6CN011 Contract Law and

Dispute Resolution (Qatar)

Lecture 7
Termination / Suspension
Risks & Insurance
28 March 2012

Today: Scope of the

lecture
Termination of Works by the
Employer
Termination and suspension of Works
by the Contractor
Risks in construction
projects/contracts
Insurance of the Works and resources

Termination by the Employer (Cl

15)
The Employer is entitled to terminate
the contract if the Contractor fails to:
Obtain a performance security
Remedy a failure when notified by
the PM
Commence or proceed with the works

Termination by Employer (Cl 15)

Employer can also terminate if Contractor:
Subcontracts the works
Assigns the contract
Becomes bankrupt or insolvent
Demonstrates being corrupt (bribery, etc)
Further; Employer can terminate by
reason of convenience (15.5)

Rice V Great Yarmouth BC

A (JCT) contract stated that if the
Contractor commits a breach of any of
any of its obligations under the Contract
the Council (Employer) may, without
prejudice to any accrued rights or
remedies under the Contract, terminate
the Contractors employment under the
contract, by notice in writing.
Is the Employer entitled to terminate for
any breach?

Rice V Great Yarmouth BC

The Court held that: the employer
was entitled to terminate only where
the breaches amounted to
repudiation in the normal sense.

Termination by the Employer (Cl

15)
Timing: The Employer can terminate
the Contract immediately:
Corruption
Insolvency
Employer to give Contractor 14 days
notice in other circumstances

Termination by the Employer (Cl

15)
In the event of termination by The
Employer, Contractor to:
leave site
Comply with reasonable instructions,
where possible
Hand-over any relevant documents to
the Employer

Suspension and termination by

the Employer
Employer to notify and hand-over
Contractors equipment:
At or near the site
Can sell these to recoup any
money owed
Employer to value works done by
Contractor and pay the later, where
applicable
Employer may complete the Works

Suspension and termination by

the Contractor
1. Contractor can stop (Suspend) work or
slow-down, [after 28 days notice], if
Employer does not:
issue payment certificate
Provide evidence of Financial Arrangement

2. Contractor can further

1. Terminate the Contract if the Employer
does not rectify (1) above
2. Claim for losses therein
Engineer to agree or determine matters

Suspension and termination by

the Contractor
Contractor can terminate the Contract
for several reasons:
Exercise: Using Clause 16.2, discuss
these reasons:
1)

Suspension and termination by

the Contractor
In the event of termination,
Contractor to (16.3):
Leave site; except for safety reasons or
to protect life
Handover documents and resources
already paid for
Remove other goods from site

Suspension and termination by

the Contractor
After termination, Employer to (16.4):
Return Performance Security to
Contractor
Pay the Contractor, where applicable

Suspension and termination

through Force majeure
Force majeure = exceptional events or
circumstances beyond the control of the
parties, e.g.:
War, hostilities, terrorist activities,
Riots, disorder, lock-out,
Munitions of war, explosive materials,
ionising radiation, contamination due to
radio-activity,
Tsunami, earthquake, hurricane, volcanic
activity,
Etc.

Suspension and termination

through Force majeure
1. Force majeure can affect either
Employer, Contractor or both
2. If so affected, either party can:
Notify the other within 14 days of
becoming aware, stating the event or
circumstances
Applicant excused from performance
but this does not include obligation to
make payments

Suspension and termination

through Force majeure
1. Parties to try to minimise delays due
to Force majeure
2. Notify the other party when they are
no longer affected by Force majeure

Suspension and termination

through Force majeure
If so affected by Force majeure, and
notice has been given:
1.Engineer to assess impact of event
or circumstances
2.Contractor may be entitled to i)
extension of time, and ii) extra costs.

Termination of Contract through

Force majeure
A contract can be terminated due to
Force majeure, if it persists for:
1.84 days single occurrence
2.140 days cumulatively multiple
occurrences
A party may give notice in this respect
Termination to take effect 7 days after
this notice
Engineer to assess Contractors
entitlement, if any

Termination through other causes

1. In addition to Force majeure, a
Contract can be terminated if an
exceptional event or circumstance
prevents a party from carrying out
the Contract
Payment to the Contractor, if any, is
assessed as in the case of Force
majeure

Short Break

Risks
A risk is a hazard or danger to ...
Consequences of risks:
Injury to persons
Injury or damage to property
Deaths

21

Contractors actions concerning

risks
Contractor is liable for risks except for
1.Excepted risks; or
2.Negligence of the Employer

22

Risk and Responsibility

Contractor to indemnify Employer &
personnel, [and vice-versa] against [17.1]:
Injury, sickness, disease, death
Damage/loss to property

Contractor to care for the Works (17.2)

To restore any damage at own cost and risk
except caused by Employer

C responsible for damage caused even

after the issue of the Taking-Over
Certificate

Employers Risks
Are listed in Cl 17.3
Discuss the Employers risks and
compare and contrast these risks
with Force majeure events

Employers Risks
Damage cause by Employers risks
shall be rectified by the Contractor
However, the Contractor is entitled
to:
Extension of time
Any additional costs

Intellectual / Industry Property

Right
Employer and Contractor to
indemnify each other
i.e. protect each other against
breaches of copyrights

Intellectual / Industry Property

Right
Employer to indemnify the Contractor
against:
Breaches for unavoidably complying with
the Contract
Works being used by the Employer, i.e. for:
1. Purposes not indicated or inferred from the
Contract
2. Any harmful thing supplied which was not
disclosed to the Contractor prior to the Base
Date

Intellectual / Industry Property

Right
Contractor to indemnify the Employer
against breaches :
Manufacture, use, sale or import of
any Goods or any design for which the
Contractor is responsible
E.g. advise the Employer is they need to
apply for a license to continue to use
any Goods purchased

Limitation of liability
Except for fraud, deliberate default
or reckless misconduct; liability
should not exceed:
1. The sum stated in the Particular
Condition; or,
2. Accepted Contract Amount

Insurance
Insuring Party = Insurer
Contractor to insure on terms approved
by the Employer
Employer to insure in accordance with the
Particular Conditions

Joint cover shall apply as if each party

had been insured separately
Payment to be made in currency for
rectifying the loss or damage

Insurance
Insuring Party to provide:
evidence of insurance and policy
documents to the other Party
Evidence of payment + notify Engineer
Employer to insure in accordance with
the Particular Conditions

To insure:
1.Works and Contractors Equipment
2.Against injury to persons and damage to
property
3.Contractors personnel

Insurance
Insurance must be maintained till the
Performance Certificate is issued
Insurance for equipment includes
their transportation to the site
If certain insurance cover is not
available at commercially reasonable
rates; Contractor:
To notify Employer
May obtain exemption

Todays lecture has

covered:
Termination of Works by the
Employer
Termination and suspension of Works
by the Contractor
Risks in construction
projects/contracts
Insurance of the Works and resources