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CONTRACTOR ABANDONING THE WORKS

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Re: CONTRACTOR ABANDONING THE WORKS

Post  RJM on Mon Oct 25, 2010 7:30 pm

I was asked and this is my contribution. Let us keep the ball rolling.

1. The action of the contractor to abandon work is the fundamental breach of contract which amount to repudiation. Clause 62.2 of the GCC of the referred Form of Contract narrates that one of the fundamental breaches of contract is when “the contractor stop for 28 days when no stoppage of work is shown on the current Programme of Work and the stoppage has not been authorized by the Project Manager”. If the situation above satisfies this condition then PE must terminate the contract by follow appropriate procedures prescribe in the contract.

2. Termination should follow by confiscating of the Performance Bond/Security. [Do not ask me what if the the contractor did not submit the security or the security submitted is unauthenticate.]

3. Overpayment – this can be recovered under the Clause 63 [Payment upon Termination] which narrates that “

If the Contract is terminated because of a fundamental breach of Contract by the Contractor, the Project Manager shall issue a certificate for the value of the work done and Materials ordered less advance payments received up to the date of the issue of the certificate and less the percentage to apply to the value of the work not completed, as indicated in the Special Conditions of Contract. Additional Liquidated Damages shall not apply. If the total amount due to the Employer exceeds any payment due to the Contractor, the difference shall be a debt payable to the Employer.

Practically Project Manager will determine the work done so far and how much has been paid to date to establish who owe who [balance the books] and how much. The excess will be a debt payable to respective party. I think here is where complications begin – Litigation.

4. If the above is not enough, Clause 64 [Property] is of advantage to PE in terms of recovering overpayment. The clause states that

“All Materials on the Site, Plant, Equipment, Temporary Works, and Works shall be deemed to be the property of the Employer if the Contract is terminated because of the Contractor’s default”. This is trick if the contractor has already demobilize.

The GCC does not say what exact happen after the PE has confiscated those assets. I presume that they can be sold to recover the debt.

RJM

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CONTRACTOR ABANDONING THE WORKS

Post  RJM on Wed Nov 04, 2009 5:16 pm

I was asked this question with one of the practitioners in the procurement and I found it interesting and merit to share. Please help!

What are the courses of action that the PE should take, as per the provisions of Standard Bidding Document (Smaller Works & Medium and Large Work), supposing that the contractor quit the job without completing the job and that the contractor had been over paid at that point of time?

RJM

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