Non-Contractor Caused Delay
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Nariman ArslanMember for 19 years 10 months
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Dear all,
Can you provide me with your opinion in a delay caused by the Employer by delaying the effecting of the Advance Payment to the Contractor.
The Advance Payment was credited to the Contractor’s account after (64) days of the issuance of the Advance Payment Guarantee by the Contractor. Such a delay was the major effect in delaying the effecting of L/C’s for the Contractor’s steel supliers. Hence, delaying the overall project duration.
Since there no exists any clause in the Project’s Contract Conditions supporting Contractor’s position, my question here: is there anyway that the consequential damages and costs caused by the delay not to be born by the Contractor??? in other words, how to defend the Contractor in this case???
Can you provide me with your opinion in a delay caused by the Employer by delaying the effecting of the Advance Payment to the Contractor.
The Advance Payment was credited to the Contractor’s account after (64) days of the issuance of the Advance Payment Guarantee by the Contractor. Such a delay was the major effect in delaying the effecting of L/C’s for the Contractor’s steel supliers. Hence, delaying the overall project duration.
Since there no exists any clause in the Project’s Contract Conditions supporting Contractor’s position, my question here: is there anyway that the consequential damages and costs caused by the delay not to be born by the Contractor??? in other words, how to defend the Contractor in this case???
5 replies
Oldest first- 0Kieran Thomson ·Good morning Nariman
Sounds like a good question for another long thread. One with many possible answers but at the end of the day it will be down to the terms & conditions set out in the contract between the client (the plaintiff) & the principle contractor (the defence). And not knowing these in detail then see below.
A brief summary;
If it was agreed that orders (or a clause that orders over a certain amount) would not be placed by the principle contractor unless funds were released by the client... you see were this is going, then the principle contractor cannot be at fault.
If no terms were in the contract and the client believed they had chosen a contractor with a big enough wallet to cover costs until costs were invoiced properly disregarding the amount and terms of the sub contractor (probably the smartest client in legal & financial terms), then the principle contractor doesn’t have a leg to stand on.
In summary of above, if the client has drawn up a fairly air tight contract then you is stuffed. Best advice is go and see the leagl team who negotiated the contract with the client and ask them where does the principle contractor stand. They are the best people to see in these circumstances.
Please let PP know how it turns out.
Cheers
Kieran
PS> T&C’s on a pear shaped projects can be cruicial and certainly interesting for future projects.
- 0Larry Rino ·Naimran,
In my opinion, I don’t think that Advance Payment (A/P) should be linked from project mobilization cost such as LC in your case.
Basically, the initial cost expenses such as mobilization cost, etc. should come from the project operating cost which is sourced from Contractor’s own account.
In case of Employers late payments of such A/P, Contractor is reasonably entitled to receive an interest rate for the period of delay.
Good day
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