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Withdrawal by Contractor in the early stage

3 replies [Last post]
Kannan CP
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Joined: 12 Jun 2008
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Hi All,

After the award of Contract and just after the mobilisation time period, the Contractor sent letter to Client stating that they are unable to carry out the works due to some internal issues in the Organization. Also they want a no future claim letter from the Client and not interested to take the money for mobilisation stage (less amount).

In this case with which clause of FIDIC the client can claim (if he intended). and what are the possible scenarios of negotiation for closing this issue. Definitely the Client wants to carry out this Project.

Best Regards

Kannan

Replies

Kannan CP
User offline. Last seen 5 weeks 6 days ago. Offline
Joined: 12 Jun 2008
Posts: 280
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Thanks Mike and Patrick.

Patrick Weaver
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Joined: 18 Jan 2001
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The most expeditious way forward would be:

1) To accept the termination by the contractor, holding them liable. If the withdrawl is genuine you don't want them on the project. 

2) Relet the contract expiditiosly (maybe negotiate with the 2nd and 3rd tenderes from the original bid).

3) When the full cost and time consequences are determined, seek compensation from the defaulting contractor.

HOWEVER, this is a matter that requires local expert knowledge of the law and careful consideration of the risks - the client ultimately needs the project and will not nescesarily recover anything from the defaulting contractor. A negotiated outcome is likely to be the lowest cost and risk to the client: https://www.mosaicprojects.com.au/WhitePapers/WP1024_Negotiating.pdf

Mike Testro
User offline. Last seen 5 days 22 hours ago. Offline
Joined: 14 Dec 2005
Posts: 4398

Hi Kannan

Wrongful termination by the contractor.

Best regards Mike Testro