Webinar October Payments: Termination With Guest Speaker Karen Gough - 39 Essex Chambers Bill Barton - Barton Legal
The Trials and Tribulations of Termination KAREN GOUGH 39 ESSEX CHAMBERS
The Trials and Tribulations of Termination Construction Director Bill Barton, billbarton@bartonlegal.com • He has particular expertise in drafting and negotiating specialist bespoke contracts whether in relation to wind farms, renewable energy such as biomass, office and industrial developments, colleges or standard construction projects. As a result, he is experienced in drafting amendments to and negotiating not only standard forms of contract such as JCT, NEC and ICE, but also the FIDIC Red and Silver books as well as IChemE Burgundy, Red and Yellow books.
The Trials and Tribulations of Termination: Under the NEC & JCT Forms of Contract
The Trials and Tribulations of Termination: Under the NEC & JCT Forms of Contract
The Trials and Tribulations of Termination: Under the NEC & JCT Forms of Contract
The Trials and Tribulations of Termination: Under the NEC & JCT Forms of Contract
The Trials and Tribulations of Termination: Under the NEC & JCT Forms of Contract
The Trials and Tribulations of Termination: Under the NEC & JCT Forms of Contract
The Trials and Tribulations of Termination: Under the NEC & JCT Forms of Contract
The Trials and Tribulations of Termination: Under the NEC & JCT Forms of Contract
The Trials and Tribulations of Termination: Under the NEC & JCT Forms of Contract • We have also provided you with a handout, this includes: 1. A guide on termination across the various contracts; 2. The contract process that should be followed to terminate the contract; 3. A comparison of the reasons to terminate across the various contracts; 4. A discussion on repudiation; 5. Case law that relates to termination.
The Trials and Tribulations of Termination: Under the NEC & JCT Forms of Contract • We have also created example termination notices, that can be accessed after the webinar: • These can be used as a template for a termination notice you may send. • Please note, these are examples only. Barton Legal do not accept any responsibility for any attempted terminations that use these templates.
The Trials and Tribulations of Termination: Under the FIDIC Forms of Contract KAREN GOUGH, Barrister, Attorney-at-law, Chartered Arbitrator, Past President of the CIArb. karen.gough@ 39 essex.com • Karen Gough practises internationally as counsel, attorney-at-law, arbitrator, adjudicator and ADR neutral. She has specialised, for more than 30 years, in complex construction, engineering, professional negligence and general commercial disputes whether resolved by litigation, arbitration or ADR. She represents a wide range of clients including governments, government agencies, local authorities, educational institutions, contractors, sub-contractors, and major commercial organisations. Karen is dual qualified in the Caribbean and is an expert in FIDIC and recognised as such.
The Trials and Tribulations of Termination: Under the FIDIC Forms of Contract • Is termination inevitable? • Is there another option? • Suspension; • direct renegotiation; • dispute avoidance under clause 21? • Termination by agreement; • Employer’s termination for convenience?
EMPLOYER’S TERMINATION CLAUSE 15 NOTICE TO CORRECT: S-C 15.1 • 2017 Forms: Engineer or Employer’s right to issue a notice to correct… • And • Prescribed contents of Notice to Correct: describe failure and sub-clause of GCOC breached, specify [reasonable] time within which it must be remedied. • Contractor MUST respond immediately specifying measures to be taken to remedy the failure and the date they will be started. • The time specified in the Notice to Correct does not imply any extension of the Time for Completion. [Notices substantially intended to refer to Contractor default, therefore probably no entitlement to money or costs.]
EMPLOYER’S TERMINATION CLAUSE 15 S-C15.2: Termination for Contractor’s default : • Grounds (a) – (e) (some changes of substance from 1999) see: (a) Contractor’s failure to comply with (i) Notice to correct [S-C 15.1]; (ii) an Agreement or final and binding Determination under S-C 3.7; or (iii) DAAB Decision, binding or final and binding [S-C 21.4]. • AND such failure constitutes a material breach of the Contractor’s obligations under the Contract .
EMPLOYER’S TERMINATION CLAUSE 15 …/S-C15.2 : Requirements/form of Employer’s Notice under S-C 15.2.1: Either: • Notice of Intention to Terminate the Contract: grounds (a) – (e); or • Notice of Termination (immediate) in respect of grounds (f) – (h): (f) Subcontracts the whole of the works without required agreement; (g) Bankruptcy or insolvency… [NB position regarding JVs joint and several liability, so partners must cover insolvent member]; (h) On reasonable evidence of fraud, corruption… in relation to the works.
EMPLOYER’S TERMINATION CLAUSE 15 Consequences of Employer’s notice : S-C 15.2.2: Unless the Contractor remedies the matters specified in the Notice of Intention to • Terminate within 14 days, the Employer may terminate. In respect of Notices in respect of S-C 15.2.1(f)-(h), the termination is effective • immediately. 2017 Forms have more detailed provisions for action after termination (S-C 15.2.3) • and completion of the works (S-C15.2.4) which, as in the 1999 Forms, includes the release of the contractor’s equipment and temporary works at or near the site, or their sale if the Contractor is indebted to the Employer.
EMPLOYER’S TERMINATION CLAUSE 15 Valuation after termination : S-C 15.3 • Engineer/Employer to agree or determine value of the works/sums due to the contractor (S-C 3.7); • The date of termination is the date for the commencement of time limits under clause S-C 3.7.3. Payment after Termination: S-C 15.4 • Emphasises the Employer’s right to withhold payment until all claims/costs of completion/loss and damages, including delay damages between the Date for Taking Over the Works and the Date of Termination (if later).
EMPLOYER’S TERMINATION CLAUSE 15 Termination for Employer’s Convenience : S-C 15.5 1999 Forms recap: By notice at any time, effective 28 days after the notice or the return of the performance security. • Employer must return performance security forthwith and may not terminate to execute the works himself or by third parties. • Works valued under S-C 16.3, and paid as provided for in S-C 19.6. 2017 Forms : As above, but Employer also: may not use Contractor’s Documents (unless paid for), or Equipment, Temporary Works etc. • Unless/until Contractor has been paid sums due on termination, the Employer may not continue the Works. • Note: no prohibition against termination for Employer or third party to complete works. BUT CF S-C 13.1(iv) Omissions may not be instructed to give work to others, unless agreed.
EMPLOYER’S TERMINATION CLAUSE 15 Termination for Employer’s convenience: New S-C 15.6: • The Contractor must submit particulars of the value of the work done (see S-C 18.5 (optional termination)), and additions/deductions of balance due under S-C 14.13 (Final Payment Certificate). Includes loss of profit or other losses and damages. • The Engineer/Employer’s Representative must determine the sums due under S-C 3.7 and issue a payment certificate, time runs from the date of receipt of the Contractor’s particulars. and New S-C 15.7 : Employer must pay within 112 days from date of receipt of Contractor’s submission.
CONTRACTOR’S TERMINATION CLAUSE 16 Termination by Contractor : S-C 16.2 Notice of intention to terminate (14 days): 1999 Forms RECAP: (a) Failure to supply evidence of ability to pay (S-C 2.4) within 42 days of the notice; (b) Failure within 56 days of receipt of Statement… to issue IPC (not S.B.); (c) None payment, 42 days after expiry of time for payment; (d) Employer’s Substantial failure to perform its obligations under the Contract; (e) Failure to comply with provisions for execution of the Contract Agreement (S-C 1.6) or requirements for Assignment (S-C 1.7).
CONTRACTOR’S TERMINATION CLAUSE 16 Termination by Contractor: (2017) S-C 16.2 Notice of intention to terminate (14 days): As for 1999 (a)-(c); [new] (d) failure to comply with binding agreement or final and binding Engineer’s determination (S-C 3.7) or binding OR binding and final DAAB decision (S-C 21.4); AND such failure constitutes a material breach of Employer’s obligations under the Contract ; (e) (old s-c (d) revised) Employer substantially fails to perform, and such failure constitutes a material breach of its obligations… ; (f) Failure to issue a Notice of the Commencement Date within 84 days of the receipt of the Letter of Acceptance. (g)(i) Failure to execute the Contract Agreement (S-C 1.6).
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