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1. LECTURE 8 - DETERMINATION OF
OWN EMPLOYMENT BY
CONTRACTOR
YONG BOON XIONG - 0321754
YONG SEEN YEE - 0315883

2. DETERMINATION OF OWN EMPLOYMENT BY
CONTRACTOR
Clause 26.1 states that the Contractor MAY
determine his own employment if the Employer
defaults in any of the following, where the Employer:
 Cl 26.1(a) – Fails to pay the certified amount within the Period
of Honouring Certificates.
 Cl 26.1(b) – Interferes the issues of any Certificates.
 Cl 26.1(c) – Fails to nominate a succeeding Architect or
Consultant.
 Cl 26.1(d) – Suspends the work for a continuous period of
time exceeding the stated Period of Delay in Appendix.

3. CLAUSE 26.1(A) – EMPLOYER FAILED TO PAY
CERTIFIED AMOUNT
 Clause 30.1 – The Employer shall pay the Contractor the certified
sum within the Period of Honouring Certificate stated in
Appendix.
 Failure to pay = Breach of Contract
 The Contractor will be entitled to determine his own employment.
 Amount due on any certificate is subjected to deduction:
 Clause 22.1 – Liquidated Damages
 Clause 30.4 – Set-off
 However, the Employer has to inform the Contractor before
making any deduction to the amount in Certificate.

4. CLAUSE 26.1(B) – EMPLOYER INTERFERES
WITH ANY CERTIFICATE
 The Architect is required to act FAIRLY and WITHOUT BIAS.
 If the Employer interferes in the issuance of certificates such
as instructing the Architect to:
 delay the issuance of certificate or
 reduce the certified amount,
 The Contractor is entitled to determine his own employment
under Clause 26.1(b).

5. CLAUSE 26.1(C) – EMPLOYER FAILS TO APPOINT A
SUCCEEDING ARCHITECT/CONSULTANT
 Failure to appoint a replacement Person within a reasonable
time = Breach of express term of the contract.
 The Contractor must be able to establish the following to
prove the Employer is on default:
 The Architect or Consultant ceasing to act in that capacity.
 The failure of Employer to nominate a successor; and
 Such failure to confirm beyond the time period stated in the contract,
28 days.
 However, the Employer may request for an extension if he is
unable to find a replacement.

6. CLAUSE 26.1(D) – THE WORKS IS
SUSPENDED
 For the Contractor to determine his employment under Clause
26.1(d), he must prove the following:
 There was a suspension.
 The suspension exceeds a continuous period stated in the Period of
Delay in Appendix.
 The suspension must be due to one/more of the following events:
 AI issued by the Architect under Clause 1.4, 21.1 and 21.4.
 Architect’s inability to provide all necessary information requested by the
Contractor to carry out the Works.
 Contractor not having in due time the necessary for AI for the expenditure of PC
and Provisional Sum.
 Delay by works not forming part of Contract, e.g. Employer’s tradesmen.
 Opening up for inspection and test which later is found to be in accordance
with the contract.

7. PROCEDURE FOR DETERMINATION BY
CONTRACTOR
Under clause 26.2, the contractor must:
 Comply meticulously with the time table stated in
contract.
 Ensure that such notice must not be given
unreasonably or vexatious.

8. 2-STEPS PROCEDURE FOR DETERMINATION
STEP 1:
 Issue written Notice of Default to Employer
 Employer has 14 Days to rectify the default
 Should Employer fails or neglect to act, then the
Contractor can trigger the next stage of the
determination process.

9. STEP 2:
 Issue actual written Notice of Determination within ten (10)
Days to determine his own employment.
 Vacate the Site
 To request for the date of inspection on site to jointly record
extent of work done and materials delivered.
 Submit final account
 Check final account and advise Employer. Any disputes from
Employer must be raised within 3 Months.
 Employer must submit their disagreement within 3 Months.
Besides, the Employer has 3 Months to refer the
disagreement on the final account to arbitration

10.  Clause 26.2 does not stipulate any option for the
revocation of the determination and resumption of
works. If such reinstatement were to arise, this has
to be effected through a separate agreement by
mutual consent of both parties.

11. AUTOMATIC DETERMINATION (CLAUSE 26.3)
If the Employer :
 Insolvent
 making a composition or arrangement with his
creditors
 Winding up order made
 Voluntary winding up
 Having a liquidator/receiver/manager of his
business of undertaking duly appointed by the
court; or
 Company taken over by holders of debentures

12. RIGHTS AND DUTIES OF EMPLOYER/CONTRACTOR
AFTER DETERMINATION (CLAUSE 26.4)
 Vacate the Site
 Demobilize all workers and remove all temporary
buildings, construction plants, and tools on the Site
 Employer must pay for loss and/or expense
suffered by the contractor
 Put a lien over any unfixed goods and materials
which are unpaid
 Strictly to the contractual procedures laid down in
Contract.

13. CONTRACTOR’S RIGHTS AND REMEDIES NOT
PREJUDICED (CLAUSE 26.7)
 The contractor can determine his own employment
either:
a. under the contract (clause 26.1), or
b. under common law.
 If the Contractor chooses to determine under the
contract and if such determination was eventually found
to be invalid, then he is bound by the contract
provisions.
 He cannot then resort to the common law rights of
determination as an alternative cause of action.
 Malayan Flour Sdn Bhd v Raja Lope & Tan Co & Anor
(1998) 6 MLJ 377.

14.  TUTORIAL QUESTIONS

15. QUESTION 1:
 If the project is suspended by the Employer for
more than 3 months due to design change, what
are the remedies available to the Contractor.
Discuss the conditions whereby the Contractor is
entitled to determine his Own Employment.

16. REMEDIES AVAILABLE TO THE CONTRACTOR
 Under Clause 24.1,
 The Contractor is entitled to claim for loss and expenses caused
by matters affecting the regular progress of the Works.
 Clause 24.3(c) states suspension of Works in compliance with AI as
matters affecting the regular progress of the Works.
 Under Clause 23.1,
 The Contractor is entitled to claim for extension of time.
 Clause 23.8(g) states compliance with AI under Clause 21.4
(Postponement of works) as the Relevant Events for EoT Claim.
 Under Clause 26.1(d),
 When the uncompleted Works is suspended for a continuous period
of time exceeding Period of Delay stated in the Appendix,
 The Contractor is entitled to determine his own employment

17.  For the Contractor to determine his employment under Clause
26.1(d), he must prove the following:
 There was a suspension.
 The suspension exceeds a continuous period stated in the Period of
Delay in Appendix.
 The suspension must be due to one/more of the following events:
 AI issued by the Architect under Clause 1.4, 21.1 and 21.4.
 Architect’s inability to provide all necessary information requested by the
Contractor to carry out the Works.
 Contractor not having in due time the necessary for AI for the expenditure of PC
and Provisional Sum.
 Delay by works not forming part of Contract, e.g. Employer’s tradesmen.
 Opening up for inspection and test which later is found to be in accordance
with the contract.

18.  QUESTION 2:
Discuss the checklist before the Contractor determine
his own employment. What is the procedure required
under PAM 2006 for determination of Contractor’s
Own Employment?

19. Under clause 26.2, the contractor must:
 Comply meticulously with the time table stated in
contract.
 Ensure that such notice must not be given
unreasonably or vexatious.

20. STEP 1:
 Issue written Notice of Default to Employer
 Employer has 14 Days to rectify the default
 Should Employer fails or neglect to act, then the
Contractor can trigger the next stage of the
determination process.

21. STEP 2:
 Issue actual written Notice of Determination within ten
(10) Days to determine his own employment.
 Vacate the Site
 To request for the date of inspection on site to jointly
record extent of work done and materials delivered.
 Submit final account
 Check final account and advise Employer. Any disputes
from Employer must be raised within 3 Months.
 Employer must submit their disagreement within 3
Months. Besides, the Employer has 3 Months to refer
the disagreement on the final account to arbitration

22. QUESTION 3:
 What happen if the Architect resigns from the
project and there is no replacement for 4 months?

23.  Architect is the person who responsible for
supervising the work on site.
 If the architect resigns, and no one can supervising
the work on site. The contractor must stop work.
 The contractor can terminate his own employment
where the whole project is suspended for a
continuous period of time exceeding the period
stated in the Period of Delay (if none is stated 3
months) in Appendix

24.  ADDITIONAL QUESTIONS

25. QUESTION 1:
What is the different situation between the employer
determinate the contractor’s employment and the
contractor determinate his own employment when the
contractor submit final account to QS ?

26. Answer:
 If the employer determinate the contractor’s
employment due to the contractor’s fault. The QS
will only issue the final account only after the
remaining works is completed by second (NEW)
contractor.
 If the contractor determinate his own employment
due to the employer’s fault. The QS will issue the
final account to the contactor. In this situation, the
contractor NO NEED wait after remaining works is
completed by second (NEW) contractor.

27. QUESTION 2:
Can the Contractor determine his own employment if
the Employer make deduction in the Interim
Certificate?

28. Answer:
 Yes, the Contractor may determine his own
employment under Clause 26.1(a).
 Unless the Employer made deduction based on the
following, which he is entitled to:
1.) Clause 22.1 – Liquidated Damages
2.) Clause 30.4 – Set-Off

29. THANK YOU