In my opinion, I don’t think that Advance Payment (A/P) should be linked from project mobilization cost such as LC in your case.
Basically, the initial cost expenses such as mobilization cost, etc. should come from the project operating cost which is sourced from Contractors own account.
In case of Employers late payments of such A/P, Contractor is reasonably entitled to receive an interest rate for the period of delay.
Good day
Member for
21 years 9 months
Member for21 years9 months
Submitted by Kieran Thomson on Fri, 2008-07-25 00:33
Sounds like a good question for another long thread. One with many possible answers but at the end of the day it will be down to the terms & conditions set out in the contract between the client (the plaintiff) & the principle contractor (the defence). And not knowing these in detail then see below.
A brief summary;
If it was agreed that orders (or a clause that orders over a certain amount) would not be placed by the principle contractor unless funds were released by the client... you see were this is going, then the principle contractor cannot be at fault.
If no terms were in the contract and the client believed they had chosen a contractor with a big enough wallet to cover costs until costs were invoiced properly disregarding the amount and terms of the sub contractor (probably the smartest client in legal & financial terms), then the principle contractor doesnt have a leg to stand on.
In summary of above, if the client has drawn up a fairly air tight contract then you is stuffed. Best advice is go and see the leagl team who negotiated the contract with the client and ask them where does the principle contractor stand. They are the best people to see in these circumstances.
Please let PP know how it turns out.
Cheers
Kieran
PS> T&Cs on a pear shaped projects can be cruicial and certainly interesting for future projects.
Member for
18 years 10 monthsRE: Non-Contractor Caused Delay
Thank you Kieran, Larry, sathis and Sherif for replying..
I appreciate your contribution ..
I will update you with the way it will be solved ..
Sherif, the contract conditions are not standard conditions like FIDIC or nec3, ... they are specially written to this project ..
Member for
20 years 6 monthsRE: Non-Contractor Caused Delay
Which type of Contract is the project? (FIDCI, nec3,...).
I case of Fidic; please specify which revision.
Member for
18 yearsRE: Non-Contractor Caused Delay
Larry
Your are correct, other than interest rate could not entitle, although he has to prove.
Member for
18 yearsRE: Non-Contractor Caused Delay
Naimran,
In my opinion, I don’t think that Advance Payment (A/P) should be linked from project mobilization cost such as LC in your case.
Basically, the initial cost expenses such as mobilization cost, etc. should come from the project operating cost which is sourced from Contractors own account.
In case of Employers late payments of such A/P, Contractor is reasonably entitled to receive an interest rate for the period of delay.
Good day
Member for
21 years 9 monthsRE: Non-Contractor Caused Delay
Good morning Nariman
Sounds like a good question for another long thread. One with many possible answers but at the end of the day it will be down to the terms & conditions set out in the contract between the client (the plaintiff) & the principle contractor (the defence). And not knowing these in detail then see below.
A brief summary;
If it was agreed that orders (or a clause that orders over a certain amount) would not be placed by the principle contractor unless funds were released by the client... you see were this is going, then the principle contractor cannot be at fault.
If no terms were in the contract and the client believed they had chosen a contractor with a big enough wallet to cover costs until costs were invoiced properly disregarding the amount and terms of the sub contractor (probably the smartest client in legal & financial terms), then the principle contractor doesnt have a leg to stand on.
In summary of above, if the client has drawn up a fairly air tight contract then you is stuffed. Best advice is go and see the leagl team who negotiated the contract with the client and ask them where does the principle contractor stand. They are the best people to see in these circumstances.
Please let PP know how it turns out.
Cheers
Kieran
PS> T&Cs on a pear shaped projects can be cruicial and certainly interesting for future projects.