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NEC ECS: Insolvency Termination - Take over

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Main contractor perspective, subcontractor is insolvent, currently on a default notice for significant hindrance (not placing orders for plant required) .

Has come to light subs are likely to become insolvent.

Question is, does the current default notice require amending, if no longer terminating for stated R14 reasons ? Or do we need to amend for R1 - R10 reasons ?

Or is it better to pursue original default (due to terminate in 2 weeks) rather than wait for a notice in the Gazette etc ?

Also if we know they are likely to become insolvent, can we reasonable appoint others to carry out their works if no longer on site before the date for termination.

asked May 24, 2019 in Termination by JohnQS (420 points)  

1 Answer

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Best answer
If you have already  notified a default which then gives you the right to terminate (reason R14), then you would probably be best to continue down that route rather than try to pursue any other reason, unless the other reason was more immediate, which provides you with a significant advantage..  The procedure on termination and amount due is the same for both reasons.

The terms of the contract remain until you issue a termination certificate so if you get others to do the Subcontractor's work you might create problems with Estoppel or Repudiation, even though the Subcontractor is no longer on Site.  I would take particular advice before proceeding down this route.
answered May 28, 2019 by Andrew W-I Panel Member (27,560 points)  
selected Mar 31 by JohnQS