Discuss, define and elaborate the following contract provisions in the standard forms of PAM

Contract 2018 (with quantities) :

PAM contract 2018 (with quantities)

Clauses 21- Date of commencement, postponement and Date of completion
Clauses 22 – Damages for non-completion
You are required to articulate the following :
1) Discuss and elaborate the above clauses, including an explanation with the relevant
case study for each clause.
2) Compare and contrast the above provisions with P.W.D 203A Form of Contract
3) Identify and discuss the corresponding provisions in PAM 2018 Nominated Sub-
contract.
 a. Compare and contrast the above provisions with P.W.D 203A Form of Contract

Type of Contract PAM P.W.D 203A Form PAMD (2018) Nominated

/Clauses Contract of Contract Sub-Contract
(2018)
With
Quantities
Commencement and Clause Clause 38.1, 38.2, Clause 15.1
Completion 21.1 38.3, 38.4, 38.5,
38.6, 39.1, 39.2,
39.3, 39.4, 39.5,
39.6
Sectional Clause
Commencement 21.2
Dates
Sectional Clause21.3 Clause41.1, 41.2 Clause 15.2
Completion Dates
Postponement or Clause Clause 50.1, 50.2,
Suspension of 21.4 50.3
Works

Clause 21 – Date of commencement, postponement, and Date of completion

In Clause 21.0 it consists of 4 sub-topic which is (21.1 – Commencement and Completion,
21.2 – Sectional Commencement Dates, 21.3 – Sectional Completion Dates, and 21.4 -
Postponement or suspension of the Works)
To compare the different between three specific contracts stated as in PAM 2018 (with
Quantities) in terms of Clauses 21.1 – Date of commencement and completion,
commencement date is defined as the contractor shall be given possession of the site and
shall begin the execution of the works and shall regularly and diligently proceed with and
complete the same on or before the completion date. If the employer fails to provide the
contractor control of the Site on schedule, the architect must grant an extension of time under
Article23.8 (g). The contractor shall not be entitled to decide his own employment under the
contract unless the delay in giving possession of the site does not exceed the Period of Delay
mentioned in the appendix. For example, contractor shall be given possession and to start his
work on the date 12th February as stated in contract and complete his work by 20 th December
as the completion date stated in contract.
From the others side, in PWD form, clause 38.1 stated that contractor must discharge his
responsibility to submit to government the cover notes of the said insurance policy and the
receipt of premium paid for Performance Bond before any work under contractor can be
commence and carry out. In Clause 38.2, it subject to Clause 38.1 that contractor must
commence his work and complete by or before completion date. And government shall
provide site possession for contractor on or before “Date of possession”. In Clause 38.3 stated
that completion date is calculated from the Date of possession stated in contract. And also,
possession of site may be given in section or in parts and any other restrictions as stated in
appendix in Contract Document. In Clause 38.4 stated that if government delay of giving site
possession from the “Date of possession’ as state in Letter of Acceptance. S.O. may giving
instruction to request for revise the Date of Possession and Date of Completion. Contractor is
not entitled to claim any loss or damage and not entitled to terminate this contact due to any
delay in giving site possession.

In Clause 38.5 pointed out that, when delay of delivering whole site possession beyond (90)
days of the “Date of Possession”, S.O. shall notice contractor with written notice the causes
of delay. After receive notice from S.O. contractor shall notice S.O. by written notice his
decision within 14 days whether he agree to proceed the work when site available and not
entitled to claim for loss or damage cause by such delay of giving site possession. Or
contractor wanted to terminate the contract without affecting any other rights or remedies that
the government or the contractor may have as a result of the termination, terminate this
contract. In Clause 38.6 additionally specified that the S.O. must tell the contractor in writing
of the reason for any section of work delays in delivery of a site that last longer than 90 days.
After receiving written notice from S.O., contractor shall inform S.O. with written notice of
his decision within 14 days. If the contractor decides to continue the work after the site has
been delivered, he cannot claim for any loss and damages cause by the delay. Or contractor
can request S.O. to omit the relevant part of work from contract. If S.O agree, the appropriate
part of work will be omitted properly, and changes won’t make agreement invalid. The
contractor shall be entitled to claim for damages and expenses caused by and in respect of
such delay beyond ninety (90) days as mentioned if the S.O does not agree to such request.

Besides, in PAM 39.0 – Completion of Works, Clause 39.1 of PWD form stated that
contractor shall complete their work as in contract within or on “Date of Completion” subject
to clauses 38.3, 41 and 43. In Clause 39.2, stated that contractor shall notice S.O. in written
notice to determine his work had achieve practical completion. Clause 39.3 stated S.O. shall
carry out testing or inspection for the works within 14days after receipt notice from
contractor. S.O will decide whether issue Certificate of Practical Completion to contractor
and Defect Liability Period commence. Or S.O. will give instruction to the contractor to
rectify all the defective works before issuance of Certificate of Practical Completion. And in
Clause 39.4 stated that unless contractor done carry out and complete all the defective work
otherwise Certificate of Practical Completion will not be given. Clause 39.5 stated work
deemed to practically complete if work have been completed according to terms and
conditions of contract, fulfil government beneficial use of the works for their intended
purpose, work have passed commissioning tests, and fulfil all the essential services including
access roads, landscape, car parks, drains, sanitary, water and electricity installation and etc.
And clause 39.6 stated S.O. will certify the work practical completion when it satisfies S.O.
requirement and the date of such completion shall be the date of commencement of Defects
of Liability Period.
However, in PAM 2018 Nominated Sub-Contract, Clause 15.1 stated subcontractor must start
design work (if any, and fabrication work on the commencement date of the subcontract
according to work programme. Architect shall issue Certificate of Practical Completion.

Clause 21.2 – Sectional Commencement Dates

Clause 21.2 – Sectional Commencement Dates stated that when there is a different stage and
date of commencement for components of the works occur, they must be specified in the
appendix. In this situation contractor must notify architect in writing their intention to
commence on each section and get confirmation of the Sectional commencement date to the
contractor. Contractor must complete each section within specific period and if contractor
fails to complete architect may issue a notice to contractor to set a new completion date.

Clause 21.3 -Sectional Completion Dates

Clause 21.3 -Sectional Completion Dates is the clauses that stated where there are several
completion deadlines stated in the contract agreements for portions of the works, the architect
shall provide a certificate of sectional completion when the sections of the works are
substantially completed. In the same time, provision in the Contract in regard to Practical
Completion and the Defects Liability Period under Clause 15.0, extension of time under
Clause 23.0, Liquidated Damages under Clause 22.0 and release of Retention Fund under
Clause 30.6 shall apply with necessary changes as if each such section was a separate and
distinct contract.
In PWD form, Clause 41.1 stated that when construction project separate into multiple
sections will have individual contract and different Liquidated and Ascertained Damages will
be provided in each section of work, it includes Certificate of Practical Completion, Delay
and Extension of Time. But not include Insurance of the Works, Performance Bond, final
certificate. And in Clause 41.2, contractor are entitled to receive back performance bond
when he receive Certificate of Making Good Defects of whole works as he rectify all the
defects work.
However, as Clause 15.2 in PAM Sub-Contract stated when there are separate section of Sub-
Contract Works with Sub-contract Completion Dates, architect shall issue Sectional
Completion when sections of works are Practically Completed. If each such section was a
separate contract, provisions of Sub-contract such as practical completion, specified retained
funds released, liquidated damage, extension of time and defect liability period have been
change required.
Clauses 21.4 Postponement or suspension of the works
In Clauses 21.4 Postponement or suspension of the works stated that architect may issue an
AI for the postponement or suspension of all, or any part of the contract works for a
continuous time not exceeding the period of delay specified in the appendix. If the insurance
is covered by the contract under clauses 19.0 and 20.A, the contractor must provide full
insurance coverage for the entire period of postponement or suspension; otherwise, if the
insurance is covered by the Employer under Clause 20.B or 20.C, the Employer must provide
similar insurance coverage.
However, in the PWD form, Clause 50.1 point out that S.O. have right to delay the progress
of construction work. Contractor shall follow the manner and time of work suspension by
S.O. written instruction. Contractor shall continue to perform its obligations according to
contract including to maintain insurance and performance bond. Contractor shall resume the
works upon receipt instruction from S.O. in anytime. And work to be carry out after delay
shall be examine by the S.O. Contractor responsible to make good for any defect or
deteriorate works in and loss of the works which occurs when works to be delay. In Clause,
50.2 – Extension of time specified that if the contractor is delayed in the progress of the work
due to any of the relevant event mentioned in the clause, contractor entitled to apply for an
extension of time. The reasons mentioned in clause may include factors like force major,
adverse weather conditions, delays cause by the owner or the engineer etc. The contractor
will not be entitled for an extension of time and not be entitled to payment of loss and
expenses if he fails to take action to follow instruction from S.O. as stated in clause50.1(b)
and fails to take action to reduce the expenses incurred. If the postpone period for a further
period. Clause 50.3 stated that if a contract is mutually agreed by parties to be terminate,
clause 51.1(c) and clause 54 will be applied.

Case Study
Title: Thamesa Designs Sdn Bhd & Ors v Kuching Hotels Sdn Bhd [1993]

Case Detail:
The problem of this case is whether the employer was authorised to impose liquidated
ascertained damages when it failed to deliver over the site to the contractor on time. In that
instance, the contract's extension of time clause does not cover late site handover. The
Supreme Court ruled that the employer is not authorised to impose liquidated determined
damages since the period was set "at large" by the employer's act of prevention.

Court held that:

There is a prove that the employer was late in delivery the site possession to the subcontractor
which leads subcontractor to unable to complete work by the completion date. Because sub-
contractor unable to start his work on commencement date due to late delivery of site
possession by the employer. Obviously, contractor are also unable to complete his work on
the completion date stated in the contact. Therefore, the employer is not entitled for the
liquidated damages and final certificate become invalid. And employer have no right to
deduct the retention fund as liquidated damages for the sub-contractor.
According to PAM Contract 2018 (with quantities) stated in clause 21.1 architect shall grant
an EOT (Extension of Time) under clause 23.8 (f) . And contractor shall not entitled to
determine his responsibility from the contract.

Lesson Learnt
In the situation of works delay, if it’s not cause by contractor default and contractor had put
his effort and endeavour to carry out his work, employer have no right to determine his
employment and claim for liquidated damages according to clause 22.1 – Liquidated
Damages & certificated of non-completion. And architect not entitled to issue certificate of
non-completion to contractor. In the same moment, contractor are entitled to claim for
Extension of Time (EOT).
Compare and contrast the above provisions with P.W.D 203A Form of Contract

Type of Contract PAM P.W.D 203A Form PAMD (2018)

/Clauses Contract of Contract Nominated Sub-Contract
(2018)
With
Quantities
Lquidated Damages Clause22.1 Clause 40.1 Clause 16.1
& Certificated of
Non-Completion
(CNC)
Agreed Liquidated Clause Clause 40.3, 40.4 Clause 16.1
Damages 22.2
Certificated of Non- Clause
Completion 22,3
Revoked by
Subsequent
Certificate of
Extension of Time

Clauses 22 – Damages for non-completion

There is 3 sub-title in Clause 22.0 which is Liquidated Damages and Certificate of Non-
completion, Agreed Liquidated Damages amount, and Certificate of Non-Completion
revokes by subsequent Certificate of Extension of Time.
To compare PAM Contract (2018) the clauses 22.1 – Liquidated Damages and Certificate of
Non-Completion stated that if the contractor fails to finish the works by the completion date
and the architect believes that they should have been completed, the architect shall issue a
certificate of non-completion. Following the issuing of the certificate of non-complete, the
contractor shall pay or allow to the employer a sum calculated at the rate specified in the
Appendix as Liquidated damages for the period from the completion date to the date of
practical completion. Following the issue of the certificate of non-complete, the contractor
shall pay or allow to the employer a sum calculated at the rate specified in the Appendix as
Liquidated damages for the period from the completion date to the date of practical
completion.
In Clause 22.2 – Agreed liquidated damages amount is an agreed amount that contractor will
be liable to pay when he is in breach of contract in the event that the work is not completed
within the agreed time frame. This amount must be genuine assessment of the employer’s
losses and must not be a penalty. For example, the agreed amount of liquidated damages is
typically calculated as daily rate, which usually expressed as a percentage of the contract
sum. For example, a amount of RM 1,000 of liquidated damaged is pre-estimated in the
contract, and the contractor delay his work and a Certificate of Non-completion issued by
architect. And contractor delay his work 2 weeks from the completion date, employer entitled
to claim his RM 14,000 of liquidated damages from the contractor.
22.3 – Certificate of Non-Completion revoked by subsequent Certificate of Extension of
Time.
An employer may issue a certificate of non-completion to contractor if contractor fails to
complete the work within agreed time frame. However, if the contractor can show that the
delay was caused by causes beyond their control, such as terrible weather or unexpected
events, they may be entitled to a time extension. If a time extension is granted, the certificate
of non-completion is effectively cancelled, and a new certificate of time extension is issued.
Article 22.3 states that in this case, the employer's right to liquidated damages will be
adjusted to reflect the revised completion date provided in the certificate of time extension.
For example, if the original completion date was 1st January and the certificate of non-
completion was issued on 2nd January, with a daily rate of liquidated damages of RM1,000
per day and the works delay 3-week liquidated damages will be RM21,000. Subsequently, an
extension of time was granted until 1st March, then the employer’s right to claim liquidated
damages will be adjusted. If amount of Liquidated Damages retained exceeds the amount the
Employer is entitled to retain, he shall repay the surplus amount to the Contractor within the
Period of Honouring Certificate from the date of the latest Certificate of Extension of Time.
If the Contractor still unable to complete his work by the completion date after Certificate of
EOT, architect shall further issue a Certificate of Non-completion.

However, Clause 40.1 in PWD form, stated that the S.O shall issue Certificated of Non-
completion immediately to the contractor if contractor fails to complete the works before or
by the Completion date or extended granted pursuant to clause 43. And government have the
right to terminate the contract when S.O issues Certificate of Non-completion to the contract
in clause40.2. and Government entitled to recover Liquidated and Ascertained Damages from
contractor. S.O may must first write a notice to inform contractor for a deduction. Liquidated
and Ascertained damages must be calculated according to rate stated in Appendix 1 from the
date of issuance of Non-completion Certificate to the date of issuance Practical Completion
Certificate. At the end, S.O can deduct Liquidated and Ascertained Damages from any money
due or become due to the contractor if he is failing with such damages shall recovered from
Performance Bond. In clause 40.3 specified Liquidated and Ascertained Damages must be
reasonable amount of loss stated in contract which Government will suffer from the
contractor default to breach the contract. In clause 40.4 stated that contractor still need to
carry out his responsibilities to complete his works and liabilities under the contract even
though his payment or liquidated and ascertained damages.

From the other part, PAM Sub-contract ( Clause 16.1 – Failure of Sub-Contractor to complete
)specified that contractor may issue a Certificate of Non-completion (with a copy to Architect
and Consultant) when sub-contractor fails to complete his work by completion date, with
stating his opinion, sub-contract work ought reasonably to have been completed. After
apportioning responsibility where the delays may have also been caused by the Contractor
and other Nominated Sub-Contractors, the Contractor shall thereafter be entitled to set-off a
sum for any loss and/or expense suffered or spent by the Contractor. The contractor may
think about sharing responsibility for delays brought on by non-completion between himself
and other NSC and mitigating the losses he suffers as a result of non-completion in
accordance with Cl 26.13. The amount of losses incurred may alternatively be seen as the
specified LD amount that both parties have agreed upon.
Case study
Title:  PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah
Case detail:
The plaintiffs purchased condos at the Skypark property in Cyberjaya (the project). The first
and third defendants were the project's developer and architect, respectively, while the second
defendant was the landowner. The plaintiffs claimed that the first and second defendants
failed to give unoccupied possession because they did not provide a legitimate certificate of
completion and compliance (CCC). While delivering vacant possession, they had issued form
F1 (a partial CCC) rather than form F (a full CCC). The plaintiff argued that to claimed
further liquidated ascertained damages (LAD) against defendant. (Liquidated Damages –
Second Bite of the Cherry? – Gan Partnership, 2022)

Court held:
Court help that the parties involve in the contract make a settlement agreement. Plaintiff had
claimed his compensation through settlement agreement. And it was also determined that the
plaintiffs were not permitted to revisit the issue of LAD because their claims had been settled
before the Housing Tribunal and they had not challenged the Housing Tribunal's judgement.
The Court further stated that the first defendant was responsible for delivering the property in
line with the SPA and that no claim could be brought against the second or third defendants.
Given the foregoing, the Court eventually dismissed the allegations against all three
defendants.

Lesson Learnt
Through this case, learn that the plaintiff who fail to receive an unoccupied vacant possession
have the right to claimed for liquidated damages as defendant fail to fulfil his promises. And
the defendant can said as breach the contract by late deliver the possession to the buyer due to
his default. .

Reference
1. Liquidated damages – second bite of the cherry? – Gan Partnership. (2022, June 14).
https://www.ganlaw.my/liquidated-damages-second-bite-of-the-cherry/?
utm_source=mondaq&utm_medium=syndication&utm_term=Real-Estate-and-
Construction&utm_content=articleoriginal&utm_campaign=article
2. Jenny, L.S.Y. (2012). THE PROFILE OF CONSTRUCTION DELAY CASES
JENNY LOO SHIH YEIN UNIVERSITI TEKNOLOGI MALAYSIA. [online]
Available at: https://bic.utm.my/files/2019/04/jennylooshihyeinmb111048d12ttt.pdf
[Accessed 11 April. 2023].