1.

As per the first scenario when we divide the context in to several questions we can visualize that
a) Whether the Consultant is liable as per the context?
b) Can the Client withheld the payment to Consultant for a disputed item?
c) Can the Consultant suspend his services for non-response of the Client?
d) Can the Client terminate his service for the suspension made by JSCS?

While analyzing the scenario it is evident that Consultant has done a serious error but when he was
questioned regarding his Service he was giving a counter argument. As per the Standard conditions
of Engagement Sub Clause 3.1 (Skill Care and Diligence) Consultant need to excise reasonable
skill, care and diligence while providing his Service otherwise he will be found default. But as per
the question none of the technical details are evident so that as an independent consultant I cannot
decide the mistake unless and until relevant documents are submitted. Furthermore for the counter
argument of the Consultant Client has not expressed their view point so as per the Sub Clause 2.10.6
for any claims and damages arising out of default parties need to mutually come to an agreement
that is per Sub Clause 6.1(Amicable Settlements) if there is any disputes arising out of Agreement
parties need to use best efforts to settle among them but as per the Sub Clause 6.2(Right to
Arbitration) if within 30 days if there is no amicable settlement parties can refer the dispute for
arbitration.

When analyzing the second question as per the Sub clause 9.3(Items in Dispute) it is clearly
mentioned Client cannot withheld the payment to Consultant in any case. If hit happens according to
Sub Clause 9.2 Consultant need to be paid asper the agreed period but if his not paid within the
stipulated time then he can charge interest for the delay payment. So the total amount payable will
be Remuneration plus relevant interest.

With regards to third question Consultant has suspended his Services after his payment was
withheld by Client. So referring to Sub Clause 2.10.3 which says that Consultant has the right to
terminate the services when he is not paid for more than 60 days after submitting is documents for
payments but here in this scenario the time frame is unknown so we cannot comment on that.
Furthermore the Consultant has postponed his Services but as per the Agreement he cannot do that
because only in the situation of Force Majeure event the Services provided by Consultant can be
postponed refer Sub Clause 2.10.2. So here Client can claim damages against Consultant for
suspension made by him as per Sub Clause 2.10.6 and amount need to be agreed within them within
30 days as per Sub Clause 6.1 if not it will be referred to arbitration
Coming to the last part whether Client has the right to terminate the Contract? Yes, he has the right
to terminate the Contract at any time he wants as per sub clause 2.10.1 but when an Agreement is
terminated Client has the obligations to Settle all remuneration balance to Consultant which is due
to him before the effective date of termination and also compensation regard to termination need to
be agreed within Consultant and Client as per Sub Clause 2.10.6 and amount need to be agreed
within them within 30 days as per Sub Clause 6.1 if not it will be referred to arbitration.
Additionally once terminate the Consultant need to spend significant amount of money and time
finding another suitable Consultant so it is advised to work with the existing Consultant because
once if it is proved form arbitration that Consultant has done an error with the help of professional
indemnity insurance cover it can be covered.

2. This policy is meant for professionals to cover liability falling on them as a result of errors and
omissions committed by them whilst rendering professional service.

The purposes of having professional indemnity insurance are to:

• ensure that if the firm faces a claim, it is protected from financial loss that it cannot meet from its
own resources;

• protect the insured member or firm against the consequences of its liability to pay damages to third
parties for breaches of professional duty that it commits through its professional activities; and

• ensure that the firm’s clients do not suffer financial loss, which the firm cannot meet.

Normally the victim would have to establish negligence on the part of the service provider in order
to succeed in a claim. Unlike other general liability policies, Professional Indemnity policy normally
provides indemnity to the Insured against financial losses only arising from the provision of
professional services. Indemnity for defense costs and expenses is also provided .In This scenario
Cost Advising Company (CAC) was working a consultancy services provider for the Client Free
Trade Zone Development Board (FTZDB) as per the Standard conditions of Engagement Consultant
need to provide pre tender estimate. Sub Clause 3.1 (Skill Care and Diligence) states that Consultant
need to excise reasonable skill, care and diligence while providing his Service to Client otherwise
Consultant will be found default but in this case it is found that CAC had done a serious error , It
was observed that some cost significant parts of the proposed building were not measured and
included to the BOQ by the CAC which ultimately results in very low pre tender estimate whereby
wrongly advising the Client on his financial arrangements which may put him to bankruptcy risk in
future if he commence the project. So this situation is complete professional negligence by the
Consultant so as per Sub Clause 2.10.6 Client may claim damages against the Consultant for his
negligence. So to protect the Consultant from this situation Professional Indemnity Insurance
submitted by the Consultant can be used.

PII policy taken for a given profession is limited to that profession and also Professional Indemnity
Insurance do not cover

• Collateral warranties not likely to be covered

• Cover the damages only to client but not damages to third parties

In this scenario while calculating damages of PII concern should be given to damages caused to
Client only because as it is mentioned above damages caused to third party due professional
negligence of Consultant cannot be covered under this PII Cover so it does not have any impacts.