A manufacturer of towers for a HV transmission line has failed to deliver on time and exposed the Contractor to the application of delay damages by the Employer.
When the construction Contractor gave notice of sanction in the form of a notice of intent to institute a damages claim, the supplier then ceased all further deliveries.
The Contractor made an offer and effected the placing of monies into a trust account for release as and when the tower units were delivered.
The supplier continues to refuse delivery.
The effect of placing orders with alternative suppliers (which is currently under price adjudication) will result in major delays and the risk of maximum delay damages being applied as well as Time related costs.
The Manufacturer is NOT an ECC Section 26 subcontractor
This is an option B Contract
Please advise if I am correct in my interpretation that this could be construed as a 60.1 (19) Compensation Event?
OPtion B is priced based contracts which essentially means that all risks not listed as compensation events fall up the Contractor.
The first sentence of clause 26.1 says “If the Contractor subcontracts work, he is responsible for Providing the Works as if he had not subcontracted” so on the face of it, it is a Contractor’s liability risk.
Does the risk of a supplier not delivering on time satisfy the criteria of 60.1 (19) ? I don’t think so.
However, a supplier acting in this rather extreme way is surprising and MAY possibly satisfy this criteria. Even if it does, then the compensation event could be assessed at zero if “it arises from the fault of the Contractor” - see clause 61.4, so the Contractor needs to demonstrate that it acted competently in selecting them etc.