Employer or Engineer Breach after Failure to Certify?

Andrew



You rightly said.



The certification period should include in new Contracts in Payment Clause as payment due date is given in the Contracts to avoid any Claim under Certification Period

Hi all,



Stuart (Ness) seems to have the answer pretty spot on although I will add one coment.



If the contract is silent on the period of certification (or period of payment or come to that anything else) then certification or whatever should be carried out in a reasonable time!!!!



So what is a reasonable time?



There is no one answer to this, but generally you could take whatever is normal custom in the industry to give you a good indication. This is problem that’s been around for along time and if you do a bit of reseach there will almost certainly be some past court cases that should shed some light on how it is dealt with in your country.

Shahzad,



I think that your post may be considered by some to be a little confusing.



I think that most Contracts – whether Standard or bespoke – will set out the period within which payment is to be made. After all, payment of the Contract Price is the primary obligation of the Employer! Not all Contracts specify a separately identifiable period for certification, though this is the norm in many Standard Forms of Contract.



If the Contract is silent on the period in which certification is to be made, but does define the period within which payment is to be made, then the late certification is not an issue. Indeed, when – if at all – would the contractor actually know when certification had been made? There would be, however, an entitlement to claim based on the late payment, since late payment would be a breach of the Contract terms by the Employer. Late certification, if it is not addressed by the Contract terms, would not be cause for entitlement to claim.



In Anthony’s case, however, his Contract appears to set out a period for certification as well as a period for payment, and any failure to comply with these periods should be treated separately, although in both cases the Employer is liable for the consequences.



Hope this clarifies.



Cheers,



Stuart



www.rosmartin.com

If the Engineer fails to certify IPC in absence of certification period in the Contract and accordoingly the Employer delays the payment as stipulated in the Contract then you may raise Claim of Interest on Delayed certification and Payment also.



But mostly in such cases the certification period is mutually agreed such as if Employer is to pay within 28 days as per Contract, then 7 or 14 days are mutually and reasonably agreed for certification between the parties i.e the Contractor and the Engineer

Anthony,



Sorry to see that things have drifted so badly in regard to your payment. No point in crying over spilled milk, but you have just proved my earlier point that if you let this matter drift, then the Employer and Engineer will continue to take advantage of you, as they appear to have done. Unfortunately, they will have seen your own failure not to take up this issue earlier as a sign of acceptance on the Contractor’s part. (Project Managers take note!!!!)



However, the graveness of your situation does not alter the steps that you must take NOW!



The matter of the late certification and late payments ARE related! Both the Engineer and Employer are taking unfair advantage of the Contractor.



Send a notice of claim to the Employer, noting the cumulative failures of the Engineer to certify payment within the due time, together with a further claim in regard to the Employer’s own failures to pay within the due period (though if the Employer has paid within the required period of a late certification, you will be unable to claim the delayed payment section); make sure you distinguish between the failure to certify under Clause 60.2 and the failure to pay under Clause 6.10, for example. I would anticipate that your claim for compound interest should be based on something like at least 3% over Base.



Once you have dealt with the currently outstanding failures, make sure that you keep up to date with subsequent failures in certification and payment, by addressing each and every failure as noted in my earlier post.



Good luck



Stuart

www.rosmartin.com

Anthony,



Under Clause 60.2 of FIDIC Red Book Conditions (4th Edition), the Engineer is required to certify the amount of payment within 28 days of receipt of the Contractor’s application for payment.



If the Engineer fails to comply with this contractual requirement, he is in breach of his duties under the Contract. You must therefore give notice of this breach – I would suggest in a letter to the Employer with a copy to the Engineer – advising that if the breach is not remedied within the immediate future, then a claim for interest and any other cost consequences arising out of the Engineer’s failure will be presented and pursued.



It is a fundamental obligation in contracting that the Engineer certify fully, and that the Employer pays the certified amount, in accordance with the Contract’s requirements. I wouldn’t worry too much about the niceties of breach of contract; the simple approach is that

• the Engineer has failed in his duties to comply with the Contract (see Clause 2.1 of FIDIC 4th)

• notice of this failure must be given to the Employer

• the contract is between the Contractor and the Employer, so ultimately the contractual relief lies with the Employer

• your claim for loss of interest and other fiscal elements should be presented to the Employer.





If you do not address this failure immediately Anthony, you can be sure that there will be a continual delay in the certification process for the rest of the project. Also make sure that the Employer pays the certified amount within the stipulated period, and if he doesn’t, then again give notice of the failure, then prepare and present a claim against the Employer for interest on the monies due and owing.

Good luck!



Hope this helps,



Stuart



www.rosmartin.com