German and Greek:
But I wholly forgot (and it vexes me much)
That English is what you speak!" Hunting of the Snark - Lewis Caroll
Match your presentation to the reader!
The joy of food lasts but an hour, of sleep but a day, of a woman, but a month, but the joy of a building lasts a lifetime. Syrian proverb.
Comments and observations leading to improvements in the translation of FIDIC Red & Yellow books into Romanian prior to approval by FIDIC (reference 'Preface to the Romanian edition')
Question I am building a residential home. I have an agreement with a builder to scope the house for lump sum amount of $25,000. My contract with the builder states the following regarding payment," Owner will pay contractor the amount of $4166.67 per month for an initial duration of 6 months from the date that the initital building permit is secured. This sum will be due on the first of each month. In the event that this project requires additional time for completion, these terms will be renegotiated to the satisfaction of both Jamie Rogers of Gemini Construction and Melissa Bosiger." The building permit was secured on 4/13/05. I paid the first payment on 5/1/05 and the second on 6/1/05. The bank has came to the house and assessed the construction is not at 50% for the 7/1/05. His third payment would be 50% of the total amount due. I don't want to overpay him. Can I withold payment from the contractor? In addition, the contractor is telling me now that it will take him eight months. The project scope is the same and there have been no changes. He will not provide me with a schedule to show me why it is going to take eight months. What can I do? I feel liking he is slowing down to get more money.
Thanks,
Melissa
Answer Hi Melissa,
I think that I pressed the wrong button - the joys of computers - and sent you another answer, but here is the 'real' on.
You do not have the right to withhold payments which are legally due, but how much is legally due to the Contractor? You have a contract which includes for modification of the payment terms, so modify them.
Generally, payments are based on progress, or stages, not time. The stages are clearly defined; such completion of ground floor slab, walls to roof level, watertight structure, etc., and the amount is related to the value of work done. About 5% of the final value is often retained until the end of the defects notification period, usually one year, but this sum could be replaced by an acceptable warranty. I suggest that you discuss progress with your contractor and propose that payments are rescheduled over nine months, as there have been delays to date and thus there are likely to be more delays, and that the next payment reflects the payments made to date, so that no payment would be made in July - he has been paid one third of the total and one third of the estimated time has passed. In the mean time, put the payment due for July into an escrow or similar account until agreement is reached and inform the Contractor of your action and that any interest on the account will be paid to him. Do not delay in making this arrangement, because the Contractor could issue a mechanic's lien or, worse, stop work all together. This action shows that you are not refusing to pay the Contractor, but wishing to be fair to both sides. If the Contractor is uncooperative, then you could discuss payment of liquidated and ascertained damages by him to cover your expenses due to the late completion of your new home.
It seems as the Contractor has no grounds for claiming extra money. It could be that he underestimated the work, had problems on other sites or suppliers were late with deliveries. None of these things matter to you, but you assume that he had included for these risks in his price.
Stay away from lawyers whatever you do, because they are expensive. As Churchill said 'Jaw jaw is better than war war'. I hope that you enjoy your new home.
