One of our subcontractors demobilised from site without any prior written notice to the main contractor and we are now having programme delays to completion. We need to write a contractual letter to the subcontractor referring to the clause in the contract but i am bit struggling and we need to let him know that there will be a contra charge of our costs.
We are using NEC conditions but it is a bespoke highways maintenance contract and the subcontractor is under short form of subcontract.
Your advise is highly appreciated.
I am assuming this is under the NEC3 Engineering and Construction Short Contract and will give advice accordingly. I also give my advice from a purely contractual viewpoint.
I would send an email with receipt required backed up by a recorded delivery letter stating
- that if they do not achieve Completion under their contract by the Completion Date, then delay damages will be deducted at the rate stated in the Contract Data until they do and there is no cap on this. I.e. it can go on forever in theory.
- that they risk being in substantial default of the contract under clause 30.1 so once Completion is later than the Completion Date, this is grounds for termination under reason 2 in clause 90.3. As such as well as being liable for delay damages, they would also be liable for forecast additional costs for completing the works under clause 92.2.
I think Jon has given very good advice here. The fact is that there is no such thing as “contra charges” in NEC contracts. You can only use the mechanism(s) within the contract to seek recovery from them - you cannot just unilaterally charge them whatever cost you are going to incur.
Hi Jon, Thank you and much appreciated for your rapid response. This is really an helpful answer and gives an idea to steer on a right way but I will look more into the contract and go through the clauses which is more appropriate in this regard.
Hi Glenn, Many thanks for your input.