PP2 Seminar P8 - Determination of Contractor's Employment by Employer

1. P8 - Determination of Contractor’s Employment
By Employer
Name : NGIENG TIEN YUNG 0320221
NG HUOY MIIN 0319097
TRACE GEW YEE 0320269

2. Summary

3. - The contractor is relieved from his contractual
obligation to proceed further
- Termination of his employment
MEANING ?

4. When the contractor :
WHY ?
- Fails to commence any work on site within a reasonable mobilisation
period after receiving & accepting the L.O.A.
- Completely or substantially suspending the works before completion
- Fails to proceed regularly and/or diligently with the Works with regards to
compliance with time and quality.
- Refuses or neglects to comply with an A.I. after reminders instructing him to
do so.
- Assigns his rights, interest or benefits under the contract to other party
without consent of the Employer
- Substantially subcontract the Works without written consent of the
Employer
- Abandons the Works with no intention to continue

5. HOW ?
Step 1 : the Employer or Architect on his behalf shall give to the Contractor a
written notice delivered by hand or by registered post specifying the default.
Step 2 : If the Contractor shall continue with such default for fourteen (14) Days
from the receipt of such written notice,
Step 3 : then the Employer may, within ten (10) Days from the expiry of the
fourteen (14) Days, by a further written notice delivered by hand or by
registered post, forthwith determine the employment of the Contractor under
the Contract. Provided always that such notice shall not be given
unreasonably or vexatiously.

6. Tutorial Questions

7. Questions 1
Discuss the situations where Employer can determine the Contractor’s
Employment provided for in PAM 2006.

8. 25.1(a)
- Contractor fails to commence the Works without reasonable cause in accordance with
the Contract
- after receiving and accepting the Letter of Award
- within a reasonable mobilisation period
25.1(b)
- contractor completely or substantially suspends carrying out the Works
- before completion without reasonable cause
- e.g. substantially reduced his labour and other resources to a skeletal level
Questions 1

9. 25.1(c)
- If contractor fails to proceed regularly and/or diligently with the Works;
- with regards to compliance with time and quality
25.1(d)
- If contractor persistently refuses or neglects to comply with an Architect's Instruction
- after reminders instructing him to do so
Questions 1

10. 25.1 (e)
if contractor fails to comply with the provisions in Clause 17.0
● When the Contractor assigns his rights, interest or benefits under the Contract to
other party
● When the Contractor wholly or substantially subcontract the Works (except specialist
works)
● both without written consent of the Employer
25.1 (f)
- if contractor has abandoned the Works.
- no intention to continue performance of his obligations under the Contract
Questions 1

11. Questions 2
What must the Employer check before determining the Contractor’s
Employment? What can happen if the Employer had failed to pay the sum
due on Interim Certificate at the time of determination?

12. What must the Employer check before determining the Contractor’s
Employment?
Questions 2

13. the failure of the Contractor to start the Works in accordance with the
Contract without reasonable cause
the Contractor suspends Work completely or partially before the
completion without reasonable cause
the Works are not proceed regularly or diligently by the Contractor
Clause 25.1(a) -
Clause 25.1(b) -
Clause 25.1(c) -
Questions 2
The Employer may determine the Contractor’s Employment with the following defaults by
Contractor :

14. the Contractor refuse or ignore to follow the Architect Instruction (A.I)
without the written consent of the Employer, the Contractor assigns his
rights, interest or benefits under the Contract to other parties or
without the written consent of the Employer, the Contractor completely
or substantially subcontract the Works
the Contractor abandons the Works with no purpose to continue
performance of his obligations according to the Contract
Clause 25.1(d) -
Clause 25.1(e) -
-
Clause 25.1(f) -
Questions 2

15. What can happen if the Employer had failed to pay the sum due on
Interim Certificate at the time of determination?
Questions 2

16. Questions 2
the Employer shall not make any further payment to the Contractor
the Contractor shall allow or pay back to the Employer all the cost
incurred to complete the Works including loss and/or expense suffered
by the Employer
Clause 25.4(d) -
-
OR

17. the Employer fails or ignores to pay the Contractor the certified amount
within the Period for Honouring Certificates
the amount from any certificate is subject to deduction of any
liquidated damages (Clause 22) and set-off (Clause 30.4)
Clause 26.1(a) -
-
The Contractor may determine his own Employment :
Questions 2

18. Discuss the essential contents required in the Notice of Default and Notice
of Determination.
Questions 3

19. - Comply meticulously with the time table stated in contract.
- Make sure that the notice must be clear as to what is being notified, stating clearing
the Contractor's default and the applicable clauses of the Contract.
- Must stated a time frame to cure the default
Questions 3

20. Questions

21. Discuss the reasonable cause which results the contractor failed to
commence with the works? What happened when the reasonable cause
existed ?
Questions 1

22. Employer’s defaults or acts of prevention
- failure to give effective site possession,
- legal or physical impossibility
- Frustration
- force majeure,etc
● It will affect the validity of the employer’s right to utilise the default in a possible
determination.
● The employer need to ensure that he has contributed to the contractor’s default.
● There’re credible reasons exist beyond the contractor to justify his failure.
Questions 1

23. Under clause 25.1 (e), what must the employer prove under the provisions
in Clause 17.0?
Questions 2

24. Assignment by Contractor
1) there was an assignment undertaken by the contractor
2)It is relation to contractor’s rights, interests or benefits under contract to other parties except
for assignment due under the contractor’s financial institution
3)such assignment was carried out without seeking the prior written consent of the employer
No Sub-contracting
1) there was sub-contracting of the Works by the contractor
2) the sub-contracting is in relation to either the whole or substantial part of the Works
3) the sub-contracting is not for labour only of craftsmen, skilled or semi-skilled workmen to
carry out any portion of the Works
4) there is no other provision in the contract permitting such sub-contracting
Questions 2

25. According to Clause 25.6 of PAM Contract 2006, why do the Architect or
Quantity Surveyor needs 6 months time, from the completion of the
remaining Works, to submit the final account to the Employer & Contractor
even after the determination of the Contractor’s Employment?
Questions 3

26. within 3 months from the date of the receipt of the final account, any
disputes from the Employer and Contractor must be raised or else the final
account is conclusive and deemed agreed by both parties
within 3 months, if either of the parties have disputes of the final account,
they must submit their disagreements to the Architect or Quantity Surveyor to
look through their disagreement and decide either to amend or not
within 3 months, if any parties have disagreement on the final account,
either amended or not, shall refer to the arbitration (Clause 34)
If either parties have disagreement on the final account,as a result it shall
deem to be conclusive and agreed by both parties
Clause 25.6(a) -
Clause 25.6(b) -
-
-
Questions 3

27. End
Thank You