As a subcontractor we have received this from Contractor:
Give notice under clause 90.3 of the contract of our intention to terminate contract with immediate effect on the following grounds:
Failure to comply with subcontract
Hindered the contractor
At no time have we not followed subcontract, also we were ahead of program and off site for a week while waiting on them. Due to start back and we have been sent this.
Can we recoup any money through loss and expense as we have turned down work due to this contract?
Firstly, the Contractor may terminate for any reason under NEC3 ECS, so contractually they have the right to terminate. The reason for termination is important, however, as it determines the procedure and the amount due, as stated in the termination table.
For the Contractor to terminate for the reason you have stated they would need to firstly notify the default and then the right to terminate would only arise where this default continues for a period of 3 weeks, without being rectified (see clause 91.2 and 91.3).
There is no ‘loss and expense’ under NEC contracts and the amount due depends on the reason for termination and detailed under clause 93.
I would formally request the Contractor to clarify which reason they are terminating the subcontract for. It may be that you have not correctly notified the event that caused you to be off site for a week, although even if it was for your own benefit I don’t see why the Contractor could use this as a reason for terminating, except where they terminate for ‘any reason’.
Thank you for your response.
We were never given a default or any indication that they were not happy with our work. We received a telephone call to say hold up in job but when its ready we wont be proceeding with yourselves and then the termination letter.
This has never happened before and as I said we have turned down other work due to this contract.
The situation has not been properly administered although if termination is for a reason other than R1 to R21 then at least you should get a sensible amount due calculated at A1, A2 and A4. I appreciate that this doesn’t fully ‘compensate’ for your possible loss and expense, although the Contractor dies have the right to terminate for any reason under the contract.
You also need to consider your actions under the contract as a verbal instruction is not recognised by NEC contracts (unless formally amended), so you were under no obligation to stop work on the basis of a telephone call.
Make sure that the amount due is assessed as A1, A2 and A4 and if not then you may have to formally dispute this.