We have two separate contracts with our customer:
Fabrication contract (NEC3 Option A Subcontract)
Installation contract (NEC3 Option C Subcontract)
We are part way through both contracts and an item has been fabricated and installed at site by us but has subsequently been discovered to be defective.
We have requested a concession for the Defect to be accepted.
Our customer has requested a quotation from us for accepting the Defect, for consideration.
Should our quotation for Defects acceptance cover the impact both on the fabrication and installation contracts, or just the fabrication contract (the defect is in the component fabrication, rather than installation)?
I ask because under our installation contract (Option C), Defects before completion are paid for, therefore why should we offer a saving for the site removal and re-installation element?
Also, if the Installation contract had been with another company rather than us, would the customer have been able to back-charge us under our fabrication contract for the cost involved in the site removal/re-installation of the defective components?