I DONT THINK THAT THE CONTRACTOR CAN REQUEST FOR ANY ADDITIONAL COSTS, AS HE SHOULD CONSIDER AND EXPECT ALL RISKS. THIS IS THE TRAP FOR ANY CONTRACTOR.
Member for
21 years 5 months
Member for21 years5 months
Submitted by Geoffrey Boulton on Thu, 2007-10-18 18:09
As was said by James, you would be better off looking under the clause dealing with changes in the law than under those dealing with the durational validity of rates and prices. You may be fortunate and find that somebody negotiated well and such things are covered - then again, maybe not.
Member for
20 years 10 months
Member for20 years10 months
Submitted by Andrew Flowerdew on Mon, 2007-10-15 12:40
Generally the increase is not recoverable by the contractor. An increase is not a change in policy, the policy is to give a minimum wage in the first place.
Its just one of those risks which everybody in business (who pays the minimum wage) has to suffer and take onboard - and on long duration contracts, take account of when pricing.
I would suggest it would need clear wording in the contract to recover what is a general risk to all in business.
In a lump Sum contract where issues of this nature can arise,there is always a clause too that deals with Change in Government policy such as Tax,VAT or this issue of minimum wages review.The client is liable to reinburse all the extra cost that might arise from this increase in minimum wage cos it has no alternative than to comply to regulations of the land.
The only aspect this will not be entertained is the effect the minimum wage increase will have on the items yet to be purchased,which in this content amount to fluctuation,cos fluctuation is forbiden in a lump sum contract.
Therefore i always advise that minimum wages increase should be treated as variations and not fluctuations.
But in all cases, make sure you read every contract clause letter-by-letter and not line-by-line.
TX
Member for
18 years 2 months
Member for18 years2 months
Submitted by James Barnes on Wed, 2007-10-03 04:16
My point was moral responsibility wont be enshrined in the contract (although perhaps on the statutes, depending on where youre working, but Im not aware of one anywhere Ive ever worked)
ongoing working relationship and intrinsic business interests (eg a specialist contractor who is the only one capable of providing the product you need) are other factors I should have mentioned and ones that you very correctly point out as reasons to find a negotiated settlement. Always being ware of course that an ongoing working relationship is a double edged sword. Give in too easily and see what happens next time. Ditto for relying on a "unique" contractor
It will all come down to politics is my guess and would suggest that a way to compensate the contractor without appearing to have done so (perhaps by rejecting his labour cost claim while approving some other contentious ones as balance) then finding a more "fairly" worded clause for the next contract would be one way forward.
As for sample clauses I dont have any, but Im sure some of the more legally minded here can halp you out. Otherwise perhaps look to FIDIC, ICE or JCT standard forms, something may present itself. I know that there used to be clauses in ICE to cover changes in materials costs over long projects but its a long time since Ive looked at one of those. Otherwise the clients own lawyers should be able to help you out. Afterall, they probably came up with the exclusion clause in the first place...
Or.... drive him to the point of bankrupsy then buy him out.
Member for
18 years 2 months
Member for18 years2 months
Submitted by James Barnes on Wed, 2007-10-03 04:07
My point was moral responsibility wont be enshrined in the contract (although perhaps on the statutes, depending on where youre working, but Im not aware of one anywhere Ive ever worked)
ongoing working relationship and intrinsic business interests (eg a specialist contractor who is the only one capable of providing the product you need) are other factors I should have mentioned and ones that you very correctly point out as reasons to find a negotiated settlement. Always being ware of course that an ongoing working relationship is a double edged sword. Give in too easily and see what happens next time. Ditto for relying on a "unique" contractor
It will all come down to politics is my guess and would suggest that a way to compensate the contractor without appearing to have done so (perhaps by rejecting his labour cost claim while approving some other contentious ones as balance) then finding a more "fairly" worded clause for the next contract would be one way forward.
As for sample clauses I dont have any, but Im sure some of the more legally minded here can halp you out. Otherwise perhaps look to FIDIC, ICE or JCT standard forms, something may present itself. I know that there used to be clauses in ICE to cover changes in materials costs over long projects but its a long time since Ive looked at one of those. Otherwise the clients own lawyers should be able to help you out. Afterall, they probably came up with the exclusion clause in the first place...
Or.... drive him to the point of bankrupsy then buy him out.
Member for
20 years
Member for20 years
Submitted by Devamalya De on Tue, 2007-10-02 15:31
I am afraid moral responsibility is not of any individual(s). It is the collective sense of equity prevailing in a business meant for the long-term where the driving moto is not to antagonize any stakeholder. Considering that the Contractor can be an associate (involved in all of the Client’s projects in the last 4-5 years and having an yet-to-be executed order value of USD 100 m with the Client, niche offering in the market of the latter intrinsically linked with the specific contractor’s involvement in the project etc.), I believe negotiation is perhaps the only solution as you have mentioned. While the Contractor may look for any clause indemnifying it against legislative changes, can the Client consider inclusion of such clauses in future contracts indemnifying it against similar claims? Do you have any such sample clause or write up? Please revert.
Member for
18 years 2 months
Member for18 years2 months
Submitted by James Barnes on Tue, 2007-10-02 04:36
If I were the contractor I would search for another clause indemnifying me from legislative changes, but I doubt Id find it. Its the sort of risk that clients usually write across to their contractors, if not in the standard terms then in Special Conditions.
OTOH, pragmatic responsibility to the project as a whole is a different matter. Assuming there is no contractual responsibility to pay, the client needs to ask himself the following;
If the client accepts that the contractor did not forsee this increase and so has not budgetted for it; Is the contractor at risk of bankrupsy if we force him to absorb the cost?
If he does go under and defaults on the contract, what would be the cost of sourcing a new contractor?
What compromise might the contractor accept (pain share)
What additional concessions might the client squeeze from the situation (for example, the client pays all or part of the increase and the contractor agrees to a slightly accelerated programme or to drop other claims etc)
If the risk to the project is greater than the cost of finding a solution, then I suggest the client negotiates, but its unlikely that they have a contractual responsibility to do so.
Member for
18 years 2 monthsRE: Reimbursement for increase in Minimum Wages
I DONT THINK THAT THE CONTRACTOR CAN REQUEST FOR ANY ADDITIONAL COSTS, AS HE SHOULD CONSIDER AND EXPECT ALL RISKS. THIS IS THE TRAP FOR ANY CONTRACTOR.
Member for
21 years 5 monthsRE: Reimbursement for increase in Minimum Wages
As was said by James, you would be better off looking under the clause dealing with changes in the law than under those dealing with the durational validity of rates and prices. You may be fortunate and find that somebody negotiated well and such things are covered - then again, maybe not.
Member for
20 years 10 monthsRE: Reimbursement for increase in Minimum Wages
Generally the increase is not recoverable by the contractor. An increase is not a change in policy, the policy is to give a minimum wage in the first place.
Its just one of those risks which everybody in business (who pays the minimum wage) has to suffer and take onboard - and on long duration contracts, take account of when pricing.
I would suggest it would need clear wording in the contract to recover what is a general risk to all in business.
Member for
19 years 6 monthsRE: Reimbursement for increase in Minimum Wages
Hello Guys,
In a lump Sum contract where issues of this nature can arise,there is always a clause too that deals with Change in Government policy such as Tax,VAT or this issue of minimum wages review.The client is liable to reinburse all the extra cost that might arise from this increase in minimum wage cos it has no alternative than to comply to regulations of the land.
The only aspect this will not be entertained is the effect the minimum wage increase will have on the items yet to be purchased,which in this content amount to fluctuation,cos fluctuation is forbiden in a lump sum contract.
Therefore i always advise that minimum wages increase should be treated as variations and not fluctuations.
But in all cases, make sure you read every contract clause letter-by-letter and not line-by-line.
TX
Member for
18 years 2 monthsRE: Reimbursement for increase in Minimum Wages
My point was moral responsibility wont be enshrined in the contract (although perhaps on the statutes, depending on where youre working, but Im not aware of one anywhere Ive ever worked)
ongoing working relationship and intrinsic business interests (eg a specialist contractor who is the only one capable of providing the product you need) are other factors I should have mentioned and ones that you very correctly point out as reasons to find a negotiated settlement. Always being ware of course that an ongoing working relationship is a double edged sword. Give in too easily and see what happens next time. Ditto for relying on a "unique" contractor
It will all come down to politics is my guess and would suggest that a way to compensate the contractor without appearing to have done so (perhaps by rejecting his labour cost claim while approving some other contentious ones as balance) then finding a more "fairly" worded clause for the next contract would be one way forward.
As for sample clauses I dont have any, but Im sure some of the more legally minded here can halp you out. Otherwise perhaps look to FIDIC, ICE or JCT standard forms, something may present itself. I know that there used to be clauses in ICE to cover changes in materials costs over long projects but its a long time since Ive looked at one of those. Otherwise the clients own lawyers should be able to help you out. Afterall, they probably came up with the exclusion clause in the first place...
Or.... drive him to the point of bankrupsy then buy him out.
Member for
18 years 2 monthsRE: Reimbursement for increase in Minimum Wages
My point was moral responsibility wont be enshrined in the contract (although perhaps on the statutes, depending on where youre working, but Im not aware of one anywhere Ive ever worked)
ongoing working relationship and intrinsic business interests (eg a specialist contractor who is the only one capable of providing the product you need) are other factors I should have mentioned and ones that you very correctly point out as reasons to find a negotiated settlement. Always being ware of course that an ongoing working relationship is a double edged sword. Give in too easily and see what happens next time. Ditto for relying on a "unique" contractor
It will all come down to politics is my guess and would suggest that a way to compensate the contractor without appearing to have done so (perhaps by rejecting his labour cost claim while approving some other contentious ones as balance) then finding a more "fairly" worded clause for the next contract would be one way forward.
As for sample clauses I dont have any, but Im sure some of the more legally minded here can halp you out. Otherwise perhaps look to FIDIC, ICE or JCT standard forms, something may present itself. I know that there used to be clauses in ICE to cover changes in materials costs over long projects but its a long time since Ive looked at one of those. Otherwise the clients own lawyers should be able to help you out. Afterall, they probably came up with the exclusion clause in the first place...
Or.... drive him to the point of bankrupsy then buy him out.
Member for
20 yearsRE: Reimbursement for increase in Minimum Wages
I am afraid moral responsibility is not of any individual(s). It is the collective sense of equity prevailing in a business meant for the long-term where the driving moto is not to antagonize any stakeholder. Considering that the Contractor can be an associate (involved in all of the Client’s projects in the last 4-5 years and having an yet-to-be executed order value of USD 100 m with the Client, niche offering in the market of the latter intrinsically linked with the specific contractor’s involvement in the project etc.), I believe negotiation is perhaps the only solution as you have mentioned. While the Contractor may look for any clause indemnifying it against legislative changes, can the Client consider inclusion of such clauses in future contracts indemnifying it against similar claims? Do you have any such sample clause or write up? Please revert.
Member for
18 years 2 monthsRE: Reimbursement for increase in Minimum Wages
Morally responsible?
youre in the wrong industry ;)
If I were the contractor I would search for another clause indemnifying me from legislative changes, but I doubt Id find it. Its the sort of risk that clients usually write across to their contractors, if not in the standard terms then in Special Conditions.
OTOH, pragmatic responsibility to the project as a whole is a different matter. Assuming there is no contractual responsibility to pay, the client needs to ask himself the following;
If the client accepts that the contractor did not forsee this increase and so has not budgetted for it; Is the contractor at risk of bankrupsy if we force him to absorb the cost?
If he does go under and defaults on the contract, what would be the cost of sourcing a new contractor?
What compromise might the contractor accept (pain share)
What additional concessions might the client squeeze from the situation (for example, the client pays all or part of the increase and the contractor agrees to a slightly accelerated programme or to drop other claims etc)
If the risk to the project is greater than the cost of finding a solution, then I suggest the client negotiates, but its unlikely that they have a contractual responsibility to do so.
/2p