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CHARLTON MARTIN ONE DAY SEMINAR

PAM 2006 A USERS MANUAL THURSDAY 16 JULY 2009

Mission and Vision


Our mission is to provide high quality consultancy services which are relevant to our clients needs and circumstances in any particular situation. Our vision is to be the construction contracts consultant of choice within the Asia Pacific Region.

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About Charlton Martin Group


Worldwide construction contract consultancy provider dealing specifically with the many disputes and varied problems frequently arising in: Construction Engineering Oil & Gas Power Process Petrochemical

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About Charlton Martin Group


Mike Charlton and Rod Martin have combined in excess of thirty five years experience of working in the Asia Pacific region.

Previously as CEO and Group Regional Director (Asia), respectively of the Knowles Group they successfully managed, developed and maintained the Knowles consultancy businesses in Asia.
In 2007, they started their own consultancy practice across Asia Pacific and now have businesses in Hong Kong, Singapore and Malaysia

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Our Offices
Hong Kong

Malaysia
Singapore International Consultancy Coverage

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Our Services
Advice and Detailed Analysis of Contractual Problems
Whether the problem has arisen under a standard form of contract or sub-contract or under any other form of contract, definitive advice and analysis of any problem or dispute can be provided. Detailed guidance on administration of main contracts and sub-contracts generally throughout the project is also offered.

Contractual Claims

Choice of Contract

Preparation of Contract Documents

On behalf of Employers / Owners

On behalf of Contractors / Sub-Contractors

Advice on the appropriate form of contract and method of appointment of a contractor or sub-contractor Advice to the Employer/Owner on contract procedures, administration of the contract and potential problem areas.

Drafting contracts, subcontracts, Joint Venture agreements; modifying standard forms of contract and sub-contract; drafting special conditions and preliminary clauses; checking contract documents and advising on suitability.

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Our Services
Regular Advice Throughout the Project (Retainer Services)
Regular attendance at employers/owners, contractors' or subcontractors' offices, at monthly or other suitable intervals, discuss financial and contractual difficulties and disputes on all current contracts. Advice on notices to be given under the contract. Dealing with correspondence between employers, consultants, main contractor, sub contractors and suppliers.

Arbitration

Mediation

Expert Witness Services

As arbitration advisers, preparing a client's case from issuing a notice of arbitration including advice on the appointment of an arbitrator, preparation of pleadings, discovery of documents and representing a party before the arbitral tribunal. For many of our clients, arbitration is an unfamiliar process. We explain the process and procedures adopted which are required to be followed in detail.

As representative of a party with a dispute referred to mediation, we explain the procedure and assist to prepare for the entire process including drafting agreements upon successful closure. We also act as the appointed mediator in disputes referred to mediation.

Preparation of Expert Witness reports on most construction matters, including claims evaluation, delay analysis, etc., with subsequent attendance at litigation or arbitration proceedings as necessary.

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Our Services
Project Planning / Project Management Services
Providing planning, coordination and management of projects from inception through to completion. Adhoc planning services to support Extension of Time claims prepared on behalf of Contractors or to defend the Employer's position on receipt of such claims from Contractors.

Seminars & Training

Staff Secondment

Professional Search Services


We work in partnership with our Clients to source the best talent for their organisation. The search for the right candidate can be specifically directed only to those who possess the potential to fill the role in a broader capacity than simply having the right qualifications.

The whole spectrum of construction contracts and construction related topics is covered, and training is organised to suit individual client's requirements either "in house" or at public venues. The training service includes provision of comprehensive training material and provision of experienced lecturers and all organisational matters. Public seminars are presented regularly with subject matter relevant to construction contracts and related topics.

Secondment of Contract Administrators and Project Managers to site, together with full back up as required. This service is flexible and caters to Employers/Owners, Contractors and Subcontractors needs on live construction projects irrespective of the size, location or nature of the project.

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Programme
09:10 10:00 10:00 10:40 10:40 11:00 11:00 12:00 12:00 12:30 12:30 14:00 14:00 14:45 14:45 15:30 15:30 15:45 15:45 16:30 16:30 17:00 17:00 Session 1 Rodney Martin Session 2 Michael Charlton Tea / Coffee Break Session 3 Rodney Martin Questions & Discussion Lunch Session 4 Michael Charlton Session 5 Rodney Martin Tea / Coffee Break Session 6 Michael Charlton Questions & Discussion Close
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Session 1 by Rodney Martin

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Session 1
Introduction to Construction Contracts History of the PAM Form Background and Intended Use Structure of the Contract Definitions New Features and Key Changes in PAM 2006 Comparison with other Malaysian Forms
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INTRODUCTION TO CONSTRUCTION CONTRACTS


What is a Construction Contract? A building contract is an entire contract for the sale of goods and work and labour for a lump sum price payable by installments as the goods are delivered and the work is done. (Lord Diplock Modern Engg v Gilbert-Ash 1974)

Note building contract now construction contract

Governed by the Contracts Act 1950

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All elements of a simple contract must be present:


Offer Acceptance Consideration

As with any contract, the contract will be: Voidable if there has been fraud or misrepresentation by either
party

Void if there has been a mistake about a fundamental matter

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Only the Contract Documents contain the terms of the contract

Distinguished from other documents available or representations made at time of tender E.g. Reps about site conditions or report on soil conditions Where these meant to be in or out of the contract? If out then of no legal effect If in then any inaccuracy causing loss has remedy in damages

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Common Construction Contract Documents:


-Articles of Agreement -Conditions of Contract -Drawings -Bills of Quantities -Schedule of Rates -Specification -Other documents sometimes included (tender docs) Where the agreement is stated in contract documents difficult to argue that anything else is a term of the contract

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Construction contract arrangements are now varied and complex


Traditional model Traditional model with partial design by contractor Design and Build Construction Management

Available Standard Forms


PAM IEM CIDB PWD International e.g. FIDIC

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Why do we have Standard Forms?


Avoids re-inventing the wheel
Expense and time of setting out all rights and obligations of the parties for each project would be considerable

Provides high level of certainty


Contains the key principles of customs, practices and processes supported by judicial precedents handed down by the courts

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HISTORY OF THE PAM FORM

PAM/ISM 1969 Form


Based on the JCT 1963 form with all its deficiencies

PAM 1998 Form


Comprehensively redrafted to deal with the problems of PAM 1969

PAM 2006 Form


Not a radical redraft but some important significant changes More of a facelift than a new model!

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BACKGROUND AND INTENDED USE


PAM 2006 has two versions:
Lump Sum Contract Without Quantities (drawings and specs) Lump Sum Contract With Quantities
Adjustments to the Lump Sum for variations and loss & expense Modified entire contract to cater for interim payments and retention Subject to general law of contract (Contracts Act 1950 & case law)

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Conditions Did you know?


PAM 2006 defines Conditions as the Conditions of Contract

Conditions in the legal sense has more precise meaning:


Contractual terms include both conditions and warranties A condition is an essential term of a contract A warranty is a less significant term than a condition Breach of condition = discharges from further performance of the contract (e.g. refusal to pay) Breach of warranty = damages (e.g. interest for late payment)

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But thats not all


Many express terms exist within a standard form like PAM 2006

But certain terms may be implied into the contract : implied terms
Give business efficacy to the agreement Fill the gaps where the express terms do not deal with the subject matter in dispute

Courts use implied terms to represent:


presumed intention of the parties the commercial bargain of the contract

But only where necessary to give business efficacy and not otherwise

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Examples of Implied Terms in Construction Contracts


The Employer will take all steps reasonably necessary to enable the Contractor to discharge his obligations under the contract and to execute the Works in a regular and orderly manner The Employer would not hinder or prevent the Contractor from carrying out his contractual obligations or from executing the Works in a regular and orderly manner.

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Standard Forms To Amend or Not to Amend?


Standard Forms are recognisable, familiar and understood

Therefore good reasons not to amend


A no amendment policy may not suit all If amendments are necessary care must be taken to avoid disputes due to poor drafting

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STRUCTURE OF THE PAM CONTRACT Articles of Agreement


Contain the Recitals (Agreement Date; Parties; and Nature & Description of the Work)

Articles
Contractors Obligations; Contract Sum; Architect & Other Consultants; Definitions; and Meanings

Attestation / Signatories of the Parties

Conditions of Contract
1 to 38

Appendix
Convenient collection of specific data for each contract such as LD amount, DLP period, Insurance cover, etc.

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DEFINITIONS
41 new definitions (59 in PAM 2006 versus 18 in PAM 98)

But many simply cross references with definitions in Conditions (e.g. see Variation and Practical Completion) Useful Source for reference purposes
Certain New Definitions to Note:
Day; Defects; Force Majeure; Lump Sum Contract; Person; Site

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DEFINITIONS
Day
New definition under PAM 2006 Any day other than gazetted holiday at place of works Care must be taken when preparing programme and applying for EOT

Defects
New definition under PAM 2006 due to materials and workmanship not in accordance with the Contract Includes faulty design where Contractor carries out design Includes NSC defects

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DEFINITIONS
Force Majeure
New definition under PAM 2006 Restricted definition But should reduce disputes

Lump Sum Contract


Fixed Price Contract subject only to adjustment as prescribed in contract Forgot to include Provisional Sums and PC Sums in definition

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DEFINITIONS
Person
Used for ease of reference to describe the variety of legal entities which Consultants are capable of being from sole practitioner to limited liability company

Site
Includes other land and places obtained by the Contractor and accepted by the Employer as forming part of the Site.

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NEW FEATURES AND KEY CHANGES IN PAM 2006


Rights to Set-off by Employer

Right to Interest for Late Payment


Right to Suspend the Works for Non-Payment

Retention Monies in Trust fund on Request

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NEW FEATURES AND KEY CHANGES IN PAM 2006


Notices a Condition Precedent

7 Additional Relevant Events for Extension of Time including: Re-nomination of NSC / NS Suspension due to Non-Payment Definition of Variation
Adjudication

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COMPARISON WITH OTHER MALAYSIAN FORMS


Private Sector PAM 2006 IEM Civil Engineering Construction 1989 IEM Mechanical & Electrical Installation 1994 CIDB Contract for Building Works 2000 No Malaysian Private Sector Design & Build Standard Form Public Sector PWD 203A / 203 PWD Design & Build / Turnkey Contract DB/T
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Session 2 by Michael Charlton

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1.0

Contractors Obligations

Clause 1.1 obligation to complete Works as required by Architect in accordance with Contract Not to the reasonable satisfaction of Architect as PAM 1998 avoids architect taking responsibility for exercising his discretion.

Clause 1.2 responsible for safety and adequacy of site operations irrespective of approval by Consultants temporary works = Contractors design responsibility

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1.0

Contractors Obligations

Clause 1.3 Contractor responsible his alternative design must be fit for purpose (irrespective of approval by Consultants) Fit for purpose = higher standard than that imposed on architect or engineer, who must design to a reasonable level of skill and care If particular purpose not stated in Contract, Contractor only can design to fit normal purpose contemplated at time of Contract signing Advice Employer must state particular purpose in Contract Claiuse 1.4 no obligation to search for discrepancy or divergence

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2.0

Architects Instructions

Clause 2.1 Forthwith comply with all A.I.

Time for compliance = not less than 7 days Contractor take care to comply, otherwise Employer engage others and backcharge Contractor
Advice- Contractor must start compliance before 7 days expire and ask for more time to complete compliance, if necessary. What is meant by comply? Contractor must Confirm verbal instruction as Confirmation of A.I. All A.I. must be in writing before Contractor receives certification for variation work, no provision for verbal instructions
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3.0

Contract Documents, Programme and As-Built Drawings

Clause 3.1 certainty in order of precedence if discrepancy


3.1(a) 3.1(b) 3.1(c) the Letter of Award; the Articles of Agreement; the Conditions of Contract;

3.1(d)
3.1(e) 3.1(f)

the Contract Drawings;


the Contract Bills; and other documents incorporated in the Contract Documents, unless expressly stated to be excluded in any of the Contract Document.

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3.0

Contract Documents, Programme and As-Built Drawings

Clause 3.4 Architect must issue construction drawings for Contractor to start construction on time as per Works Programme C responsible for managing the information Clause 3.6 programme not a contract document, but changes to specified sequence of work may be a variation (Clause 11.1(d)(iv)

Clause 3.7 Works Programme or updated Works Programme may basis for EOT claim and assessment
Contractor must apply to Architect in advance for detailed drawings record date application and date received drawings for future EOT claim

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4.0

Statutory Obligations, Notices, Fees and Charges

Clause 4.2 Before start works, Contractor responsible to notify discrepancy between Contract Documents and laws, if he finds them

Architect must issue instruction , otherwise changes caused by laws = deemed variation

Contractor claim variation but difficulties if he carries out work as drawings which do not comply with statutory obligations

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5.0

Levels and Setting Out of the Works

Clause 5.1 If error in Contractors setting out, Employer may make appropriate deduction for set-off

Unclear what is appropriate deduction

Ruxley v Forsyth [1996] - Contractor built swimming pool depth about 1 feet lesser than specification, court awarded loss of amenity as unreasonable to reinstate pool

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6.0

Materials, Goods and Workmanship to Conform to Description, Testing and Inspection

Clause 6.1 all work to conform with Contract requirements, otherwise defective Clause 6.3 instruct open up works for inspection, difficulty if part of work complies and part does not Clause 6.5(e) option to deal with defects includes leaving defect in Works subject to appropriate set off by Employer see Ruxley v Forsyth [1996]

Warranty by Manufacturer does not release Contractor from liability

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7.0

Royalties and Intellectual Property Rights

Clause 7.1 Contractor to indemnify Employer against loss or claim arising from Contractor infringing intellectual property rights (e.g. design rights)

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8.0

Site Agent

Clause 8.1 Contractors site agent (normally project manager) must be competent and employed full time Frequently contract requirements lays down specific qualifications and experience

Clause 8.3 Architects power to remove incompetent site agent-but must NOT be unreasonable or vexatious avoid abuse

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9.0

Access to the Works

Clause 9.1 Contractual right for Architect and Consultant to be given reasonable access to Works and to factories. Subcontracts to have same provision

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10.0 Site Staff Clause 10.2 Instructions from Employers Site staff has NO effect unless:-

- instruction in writing

- Architect delegates authority to Site Staff in writing Directions involving variation to be confirmed by AI Site staff include clerks of works, resident architect or engineer, inspector or works etc

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CHARLTON MARTIN ONE DAY SEMINAR

TEA / COFFEE BREAK

Session 3 by Rodney Martin

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11.0 Variations Provisional and Prime Cost Sums


Why do we have Variation Clauses?
Employer given power to vary the Works as a right
No need to get Contractors agreement each time Architect has no implied authority to contract for the Employer Contractor would not get paid for AIs if no VO clause

Pre-agreed rules for valuing variations

PAM 2006 has a comprehensive Variations Clause


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11.0 Variations Provisional and Prime Cost Sums


Definition of Variation (11.1) the alteration or modification of the design, quality or quantity of the Works including the addition, omission, or substitution of any work as well as the alteration of the kind or standard of any materials and goods to be used in the Works and the removal of any works other than defective work as instructed. also changes in: limitation of working hours working space access to or utilization of any part of the Site executing and completing the Works in any order

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11.0 Variations Provisional and Prime Cost Sums


PAM 2006 has a comprehensive definition for Variations

Removed old PAM 98 change to alter the ultimate use to which the Works will be put which is an improvement otherwise the principle of the variation clause would be violated
Chadmax Plastics v Hansen 1984 variation omitting 98% of scope of work exceeded authority to vary the work

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11.0 Variations Provisional and Prime Cost Sums


No Variation shall vitiate the contract (11.2)
Vitiate = to impair the legal validity of a contract But if the Variation is a valid Variation under the 11.1 definition how could it vitiate the contract?

Contractor to proceed pending valuation of the Variation (11.3)


Contractor must proceed with due diligence and expedition West Faulkner v Newham 1994 means: continuously, industriously and efficiently with appropriate physical resources So once Contractor receives a Variation Instruction he must get on with it whether or not the price is agreed

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11.0 Variations Provisional and Prime Cost Sums


Architect may issue instructions after Practical Completion to deal with Appropriate Authority and Service Provider (11.3) But once Practical Completion achieved the Works are deemed complete and usually the power of Architect to issue Variation Instructions ends This makes 11.3 illogical either the work is complete or it is not AIs to be issued for expenditure of PC and Provisional Sums (11.4) Variations to be measured and valued by the QS (11.5)

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11.0 Variations Provisional and Prime Cost Sums


Valuation Rules (11.6)
Apply Contract Rates and Prices - 11.6(a) Where Work is similar in character, executed under similar conditions and does not significantly change work in Contract Apply Fairly Adjusted Contract Rates and Prices - 11.6(b) Where work is similar in character, but executed under different conditions or similar character and conditions but there is a significant change in quantity of work Apply Fair Market Rates and Prices Determined by the QS - 11.6(c) Where work is not of similar character to work in Contract Apply Daywork Rates 11.6(d) Where work cannot be properly measured and valued in accordance with first three rules based on verified daywork sheets

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11.0 Variations Provisional and Prime Cost Sums


Omitted Items to be valued at Contract Rates - 11.6(e)
If substantial change to the conditions in which remaining work carried out then the valuation rules apply for remaining work

Provisional Quantities to be re-measured and valued using Contract Rates

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11.0 Variations Provisional and Prime Cost Sums


PAM 2006 Introduces fair market rates for work not of similar character
Radical departure from PAM 98 which maintained reference to Contract Rate Contractor takes no pricing risk for such work Contractor can dispute QSs determination of what is a fair market rate

Different from fair valuation which usually refers to the Contractors overall level of Contract Pricing and level of profitability
Charrington v Wooder (1914) market price of a commodity was to be construed with reference to the surrounding circumstances

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11.0 Variations Provisional and Prime Cost Sums


Claims for loss & expense arising from a Variation (11.7)
Provided not recovered under any provision of 11.6 Strict compliance with notice requirements essential or right lost Initial estimate and calculations with notice within 28 days of AI or CAI Full particulars within 28 days of completion of Variation Amount ascertained to be included in interim certificates and added to Contract Sum

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12.0 Contract Bills


The relevance of the BQ as a Contract Document (12.1)
BQ linked to amount of work included in Contract Sum BQ prepared in accordance with SMM unless otherwise expressly stated SMM is incorporated into the Contract by reference any variance from the SMM must be expressly stated in the Contract Documents Now the ordinary rule that the written word prevails over the printed form is intact - PAM 2006 has removed old sub-clause12.2 from PAM 1998 which stated:
Nothing contained in the Contract Bills shall override, modify or affect in any way whatsoever the application or interpretation of that which is contained

In these Conditions

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12.0 Contract Bills


The Contact is a Lump Sum Contract (12.2)
Any errors in the Contract Bills shall not vitiate the contract Errors to be corrected by the Architect or consultant But does not say such corrections may amount to a Variation? Not a re-measurement contract so adjustments only for: Variations Expenditure of P.C. and Provisional Sums Measurement of Approx Quantities

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13.0 Contract Sum


Same principle as Clause 12 Lump Sum Contract No adjustments for arithmetic errors or pricing errors No contractual link between Lump Sum Contract Price and BQ total Errors in rates to be rationalised by Architect or Consultant without change to Contract Sum before Contract signed BUT

If Contract Sum will not change as a result what is the point? Who is the Architect or Consultant to say Rates or Prices are in error? The rates are what they are for a variety of reasons pricing strategy? Unilateral variation of the contract? Is PAM 98 better?
any error whether arithmetic or not in the computation of the Contract Sum shall be deemed to have been accepted by the parties hereto.

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14.0 Materials and Goods


Materials and goods once delivered and paid for become property of Employer Contractor to have obtained adequate title to materials and goods Title usually is retained by seller until full payment (S25(1) Sale of Goods Act) Contractor warrants title in materials and goods free of encumbrances once value included in interim payment applications Employer can recover any loss (14.4) Contractor responsible for loss or damage to materials & goods on site (14.3)

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15.0 Practical Completion and Defects Liability


Practical Completion a state of readiness for use or occupation by the owner and free from any known omissions and defects which are not merely trivial The Architect certifies this important event Important because: preparation of final accounts follow release of performance bond commencement of the defects liability period release of one part of the retention passing of risks associated with the completed works

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15.0 Practical Completion and Defects Liability


PAM 2006: When in the opinion of the Architect the Employer can have full use of their Works for the intended purpose, notwithstanding minor defects (subject to Contractors written undertaking to make good such defects within a reasonable time, the Works are Practically Complete (15.1) PAM 2006 is therefore consistent with the accepted definition PAM 98 did not attempt to define the term but instead used the words the Contractor has performed and completed all the necessary Works specified in the Contract

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15.0 Practical Completion and Defects Liability


The Contractor now must give written notice to the Architect as soon as he thinks the whole of the Works are Practically Completed This is new. PAM 98 required the Architect to act when he formed the view Within 14 days of Contractors notice, Architect must: Notify Contractor why Works are not Practically Completed; or Issue a Certificate of Practical Completion

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15.0 Practical Completion and Defects Liability


Defects Liability Period Begins at Practical Completion
Contractor to make good defects listed at PC (15.3) and at end of DLP (15.4) If Contractor fails, Employer has three options: Grant Contractor additional time Employ others and set-off the cost Accept the defects and set-off an appropriate amount New to PAM 2006 (15.5), Architect can issue an AI at any time during the DLP requiring any critical defects to be made good within a reasonable time Contractor has the right to remedy all defects during the DLP (default 12 month period) Contractor to notify Architect at end of DLP when all defects made good

If Architect agrees he issues a Certificate accordingly or a notice giving reasons why he disagrees

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16.0 Partial Possession By Employer

Employer takes early possession of a part of the Works (the Occupied Part with consent of Contractor before Practical Completion BUT

Where Contract Completion Date has lapsed and a Certificate of Non Completion issued, no such consent of Contractor required (provided no unreasonable disturbance)

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16.0 Partial Possession By Employer


When Employer takes possession of an Occupied Part:
Architect issues cert of Partial Completion for the Occupied Part within 14 days stating value of part
Practical Completion takes place and DLP commences for the part from date of occupation by Employer Liquidated Damages reduced by the ratio of the value of occupied part to the Contract Sum Half Retention Sum for the value of the Occupied Part is released When defects in the Occupied Part are made good a cert is issued Remaining Retention Sum is released within 14 days of cert of Occupied Part www.charltonmartin.com 66

16.0 Partial Possession By Employer


Architect will issue an instruction to remove any construction plant or equipment, materials or goods in the Occupied Part Q: Is there finality for the Occupied Part? A: No. There is no final settlement for any Occupied Part until the Final Certificate for the whole Works is issued Partial Possession is not Sectional Completion

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17.0 Assignment And Sub-Contracting


The transfer by a party of his rights under a contract to another

Generally the law does not permit assignment of contractual liabilities


Usually consent of other party required (not unreasonably withheld)

Exceptions:
Employer assigning rights, interests or benefits to a financial institution

Contractor assigning any payment due or to become due to a financial institution

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17.0 Assignment And Sub-Contracting


Sub-Contracting is not assignment because both rights and obligations as passed to the sub-contractor Contractor cannot wholly or substantially sub-contract the Works unless provided in the Contract (17.3)

Failure to comply with any of the provisions of Clause 17 are grounds for Employer to terminate

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CHARLTON MARTIN ONE DAY SEMINAR

QUESTIONS AND DISCUSSION

CHARLTON MARTIN ONE DAY SEMINAR

LUNCH BREAK

Session 4 By Michael Charlton

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18.0 Injury to Person Or Loss And/Or Damage Of Property And Indemnity To Employer Clause 18 Contractor to indemnify the Employer against any loss or claim under common law or statute for:18.1 Personal injury or death of any person 18.2 Loss or damage to any real or personal property incl Employers property and the Works 18.3 Workmens claim, Workmens Compensation Act 1952, and Employees Social Security Act 1969.

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18.0 Injury to Person Or Loss And/Or Damage Of Property And Indemnity To Employer

discharge liability
Primary Liability: Promisor Principal Debtor

owes debt/liability 3rd party

Diagram 1 - a contract of indemnity relationship

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18.0 Injury to Person Or Loss And/Or Damage Of Property And Indemnity To Employer

owes debt/liability Primary


Liability: Secondary Liability: Guarantor

Principal Debtor

Creditor

gives guarantee

Diagram 2 - a contract of guarantee relationship

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18.0 Injury to Person Or Loss And/Or Damage Of Property And Indemnity To Employer
causes injury

discharges liability for claim Primary Liability: Contractor Employer

owes liability for claim 3rd party

claims damages for injury


Diagram 3- Clause 18.1

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18.0 Injury to Person Or Loss And/Or Damage Of Property And Indemnity To Employer Conditions for indemnity:18.1 All loss or claim must be caused negligence/omission/default/breach of contract by Contractors

18.2 Even if partly caused by Employers negligence/default, Contractors indemnity shall not be defeated or reduced Sukumaran v Building Construction [1969] (surveyor stood in dangerous location, 50% liable) 18.3 Contractors liability for indemnity arises when Employer incurs loss County v Jenner [1976] Loss in indemnity means financial loss - Anglian v Crawshaw [2001]

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19.0 Insurance against injury to person and loss and/or damage of property Clause 19 purpose aid Contractor in managing risks in Clause 18 by transferring risks to Insurer But Contractor is still liable to Employer for risks not covered by Insurer e.g. consequential loss- Without prejudice to his liability under Clause 18

Insurance under Clause 19 is a condition precedent to commencement of the Works:a) b) not practical on site Estoppel Boustead v Arab-Malaysian Merchant Bank [1995]

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19.0 Insurance against injury to person and loss and/or damage of property Clause 19.1 joint names of Employer, Contractor, sub-contractor and interested parties Unclear who are interested parties practical suggestion, identify them, otherwise void for uncertainty

Interested parties do not include consultants who are defined as third parties

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19.0 Insurance against injury to person and loss and/or damage of property Clause 19.1 joint names of Employer, Contractor, sub-contractors and interested parties Petrofina v Magnaload [1983] a) b) c) Accident at oil refinery caused by sub-sub-contractors negligence Sub-contractors = sub-sub-contractors (inseparately connected, avoid overlapping/cross-claims) sub-contractors could claim benefit under policy that covers main contract and sub-contract works although not parties to policy.

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19.0 Insurance against injury to person and loss and/or damage of property Clause 19.1 Public Liability insures against:a) personal injuries or death to any person Any person=pedestrian, employee Contractor

of

Employer,

Consultants,

- Employee to employee extensions endorsement to indemnify employee of Insured making a claim against Insured
b) Loss or damage to real or personal property - real property = building adjacent to site - personal property = pedestrian car

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19.0 Insurance against injury to person and loss and/or damage of property Endorsements to Public Liability Cross liability As though each Insured party is separately insured allow one Insured to sue another Insured for causing loss Deem employees of Employer and Consultants = 3rd parties Waive subrogation rights a) Subrogation = Insurer right to step into shoes of Injured Party to sue defaulting party who caused injury b) Petrofina v Magnaload If defaulting party is the Insured, NO subrogation rights

Auto extension/renewal up to Certificate of Making Good Defects a) No certainty of date, Not practical, May not be accepted by Insurer
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19.0 Insurance against injury to person and loss and/or damage of property Clause 19.1 criteria to claim Public Liability: a) b) Loss arise out of Works Irrespective whether Loss caused by negligence/default of Employer, Contractor, sub-contractor, interested parties

Practical suggestion check fine print - Exclude wilful negligence = not negligence - Re City Equitable [1925] wilful if person knew and intended the action

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19.0 Insurance against injury to person and loss and/or damage of property Clause 19.2 Contractor and sub-contractors to register all local workmen under Employees Social Security Scheme (SOCSO) Local workmen are no longer covered under Workmens Compensation Act 1952 from 1 July 1992.

If sub-contractor fails to pay monthly contribution for local workmen, Contractor or Employer may be liable Advised to check

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19.0 Insurance against injury to person and loss and/or damage of property Clause 19.3- Workmen Compensation Insurance - Contractor only needs to insure local workmen not covered under SOCSO. Hence, reduce amount of estimated wages to reduce premium Clause 19.4 all foreign workers (manual) covered under Workmens Compensation (Foreign Workers Scheme) - suggestion: Contractor to ask from sub-contractors policy on Workmens Compensation (Foreign Workers Scheme) for all foreign workers (manual) Insurance policies valid until Completion Date (cover Works) + Maintenance Cover until 3 months after Defects Liability Period (cover defect remedial works) If delay Works or defect remedial works - Extend policy 1 month before expiry
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20.0 Insurance of New Buildings/Works or Existing Building by the Contractor or the Employer 3 options to insure Works under CAR policy 20A- Insure Works or construction of new buildings by the Contractor 20B and 20C- Insure Works or construction of new or existing buildings by the Employer - Contractor still liable for risk of damage to Works under Clause 18 - insurance preferred by Employer if overlapping work packages, lower premium but higher deductibles for Contractor to bear - may not be economical for Contractor to insure deductibles

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20.0 Insurance of New Buildings/Works or Existing Building by the Contractor or the Employer

Clauses 18.2 & 18.4 Contractor liable to indemnify Employer for damage to Works even if negligence/default partly responsibility of Employer/Consultants - E.g. faulty Consultants design or negligence in supervision of Works

Advice- check CAR policy does it exclude faulty design or workmanship? - get endorsement to cover faulty design or workmanship - check plant hirers or sub-contractors Plant policy, if necessary insure under CAR policy

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20.0 Insurance of New Buildings/Works or Existing Building by the Contractor or the Employer

CAR policy for Works valid until Completion Date + Maintenance Cover until 3 months after DLP

If delay to Works, extend CAR policy 1 month before the date of expiry

a) b)

Good practice Advice- compile extended insurance receipt for Loss and Expense claim if delay caused by Employer

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20.0 Insurance of New Buildings/Works or Existing Building by the Contractor or the Employer Clause 20.A.4 in event of claim Contractors obligation to restore, replace and repair damaged Works No need to wait for insurance claim Repair is not a VO Indemnity Clause 18.2 & Clause 20.A.4 - Gold v Patman [1958] Contractors risk = damage to Works even by natural catastrophe Clause 20.A.4 - unclear what is meant by an instalment payment to Contractor by Employer on insurance claim - Advice- Contractor to clarify at tender

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21.0 Date of Commencement, Postponement and Completion Date

Clause 21.1 Possession of Site given on Date of Commencement Site means entire Site not so much of the as necessary to carry out the Works Avoid two different dates in Letter Award Site Possession provides contractual licence to enter whole site, cannot be revoked during Contract Period Hounslow v Twickenham [1970] Merton v Stanley Hugh Leach (1985) Employers implied duty not to prevent or hinder Contractors works

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21.0 Date of Commencement, Postponement and Completion Date

Clause 21.2 several Dates of Commencement for several Sections of the Works , potential for confusion unless Site is redefined. Each Section = as if separate contract - but PAM 2006 silent on retention fund, implied proportion retention fund according to value of Section Practical suggestion insert proportioned retention fund in Appendix Limit of Retention Fund= 5% of Contract Sum Avoid inconsistent terms Contract Sum/Contract Price/Revised Contract Sum

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21.0 Date of Commencement, Postponement and Completion Date

Clause 21.4 instruction to suspend Works (period < 3 months) - claim EOT and Loss and Expense (additional premium insure period of suspension) - Cannot instruct to suspend > 3 months avoid abuse by Employer with financial problem - if suspension > 3 months, Contractor option to terminate (Clause 26)

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22.0 Damages for Non Completion Clause 22.1 : Upon the issuance of the Certificate of Non-Completion (CNC), the Contractor shall pay Liquidated Damages Lion Engineering v Pauchuan Development [1997] - CNC = condition precedent to Liquidated Damages Cantrell v Wright [2003] - must issue CNC before Final Certificate Engineering Construction v Attorney General [1994] - must issue CNC before Contract terminated

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22.0 Damages for Non - Completion Clause 3.1 : Order of precedence- Letter of Award prevail over Conditions of contract Practical suggestion if tender negotiation resulted in discounted Liquidated Damages rate, Contractor to ensure new rate is reflected in Letter Award see Session 2 page 8 - Cannot rely on tender negotiation minutes of meeting as it falls under the lowest order of precedence other documents incorporated in the Contract Documents

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22.0 Damages for Non Completion Clause 22.2 No need for Employer to prove actual loss, circumvent Selva Kumar v Thiagarajah [1995] But unless the contrary is proven by the Contractor - affirms Sakinas v Siew Yik Hau [2002] if Contractor proves LD not due if it could be assessed by settled methods, Employer needs to prove actual loss Clause 22.3 If EOT given after 1st CNC, Architect must issue 2nd CNC if cannot meet extended Completion Date before deduct LD - affirms Bell v CBF Residential (1989)

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23.0 Extension of Time (EOT) Clause 23.1 Notice of intention to claim EOT + estimate + records = condition precedent to EOT Clause 23.1 Within 28 days of Delay Ending, Contractor to submit final claim for EOT + full supporting records (if Contractor needs more than 28 days, ask Architect for more time, failure to provide details means deemed relevant event will not delay completion, i.e. waived right to EOT) Putrajaya v Digital Green [2008] - deem = assuming something to be a fact which may/may not be the case

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23.0 Extension of Time (EOT) Architects duties Architect to assess EOT after delaying factor ceasesaffirms Lian Soon Construction v Guan Qian Realty [2001] (good practice to grant interim EOT for Contractor to target new Completion Date, avoid constructive acceleration) Architect to issue Certificate of EOT within 6 weeks of receipt of particulars but what if Architect exceed 6 weeks? Employers breach? Hiap Hong v Hong Huat Development [2001] - Employer not undertake Architect will exercise certification powers

What are Contractors recourse if Architect refuses to give EOT?


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23.0 Extension of Time (EOT) Architects duties Lian Soon Construction v Guan Qian Realty [2001] - a EOT decision = foundation for delay certificate (=CNC) before deduct Liquidated Damages (LD) - Architect should avoid granting a block EOT, should consider separate delay events effect on Completion Date Arab Malaysian v ASM Development [1998] - if Architect wrong in refusing EOT, then no basis for Employers deduction of LD

Advice: Architect to give correct EOT to preserve Employers right to LD

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23.0 Extension of Time (EOT) Architects duties Clause 23.5(b) -Architect express power to grant EOT despite Contractor not made claim note Peninsula v Abigroup Contractors [2002], Superintendent had no right to grant EOT without notice but court held contractor could not rely on prevention by employer in overcoming notice requirement.

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23.0 Extension of Time (EOT) Contractors duties Clause 23.6 Contractor to use best endeavours to prevent/ reduce delay Re-sequence works=mitigate delay, claim mitigation cost Rapsican v Global Container [2002] If Employers delay, Contractor should get EOT - no need to increase resources/accelerate unless instructed by Architect and paid by Employer Architect to take care in instructing Contractor! If Contractors delay, Architect has right to instruct Contractor to increase resources to accelerate at own cost

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23.0 Extension of Time (EOT) Relevant Events (grounds for EOT) Force majeure government ban on heavy traffic Exceptionally inclement weather compare average past 5-10 years rainfall with present rainfall Delay in re-nomination of NSC (new in PAM 2006) Employers act of prevention (wide) Delay caused by change to law (new in PAM 2006) Delay in replacing Consultants (new in PAM 2006) Delay in executing higher Provisional Quantity (new in PAM 2006) Delay in suspending Works due to Employers late payment (new in PAM 2006) Delay in suspending Works due to Consultants withdrawal from supervision of Works (new in PAM 2006) Delay in suspending works by Local Authoritys order (new in PAM 2006)

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Session 5 By Rodney Martin

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24.0 Loss And/Or Expense Caused By Matters Affecting The Regular Progress Of The Works
Contractor has right to claim loss & expense due to delay or disruption events subject to condition precedents:
Notice to Architect within 28 days of start of event or issue of AI / CAI with initial estimate and supporting calculations Submit to Architect or QS complete particulars of his claim with substantiating records and calculations within 28 days after the event has ended

Failure to comply means Contractor looses right to claim

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24.0 Loss And/Or Expense Caused By Matters Affecting The Progress Of The Works

Regular

Contractor to keep contemporary records of loss & expense including sub-cons (24.2) Matters allowing loss & expense to be claimed:
Late information Delayed site possession Compliance with Postponement or Suspension AI Delay by contractors engaged by Employer Delay by Employer in supplying goods and materials Opening up the works (unless defects found) Any act of prevention or breach of Contract by Employer Delay resulting from antiquities AI Appointment of a replacement Person under Articles 3,4,5 and 6 Compliance with a Neighbour dispute AI Inaccurate Provisional Quantities Employers delay in giving site access Suspension by the Contractor due to late payment or compliance with bye-laws Suspension by the Contractor on instruction of Appropriate Authority or SP due to negligence of E, A or C

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24.0 Loss And/Or Expense Caused By Matters Affecting The Regular Progress Of The Works
Matters not allowing loss & expense to be claimed (outside Employers control):
Force Majeure Exceptionally Inclement Weather Insurance clause contingencies Civil Commotion Delay by NSC Delay in re-nomination of NSC War Damage Change in Law and Regulations Delay by Appropriate Authority & Service Providers

Architect or QS to ascertain amount of L&E from time to time and add to Contract Sum by way of interim certificate

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25.0 Determination of Contractors Employment By Employer


Employer may determine employment of Contractor when in default as follows:

Fails to commence the Works without reasonable cause


Wholly or substantially suspends the Works without reasonable cause Fails to proceed regularly and diligently with the works Persistent refusal or neglect to comply with an AI Assigns rights or wholly / substantially sub-contracts without consent of employer Abandons the Works

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25.0 Determination of Contractors Employment By Employer


Procedure is very important (25.2)
Notice of default by registered post or hand from Architect or Employer Notice must not be:

unreasonable (to take advantage of accidental error or omission), or vexatious (without good grounds to cause annoyance or embarrassment or irritation

If default continues for 14 days then Within 10 days notice of determination from Employer

If not issued then go back to beginning (fresh default notice)

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25.0 Determination of Contractors Employment By Employer Contractors employment is then determined


Other provisions continue such as:
Valuation of the Works (25.5) Reference of a dispute to Arbitration (34)

Automatic determination on Contractors insolvency, arrangement with creditors or winding up (25.3) Is (25.3) an infringement of bankruptcy laws? right of trustee or liquidator to elect to carry on or disclaim the contract So perhaps look for an alternative right to determine such as suspension or abandonment

Effective against receivers not covered by bankruptcy laws

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25.0 Determination of Contractors Employment By Employer


Post determination procedure (25.4)
Contractor vacates the site and Employer may us his plant, equipment, goods and materials but has no right to sell them Right to use plant may be at odds with owners of hired plant but 25.4(a) assignment of hire agreements to Employer within 21 days of determination

Right to have agreements for supply of materials/goods or any sub-contract assigned to Employer within 21 days - 25.4(b)
Architect may instruct the removal of any plant, equipment, materials or goods belonging to Contractor 25.4(c)

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25.0 Determination of Contractors Employment By Employer


Post determination procedure (25.4)
No further payment to Contractor until Works completed Contractor liable to pay Employer all additional costs incurred in completing the remaining works including loss & expense 25.4(d)
Extra over cost of replacement contractor Cost of removing Contractors plant & equipment Additional consultants fees Liquidated Damages up to determination if Completion Date already lapsed

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25.0 Determination of Contractors Employment By Employer


Site Inspection between Architect and Contractor within 28 days (25.5) Architect or QS to produce a final account for the parties to consider within 6 months from the completion of the remaining Works (25.6), including:
Total value of Works completed up to date of termination (certified and not certified) Total amount of the cost of engaging a replacement contractor Liquidated Damages to be recovered Total amount of any set-off against the Contractor Total amount of any Loss & Expense suffered by the Employer

The Parties must dispute within 3 months or else account is considered agreed If the amount of the final account is greater than the amount which would have been payable to the contractor (a notional FA) the difference is a debt due from the Contractor to the Employer
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25.0 Determination of Contractors Employment By Employer


PAM 2006 25.6(a) wording is an anomaly:
If the said amount is less than the said total amount, the difference shall be a debt payable to the Contractor by the Employer So if the Employers total costs after replacing the Contractor and finishing the Works are less than would have been paid to the defaulting Contractor, then the Employer should pay money back to the defaulting Contractor? Surely the correct position is that the Employer has suffered no loss and has no claim against the defaulting original Contractor

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25.0 Determination of Contractors Employment By Employer


If final account disputed then notice must be given to other party within 3 months with reasons and records - 25.6(b) Architect or QS must decide within 3 months of final account dispute notice whether to amend the final account If either party disagrees then they have 3 months to refer the matter to arbitration under Clause 34 otherwise the FA is conclusive and agreed by the parties Departure from the Limitations Act which gives the parties 6 years to refer But 25.8 states that the Employers rights at common law and statute are not prejudiced by the provisions of Clause25.0 So the Employers rights are preserved but the Contractor has to refer any dispute within 3 months is this practical?

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25.0 Determination of Contractors Employment By Employer


Mandatory obligation on Contractor to give back Site within 14 days -25.7
If Contractor disputes Employers Notice of determination he must still go Contractor has no right to continue with the Works where he disputes Only remedy is damages for breach of contract (unlawful termination)

See Kong Wah Housing v Desplan Construction (1991)

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26.0 Clause Determination of Own Employment By Contractor


Contractor may determine his own Employment due to the following Employer defaults:
Failure to pay any amount due after LD and set-off 26.1(a) Interference by Employer 26.1(b) (any not just improper or fraudulent as in PAM98) Failure to nominate a new Architect or Consultant 26.1(c) Suspension of whole Works for continuous 3 month period due to:
AIs (on discrepancies, postponed site possession and postponed Works) Late instructions or information by Architect Delay or failure by Employer appointed Contractors The opening up of the works for testing

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26.0 Clause Determination of Own Employment By Contractor


Similar Notice requirements and procedure as Clause 25 Employer insolvency is grounds for automatic determination

Contractor to leave site within 14 days


Payment for work done plus loss & expense arising Joint valuation within 28 days of determination by Contractor Architect and QS Contractor to prepare the final account (unique to PAM 2006) within 6 months of determination Employer has 3 months to dispute the FA otherwise deemed agreed

Same limitation period issue for Employer here having to refer any dispute on the FA to arbitration within 3 months

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26.0 Clause Determination of Own Employment By Contractor


Payment due after FA settled less LDs and set-off LDs no longer payable if the Contractor validly determines his employment and at that time no LDs have accrued because completion date yet to arrive

General or un-liquidated damages still recoverable subject to proof of loss

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27.0 Nominated Sub-Contractors


NSC is responsible for design in NSC Works and not the Contractor Objection by Contractor to nomination within 14 days of AI Terms of the Sub-Contract to include:
Works must be to reasonable satisfaction of the Architect and Contractor Contractors obligations as to performance passed down to NSC Indemnity from NSC to Contractor as given by Contractor to Employer Indemnity against negligence, omission or fault EOT from Contractor subject to Architects recommendation (but not mandatory) Architect to issue CPC not Contractor Contractors right to claim loss/expense due to delay by NSC NSC right to payment within 7 days after Period of Honouring Certificates even where Employer has not paid Contractor Right of Architect to access NSC premises for inspections

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27.0 Nominated Sub-Contractors


Right to Object to Nomination
Contractor has right to object to nomination if documentary evidence of poor financial and technical capacity of NSC which would jeopardise the Work progress - 27.3 Architect can cancel instruction, re-nominate or override Contractors objection by issuing an instruction to appoint the NSC 27.4 Unfair See 27.9 Contractor still responsible for NSC performance

Payment to NSC
Payment proof to be provided by Contractor to Architect prior to issuing interim or penultimate certificates 27.6 Direct payment by Employer if Contractor cannot justify non-payment

But Employer not obliged to pay NSC and NSCs only recourse for non-payment is to sue Contractor KM Quarry Sdn Bhd v Ho Hup Construction (2006)
See also 27.10 - no privity of contract between Employer and NSC www.charltonmartin.com 119

27.0 Nominated Sub-Contractors


Final Payment in Advance to NSC
Architect can certify final payment to NSC before final payment is due to the Contractor 27.7

NSC Termination
Architects consent needed as a CP before Contractor can terminate the NSCs employment 27.8 Contractor must issue a report to the Architect and NSC stating the default and the Architect can ask the NSC to respond to the allegations Architect obliged to re-nominate 27.11

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27.0 Nominated Sub-Contractors


Final Account Procedure upon termination 27.11
Similar in principal to Main Contractor termination Employer to pay any additional cost of re-nomination if cannot be recovered from defaulting terminated NSC

EOT for delay due to terminated NSC but no L & E 27.11


Time taken to re-nominate Any extra time needed by re-nominated NSC Contractor not entitled to loss & expense

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27.0 Nominated Sub-Contractors


Termination by NSC with cause 27.12
Contractor liable to pay any additional cost of re-nomination Contractor liable to pay Employer any additional costs incurred No EOT for Contractor unless proof of wrongful termination by NSC

Contractor has right to tender for PC Sum and Provisional Sum work 27.14

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28.0 Nominated Suppliers


NS Contract of Sale to include 28.2:
Goods of quality and standard specified Make good defects Comply with delivery programme Ownership to pass upon delivery to Contractor (whether or not paid for) Payment within 7 days of Period of Honouring Certs

Right to reasonable objection 28.3 (similar to 27.3) Architect may:


issue further instructions to remove objection cancel the instruction and omit the materials or goods re-nominate

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28.0 Nominated Suppliers


NS payment provisions similar to NSC 28.5 & 28.6 Contractor responsible for any of NSs : negligence omission Default

- 28.7

No privity of contract between Employer and NS 28.8

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29.0 Works By Craftsmen, Tradesmen Or Other Contractors Employed or Engaged By the Employer
Permission for Employers direct contractors to enter the site and carry out direct related Works Employer responsible for any delay caused

EOT and L&E claimable in event of critical delay

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CHARLTON MARTIN ONE DAY SEMINAR

TEA / COFFEE BREAK

Session 6 By Michael Charlton

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30.0 Certificates and Payment Clause 30.1 : onus on Contractor to submit payment application each month, otherwise NO interim certificate Tuck Sin Engineering Sdn Bhd v Yee Heng [2007] - Architects payment certificate = condition precedent to payment Clause 30.3 : Architect to revise previous payment certificate to correct error

Anwar v Teo Hee Lai Building Construction [2007] - revised certificate must be issued when occasion arises for correction

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30.0 Certificates and Payment Clause 30.6(a) : Within 14 days of request by Contractor, Employer duty to set aside retention fund in separate trust account Enable Contractor to access retention fund if Employer insolvent, otherwise lose retention as in MacJordan v Brookmount (1992) Clause 30.6(b) Employer notify Contractor reason for deducting against retention fund avoid abuse Clause 30.6(c) & (d) Architect to release 1st and 2nd moiety of retention within 14 days from CPC and CMGD respectively -certainty

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30.0 Certificates and Payment Clause 30.7 : If Employer fails to pay certified amount by 21 days of Architects certificate, Contractor to give 1st notice of default If Employer continues default for another 14 days, Contractor to give notice of suspension until full payment Contractor gets EOT, loss and expense for suspension (eg insurance premium)

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30.0 Certificates and Payment Clause 30.10(a) : If Employer / Contractor fails to give notice disputing QSs final account within 3 months of receipt, final account = conclusive QS to study Contractors reasons of dispute, and decide if to amend final account If Employer / Contractor still disputes QSs decision/ amended final account, he must refer the dispute to arbitration within another 3 months, otherwise final account = conclusive Practical suggestion give notice of dispute/arbitration to buy more time whilst negotiating final account

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30.0 Certificates and Payment Clause 30.14 : Architect to issue Final Certificate within:- 21 days after another 21 days of the Penultimate Certificate , or - 28 days after the issue of CMGD Clause 30.15 : Onus on Contractor to ensure Employer makes payment of all previous certificates - as Final Certificate states the net sums certified after less all previous certificates

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30.0 Certificates and Payment Clause 30.16 : Final Certificate = conclusive on final value of Works except LD, set-off, interest payment But not conclusive as to quality of materials and workmanship complying with Contract Affirms SA Shee Sarawak v Sejadu [2000] final certificate= conclusive on balance sums due, NOT sufficiency of materials and workmanship

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30.0 Certificates and Payment Clause 30.17 : entitles Contractor to simple interest for Employers late payment of certified sum at Maybank BLR + 1% Payment certificate shows certified sum, must not show Liquidated Damages or set-off Employer can deduct Liquidated Damages and set-off against certified sum

Advice - Take care to check and avoid Employers wrongful deduction of Liquidated Damages and set-off

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31.0 Outbreak of Hostilities Clause 31.1 : in the event of war, allows Employer or Contractor to terminate by notice Advice - Once terminated, Contractor to: - protect Works - take photographs of completed Works to prove value of Works completed up to termination - carry out joint site valuation only if permits

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32.0 War Damage Clause 32.1(b) : Architect may give AI instructing Contractor to remove damaged Works and protect the Works, deemed to be a variation

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33.0 Antiquities Clause 33.1 : When discover antiquities, requires Contractor to suspend Works and request further instruction Contractor gets EOT for suspension

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34.0 Adjudication and Arbitration Clause 34.1 : Speedy resolution of dispute on Employers set-off via an agreed adjudicator avoids disruption to Works But parties can agree to refer other dispute to adjudicator Clause 34.4 temporary binding effect of adjudicators decision until Practical Completion

Parties have 6 weeks to give notice refer dispute on adjudicators decision to arbitration, otherwise decision is final and binding
6 weeks too short- compel parties to negotiate and settle

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34.0 Adjudication and Arbitration Clause 34.6 : any party may start arbitration by Notice to appoint arbitrator Arbitrators award = final and binding except for circumstances (e.g. misconduct) Arbitrators powers: - rectify the Contract - certification, open up and review (e.g. under-certification) - revise Architects certificates or decision

- award pre-award and post-award interest

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34.0 Adjudication and Arbitration Clause 34.9 : Best endeavours by Contractor, Employer and Nominated SubContractor to appoint same arbitrator to hear same/connected dispute involving subcontractor Clause 34.9 =Similar to tripartite arbitration agreement affirms Lafarge v Shepherd Hill [2001] Clause 34.10 cannot start arbitration until practical completion or termination unless urgent: - Questioning Architects authority to issue instruction - war outbreak - improper withholding certificate - improper withholding of payment to Contractor

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35.0 Mediation Clause 35.1 : flexibility for parties to mediate = commercial negotiation (separate from adjudication and arbitration)

Mediation = NOT condition precedent to adjudication and arbitration

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36.0 Notice Clause 36.3 : Importance of proof of delivery of notice by:- notice by hand : acknowledgement of receipt - notice by registered post : receipt of posting from Post Office (useful when party refuse to acknowledge receipt)

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37.0 Performance Bond Clause 37.1 : Submit Performance Bond 5% Contract Sum brefore commence Works Esso Petroleum Malaysia v Kago Petroleum [1995] - unconditional bond= call on bond triggers banks liability to pay - no need prove breach by Contractor Bond valid until 3 months after practical completion Employer must return Bond within 28 days of Contractors termination in practice if Employer disputes Contractors right to terminate, unlikely return Bond

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38.0 Governing Law Clause 38.1 : Malaysian law applies to PAM 2006 Contract (foreign case-law = persuasive authorities, though not binding)

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CHARLTON MARTIN ONE DAY SEMINAR

QUESTIONS AND DISCUSSION

CHARLTON MARTIN ONE DAY SEMINAR

Contract Administration In A Day


THURSDAY, 19 NOVEMBER 2009

CHARLTON MARTIN ONE DAY SEMINAR

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