Civil Engineering Reference
In-Depth Information
9.4.3 General termination provisions under the NEC3
The termination provisions in the NEC3 are contained in clauses 90-93. Clause 90.1
states that if either party wishes to terminate the Contractor's obligation to Provide
the Works he notifies the Project Manager and the other party, giving details of his
reason for terminating. The Project Manager will then issue a termination certificate
to both parties promptly, providing that the reason given complies with the con-
tract. Unlike the SBC and the SBC/DB, the termination provisions are not split into
separate sections for termination by the Employer, the Contractor or either party.
There are four relevant clauses, namely, termination (clause 90); reasons for termina-
tion (clause 91); procedures on termination (clause 92); and payment on termination
(clause 93). Clause 90.2 contains the 'Termination Table'. This Table sets out which
partycanterminate;forwhatreasons;theproceduretobefollowed;andhowthe
amount due is calculated. There is no specific notification procedure for termination
under the NEC3. Parties should follow the requirements of clause 13. 13.The procedures
for termination are implemented immediately after the Project Manager has issued
the termination certificate and, within 13 weeks of termination, the Project Man-
ager certifies a final payment to or from the Contractor. This is the Project Manager's
assessment of the amount due on termination less the total of previous payments. Pay-
ment is then made within three weeks of the certificate. Once a termination certificate
has been issued, the Contractor is not permitted to do any further work.
9.4.4 Termination by the Employer under the SBC and the SBC/DB
Clause 8.4 of the SBC and the SBC/DB entitles the Employer to terminate the employ-
ment of the Contractor if the Contractor continues a 'specified default' for 14 days
after receiving a notice specifying that default. The 'specified defaults' relied upon
must arise before the date of practical completion of the Works and are set out in
clause 8.4.1. These are where:
•
he Contractor without reasonable cause, wholly or substantially suspends the car-
rying out of the Works (or the design of the Contractor's Designed Portion in the
case of the SBC);
•
fails to proceed regularly and diligently with the Works or the design of the Con-
tractor's Designed Portion in the case of the SBC, and with the performance of his
obligations under the contract in the case of the SBC/DB. The inclusion of such
a termination event does not necessarily mean a separate implied obligation to
proceed regularly and diligently, see
Leander Construction Limited
v.
Mulalley &
Company Limited
(2011) discussed in Section 3.4.4. For a recent decision on an
employer's right to terminate for the contractor's failure to proceed with 'due dili-
gence', see
SABIC UK Petrochemicals Ltd
v.
Punj Lloyd Ltd
(2013).
•
The Contractor refuses or neglects to comply with a written notice or instruc-
tion from the Architect under the SBC and from the Employer under the SBC/DB
requiring the removal of any work, materials or goods not in accordance with the
contract, where the Works are materially affected by such refusal or neglect.
