Knowing what a minefield such contracts can be - having most likely been put together by many lawyers negotiating with one another a long period of time, it is really impossible to say.
Unfortunately theres no assumption that the playing ground is level, it is as negotiated which can sometimes be very unlevel. But yes both parties must perform their obligations in a reasonable manner so as to not hinder the other party from complying with their obligations. (prevention principle) In the USA I believe this would include a duty to act in good faith. (dont have it in the UK) But what is good faith in the circumstances would have to be taken in the context of what has been agreed each party is to do and who is liable for what in the contract.
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18 years 2 months
Member for18 years3 months
Submitted by Randal Lindley on Wed, 2007-08-15 09:18
For days now Ive been pouring over the volumes that comprise the contracts and have seen a lot of language referring to recouping Direct Costs, the definition of which doesnt specifically include subcontractors, but doesnt explicitly exclude them either. According to the owner, subcontractor costs arent ever direct costs.
My argument goes something like this right now, unless I can get something better going: Even though the contractor may have adopted certain risks, this was risk that assumed the playing ground was level- that both parties were performing their obligations (and then, should something unforeseen have occurred, the contractor would have to absorb the costs). But where one of the parties, ie, the owner, is single-handedly responsible for that "risk" being realized, it cannot then hide behind a "no-risk" argument.
Basically the idea that all the risk is on the contractor has created an atmosphere that the owner neednt try so hard to prevent delays because there wont be any consequences beyond the formal "direct costs."
I guess it borders on a bad faith argument.
I appreciate your insight
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20 years 10 months
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Submitted by Andrew Flowerdew on Wed, 2007-08-15 06:19
BoT, PFI, EPC, etc contracts are normally bespoke forms of contracts, sometimes many volumes thick.
No way of being able to answer your question but very generally these types of contract normally put alot more risk onto the contractor. Compared to standard form contracts they are very onerous but in return the contractor should have a significantly higher profit margin and contingencies built in. The contractor takes on alot more risk (sometimes just about all) but at a price.
So can’t say yes or no to your question but it wouldn’t surprise me if it is a contractor risk. Reading is the key to this one!
Member for
20 years 10 monthsRE: adding subcontractor costs to the claim - recognized?
Randal,
Knowing what a minefield such contracts can be - having most likely been put together by many lawyers negotiating with one another a long period of time, it is really impossible to say.
Unfortunately theres no assumption that the playing ground is level, it is as negotiated which can sometimes be very unlevel. But yes both parties must perform their obligations in a reasonable manner so as to not hinder the other party from complying with their obligations. (prevention principle) In the USA I believe this would include a duty to act in good faith. (dont have it in the UK) But what is good faith in the circumstances would have to be taken in the context of what has been agreed each party is to do and who is liable for what in the contract.
Member for
18 years 2 monthsRE: adding subcontractor costs to the claim - recognized?
Hi Andrew,
Thanks for answering.
For days now Ive been pouring over the volumes that comprise the contracts and have seen a lot of language referring to recouping Direct Costs, the definition of which doesnt specifically include subcontractors, but doesnt explicitly exclude them either. According to the owner, subcontractor costs arent ever direct costs.
My argument goes something like this right now, unless I can get something better going: Even though the contractor may have adopted certain risks, this was risk that assumed the playing ground was level- that both parties were performing their obligations (and then, should something unforeseen have occurred, the contractor would have to absorb the costs). But where one of the parties, ie, the owner, is single-handedly responsible for that "risk" being realized, it cannot then hide behind a "no-risk" argument.
Basically the idea that all the risk is on the contractor has created an atmosphere that the owner neednt try so hard to prevent delays because there wont be any consequences beyond the formal "direct costs."
I guess it borders on a bad faith argument.
I appreciate your insight
Member for
20 years 10 monthsRE: adding subcontractor costs to the claim - recognized?
Randal,
BoT, PFI, EPC, etc contracts are normally bespoke forms of contracts, sometimes many volumes thick.
No way of being able to answer your question but very generally these types of contract normally put alot more risk onto the contractor. Compared to standard form contracts they are very onerous but in return the contractor should have a significantly higher profit margin and contingencies built in. The contractor takes on alot more risk (sometimes just about all) but at a price.
So can’t say yes or no to your question but it wouldn’t surprise me if it is a contractor risk. Reading is the key to this one!