Professional Documents
Culture Documents
2016
GROUP 6
QUESTION 1
• 6. LETTER OF AWARD.
• The formal letter of award can be issued by the owner once both parties
have agreed on the principal terms of the contract. The letter is usually
incorporated as part of the contract document. Quite often, the letter of
award may be issued even though not all terms have been agreed between
the parties, e.G. The definitions of milestones within a programme,
insurance and performance bonds to be subject of negotiations until after
the works have commenced. The typical contents in the letter of award are
Answer :
• There is an enforceable contract between Jolly and Can-do. In the event of Can-
do(contractor) was given possession of the site by Jolly(client) and instructed to
commence the work. Although, there was no letter of acceptance was signed but
Can-do(contractor) had begun the work while the contract documents were being
prepared and finalized for signing. Under red book of FIDIC in section 1.1.1.3,
“letter of acceptance” means the letter of formal acceptance, signed by the
employer, of the letter of tender, including any annexed memoranda comprising
agreements between and signed by both parties. If there is no such letter of
acceptance, the expression “ letter of acceptance” means the contract agreement
and the date of issuing or receiving the letter of acceptance means the date of
signing the contract agreement. In such case, Bang-Bang(project manager)
requested Can-do to expedite the preparation of the contract documents for
signing. The bound contract documents incorporated all the correspondence and
documents listed in the letter of acceptance. In Event that MrJoll (client) would be
CASE LAW
• The classic case of Trollope & Colls Ltd V Atomic Power Construction Ltd (1963)
support this situation where the subcontractors were notified of changes to the
works after their submission of tender. They were instructed to commence work
on the following terms: ‘as soon as matters outstanding between us are settled
we will enter into a contract agreement with you, and in the meantime please
accept this letter as an instruction to proceed …’ although no contract was
actually signed, the english court held that a contract came into existence when
the contractor commenced work.
QUESTION 2
-THE CONTRACTOR SHALL THEN LEAVE SITE AND DELIVER ANY REQUIRED
GOODS, ALL CONTRACTOR’S DOCUMENTS AND OTHER DESIGN
DOCUMENTS MADE BY OR FOR HIM TO THE ENGINEER. HOWEVER,
CONTRACTOR SHALL USE HIS BEST EFFORTS TO COMPLY IMMEDIATELY
WITH ANY REASONABLE INSTRUCTIONS INCLUDED IN THE NOTICE
• FOR THE ASSIGNMENT OF ANY SUBCONTRACT
• FOR PROTECTION OF LIFE OR PROPERTY OR FOR THE SAFETY OF THE
WORK
• AFTER TERMINATION, EMPLOYER MAY COMPLETE WORKS AND/OR
ARRANGE FOR ANY OTHER ENTITLES TO DO SO. THE EMPLOYER
AND THESE ENTITLES MAY THEN USE ANY GOODS, CONTRACTOR’S
DOCUMENTS AND OTHER DESIGN DOCUMENTS MADE BY OR ON
BEHALF OF THE CONTRACTOR.
• THE EMPLOYER SHALL THEN GIVE NOTICE THAT THE
CONTRACTOR’S EQUIPMENT AND TEMPORARY WORKS WILL BE
RELEASED TO THE CONTRACTOR AT OR NEAR THE SITE. THE
CONTRACTOR SHALL PROMPTLY ARRANGE THEIR REMOVAL, AT THE
RISK AND COST OF CONTRACTOR. IF CONTRACTOR FAILS TO MAKE
PAYMENT BY THIS TIME TO THE EMPLOYER, THESE ITEMS MAY BE
SOLD BY THE EMPLOYER TO RECOVER THIS PAYMENT. ANY BALANCE
OF THE PROCEEDS SHALL THEN BE PAID TO THE CONTRACTOR .
PAM 2006 (WITH QUANTITIES)
-CLAUSE 25.4 (A) - THE CONTRACTOR SHALL VACATE THE SITE AND
RETURN POSSESSION OF THE SITE TO THE EMPLOYER WHO MAY EMPLOY
AND PAY OTHER PERSON TO CARRY OUT AND COMPLETE THE WORKS AND
TO MAKE GOOD ANY DEFECTS. SUCH PERSON MAY ENTER UPON THE
WORKS AND USE ALL TEMPORARY BUILDINGS, CONSTRUCTION PLANT,
TOOLS, MATERIALS AND GOODS INTENDED FOR, DELIVERED TO AND
PLACED ON OR ADJACENT TO THE SITE (EXCEPT CONSTRUCTION PLANTS
HIRED BY CONTRACTOR) AND MAY PURCHASE ALL MATERIALS AND GOODS
NECESSARY FOR CARRYING OUT AND THE COMPLETION OF THE WORKS.
THE CONTRACTOR IF SO REQUIRED BY THE EMPLOYER OR BY THE
ARCHITECT ON BEHALF OF THE EMPLOYER SHALL WITHIN 21 DAYS OF THE
DATE OF DETERMINATION, ASSIGN TO THE EMPLOYER THE BENEFIT OF ANY
AGREEMENT FOR THE CONTINUATION OF THE HIRE OF CONSTRUCTION
PLANT AND EQUIPMENT ALREADY ON THE SITE.
• CLAUSE 25.4 (B) - THE CONTRACTOR IS SO REQUIRED BY THE EMPLOYER
OR ARCHITECT, SHALL WITHIN 21 DAYS OF DETERMINATION, ASSIGN THE
EMPLOYER WITHOUT PAYMENT THE BENEFIT OF ANY AGREEMENT FOR THE
SUPPLY OF MATERIALS, GOODS AND/OR FOR THE EXECUTION OF ANY
WORK FOR THE PURPOSES OF THE CONTRACT TO THE EXTENT THAT THE
SAME IS ASSIGNABLE.
• CLAUSE 25.4 ( C ) - THE CONTRACTOR WHEN INSTRUCTED IN WRITING BY
ARCHITECT SHALL REMOVE THE WORKS ANY TEMPORARY BUILDINGS,
CONSTRUCTION PLANT, TOOLS, EQUIPMENT, MATERIALS AND GOODS
BELONGING TO OR HIRED BY HIM. IF WITHIN A REASONABLE TIME AFTER
ANY SUCH INSTRUCTION HAS BEEN ISSUED TO CONTRACTOR, HE HAS
NOT COMPLIED WITH, THE EMPLOYER MAY WITHOUT LIABILITY REMOVE
AND SELL ANY SUCH PROPERTY BELONGING TO THE CONTRACTOR
EXCEPT THOSE THAT ARE ON HIRE AND HOLD THE PROCEEDS LESS ALL
COSTS INCURRED TO THE CREDIT OF THE CONTRACTOR.
• CLAUSE 25.4 (D) - THE CONTRACTOR SHALL ALLOW OR PAY TO
THE EMPLOYER ALL COST INCURRED TO COMPLETE THE WORKS
INCLUDING ALL LOSS AND/OR EXPENSE SUFFERED BY THE
EMPLOYER. UNTIL AFTER THE COMPLETION OF THE WORKS
UNDER CLAUSE 25.4(A), THE EMPLOYER SHALL NOT BE BOUND BY
ANY PROVISION IN THE CONTRACT TO MAKE ANY FURTHER
PAYMENT TO THE CONTRACTOR, INCLUDING PAYMENTS WHICH
HAVE BEEN CERTIFIED BUT YET PAID WHEN THE EMPLOYMENT OF
THE CONTRACTOR WAS DETERMINED. UPON COMPLETION OF
THE WORKS, AND ACCOUNT TAKING INTO CONSIDERATION THE
VALUE OF WORKS CARRIED OUT BY THE CONTRACTOR AND ALL
COST INCURRED BY EMPLOYER TO COMPLETE THE WORKS
INCLUDING LOSS AND/OR EXPENSES SUFFERED BY THE EMPLOYER
SHALL BE INCORPORATED IN A FINAL ACCOUNT PREPARED IN
ACCORDANCE WITH CLAUSE 25.6
QUESTION 9
• THE PART WHICH IS USED WILL BE DEEMED TO HAVE BEEN TAKEN OVER
• THE RESPONSIBILITY NOW LIES ON JOLLY, NOT CAN-DO
• CAN-DO CAN REQUEST JAZZ TO ISSUE THE TAKING-OVER CERTIFICATE
QUESTION 10 (A)
CONSEQUENTIAL EFFECT:
• FIRST HALF OF THE RETENTION MONEY CERTIFIED AND PAID FOR THE PART [SUB-
CLAUSE 14.9]
• 84-PERIOD FOR SUBMISSION OF STATEMENT AT COMPLETION STARTS [SUB-
CLAUSE 14.10]
• NO FURTHER VARIATION CAN BE ISSUED [SUB-CLAUSE 13.1]
QUESTION 10 (B)
• THIS QUESTION IS RELEVANT TO CLAUSE 16 OF PAM CONTRACT 2006.
• PICASSO SHALL GIVE WRITTEN NOTICE OF INTENTION TO TAKE PARTIAL
POSSESSION TO CAN-DO
• PICASSO SHALL IDENTIFY PART TO BE TAKEN OVER
• HE SHALL MAKE SURE THAT THE CONTRACTOR HAS GIVEN HIS CONSENT
• HE SHALL ALSO ISSUE THE CERTIFICATE OF PARTIAL COMPLETION WITHIN 14
DAYS OF TAKING PARTIAL POSSESSION AS STATED IN CLAUSE 16.1(A)
QUESTION 10 (B)
CERTIFICATE OF PARTIAL COMPLETION SHALL INCLUDE
• ASSUMING THE PART TAKEN OVER • AS FOR PAM, THE CALCULATION WILL
HAS AN ESTIMATED VALUE OF RM BE
20,200,200.00 • RM20,200,200.00/RM80,800,800.00
• MAXIMUM RETENTION ASSUMED TO X RM4,040,040.00 X ½
BE 5 %, CALCULATION FOR FIDIC WILL • =RM505,005.00
BE AS FOLLOWED:
• RM20,200,200.00/RM80,800,800.00
X RM4,040,040.00 X 40%
• = RM404,004.00
CALCULATION FOR DELAY/LIQUIDATED
DAMAGE
• FOR FIDIC AND PAM
• RM20,200,200.00/RM80,800,800.00 X RM1,000,000.00
• = RM250,000.00
• THE DELAY DAMAGE TO BE IMPOSED
= RM1,000,000.00-RM250,000.00
= RM750,000.00
QUESTION 11
DISCUSS JAZZ’S ACTION TO ISSUE AN
INSTRUCTION TO OMIT PORTIONS OF THE
WORKS FROM CAN-DO’S CONTRACTED SCOPE
SO THAT ANOTHER CONTRACTOR CAN BE
ENGAGED TO CARRY OUT THE OMITTED
PORTIONS.
PAM Form 2006 (With Quantities) assume Engineer is Architect
A certain portion of works have been omitted from the Engineer’s Instructions assigned to Can-Do and have
been arranged for another contractor to carry out the omitted works.
From the point of view of the Contractor:
As stated in Clause 6.1, all works, materials, goods and workmanship shall be of the respective quality and
standards described in the Contract Document. According to Clause 6.5, In the case where it is not up to
quality, the consultant admin may
a) Remove the materials from site
b) To demolish and reconstruct
c) To rectify such work as AI
d) To submit a method statement within 7 days of receipt of the written instructions
e) To leave all works with the consent of the employer together with the appropriate set-off
As stated in Clause 15.3(b), 15.4, 15.5, 29.1, 30.4 if the Contractor, Can-Do fails to attend to the defects, the
employer may employ and pay other Person to rectify the defects. All defects not made good by the Contractor
shall be set-off.
11. Discuss Jazz’s action to issue an instruction to omit portions of the works from Can-Do’s contracted scope so
that another contractor can be engaged to carry out the omitted portions.
FIDIC Contract Form
Based on Clause 4.9, the contractor shall institute a quality assurance system to demonstrate compliance with the
requirements of the Contract. Compliance with the quality assurance system shall not relieve the Contractor of any
of his duties, obligations or responsibilities under the Contract, which in this case Can-Do did not comply with the
quality assurance system.
Based on Clause 7.6, if the Contractor fails to comply with the instructions, the Employer, Jolly is entitled to employ
and pay other Person to carry out the work. Except to the extent that the Contractor would have been entitled to
payment for the work, the Contractor shall subject to Sub-Clause 2.5 pay to the Employer all costs arising from this
failure.
QUESTION 12
Due to the failure of the membrane roofing works, Jolly has the rights to set-off all cost incurred for loss and
expense which such as stated Clause 30.4 where the contractor is in breach of the followings:
a) Under clause 15.3(b) where failure to comply with his undertaking to rectify minor defects, Jolly is able to
engage other Person to execute the works to give effect to the contractor’s said undertaking. All cost
including loss and expense shall be set-off by the employer.
b) Besides, under clause 15.3(c), Jolly can accept the defects as it is, but subject to an appropriate set-off
against the contractor, Can-Do.
12. Advise Jolly (Employer) on their rights in respect of the failure of the membrane roofing works.
Since the Defects Notification Period had expired, under Clause 11.10 also stated that each Party shall remain
liable for the fulfilment of any obligation which remains unperformed at that time; and as for the purposes of
determining the nature and extent of unperformed obligations, the Contract shall be deemed to remain in force.
QUESTION 13
UNLIKE
However, in this case, there was an absence of agreement of extension of time because Employer
has instructed for the sub-clauses to be omitted from the Contract. Hence, the Engineer will
determine a fair extension while considering;
i. Causes of delay,
ii. Effect of a review of any previous determinations of time extension which may result in in an
increase, but not decrease in total time of extension
iii. Notifies contractor
16 (B)