CON4541 CONSTRUCTION CONTRACT MANAGEMENT

4. Contract Administration (refer Private Standard Form with Quantities for HK)
Contd

K. Determination by Employer ()

Clause 35 provides two types of determination of the employment of the

Contractor by the Employer.

A(i) Optional determination:

(a) If the Contractor completely or substantially suspending the carrying out of the
Works without good cause.

This means a complete or almost complete cessation of work, partial suspension is

not enough.

(b) Not proceeding regularly and diligently with Works.

This is difficult for the Employer to establish and the Contractor could argue,
depending on the circumstances, that he had reasonable cause for the alleged (
) failure.

For example, if the Employer were persistently late in honoring Interim Certificates
or under valuation in Interim Certificates this could well be reasonable cause for
slowing down the progress of the Works by the Contractor.

(c) Not complying with Architects Instructions for replacement, repair or

reconstruction of works not in accordance with the Contract resulting in the Works
being materially affected.

(d) Failure to comply with Clause 19.1 Assignment. The Contractor must not
assign any part of the works without the appropriate written consent from the
Employer.

(e) Failure to comply with Clause 19.2 Sub-letting. The Contractor must not
sub-let the whole or substantially the whole of the Works to the same person.

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A(ii) Automatic determination

Although determination is automatic, it is not irrevocable(). The Contractors

employment may be reinstated if the Employer and the Contractor (or his trustee,
liquidator etc.) so agree.

Insolvency of Contractor which includes :

(a) becomes bankrupt;
(b) makes a composition or arrangement with his creditors;
(c) has a petition for compulsory winding-up;
(d) enters into compulsory or voluntary liquidation except reconstruction; or
(e) has a provisional liquidator or receiver appointed.

B. Determination Procedure by Employer

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(1) The Architect must serve notice on the Contractor specifying the default, so as
to provide the opportunity of remedying the default by the Contractor.

(2) On receipt of the notice the Contractor has three courses of action available to
him:

a. If the Contractor believes the allegations to be groundless he can dispute the

notice and give notice of arbitration.
b. The Contractor can accept that he is in default, improve immediately and inform
the Architect that the default specified in the notice has ceased.
c. The Contractor may ignore the notice of determination and risk the
consequences of the Employer exercising the option to determine his
employment under the Contract.

C. Rights and Duties upon determination by Employer

The Employer may employ others to complete the Works, who for this purpose,
may enter the Site, use all temporary buildings, plant, tools, goods and materials
intended for them; and purchase all materials and goods required for completion.

The Contractor shall not remove any materials, goods, temporary buildings,
plant or equipment from the Site until instructed by the Architect;

The Contractor shall if so required, assign to the Employer the benefit of any
agreement for the supply of materials or goods and/or the execution of any work
under the Contract.

The Contractor shall, when required by the Architect, remove from the works
any temporary buildings, plants, tools, equipment, materials and goods belonging to
or hired by him. If within a reasonable time after such a requirement, the Contractor
has not complied, then the Employer may remove and sell any such property. The
proceeds, less all cost included, will be held by the Employer to the credit of the
Contractor.

The Employer is not bound to make any further payment to the Contractor until
the completion of the Works. The balance between the value of the work completed
and the value of the work certified, less the amount of the direct loss or damage

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caused by the determination will be computed in the final account and handle
accordingly.

L. Determination by Contractor ()

Clause 36 determination by Contractor specifies the Employers default which

may entitle the Contractor to determine his own employment under the Contract.

A(i). Optional determination:

(a) Fail to make payment of certificates. If the Employer does not pay amounts
properly due on certificates within the period for payment of certificates (say
14 days), the Contractor may exercise his right to determine his own
employment under the Contract.

(b) Interference with or obstructing the issue of a certificate to the detriment of the
Contractor. Such interference by the Employer would include any attempt to
prevent the Architect issuing a certificate of any kind to the Contractor.

(c) Failure to comply with Clause 19.1(1) Assignment. The Employer must not
assign any part of the works without the appropriate written consent from the
Contractor.

(d) Postponing the date for commencement of the whole of the Works or
substantially the whole of the Works for a period of 120 days or more due to
Architects Instruction under clause 23.3.

(e) Suspension of the Works or substantially the whole of the Works for a period
of 120 days or more due to Architects Instructions under clause 23.3.

A.(ii) Automatic determination

The Contractor may give a notice of determination of his own employment if the
Employer insolvent which includes:

(a) becomes bankrupt;

(b) makes a composition or arrangement with his creditors;

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(c) has a petition for compulsory winding-up;

(d) enters into compulsory or voluntary liquidation except reconstruction; or
(e) has a provisional liquidator or receiver appointed.

The obligation of the Contractor to carry out and to complete the Works shall be
suspended immediately if the Employer is insolvents and before any notice of
determination of his own employment takes effect.

B. Determination Procedure by Contractor

The Contractor serves a notice of default to the Employer specify the default and
state that notice of determination may be served if the default continues for a further
14 days.

If the Employer continues with the default after 14 days of receipt of such notice of
default, the Contractor may determine his own employment by serving a notice of
determination to the Employer within a further 14 days.

C. Rights and Duties upon determination by Contractor

The Contractor must forthwith remove all his temporary buildings, plant, tools,
equipment, materials and goods.

The Contractor is entitled to receive payment from the Employer for the total
value of work completed or partially completed up to the date of determination.

Any sum ascertained as direct loss and or expense claimed whether

ascertained before or after determination.

The cost of removal of temporary buildings, plant, etc.

Direct loss/ and or damage, loss of profit etc. caused to the Contractor due to
the determination.

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