Launched on 1 July 2010

By

YAB Tan Sri Dato' Hj. Muhyiddin Hj . Mohd Yassin

Deputy Prime Minister, Malaysia

In conjunction with PAM Convention 20 10

 HANDBOOK
FOR
PAM 2006 CONTRACT
FIRST EDITION

This book is published by :

Pertubuhan Akitek Malaysia (Malaysian Institute of Architects)

4&6 Jalan Tangsi 50480 Kuala Lumpur Malaysia
Tel : +603 2693 41 82
Fax : +603 2692 8782
Ar Tan Pei Ing
E-mail : info@pam.org.my Sr Low Khian Seng
Website : www.pam.org.my
Ar Jerry Sum Phoon Mun
© 2010 Ar Tan Pei Ing, Sr Low Khian Seng, Ar Jerry Sum Phoon Mun Ar Chee Soo Teng
and Ar Chee Soo Teng

All rights reserved. No part of this publication may be reproduced or transmitted in any
brm-orbyany means-;-elecmm:itall'y-ormechanfoally,irrclmttng-photocnpyin!;,Fecordi11g
or any information storage or retrieval system, without either prior permission in writing
from the publisher or the copyright holders.

Every effort has been made to ensure that the advice and infonnation contained in this
handbook are accurate. The subject matter is complex and legal opinions on it are va1i ed.
Construction professionals or other interested patties wishing to refer to this book in
relation to their work are advised to seek expert advice or guidance when faced with
specific problems.

ISBN : 978-967-5264-02-3
Pertubuhan Akitek Malaysia
Cover Design : Nie O One Design Kuala Lumpur Malaysia
Printed by : Percetakan Osacar Sdn Bhd 2010
 Contents

Table of Contents
Preface .......................................................................................................... x
Dedication ................................................................................................. xiii
Background to drafting of the PAM 2006 Forms of Contract. ............. xv
Foreword by President of Pertubuhan Akitek Malaysia (PAM) ......... xix
F01·eword by Raja Aziz Add ruse............................................................. xxi
Introduction ............................................................................................ xxili
Articles of Agreement ................................................................................. 1
A rticle 1 ..... ........ ... ......... ........ ... ........ ... ... .... ......... ...... ............... ..... .... ....... 4
Alticle 2 .... .......... ..... ... ... ... ..... ... ........ ......... ............ .... ................... ...... ...... 4
Al·ticle 3 .... ......... ............... ...... ................. ......... ........... ............. .............. .. 5
Article 4 .... ........... .... .......... ..... .......... ....... ......... .. ........ ..... ........... ...... ....... . 7
Al·ticle 5 .... ............ ... .......... ..... ... ... ......... ..... ........ .. ........ ... .......... ............... 8
Article 6 ....... .... ....... , ... ..... .... ... .. .... ........ .. ...... ... ............ .... .......... .. ........ ..... 9
Article 7 ... ... ....... ............ ......... .. ... ........ .. ......... ...... ............. .. ............... .... 10
Article 8 ..... ... ..... ..... ... .... ............. ..... ....... .... ... ... ............ ... ...... ... ... .... ... .. .. 20
Clause 1.0 - Contractor's Obligations ..................................................... 21
C la use 1.1 - Completion of Works in accordance wi th Contract
Documents .................. .. ........................... ..... ... ..... ......... 2 1
Clause 1.2 - Tem porary works and construction methods ........ ........ . 23
Clause 1.3 - Contractor 's design and responsibility .......... .... .......... ... 25
Clause I .4 - D iscrepancy or divergence between documents ........ .... 31
Clause 2.0 -Architect's Instruction (' Al') .............................................. 35
Clause 2. 1 - Contractor to comply with AI .............................. ... ....... 36
Clause 2.2 - AI ...... ................. ........... .. ...... .. .... .................... ........ ... ... . 36
Clause 2.3 - Provisions empowering instructions .. .. ..... ......... .. ..... ... .. 37
Clause 2.4 - Failure of Contractor to comply with Al .. ... ... ........ ....... 38
Clause 3.0 - Contract Documents, Programme And As-built Drawing .... .41
Clause 3. 1 - Contract D ocuments ..... .... ........... ............. ................ ..... 4 1
Cla use 3.2 - Custody of tender documents ......... .... ............. .......... .... 42
C la use 3.3 - Copies of documents .. ...... ..... .. ..... ................... ...... ......... 42
C la use 3.4 - Further drawings or details ... ..... .... ...... .. .... .......... .......... 43
Clause 3 .5 - Works Programme ...... .............. .... .. ......... ......... ......... .. .. 45
 Contents
Clause 3.6 Programme not part of Contract .................................... 47
Clause 3.7 Architect's acceptance of programme ............................ 47
Clause 3.8 Availability of documents .............................................. 48
Clause 3.9 Limitation of use of documents ..................................... 48
Clause 3.10 - As-built Drawings and operation and maintenance
manuals ................................................................................. 48
Clause 4.0 - Statutory Obligations, Notices, Fees And Charges ........... 51
Clause 4.1 Statutory requirements ................................................... 51
Clause 4.2 Inconsistencies with statutory requirements .................. 51
Clause 4.3 Conforming to statutory obligations .............................. 52
Clause 4.4 Fees, levies and charges ................................................. 52
Clause 5.0 - Levels And Setting Out Of The Works .............................. 55
Clause 5.1 - Setting out ...................................................................... 55
Clause 6.0 - Materials, Goods And Workmanship To Conform To
Description, Testing And Inspection ........................................................ 57
Clause 6.1 Standards of works, materials, goods and workmanship57
Clause 6.2 Provision of vouchers .................................................... 57
Clause 6.3 Inspection and testing .................................................... 57
Clause 6.4 Contractor's obligation not relieved .............................. 58
Clause 6.5 Work not in accordance with the Contract.. ................... 58
Clause 6.6 No compensation for time and cost ............................... 60
Clause 6.7 Failure of Contractor to comply ..................................... 60
Clause 6.8 Waffanties in respect of materials and goods ................ 60
Clause 7.0 - Royalties And Intellectual Property Rights ...................... 63
Clause 7. I Indemnity to Employer .................................................. 63
Clause 7.2 Contractor's liability to pay ........................................... 63
Clause 7 .3 Government royalties ..................................................... 63
Clause 8.0 - Site Agent.............................................................................. 65
Clause 8.1 Site Agent ....................................................................... 65
Clause 8.2 Instructions to Site Agent.. ............................................. 65
Clause 8.3 Exclusion of Person employed on the Works ................ 66
Clause 9.0 -Access To The Works ........................................................... 67
Clause 9.1 - Access To The Works ..................................................... 67
ii Contents iii
Clause 10.0 - Site Staff ............................................................................. 69
Clause JO.I Duty of Site Staff ........................................................... 69
Clause 10.2 - Directions given by Site Staff........................................ 70
Clause 11.0 - Variations, Provisional And Prime Cost Sums ................ 71
Clause 11.1 Definition of Variation ................................................... 71
Clause 11.2 No Variation required by the Architect shall vitiate
Contract ................................................................................. 73
Clause 11.3 Issue of Variations after Practical Completion ............... 73
Clause 11.4 AI on P.C. Sums and Provisional Sums ......................... 74
Clause 11.5 Valuation of Variation and Provisional Sums ................ 75
Clause 11.6 Valuation rules ............................................................... 75
Clause 11. 7 Additional expense caused by Variation ........................ 79
Clause 11.8 Access to Contractor's books and documents ............... 80
Clause 11.9 Variations and additional expenses added to Contract
Sum ........................................................................................ 81
Clause 12.0 - Contract Bills ..................................................................... 83
Clause 12.1 - Measurement of building works .................................... 86
Clause 12.2 - Coffection of errors or omissions .................................. 87
Clause 13.0 - Contract Sum ..................................................................... 89
Clause 13.1 - Contract Sum not to be adjusted or altered .................... 89
Clause 14.0 - Materials And Goods ......................................................... 91
Clause 14.1 Materials and goods not to be removed ......................... 91
Clause 14.2 Materials and goods included in certificates .................. 92
Clause 14.3 Responsibility for materials and goods .......................... 93
Clause 14.4 Warranty of title of goods and materials ........................ 94
Clause 15.0 - Practical Completion And Defects Liability ................... 95
Clause 15. I Practical Completion And Defects Liability .................. 95
Clause 15 .2 Certificate of Practical Completion................................ 98
Clause 15.3 Contractor's failure to comply with undertaking ......... 102
Clause 15.4 Schedule of Defects ..................................................... 103
Clause 15.5 Instruction to make good Defects ................................ 105
Clause 15.6 Certificate of Making Good Defects ............................ 106
 Co11tents V

Clause 16.0 - Partial Possession By Employer ..................................... 109 Clause 20.B - Insurance Of New Buildings/Works - By The
Clause 16.1 - Possession of Occupied Part with consent ................... I 09 Employer .................................................................................................. 133

Clause 16.2 - Possession of Occupied Pait without Consent... ........... 110 Clause 20.B. l - Insurance by Employer ...................... .......................... 135

Clause 16.3 - Contractor to remove equipment .................................. 112 Clause 20.B.2 - Additional risks required by the Contractor ................ 136

Clause 17.0 -Assignment And Sub-Contracting .................................. 113 Clause20.B.3 - Maintenance of policy ................................................. 136

Clause 17 .1 - Assignment by Employer. ............................................. 113 Clause 20.B.4 - Failure of Employer to insure ...................................... 136

Clause 17 .2 - Assignment by Contractor ............................................ 113 Clause 20.B.5 - Application of insurance claim proceeds ..................... 136

Clause 17 .3 - No sub-contracting ........................................................ 114 Clause 20.C - Insurance Of Existing Building Or Extension - By The

Clause 18.0 - In.jury To Person Or Loss And/Or Damage Of Property Employer .................................................................................................. 139

And Indemnity To Employer .................................................................. 115 Clause 20.C. l - Employer's risks - existing building or extension ....... 139

Clause 18. l - Contractor 's indemnity against inju1y or death ............ 11 5 Clause 20.C.2 - Additional risks required by Contractor ...................... 140

Clause 18.2 - Contractor 's indemnity against loss and/or damage ..... 116 Clause 20.C.3 - Maintenance of insurance by Employer ...................... 140

Clause 18.3 - Contractor's indemnity against claims by worlanen .... 116 Clause 20.C.4 - Failure of Employer to insure ...................................... 140

Clause 18.4 - Indemnities not to be defeated ...................................... 117 Clause 20.C.5 - Application of insurance claim proceeds ..................... 141

Clause 19.0 - Insurance Against Injury To Person And Loss And/Or Clause 21.0 - Date Of Commencement, Postponement And Completion
Date........................................................................................................... 143
Damage Of Property ................................................................................ 119
Clause 2 1.1 - Conrn1encement and Completion ................................. 143
Clause 19.1 - Contractor to insure against injury to Person and loss
Clause 21.2 - Sectional Conunencement Dates ................................. 145
and/or damage of property ............................................ 119
Clause 21.3 - Sectional Completion Dates .................... ............. ........ 145
Clause 19.2 Employees' social security scheme for local workmen 122
Clause 2 1.4 - Postponement or suspension of the Works .................. 146
Clause 19.3 Insurance for local worlrn1en not subject to SOCSO ... 123
Clause 22.0 - Damages For Non-Completion ....................................... 147
Clause 19 .4 - Workmen's compensation insurance for foreign
Clause 22.1 - Liquidated Damages and Certificate of
workers ................................................................................ 124
Non-Completion ............... ................................................. 147
Clause 19 .5 - Placing of insurance with licensed insurance
Clause 22.2 - Agreed Liquidated Damages amount .......................... 15 1
co.mpames- - - - · · - - - - - - - - - - - --J25
Clause 22.3 - Certificate of Non-Completion revoked by subsequent
Clause 20.A - Insurance Of New Buildings/Works - By The
Certificate of Ex tension of Ti me .................................. 15 3
Contractor................................................................................................ 127
Clause 23.0 - Extension OfTime ........................................................... 155
Clause 20.A. 1 - Contractor's risks - new buildings/ works ................... 127
Clause 23 .1 - Submission of notice and particulars for extension
Clause 20.A.2 - Additional risks to be covered under the insurance ..... 130
of tin1e ................................................................................... 156
Clause 20.A.3 - Placing of insurance with licensed insurance companies .. 131
Clause 23.2 - Delay by Nominated Sub-Contractor ................... ....... 162
Clause 20.A.4 - Application of insurance claim proceeds ..................... 131
Clause 23.3 - Insufficient information ............................................... 163
Clause 23.4 - Certificate of Extension of Time .................................. 163
Clause 23.5 - Other consideration for extension of time ................... 170
 Contents vi Contents vii

Clause 23.6 - Conh·actor to prevent delay .......................................... J 7 1 Clause 27.0 - Nominated Sub-Contractors .......................................... 227
Clause 23.7 - Notification to Nominated Sub-Contractors ................ 171 Clause 27. l - P.C. Sums and Provisional Sums - Nominated
Clause 23.8 - Relevant Events ........................................................... J 72 Sub-Contractors .. ............................................... .. ........ 232
Clause 23.9 - Extension of time after the issuance ofCe11ificate of Clause 27 .2 - Nomination of sub-contractor.. .................................... 234
Non-Completion .......................................................... 184 Clause 27 .3 - Objection to nomination of sub-contractor.. ......... ....... 23 7
Clause 23.1 0 - Architect's review of extension of time after Practical Clause 27.4 - Action following objection of Nominated
Completion ................................................................... 185 Sub-Contractor .................................................................... 237
Clause 24.0 - Loss And/Or Expenses Caused By Matters Affecting The Clause 27.5 - Payment by Contractor to Nominated
Regular Progress Of The Works ............................................................ 189 Sub-Contractors ............................................................... 238
Clause 24.1 - Loss and/or expense caused by matters affecting the Clause 27.6 - Failure of Contractor to pay Nominated
regular progress of the Works ...................................... 19 1
Sub-Contractors .. ....... ....................................................... 238
Clause 24.2 - Access to Contractor's books and documents ............. 194
Clause 27.7 - Final payment to Nominated Sub-Contractors ......... .. . 240
Clause 24.3 - Matters materially affecting the regular progress of the
Clause 27.8 - Determination of the Nominated Sub-Contractor 's
Works .................... .. ..................................................... 194
employment .................................................... ............. 241
Clause 24.4 - Loss and/or expense to be included in ce11ificate ........ 196
Clause 27.9 - Contractor's responsibility for Nominated
Clause 25.0 - Determination Of Contractor's Employment By
Sub-Contractors ........................................................... 242
Employer.................................................................................................. 197
Clause 27 .10 - Employer no privity of Contract with Nominated
Clause 25. 1 - Defaults by Contractor.. ............................................... 197
Sub-Contractors ........................................................... 243
Clause 25.2 - Procedure for determination ........................................ 201
Clause 27.1 1 - Re-nomination of sub-contractor due to determination by
Clause 25.3 - Contractor' s insolvency ............................................... 205
the Contractor .............................................................. 244
Clause 25.4 - Rights and duties of Employer and Contractor.. .......... 206
Clause 27. J 2 - Re-nomination of sub-contractor due to determination
Clause 25.5 - Records of Works ......................................................... 2 10
by the Nominated Sub-Contractor ............................... 245
Clause 25.6 - Final Account upon determination ................................ 2 11
Clause 27.13 - Contractor to recover additional expenses from
Clause 25.7 - Remedy limited to damages only ................................. 213
N ominated Sub-Contractor .......................................... 245
Clause 25.8 - Employer's rights and remedies not prejudiced ........... 214
Clause 27.14 - Contractor permitted to tender for P.C. Sums .............. 246
Clause 26.0 - Determination Of Own Employment By Contractor...... 215
Clause 28.0 - Nominated Suppliers ....................................................... 247
Clause 26. 1 - Defaults by Employer .................................................. 2 15
Clause 28. l - P.C. Sums and Provisional Sums - Nominated
Clause 26.2 - Procedure for determination ........................................ 2 19
Suppliers .. .................................................................... 247
Clause 26.3 - Employer 's insolvency................................................. 221
Clause 28.2 - Nominated Suppliers and their obligations .................. 247
Clause 26.4 - Rights and duties of Contractor and Employer ............ 221
Clause 28.3 - Objection to nomination of suppliers ........................... 251
Clause 26.5 - Records of Works ... ......... ......................... .. .................. 223
Clause 28.4 - Action following objection of suppliers ...................... 252
Clause 26.6 - Settlement of accounts ................................................. 223
Clause 28.5 - Value of materials and goods supplied by Nominated
Clause 26.7 - Contractor's rights and remedies not prejudiced ......... 225
Suppliers ...................................................................... 252
 Co11te11ts Fiii
Contents ix

Clause 28.6 - Payment to Nominated Suppliers .............. .... .............. 253 Clause 32.0 - War Damage..................................................................... 293

Clause 28.7 - Contractor 's liability for Nominated Suppliers ............ 253 Clause 32. 1 - Procedures following war damage ............................... 293
Clause 32.2 - Definition of war damage ............................................ 293
C lause 28.8 - Employer no privity of Contract with Nominated
Suppliers ...................................................................... 254 Clause 33.0-Antiquities ........................................................................ 295

Clause 29.0 - Works By Craftsmen, Tradesmen Or Other Contractors Clause 33.1 - Antiquities property of Employer. ............................. .. 295

Employed Or Engaged By Employer .................................................... 255 Clause 34.0 -Adjudication And Arbitration ........................................ 297

C lause 29.1 - Works by Employer's Craftsmen ................................. 255 Clause 34.1 - Set-off disputes referred to adjudication ...................... 297

Clause 30.0 - Certificates And Payment ............................................... 257 Clause 34.2 - Notice to refer to adjudication ..................................... 298

Clause 30.1 - Payment application and issuance of Architect's Clause 34.3 - Adjudication Rules ...................................................... 298

certificate ............................................................................. 25 7 Clause 34.4 - Decision of the adjudicator .......................................... 298

Clause 30.2 - Amount due in Architect's certificate .......... ................ 261 Clause 34.5 - Disputes referred to arbitration .................................... 300

Clause 30.3 - Eirnrs in payment certificate ........ ................................ 264 Clause 34.6 - Procedures for appointment of arbitrator.. ................... 300

Clause 30.4 - Set-off by Employer ................ ......... ............ .......... ...... 266 Clause 34. 7 - Arbitration Act and Rules ............................................ 30 I

Clause 30.5 - Retention Fund ............................ ................................. 269 Clause 34.8 - Powers of arbitrator ..................................................... 302

Clause 30.6 - Rules regarding Retention Fund .................................. 270 Clause 34.9 - Consolidation of arbitration proceedings ..................... 303

Clause 30.7 - Suspension of Works for non-payment ........................ 275 Clause 34.10 - Commencement of arbitration proceeding .................. 303

Clause 30.8 - Compulsory suspension of Works ................................ 277 Clause 34. 11 - Arbitrator's award to be final and binding on parties .. 304

Clause 30.9 - Cessation insurance resulting from suspension of the Clause 35.0 - Mediation ......................................................................... 305

Works .......................................... ................................. 278 C lause 35.l - Mediation under PAM rules ......................................... 305

Clause 30. 10 - Final Account... ............................................................ 278 C lause 35.2 - Mediation does not prejudice the parties' rights to

Clause 30.11 - Items in Final Account.. ............................................... 281 arbitration ..................................................................... 305

Cla use 30.12 - Conclusiveness of the Final Account. .......................... 283 Clause 36.0 - Notice ................................................................................ 307

Clause 30. 13 - Issuance of Penultimate Certificate.............................. 284 C lause 36.1 - Notice ........................................................................... 307

Clause..3.0 14 - Issuance of Final Certificate .. ~~~~~~~ . • • •= · 28,5 J_ C lause 36.2 - Notice deem served ...................................................... 308

Cla use 30.1 5 - Final Ce1iificate ........ .. .............. .............................. .. .... 285 Clause 36.3 - Proof of Notice ............................................................. 308

Clause 30. 16 - Final Ce1iificate not conclusive ............. ...................... 287 Clause 36.4 - Written communication ...... .......................................... 309

Clause 30. 17 - Interest ........ ............................................................ .. .. . 287 Clause 37.0 - Performance Bond ............................................................311

Clause 31.0 - Outbreak Of Hostilities ................................................... 291 Clause 37.1 - Submission of Performance Bond ................................ 3 11

Clause 31.1 - Hostilities - determination by Employer or Clause 37.2 - Form of Performance Bond .......................................... 3 ll

Contractor .......... .................................... ...................... 291 Clause 37.3 - Validity of the Performance Bond ................................ 3 11

Clause 3 1.2 - Notices of determination ......... .. ............. ...................... 291 C lause 3 7.4 - Failure to extend validity ............................................. 31 2

Clause 3 1.3 - AI regarding protective work ....................................... 291 Clause 37.5 - Payment from Performance Bond ................................ 3 12

Clause 3 1.4 - Payment resulting from determination ........................ 292 Clause 37.6 - Return of Perfom1ance Bond ................ ..................... .. 312
 Conte11rs
Clause 38.0 - Governing Law ................................................................ 315
Clause 38. 1 - Governing Law ............................................................ 315
PAM 2006 WITHOUT QUANTITIES .................................................. 317
ANNEXURE 'A' ...................................................................................... 321
SAMPLES OF CONTRACT AND ADMINISTRATION
PROFORMAS ...................................................................................... 321
ANNEXURE 'B' ...................................................................................... 347
SAMPLE OF THE NOMINATED SUPPLIER AGREEMENT .......... 347
ANNEXURE 'C'...................................................................................... 355
SAMPLE OF A COLLATERAL AGREEMENT BETWEEN THE
EMPLOYER AND NOMINATED SUB-CONTRACTOR .................. 355
ANNEXURE 'D'...................................................................................... 363
PAM ADJUDICATION RULES ........................................................... 363
ANNEXURE 'E' ...................................................................................... 375
DOCUMENTS TO ASSIST THE MIGRATION FROM PAM 98 TO
PAM 2006 ............................................................................................. 375
Index ......................................................................................................... 475
X Preface xi
Preface
This book staiied life with our objective of writing a "simple" 40-50 odd page
guide for users of the PAM 2006 Forms of Contract. Like most things, keeping
it simple does not mean simply doing it, and simple explanations, especially
in contractual matters, invariably do not mean short answers. So, from simple
beginnings, it has morphed into this 500 odd paged Handbook, and there are
still areas where we think we can elaborate fmiher in order to make it clearer.
Tn Malaysia, although the PAM98 Forms were the de facto private industry
standard forms of contract, most users also use or are exposed to the JK.R
Forms as well as other forn1s of contract. Feedback collected during the
seminars and workshops to introduce the PAM 2006 Forms to the industry
indicated that there was a great need to explain the changes made as well
as highlight the differences between the forms. Over the years, most users
in Malaysia have built up a pool of knowledge and experience with respect
to const:mction contracts. This is built on a mixed foundation of information
drawn from a background of the PAM Fom1s, the JKR Forms, the CIDB
Forms, the FIDIC and JCT Fonns as well as various hybrids that have found
their way into the local industiy. Given the diverse nature of the info1mation
sources, it is no wonder that there are some areas of confusion among users
that needed clarification, especially with regard to applying that knowledge to
the PAM 2006 forms.
With the quantum of costs involved in today's construction contracts and a pool
of expertise readily available to be tapped, the propensity to dispute decisions
or to refer disputes to arbitration or the cou1is has taken on a new magnitude.
Disputes often arise as a result of a combination of disputable ambiguity in
the contract documents, lack of understanding of terms and conditions during
administration ofcontracts as well as a less than careful preparation or alteration
of documents. For architects and contract managers, administering a contract
by relying on past experience and insufficiently thorough understanding is no
longer sufficient. There are issues like statutory position, legal precedence,
appropriateness of context and procedw-al protocols, not to mention evolving
stah1tory provisions like the proposed Construction Industry Payment and
Adjudication Act as well as the amended Arbitration Act to contend with.
Understanding the contract is an essential paii of the work of all who are
involved in the construction industiy if costly (both financial and reputation)
pitfalls are to be avoided.
The authors are all practicing professionals and have considerable involvement
with contractual issues arising from the use of the PAM Fonns of Contract.
Wherever possible, this book tries to look at these issues drawn from their
 Preface xii
experience or from tbe user 's perspective by explaining the fundamentals so that
Dedication
they can then apply their knowledge by way ofrecognising and understanding
the issues involved and solving problems in the same manner. Qualitative data
based decisions are avoided in crucial milestones (i.e. Certificate of Practical
Completion, where "opinion" is used twice in PAM 98) to reduce the scope
of what has hitherto been fe11ile g rounds for disputes and abuse. Whenever
possible, decisions or deadlines are triggered by quantitati ve based events and
data. Choice and structure of the language used are influenced by reference to
the outcome of the lega l cases that illustrate or clarify contractual positions.
T his Handbook is targeted at a ll members of the construction industiy who
may need to keep their contractual knowledge and understanding up to date
as well as to find useful pointers directly related to the PAM 2006 Forms. It
is anticipated that this book will come in handy as a source of reference not
just w ith respect to PAM 2006 but also some contractual issues in general. lt
is also hoped that this book will also become a preferred source ofreading by
all students and academics of construction in Malaysia. For first timers, it is
hoped that this book g ives an easy introduction to the PAM 2006 Forms of
Contract.
Fina lly, to address any perceived misogynic tendencies on our pa11, the
authors did debate long and hard over the issue of addressing parties referred
to in the contract as the conventional " he" rather than the impersonal "it" or
the politically correct "he/she". After a couple of flip flops, it was decided
that we will stick to convention and use "he" to keep things simple. ft has
to be stressed that this is NOT to be interpreted to mean that we are any less
respectful of members of the fair gender who walk amongst us in the world of
construction contracts.
Ar Tan Pei Ing
B Arch H ons (Melbourne) FPAM, AIPDM, ARAlA.,_MMIArb,-f..Arcasia
Sr Low Khian Seng
MSc Const Law & Arb (KCL) FI SM, F RI CS, FCIARB, MS ISV, MM IA.rb
Ar Jerry Sum Phoon Mun
B Arch (Sydney) A PAM, AlPDM
Ar Chee Soo Teng
B Arch (Strathclyde) APAM, MM IA.rb, MIFireE
Declication xiii
Ar. Tan Pei Ing .
13 Arch Hons (Melbourne) FPAM, AIPDM, ARAIA, MM!Arb, FArcas1a
I would like to record my special thanks to my parents Chon Tik
and Poh Lin, my children Ching Yi and Kien Ming and my siblings,
who have allowed me to indulge in my passion for almost 10
years at the expense of my fam ily time wit_h them and supported
me unconditionally tlu·oughout both the draftmg of the PAM 2006
Forms and the handbook. I woul d also like to thank Kh ian Seng
fo r unreserved ly sharing all his knowledge on the variou~ aspects of
contract and Jerry and Chee Soo Teng for all their expert mput. It has
been most enjoyable wor king wi th all of you .
Sr. Low Khian Seng
M Sc Const Law & Arb (KCL) FISM, f'RJ CS, FCIARI3, MSISV, MM !Arb
This book is dedicated
- to my wife, Fie Yin, who inspired me to believe that I was capable
of authoring a book; . .
- to my daughter Juli e Low for valuable. input and prov1d111g a
soundboard for discussion on the topic of construction law;
- to my daughter Joanne Low for edi torial assistance ..
- to Pei Ing, Jeny Sum and Soo Teng, it has been an en1oyable and an
enlightening experience co-authoring this book. Now that this
project is completed, what next?
Ar. Jerry Sum Phoon Mun
13 Arch (Sydney) A PAM, /\IPDM
Firstly, I must thank Pei Ing, in her capacity as the th_en _Chairman
of the PAM Contract Review Conuuittee, for havmg mv1ted me to
join her and her Committee in drafting PAM 2006 and subseq uently,
this Handbook. Secondly, I must also thank all the members of the
Conunittee, my fellow authors of thi s Handbook - Pe_iIng, Chee_ Soo
Teng and Khian Seng, for selflessly sharing all then- expert views
and opinions. I have learned so much from all of you. Thanks guys!
Last but not least, I wish to dedicate thi s Handbook to my wife,
Alice. for having wi llingly sacrificed the many hours of our quality
time to allow m; to complete these two projects.
Ar. Chee Soo Teng
B Arch (Strathclyde) APAM, MMlArb, MTFireE
Writing th.is Handbook has been an enj oyable journey of discovery.
I would like to record my appreciation of Pei fng, Khian Seng and
Je1Ty for their selfless input, magnanimity in accepting differing
views, tireless energy and positive attitude throughout the whole
project. Thank you for letting me share your knowledge.
I would also like to take this opportunity to thank my wife, Seok,
for her unconditional support in all my endeavours. Last but not
least I would like to thank my partners in ARC Partnership for their
pati; nce and understanding as well as their constructive feedback.
 Background to drafting xv

Background to drafting of the PAM 2006 Forms of Contract

Before 1970, construction contracts in Malaysia, Singapore and Hong Kong

were drafted based largely on the RTBA 63 Forms in the UK. Tn 1980, the JCT
80 Forms replaced the RlBA 63 Forms and similarly in Singapore, the STA
69 Forms were replaced by the SIA 80 Forms drafted by Duncan Wallace. In
2005, Hong Kong also finally got into the act and replaced their earlier forms
of contract based on RISA 63. Malaysia was ahead of Hong Kong and the
PAM/ISM 69 was finally replaced by PAM 98 in 1998. All in all, it took 29
years before the PAM/ISM 69 Forms were replaced.

The PAM 98 suite of contracts comprising PAM 98 (with quantities), PAM

98 (without quantities) and PAM 98 NSC were officially launched in October
1998 to replace PAM/TSM 69 suite of contracts. Following the launch of
PAM 98 suite of contracts, PAM organised a series of seminars throughout
the country to explain the PAM 98 main contract forms. Workshops were also
organized to enable participants to have an opportunity to discuss and highlight
any issues and difficulties that they may encounte r using the fo1111s as well as
to receive, constructive criticism or suggestion for future improvements to the
fonns of contract; the intention being that if any interim revisions to the forms
of cont ract were required, this could be caJTied out by means of amendment
slips issued from time to time to the published fonns.

Arising from the issues raised at the workshops, PAM organised a brain-
storming session in May 2002 to discuss the comments and constructive
criticism and to decide on the next course of action to improve the forms.
Arbitrators who are more conversant with construction disputes on the PAM
contracts, senior architects and members from the legal fraternity specialising
in building contracts were invited to participate in the brainstonning and assist
PAM in its endeavour to carry out any necessary amendments to PAM 98 .

Following the brainstonning session, PAM set up a Contract Review

Committee (Committee) under the chairmanship of the late Dato'Kington Loo
to look into any amendments to be made to PAM 98. The initial committee
members included Ar. Tan Pei Ing, Ar. Chee Soo Teng, and Sr. Low Khian
Seng, a quantity surveyor and Mr Lim Chee Wee, a lawyer who is a partner of
Skrine & Co. When Dato' Kington Loo passed away in March 2003, Ar. Tan
Pei Ing took over the chairmanship of the drafting committee. The first draft of
the main form of contract was completed in April 2003 and in late April 2003,
a workshop was held to explain the salient points of the amendment to gather
feedback from the users of the forms. The Co1mnittee also proceeded with the
redrafting of the Nominated Sub-Contract Form. Chee Wee unfottunately was
not able to participate fully in the re-drafting around 2004 because of his work
 Backgruuncl tu clrq/iing x vi
commitment. Ar Jerry Sum Phoon Mun was invited to join the Committee
in 2003 and has been involved with the Committee intensively since then.
Professor Dr Colin Ong, a lawyer also joined the Committee in 2005 when the
drafting of the forms was in an advanced stage and contributed on some legal
aspects of the final version of the forms.
As the Committee progressed with its work, it became obvious that the
amendments to PAM 98 may be quite extensive and the original intention of
caITying them out by means of amendments slips may be inadequate.
While the review of PAM 98 was in progress, local construction contracts
continued to move on and it was no longer entirely appropriate to draft
the forms of contract based on the models in the UK. or even tbe forms in
Singapore. Our construction industry has developed and matured to such an
extent that there was a requirement for a form of contract that specifically met
the Malaysian construction industry requirements. It was with this aspiration
to produce a fair and balanced form of contract that would satisfy that role,
and to respond positively to the feedback from the industry that PAM decided
to revise PAM 98.
The Committee carried out the revision over a period of 5 years and sacrificed
many weekends voluntarily and paiticipated in a series of intensive meetings
which often entailed passionate and constructive arguments on policy and
drafting issues. At periodical intervals, the Committee held a number of
workshops to explain the drafting progress and to solicit feedback. These
workshops were open not only to PAM members but also to the public so that
any organisation or person involved in the construction industry was able to
attend and voice their views. These workshops were a good forum to obtain
feedback as the participants were from all sectors of the construction industly,
and views expressed have been considered by the C01mnittee and where
appropriate, incorporated in the on-going drafting exercise.
In October 2005, when tbe Committee reached an advanced stage of drafting
both the PAM 2006 and PAM 2006 NSC, a 2-day workshop was held to explain
the proposed conti·acts in detail. The members of the Committee presented
detailed explanations of all contract clauses and why and where amendments
were proposed to be made to PAM 98 (with and without quantities) and the PAM
98 NSC. Question and answer sessions were also conducted for participants to
clarify any areas of concern that they might have in the proposed new forms.
Participants were also given more than a month from the date of the workshop
to present any comments or suggestions that they might have in any areas that
the Committee should consider or have failed to consider.
Background to drqftin[? xvii
A number of participants who offered comments and suggestions were
invited to attend the Committee's deliberations. Some participants even gave
up valuable weekends to attend meetings with the Committee to help the
Committee to move the drafting process forward.
The Committee wishes to put on record its sincere thanks and 'appreciation to
the following people:-
Special co-opted members:
Lim Chee Wee, Partner of Skrine, and
Dr Colin Ong, Partner of Dr Colin Ong Legal Services in Brunei.
Both of them have guided us on the legal aspects of the contract, and
Other contributors consisting of
Ar. Szeto Kok Yin, a Past President of PAM and Director of Al-ambia Sdn
Bhd, a construction company;
Tony Tan and Tang Juang Yew, Directors of Al-ambia Sdn Bhd,
Steven Shee of Sunway Construction Bhd,
who offered perspectives from the contracting pa1ties
N Pathmavathy of Skrine,
Kevin Reeves who helped to address specific issues during the re-drafting
exercise and Mak Siew Fong of Insurama Sdn Bhd who assisted with the
insurance clauses, and
Miss Loke Soo Mooi, who provided us with invaluable secretarial assistance
All of them have sacrificed many weekends to complete the tasks and put in
many hours ofvoluntaiy work.
There were many parties who had contributed to the drafting of the PAM06
Forms and they are too numerous to name individually. To all those who
contributed, PAM and the Committee will always be grateful.
 Foreword by President of PAM xix

Foreword by President of Pertubuhan Akitek Malaysia (PAM)

The most outstanding design will rema.injust that, a design, unless turned into
reality by building processes. This operation of transfomrntion from a design
to a building invariably requires an agreement which sets out how it should be
done, who does what, for how much, and at what risk - in essence, a conh·act.
A well drafted contract will reflect the aspirations of the contracting parties
as partners that are committed to a relationship for a successful outcome and
enable the achievement of that outcome, rather than become a basis for claims
and disputes by two opposing parties.
In this regards, PAM's Agreement and Schedule of Conditions of Building
Contract (PAM Form) had served the building and construction industry
of Malaysia very well since its first issue under the sanction of Pe1iubuhan
Akitek Malaysia (PAM) and Institution of Surveyors (Federation of Malaya)
in 1969. This was then revised as the PAM 1998 Forms and currently as the
PAM 2006 Forms. To date, it remains the only widely used suites of conh·act
in the conventional procurement of private building works in Malaysia.
As a standard form, it provides our industry with an authoritative and familiar
framework for the entire conh·act procurement process, from the cost effective
ce1tainty during tender, to the rights, obligations and duties of the contracting
parties, and in setting out the ambits of powers, duties, and functions of the
contract administrator. It bad proven itself to be suitable for almost eve1y
size of building contract in the country, and had built up a substantial body
of knowledge, practice and case law over the years. It was with careful
consideration of this background that the PAM 2006 Form of Contract is
written in a style that is an evolution, rather than a revolution, of the previous
forms.
The publication of this Handbook for PAM 2006 Conh·act marks the
culmination of seven years of industry consultative workshops during
the drafting, followed by the highly successful series of touring seminars
nationwide after the launch, by the core authors of the PAM 2006 Contract Ar
Tan Pei Ing, Sr Low Khian Seng, Ar Jeny Sum and Ar Chee Soo Teng.
Drawing on their combined expe1tise gained in pursuit of their careers as
active practitioners, the authors of PAM 2006 explain all clauses succinctly
and when necessmy, with reference to relevant case law decisions, illustrate
the legal principles that have been used to shape the PAM Form of Contract
2006. Written in a style that has come to characterize their collaborative
authorship, the narrative, including the cases cited and their interpretations
are readily understood, and regardless of the complexity of the subject matter,
the writing remains clear and easy to follow.
 Fore111ord by Presidenl of PA..M
As a handbook, it is also supple111ented with sample easy-to-use proformas
for certificates, instructions, notices etc. that are required to be issued in the
administration of the PAM 2006 contract, as well as samples of collateral
warranties, No111inated Suppliers' agreement and adjudication rules. To assist
in the transition from the earlier PAM 1998 Fonns to this latest revision, the
authors have also included a coloured appendix identifying the text changes in
the revision from PAM98 Form to the PAM2006 Fo1m.
l am confident that this book will be an indispensable resource for both
experienced and emerging practitioners, as well as all individuals involved
with the building and construction industry.
On behalf of PAM, I thank the authors for their commitment to complete this
task that they and PAM have promised the industry after the launch of PAM
For111 of Contract 2006, and their combined effo11 is another testament to the
spirit of voluntarism amongst the building industry professions in Malaysia.
Ar Boon Che Wee
PAM President
May 2010
xx
Foreword by Raja Aziz Addruse
A construction contract is essentially an agreement entered into between the
employer or building owner, and the contractor employed to execute specified
construction works in consideration of payments to be made at various stages
in the work; yet it is different from other types of conh·acts. Its i111plementation
requires the services and skills of a wide range of professional advisers,
contractors, specialist contractors, suppliers and others. lt has been described
by Lord Diplock in Modern Engineering (Bristol) Ltdv. Gilbert-Ash Northern
[l 974] AC 689, 717 as ' an entire contract for the sale of goods and work
and labour for a lump sum price payable by instalments as the goods are
delivered and the work done. Decisions have to be made from time to time
about such essential matters as the making of variation orders, the expenditure
of provisional and prime cost sums and extension of time for the carrying out
of the work under the contract.'
Because of the complex nature of construction contracts, the building
industry has since 1969 been publishing a standard form of contract issued
by Pertubuhan Akitek Malaysia (PAM). The first standard form , published
in 1969 (PAM/TSM For111 of Contract 1969) was based on the 1963 form
of contract of the British Royal Institute of Architect (RIBA). That was
fo ll owed by the PAM 1998 Form of Contract, itself replaced in 2006 by the
PAM 2006 For111 of Contract. Each edition took into account changes in the
law and in the practice of the building industry which had occurred since
the last edition.
The Handbook to the PAM 2006 FORM OF CONTRACT provides a
c01ru11entary on the standard contract, drawing attention to differences from
the 1998 form of contract and highlighting and discussing relevant judicial
decisions. Where needed, it deals with specific provisions of the standard
fonn of contract, offering views and making suggestions. Tn the event of
the issue of a notice of non-completion under clause 22.1 of the Conditions
of Contract, for instance, tbe emphasis made that Architects should advise
Employers on the amount of Liquidated Damages they would be entitled to
and that Employers, too, must inform Contractors in writing of their intention
to impose Liquidated Damages, are helpful reminders to both concerned.
Equally welcome to Architects must be the suggestion made that a notice
of non-completion should, following the observations made in Finnegan v
Community Housing 65 BLR 103 · indicate at least some basic details which
are being relied upon to justify' deduction of Liquidated Damages.
The Handbook, with its pithy commentary, elaborates on the provisions of the
PAM 2006 Form of Contract in a simple way.
 lntroduction .1xii lntrod11ctio11 xxiii

Authored jointly by three Architects, and a Quantity Surveyor, each a ve1y
senior member of his profession, the Handbook will be an indispensable
companion to the Fmm of Contract not just to the building industry but as
well to prospective lay Employers.
Raja Aziz Addruse
29 May 2010.
Introduction
The early forms of contract in Malaysia, Singapore and Hong Kong were
based on RlBA 1963 Form. Tn Malaysia, it was the PAM/ISM 69. As the
fon11S of contracts in the early days were based on an adaption of RTBA 63,
case law in the United Kingdom, Singapore and Hong Kong were applicable
to Malaysian cases.
T he forms of contract were re-drafted in the United Kingdom in the 1980
and were known as the JCT 1980 fonn. lt has s ince been revised a number of
times.

In Singapore, the Singapore Institute of Architects commissioned Professor

Duncan Wallace to re-draft the SIA form s in 1980. The SIA forms have also
since undergone a number of amendments.

Since 1980, case law from the United Kingdom and Si ngapore ceased to be a
useful guide to Malaysian construction law cases. It is therefore important to
bear in mind that we should not apply blindly the decision of case law in other
jurisdictions without knowing the primary circumstances that gave rise to their
decisions. For example, the case of Balfour Beatty Building v Chestermount
Properties 62 BLR 1 on extension of time based on a dot on principle, was
a decision based on the JCT 80 Fonns of Contract and we cannot therefore
assume that the case law is equally applicable to PAM/ISM 69 or PAM 98.
For a detailed explanation of the Balfour Beatty case, refer to the commentary
under Clause 23.9 in this Handbook.

PAM 2006 has endeavoured to put in express provisions whenever there are
lessons to be learned from case law. It is disappointing to note that some critics
have dismissed these improvements in PAM 2006 by simply saying, when
comparing to PAM 98, that PAM 2006 has "a positive provision that helps put
in an express.form a long informal practice" or "another welcome change that
puts in an express form a common implied practice thusfa1'."

PAM 2006 has removed the controversial PAM 98 Clause 12.2 which states
that: "Nothing contained in the Contract B ills shall override, modify or affect
in any way the application or interpretation of that which is contained in these
Conditions." A provision in the Contract Bill to delete this clause when using
the PAM 98 will be invalid as it is clear from the clause that the Contract
Bills shall not oveJTide the Conditio ns of Contract. More wony ing is the fact
that even the Letter of Award shall not override the PAM 98 Conditions of
Contract. For a detailed explanation oftbe effect of this clause, please refer to
the comm entary under Clause 12 in thi s Handbook.
 !111roduction .r.riv
The JCT Clause similar to PAM 98 Clause 12.2 had been harshly criticized
by Lord Denning in English Industrial Estate Corporation v George Wimpey
7 BLR 122, who found the clause so offensive that he was even prepared to
consider disregarding the clause as an issue which is against public policy.
Duncan Wallace also expressed an opinion that the clause was notorious and
that "such artificial priority between documents can only produce injustice .....
seeking to put forward an intetpretation of the contract which departs from
the parties ' true intention ..... ". Vincent Powell-Smith in his book on PAM/
ISM 69 Form recommended that the clause "should be entirely deleted as in
practice it ofien defeats the true intentions of the parties and there is no legal
or logical justification for its inclusion." Yet despite these judicial comments,
Clause 12.2 remained in PAM 98. lt was said at a seminar that Clause 12.2
provided some measure of stability and assurance to contractors as it will
nullify attempts by the Employer to override, modify or affect the PAM 98
Conditions by writing special provisions in the Contract Bills or Letter of
Award. Put it another way; PAM 98 Clause 12.2 ensures that any such special
provisions in the Contract Bills or even the Letter ofAward will be of no effect
as the Contract will be read as if the special provisions in the Contract Bills
or Letter of Award were not there. lt is difficult to comprehend that PAM98
Clause 12.2, which curtailed the freedom to contract, can ever be considered
beneficial to the Employer.
The editors of the Building Law Rep01t tried to express their frustration on the
attitude of those drafting contracts that despite the bmnge of complaints and
judicial comments on the clause in the JCT Form (which is similar to PAM
98 Clause 12.2), there seem to be few consequential changes made to the new
JCT Forms of Contract.
Physicians of the utmost fame
Were called at once; but when they came,
They answered, as they took their fees,
- - - - - - ---.,l,.,h-e-re- 1.s-· -n o cure for this aisease.
The above comment was made by the editors of the Building Law Rep01t in
7 BLR 125.-
We now have a mature construction industry which is comparable to the
best in the world. The employers, contractors and sub-contractors often have
construction professionals at their top management level and construction
professionals often comprise a majority of their staff. The employer, contractor
and sub-contractors are also represented by various organisations that ensure
that their members are kept up to date on all the aspects of construction,
lntrud11c:tio11 xxv
including the forms of contract by means of regular seminars and workshops,
often presented to them by construction professionals and lawyers.
Tn terms of a standard form of contract, the Employer would like to have
a contract that will be capable to ensure that the Employer succeeds in
completing a project of the highest quality, in the shortest possible time, at
the lowest cost and with as many !mown risks and all unforeseen risk the
responsibility of the Contractor. On the other hand, for the Contractor (and
sub-contractor), an ideal standard fonn of contract should not be ambiguous,
the scope and quality of work should be well defined, the cost should be as
high as possible, the completion time should be more than sufficient to carry
out the works with nomrnl resources and with as many known risks and all
unforeseen risks the responsibility of the Employer.
It is obvious that a standard form of conh·act cannot satisfy all the aspiration
of both patties to the contract; it has to be a compromise of requirements. As
such, the Committee decided to adopt the principle of allocating the risk to
the party who can best manage it (neither pro Contractor nor pro Employer).
The principle and philosophy of wanting to produce a fair and balanced fonn
of contract has guided the Committee throughout the entire process. The
Committee is of the opinion that by having a fair and balanced contract, the
tender pricing by the contractor will be more competitive. The contractors
are now more professional and lmowledgeable compared to those in the
construction industry 30 years ago, and they should be treated as an equal
conh·acting party. Passing more risks to the contractor may not necessmy
benefit the employer as most contractors will price for the additional risks. If
risks that cannot be managed by the contractors are passed to them, it will be
priced in, or if it cannot be priced in, it will often lead to disputes.
In order to achieve the result that the PAM 2006 will be a fair and balanced
contract, the Committee tested the contract by assuming the roles of
Contractor, Employer and also the Consultant on various clauses to ensure
that the contract is indeed a fair and balanced form of contract capable of
meeting the aspiration of all parties to the contract. We hope that we have
achieved this result.
PAM 2006 was published and launched by YB Dato Seri S Samy Vellu, the
then Minister of Works on 5'h April 2007.
As pa1tofthe Committee's initiative in drafting the PAM 2006 suite of contracts,
the Committee also undertook to prepare a guidebook to the fonn. The initial
intention was to prepare a simple guidebook for users of the form on the
application of the clauses in PAM 2006. That guidebook was in fact completed
 /11troductio11 xxvi /111rod11clio11 x,n ,ii

and was at the final stage of being edited at the end of 2009. However, in view For ease ofreference, the following terms will be used throughout this
of the great in!erests generated by PAM 2006 in the construction indushy and Handbook:
the views expressed at various seminars conducted on the forms by us and
others, we decided to expand the guidebook into a much more comprehensive PAM/ISM 69 - refers to the PAM/ISM 1969 Form (with Quantities)
Handbook which includes not only the guide on the application of the clauses, PAM/ISM 69 NSC - refers to the PAM/ISM 1969 Nominated Sub-
but also the reasons for amendments on some of the clauses in PAM 98. We Conti·act
also tried to keep the explanation of each clause as s imple as possible and also
to make the reading of this Handbook interesting. We understand how very PAM98 - refers to the PAM 1998 Form (with Quantities);
frustrating it is to read a book on building contract, which is peppered with PAM 98 NSC - refers to the PAM 1998 Nominated Sub-Conti·act
legal words that make no sense to the construction professionals who do not Form;
have recourse to a legal di ctionary. Similarly, books on building contracts are
often peppered with references to case laws, which unless properly explained PAM 2006 - refers to the PAM 2006 Contract (with Quantities);
in the book, is only suitable for persons who have access to a law library. That PAM2006NSC - refers to the PAM 2006 Nominated Sub-Contract;
said, it is not possible to write this Handbook without making some reference
CIDB 2000 - refers to the CIBD Standard Form of Conti·act for
to case law. With this in mind, we have endeavoured w henever it is necessary
Building Works 2000 Edition.
to refer to case law, to explain the main principle points behind each case, so
that the reader can easily understand the Handbook without having to refer to
The defined terms in Article 7 of PAM 2006 will be used throughout this
a legal dictionary or a law library.
Handbook and can be recognized by the use of a capital letter in front of the
word; for example, the defined te1m "Day" in Article 7(w) means ' calendar
We have also decided to include some bonus materials. Annexures A, B and
day including the weekly day of rest but excluding gazetted holidays in the
C, which parties are free to adopt (or amend) for their contract administration,
location where the Works is carried out' whereas the undefined term 'day' will
wh ile Annexures 'D' and 'E' are for ease of reference in relation to the PAM
Adjudication Rules and PAM 98 to PAM 06 changes: mean a calendar day.

(I) In Annexure ' A' are samples of contract and administration proformas;
(2) ln Annexure 'B' is a sample of the Nomi nated Supplier Agreement;
(3) In An nexure 'C' is a sample of a Collateral Agreement between the
Nominated Sub-Contractor and the Employer under C lause 27 .1 ;
(4) lnAnnexure 'D' is the Adjudication Rules relating to set-off provisions
under Clause 30.4:
(5) lnAnnexure ' E' is a document showing the changes made to PAM 98
to result in PAM 2006. This document is to make it easier for users
familiar with PAM 98 migrating to PAM 2006.
The Committee had carried out the drafting of PAM 2006 suite of contracts
on a pro bono basis. According to Wikipedia, the free encyclopedia, Pro bona
publico (usually shortened to pro bona) is a phrase derived from Latin meaning
' for the public good ' . The term is generally used to describe professional work
undertaken voluntarily and without payment as a public service.
We have completed this Handbook with full commitment and passion and
hope that it will serve not only as a useful guide to those working their way up
the professional ladders, but that it w ill also be useful to all professionals in
the construction industry as a source of reference when needed.
Ar Tan Pei Ing
B Arch Hons (Melbourne) FPAM, AIPDM , A RAIA, MMIArb, FArcasia
Sr Low Khian Seng
MSc Const Law & Arb (KCL) FISM, FRICS, FClARB, MSISV, MM!Arb
Ar Jerry Sum Phoon Mun
B Arch (Sydney) APAM, AIPDM
Ar Chee Soo Teng
B Arch (Strathclyde)APAM, MMlArb, MIFireE

The authors of the Handbook, whilst retaining the copyright, have also agreed
to donate the publishing right of the first edition of thi s Handbook to PAM
including all the proceeds from the sales.

Note to Reader
For ease of reference, the Clauses from the PAM 2006 Contract a re reproduced
in ' blue' , and where a detailed explanation is given, that part of the C la uses
extracted will be shown in 'blue italics'
T he defined terms in PAM 2006 Article 7 are used in this Handbook
' Contract have agreed and therefore represents the essence of the Contract. At
Articles 1
- ---~~-
[ - Articles of Agreement_ _ _ _ _ _ _~
Articles of Agreement
This Agreement is made on the --------·····-- ·· day of __ --------- ----·----------- --- 20 ___ _
between ____ __ _--------------------------------. _....... _________ . _....... _____ .... ------------------
of (or whose registered office or business address is situated at) __ ____________ _
. _.... _. ____________ . __ _-·----------------------------- -- (hereinafter called 'the Employer ' )
and --------------- --------------------- -- . . . . ----__------ --------------- ---- ---------------------------------------
of (or whose registered office or business address is situated at) ___ __ . ____... _.
_. ___ .. __. ___ _____ . ___ . . .. . .... . ___-------- ------- (he reinafter called ' the Contractor')-
The Aiticles represent the core statement of intent of what the parties to the
a basic level, without the Aiticles or something that resembles a contractual
atTangem ent, it can be argued that there is no contract.
This is, unfortunately, also one of the least read sections of the Contract
Documents_
"This Agreement is made on the ------------- ---- ------ ----- ___ ---- --- ------ day of __ "
Unless the Agreem ent bas been executed simultaneously, the date of the
A greement is nonnally inserted after the second patty has signed the Contract
or has attached the common seal.
N ote that there is a footnote provision on the first page of the Att ic Ies
of Agreement of PAM 98 stating that:
' This agreement must be duly stamped in accordance with the laws
applicable in that part of Malaysia in which the agreement is made
and in that part of Malaysia in which the Works are to be carried out if
different from the place in which the contract is made.'
This is an antiquated provision from the days of PAM/ISM 69 requiring
m ultiple stampi ng at the location where the agreement is made, and at the
location of the Works (if differen t from the place in which the con tract is
made). It is uncertain why the req ui rements were in both PAM/ISM 69 and
PAM 98, when the requirements were not in the Stamp Act at that time.
 Articles
PAM 2006 needs to comply with the Stamp Act before it can be accepted as
evidence in court. Stamp Act Section 52(1) states that:
'No instrument chargeable with duty shall be admitted in evidence for
any purpose by any person having by law or consent ofparties authority
to receive evidence, ... unless such instmment is duly stamped.'
What this means is that before an Agreement can be accepted as evidence
in court or arbitration proceedings, the Agreement needs to be stamped by
paying the appropriate stamp duty. The stamp duty for an Agreement made
before 20 I I is RM 10 a copy. After 20 I 1, the new stamp duty for Contracts
will be increased to the following new rates:
First tier
Contracts between the Employer and the Contractor - ad valorem
stamp duty equivalent to 0.5% of the contract sum.
Second tier
Sub-contracts including Nominated Sub-Contracts - stamp duty at
RMSO flat rate a copy.
It is therefore advisable that Architects and Consultants make provisions in all
the new contracts for the payment of the appropriate stamp duty, and especially
for those contracts which may be executed after 2011. The provision for the
cost of stamp duties can either be the Contractor's responsibility, in which
case, the Contractor must be allowed to price for this item in the Contract Bills
or alternatively, if the stamp duty is to be the responsibility of the Employer,
a Provisional Sum for the payment of stamp duty can be included in the
Contract Bill.
'· ... (or whose registered office or business address is situated at) ... "
PAM 98 provides that the address of the registered office of the parties in the
contract shall be the address inse1ied in the contract. Very often, architects
and consultants preparing the contract insert the address shown on the party's
letterhead. Unfortunately, the letterhead address is often not the address of the
registered office of the business.
PAM 2006 therefore allows for the flexibility to insert either the registered
office or the business address of the paiiies.
2 Articles 3
Whereas
The Employer is desirous of .... ............. . ....................................... .
(hereinafter called 'the Works ') at . .... . .. ..................................................... .
and has caused drawings and Contract Bills showing and describing the work
to be done to be prepared by his Architect and Consultant.
And Whereas the Contractor has supplied the Employer with a fully priced
copy of the said Contract Bills.
And Whereas the said drawings numbered
············· ········ · · ········ · · ··· , ... .. ... ..... ........ ·············· ····· ····· ···· ····· ······
inclusive (hereinafter referred to as 'the Contract Drawings') and the Contract
Bills have been signed by or on behalf of the parties hereto.
"... (hereinafter called 'the Works') ... "
' Works' has been defined in Aliicle 7(bf) to mean 'the works described in the
Aliicles ofAgreement and referred to in the Contract Documents and includes
any changes made to these works in accordance with the Contract.' This is
usually the same as the title of the tender documents.
".. .and has caused dmwings and Contract Bills ... to be prepared by his
Architect and Consultant."
The Contractor's tender shall be based on the drawings and Contract Bills
prepared by the Architect and Consultant on behalf of the Employer.
"And Whereas the Contractor has supplied the Employer with a.fully priced
copy of the said Contract Bills. "
The tender documents shall be prepared in accordance with the drawings
prepared by the Architect and Consultant; when the Contractor submits a
tender, he will usually submit a fully priced copy of the tender documents
to the Employer at the time of submission of the tender. If the Contractor's
tender is accepted, the tender documents will be the basis for the preparation
of the Contract Bills.
"A nd Whereas the said drmvings numbered ... "
The list of drawing numbers which form part of the Contract is inse1ted in the
spaces provided. It is important that the drawing numbers and any revisions
refen-ed to are the same drawings used by the Consultant for the preparation
 Articles
of the tender document. If the Architect and Consultant update any drawings
after the tender documents have been completed, it is advisable that sufficient
copies of the drawings which were used for the preparation of the tender
document are retained to be bound into the Contract. Any updating of the
drawings after the tender documents have been completed shall be treated as
a Variation under the Contract.
The Contract Drawings and the Contract Bills are required to be signed
by the patties at the same time as they sign the Articles of Agreement.
As the Contract Drawings often run into hundreds of drawings, it is often
inconvenient to require the directors of the companies signing the Contract
to sign all drawings. As such, some lawyers have advised that it should be
sufficient if the contracting parties sign the schedule of drawings, which lists
all the Contract Drawings.
Now it is hereby agreed as follows:
Article 1
For the consideration hereinafter mentioned the Contractor will upon and
subject to the Conh·act carry out and complete the Works shown upon and
described by or referred to in the Contract.
Article 1: "For the consideration hereinafter mentioned. .. "
The consideration is the sum which the Employer will have to pay the Contractor
for carrying out the Works. As referred to in Article 2, the consideration is ' the
Conh·act Sum or such other sum as shall become payable .... '
Article 1: •· ... cany out and complete the Works shown upon
and described by or referred to in the Contract... "
This is the primary obligation of the Contractor, and is further emphasised
in Clause 1.1, that the Contractor's obligation is to ' carry out and complete
the Works in accordance with the Conh·act Documents and in compliance
therewith provide materials, goods and standards of workmanship of the
quality and standard described in the Contract Documents and/or required by
the Architect in accordance with the provisions of the Contract.'
Article 2
The Employer wi ll pay the Contractor the sum of Ringgit Malaysia: ... .... . .
·· ···· · ··········· ··· ···· ······ ·· ···················· ······ ········· (RM ..... .. .. .......)
4 Articles 5
hereinafter referred to as ' the Contract Sum ') or such other sum as shall become
payable hereunder at the times and in the manner specified in the Contract.
Article 2: "The Employ er will pay the Contracto,:.. "
This is the primaty obligation of the Employer, which is to pay to the Contractor
'the Conh·act Sum or such other sum as shall become payable .... ' as the
consideration for canying out the Works. See also comments under Article 1.
Article 2: " ... (hereinafter referred lo as 'the Contract Sum') or
such other sum as shall become payable ... "
The sum payable shall be the Contract Sum, including adjustment for Variation
and any other sums, that the Employer may be obligated to pay the Contractor
at the times and in the manner specified in the Contract. The exception to this
rule will be if the Contract is based on Provisional Quantities, in which case,
under Clause 11.6(£), the sum payable to the Contractor for the Works shall be
based on re-measured quantities of works executed.
Article 2: "Contract Sum"
Under PAM 2006, the Conh·act Sum has been defined in Article 7 to mean ' the
sum stated in Article 2. ' The Contract Sum is therefore a fixed sum and the
Retention Sum and the Performance Bond are calculated based on the stated
Contract Sum. When any amounts are added to, or deducted from it, the figure
becomes the adjusted Contract Sum.
Article 3
The term ' the Architect' in the Contract shall mean .. ... .. ..... ... .. .... .. ...... .
of. ........................................ ············ ················································· ....... .
or in the event of such Person ceasing to be the Architect for the p urpose of the
Contract, such other Person as the Employer shall appoint within twenty eight
(28) Days therefrom. No Architect so appointed shall be entitled to disregard
or overrule any certificate or opinion or decision or approval or instruction
given by the preceding Architect.
Article 3: " ... the Architect... "
The Architect has been defined in Article 7(c) to mean 'the Person named in
Article 3 and shall be a Professional Architect or any other fonn of practice
registered under the Architects Act 1967 and approved by the Board of
Architects, Malaysia.'
 Articles
Article 3: .. .•. o_.t·sucI1 .person ... "
1
Architects and consultants continuing to use PAM 98 must note that the
position of 'Architect' in PAM 98 is meant to be an individual and not any
architectural consultancy practice. The tenn ' person ' is not a defined tenn
in PAM 98 and as such does not cover architects practicing as a firm, body
corporate or multi-disciplinary practice. PAM 98 Article 3, when referring
to the ' death' of the Architect, can only mean the death of an individual; as
architects practicing as a firm, body corporate or multi-disciplinary practice
cannot die, but instead can be insolvent or wound up. The recognition that sub-
contractors nominated by the Architect under PAM 98 Clause 27.l(i) could be
either ' person' or ' companies' fwiher reinforced the view that the reference to
'person ' in Article 3 is a reference to the Architect as an individual.
PAM 2006 A1iicle 7(aq) has therefore defined ' Person' to mean 'an individual,
sole proprietorship, firm (patinership) or body corporate. ' The definition will
therefore allow the Architect to practice as a sole proprietorship, partnership,
a body corporate or be part of a multi-disciplinary practice as allowed by the
Board of Architects, Malaysia.
Article 3: "... the Employer shall appoint within twenty eight
(28) Day ... "
Under the Uniform Building By-Laws, the Architect is a ' Qualified Person'
('QP') to supervise the works under construction. In the event the Architect
ceases to be the Architect on the project, the Employer has to appoint a new
Architect within 28 Days. In the meantime, the Contractor has to compulsorily
suspend work in the absence of an Architect for the Works. Refer to Clause
30.8 'If the Architect and/or Consultant inform the Contractor in writing of
their withdrawal from the supervision of the execution of the Works required
under the local building by-laws for whatever reasons, the Contractor shall
fo1ihwi th---&usp~nd- th~ eGl+ti 1.l n-of t-h~ WGt:k"8 and Gen tin ue-such-suspens-ion
until the resumption of the said supervision. '
If the Contractor continued with the construction work, after being infonned
by the Architect of his suspension of work, the new or continuing Architect
will not be able to issue the relevant Form Gs to facilitate the issuance of
the Certificate of Completion and Compliance or apply for the Certificate of
Fitness for Occupation as he is in no position to certify that the constrnction
work was carried out under his supervision.
In Croudace v London Borough ofLambeth 33 BLR 20, the employer failed to
appoint an architect to replace the original architect, who had earlier retired.
6 Arricles 7
Without an architect there was no one under the contract empowered to certify
the contractor's claims for loss and expense. The court held that the employer
was in breach of the contract when he failed to appoint a succeeding architect
to administer the contract. It is therefore essential under PAM 2006 that the
Employer carries out his duty to appoint a succeeding Architect within 28
Days to administer the Contract. The failure to appoint a succeeding Architect
would also mean that the Employer has failed to comply with the Uniform
Building By-Laws to appoint a QP to supervise the architectural works.
Article 3: "No Architect so appointed shall be entitled to
disregard or overrule any certificate or opinion or decision or approval or
instruction given by the preceding Architect. "
There may be instances when the Employer is tempted to discharge the
Architect for making decisions contrary to the Employer 's intentions or
expectations, and to re-appoint a replacement Architect who concurs with the
Employer. Such action should be resisted as Article 3 expressly provides that
the replacement Architect is not entitled to disregard or overrule any ce1iificate,
opinion, decision, approval or instruction given by the preceding Architect.
Under Clause 34.8(d), the Arbitrator and not the replacement Architect is
the paiiy allowed to ' to open up, review and revise any certificate, opinion,
dec ision, requirement, or notice.'
A rticle 4
The term ' the Engineer' in the Contract shall mean:
(a) Structu ral & Civil Engineer: ..................................................................... .
of. .......................... . ........ ... . .......... ........ . .. ............ ............ .
(b) Mechanical & Electrical E ngineer: . ... ........ ........... . ............ . ........ .
of. .. .. . ........ .. .. ........................ .... ............ . ..... ... .. ..... . . . .... . .... .
or in the event of such Person ceasing to be the Engineer for the purpose of the
Contract. such other Person as the Employer shall appo int within twenty eight
(28) Days therefrom. T he Engineer shall perform the duties expected of his
profession, and the Archi tect may from time to time delegate such duties and
a uthority of the Architect to the Engineer as the Architect deems fit.
Article 4: "... the Enginee1:.. "
The Engineer has been defined in Article 7(aa) to mean 'the Person nam ed in
Article 4 and shall be a Professional Engineer or any other form of practice
registered under the Registration of Engineers Act 1967 and approved by the
Board of Engineers, Malaysia.'
 Articles 8 Articles 9

Article 4: .. ... o,rsue h p erson ... " Article 5: the Employer shall appoint within twenty eight
1
(28) Day. .. "
The commentary under Article 3 on the ' Architect' is equally applicable here
for the 'Engineer' . The Quantity Surveyor is not a QP under the Uniform Building By-Laws, and
as such, an appointment of a replacement Quantity Surveyor within 28 Days
Article 4: "... the Employer shall appoint within twenty eight is more for the proper administration of the Contract. For example, in Clause
(28) Day. .. " 30.1, the Architect will need the valuation from the Quantity Surveyor, before
he issues an Interim Certificate. If the appointed Quantity Surveyor ceases to
The commentary under Article 3 on the 'Architect' is equally applicable here be the Quantity Surveyor for the Works, the Architect may not be able to issue
for the 'Engineer'. an Interim Ce1tificate, and this will affect the obligation of the Employer to
make timely payments to the Contractor.
Article 4: "... the Architect may from time to time delegate such
duties and authority of the Architect to the Engineer as the Architect deems Article 5: •· ... the Architect mayfi-0111 time to time delegate such
fit. " duties and authority of the Architect to the Quantity Surveyor as the Architect
deems fit. "
If the Architect wishes to delegate any of his authority under the Contract,
this must be notified to the Contractor in writing. For example, if the The comments on the delegation of authority to the Engineer apply equally
Architect wishes to delegate to the Engineer the authority to issue AI on here.
piling works direct to the Contractor, it will be necessary to clarify whether
such delegation would mean that it will be unnecessary for the Architect to Article 6
issue a further AI.
The term 'the Special ist Consultant' in the Contract shall mean:
Article 5 (a) ... ............................... ................... .............. . ............. . .. . .. ............. .
of .............................................................. ............. .. .... . .. ... ... .. .. .. .
The term 'the Quantity Surveyor' in the Contract shall mean ..... . ........ .... . (b) ............ ................................................................. . ..... .......... ....... . .
of............................... ............................................................ ...................... . of ........................................................ ....... . .. ... . .................... ..... .. .
. . . . or in the event of such Person ceasing to be the Quantity Smveyor for (c) .................................................................... ... ....... . .. ... ....... . ..... ..... .
the purpose of the Contract, such other Person as the Employer shall appoint of ....................................................... . ... ... ....... ... .... .... ..... ... .. .... .. . .
within twenty eight (28) Days therefrom. The Quantity Surveyor shall perform or in the event of such Person ceasing to be the Specialist Consultant for the
the duties expected of his profession, and the Architect may from time to time purpose of the Contract, such other Person as the Employer shall appoint w ithin
delegate such duties and authority of the Architect to the Quantity Surveyor as twenty eight (28) Days therefrom. The Specialist Consultant shall perform the
the Architect deems fit. duties expected of his profession, and the At·chitect may from time to time
delegate such duties and authority of the Architect to the Specialist Consultant
Article 5: "... Q uan , tty
· s
urveyo,:.. " as the Architect deems fit.

The Quantity Surveyor has been defined in Atticle 7(av) to mean 'the Person Article 6: "... Specialist Consultant ... "
named in A1ticle 5 and shall be a Registered Quantity Surveyor or any other
form of practice registered under the Quantity Surveyors Act 1967 and Article 7 (be) defined the Specialist Consultant to mean 'the Person named
approved by the Board of Quantity Surveyors, Malaysia.' in Article 6 and such Person shall be a Specialist Consultant appointed by
the Employer for a designated scope of professional work.' The Specialist
Article 5: " ... o,rsueIp
1 erson ... ,, Consultant refers to any other consultants retained by the Employer to work
1
under the At·chitect in the performance of his duties, for example: acoustic
The commentary under Article 3 on the 'At·chitect' is equally applicable here
for the ' Quantity Surveyor'.
 Articles 10 Articles II

consultant, fa9ade consultant, lighting consultant, interior consultant, kitchen
consultant etc ...
The provision in PAM 98 Article 7(f) that the Specialist Consultant must
be ' .... registered with their respective statutory Boards and/or Professional
Institutes in Malaysia .... ' is e1TOneous as there is no requirement in law that
the Specialist Consultant needs to be registered under any statutory boards and
furthennore some of them do not even have a local professional institution.
As the scope of the Specialist Consultant is limited to specialist work, it
is puzzling why the PAM 98 NSC has named only the Architect and the
Specialist Consultant to administer the sub-contract works, which could
include, inter alia, earthworks, piling works, fa9ade work, mechanical and
electrical installation, interior design works and landscape works.
(c) Architect means the Pe rson named in Article 3 and shall be a
Professiona l Arch itect or any other form of practice registered under
the Architects Act 1967 and approved by the Board of Architects,
Malaysia;
(d) Architect's Instruction or Af - as described in C lause 2.2;
(e) As-built D rawings means as-built dra wings for works designed
(i ncluding alternative design) by the Contractor and/or Nominated
Sub-Contractor and any other as-built dra wings required to be
provided as specified in the Contract Doc uments;
(f) Certificate of Extension of Time means the certificate issued under
Clause 23 .4;

Article 6: " ...o,,sueIP

1 erson ... ,, (g) Certificate of Making Good Defects means the certificate issued
1
under Clause 15.6;
The commentaiy under Article 3 on the 'Architect' is equally applicable here
for the 'Specialist Consultant'. (h) Certificate of Non-Completion means the certificate issued unde r
Cla use 22. l ;
Article 6: "... the Employer shall appoint within twenty eight
(28) Day ... " (i) Certificate of Partial Completion means the certificate issued unde r
Cla use 16. l ;
The Specialist Consultant is not a ' Qualified Person' under the building by-
law and as such, an appointment of a replacement Specialist Consultant within U) Certificate of Practical Completion means the certificate issued
28 Days is more for the proper administration of the Contract. under Clause 15.2;

Article 6: "... the Architect may from time to time delegate (k) Certificate of Sectional Completion means the certificate issued
such duties and authority of the Architect to the Specialist Consultant as the under Cla use 2 1.3;
Architect deems.fit. "
(I) Clause means the clauses in the Conditions of the Contract;
The comments on the delegation of authority to the Eng,_
in---'e--'ec....
-r "'-a GLC;_;,_-"'" (m) Completion Date means the date(s) for completion ofthe Works stated
here. in the Appendix under C lauses 21. I and 2 1.3 or the last extended date
granted under Clause 23 .4;
Article 7
(n) Conditions means the Conditions of the Contract;
In the Contrac t Documents as hereafter defined, the follow ing words a nd
expressions shall have the meanings here by assigned to them, except where Confirmation of Architect's Instruction or CAI - as described in
(o)
the context otherw ise requires.
Clause 2 .2;

(a) Appendix means the Appendix to the Conditions of the Contract;

(p) Consultant means the Engineer, Quantity Surveyor and/or Specia list
Consultant as appropriate;
(b) Appropriate A uthority means any statut01y authority having
jurisdiction over the Works;
 Articles 12 Articles 13

(q) Contract or Contract Documents comprise the following documents : (x) Defects means defects, shrinkages or other faults due to materials or
(i) the Letter of Award; workmanship not in accordance with the Contract and Nominated
(ii) the Articles of Agreement; Sub-Contract and/or due to any fau lty design (if any) unde1taken by
(iii) the Conditions of Contract; the Contractor and Nominated Sub-Contractor;
(iv) the Contract Drawings;
(v) the Contract Bills; and (y) Defects Liability Period means the period stated in the Appendix
(vi) other documents incorporated in the Contract Documents, under Clause 15.4;
unless expressly stated to be excluded therefrom;
(z) Employer means the party named in the Articles of Agreement and
(r) Contract Bills comprise the following documents (as may be incl udes the Employer's legal successors or personal representatives
applicable): or any Person to whom the rights and obligations of the Employer
(i) lnstrnctions to Tenderers; have been transferred with the agreement of the Contractor;
(ii) Conditions ofTendering;
(iii) Form ofTender; (aa) Engineer means the Person named in Article 4 and shall be a
(iv) Preliminaries; Professional Engineer or any other form of practice registered under
(v) Preambles and Specification; the Registration of Engineers Act 1967 and approved by the Board of
(vi) Bills of Quantities; and Engineers, Malaysia;
(vii) any other documents specifically mentioned m any of the
above documents; (ab) Final Account means the documents showing the adjustment of the
Contract Sum issued under Clause 30. 10;
(s) Contract Sum means the sum stated in Article 2;
(ac) Final Certificate means the final certificate issued by the Architect
(t) Contractor means the party named in the Articles of Agreement and under Clauses 30.14 and 30. 15;
includes the Contractor's legal successors or personal representatives
or any Person to whom the rights and obligations of the Contractor (ad) Force Majeure means any ci1·curnstances beyond the control of the
have been transferred with the agreement of the Employer; Contractor caused by terrorist acts, governmental or regulatory action,
epidemics and natural disasters;
(u) Contractor's A ll Risks Insurance ('CAR Insurance') means an
insurance policy which provides cover against any physical loss (ae) Interim Certificates means the progress payment certificates issued
or damage to work executed, materials and goods under a standard by the Architect under Clause 30. 1;
CAR Insurance policy. The minimum insurance risks are specified
under-Cla u s e s - - ~ - o ~.B-of~ ~ --,--attd-tbe-insuranee sh al I (af) Letter of Award means the letter of acceptance of the Contractor's
have the appropriate endorsements. Any additional insurance risks tender issued by or on behalf of the Employer;
in addition to those stated in these Conditions that are required to
be covered under the CAR Insurance shall be stated in the Contract (ag) Limit of Retention Fund means the amount as stated in the Appendix
B ills; under Clause 30.5;

(v) Date of Com mencement means the date(s) fixed and stated in the
Appendix under C lauses 21. I and 21 .2;
(w) Day means calendar day including the weekly day ofrest but excluding
gazetted holidays in the location where the Works is carried out;
(ah) Lump Sum Contract means a fixed price Contract and is not subject
to re-measurement o r recalculation except for Provisional Quantities
and Variations which shall be valued under C lause 11 .0;
(ai) Month means calendar month;
 Articles 14
(aj) Nominated Sub-Contract means the contract entered into between
the Main Contractor and the Nominated Sub-Contractor pursuant to a
nomination by the Architect under Clause 27.2;
(ak) Nominated Sub-Contractor means a sub-contractor nominated by
the Architect under Clause 27.1 ;
(al) Nominated Supplier means a supplier nominated by the Architect
under Clause 28. L;
(am) PAM Sub-Contract 2006 means the form of contract as published by
Pe1tububan Akitek Malaysia where the sub-contractor is nominated
under the PAM Contract 2006;
(an) Penultimate Certificate means the payment certificate issued by the
Arch itect for the release of monies to Nom inated Sub-Contractors
and/or Nominated Suppliers under Clause 30. 13;
(ao) Performance Bond means the bond required to be provided by the
Contractor as a security for the due perf01111ance of the contract under
Clause 37.1;
(ap) Period of Honouring Certificates means the period for honouring
certificates stated in the Appendix under Clause 30.1;
(aq) Person means a n individual, sole proprietorship, fi1111 (partnership) or
body corporate;
(ar) Practical Completion or Practically Completed means the state of
completion described in Clause 15.1;
(-as) Prime--(;ost Sums r.P.&Sums!)--means the-sutns-- provided in the
contract for works or services to be executed by Nominated Sub-
Contractor or for materials and goods to be supplied by Nomi nated
Supplier;
(at) Provisional or Provisional Quantity means the estimated qua nti ties
of work provided in the Contract Bills for work to be executed or for
the supply of any materials and goods which cannot be detennined or
detailed at the time;
(a u) Provisional Sums means the sums provided in the contract and/or the
Nominated Sub-Contract for work to be executed or for the supply
Articles J5
of any materials and goods which cannot be foreseen, determ ined or
detailed at the time;
(av) Quantity Surveyor means the Perso n named in A.Iticle 5 and shall
be a Registered Quanti ty S urveyor or any other fo rm of practice
registered under the Quantity Surveyors Act 1967 and approved by
the Board of Q uantity Surveyors, Malaysia;
(aw) Releva nt Event means any one of the events for extension of time set
out in Clause 23.8;
(ax) Retention Fund means the sum retained in accordance with Clause
30.5;
(ay) Service Provider means any company or body authorised to provide
water, electricity, telephone, sewerage and o ther related services;
(az) Site means the land and other places on , in, under, over or through
which the Works are to be executed and is provided by the Employer
fo r the purposes of the Contract including other land and places
obtained by the Contractor and accepted by the Employer as formi ng
part of the Site;
(ba) Site Agent mea ns the person appointed under C lause 8.1;
(bb) Site Staff means the person appoi nted under Clause I 0. 1;
(be) Specialist Consultant means the Person nam ed in A.Iticle 6 and such
Person shall be a Specialist Consultant appointed by the Employer for
a designated scope of professional work;
(bd) Variation means changes made to the Works as defined under C lause
11.1 ;
(be) Week means a period of seven (7) consecutive days;
(bf) Works means the works described in the A.Iticles of Agreement and
referred to in the Contract Documents and includes any c hanges made
to these works in accordance with the Contract;
(bg) Works Programme means the works programme described in the
Conh·act Documents and in C lause 3.5.
 Articles 16 Articles 17

The Article above sets out the definition of the various terms used throughout Article 7(k): "Certificate ofSectional Completion ..... "
the PAM Forms, and is denoted by the use of a capital letter in front of the
word or expression. For example, Article 7(w) defined ' Day ' to mean the Refer to Annexure ' A' for a sample of the Certificate of Sectional Completion.
'calendar day including the weekly day ofrest but excluding gazetted holidays
in the location where the Works is canied out' whereas ' day' will be given its Article 7(/) : "Clause ... "
ordinary meaning of365 days in a year.
The clauses refened to are clause I to clause 38 of the Contract.
Most of the definitions above are self-explanatory, so further elaboration are
only made on a selected number of definitions for further clarifications. Article 7(m): "Completion Date... "

Article 7 (a): "Appendix... " This term is applicable for the Completion Date stated in the Appendix (which
is the first completion date) as well as any dates established by the latest
The Appendix can be found on page 44 of the Conditions. The Architect or Certificate of Extension of Time.
Consultant must ensure that the details in the Appendix are appropriately
completed, before the Conh·act is entered into. A rticle 7 (o): "Confirmation ofArchitects Instruction or CAI. .. "

A rticle 7(d): "Architect's instruction... " Refer to Annexure 'A' for a sample of the Confirmation of Architect's
lnstrnction or CAI.
Refer to Annexure ' A' for a sample of the Architect's Instruction (A.I.).
A rticle 7(q): "Contract or Contract Documents ... "
A rticle 7(e): "As-built Drawings... "
Some consultants may refer to the contents of the Contract Document under
See comments under Clause 3. 10. different names. If this is so, then it is advisable to amend this Clause as
appropriate, to take account of such difference.
Article 7(/): "Certificate ofExtension of Time ... "
Article 7(r): "Contract Bills... "
Refer to Annexure ' A' for a sample of the Certificate of Extension of Time.
Some consultants may refer to the contents of the Contract Bill under different
Article 7(g): "Certificate of Making Good Defects ... " names. If this is so, then it is advisable to amend this Clause as appropriate, to
take account of such difference.
Refer to Annexure 'A' for a sample of the Certificate of Making Good Defects.
Article 7(s): "Contract Sum ... "
A rticle 7(/t) : "Cert{ftcate of Non-Completion ... "
Some contracts defined the Contract Sum to include 'such other sum as may
Refer to Annexure 'A' for a sample of the Certificate of Non Completion. become payable under the provisions of the Conh·act'. This is not the case
in PAM 2006 where the Contract Sum is a 'fixed figure.' This makes it more
Article 7(i): "Certificate ofPartial Completion ... " convenient as the Retention Sum and the Performance Bond are calculated as
a percentage of the 'fixed figure' and they will thus remain constant throughout
Refer to Annexure 'A' for a sample of the Certificate of Partial Completion. the contract period.

A rticle 70): "Certificate of Practical Completion ... " Article 7(t): "Contrac/01: .. "

Refer to Annexure 'A' for a sample of the Certificate of Practical Completion. In PAM 98, the Conh·actor means ' the person, firm or company named in the

,, ~-. '1/JJJ .
 Articles 18
second part of the Articles of Agreement, whose tender has been accepted by
the Employer. '
PAM 2006 extended the definition to include the Contractor's legal successor
(if it is a company) or personal representative (if it is an individual). The
Contractor however cannot novate the Contract without the agreement of the
Employer.
Article 7(11): "Contractors All Risks Insurance ('CA R
Insurance') "
The CAR Insurance provision as provided in Clauses 20.A or 20.B or 20.C is
the minimum cover for a standard form of contract. It is important to note that
if the project requires insurance cover for any risk not covered in these clauses,
the additional insurance coverage must be spelt out in the Contract Bills so
that it can.be appropriately priced. The amount of cover for third party liability
for injmy to persons and property will depend on the location and risk, and
appropriate advice should be obtained when specifying the risk and amount.
Article 7 (w): "Day.. . "
Tn some contracts, it is specified that the Contractor shall not catTy out any
work on:-
(i) The weekly day of rest; and
(ii) Any public holiday which is recognised in the State, where the Work is
being carried out.
In such circumstances, there may be dispute whether Liquidated Damages
can be imposed on days referred to in (i) and (ii). This definition becomes
important when the amount of Liquidated Damages is large. The pmpose of
this definition is to provide certainty on what is meant by a 'day' .
The definition of 'day' is also impmtant when one consider a dispute can
be referred to adjudication under Clause 34.1. As adjudication is a speedy
process, it is important that patties are not forced to respond in a shorter period
of time than expected if a dispute is submitted, for example, on one of the
days referred to in (i) or (ii), when the parties can reasonably expect not to be
working. For example, if a dispute is submitted over the Hari Raya period, the
definition of 'Day' will exclude the days during Hari Raya, giving the party
more time to respond to a claim, which they would not have, if the ' Day' was
not defined.
Articles 19
Article 7(x): ''D <;1eC
,r, tS ... "
This definition clarifies that besides being responsible for his own Defects, the
Contractor's responsibility also includes the Defects of his Nominated Sub-
contractor.
Article 7(y): "Defects Liability Period... "
Unless the period is specified in the Contract Bill, the default period in the
Appendix is 12 Months.
Article 7(z): "Employe1: .. "
In PAM 98, the Employer means 'the party named in the first part of the
Agreement.' The definition of the Contractor was differently defined. In PAM
98, the Contractor means 'the person, finn or company named in the second
part of the Articles of Agreement.' Further, there is uncertainty as to what
would happen if the Employer, being an individual, dies. Will the contract be
continued by the legal successor (if it is a company) or personal representative
(if it is an individual), or will it mean that since there is no provision in the
contract for such a contingency, the contract will simply lapse or is considered
terminated?
PAM 2006 rectified this shortcoming by extending the definition of the
Employer to include its legal successor (if it is a company) or personal
representative (if it is an individual). This caters for the possibility that the
Employer can have a successor. The Employer, however, cannot novate the
Contract without the agreement of the Contractor.
Article 7(ac): "Final Certificate... "
Refer to Annexure 'A' for a sample of the Final Certificate.
Article 7(ad): "Force Majeure... "
As there are many conflicting definitions of ' Force Majeure', it is necessa1y to
define the term to avoid misinterpretation. The term in PAM 2006 will, besides
including natmal disasters, now cover terrorist acts, which would not have
been covered under the previous 'Force Majeme' definition. It also extends
to governmental or regulatory regulations which will include for example,
regulations restricting or banning imported labour. It is also extended to cover
epidemics, such as SARS, which may prevent the movement of labour.
 Articles 20 Clause 1.0 21

Article 7(ae): '"Interim Certificates... "

Refer toAnnexure 'A' for a sample of the Interim Certificate. Clause 1.1 - Completion of Works in accordance with Contract Documents

Article 7(an): "Penultimate Certificate... " The Contractor shall upon and subject to these Conditions carry out and
complete the Works in accordance with the Contract Documents and in
Refer to Annexure ' A' for a sample of the Penultimate Ce1tificate. comp I iance therewith provide materia ls, goods and standards ofworkmanship
of the quality and standard described in the Contract Documents and/or
A rticle 7(az): "Site... " required by the Architect in accordance with the provisions of the Contract.

Refer to further comments under Clause 30.2. Clause 1. J: " .. .subject to these Conditions cony out and complete
the Works in accordance with the Contract Documents "
A rticle 7(hj): "Works ... "
In carrying out the Works, the Contractor shall comply with the Conditions of
The Works is usually the title of the Contract. the Contract and any other provisions contained in the Contract Documents.

Article 8
In the interpretation of the Contract, unless the context requires otherwise, the
following shall apply:
(a) Gender - words of one gender include the other gender, and words
denoting natural persons include corporations and finns and all such
words are to be construed interchangeably in that manner;
(b) Headings and Marginal Notes - the headings and marginal notes in the
Conditions are not to be taken into consideration in the interpretation
or construction of the Conditions or of the Contract;
(c) Reference to legislation - a reference to any Acts is deemed to
include references to any subsequent amendments, consolidation or
replacement of the Acts;
(d) Singular and Plural - words imp01ting the singular also include the
plural and vice versa where the context requires;
(e) Where any word or phrase is given a defined meaning, any other
grammatical form of that word or phrase has a corresponding meaning.
This Article is self explanatory.
The 'Conditions' refeITed to in this clause are the Conditions contained in
PAM 2006 and include any amendments to the Conditions stated in the
Contract Bills.
The Contract Documents are defined in Article 7(q) and comprise the following
documents:
(i) the Letter of Award;
(ii) the Ar·ticles of Agreement;
(iii) the Conditions of Contract;
(iv) the Contract Drawings;
(v) the Contract Bills; and
(vi) other documents incorporated in the Contract Documents, unless
expressly stated to be excluded therefrom.
This Clause states clearly that the Contractor 's paramount obligation under
the Contract is to carry out and complete the Works in accordance with the
Contract Documents, and the Works are also to be in accordance with the
provisions of the Contract. This important obligation is an amplification and
reinforcement of Article 1. The Contractor has full responsibility to organise
and carry out the Works in the manner he deems fit (unless the specifications
or other provisions in the Contract state that he has to carry out the works in
a particular way), and must also complete the Works within the time stated
in the Contract. The Contractor's obligation is to carry out and complete
the Works in accordance with the Architect's and Consultant's design,
and as such, unless he has submitted an alternative to the Architect's and
Consultant's design under Clause 1.3, he is not responsible for the suitability
and adequacy of the design of the Works. The exception to this rule will

Clause 1.0 22
be temporary works where the Architect and Consultant have provided no
design, and the Contractor therefore has the responsibility to design and
erect the temporary works as provided in Clause 1.2.
The Contractor's obligation is not restricted to carry out only his own works.
His obligation under the Contract includes an obligation to also ensure that all
Nominated Sub-Contractors can-y out the sub-contract works in accordance
with the Nominated Sub-Contract as provided in Clause 27.9.
Clause 1.1: " ... Works ... "
A brief description of the Works is described in the Articles ofAgreement, and
the title usually c01Tesponds to the title of the Contract.
Note the definition of' Works' in Article 7(bf) means 'the works described in the
Articles ofAgreement and refe1Ted to in the Contract Documents and includes
any changes made to these works in accordance with the Contract.' Works'
therefore includes any changes subsequently brought about by any Architect's
Instructions, additional drawings or other info1mation issued by the Architect
and Consultant. These may not form part of the Contract Documents, but they
nevertheless have an important status, and the Contractor is obliged to carry
out any additional or varied work shown therein.
Clause 1.1 : " ...provide materials, goods and standardy of
workmanship (~l the quality and standard described in the Contract
Documents... "
The Contractor has an obligation to provide materials, goods and standards
of workmanship of the quality and standard described in the Contract
Documents. If the Contractor provided any materials, goods or carried out
any work which is not in accordance with the quality and standard described
in the Contract Document, it will not e a defence or tneContractor to
submit that the Architect or Consultant had earlier approved the work, or
that the work had been included in Interim Certificates (therefore implying
that the work was properly executed), or that the Architect or Consultant had
not raised any concern to vouchers submitted to the Architect or Consultant
under Clause 6.2 showing that the materials or goods were in accordance
with the Contract.
The Contractor's obligation is clear when reference is made to PAM 2006
Clause 30.16 which provides that even if the Final Certificate is issued by
the Architect, the Final Certificate shall not be conclusive evidence that any
,.
Clause 1.0 23
work, materials and goods carried out and designs (if any) are in accordance
with the Contract. Contrast tbe provision of this clause with tbe provisions
in PAM 98 Clause I. 1: ' ... provide materials, goods and standards of
worlananship of the quality and standard therein specified in every respect
to the reasonable satisfaction of the Architect. .. ', where it can be argued that
if the Architect had expressed his reasonable satisfaction to the materials,
goods and standards of workmanship executed by the Conh·actor, he may be
estopped from rejecting the work, materials and goods on the grounds that it
was not in accordance with the Contract.
Clause 1.2 - Temporary works and construction methods
U nless designed by the Archi tect or Consultant, the Contractor shall be fu lly
responsible for the adequacy, stability and safety of all tempora1-y works and
of all methods of construction of the Works, irrespective of any approval by
the Architect or Consultant.
Clause 1.2: " Unless designed by the Architect or Consultant, the
Contractor shall be.fiilly responsible ... "
Tempora1-y works and methods of construction may be designed by the
Architect or Consultant, or specified by the design consultant to be executed
in a particular manner. Where the Architect or Consultant provides the design
for tempora1-y works or specifies the manner in which the work shall be carried
out, the Conh·actor's obligation is to can-y out such works in accordance with
the Architect or Consultant's requirement, and his liability shall be limited to
use 'reasonable skill and care' in can-ying out the works. If the works carried
out fail due to design deficiency, the Contractor will not be liable. An example
is sheet piling and strutting to support the sides of basement excavation
designed by the Consultant and carried out by the Contractor in accordance
with the Consultant's design.
Where the provisions in the Contract require the Contractor to provide
temporai-y works, and no design is provided by the Consultant, or the methods
of construction are left entirely to the Contractor, the Contractor shall be
deemed to have taken all the risk, and shall ensme that such works are ' fit
for its purpose. ' An example is strutting to formwork to support the casting
of concrete works. If the strutting work fails, the Contractor will be liable
because the work is not 'fit for purpose', and it will not be a defence for him
to say that he should not be liable because he has procured the services of a
renowned professional engineer to design the strutting.
-'- '1,JJJ -
 Clause I .0 24
Clause 1.2: " ...and ofall methods ofconstruction ofthe Works ... "
Unless specified by the Architect or Consultant, the Contractor shall be
responsible for his methods of construction of the Works. When a Contractor
submits a method of construction , it is advisable to make clear that any changes
required to the method of construction to fulfill the Contractor's contractual
obligation shall be at his own risk and costs; in other words, any changes
required do not constitute a variation to the Works.
In Simplex Concrete Piles v St Pancras Borough Council I 4 BLR 80,
the architect was not cautious enough when he accepted a revised piling
method as an alternative to the earlier method proposed by the contractor.
T he arc hitect thought that as it was proposed by the contractor to solve his
own construction problem, it would be at no extra costs. It was held that
the original method proposed on the initiative of the contractor bound into
the contract forms part of the contract, and that any changes to the method
during construction was held to be tantamount to an instruction for a variation
entitling the contractor to extra costs.
In English Industrial Estates Corporation v Kier Construction Ltd 56 BLR
93, the contractor was required to submit with his tender a full and detailed
programme indicating his proposed work seque nce together with a brief
description of the arrangements and m ethods of demolition and construction
which he proposed to adopt. The method statement provided for suitable
demolition materials to be crushed on site and unsuitable arisings to be
removed from site . During the construction, the E ngineer however instructed
that all hard arisings was to be crushed and the surplus stockpiled on site. It
was held that this was a variation to the contract as it prevented the contractor
from carryi ng out the work in an economic manner as set out in his method
statement.
Care must therefore be taken when including any Contractor 's design and/or
methodology in the Contract Docume nt to e nsure that events similar to the
above cases do not happe n.
It is important to note that the Contractor shall also be responsible to ensure
that the m ethods of construction employed to carry out the Works comply with
the requirements (regulations, by-laws, etc) of any Statutory Bodies, such as:
the Construction Industiy Development Board (CJDB), the Department Of
Occupational Safety and Health (DOSH) and the Local A uthorities (Pihak
Berkuasa Tempatan) having jurisdiction over the Works.
Clause 1.0 25
Clause 1.2: "... irrespective of any approval by the Architect or
Consultant... "
The Contractor's liability will not be diminished by the fact that the Architect
or the Consultant may have approved his designs for temporary works or
methods of constm ction.
Clause 1.3 - Contractor's desi~n and responsibilitv
If the Contractor proposes any alternative design to that specified in the
Works or if the Contract leaves any matter of design, specification or choice
of materials, goods and workmanship to the Contractor, the Contractor shall
ensure that such works are fit for its purpose. The copyright of the Contractor's
design and alternative design belongs to the Contractor, but the Employer
shall be entitled to use the design and alternative design for the completion,
maintenance, repair and future extension of the Works. The acceptance by the
Architect or Consultant of the Contractor's design and alternative design shall
not relieve the Contractor of his responsibilities under the Contract.
Clause 1.3: "If the Contractorproposes any alternative design lo
that specified in the Works ... "
The PAM 2006 is basically a constmction contract where the Contractor
canies out the work in accordance with the designs prepared by the Architect
and Consultant. The PAM 2006 is not suitable for use if the Contractor is
required to design and build the whole of the Works in accordance with the
Employer's Requirements. In such a case, the appropriate form of contract is
a design and build contract.
This is a provision in PAM 2006 to cater for the common occurrence of the
Contractor choosing to submit in a Contractor 's Alternative Design (which
can be refened as 'CAD' ) to the Architect's and Consultants' design. Although
this provision is in the Contract to cater for the contingency of the Contractor
submitting a CAD, he is not under any obligation to submit a CAD. The
Contractor can choose to submit only a tender based entirely on the Architect
and Consultants' design.
When a Contractor submits a CAD, this must not be confused w ith the tern1
'Contractor's Designed Portion' (' CDP'), which is often bandied about
without much understanding of the difference between the two terms. CDP
is applicable for projects where the Architect or Consultant did not cany out
any design or had carried out only the conceptual design for ce1tain sections
 Clause 1.0 26
of the work, and the Contractor's scope of work will include the design for
that section of work. In other words, it is not an option for the Contractor
not to accept the design responsibilities. An example of this is where the
Employer, on the advice of the Architect or Consultant, makes a decision,
based on commercial and technical reasons, that the Contractor's scope of
work will include the design and construction of all the structural elements
of the building, but the design of the architectural, mechanical, electrical and
interior works remains with the Architect and Consultants.
PAM 2006 recognised that it is becoming common nowadays for the
Contractor, in his effort to submit a more competitive bid, to propose often
unsolicited CAD to the Architect's or Consultant's design under the banner
of 'value engineering'. This most commonly happens to piling and basement
works where there are many alternative ways to cany out the construction to
achieve the same end product. A piling tender based on a Consultant's design
using pre-cast concrete piles may receive a more competitive bid from a
contractor submitting an alternative tender based on concrete bored piles. Or,
a concrete frame structure using the conventional beam and slab design may
receive a more competitive time and cost bid when the Contractor submits a
concrete flat slab or shear wall design using a special formwork system.
Clause 1.3: "... or if the Contract leaves any matter of design,
specification or choice ofmaterials, goods and workmanship to the Contracto1;
the Contractor shall ensure that such works arefitfor its pwpose. "
An example is where the Contractor has to design a cu1tain wall system to
fulfill the perfo1mance specification. If the test on the completed curtain wall
showed that the Contractor had failed to meet the performance specifications,
it would mean that the curtain wall was not 'fit for its purpose.
-Clause..LL- " the Contractor sh.all ensure that ~udv1lflrks arejit
for its pw1Jose.. . "
This clause does not impose additional liability on the Contractor. It is intended
to stress that in a design and build obligation (whether CAD or CDP), the
liability in law is already a 'fit for purpose' liability. This clause is merely to
remind the Contractor that by choosing to submit a CAD, he would have to
accept a higher standard ofliability when he undertakes the construction of the
CAD. The 'fit for purpose' liability can only be excluded in a design and build
obligation, if the parties expressly exclude such a liability in the Contract. See
the later commentary for an example of such an exclusion of liability.
Clause 1 .0 27
If the Contractor submits a CAD which is acceptable to the Employer, it would
be advisable to include in the Contract any agreement the Contractor has to
comply with, in respect of any procedures and timing for the submission of
drawings, specifications, calculations and other information to the Architect
and Consultant for approval.
Clause 1.3: "The copyright of the Contractors design and
alternative design belongs to the Contrac/01; but the Employer shall be entitled
to use the design and alternative design for the completion, maintenance,
repair andji,ture extension of the Works"
This Clause clarifies that although the Contractor owns the copyright of his
design, the Contract provision allows the Employer to use the Contractor's
design to continue the Works in the event of the Contractor's determination, or
for maintenance, repair or future extension of the Works. It would not be fair or
practical if a Contractor, through his own non-performance or incompetence,
bas his employment dete1mined, but is still in a position to hold the Employer
to ransom over copyright issues.
Clause 1.3: "The acceptance by the Architect or Consultant of
the Contractors design and alternative design shall not relieve the Contractor
of his responsibilities under the Contract."
Where the Contract leaves any matter of design, specification or choice of
materials, goods and workmanship to the Contractor, he has a responsibility to
ensure that the product is 'fit for its purpose'. The same responsibility applies
to any CAD. This would be so even if the design may have been accepted by
the Architect or Consultant.
Duty of Care
There are no expressed provisions in PAM 98 on the standard duty of care.
In the absence of express provisions, it would be necessary to rel y on implied
terms to determine the duty of care.
There are basically two impo1tant duties affecting construction contracts:
(i) the obligation to use reasonable skill and care; and
(ii) the obligation to ensure that the end product is 'fit for its purpose'.
The judgment in Samuels v Davies [1943} KB 526 explains the difference on
the duty of care very nicely as follows:
' .. .if someone goes to a professional man ... and says: Will you make
me something which fit a pa1ticular part of my body?' ... and the
 Clause l .0 28
professional gentleman says: 'Yes,' without qualification, he is then
warranting that when he has made the a1ticle it will fit the part of the
body in question.'
'If a dentist takes out a tooth or a surgeon removes an appendix, he
is bound to take reasonable care and to show such skill as may be
expected from a qualified practitioner.'
To explain the duty of care in a construction environment, we would explain
it this way:
(i) When the architect carries out the design for the works, his duty of
care will be to use ' reasonable skill and care'. In this example, the
architect is not participating in the construction of the work.
(ii) If the obligation of the contractor is to carry out the construction of the
works in accordance with the architect's design, his duty of care will
be to use ' reasonable skill and care'. In this example, the contractor is
not participating in the design of the work.
(iii) If the contractor canies out the design and construction of the work
(in other words, he is a design and build contractor), his duty of care
will be 'fit for its purpose'. In this example, the contractor is involved
in both design and construction.
To understand what is meant by 'reasonable skill and care', it is best to quote
what the comt said in Bo/am v Friern Hospital Management Committee 1
WLR 582:
'When you get a situation which involves the use of some special
skill or competence, then the test as to whether there has been
negligence or not. ..is the standard of the ordinary skill man exercising
and professing to have that special skill. A man need not possess the
highest expert skill...it is sufficient ifhe exercises the ordinary skill of
an ordinaiy competent man exercising that particular ait. '
Thus, where an architect has an obligation to use 'reasonable skill and care',
he will not have failed if he does what his peers would have done in those
particular circumstances. For example, in London Borough ofMerton v Lowe
18 BLR 130, the comt found that the architect was not negligent when using
a new product as he had made the necessaiy enquiries which a competent
architect would be expected to make before hying the new product. This is
often refe1Ted to as the traditional 'Bo lam' test.
Clause I .0 29
In Malaysia, the duty to exercise 'reasonable skill and care' has been raised in
the Federal Coutt case of Foo Fio Na v Dr. Sao Fook Mun [2007] I CLJ 229.
The comt imposed the 'Rogers' test following the Australian case of Rogers v
Whitaker [1992] HCA 58 instead of the traditional 'Bolam ' test. The cou1t said:
' .. .it has been accepted that the standard of care to be observed by a
person with some special skill or competence is that of the ordinary
skilled person exercising and professing to have that special skill.
But the standard is not determined solely or primarily by reference to
the practice followed or supported by a responsible body of opinion
in the relevant profession or trade ... instead the courts have adopted
the principle that, while evidence of acceptable medical practice is a
useful guide for the coutts, it is the courts to adjudicate on what is the
appropriate standard of care' .
If the same principle is applied to architectural practice, this would mean that
in future, the architect or any construction professionals would not just be
judged against what his fellow architects or construction professionals would
do under the same condition, as the court can impose an appropriate standard
of care which could be higher than the Bolam test.
When we say that a contractor has a responsibility to ensure that the
constrnction work is 'fit for its purpose' we mean that if the construction
work fails for whatever reasons, the contractor will be liable even if he has
exercised his best skill and care by employing the best professional to design
the work.
ln a conventional construction only contract, where the contractor is not
responsible for the design of the work, the wan-anties offered by the contractor
should be ' reasonable skill and care' and relate only to workmanship and
materials. The contractor should be wa1y of clauses in the contract requiring
the contractor to warrant that: ' the works shall be executed with the highest
standard of skill, care and diligence and shall be suitable for their intended
purpose'. Such clauses are intended to increase the contractor's liability from
' reasonable skill and care' to that of 'fit for purpose.'
On the other hand, some contracts attempt to lessen the design and build
contractor's liability from that of 'fit for purpose' to that of 'reasonable skill
and care' . An example of this is JCT 2005 Design and Build Contract Clause
2.17 .1 which expressly provides that:
' In so far as its design of the Works is comprised in the Contractor's
Proposal and in what the Contractor is to complete... the Contractor
 Clause 1.0 30
shall in respect of any inadequacy in such design have the like
liability to the Employer, whether under statute or othe1wise, as would
an architect or, as the case may be, other appropriate professional
designer... '
The CIDB 2000 was drafted in the same way (see Module D Clause Dl(b).
It is therefore essential that if the liability is to be reduced from that of 'fit
for purpose' to ' reasonable care and skill' in a contract, express provision
must be provided to over-ride any implied provision. That said, construction
professionals should advise the Employer appropriately on the duty of care to
be incorporated in the construction contracts.
Tn the case of Greaves (Contractors) Ltd v Baynham Meikle & Partners 4 BLR
56, the contractor undertook to design and build a warehouse on a ' package
deal ' . As the contractor did not have a design office, he employed the engineer
to design the structure of the building. The employer told the contractor that
the floor of the warehouse had to take the weight of forklift trucks, and the
engineer was made aware of the employer's requirement. After completion of
the warehouse, cracks were discovered in the building. The judge found that
the cracks were not due to shrinkages in the concrete, but was instead caused
by vibration of the forklift trucks. Lord Denning in this case said:
'Now, as between the building owners and the contractors, it is
plain that the owners made known to the contractor the purpose for
which the building was required, so as to show that they relied on
the contractor 's skill and judgment. It was, therefore, the duty of
the contractor to see that the finished work was reasonably fit for
the purpose for which he knew it was required. It was not merely
an obligation to use reasonable care. The contractor was obliged to
ensure that the finished work was reasonably fit for the purpose' .
he contra-cmrr tiat:5rhty1s a y7b undenmn1cr,tmrwhaL would be Lhe du1y
of the engineer towards the contractor? Normally when the engineer carries
out the design for the works, his duty of care will be to use 'reasonable skill
and care' . But from the evidence of the case, it was found that the engineer
knew that the employer and the contractor wanted a warehouse that would be
suitable for the use of forklift trucks and as the contractor has relied on the
engineer to produce a design to suit the employer's requirement, the judge
concluded:
' there was implied in fact a term that, if the work was completed in
accordance with the design, it would be reasonably fit for the use of
forklift trucks. The engineers failed to make such a design and are,
therefore, liable' .
Clause 1.0 31
What this case shows is that it is possible that a designer working under a
design and build contractor can be made to carry a ' fit for purpose' liability.
If a designer employed by a design and build contractor wishes to avoid this
liability, there must be an express provision in the conh·act to expressly state
that bis liability is to cany out his work with ' reasonable skill and care.'
In the case ofIndependent Broadcasting Authority v EMI Electronic and BJCC
Construction 14 BLR I, the conh·actor was instructed to engage the nominated
sub-conh·actor 'to design, supply and erect a 1,250 feet television mast' , on
top of which the contractor installed his equipment. After construction, the
mast collapsed in strong winds. Although the contractor was not involved in
the design of the masts, (these being matters resolved by the employer and
the nominated sub-contractor), it was held that under the contract between
the employer and the contractor, the contractor had accepted responsibility
for the nominated sub-contractor's design even though they took no pai1 in
the design and as such, the contractor was therefore also responsible to ensure
that the construction of the mast was 'fit for its purpose'. One reason for this
presumption is the practical convenience of having a chain of contractual
liability from the employer to the contractor and from the contractor to the
nominated sub-contractor. (See further commentary under Clause 27.1)
Clause 1.4 - Discrepancy or diver,lence between docu ments
The Contractor shall use the Contract Documents and any other subsequent
documents issued by the Architect to p lan the Works prior to execution. If
during the said planning and subsequent execution ofthe Works, the Contractor
finds any discrepancy in or divergence between any of the Contract Documents
and any subsequent documents issued by the Architect, he shall give to the
Architect a written notice in sufficient time before the commencement of
construction of the affected works, specifying the discrepancy or divergence
to enable the Architect to issue written instructions within a period which
would not materially delay the progress of the affected works, having regard
to the Completion Date. Such discrepancy or divergence shall not vitiate the
Contract.
Clause 1.4: "The Contractor shall use the Contract Documents
and any other subsequent documents issued by the Architect to plan the Works
prior lo execution... "
Previously under PAM 98 Clause 1.2, the Contractor's obligation is 'If the
Contractor finds any discrepancy in or divergence between the Contract
Drawings and/or the Contract Bills he shall immediately give to the Architect
a written notice ... ' If the Contractor is required to report any discrepancy or
 Clause 1.0 32
divergence between the Contract Drawings (which are the tender drawings
bound into the Contract) and the Contract Bills, it does not serve much purpose
for construction planning as the Contract Drawings may be different from
the construction drawings and furthermore, the Architect may issue further
drawings, details, levels and other construction information as provided in
Clause 3.4. PAM 2006, therefore, clarifies that the Contractor's obligation
is to use the Contract Documents and the various construction documents
that are issued by the Architect and Consultants throughout the construction
period, to plan the Works prior to executing them on Site and if he finds any
discrepancy, he shall notify the Architect in accordance with Clause 1.4.
The standard duty to report on any discrepancies or divergence in the
construction documents would normally be in accordance with the ' Bolam 'test
( unless the court imposed the 'Rogers' test). In accordance with the 'Bo/am'
test, if the Contractor is a CIDB Grade 7 contractor, the duty expected of the
contractor of that grade would be higher than a CIDB Grade 5 contractor.
Although the Contractor has a contractual obligation to the Employer to use
the Contract Documents and the documents issued for construction to plan
the work, and report any discrepancies in or divergence between any of these
documents, the Architect must neve1theless not rely on the Contractor to
discover any such discrepancies or di vergence. The Architect and Consultant
also owe a contractual duty to the Employer under their respective consulting
agreements to always act with reasonable diligence and use reasonable skill
and care to make sure that the Contract Documents, construction drawings
and information they issue to the Contractor are properly coordinated and free
from any discrepancies or divergences.
Clause 1.4: "Jf during the said planning. .. the Contractor .finds
any discrepancy...he shall give to the Architect a written notice"
f the Contractor finds any discrepancy~ or..div~e-nce-betw~,~ny of the
documents used by him when he plans the execution of the Works, he must
notify the Architect in writing.
Clause 1.4: "in Sl!/ficient time before the commencement of
construction ofthe affected works specifying the discrepancy or divergence to
enable the Architect to issue written instructions within a period which would
not materially delay the progress of the affected works... "
The provision in PAM 98 Clause 1.4: 'If the Contractor finds any discrepancy...
he shall immediately give to the Architect a written notice ... and the Architect
shall issue instructions in regard thereto ' provides an unce1iain time frame for
Clause 1.0 33
the Contractor to request and for the Architect to provide the same. Although
it is stated that the Contractor shall immediately give to the Architect his
request for further instruction, it may nevertheless encourage Contractors to
ambush the Architect at the very last minute with many requests for further
instructions on the grounds that he has just discovered the discrepancies. PAM
2006 improves upon PAM 98 by imposing an obligation on the Contractor
to plan the execution of the Works, and by such planning, it will reduce the
number of late requests for drawings and details to resolve discrepancies.
If such a late request is still necessary, then the Contractor will not be able
to hold the Architect responsible if there is a delay in the provision of such
information.
Although under PAM 98, the Contractor must give notice to the Architect
immediately the Contractor finds any discrepancy or divergence between the
documents, there is no timescale that the Architect needs to respond to. PAM
98 Clause 1.4 merely states that: ' ... the Architect shall issue instructions in
regard thereto'. As the response time ve1y much depends on the nature and
magnitude of the discrepancy or divergence found by the Contractor, it may
not be appropriate to specify a timescale for the Architect to respond to the
Contractor, but it is also not ve1y satisfactory to let matters remain as they are.
Leaving matters as they are may also cause difficulties to the Architect, as the
Contractor may claim that the Architect had caused the delay in not providing
timely information under PAM 98 Clause 23.7(v).
PAM 2006 recognised this difficulty and has now provided that when the
Contractor notifies the Architect, he must:
(i) specify the nature of the discrepancy or divergence;
(ii) do so before the commencement of construction of the affected
works; and
(iii) allow sufficient time for the Architect to decide on the discrepancy
and issue written instruction to the Contractor, so that the
affected work can be constructed without materially affecting the
Completion Date.
Be that as it may, the Architect on his patt must always endeavour to respond
to the Contractor expeditiously, but the Architect is not expected to provide
the information immediately. The impmtant note is that the Architect, if given
enough warning by the Contractor, should provide the information on time so
as not to affect the Contractor's progress on the affected work. For example, a
Contractor's request submitted at the commencement of the Works to resolve
 "'~
Clause 1.0 34
a discrepancy between the architectural and engineering drawings on the size
of the gutter, to which a response by the Architect issued two months before
the Contractor reached the rooflevel, will not be considered late infonnation.
However, if the Architect had taken a long period of time to confirm the
discrepancy or divergence and this consequently caused a delay to the
structural works at the roof, then the Contractor will have a valid claim for
an extension of time under Clause 23.8(e). The Contractor will however be
required to show that he could not proceed with the work on the affected area
because of the Architect's failure to resolve the discrepancy or divergence.
Another example is a situation where the Contractor requested at the
commencement ofpiling works the confirmation on the lift pit sizes and details
even though it appeared premature. As is common practice, lift pit details
are dependent on the individual lift manufacturers and can only be confirmed
after the Lift Supplier has been awarded the sub contract. If the Architect for
any reason delays the nomination of the Nominated Sub-Contractor for the
lift installations and this in tum results in delayed confirmation of the lift pit
details to the Contractor and causes delay to the installation of tbe slip forming
platform for casting the lift cores, the Contractor will, if there is delay to the
overall Works caused by this late confirmation, have grounds for claiming
extension of time under Clause 23.8(e).
Clause 1.4: ".. . having regard to the Completion Date. "
Note that the definition of Completion Date inA1ticle 7(m) means ' the date(s)
for completion of the Works stated in the Appendix under Clauses 21. l and
21.3 or the last extended date granted under Clause 23 .4.'
..
Clause 2.0 35
Under PAM 98, there is no requirement that the.Architect's Instruction (AI) has
to be in any particular form as long as it is in writing. Examples of instrnctions
in writing issued by the Architect will, therefore, inter alia, include emails,
letters, issue of drawings transmittal forms, instructions written in site record
books and site meetings recorded by the Architect. Under PAM 98 Clause 2.5,
the Architect is also empowered to issue verbal inshuctions, but the verbal
instructions shall have no immediate effect, and need to be confirmed by the
Contractor to the Architect within 7 Days. Thereafter, if the Architect does
not dissent within another 7 Days, the Contractor's earlier confirmation shall
then be deemed to be an Architect's Instruction on the date of the Contractor's
confirmation.
Under PAM 98 Clause 2.2, the Contractor is further required to comply with
all of the Architect's Instructions within 7 Days upon receipt, otherwise it
would be a breach of contract, and the Employer may employ others to carry
out the work.
Under PAM 98 Clause 2.6, it is expressly stated that ' Architect's instructions
and other documents shall be deemed to be served upon the Contractor if sent
by registered post or recorded delivery to his address stated in this Contract. ... '
The above provisions do not appear to be practical for cmTent contract
administration requirements. Consider the following:
(i) It is difficult for the Employer, Contractor and Consultant to know
precisely what is an Architect's Instruction, if instructions can be
in the form of emails, general coITespondences, issue of drawings
transmittal forms, instrnctions written in site record books and
site meetings recorded by the Architect. Failure to comply with an
instruction would be a breach of conh·act, entitling the Employer to
dete1mine the employment of the Contractor under Clause 25.l(vi).
(ii) Is it necessaiy that the Contractor must comply with all Architects '
Instruction within 7 days upon receipt of the instructions?
Most instructions do not need to be complied with within 7 Days.
For example, if the Architect issues an instruction for a revised roof
structure, it would be impossible for the Contractor to build the roof
stmcture, ifhe is cunently working on the foundation.
 Clause 2 .0
(iii) Is it necessary to send the Architect's Instructions by registered post or
recorded delive1y as required under Clause 2.6? Further in Malaysia
there is no such thing as recorded delivery.
It is in the interest of all parties, that instructions can be easily identifiable
as an Architect's Instruction. A sample of the suggested format for the
Architect's Instruction can be found in Annexure 'A'.
Clause 2. 1 - Contractor to comply with Al
The Contractor shall subject to Clauses 2.2 and 2.3 forthwith comply with all
instructions issued to him by the Architect in regard to any matter in respect
of which the Architect is expressly empowered by these Conditions to issue
instructions.
The Architect's power to issue instructions must be based on the Conditions
in the PAM Form. If the Contractor has any doubt regarding the Architect's
power to issue a particular instruction, Clause 2.3 gives the Contractor the
right to request the Architect to specify in writing as to which provision of
the Contract empowers him to issue the specific instmction.
Clause 2.2 - AI
All instructions issued by the Architect shall be in writing expressly entitled
"Architect's Instruction" (' AI'). All other fonns of written instructions
including drawings issued by the Architect shall be an Al:
2.2(a) upon written confinnation from the Contractor entitled
"Confirmation of Architect's Instruction" ('CAI'); or
2.2(b) upon subsequent confirmation of the written instructions by the
Architect with an AI.
Clause 2.2: 'All inslruc:/1ons issued by7neilrcffilectshall be in
writing expressly entitled "Architect~· Instruction" ('Ai)."
It is recommended that the Architect issues all instructions in specially
prepared and clearly identifiable Architect's Instruction proformas, and each
Architect's Instrnction should have serial numbering. The reason for serial
numbering is to ensure, that the number of Al's issued can be easily tracked.
An AI will also be required for any other forms of written instructions.
36 Clause 2 .0 37
Clause 2.2: "Alf other.forms of written instructions... "
Under PAM 98, written instructions do not have to be in any specific form. All
it requires is that it is in writing. This will include emails, site meeting minutes
recorded by the Architect, letters, issue of drawings recorded in transmittal
sheets. As long as it is in writing, it will be deemed an Architect's Instruction.
Under PAM 2006 Contract, the Architect can continue the issuance of
instructions in the above manner, but for it to have the force of an Al under
Clause 2.1 it must still be re-confirmed by an AI issued on the Architect's
Instruction proforma.
Clause 2.2(a): upon written confirmation from the Contractor
entitled "Confirmation ofArchitect's Instruction" ('CAI)"
If the Architect fails to issue an Al to cover these other forms of written
instruction, the Contractor can issue his 'Confirmation of Architect's
Instruction' ('CAI') by attaching such instruction to his CAI. In this way,
the Architect cannot deny that he has issued an AI. The Contractor should
issue this CAI before he commences the relevant work as instructed, to avoid
disputes from arising at a later date.
Similar to the Architect's Instruction proforma, the CAI should also be based
on a proforma and have serial numbering.
Clause 2.3 - Provisions empowerin~ instructions
Upon receipt of a written instruction from the Architect, the Contractor may
request the Architect to specify in writing which provision of these Conditions
empowers the issuance of the said instruction and the Architect shall forthw ith
comply with such a request. lf the Contractor thereafter complies with the
said instruction without invoking any dispute resolution procedure under the
Contract to establish the Architect's power in that regard, the instruction shall
be deemed to have been duly given under the specified provision.
Clause 2.3: "...the Contractor may request the Architect lo
specffy in writing which provision of these Conditions empowers the issuance
of the said instruction. .. "
The Architect's power to issue instructions is limited to the types of instruction
expressly identified in the Contract. The most impmtant are:
 Clause 2.0 38 Clause 2 .0 39

Clause 1.4 Discrepancy or divergence between documents. Clause 2.4 - Failure of Contractor to comply with AI
Clause 3.4 Further drawings or details
Clause 3.5 Revise Works Programme If the time of compliance [which shall not be less than seven (7) Days from
Clause 4.2 Inconsistencies with statutory requirements receipt of the Al] is stated by the Architect in the Al and the Contractor does
Clause 4.4 Fees, levies and charges not comply therewith then the Employer may, without prejudice to any other
Clause 5.1 Setting out rights and remedies which he may possess under the Contract, employ and pay
Clause 6.2 Provision of Vouchers other Person to execute any work which may be necessary to give effect to
Clause 6.3 Inspection and Testing such instruction. The cost of employing other P erson and any additional cost
Clause 6.5 Works not in accordance with the Contract in this connection shall be set-off by the Employer under Clause 30.4.
Clause 8.3 Exclus ion of Person employed on the Works
Clause 11.2 No Variations issued by Architect shall vitiate Contract/ Under PAM 98 Clause 2.2, it is provided that: 'If within seven (7) days upon
Instruction ordering a Variation receipt of the Architects' Instruction in writing, the Conh·actor does not comply
Clause 11.3 Issue of Variations after Practical Completion therewith then the Employer may employ and pay other persons to execute any
Clause 11.4 Al on P.C. Sums and Provisional Sum work. ... ' This means that the Contractor must commence compliance with
Clause 12.2 Correction of errors or omissions the instructions w ithin 7 days, otherwise the Contractor will be in breach of
Clause 15.4 Schedule of Defects Contract. This is not a realistic approach, as in most cases there is no urgency
Clause 15.5 Instruction to make good Defects that the Contractor must cany out the instructions within 7 days.
Clause 16.3 Contractor to remove equipment upon Partial Possession
by Employer U nder PAM 2006, the A rchitect can issue his instrnctions, and it is up to the
Clause 2 1. l Commencement and Completion. Contractor when he complies, as long as he can complete the Works before
Clause 21.4 Postponement or suspension of the Works the Completion Date. If the Architect requires the Contractor to comply with
Clause 23.3 Insufficient information for EOT the instruction within a specific time, PAM 2006 provides that the Contractor
Clause 25.4 Contractor's duty to remove temporary buildings, plant, should be given a minimum of7 Days notice to do so.
tools, equipment, materials and goods upon dete1mination
of Contractor's employment There may be circumstances where the Architect may require the Contractor
Clause 25.7 Instruction to remove construction plant, tools and to carry out emergency work in order to comply w ith statuto1y requirements;
equipment upon determination of Contractor 's employment for example, where work is urgently required to be carried out to ensure the
Clause 27.1 Nominated Sub-Contractors continuing safety of people and prope1ty. In such circumstances, this clause
Clause 27.4 Action following objection to nomination of Sub-Contractor requiring a minimum notice of 7 Days will not apply as the requirement to
Clause 27.1 l Re-nomination of sub-contractor due to determination by comply with Clause 4.1 will take precedence. Clause 4.1 states that: 'The
the Contractor Contractor shall comply with . . ... laws, regulations, by-laws, terms and
Cause 2772 Re-nomination of sub-contractor due to determination by conditions of any Appropriate A uthority and Service Provider in respect of
the Nominated Sub-Contractor the execution of the Works and all tempora1y works.' Examples are where
Clause 28. 1 Nominated Suppliers the Contractor is required to comply with the laws, regulations or by-laws of
Clause 28.4 Action following objection of suppliers the Conshuction Industry Development Board (CIDB), the Local Authorities
Clause 31.3 Protective work in event of o utbreak of hostilities (Pihak Berkuasa Tempatan), the Occupational Safety and Health Act 1994
Clause 32. l Removal or disposal of debris or damaged works following and the Factories and Machine1y Act 1967. In such cases, the Architect can
war damage or protective works instrnct the Contractor to comply w ith the statutory requirement immediately.
Clause 33.1 Antiquities - discovery on site
"".- ~ --------·

Clause 3 .0 41

1· - - Clause 3.0 - Contract Do~~-ments, J

I_ ___ Programme And As-built Drawing________ I

Clause 3.1 - Contract Documents

The Contract Documents are to be read as mutually explanatory of one another.

In the event of any conflicts or inconsistencies between any of the Contract
Documents, the priority in the interpretation of such documents shall be in the
following descending order:
3.1(a) the Letter of Award;
3.l(b) the Articles of Agreement;
3.l(c) the Cond itions of Contract;
3. I ( d) the Contract Drawings;
3.l(e) theContractBills;and
3.l(f) other documents incorporated in the Contract Documents, unless
expressly stated to be excluded in any of the Contract Document.

The Clause provides that in the event of any conflicts or inconsistencies, there
is a hierarchy of priority to decide between them. For example, any special
terms in the Letter of Award shall now take precedence over the Conditions
of Contract as the special terms in the Letter of Award usually reflect the final
tenns agreed in negotiation just prior to the award of the contract and reflect
the final intentions of the contracting parties.

This is in contrast to the Clause 12.2 of PAM 98: 'Nothing contained in the
Contract Bills shall oveITide, modify or affect in any way whatsoever the
application or interpretation of that which is contained in these Conditions.'
The implication of this clause is that any special terms in the Letter of Award,
if it conflicts with the Conditions of PAM 98, shall not oveITide, modify or
affect in any way any of the Conditions in PAM 98. In other words, any such
special terms in the Letter of Award are negated by Clause 12.2 under PAM
98.

If there are more documents than those mentioned in Clause 3. l(a) to (e), the
Architect or Consultant is at liberty to amend this clause to include further
documents to form part of the Contract.

Clause 3. I (f) expressly provides that if any documents are inadvertently bound
into the Contract Document, they will not fo1m pait of the Contract if they are
expressly stated to be excluded from the Contract. For example, if the Works
Programme was bound into the Contract Document contrary to the intentions
of Clause 3 .6, it still does not fmm pa1t of the Contract. This may also apply
 Clause 3 .0 42
to documents such as geotechnical reports, which may have been included in
the Tender Documents for the information of the Contractor.
Clause 3.2 - Custody of tender documents
The original tender documents sha ll rema in in the custody of the Architect or
Quantity Surveyor so as to be availa ble at a ll reasonable times for inspection
by the Employer and Contractor.
In many circumstances, the original tender documents could not be re-
printed for the contract binding because of the amount of correction and rate
rationalisation. Neat copies are usually prepared from the original tender
documents for contract binding. The original tender documents remain in the
custody of the Architect or Quantity Surveyor so as to be available for the
Employer or Contractor to check, that the neat copies for contract binding are
reflective copies of the tender documents.
Clause 3.3 - Copies of documents
Immediate ly after the execution of the Contract, the A rchi tect or Quantity
Surveyor shall without charge to the Contractor provide him with:
3.3(a) one of the two s igned ori gi na l copies of the Contract Documents;
3 .3(b) two (2) fmiher copies of the Contract Drawings; and
3.3(c) two (2) copies of the unpriced Contract Bills.
In PAM 98, the Contractor is only entitled to a certified copy of the Contract.
In the event of any dispute, the arbitrator or court may need to see the original
copy of the Contract, and it would be difficult for the Contractor if he cannot
produce a signed original copy of the Contract.
This clause therefore, requires the Architect or Consultant to prepare two
ongma copies oft e Contract, wruch could be referred to as 'Original l of 2'
and ' Original 2 of 2'.
If the execution of the Contract is not carried out immediately, the Architect
and Consultant should issue two copies of the Contract Drawings and Contract
Bills upon issuing the Letter of Award to the Contractor, in order for him to
plan his construction work. If the Contractor requires further copies of any
documents, the Architect or Consultant shall provide such additional copies
subject to a charge.
Clause 3 .0 43
Clause 3.4 - Further drawings or details
When necessary, the A rchitect sha ll w ithout c harge to the Contractor furni s h
him wi th two (2) copies of fu rther drawings, details, levels and any other
infor mation as are reasonably necessa1y either to explain and amplify the
Contract Drawings or to enable the Contracto r to complete the Works in
accordance w ith these Conditions. If the Contractor requires any further
draw ings, details, levels and any other information, he sha ll sp ecificall y
apply in writing to the A rchitect for these ite ms in suffic ient time before the
comme nceme nt of construc tion of the affected works to enable the Architect
to issue instructions within a period which would not materi ally de lay the
progress of the affected works having regard to the Comp letion Date.
Clause 3.4: "the Architect shall without charge to the Contractor
ji,rnish ... further drawings, details, levels and any other information... ff
the Contractor requires any further drawings, details, levels and any other
i11fonnation. "
This Clause recognises that the information provided for building contracts
are often insufficient for the Contractor to cany out the Works without
the Architect providing further drawings, details and other construction
information from time to time to explain and supplement the information
prov ided in the Contrac t Documents. This is consistent w ith Neodox v Swindon
and Pendlebwy B. C. 5 BLR 34, w here the judge put it this way:
'No doubt it is to the contractor 's interest to have eve1y detail cut
and dried on the day the contract is signed, but the contract does not
contemplate that. It contemplates further details and instructions
being provided ... '
In addition to the drawings, details and other construction information that
may be provided by the Architect, the Contractor may also request for further
information from the Architect, either before it is provided by the Architect or
because the Contractor requires it earlier than the Architect may anticipate his
requirement. In such a case, the Contractor must make a written request to the
Architect for such information in order that the Architect will be aware that
the information is required.
Clause 3.4: ...111 sufficient time before the commencement of
construction ofthe affected works to enable the Architect to issue instructions
within a period which would not materially delay the progress of the affected
·works having rega1d to the Completion Date. "
 Clau!ie 3 .0 44
Although the Contractor must give adequate notice to the Architect if he
requires fwther drawings or details, PAM 98 Clause 3.3 only requires the
Architect to provide such details from time to time as may be necessary to
enable the Contractor to carry out the works. It is thus not clear how much time
the Contractor needs to give to the Architect before the Architect has to issue
the information required by the Contractor. Tt is also not clear how much time
the Architect has to issue the infomrntion required by the Contractor. Leaving
matters as they are may cause difficulties to the Architect, as the Contractor
may ambush the Architect with multiple requests for further drawings or
details and if the Architect fails to respond immediately, the Contractor may
claim that the Architect had cause a delay in not providing timely information
under PAM 98 Clause 23.7(v).
In the absence of any express provision in the contract, it will be implied
that the Architect must provide the drawings and details within a reasonable
time. In the Neodox case, it was suggested that a reasonable time does not
depend solely upon the convenience and financial interest of the contractor.
A reasonable time also mean that:
'the architect is to have the time to provide the information required by
the contractor which is reasonable having regard to the point of view
of the architect and his staff and the point of view of the employer as
well as the point of view of the contractors. '
Therefore, in order to clarify the duties of both the Contractor and the Architect
in this clause, PAM 2006 has provided that when the Contractor makes any
request for further drawings, details or infonnation, he is obliged under this
Clause to make such a request to the Architect in sufficient time, in advance
of the commencement of the affected works. As the Architect's response time
very much depends on the nature and magnitude of the type of drawings,
details or information required by the Contractor, it may not be appropriate to
spec-ify-a-fi~ecl tirnesettle-fo1~the·Arehiteet te-pmvitle-·the-in-formati<:m-required
by the Contractor. As such, PAM 2006 provides that the Architect is obligated
to issue his instructions within a period which would not materially delay
the progress of the affected works taking into consideration the Completion
Date of the Works. Be that as it may, the Architect on his pait must always
endeavour to respond to the Contractor expeditiously, but the Architect is
not expected to provide the information immediately. The important note is
that the Architect, if given enough warning by the Contractor, should provide
the info1mation on time in order not to cause delay to the affected area of
the Work. For example, a Contractor's request for a painting schedule at the
commencement of the work, to which a response is issued months later, will
not be considered late info1mation if it is provided before the Contractor is
Clause 3 .0 45
required to order his paint. If the Architect has taken an unreasonable length of
time, considered longer than necessary to respond to the Contractor's request
and this, in tum, causes a delay to the Contractor obtaining the correct paint to
enable him to complete the Works before the Completion Date, the Contractor
will be entitled to an extension of time under Clause 23.8(e).
Clause 3.5 - Works Pro~ramme
Within twenty one (21) Days from receipt of the Letter of Award (or within
such longer period as may be agreed in writing by the Architect), the
Contractor shall provide to the Architect for his information, six (6) copies
of the Works Programme (unless a higher number is stated in the Conh·act
Documents) showing the order in which he proposes to carry out the Works.
The Works Programme shall comply with any requirements specified in the
Contract Documents. If the Works or any pait of the Works is delayed for
whatever reason, the Architect may instruct the Contractor to revise the Works
Programme. The Contractor without charge to the Employer, shall provide
the Architect from time to time with simi lar number of copies of any revised
Works Programme.
Clause 3.5: "Within twenty one (21) Days Ji-om receipt of the
Letter ofAward (or within such longer period as may he agreed in writing by
the Architect) ... "
The time period of 21 Days is the provision allowed in PAM 2006 being
a standard form of contract. Depending on the size and complexity of the
Works, if it is necessary to change the period to provide the Works Programme
to a shorter or longer period, this clause could be amended.
Although there is no provision in the Contract to sanction the Contractor if
he fails or chooses not to comply with the time requirement to submit the
Works Programme to the Architect, the Contractor should bear in mind that
without the Works Programme, he will have great difficulty in justifying to the
Architect any claims for extension of time and loss and/or expense.
Clause 3.5: " ...shall provide to theArchitectfor his information ... "
This is to stress that the purpose of the Works Programme is for the Architect's
info1mation and therefore does not form part of the Contract. However, it
does not mean that the Architect has no say in the way the programme is
structured. The Architect may require the Contractor to revise the programme
if the Architect is of the opinion that it is not reflective of efforts to ensure
that all works, including works by Nominated Sub-Contractors are reasonably
 Clause 3 .0 46 Clause 3 .0 47

programmed. If the Contractor produces a Works Programme, which shows the Contractor to submit the Works Programme using a pa1ticular format or
his intention to complete the Works well ahead of the Completion Date stated software, the Conh·actor will then be entitled to claim this as a Variation.
in the Contract Appendix, this may create difficulties for the Architect or
Consultant, unless the Architect or Consultant makes it clear to the Contractor Clause 3.6 - Proi:ramme not part of Contract
that he has no obligation to supply all the details and information for him t~
The Works P rogramme shall not constitute part of the Contract, whether
achieve the earlier completion date.
physically incorporated or not into the Contract Documents.
Clause 3.5: "... The Works Programme shall comply with any
Clause 3.6: "The Works Programme shall not constitute part of
requirements specified in the Contract D ocuments... "
the Contract... "
A properly prepared Works Programme is a ve1y useful tool for managing
It is important that the Architect does not 'approve' the Work Programme in
a project as such a programme will be able to highlight to the Architect or
such a way that it can be constmed by the Contractor as a Contract Document.
Consultant whether the Contractor is carrying out the Works according to
If the Works Programme was to form pa1t of the Contract Document, it
plan. The Works Programme will also be able to identify the area of weakness
would impose on the Architect or Consultant an obligation to ensure that
in the project implementation and therefore allows corrective action by the
all construction infonnation and the appointment of sub-contractors and
relevant paities.
suppliers comply with the dates shown in the Works Programme. A failure by
the Architect to provide all construction info1mation and appointment of sub-
PAM 2006, like many other standard forms of contract, does not specify
contractors and suppliers, before the dates shown in the Works Programme,
the form the Works Programme should take. The type of Works Programme
may be consh11ed as a breach of contract by the Employer.
required very much depends on the size and complexity of the project, and
it would not be wise to have the same standard provisions for small and big
Clause 3.6: "... whether physically incorporated or not into the
projects. This Clause requires that if there are any particular requirements the
Contract Documents ... "
Contractor has to comply w ith in the preparation of the Works Programme,
this must be specified in detail in the Contract Bills. Some of the items to be What happens if the Works Programme was physically incorporated into the
considered for inclusion in the Works Programme may include: Contract Document? Does it then become pa1t of the Contract? This Clause
expressly ensures that such a mistake does not automatically make the Works
(i) any design, manufacturing and procurement activities; Programme part of the Contract Documents.

(ii) on-site construction activities ; Clause 3.7 -Architect's acceptance of proi:ramme

(iii) manpower requirements; The acceptance by the Architect of the Works Progranune shall not relieve
the Contractor of his obligations, duties or responsibilities under the Contract.
(iv) design and construction requirements; The Works Programme may be used by the Architect to monitor progress and
the Architect is entitled to rely on the Works Programme as a basis for the
(v) materials and samples testing and approval; and assessment of extension of time and the effect of the delay and/or disturbances
to the progress of the Works.
(vi) appointment of sub-contractors and suppliers which is the
responsibility of the Employer; Clause 3. 7: "The acceptance by the Architect of the Works
Programme ... "
If specific types of computer facilities and software are required, this must
also be stated in the Contract Bill. If no particular requirements are specified Although the Work Programme does not fom1 part of the Conh·act, it does not
in the Contract Bill, it will be up to the Contractor to submit any type of Works mean that the Architect has to accept an unrealistic programme, which may be
Programme. If no requirements are specified but the Architect then requires designed to frustrate the Architect in the provision of information.
 Clause 3 .0 48
Clause 3. 7: "The Works Programme may be used by the Architect
to monitor progress... "
If the Works Programme is realistically prepared, and is in accordance with
the intended progress of work, it will be an aid to the Architect, when he
has to assess any delays and extension of time. As such, the Architect and
Consultant must be fully acquainted with the details contained in the Work
Programme, in order to monitor the progress or lack of progress on Site. Tf
properly prepared, the Works Programme will also be a useful tool for the
Employer to plan his cash flow to meet interim payments to the Contractor
under the Contract.
Clause 3.8 - Availability of documents
The Contractor shall keep a copy of the Contract Drawings and the unpriced
Contract Bills on the Site to be available to the Architect and Consul tant and
their authorised representatives at all reasonable times.
A copy of the Contract Drawings and Contract Bills together with all up to
date drawings and information are usually kept at the site office, and made
available to the Architect or Consultants when they visit the Site periodically.
Clause 3.9 - Limitation of use of documents
None of the Contract Documents in C lause 3.1 shall be used by the Contractor
for any purpose other than the Contract. Except for the purpose of the Contract,
the parties shall not disclose any of the rates and prices in the Contract Bills
to any other party.
This Clause is self-explanatory.
-Clause-3....10 • As buiJt-Dt=awines--and operation and-main terumee-man uals-
The Contractor sha ll supply and shall cause any Nominated Sub-Contractor
to supply As-built Drawings and/or operation and ma intenance manuals
specified in the Contract Documents and/or Nominated Sub-Contract
documents in the manner and within the time specified therein. Where
these are not specifi ed, the Contractor sha ll supply and shall ensure that
the Nominated Sub-Contractor supplies four (4) copies of the above items
before the Completion Date.
Under PAM 98 Clause 3. IO, it is provided that: 'Within three (3) months
from the commencement of the Defects Liability Period, the Contractor shall
Clause 3 .0 49
without futther charge to the Employer supply ... two copies of such drawings
and infonnation describing the Works as-built and concerning the maintenance
and operation of the Works, including any installation comprised in the
Works, ...'. This has been interpreted by some to mean that the Contractor
has an obligation to provide architectural as-built drawings, even though it
is the Architect's duty to do so under the Architect's Act, Architects (Scale of
Minimum Fees) Rules, Rule 5(4)(vii), which defines the Architect's duty to
include providing:
' ... a set of drawings showing the building as constructed and obtaining
for the client the drawings of building services as installed together
with all warranties and maintenance manual as provided in the
contracts. '
Similarly, some works require As-Built Drawings and operation and
maintenance manuals to be submitted before the Works can be considered
Practically Completed. So Clause 3.10 in PAM 98 was not reflective of
practice norms in the industry.
Clause 3.10: "The Contractor shall supply and shall cause any
Nominated Sub-Contractor to supply As-built Drawings and/or operation and
maintenance manuals specified in the Contract Documents and/or Nominated
Sub-Contract documents ... "
The issue of As-Built Drawings has now been clarified in PAM 2006 Article
7(e) to mean 'As-built drawings for works designed (including alternative
design) by the Contractor and/or Nominated Sub-Contractor and any other as-
built drawings required to be provided as specified in the Contract Documents.'
The Contractor is not required to produce any As-Built drawings if he has
constrncted the works in accordance with the Architect's drawings, including
any variations. His obligation is to provide As-Built Drawings only where he
has provided designs, and also to obtain the As-Built Drawings from Nominated
Sub-Contractors where it is provided in the Sub-Contract, that the Nominated
Sub-Contract is to provide such drawings. This Clause further clarifies that if
there are any other specific as-built drawings required of the Contractor, this
must be specified in the Contract Documents. Example of such specific As-
Built Drawings will include the as-built position of piling works, ea1thwork
levels, ve1ticality check for high rise building and similar requirements.
The Contractor also has an obligation to ensure that operation and/or
maintenance manuals are also procured from the Nominated Sub-Contractors
and submitted on time to the Architect.
 Clause 3 .0 50
Clause 3.10: "... in the manner and within the time specified
therein. "
lf the Architect or Consultant requires the submission of As-Built Drawings
and/or operation and maintenance mannuals in any patticular manner, and
within any specific time, these must be specified in the Contract Documents.
If no specific requirements are specified in the Contract Documents, the
Contractor's obligation is to supply four (4) copies of the documents before
the Completion Date. Some examples of As-Built drawings and operation
and maintenance manuals that need to be submitted before the issuance of
the Ce1tificate of Practical Completion, are the fire fighting services drawings
and operation manuals, the air conditioning services drawings and operation
manuals, the building automated system operation manuals and the boundary
surveys etc, that need to be submitted before the Architect can request
inspections from the Fire Department and the Local Authorities.
Clause 4.0 51
Clause 4.0 - Statutory Obligations,
Notices, Fees And Charges
Clause 4.1 - Statutory requirements
The Contractor shall comply with and su bmit all notices required by any laws,
regulations, by-laws, terms and conditions of any Appropriate Authority and
Service Provider in respect of the execution of the Works and all temporary
works.
The Contractor shall comply with the statutory requirements and submit
the required notices to the Appropriate Authority and Service Provider at
the appropriate time or as required by the Architect. If the works, services
or installations are catTied out by sub-contractors (whether Nominated Sub-
Contractors or domestic sub-contractors), the Contractor shall ensure that they
also comply with such requirements and submit the required notices to the
Appropriate Authority and Service Provider on time to facilitate the issuance
of the Certificate of Fitness for Occupation.
Eventually, the Certificate of Fitness for Occupation issued by the local
authorities will be replaced by the Certificate of Completion and Compliance
('CCC') to be issued by the Principal Submitting Person ('PSP') who is the
Architect, the Engineer or the Building Draughtsman for the Works. For the
CCC to be issued, Forms Gl-G21 are required to be completed and signed
by the Contractor and sub-contractors when their respective scope of works
are completed and to be submitted to the respective consultants and the
PSP. The Fotm Gs are to be signed by directors of the company or the licensed
person where applicable. The Contractor and sub-contractor should provide
evidence ofthe company's registration with CIDB and submit a ce1tified copy of
Company's Fo1m 49 to authenticate the identity of the director and/or a certified
copy of the licence from the Appropriate Authority and Service Provider. It
would be pmdent to include a copy of all the Form G's and these provisions
in the Contract Bill to make it clear and unequivocal that the Contractor and
sub-contractors have to complete and sign the appropriate Form G's for their
respective works, services or installation as part of their contractual obligations
Clause 4.2 - Inconsistencies with statutory requirements
lf the Contractor finds any inc011sistencies between the Contract Documents
(including any subsequent documents issued by the A rchitect) and any laws,
regulations, by-laws, terms and conditions of any Appropriate Authority and
Service Provider, he shall immediately specify the inconsistencies and give
 Clause 4.0 52 Clause 4.0 53

to the Archi tect a written notice before commencement of construction of the
affected works.
The Contractor's obligation is to execute the Works in accordance with the
Architect's or Consultant's design. If the Work as designed does not conform
to statutory requirements, then the Architect or Consultant shall be responsible,
not the Contractor. The Contractor bas no obligation to check that the design
complies with statutmy requirements, and in most cases, will assume that the
Architect and Consultant have designed the Work to fully comply with any
laws, regulations, by-laws, tenns and conditions of any Appropriate Authority
and Service Provider; but if the Contractor is aware of any inconsistencies, he
has a duty to notify the Architect and request for further instructions.
Clause 4.3 - Conformin1i: to statutory obli2ations
If within seven (7) Days of having given written notice to the Architect, the
Contractor does not receive any AI in regard to the matters specified in Clause
4 .2, he shall proceed with the work to confo1111 to such laws, regulations, by-
laws, terms and conditions of any Appropriate Authority and Service Provider.
Any changes so necessitated shall be deemed to be a Variation required by the
Architect.
The Contractor is responsible to pay all fees, levies and charges required
by any laws, regulations, by-laws, terms and conditions of any Appropriate
Authority and Service Provider in respect of the execution of the Works and
all tempora1y works. The principal laws governing construction works will
include Constrnctions Industry Development Board (CIDB) Malaysia Act
1994, Factories and Machineries Act 1967, Occupational Safety and Health
Act 1994, The Street, Drainage and Building Act 1974 and the Uniform
Building By-Laws 1984.
If there is any liability to pay any penalties for any non compliance, the
Contractor will be liable to pay the penalties, even if the Employer receives
the notices, fines, compounds or charges from any of the Local Authority or
Service Providers. In the event the notice issued by the Local Authority or
Service Providers is in the Employer's name, and the Employer pays the fees
or penalties, the amount paid can be recoverable from the Contractor by way
of set-offs.

If within 7 Days of notifying the Architect of any inconsistencies between

the Contract Documents (including any subsequent documents issued by the
Architect) with any laws, regulations, by-laws, terms and conditions of any
Appropriate Authority and Service Provider, the Contrnctor does not receive
any instruction from the Architect, he shall proceed with the work to confmm
to such laws, regulations, by-laws, terms and conditions, and the work carried
out by the Contractor shall be considered a Variation required by the Architect.
That said, if the Contractor is uncertain whether the design is or is not, in
compliance with the statutory requirements, he may prefer to wait for the
Arch itec.Csinsttuc.ti ous.

Clause 4.4 - Fees, levies and char1i:es

The Contractor shall pay and indemn ify the Employer against any liability
in respect of any fees, levies and charges including any penalties which may
arise from the Contractor's non-compliance with any laws, regulations, by-
laws, tenns and conditions of any Appropriate Authority and Service Provider
in respect of the execution of the Works and all tempora1y works. Tf the
Contractor fails to pay, the Employer may pay such amount and such amount
together with any additional cost in this connection shall be set-off by the
Employer under Clause 30.4.
---------- -- ------ -

Cla/fse 5 .0 55

- ~- -- ·-------- - - - - ···- -

_ Ciau_se 5.~ - Levels And Setting Out Of Th~~orks J

Clause 5.1 - Settin2 out

The Architect shall detennine all levels which may be required for the
execution of the Works and sha ll provide the Contractor with drawings and
information to enable the Contractor to set out the Works. The Contractor
shall at his own cost rectify any errors arising from any inaccurate setting out.
With the consent of the Employer, the A rchitect may instruct that such errors
need not be rectified subject to an appropriate deduction to be set-off by the
Employer under Clause 30.4.

Clause 5.1 "shall provide the Contractor with drcrwings and

ii1for111ation to enable the Contractor to set out the Works ."

The Architect's obligation is to provide all drawings and information to the

Contractor to enable him to set out the Works at all levels. The Contractor shall
set out the Works accurately based on the drawings and information provided
by the Architect, and it would be appropriate to include in the Contract Bill
a requirement that the Contractor obtains the services of a Licensed Land
Surveyor to verify that they have properly set out the works. Irrespective of
the submission of the confirmed setting out by the Registered Land Surveyor,
the Contractor remains liable for the accuracy of the setting out, as there is no
privity of contract between the Licensed Land Surveyor and the Employer.

Clause 5.1: " With the consent ofthe Employe,; the Architect may
instruct that such errors need not be rectified ... "

If the Contractor makes an error in the setting out, he must rectify the errors
at bis own cost. Despite the provision in PAM 98 Clause 5. 1, which provides
that 'the Architect may at his discretion accept the errors without amendment
subject to such reduction in the Contract Sum ... ' it is submitted that this
needs to be c01Tected. For example, if the Architect without the consent of the
Employer accepts the wrong setting of a house (which results in insufficient
set back or a smaller house), this will cause a problem to the Employer, as the
Employer may have sold the house based on the original set back or size. The
Employer 's obligation to the house purchaser under the sales and purchase
agreement may result in the Employer being held liable to the purchaser for
damages, and if that happens, the Employer may seek to recover the damages
from the Architect who accepted the wrong setting out.

Architects are, therefore, advised to obtain the written consent of the

Employer before accepting any wrong setting out, as it is the Employer's right

• •' 'IJJ..,
 Clause 5 .0 56 Clause 6.0 57

and prerogative whether to accept the wrong setting out. Before the Architect ------- -- - - -- ..._ -

makes a recommendation to the Employer as to whether to accept or reject Clause 6.0 - Materials, Goods And Workmanship To :
a setting out that is wrong, it is prudent for the Architect to check first as Conform
---
To Description, Testing
-
And
-------
Inspection
- --
-- - -

to whether the setting out does infringe the law and regulations in tenns of
both the set back of the building as well as the Employer's commitment to
purchasers under the sales and purchase agreement.
Clause 6.1 - Standards of works, materials. goods and workmanship
All works, materials, goods and workmanship shall be of the respective
quality and standards described in the Contract Documents and required by
the Architect in accordance with the provisions of the Contract.

Refer to commentary under Clause 1.1 .

Clause 6.2 - Provision of vouchers

The Contractor shall upon the request of the Architect, provide him with
vouchers or such other evidence to prove that the materials and goods
comply with Clause 6.1.

Refer to commentary under Clause I . I.

Clause 6.3 - Inspection and testing

The Contractor shall provide samples of materials and goods for testing
before incorporation into the Works. The Architect may issue an AI requiring
the Contractor to open up for inspection any work covered up, or to arrange
for or cany out any test on any materials and goods already incorporated in
the Works or of any executed work. The cost of such opening up or testing
together with the cost of making good shall be added to the Contract Sum
unless:

6.3(a) the cost is provided for in the Contract Bi lls;

6.3(b) the inspection or test shows that the works, materials and goods were
not in accordance with the Contract; or

6.3(c) the inspection or test was in the opinion of the Architect required
in consequence of some prior negligence, omission, default and/or
breach of contract by the Contractor.

Clause 6.3(a) and (b) are self-explanatory.

Clause 6.3(c) deals with situations where the Contractor attempts to conceal
work that has not been installed in accordance with the Contract, or where
 -- - ..-,_,__________
Clause 6.0 58
the opening up of earlier installed works have revealed non compliance, and
the Architect is therefore in doubt whether the works installed at the later
date were compliant.
Clause 6.4 - Contractor's obli2ation not relieved
The provisions of Clauses 6.2 and 6.3 shall not relieve the Contractor of his
obligations to execute the work and supply materials and goods in accordance
with the Contract.
The Contractor has an obligation to provide materials, goods and standards
of workmanship of the quality and standard described in the Contract
Documents. This Clause makes it clear that even if the Contractor had
complied with Clause 6.2 and 6.3, it will not relieve the Contractor of his
primary obligation under the Contract if the Contractor had provided any
materials, goods or carried out any work which is not in accordance with the
quality and standard described in the Contract Document.
The Contractor's obligation is abundantly clear when reference is made to
PAM 2006 Clause 30.15, which provides that even if the Final Certificate is
issued by the Architect, it shall not be conclusive evidence that any work,
materials and goods carried out by the Contractor are in accordance with the
Contract.
Clause 6.5 - Work not in accordance with the Contract
If the Architect finds any work, materials, goods or workmanship which is not
in accordance with the Contract, the Architect shall instruct the Contractor in
writing:
6.5(a) to remove from and not to bring to the Site such materials and goods;
6.5(b) to demolish and reconstruct such work to comply with the Contract;
6.5(c) to rectify such work as instructed by the Architect with no adjustment
to the Contract Sum;
6.5(d) to submit a method statement within seven (7) Days from receipt of
the written instruction (or within such period as may be specified
by the Architect in the instruction) proposing how such works,
materials, goods or workmanship can be rectified. If the Architect
accepts the Contractor 's proposal, the Contractor shall carry out
the rectification work with no adj ustment to the Contract Sum or
-· - -
Cla11se 6.0 59
alternatively, the Architect may reject the proposal and issue any
other written instruction under this clause; or
6.5(e) with the consent of the Employer, to leave all or any such works,
materials, goods or workmanship in the Works subject to an appropriate
set-off by the Employer under Clause 30.4 and the Contractor shall
remain liable for the same.
The provisions in PAM 98 Clause 6.4 does not provide sufficient remedy for
the Architect, if during the inspection of the Works, he finds that there are
works, materials, workmanship or goods which are not in accordance with the
Contract. Under PAM 98 Clause 6.4 'the Architect may insh1.1ct the Contractor
(i) to demolish and reconstrnct any work so that it is in accordance with the
Contract" and "(ii) to remove from and/or not to b1ing to the site any materials
or goods which .... are and/or may not be in accordance with the Contract.'
The use of the phrase 'the Architect may instruct' gives the impression that the
Architect has a discretion to accept works, materials, goods and workmanship
which is not in accordance with the Contract, without adjustment to the costs.
This would be wrong. If the Architect is aware of works, materials, goods and
workmanship which are not in accordance with the Conh·act, and is prepared
to accept them, then, he must issue an instruction so that an appropriate
adjustment can be made to the cost.
Clause 6.5: "... the Architect shall instruct the Contractor in
writing: "
Under PAM 2006, the Architect must instruct the Contractor of the remedial
actions set out in Clause 6.5(a) to (e). At the same time, the Architect must
infonn the Consultant to make the appropriate adjustment in payment
valuations to take account of any work materials, goods and workmanship
executed by the Contractor, which the Architect has confinned is not in
accordance with the Contract.
The remedial actions u~der Clauses 6.5(a), (b), (c) and (d) are self-explanat01y.
Clause 6.S(e): "... with the consent of the Emp/oye,~ to leave all or
any such works, materials, goods or workmanship in the Works subject to an
appropriate set-of/ ... "
If the Employer is willing to accept any works, materials, goods and
workmanship which is not in accordance with the Conh·act, the Architect is
advised to obtain the written consent of the Employer to do so, otherwise
 Clause 6.0 60 Clause 6.0 61

the Architect may be liable for negligence in the event the Employer denies
giving consent and refuses to accept such works. See explanation given for
acceptance of wrong setting out in Clause 5.1 which canies the same principle
of a diminution in value of works built not in accordance with the Contract.
Clause 6.6 - No compensation for time and cost
Compliance by the Contractor with a written instruction issued under Clause
6.5 shall not entitle the Contractor to an extension of time nor compensation
for any loss and/or expense that may be incurred.
This Clause is self-explanatory.
The Contractor has an obligation to provide materials, goods and standards of
workmanship of the quality and standard described in the Contract Documents.
This Clause makes it clear that even if the Contractor had provided the
manufacturer's warranties or guarantees, it will not relieve the Contractor of
his obligation under the Contract, ifit was later found out that the materials or
goods were not in accordance with the quality and standard described in the
Contract Document.
The Contractor's obligation is abundantly clear, when reference is made to
PAM 2006 Clause 30.15, which provides that even if the Final Certificate is
issued by the Architect, it shall not be conclusive evidence that any work and
materials supplied are in accordance with the Contract.

Clause 6.7 - Failure of Contractor to comply

If the Contractor fails or refuses to comply with a written instruction of the

Architect issued under Clause 6.5, the Employer may without prejudice to any
other rights or remedies which he may possess under the Contract, employ and
pay other Person to cany out the subject matter of the written instruction. All
costs incurred including any loss and expense shall be set-off by the Employer
under Clause 30.4.

If the Contractor fails to comply with the Architect's instructions issued

under Clause 6.5, the Employer has the contractual right to determine the
employment of the Contractor under Clause 25.1 (d), provided that the
Contractor has persistently failed to cany out the instructions. In addition to
the Employer's contractual rights, this clause also preserves the Employer's
common law rights to determine the Contractor's employment.

Clause 6.8 - Warranties in respect of materials and goods

If the-Gontract-requrres a11y 111a11ufactmer, sub-conttactm 01 supµherto-give

a warranty or guarantee in respect of any proprieta1y systems, materials and
goods supplied, the Contractor shall procure such wananties or guarantees
and submit to the Employer. The provision of such warranties or guarantees
shall in no way relieve or release the Contractor from any liabilities under the
Contract.

If there are any specific warranties or guarantees required to be submitted

by any manufacturer, sub-contractor or supplier, this shall be stated in the
Conh·act Documents.
 Clause 7.0 63

Clause 7.1 - Indemnity to Employer

Subject to Clause 7 .2, all royalties or other sums payable in respect of the
supply and use in carrying out the Works of any articles, processes, inventions
or drawings shall be deemed to have been included in the Contract Sum. The
Contractor shall indemnify the Employer against all claims, proceedings,
damages, costs and expenses which may be brought against the Employer
or to which he may be subjected to by reason of the Contractor infringing or
being held to have infringed any such intellectual property rights.

The Contractor shall indemnify the Employer against any claims, proceedings,
damages, cost and expenses if he infringed any intellectual property rights
in the course of carrying out the works. Any royalties or sums payable for
intellectual property rights in connection with the Works shall be deemed
included by the Contractor in the Contract Sum.

Clause 7.2 - Contractor's liability to pay

Where in compliance with a written instruction, the Contractor has informed

the Architect in writing that there may be an infringement of intellectual
property rights but the Architect still instructs the Contractor in writing to
comply, the Contractor shall not be liable for any such infringement. All
royalties, damages or other monies which the Contractor may be liable to pay
for such infringement shall be added to the Contract Sum.

If the Architect issues an instruction, and tbe Contractor infmms the Architect
that complying w ith such an instruction may infringe intellectual property
rights, but the Architect nevertheless instrncts the Contractor to go ahead,
the Contractor shall not be liable if subsequently, he is found liable for
infringement. The cost of the liability paid by the Contractor will be added
to the Contract Sum. If the Contractor fails to inform the Architect on any
' infringement' at the time of the instruction, he shall be liable to pay for such
infringement.

Clause 7.3 - Government royalties

Except where otherwise provided for in the Contract, the Contractor shall pay
all Government royalties, levies, rent and all other payments in connection
w ith the Works.
 Clause 7.0 64
Clause 8 .0 65
Unless otherwise specifically stated in the Contract Bill, the Contractor is
liable for the payment of Government royalties, tonnages, levies, rents and all
other such payment incuITed in connection with carrying out the Works.
Clause 8.1 - Site Agent

The Contractor shall appoint a competent person to be the Site Agent. The Site
Agent for the purposes of the Contract shall be deemed to be the Contractor's
authorised site representative. The Site Agent shall be assisted by such
assistants and supervisory staff as necessary to execute the Works efficiently
and satisfactorily. The Site Agent shall be employed full time on Site and in
the event that he has to be tempora rily absent from the Site, the Contractor
shall designate a deputy in his place.

Under PAM 98 Clause 8.1, it is provided that: ' The Contractor shall constantly
keep upon the Works a suitably qualified and experienced Person ... toe;ether
w ith such senior assistants and supervisory staff in each trade as may be
necessary as set o ut in the Contract Documents or as amended from time to
time after prior approval of the A rchitect. ' This Clause expressly states that
the Architect has to decide and specify in the Contract Document, the number
of senior assistants and supervisory staff in each trade, that the Contractor is
to maintain on the Site. It will also be implied that if the Architect required
changes to the number of personnel, it wi ll be a Variation.

The clause in PAM 98 is not practical as it will mean that the Arch itect will
have to decide not only the number of supervision staff that the Contractor
wi ll have to maintain on the site, but he also has to decide on the number of
supervisors in each trade.

The Clause in PAM 2006 obligates the Contractor to appoint a competent

person to be the Site Agent, and to provide adequate personnel to supervise
and execute the works efficiently and satisfactorily. This means that if the
Architect is of the opinion that the Contractor does not have adequate site staff
based on the site perfonnance, he can instruct the Contractor to increase and
provide adequate site supervision personnel w ithout additional costs.

If there is a requirement that the site staff needs to have certain qua Iification
and experience, this can be stated in the Contract Bills.

Clause 8.2 - Instructions to Site Agent

The Contractor shall ensure that the Site Agent and such assistants and
supervisory staff are capable of receiving directions or instructions in English
or Bahasa Malaysia. The Site Agent shall be deemed to be authorised by the
 Clause 8 .0 66 Clause 9.0 67

Contractor to receive any directions g iven by the Site Staff or instructions " - - - I

given by the Architect and any such directions and instructions given shall be
deemed to have been given to the Contractor.
This clause requires the Site Agent and any of the site assistants and supervisory
staff to be capable of receiving directions or instructions in English or Bahasa
Malaysia. The site direction given by the Site Staff, or instruction given by the
Architect to the Site Agent, is deemed to be given to the Contractor.
Clause 8.3 - Exclusion of Person employed on the Works
The Architect may instruct the Contractor to remove the Site Agent or any
Person under the employment or control of the Contractor from the Site. The
Architect shall not exercise this discretion unreasonably or vexatiously. On
receipt of a written instruction, the Contractor shall immediately remove and
replace such staff or any Person within a reasonable time and such staff or
Person so removed, shall not again be employed on the Site. The Contractor
shall not be entitled to any extension of time and additional cost in respect of
any instruction given by the Architect under this clause.
•
1
c;1~_l_!_se 9.0 - Access To The Works __
Clause 9.1 - Access To The Works
The Architect, Consultant and their authorised representatives shall at all times
have reasonable access to the Works and to the factories, workshops or other
p laces where any construction plant, materials, goods and work are being
fabricated, prepared or stored for the Contract. The Contractor shall ensure
that all sub-contracts contain provisions entitling the Architect, Consultant
and their authorised representatives to have such access.
There may be constrnction plant, materials, goods and work being fabricated
by the Contractor's supplier at their overseas factories. This Clause, therefore,
clarifies that the Architect, Consultant and their authorised representatives
are entitled to ' reasonable' access, but they cannot demand to fly overseas
to check the work or equipment at the overseas factories. If such a visit is
required, the contract provisions must expressly provide for it. The Contractor
shall also ensure that his sub-contractors provide similar access.

The Architect is given the discretion to instruct the Contractor to remove the
Site Agent, any of the Contractor 's staff or any Person under the control of
the Contractor from the Site. This Clause is, however, silent as to whether
the Architect is required to give reasons for his action, but provided that
the Architect does not act unreasonably and vexatiously, the Contractor
cannot question the instruction. The Contractor is required to comply with
the instruction within a reasonable time, and he shall not be entitled to any
extension of time and additional cost for hiring replacement staff or Person.

Clause 8.3: "...or any Person under the employment or control of

the Contractor. .. "

The Architect's discretion extends to removing any Person under the

employment or control of the Contractor. Person has been defined in Article
7 (ad) to mean: 'an individual , sole proprietorship, finn (pa1tnership) or body
c01porate.' The definition, therefore, extends to any sub-contractors under the
control of the Contractor whom the Architect considers to be incompetent or
delinquent in their work.

Clause 8.3: "...shall not exercise this discretion unreasonably

and vexatiously... "

For an explanation of 'unreasonably and vexatiously', please refer to the

comments under Clause 25.2.
 Clau!ie 10.0 69

I - • - ---------------

1 _ Clause 10.0 - Site Staff___ _ -·~

Clause 10.1 - Duty of Site Staff

The Employer may from time to time appoint such number of Site Staff as the
Employer shall deem necessary. The Site Staff shall act as inspectors under the
direction of the A rchitect and the Contractor shall provide reasonable faci Iities
for the performance of such duties.

Under PAM 98 Clause 10.1, it is provided that: 'The Employer shall be entitled
to appoint a Resident Architect, Resident Engineer, Clerks of Works and such
others as site staff as necessmy from time to time whose duties shall be to act
as inspectors on behalf of the Employer. The site staff so appointed shall be
under the direction of the Architect. .... '

PAM 98 is a standard form of contract which can be used for projects of

varying values. To state that the Employer shall be entitled to appoint a
Resident Architect, Resident Engineer, Clerks of Works and such others as
site staff may be intimidating to the· Contractor, especially, when the overtime
costs of such personnel are often borne by the Contractor. Further, many
projects do not require such high level supervisors. The costs may be priced in
by the Contractor unnecessarily.

Clause JO.I: "... such number of Site Staff as the Employer shall
deem necessa1y ... "

PAM 2006 now clarifies that the number of Site Staff employed on the Work
depends on the size and complexity of the project. As is often the case, where
the Contractor is responsible for ove1time payment for Site Staff, it may be
prudent to provide all relevant information in the Contract Document, so that
the Contractor can make a reasonable allowance for this risk.

Clause TO.I : "... Site Staff shall act as inspectors under the
direction of the Architect... "

The provision in PAM 98 that the site staff acts as inspector on behalf of the
Employer and under the direction of the Architect, may be taken to mean that
the Employer may also be liable for any failure or negligence in supervision
by the site staff.

PAM 2006 now clarifies that the Site Staff acts as inspector under the direction
ofthe Architect. This is also to avoid the possibility of the Employer interfering
with the supervision of the work through the Site Staff.
 Clause 10.0 70 Clause 11 .0 71

It should be noted that the presence of the Site Staff does not lessen the
Architect's responsibility under the law pertaining to supervision. The
Architect still has a duty to exercise reasonable skill and care to ensure that the
works ca1Tied out by the Contractor conform to his design and specification. Clause 11.1 - Definition of Variation

This definition is also applicable to the Contractor's duty to use ' reasonable The term "Variation" means the alteration or modification of the design,
skill and care' while undertaking construction work based on the Architect's quality or quantity of the Works including:
and Consultant's design.
11. I (a) - the addition, omission or substitution of any work;
Clause 10.2 - Directions 1.:iven by Site Staff
11.1 (b) - the alteration of the kind or standa rd of any materials and goods
Any directions given to the Con tractor or his Site Agent by the Site Staff shall to be used in the Works;
be ofno effect, un less given in writing in regard to a matter in respect of which
the Site Staff have been expressly authorised in writing by the Architect. All 11. l(c) - the removal from the Site of any work executed or materials and
such directions involving a Variatio n shall be of no effect, unless confirmed goods brought thereon by the Contractor for the purposes of the
by an AI. Works other than work, materia ls and goods which are not in
accordance with the Contract; and
This clause clarifies that any directions given by the Site Staff to the Contractor
or his Site Agent shall be of no effect, unless the Architect has given such 11 . I (d) - any changes to the provisions in the Contract with regards to:
authorisation to the Site Staff in writing. The Site Staff is not authorised to 11.l(d)(i) - any limitation of working hours
issue any Variation, and if they did, it must be confirmed by the Architect with I I. I (d)(ii) working space;
an AI. There is no provision for the Contractor to confirm directions given by 11.l(d)(iii) access to or utilisation of any specific part of the
Site Staff by a CAI. If the Site Staff issues what is clearly a Variation that he Site; and
is not authorised to issue, the Contractor is not obliged to act on it until it is 11.l(d)(iv) - the execution and completion of the work in any
confinned by an Al. specific order,

but shall exclude any changes intended to rectify any negligence, omission,
default and/or breach of contract by the Contractor and such changes shall be
executed by the Contractor entirely at his own cost.

Under PAM 98 and PAM 2006, the Architect has wide powers to issue
Variations under the Contract, and the Contractor is obligated to carry out
the work. However PAM 98 Clause 11.l(vi) had widened this power further
by defining Variation to include 'any changes which may be designed to alter
the ultimate use to which the Works will be put.' By this definition, it will
mean that if the Works are varied to such an extent that the original scope
of work is fundamentally different from that contemplated by the parties at
the time the contract was made; under PAM 98, it will still be a Variation
and will be considered as work within the scope of the original contract. For
example, it will be a Variation if the construction of a block of shop houses
with a contract sum of two million ringgit was changed to a multistory block
of hotel costing five million ringgit. Sundra Rajoo in his book on the PAM 98
on page 119 said: 'The architect's power does not extend to ordering additions

- , , • •, ~ . 1111.
- - - - - - - - -- --
Clause 11 .0 72
or substitution that wo uld require the contractor to execute work clearly not
contemplated by the contract. ' If that was the view, it is puzzling why this
provision was included in PAM 98.
In Sir Lindsay Parkinson v Commissioner of Works and Public Buildings
[1950} I All ER 208, the court even arrived at the conclusion that a doubling in
the original contract sum due to extra works cannot be considered a Variation,
as the work was not within the contemplation of the parties at the time of the
contract. Although this is not the position in both PAM 98 and PAM 2006,
where there is no limit to the amount of Variation that the Architect can order
as a proportion of the Contract Sum, in PAM 2006, unlike PAM 98, a drastic
change in the 01iginal scope of the Works is not considered a Vmiation. If such
changes to the scope of the Work are necessary, it is best that the parties enter
into a separate contract to reflect the changes relating to cost and time as well
as other fundamental issues in the contract between the parties.
PAM 98 Clause 11.1 (vi) also clarified that, for the avoidance of doubt,
Variation shall include ' ... changes in the obligations and/or restrictions
which may be imposed on the Contractor 's methods of working ... ' Consider
the following example: the C ontractor has an obligation to carry out a
trench excavatio n and support the sides of the excavation w ith whatever
appropriate material s (which may include steel sheet piling), as the
support of the excavation is a Contractor 's ri sk. If, for whatever reason,
the Architect then instructs the Contractor to use only steel sheet piling to
support the excavated trench, it may give rise to a claim from the Contractor
on the gro und that the Architect has changed the Contractor 's method of
working. The PAM 98 c la use stating that: ' For the avoidance of doubt, the
term "Variation" shall include any changes ... which may be imposed on the
Contractor's methods of working', is no longer incorporated in PAM 2006.
PAM 2006 C lause 11.1 (d) clarified that if there are any specific constraints on
1e wor <mg 10urs on s1 e;
(ii) the working space on Site;
(iii) any requirement regarding the access to or utilisation of any
specific part of the Site; and
(iv) the execution and completion of the work in any specific order;
these shall be specified in the Contract Documents, so that the Contractor
can price for the risk. Any changes to any of the constraints imposed by the
Contract shall then be considered a Variation.
Clause I 1 .0 73
C lause 11.2 - No Variation required by the Architect shall vitiate Contract
The Architect may issue an AI ordering a Variation or sanctioning any Variation
made by the Contractor. No Variation ordered by the Architect or subsequently
sanctioned by him shall vitiate the Contract. Pending the valuation of the
Variations, the Contractor shall cmTy out with due diligence and expedition
all Variations so instructed.
Clause 11.2: "... sanctioning any Variation made by the
Contracto,:.. "
If the Contractor had carried out a Variation and has not been issued with an AI
before compliance, the Architect may issue an Al to formalise his instructions
at any time before the issuance of the Final Certificate. The power to sanction
is not limited to claims for extra payment by the Contractor, but includes an
unauthorised depa1ture from the Works not involving extra cost, and omission
which results in a reduction from the Contract Sum.
Clause 11.2: "No Variarion ... sha/1 vitiate the Contract"
T his C lause implies that no matter how substantial the Variations, the
Contractor must carry out the work, and not rescind the Contract. However,
the Conh·actor will be able to rescind the Contract, if the changes are so
substantial, that it affects the ultimate use to which the Works will be put.
Clause 11.2 "... Pending the valuation of the Variations, the
Contractor shall cany out with due diligence and expedition all Variations so
instructed. "
The Contractor has an obligation to carry out the Architect's instructions,
and not wait to agree the price of the Variation, since the Variation will be
valued in accordance with the rules provided in Clause 11.6, and payment for
such Variations will be included in the payment certificate in accordance with
Clause 11. 9.
Clause 11.3 - Issue of Variations after Practical Completion
The Architect may issue instructions in writing requiring a Variation at any
time before the issuance of the Certificate of Practical Completion. Thereafter,
any AI requiring a Variation must be necessitated by obligations or compliance
with the requirements of any Appropriate Authority and Service Provider.
Previously under PAM 98, there was no provision in the Conh·act to empower
- - - -- -~---- --
Clause 11.0 74
the Architect to issue a Variation either during the period of culpable delay,
or if Liquidated Damages had been imposed by the Employer lf an Architect
issues a Variation, the Contractor can request the Architect under PAM 98
Clause 2.3 ' ...to specify in writing the provision ... which empowers the issue
of the said instrnction.' lt is to be noted that this clause makes it explicit, that
the power to issue instructions cannot be implied.
This clause in PAM 2006 expressly empowers the Architect to issue an
instruction requiring a Variation, as long as the Contractor has not been issued
with a Certificate of Practical Completion, and this power to issue Variations
exists, even if the Contractor is in culpable delay and Liquidated Damages has
been imposed by the Employer.
After the Architect has issued a Certificate of Practical Completion, he has no
more power to issue any further instruction for a Variation, except if it is for
instructions to comply with the requirements of any Appropriate Authority
and Service Provider. These requirements may arise from the Appropriate
Authority and Service Provider who may not issue their approval in suppo1t
for the issuance of a Certificate of Fitness or Certificate of Completion and
Compliance, unless works are carried out to their new requirement. Although
third party contractors can be employed to carry out these new requirements,
it may be more convenient for the Contractor to carry out these works, as
it is often the case that the same licensed sub- contractor or specialist sub-
contractor is the only party allowed to install those works.
Clause 11 .4 - Al on P.C. Sums and Provisional Sums
The Architect shall issue Al in regard to the expenditure of P.C. Sums and
Provisional Sums included in the Contract Bills and of P.C. Sums which arise
as a result of instrnctions issued in regard to the expenditure of Provisional
Sums.
Prime Cost Sums ('P.C. Sums') has been defined in Article 7 (as) to mean
' the sums provided in the contract for works or services to be executed by
Nominated Sub-Contractor or for materials and goods to be supplied by
Nominated Supplier.'
Provisional Sums have been defined in Article 7 (au) to mean 'the sums
provided in the contract and/or the Nominated Sub-Contract for work to
be executed or for the supply of any materials and goods which cannot be
foreseen, determined or detailed at the time.' Works under a Provisional Sum
can be carried out by the Contractor as a Variation, or can be converted to a
P.C. Sum to enable the Architect to make a nomination of a sub-contractor or
_., , ..
Clause 11.0 75
a supplier under Clauses 27 and 28. The Clauses also enables the Architect
to issue instructions with regard to the expenditure of Provisional Sums
included in a Nominated Sub-Contract.
Unless the item of work is covered by a P.C. Sum or a Provisional Sum,
the Architect cannot issue an instruction to nominate a sub-contractor or
a supplier. Any instructions for works required to be carried out by any
particular sub-contractor or supplier shall be issued to the Contractor as a
Variation.
C lause 11.5 - Valuation of Variation and Provisional Sums
A ll Variations shall be measured and val ued by the Quantity Surveyor.
Where any recording of site information a nd/or site measurements are
carried out at the Site, the Contractor shall provide the Quantity Surveyor
with such assistance as may be necessary to carry out the works and the
Contractor shall be given the oppottunity to be present to take such notes and
measurements as he may require.
It is usual for the Quantity Surveyor to progressively measure and value all
Variations and provide details to the Contractor for agreement. In the event
that measurements are carried out at the Site, the Quantity Surveyor should
notify the Contractor, and give him an opportunity to be present and agree to
the site measurements. The Contractor shall provide any assistance required
to enable the taking of site measurements.
In the event the Contract includes all specialist work, such as mechanical and
electrical works which are handled by the Engineer, it is advisable to change
' measured and valued by the Quantity Surveyor' to ' measure and valued by
the Consultant'.
'Consultant' has been defined in Article 7 to mean 'the Engineer, Quantity
Surveyor and/or Specialist Consultant as appropriate.'
C lause 11.6 - Valuation rules
The valuation of Variations and work executed by the Contractor for which
a Provisional Quantity is included in the Contract and the expenditure of
Provisional Sums (other than for work for which a tender had been accepted
under C lause 27 . 14) shall be made in accordance with the following rules:
l 1.6(a) where work is of a simila r character to, is executed under similar
conditions as, and does not significantly change the quantity of
 Clause 11.0 76
work as set out in the Contract Documents, the rates and prices in
the Contract Documents shall determine the valuation.
l 1.6(b) where work is of a similar character to work as set out in the
Contract Documents but is not executed under similar conditions
or is executed under similar conditions but there is a significant
change in the quantity of work carried out, the rates and prices
in the Contract Documents shall be the basis for detetmining the
valuation which shall include a fair adjustment in the rates to take
into account such difference.
l l.6(c) where work is not of a similar character to work as set out in the
Contract Documents, the valuation shall be at fair market rates and
prices determined by the Quantity Surveyor.
11.6(d) where work cannot be properly measured and valued in accordance
with Clause I I .6(a), (b) or (c), the Contractor shall be allowed:
l 1.6(d)(i) the daywork rates in the Contract Documents; or
l l.6(d)(ii) where there are no such daywork rates in the
Contract Documents, at the actual cost to the
Contractor of his materials, additional construction
plant and scaffolding, transport and labour for the
work concerned, plus fifteen (15) percent, which
percentage shall include for the use of all tools,
standing plant, standing scaffolding, supervision,
overheads and profit.
ln either case, vouchers specifying the time spent daily upon the
work, the workers ' names, materials, additional construction plant,
scaffolding and transport used shall be signed by the Site Agent and
veri~y-the-&ite-&tttff-ttnd-sht11! be-delivered--to-the-Arehi-teet .ind
Quantity Surveyor at weekly intervals with the final records delivered
not later than fourteen (14) Days after the work has been completed.
ll.6(e) the rates and prices in the Contract Documents sha ll determine
the valuation of items omitted. If omissions substantially vary the
conditions under which any remaining items of work are carried
out, the prices of such remaining items shall be valued under
Clauses I l.6(a), (b) or (c).
I 1.6(f) in respect of Provisional Quantity, the quant1t1es stated in the
Contract Documents shall be re-measured by the Quantity Surveyor
Clause 11.0 77
based on the actual quantities executed. The rates and prices in the
Contract Documents shall determine their valuations.
The valuation mles will apply where works are catTied out by the Contractor
for the following:
(i) Instruction for Variations issued by the Architect for which the
Architect has issued an AI.
(ii) Provisional quantities included in the Contract Bills
(iii) Where works are carried out by the Contractor for which a Provisional
Sum has been included in the Contract Bills.
Clauses l 1.6(a) to 11.6(f) set out the valuation rules applicable.
Clause Jl.6(a): "where work is of a similar character to, is executed
under similar conditions as, and does not significantly change the quantity of
lVOl'k. .. "
The rates and prices in the Contract Documents shall be the basis of valuation
where the Variation work is similar in character to, and is executed under
similar conditions set out in the Contract Documents, and where there is no
significant change to the quantity of work indicated in the Contract Bill.
Clause ll.6(b): "where work is of'a similar character to work as set
out in the Contract Documents but is not executed under similar conditions
or is executed under similar conditions but there is a significant change in the
quantity of work carried out... "
The rates and prices in the Contract Documents shall be the basis of valuation,
and shall include a fair adjustment in the rates to take into account some
cost differences where the Variation work is of a similar character to, but is
not executed under similar conditions set out in the Contract Documents.
Therefore, for example, if the Contractor had to use gondolas to carry out a
Variation for plastering work, his rates for plastering should be adjusted to
take into account the difference in cost to use scaffolding and the hiring cost
of the gondolas.
Similarly, the rates and prices shall also be appropriately adjusted where
the Variation work is of a similar character and is executed under similar
conditions, but there is a significant change in the quantity of work as
compared to the quantity indicated in the Contract Bill. Therefore for example,
 Clause I I .0
if the Contractor originally priced 100m2 of tiling and through a Variation, the
quantity was increased to 20001112, a fair adjustment should be made to the
rate to take into account the increased quantity. When reviewing the rates,
improved bulk purchase discount cou ld also be considered. The adjusted rates
could be higher or lower than the Contract rates.
It is suggested that for both cases above, the Contractor shall be entitled to and
bound by the rates for the quantities in the Contract Bi lls. The new rates are
only applicable for the Variation work.
Clause 11. 6(c): "where work is not of a similar character to work as
set out, ... the valuation shall be at fair market rates and prices... "
It has been held in Crittall Windows v TJ.Evers ( I 996) 54 Con LR 66 to mean
that the Contractor shall be entitled to a fair valuation which will not give
the Contractor more than his actual cost, reasonably and necessarily incuITed,
plus similar allowa nce for overheads and profit.
Clause ll.6(d): ''where work cannot be properly measured and
valued. ..the Contractor shall be allowed. ..the daywork rates... "
Daywork is a means of valuing a Variation which is based upo n recorded time,
and recorded material and plant usage. It is only applicable 'where work cannot
be properly measured and valued. ' l f the Contract Documents have a priced
provision for daywork rates, the rates will be applicable for the evaluation
of the cost otherwise, the daywork will mean the actual cost incurred by the
Contractor, w ith an allowance to cover all other cost and profit.
The· Contractor bas to comply with the procedure when recording the
dayworks, and should have it verified by the Site Staff and progressively sent
to the Architect and Consultant. However, the fact that Variation works are
Tecurdedof1 <laywork does not mean t 1at payment will be paid on a daywork
basis. Where Variation works can be measured, it will be measured and valued
in accordance with Clauses l 1.6(a), (b), or (c).
Clause ll. 6(/): "in respect of Provisional Quantity, ... The rates and
prices in the Contract Documents shall determine their valuations.
If allowance has been made in the Contract Bills for designated Provisional
Quantity, or if the whole of the Works have been measured on a Provisional
basis, the Works shall be re-measured based on the actual quantities executed,
and the rates and prices in the Contract Documents shall be the basis to arrive
at a Final Account.
78 Clause 11.0 79
Clause 11.7 - Additional expense caused by Variation
Where a Variation has caused or is likely to cause the Contractor to incur
additional expenses for which he would not be paid under any provisions in
Clause 11 .6, the Contractor may make a claim for such additional expenses
provided always that:
l l.7(a) the Contractor shall give written notice to the Architect of his
intention to claim for such additional expenses together with an
initial estimate of his claim duly supported with all necessa1y
calculations. Such notice must be given within twenty eight (28)
Days from the date of the Al or CA I giving rise to his claim. The
giving of such written notice shall be a condition precedent to any
entitlement to additional expenses that the Contractor may have
under the Contract.
I l.7(b) within twenty eight (28) Days of completing such Variation, the
Contractor shal l send to the Architect and Quantity Surveyor
complete particulars of his claim for additional expenses together
with all necessary calculations to substantiate his claims. If the
Contractor fails to submit the required particulars within the stated
time (or within such longer period as may be agreed in writing by
the Architect), it shall be deemed that the Contractor has waived
his rights to any such additional expenses.
Clause 11. 7: "Where a Variation has caused or is likely to cause
...additional expenses... "
The objective of this clause is to enable the Contractor to be reimbursed as part
of the cost of vmi ation, for the additional expenses he has incutTed canying
out the Variation, and for which he would not be com pensated under C lause
11.6. Therefore, for example, if the Architect instructed the Contractor to pour
I 00m3 of concrete at the penthouse level of the building, after the Contractor bas
removed his tower crane, the Contractor should be able to recover his additional
expense hiling and installing new crane facilities, and the rates for concrete
paid to the Contractor under Clause l l.6(b) is adjusted to take into account the
additional cost of cranes which could be 500% of the concrete rates.
Clause JJ. 7(a) : " ...the Contractor shall give written notice to the
Architect of his intention to claim for such additional expenses... "
In order to succeed in a claim for additional expenses, the Contractor must
comply with the first stage notice provision. He must accompany his notice
 Clause 11 .0 80 Clause 11.0 81
with an initial estimate of his claim, duly suppo1ted with all necessary
based on their sub-contractors or suppliers, the records of the claims are also
calculations. This is to enable the Architect to advise the Employer, after
available from the sub-contractors or suppliers.
knowing the financial implication, whether to proceed with the instruction
for the Contractor to go ahead with the Variation. It is necessary that the
Clause 11 .9 - Variations and additional expenses added to Contract Sum
Contractor submits his notice within 28 Days from the date of the ATor CAI,
as his claim will fail if he does not do so. The time period of 28 Days is the
As soon as the Architect has ascertained the amount of Variations and/or
provision allowed in the standard form of contract. Depending on the size and
additional expenses claimed by the Contractor under Clause 11.7, the amount
complexity of the Works, the period could be sho1tened or lengthened.
so ascertained shall be added to the Contract Sum. When an Interim Certificate
is issued after the date of ascertainment, such amount shall be included in the
Clause ll.7(b): ... the Contractor shall send to the Architect and
certificate.
Quantity Surveyor complete particulars ofhis claim
The Architect shall, as soon as he has ascertained the amount of Variations
Within 28 Days of completing the Variation, the Contractor must submit
and/or additional expenses claimed by the Contractor, include the amount in
complete particulars of his claim for additional expenses, together with all
Interim Certificates. The amount shall be added to the Contract Sum.
necessary calcu lations to substantiate his claims. Ifhe has difficulty submitting
within the 28 Days, he must seek an agreement with the Architect for a longer
time to submit. If the Contractor fails to submit the required particulars within
28 Days or within such longer period as may be agreed in writing by the
Architect, it shall be deemed that the Contractor has waived his rights to any
such additional expenses. The time period of 28 Days is the provision allowed
in the standard form of contract. Depending on the size and complexity of the
Works, the period could be sho1tened or lengthened.

Clause 11.8 -Access to Con tractor's books and documents

The Contractor shall keep contemporaneous records to substantiate al l

his claims for additional expenses under Clause 11. 7, and shall submit all
pa1ticulars to the Architect and Quantity Surveyor. The Architect and Quantity
Surveyor shall have access to all books, documents, reports, papers or records
in the possession, custody or control of the Contractor that are material to
the claim and the Contractor shall provide free of charge a copy each to the
Architeet-nnd--Quarrtity-Survc)li".>1 wht::n rt::quesred. AH such documents shall
remain available in accordance with this clause until all claims have been
resolved. The Contractor shall use his best endeavour to ensure that all such
similar documents in the possession, custody or control of sub-contractors
and/or suppliers that are material to the claim are similarly available.

It is a requirement that the Contractor must keep contemporaneous records

to substantiate any claims, and that these records are readily available as and
when required by the Architect and Quantity Surveyor. ff requested by the
Architect or Quantity Surveyor, the Contractor shall provide copies of the
records for checking. All the records must be kept and be available until
disputes are resolved. The Contractor must also ensure that if their claims are
 Clause 12.0 83

~ ause 12.0 - Co~t~act Bills - - - - - :

Normally, when the Architect or Quantity Surveyor prepares the tender

documents, they will incorporate any special terms and conditions to suit
the particular nature of the Works that may be required by the Employer,
Architect or Consultant.

For example, in English Industrial Estates Corporation v George Wimpey

7 BLR 122, special conditions were included in the Contract Bills for the
Employer to install manufacturing plant and equipment during the progress
of the building, and that the Employer would occupy and use part of the
Works before the overall completion. It was a requirement in the Contract,
that the Contractor was to keep the whole of the Works covered by insurance,
and the increased cost of insurance would be priced in by the Contractor
and included in the Contract Sum. Before the whole of the Works was
completed, a fire broke out and gutted the new extension earlier occupied
by the Employer.

The Employer said that the insurance was under the responsibility of the
Contractor and, therefore, the loss should fall on them and their insurance
company. The Contractor (or rather the insurance company) contended
that the Employer had taken possession of several parts of the works and
therefore, the risk had passed to them. The Employer relied on the special
terms and conditions that the patis of the works taken over had been covered
by insurance, and the cost of additional insurance had already been included
in the Contract Sum. The Contractor, however, contended that because of
Clause 12(1) of the RIBA Form: 'Nothing contained in the Contract Bills
shall override, modify or affect in any way whatsoever the application or
interpretation of that which is contained in these Conditions', it was not
pem1issible for the court to consider the special terms and conditions
incorporated in the contract as overriding the printed Contract Form.

To put it another way, the similar clause in PAM 98 Clause 12.2 expressly
states that in the event of any conflict, the printed Conditions of PAM 98
will prevail over any special terms and conditions specially formulated
and incorporated in the tender document by the Employer, Architect or
Consultant. The special terms and conditions will not be considered if they
attempt to modify or override or affect the printed conditions in any way. The
words in Clause 12.2 are intended to reverse the ordinary rule of contractual
interpretation whereby the written words in a contract prevail over printed
conditions.
 Clause 12.0 84
The effect of this clause is even more alarming, when we consider the definition
of ' Contract Bills' in PAM 98 Atiicle 7(m):
'Contract Bills means the Contract Bills refeITed to in the Atticles of
Agreement comprising:
i) Instructions to Tenderers;
ii) Fonn of Tender and Conditions of Tendering;
iii) Specification To All Trades incorporating Trade Preambles and
Specification;
iv) Preliminaries and Generally;
v) Measured Works. Provisional and Prime Cost Sums and Final
Summary;
vi) Appendices including, inter alia, the Letter of Acceptance.'
Under PAM 98, if there is a conflict between the Contract Bills and the
printed PAM 98, the printed PAM 98 will prevail over the Contract Bill. The
provisions in the Contract Bill will be of no effect.
So for example, if there is a conflict between any written words in any special
written documents, such as the Letter of Acceptance (which fonns part of the
Contract Bill) with any Conditions in PAM 98, Clause 12.2 expressly states
that the Conditions in PAM 98 shall prevail over the Letter of Award. Any
special terms and conditions agreed by the parties that had been incorporated
in the Letter of Acceptance are of no effect.
A provision in the Contract Bills to delete Clause 12.2 is also not valid, as the
Conditions will prevail over anything written in the Contract Bills.
The provision of Clause 12.2 has attracted judicial comments from the
following: Lord Denning in English Industrial Estates C01poration v George
Wimpey, who found this clause so offensive, that he was even prepared to
-disregard thenrascrnrntte1 of pubrrc1mrrcy.--
Duncan Wallace said that this clause is notorious, and that: 'such artificial
priority between documents can only produce injustice ..... seeking to put
forward an interpretation of the contract which departs from the parties' true
intention .... '
Vincent Powell-Smith in his book on the PAM/ISM 1969 Form also said that:
'the clause should be entirely deleted as in practice it often defeats the true
intentions of the patties and there is no legal or logical justification for its
inclusion.'
..-., f ,., - '/1).
Clause 12 .0 85
Despite the criticism of the JCT clause (which was similar to PAM 98 Clause
12 .2) the clause was not removed from PAM 98 thereby retaining the potential
to invalidate provisions which may have been specially included in the
Contract Bill or the Letter of Acceptance by the Employer.
The controversial PAM 98 - Clause 12.2: 'Nothing contained in the Contract
Bills shall oveITide, modify or affect in any way whatsoever the application
or interpretation of that which is contained in these Conditions' has now been
deleted and is not incorporated in PAM 2006.
Although PAM 98 Clause 12.2 has not been incorporated in PAM 2006, this
does not mean that professional advisers, responsible for preparing building
contracts, should take it as a license to amend PAM 2006 on an ad-hoc basis.
It is suggested that any amendments to the standard form should be carried
out with care. Amending one clause may have repercussion on other clauses.
Any amendments carried out to the PAM 2006 must also, for consistency, be
carried through to the PAM 2006 NSC. There is also the danger of affecting
multiple clauses where they interact through cross references. Amending one
clause may affect a number of other clauses. Deleting clauses may also be
problematical. For example, if the Architect issues an instruction that has
impact on time required for compliance, and the relevant extension of time
clauses has been deleted, and as a result, there is no corresponding ground
in the Contract to grant an extension of time, then time will be at large. The
Employer will then lose his rights to impose Liquidated Damages for late
completion.
Example of Inconsistent Amendments
When professional advisors amend the 'Period of Honouring Certificates' in
PAM 98 Clause 30.1 from the standard '14 days' to say '60 days' , they often
forget to amend the relevant Clause 11.4 of the NSC Form.
PAM 98 NSC - Clause 11.4
'Within fourteen (14) days of the receipt by the Contractor of any certificate or
duplicate copy thereof from the At·chitect the Contractor shall notify and pay
to the Sub-Contractor... '
As a result of this inconsistent provision, the Contractor has an obligation to
pay the Nominated Sub-Contractor his payment within 14 days, whereas the
Employer has 60 days to pay the Contractor.
 Clause 12.0
Example of Inconsistent Te1ms in PAM 98 and PAM 98 NSC
PAM 98 - Clause 23.1
'If and when it becomes reasonably apparent that the progress of the Works is
being or likely to be delayed ... '
PAM 98 NSC - Clause 8.1
'Upon it becoming reasonably apparent that the progress of the Sub-Contract
Works is delayed ... '
Inconsistent use of terminology may cause different interpretation of the
clauses.
Inconsistent Drafting Between PAM 98 (With Quantities) and PAM 98
(Without Quantities)
PAM 98 - Clause 12.3:
'Any error in description, quantity or omission of items between the Contract
Drawings and the Contract Bills shall not vitiate this Contract...'
This Clause appears in both PAM 98 (with Quantities) and the PAM 98
(Without Quantities). In the ' Without Quantities Form' , there is no definition
of 'Contract Bills. ' So, what then is the meaning of "en-or in description,
quantity or omission of items between the Contract Drawings and the Contract
Bills..."?
If professional advisers desire to carry out any amendments to the PAM
2006 Suite of Contract, they should exercise their own skill and judgment. In
common with the new JCT Suite of Contracts, the following has been included
on the front page of the PAM 2006 Suite Fonns of Contract to caution parties
amending this standard form of contract.
' Al I parties must rely upon their own skill and judgment or upon
those of their advisers when using this document and PAM assumes
no liability to any users or any third patty in connection with such
use.'
Clause 12.l - Measurement of buildin2 works
The quality and q uantity of the work included in the Contract Sum shall
be deemed to be those which are set out in the Contract Bills and unless
othe1w ise express ly stated, shall be prepared in accordance with the principles
oftbe Standard Method of Measurement of Building Works sanctioned by the
Institution of Surveyors Malaysia and currently in force.
86 Clause 12 .0 87
The quality and quantity of work shall be as described and measured in the Bills
of Quantities. The Bills of Quantities shall be prepared in accordance with the
principles of the latest edition of the Standard Method of Measurement. If the
Standard Method is any other edition than the latest edition, then, amendment
has to be made in this clause to identify the edition of the Standard Method.
If the principles of measurement deviate from the principles stated in the
Standard Method, the deviation from the Standard Method must be expressly
stated in the Bills of Quantities.
Clause 12.2 - Correction of errors or omissions
Unless otherw ise expressly provided, the contract is a Lump Sum Contract.
Any en-or in description, quantity or o mission of items in the Contract Bills
shall not vitiate the Contract and shall be con ected by the Architect or
Consultant.
Clause 12.2: "Unless otherwise expressly provided .. "
If the Contract Sum is based on Provisional Quantities or the whole of the
Works have been measured on a 'provisional' basis, this must be expressly
stated in the Contract Bill.
Clause 12.2: " ...the contract is a Lump Sum Contract. "
Lump Sum Contract has been defined in Atticle 7 (ah) to mean 'a fixed
price Contract and is not subject to re-measurement or recalculation except
for Provisional Quantities and Variations. ' Therefore, except for Provisional
Quantities which will be re-measmed by the Quantity Surveyor based on the
actual quantities of work executed, all other quantities will not be re-measured
or adjusted, unless it is due to enor in description, quantity or omission of
items in the Contract Bills. Any financial adjustment for the Final Account
shall, therefore, use the Contract Sum as a base for such adjustment. Although
it is a lwnp sum contract, the Contractor, in accordance with the Conditions,
is entitled to progressive payments.
Clause 12.2: "Any error in description, quantity or omission of
items in the Contract B ills... "
If the Contractor discovers any error in the Bills of Quantities which may be
due to description, quantity or omission of items, he shall submit details to
substantiate such errors, together with the costs implications, to the Architect
or Consultant who, if the errors are substantiated, shall have the items and
costs corrected.
 Clause 13.0 89

-- - - - - - -- ---~-- --- ..
Clause 13.0 - Contract Sum
-- ----- - -- - - - - - - ---·· --- .

Clause 13.1 - Contract Sum not to be adjusted or altered

The Contract Sum shall not be adjusted or altered in any way whatsoever,
other than in accordance with the express provisions of the Conh·act. Any
arithmetical errors or any errors in the prices and rates shall be corrected
and/or rationalised by the Architect or Consultant without any change to the
Contract Sum before the signing of the Contract.

The Contract Sum is the sum stated in Article 2. It is a fixed sum, and the
amount of Retention Fund and that of the Performance Bond are derived from
a percentage of the Contract Sum.

Clause 13.1: "... The Contract Sum shall not be adjusted or altered
...in accordance with the express p rovisions of the Contract. "

If after all arithmetical and pricing check, there is a difference between the
tender sum and the amount in the final summary of the tender, the Architect or
Consultant, before the signing of the Contract, shall correct the figures without
any changes to the Conh·act Sum. The Architect or Consultant should also
rationalise the prices and rates before preparing the final contract documents
for contract signing, also without any changes to the Contract Sum.

Clause 13.1: "... The Architect or Consultant should also

rationalise the prices and rates...without any change to the Contract Sum
before the signing of the Contract. "

Very often, the Contract is awarded before the Architect or Consultant has
the time to rationalise the prices and rates. Although this Clause provides that
the rationalisation can be carried out before the signing of the Contract, it
is advisable for those preparing the tender documents to include a similar
condition in the 'Conditions of Tendering' or similar document.
 Clause 14.0 91

-------~--
Clause 14.0 - Materials And Goods
--~-~~
·------- - - - - - - - - - - - - - - --
Clause 14.1 - Materials and ~oods not to be removed

Materials and goods delivered to the Site for incorporation into the permanent
works shall not be removed until completion of the Works unless prior consent
in writing from the Architect has been obtained, which consent shall not be
unreasonably withheld or delayed.

Clause 14.1: "Materials and goods delivered to the Site... "

The provisions of PAM 98 Clausel4.3: 'Where materials and goods intended

for the Works ..... ' is supposed to be a payment provision in the Contract for the
Contractor to claim for the value of materials and goods before it is delivered
to the Site, or what is commonly refe1Ted to as ' off-site materials'. There is no
similar provision in PAM 2006. Under PAM 2006, materials and goods will
only be included in Interim Certificates after the materials and goods have
been delivered to the Site.

Clause 14. l: ".. for incorporation into the permanent works shall
not be removed. .. "

PAM 98 Fonn refers to 'Unfixed Materials or Good' and this has often been
interpreted to include all unfixed materials on Site, including materials used for
the purpose of constructing the permanent works such as timber and plywood
for formwork materials, sheet piles and temporary strutting materials or other
similar materials.

PAM 2006 has now clarified that the materials and goods which are delivered
onto the Site, must be for incorporation into the pennanent works to be eligible
for inclusion in the Interim Ce1tificates. This will mean that materials used for
the purpose of constructing the pe1manent works will not be included in the
valuations. Also to avoid the possibility that the Conh·actor may inadvertently
incorporate unapproved materials into the Work, only materials or goods with
specific purposes are allowed on the Site.

Clause 14.1: " .... unless prior consent in writingji,-om the Architect
has been obtained... "

If the materials and goods have been included in payment certificates, the
Architect cannot give consent to the Contractor to remove any goods and
materials. If the Contractor removes such materials and goods from the Site
after completion of the Works, such consent is not required.

1•~1 ~ -""- • - f/ )•
 Clause 14.0 92
Clause 14.2 - Materials and ~oods included in certificates
Where the value of such materials and goods has in accordance with Clause
30.2 been included in any Interim Certificate under which the Employer has
effected payment, such materials and goods shall become the property of
the Employer.
Clause 14.2: " ...the value ofsuch materials and goods ... "
The value of such materials and goods may not be the Contractor 's invoice
value. The value included in Interim Certificates shall be based on the analysis
of the prices for the items in the Contract Bills, and may not be the full value
of the materials and goods shown in the Contractor's pmchase invoices. So,
for example, if the Contractor submitted his supplier 's invoices for steel
reinforcement at RM 2000 per ton, and the rates for steel reinforcement placed
into position priced by the Contractor in the Contract Bill was RM2100 per
ton, it is obvious that the RMI 00 difference between the rates in the Contract
Bill and the supply rate would not be sufficient to cover labour, wastage
and other overheads necessary to install the reinforcement in position. The
value of the steel reinforcement included in such certificate will therefore
be appropriately adjusted to reflect the level of prices in the Cont;·act Bills. '
Clause 14.2: "... in accordance with Clause 30.2... "
Under Clause 30.2, the amount for materials and goods shall only 'include
the percentage of the value of materials and goods stated in the Appendix.'
The percentage included in payment certificates for materials and goods,
therefore, depends on the details in the Contract.
The amount for payment for materials and goods are subject to further
retention under Clauses 30.5 and 30.6.
Clause 14.2: "... which the Employer has effected payment... "
The Contractor may not receive the total certified payment for the materials
and goods, if the Employer deducts, for example, Liquidated Damages
for late completion. As long as the Employer has honoured the certificate,
which has included the value of the materials and goods, in accordance with
the provisions of the Contract, it will mean that the Employer has effected
payment for the materials and goods.
Clause 14.0 93
Clause 14.2: "... such materials and goods shall become the
property of the Employe1'. .. "
Under the Sales of Goods Act 1957, Section 25(1) provides that:
' Where there is a contract of sale of specific goods ..... the seller may by
the terms of the contract. ....reserve the right of disposal of the goods
until certain conditions are fulfilled. In such case, notwithstanding the
delivery of the goods to the buyer. .... the property in the goods does
not pass to the buyer until the conditions imposed by the seller are
fulfilled. '
An example of such a ' retention of title' will be, where the supplier states
in the contract that ' until the materials are paid in full, title in the materials
belongs to the supplier.'
To ensure that the materials and goods shall become the property of the
Employer, the Contractor must be able to satisfy the Architect or Quantity
Surveyor, that his suppliers did not impose any ' retention of title' clause in the
supply contract. This is easier said than done. Consider the following scenario:
The Contractor bought material from the first supplier and paid him in full.
In theory, title will be deemed transfen-ed to the Contractor. Unfo1tunately,
unknown to the Contractor, the first supplier obtained the material from a
second supplier, and the second supplier had imposed a ' retention of title' on
the first supplier. If the second supplier does not get paid by the first supplier,
the second supplier may still have a claim on the goods on the Contractor's
site. Since it is difficult to know how far down the line the ' retention of title'
clause goes, a new Clause 14.4 is introduced to impose on the Contractor an
obligation to ensure that there are no 'retention of title' or other conditions
attached to any materials and goods, when the Contractor includes the value
of such materials and goods in any payment application.
Clause 14.3 - Responsibility for materials and ~oods
The Contractor shall be responsible for any loss and/or damage to such
materials and goods including materials and goods supplied by Nominated
Sub-Contractors and Nominated Suppliers.
As the Contractor is responsible for the security ofthe Site, he has responsibility
to ensure that the materials and goods supplied by Nominated Suppliers, for
which he has taken delivery, are safe from loss and damage.
Similarly, he is responsible for any loss and damage for the materials and
goods belonging to Nominated Sub-Contractors, and if there are any special
 Clause 14.0 94
atTangements to ensure such security, the Contractor should resolve this with
the Nominated Sub-Contractor.
The Contr~ctor is to note that the Contractors All Risk insurance required under
Clause 20 mcludes a cover for loss and/or damage by 'theft' . The Contractor
may wish to liaise with the insurance companies for any atTangement to ensure
the risks are properly covered.
Clause 14.4 - Warranty of title of goods and materials
The Contractor shall be deemed to have warranted that he has title free from
encumbrances for such materials and goods upon inclusion of the value of
such materials and goods in any applications for payments under Clause 30.1.
In the event that the Contractor is found to have made a fal se watTanty, any
loss suffered by the Employer shall be made good by the Contractor or shall
be set-off under Clause 30.4.
Tf any materials or goods included in any Contractor's payment application
are re-possessed, the Contractor would be deemed to have breached the
Contract by making a false watTanty, and shall be liable to the Employer for
any loss suffered. If the Employer has effected payment for such materials
and goods, the Employer shall be entitled to recover the amount by setting
off the amount from any monies due to the Contractor under Clause 30.4. In
order to minimise such a risk, the Contractor should ensure that the titles of
~II such mate~·ials and goods are transfetTed to the Employer by having them
mcorporated mto the Works as soon as possible.
__...,,_ - '/IJ.
Clausel5.0 95
PAM 98 Clause 15. I has defined ' Practical Completion ' as follows: ' When
the Architect is of the opinion that the Works are practically completed,
meaning that the Contractor has performed and completed all the necessary
Works specified in the Contract and the patent defects existing in such Works
are "de minimis", the Architect shall forthwith issue a Certificate of Practical
Completion.'
The words 'de mininis' are derived from the maxim 'de minimis non curat
Lex' meaning 'the law does not concern itself with trifles.' However, without
refening to further case law, the term is difficult to understand. The term
'de minim is' was used in the case of H. W Neville (Sunblest) Ltd v William
Press (1981) 20 BLR 78 where the judge said: 'I think the word practically
complete ... gave the Architect a discretion to certify that the Contractor had
fulfilled its obligation .... where very minor de minim is work had not been
catTied out, but if there were any patent defects .... the Architect could not
have given a certificate of practical completion.'
lt must be noted that under the PAM 98 definition, Practical Completion
can be issued when ' ... the patent defects existing in such Works are "de
minimis ... ' whereas, under the definition in Neville (Sunblest), there should
be no patent defects. The PAM 98 definition allowing for patent defects is
therefore contrary to the definition in Neville (Sunblest) .
For a more detailed understanding of Practical Completion, please also
refer to the cases of Westminster County Council v J Jarvis [7 BLR 64],
Emson Eastern Ltd v EME Development Ltd [55 BLR ll4],and Mariner
International Hotel v Atlas [2007] 1 HKLRD 413 mentioned below.
C lause 15.1 - Practical Completion And Defects Liability
The Works are Practically Completed when
15. 1(a) in the opinion of the Architect, the Employer can have full use of
the Works for their intended purposes, notwithstanding that there
may be works and defects of a minor nature still to be executed
and the Contractor has given to the Architect a written undertaki ng
to make good and to complete such works and defects within a
reasonable time specified by the Architect; and
 Clause 15.0 96
15.1(b) other requirements expressly stated in the Contract Documents
as a pre-requisite for the issuance of the Certificate of Practical
Completion have been complied with.
Clause 15.J(a): " ... the Employer can have.full use of the Works.for
their intended purposes... "
In Westminster County Council v J Jarvis 7 BLR 64 Salmon LJ, in ttying
to define Practical Completion said: ' f take it that these words to mean
completion for all practical purposes, that is to say, for the purpose of allowing
the employer to take possession of the works and use them as intended.'
Contra1y to some suggestions that Practical Completion should also be tied
up with the issue of the Ce1tificate of Fitness ('CF'), or the Certificate of
Completion and Compliance ('CCC'), it is respectfully submitted that this is
wrong and is also not practical. PAM 2006 is a construction contract, and the
Architect and Consultant are responsible for the designs. The Contractor could
have can-ied out the construction work in accordance with the construction
drawings, but if the designs were not in compliance with the Building By-
laws, and the authority did not issue a CF, the Contractor cannot be faulted.
Further, PAM 2006 could have been used for, say, the Phase 1 - Substructure
work. In such a contract, there will be no issuance of the CF or the CCC,
although the Sub-structure Contractor will be obligated to complete the CCC
Fo1ms relevant to the completion of his works.
Clause 15.J(a) : " ... notwithstanding that there may be works and
defects ofa minor nature... , "
To explain this, it is perhaps prudent to quote the decisions of Judge John
Newey in Emson Eastern Ltd v EME Development Ltd 55 BLR J 14. ln arriving
at the definition of Practical Completion, Judge Newey took into account what
hap_pens_on._a_building.site. He..considered th-at buildin-g-cons-truetion is not like
the manufacture of goods in a facto1y. The size of the project, site conditions,
use of many materials and employment of various types of operatives make
it virtually impossible to achieve the same degree of perfection as can a
manufacturer. His view was that it must be rare for a new building to have
every screw and eve1y brush of paint correct. Fuither, a building can seldom
be built precisely as required by the drawings and specifications. His view was
that Practical Completion, therefore, occurs before defects and other faults
have to be remedied.
In the Hong Kong case ofMariner Tnternational Hotel v Atlas [2007] J HKLRD
413, Bokhary PJ pointed out the term 'practical completion' in England and
Clause I 5 .0 97
now in Hong Kong will (unless the contract defines it in some other way) be
taken to mean a state of affairs in which the works ha ve been completed free
from any patent defects other than ones to be ignored as trifling. As to the
meaning of ' trifling' , it has been suggested by the judge to mean ' work and
defects of a minor nature.'
Clause 15.J(a) : " ...and the Contractor has given to the Architect a
written undertaking to make good and to complete such works and dejects
within a reasonable time specified by the Architect... "
If the Architect discovers any works and defects of a minor nature on bis
inspection for Practical Completion, he shall issue the list of work to the
Contt·actor, and the Architect shall specify the time the Architect requires the
Contractor to complete the works.
The Contractor will, thereafter, provide a written undertaking that he will
cany out the work within the time specified by the Architect.
lf the Contractor considers that he is unable to carry out the work within the
time specified by the Architect, he must respond to the Architect and agree on
a revised time.
Clause 15.J(b): ".. .other requirements expressly stated in the
Contract Documents ... "
Some examples of these requirements are: testing and commissioning
requirement of mechan ical and electrical equipments, requirements for
operation and maintenance manuals, any As-Built Drawings required
as a prerequisite for Practical Completion. If the Contt·actor is required to
comply with any such requirements, these should be expressly set out in
the specification or other relevant documents forming pa1t of the Contract
Documents. If the documents contain no such express requirements, it will
mean that the Architect does not require any.
It is suggested that, unless the Contractor or Nominated Sub-Contractor carries
o ut any design for services, it is not appropriate that their obligation should
include obtaining the approval from the Service Provider.
Whether the Works is Practically Completed is a matter to be decided by
the Architect based on the provisions stated in Clauses 15.l(a) and 15.l(b).
Accordingly, the Works is considered to be Practically Completed when:-
 -- • - - . - - -- - -
Clause 15.0 98
Scenario No. 1
'in the opinion of the Architect, the Employer can have full use of the Works for
their intended purposes ' and there are no outstanding works, no patent defects
and there are no express requirements stated in the Contract Documents that
the Contractor has to comply with before the Architect can issue the Ce1tificate
of Practical Completion.
Scenario No. 2
the Architect is of the same opinion as that of Scenario No. I above,
'notwithstanding that there may be works and defects of a minor nature sti II to
be executed ' provided that the Contractor bas given to the Architect a written
unde1taking to make good such defects and to complete such works 'within
a reasonable time specified by the Architect.' Fmther, like Scenario No. 1
above, there are no express requirements stated in the Contract Documents
that the Contractor has to comply before the Architect can issue the Certificate
of Practical Completion.
Scenario No. 3
The Architect is of the same opinion as that of Scenario No. 2 above, and
the Contractor bas also complied with the express requirements stated in the
Contract Documents before the Archi tect can issue the Ce1tificate of Practical
Completion.
Clause 15.2 - Certificate of Practical Completion
When the whole of the Works are Practically Completed, the Contractor shall
forthwith give written notice to that effect to the Architect who shall within
fourteen ( 14) Days do either one of the following:
15.2(a) if the Architect is of the opinion that the Works are not Practically
eomp-teterrarrder Ctarrs-e 15.1 , the Architect shall give written
notice to the Contractor with copy extended to the Nominated Sub-
Contractors stating the reasons for his opinion; or
15.2(b) if the Architect is of the opinion that the Works are Practically
Completed under Clause 15. l, the Architect shall issue the Certificate
of Practical Completion. The date of Practical Completion shall be:
15.2(b)(i) the date ofreceipt oftbe Contracto r's written undertaking
to make good and to complete works and defects of a
minor nature, where there are s uch works and defects;
or
- -- --- .--- - -- -----
Clause 15.0 99
l 5.2(b)(ii) the date of receipt of the Contractor 's written notice,
where there are no works and defects of a minor nature
The Certificate of Practical Completion shall be issued to the Contractor with
copies extended to the Employer and Nominated Sub-Contractors. Upon the
issuance of Certificate of Practi cal Completion by the Architect, the Contractor
shall fo rthwith return Si te possession to the Employer.
Clause 15.2: "When the whole of the Works are Practica!!y
Completed, the Contractor sha!!...give written notice to that effect to the
Architect... "
PAM 98 Clause 15.1 states that 'When the Architect is of the opinion that
the Works are practically completed .... the Architect shall forthwith issue
the Certificate of Practical Completion. ' The Contractor, therefore, has no
obligation to infonn the Architect when the Work has reached the stage
of Practical Completion; the Architect has to carry out his duty to certify
completion when 'the Architect is of the opinion that the Works are practically
completed ... ' Without an express provision that the Contractor must submit
a written notification when the Contractor considers that the Works are
Practically Completed, the PAM 98 provision imposed on the Architect a
difficult and onerous duty to perform. It is also likely that whatever decisions
he makes on the date, his opinion as to whether the Works are Practically
Completed may be disputed.
Under PAM 2006, it has now been clarified that the Contractor must give
written notice when the Works have reached the stage of Practical Completion.
The Architect shall inspect the Works within 14 Days to check whether the
Works, in his opinion, has reached the stage of Practical Completion.
Cla use 15.2: "... the Cortractor shall fortlmit/1 give wriflen
notice... "
As soon as the Contractor considers that the Works has reached the stage
of Practical Completion, he shall immediately give a written notice to the
Architect to that effect.
The Contractor must only give notice to the Architect when the Work is fully
complete, rather than in anticipation of full completion during the notice period
provided for the Architect's inspection. In a situation where the Contractor bas
given notice but the Works is only anticipated to reach the stage of Practical
Completion anytime within the next 14 Days of the notice period, and the
Architect decides to carry out the inspection immediately upon receipt of the
 Clause 75.0 100
notice, the Contractor will risk receiving a response from the Architect under
Clause l 5.2(a) 'that the Works are not Practically Completed under Clause
15.1.'
Clause 15.2: "... within fourteen (14) Days do either one of the
following. .. "
Upon the receipt of such notice, the Architect may inspect the Works anytime
within 14 Days after receiving the notice. The time period of 14 Days is the
provision allowed in PAM 2006. Depending on the size and complexity of
the Works, the period of 14 Days could be shortened or lengthened. However,
if the Architect fails to inspect the Works within the time stipulated, in the
case of Clause 15.2(b)(ii), the date of Practical Completion is still the date the
Architect received the Contractor's notice. In the case of Clause 15.2(b)(i),
the date of Practical Completion shall be back-dated from the date of receipt
of the Contractor's written undertaking to make good and to complete works
and defects of a minor nature, by the length of delay that the Architect took
to act.
Clause 15.2(a): "... if the Architect is ofthe opinion that the Works are
not Practically Completed. .. "
If after inspection, the Architect is of the opinion that the Works has not
reached the stage of Practical Completion, he must inform the Contractor of
the reasons for his opinion. The Architect's response must also be copied to
the Nominated Sub-Contractors, so that the Nominated Sub-Contractors will
be aware of the reasons for the non issuance of the Certificate of Practical
Completion by the Architect.
Clause 15. 2(b): "if the Architect is of the opinion that the Works are
Practically Completed. .. "
If in the Architect's opinion, the Works has reached the stage of Practical
Completion, he must issue the Certificate of Practical Completion, and copies
of the Certificate of Practical Completion must be extended to the Employer
and Nominated Sub-Contractors.
Some architects continue to state in the Certificate of Practical Completion
that ' the Works have been completed to my satisfaction'. Since the 1972
case of English Industrial Estates COJporation v George Wimpey mentioned
earlier, the RIBA had amended their standard certificate in which the words
' completed to my satisfaction' have been struck out. All that the architect
needs to say is that the Works are Practically Completed on the specified date.
0 - - •
Clause 15.0 JOI
This will also be in accordance with Clause 30.16 that: 'The Final Certificate
shall not be conclusive evidence that any work, materials and goods ..... are
in accordance with the Contract' and is also a defence to the Contractor's
argument that if the Works has been completed to the Architect's satisfaction,
it must therefore be in accordance with the Contract.
Clause J5.2(b): "The date ofPractical Completion shall be... "
The date of Practical Completion is dictated by the Contract:
(i) if on receipt of the Contractor's notice, the Architect is of the opinion
that the Employer can have full use of the Works for their intended
pm-poses, and there are no outstanding works or patent defects, then
the date of Practical Completion shall be the date of receipt of the
Contractor's written notice; or
(ii) if on receipt of the Contractor's notice, the Architect is of the opinion
that the Employer can have full use of the Works for their intended
purposes, but there are works and defects of a minor nature still to
be attended to, the Contractor shall give a written undertaking to the
Architect agreeing to attend to such works within the time specified
by the Architect. The Certificate of Practical Completion shall be
issued when the Architect receives the written undertaking from the
Contractor, and the date of Practical Completion shall be the date of
receipt of such letter from the Contractor. The Contractor is therefore
advised not to delay the issuance of this letter.
The issuance of the Certificate of Practical Completion is an important mile-
stone because:-
(i) it signals the completion of the Works by the Contractor;
(ii) it allows the Employer to take possession of the completed Works;
(iii) it triggers the commencement dates of the Defect Liability Period and
the period to complete the Final Account;
(iv) it entitles the Contractor to rece ive half of the Retention Fund; and
(v) it marks the end of the Contractor's liability to Liquidated Damages
under Clause 22.1.
I'•
 Clause 15.0 102
Clause 15.3 - Contractor's failure to comply with undertakin2
Where applicable, the Contractor shall comply with his undertaking to attend
to the works and defects of a minor nature under Clause 15.l(a) within the
specified time. ln the event the Contractor fails to comply with his undertaking,
the Employer may without prejudice to any other rights and remedies which
he may possess under the Contract do any one of the following:
l 5.3(a) grant the Contractor addi ti ona l ex-gratia time to be specified by
the A rchitect to enable the Contractor to comply with his said
undertaking;
I 5.3(b) employ and pay other Person to execute any work which may be
necessa1y to give effect to the Contractor's said undertaking. All
costs incun-ed including any loss and/or expense shall be set-off by
the Employer under C lause 30.4; or
l5.3(c) accept to leave all or any such works and defects ofa minor nature
in the Works subject to an appropriate set-off under C lause 30.4.
Clause 15.3: "... the Contractor shall comply with his undertaking
to a/tend to the works and defects of a minor nature ... .the Employer may
without prejudice to any other rights and remedies which he may possess
under the Contract ... "
The Contractor has an obligation to fulfill his written undertaking to complete
any minor works and make good any minor defects within the time confirmed
by the Contractor in his written unde1taking to the Architect. Any failure by
the Contractor would mean that in addition to the Employer 's contractual
rights, the Employer is also entitled to common law remedies.
ClaTlS"e 15.J: lnihe evem rhe Contractor jails to comply with his
undertaking. .. "
If the Contractor fails to attend to defects and work of a minor nature , the
Employer has the following remedies under Clause 15.3(a), (b) or (c).
Clause I 5.3(a): "...grant the Contractor additional ex-gratia time... "
If the Employer is prepared to allow the Contractor, despite his prima1y default,
to fulfill his undertaking, the Employer can grant the Contractor additional
time on an ex-gratia basis for him to do so.
Clause 15 .0 I03
Clause 15.J(b): " employ and pay other Person... "
The Employer may employ another Person to carry out the works, and the
Employer will be entitled to recover all costs from any monies due to the
Contractor or from the Performance Bond. Note the definition of ' Person '
defined in Article 7(aq) to mean 'an individual, sole proprietorship, firm
(partnership) or body corporate. '
Clause 15.J(c): " ... accept to leave all or any such works... "
If the Employer decides he prefers to leave the works and defects of a minor
nature as it is for whatever reasons, he may abate the value of the works and
set-off the amount as provided under Clause 30.4.
Clause 15.4 - Schedule of Defects
Any Defects in the Works which appear within the Defects Liability Period
shall be specified by the Architect in a schedule of defects which he shall deliver
to the Contractor not later than fourteen ( 14) Days after the expiration of the
Defects Liability Period. The Contractor shall make good the Defects specified
within twenty eight (28) Days after receipt of the schedule of defects (or
wi thin such longer period as may be agreed in writing by the Architect) at the
Contractor's cost. If the Contractor fai ls to attend to the Defects, the Employer
may, without prejudice to any other rights and remedies which he may possess
under the Contract, employ and pay other Person to rectify the Defects and
all costs incurred shall be set-off by the Employer under Clause 30.4. If the
Architect with the consent of the Employer, instructs the Contractor to leave the
Defects in the Works, then an appropriate deduction for such Defects not made
good by the Contractor shall be set-off by the Employer under Clause 30.4.
Clause 15.4: " ... D eJec
,r, t s ... "
Defects has been defined in Article 7(x) to mean: ' defects, shrinkages or other
faults due to materials or workmanship not in accordance with the Contract and
Nominated Sub-Contract and/or due to any faulty design (if any) undertaken
by the Contractor and Nominated Sub-Contractor.
The definition of Defects has been expanded to include any defects due to
faulty design (if any) and also those in the Nominated Sub-Contract Works.
Clause 15.4: "...Defects Liability Period. .. "
Defects Liability Period has been defined in Article 7(y) to mean: ' the period
 Clause 15.0 104
stated in the Appendix under Clause 15.4. ' Depending on the contractual
requirement, the period could be for 12 Months or more. Recently, in some
housing projects, the period has been extended to 36 Months. The Contractor
must be made aware that the extended period of the Defects Liability Period
may also mean that the Retention Fund may not be released until the end of
this extended period.
The significance of the Defects Liability Period is sometimes misunderstood
by contractors. The Contractor may refuse to make good any Defects appearing
after the end of the Defects Liability Period, but if works or materials are not
in accordance with the Contract, they are still the Contractor's liability. The
Defects Liability Period is largely for the Contractor's benefit. lf it is not for
the Defects Liability Period, the Contractor would have no right to return to
the Site to rectify the Defects, and the Employer would be entitled to have the
Defects rectified by others and claim all costs from the Contractor.
Clause 15.4: "...he shall deliver to the Contractor not later than
fourteen (14) Days after the expiration of the Defects Liability Period... "
The time period of 14 Days is the provision allowed in PAM 2006. lf the
Architect is ofthe opinion that taking into consideration the size and complexity
of the Works, that the period of J 4 Days for preparing the schedule of defects
should be increased, an amendment to this clause could be incorporated in
the Contract Bill. However, a breach of this period would not mean that the
Architect would be estopped from sending the schedule of defects to the
Contractor. The 14 Days only serves as a g uide to time, (in other words, the
time is 'directory') and it would not be a fundamental breach of the Contract,
if the period is exceeded. However, to avoid any possibility of dispute, the
Architect should endeavour to do so within the specified time.
Clause 15.4: "Any Defects... sha/1 be specified by the Architect in a
-schedlfle--ofdefects ... "
Within 14 Days after expiration of the Defects Liability Period, the Architect
should have prepared a schedule of defects to be sent to the Contractor. The
Contractor has to be given the opportunity to make good the Defects which
appear before the expiration of the Defects Liability Period, and unless agreed
with the Architect in writing that he needs a longer period, the Contractor shall
complete the rectification of the Defects within 28 Days at the Contractor's
cost. The time period of 28 Days is the provision allowed in PAM 2006.
Depending on the size and complexity of the Works, the period of 28 Days
could be shortened or lengthened.
Clause 15.0 105
Clause 15.4: "...if the Contractor.fails to attend to the Defects ... "
Ifthe Contractor fails to rectify the Defects, the Employer has two alternatives.
The Employer can mTange for the Defects to be attended to by others and
recover all costs from the Contractor, or the Employer can agree that the
Defects be left as they are, and carry out an appropriate deduction for such
Defects not made good.
Clause 15.4: "...the Employer may, without pr~judice to any other
rights and remedies which he may possess under the Contract, employ and
pay other Person to rect(fy the D~fects.. . "
The Employer must give the Contractor the opportunity to rectify any Defects
during the specified 28 Days. If the Contractor fails to do so, the Employer
can ainnge for the Defects to be attended to by others, and all costs incmTed
shall be set-off under Clause 30.4. As an alternative to the contractual remedy,
the Employer can also recover all costs incurred from the Contractor under
common law.
Clause 15.5 - Instruction to make 200d Defects
Notwithstanding Clause 15.4, the Architect may at any time during the
Defects Liability Period issue an Al requiring any critical Defects which need
urgent rectifi cation to be made good within a reasonable time specified by
the Architect at the Contractor 's cost. If the Contractor fails to attend to such
Defects within the time specified by the Architect, the Employer may employ
and pay other Person to rectify such Defects and all costs incurred shall be
set-off by the Employer under Clause 30.4.
Clause 15.5: "...the Architect may at any time during the Defects
Liability Period issue an Al requiring any critical Defects which need u,gent
rectification... "
Some Defects need to be rectified immediately and, often cannot be delayed
until the end of the Defects Liability Period, as it may affect other part of the
Works; for example, roof leaks may cause more damage to the ceiling and
paintwork if the rectification is delayed. These defects are termed ' critical
Defects. ' For such Defects, the Architect is empowered to issue an A.I.
requiring such Defects to be rectified by the Contractor within a reasonable
time specified by the Architect at the Contractor's cost. As the rectification
work is critical, the Architect will give the Contractor a reasonable time to
attend to the Defects. If the Contractor fails to attend to these Defects within
the time specified by the Architect, the Employer may employ and pay other
 Clause 15.0 106 Clause 15.0 107

Person to rectify such Defects, and set-off all costs so incurred by him in Clause I 5.6(a): ''if the Architect is of the opinion that there is no
accordance with Clause 30.4. Defects or the Contractor has made good all Defects ... "

Under PAM 2006, the power of the Architect to issue an Al is limited to
instructing the Contractor to attend to the Defects. It is not intended that the
AI should extend to instrncting the Contractor to can-y out any Variations, as
upon Practical Completion, the Architect ceases to have the power to issue
any instructions which is a Variation, except for the circumstances as provided
in Clause 11 .3. If the Architect wishes to require the Contractor to carry out
extra works after Practical Completion, it would be prudent for the Architect
to agree w ith the Contractor the extra costs involved and document this as a
separate agreement.
Where the Defects Liability Period of the Works has been extended to 36
Months, the Contractor should be aware that he will have to allow for his costs
to attend to these 'critical Defects ' over the longer period of 36 Months.
If the Architect has not issued a schedule of defects because there are no
Defects in the Works, the Contractor must still apply to the Architect to issue
a Certificate of Making Good Defects. Similarly, he must also apply to the
Architect ifhe has rectified the Defects.
Clause I 5.6(b): "if the Architect is of the opinion that the Defects
have not been made good"
If the Architect, aBer inspection, is of the opinion that the Contractor has
not rectified all the Defects, he must write to the Contractor pointing out the
Contractor's deficiencies and request that he attend to such Defects. When the
Contractor has attended to such Defects, he must repeat the process, before a
Certificate of Making Good can be issued by the Architect.

Clause 15.6 - Certificate of Makin2 Good Defects

Upon completion of making good all Defects which may have been required
to be made good under Clause 15.4, the Contractor shall forthw ith give written
notice to the Architect to that effect. The Architect shall within fo urteen (14)
Days do either one of the fo llowing:

15.6(a) if the Architect is of the opinion that there is no Defects or the

Contractor has made good all Defects, the Architect shall issue a
Certificate of Making Good Defects and the date of maki ng good
Defects shall be the date of receipt of the Contractor's written
notice. The Certificate of Making Good Defects shall be issued to
the Contractor and copies shall be extended to the Employer and
Nominated Sub-Contractors; or

15.6(b) if the Architect is of the opinion that the Defects have not been made
good, the Architect shall give written notice to the Contractor with
copies to Nominated Sub-Contractors stating the reasons for the
non-issuance of the Ce1tificate of Making Good Defects.

Clause 15.6: "Upon completion of making good all Defects...the

Contractor shall forthwith give written notice to the Architect... "

When the Contractor has made good all Defects in accordance with the
Architect's schedule of defects, he shall inform the Architect of this fact in
writing, within 14 Days, and request for an inspection.
 Clause 16.0 109

Clause 16.0 - Partial Possession By Employer ·

Clause 16.1 - Possession of Occupied Part with consent

If at any time before Practical Completion of the Works, the Employer wishes
to take possession and occupy any part of the Works ("the Occupied Part") and
the consent of the Contractor (whose consent shall not be umeasonably delayed
or withheld) has been obtained, then notwithstanding anything expressed or
implied elsewhere in the Contract, the Employer may take possession of the
Occupied Part and the following shall apply:

16. l(a) within fourteen (14) Days from the date on which the Employer
has taken possession of the Occupied Part, the Architect shall
issue a Ce1tificate of Partial Completion. The Certificate of Partial
Completion shall state the Architect's estimate of the approximate
total value of the Occupied Part and for all purposes of Clause 16.0,
the value so stated shall be deemed to be the total value of the
Occupied Part;

16. l(b) for the purposes of Clauses 15.4, 15.5 and 16.l(f), Practical
Completion of the Occupied Part shall be deemed to have occun-ed
and the Defects Liability Period in respect of the Occupied Part shall
be deemed to have commenced on the date which the Employer
has taken possession;

16. 1(c) the Liquidated Damages under Clause 22. l shall be reduced by the
ratio of the estimated value of the Occupied Part to the Contract
Sum;

16. I ( d) upon the issuance of the Certificate of Partial Completion, the

Architect shall within fourteen (14) Days issue a certificate
to release half the amount of the Retention Fund in the ratio of
the estimated value of the Occupied Part to the Contract Sum .
The Contractor shall be entitled to payment within the Period of
Honouring Certificates. The amount of the Limit of Retention Fund
shall then be reduced by the same amount;

16. l(e) when in the opinion of the Architect all Defects in the Occ upied
Patt which he may have required to be made good under Clause
15.4 or 15.5 have been made good, he shall issue a Certificate of
Making Good Defects under Clause 15.6 in respect of the Occupied
Part; and
 Clause 16.0 110
16.l(f) upon the issuance of the Certificate of Making Good Defects of the
Occupied Part, the Architect shall within fourteen (14) Days issue a
certificate for the release of the remaining amount of the Retention
Fund in respect of the Occupied Part. The Contractor shall be
entitled to payment within the Period of Honouring Certificate.
This Clause must not be confused with Clauses 21.1 and 21.2, which deal
with 'Sectional Completion.' For 'Sectional Completion' of the Work, there
must be a requirement in the Contract that the Contractor must complete by
a specified date; for example, Section A ~ Block A by 1st January 2011 and
Block B by 1st September 2011.
The provisions in Clause 16 are often referred to as ' Partial Completion.'
Clause 16.1 only applies, if before Practica I Completion of the Works or
Sectional Completion of a designated part of the Works, the Employer
wishes to take early possession and occupy any part of the Works, and no
specific dates for completion of that part of the Works was specified in the
Contract Documents. The Employer can take such possession and occupy
the part of the Works only with the consent of the Contractor, and when the
Employer seeks the Contractor 's consent, the Contractor is not permitted
to unreasonably delay or withhold such consent. Examples of areas
requiring ' Partial Completion' are: TNB substation required for installation
of electrical equipment, kitchen areas in hotel where early possession is
required for storage and installation of kitchen equipment and so on.
Upon the Employer having taken ' Partial Completion', Clauses 16.l(a) to
(f) will be triggered, and the Contractor will accordingly be relieved of his
responsibility for such part. Under Clause 16.1, the Architect must issue a
Certificate of Partial Completion for the Occupied Part within 14 Days from
the Employer's possession of the Occupied Part. Included in the Ce1tificate of
Patti al Completion is the Architect's estimate of the approximate value of the
Oeeupiecl-Part-foMhe1'urpose of adjm,iment of Liqutdated Damages and the
Retention Fund, and the commencement and expiry of the Defects Liability
Period of the Occupied Part.
Clause 16.2 - Possession of Occupied Part without Consent
The Employer may, without prejudice to any other rights and remedies which
he may possess under the Contract, enter and occupy such part of the Works
prior to the completion of the who le of the Works without the consent of the
Contractor under Clause 16. l provided always that:
Clause 16.0 111
I 6.2(a) the completion of the Works has been delayed and a Ce1tificate
of Non-Completion has been issued by the Architect under Clause
22.1 ; and
J 6.2(b) such entry and occupation of the Occupied Patt can be effected
without any unreasonable disturbance to the progress of the
Contractor's remaining works.
In that event, the provisions of Clauses 16. l (a) to 16.1 (f) shall apply.
If the completion of the Works is delayed and the Architect has already issued
the Certificate of Non Completion, and provided such occupation will not
unreasonably disturb the progress of the Contractor's remaining Works, the
Employer may take possession of the Occupied Pait without the consent of the
Contractor. In such a case, the provisions of Clauses 16.1 (a) to 16.1 (f) shall
also apply. However, the word 'may' and the provision ' without prejudice to
any other rights and remedies which he may possess under the Contract' make
it clear, that the exercise of the Employer's entitlement under Clause 16.2 is
not mandatory and if he elected to do so, it would not affect the Employer's
other rights and remedies under the Contract. There are situations or instances
when in the event the Employer wishes to take possession of the Occupied
Part, if for example, the Employer has committed to allow tenants of a
shopping mall to carry out shop fitting works; it would be advisable for the
parties to document the arrangement in a separate bespoke agreement. Some
of the items to be considered for inclusion in the bespoke agreement are:
(i) time frame for the Contractor to complete the outstanding works.
Practical Completion should not be certified until the Contractor has
carried out the outstanding works to achieve Practical Completion; or
alternatively, an agreement between the parties setting out the details
to complete the outstanding works to be can-ied out by third pa1ties;
(ii) the uncompleted works are taken over by the Employer subject to
postponing the release of the Retention Fund and the sta1t of the
Defects Liability Period until all outstanding works has been carried
out, if can-ied out by the Contractor;
(iii) the Contractor will be relieved from liability to pay Liquidated
Damages for delay from the date the Employer has taken possession
of the uncompleted work in the Occupied Part; and
(iv) the effects on any other contracts are also taken into consideration.
 Clause 16.0
Clause 16.3 - Contractor to remove equipment
lf the Employer takes possession of the Occupied Part under Clause 16. l or
16.2, the Contractor shall upon the written instruction of the Architect remove
his site facilities, construction plant or equipment, materials and goods from
the Occupied Part.
The Contractor is required to demobilise all his site facilities, construction plant
or equipment and remove any materials and goods on the areas demarcated as
occupied by the Employer and yield possession of that part of the Site back to
the Employer.
l/2 Clause 17.0 113
Clause 17.1 - Assignment by Employer
Other than assigning his rights, interests or benefits under the Contract to his
financial institution, the Employer shall not without the written consent of
the Contractor (such consent shall not be unreasonably delayed or withheld)
assign the same to other parties.
lt was provided in PAM 98 that the Employer must obtain the written consent
of the Contractor if the Employer assigns his rights, interests or benefits to any
other party. This will include any arrangements which the Employer may wish
to have w ith his financial institution. The PAM 2006 Contract provides that the
Employer does not require the Contractor's consent when he has dealing~ with
his financial institution with regards to any project financing for the Works.
The Contractor's consent, however, is required if the Employer seeks to
assign his rights, interests or benefits under the Contract to any other patty.
For example, the Contractor may reasonably object if the Employer wishes to
assign a multi-million Ringgit Contract to a small subsidiary.
Clause 17.2 - Assignment by Contractor
Other than assigning any payment due or to become due under the Contract to
his financial institution, the Contractor shall not without the written consent
oftbe Employer (such consent shall be at the sole discretion of the Employer)
assign bis rights, interests or benefits under the Contract to other patties.
As most Contractors have to ai,-ange finance fro m their banks, the banks often
require them to enter into a legal arrangement to mandate the Contractor to
make all payments due under the Contract direct to the bank. There is, thus,
no merit to prevent the Contractors from assigning any payments without the
written consent of the Employer, as was the requirement in PAM 98. Under
PAM 2006, the Contractor is permitted to assign any payment due, or become
due, under the Contract to his financial institution.
If the Contractor wishes to assign his rights, interests or benefits under the
Contract to any other pmty, the Contractor will require the consent of the
Employer. It must be noted that the Employer has sole discretion to allow or
obj ect to such an a1,-angement.
 Clause 17.0 114
Clause 17.3 - No sub-contracting
Except where otherw ise provided by the Contract, the Contractor shall not
whol ly or substantially sub-contract the Works. Where the Contractor sub-
contracts labour only of craftsmen, ski lled or sem i-skilled workmen to carry
out any portion of the Works, this shall not constitute sub-contracting within
the meaning of this clause.
Under PAM 98 Clause 17.2 provides that: ' The Contractor shall not without
the written consent of the Architect...sub-let any portion or the whole of the
Works except othe1wise provided by the Contract ... Where the Contractor
sub-contracts labour only... this shall not constitute sub-letting within the
meaning of this clause ... ' The te1m 'sub-letting' used in PAM 98 should have
been confined to ' sub-contracting,' instead ofusing both the terms 'sub-letting
and sub-contracting' in the contract. It is a fact that the construction industry
in Malaysia relies mainly on sub-contracting to catTy out the Works, as most
contractors do not have in house capacity in all trades to cany out the Works.
As such, to require the Contractor to seek the consent of the Architect to even
sub-contract any portion of the Work is not a realistic option, as some works
such as electrical installation or plumbing works cannot be carried out by
the Contractor, unless the Contractor is also registered with the Appropriate
Authorities or Service Providers.
PAM 2006 provides that the Conh·actor shall not, except where otherwise
provided in the Contract sub-contract any portions of the Work. The Contractor
can sub-contract, if for example, there is a requirement that the electrical work
or plumbing works are to be executed by Nominated Sub-Contractors, or if the
electrical or plumbing works are included in the Contractor's scope of work,
and it is obvious that he has to sub-contract the works, as he is not registered
with the relevant Service Providers.
at 1s now clear m PA1vf"2006 1s that t e ontractor s a not w o y or
substantially sub-contract the Works. Wholly sub-contracting the works is
tantamount to a novation of the Contract, and the Contractor cannot novate
the Contract without the consent of the Employer. If the Contractor wholly
or substantially sub-contracts without the agreement of the Employer, he
would be in breach of Clause 25. l(e) which provides that: ' The Employer
may determine the employment of the Contractor if the Contractor... fails to
comply with the provisions in Clause 17 .0... ' A breach of this condition will
be sufficient ground to determine the Contractor's employment under this
Clause.
Clausel8.0 115
Clause 18.0 - Injury To Person Or Loss And/Or Damage Of
Property And Indemnity To Employer
Clause 18.1 - Contractor's indemnity against injury or death
The Contractor shall be liable for and shall indemnify the Employer against
any damage, expense, liabil ity, loss, claim or proceedings whatsoever
whether arising at com mon law or by statute in respect of personal injury
to or death of any person arising ou t of or in the course of or caused by the
carrying out of the Works and provided always that the same is due to any
negligence, om ission, default and/o r breach of contract by the Contractor or
of any Person for whom the Contractor is responsible.
Clause 18.1: "The Contractor shall be liable for and shall
indemn[fj1the Employer against any damage, expense, liability. .. whatsoever
whether arising at common law or by statute in respect a/personal injwy to
or death ofany person ... "
The Contractor is the party solely responsible for planning and carrying out
the Works, both with respect to temporary and permanent works as well as
all the ancillary activities, including protection of Site, delivery of materials,
traffic control. In other words, all construction activities are under the
Contractor's direct and sole control.
If a third party suffers any personal injury or death which occurs while the
Contractor is carrying out the construction activities, the Contractor may be
sued for damages. When a third party sues for damages, he may also decide
to sue the Employer, being the land owner and as a joint tortfeasor with the
Contractor.
This C lause provides that if that happened, this indemnity provision will
ensure that such risk is passed on to the Contractor. So if there is any
liability, whether arising at common law or by statute, the Contractor will
be responsible .
Clause 18.J: " ... provided always that the same is due to any
negligence, omission, de.fault and/or breach of contract by the Contractor
or ofany Person.for whom the Contractor is responsible."
The Contractor's indemnity is subject to the proviso that the third party claim
is as a result of negligence, omission, default and/or breach of contract of
the Contractor, as well as any Person he is responsible for. The Contractor's
 Clause 18.0 116
indemnity will not include any claim arising out of negligence, omission,
default and/or breach of contract of the Employer.
Clause 18.2 - Contractor's indemnity against loss and/or da mage
The Contractor shall be liable fo r and shall indemnify the Employer against
any damage, expense, liability, loss, clai m or proceedings due to loss and/or
damage o f any kind whatsoever to any property real or personal, includi ng the
Works and any other property of the Employer, in so far as such loss and/or
damage arises out of o r in the course of or by reason of the execution of the
Works and provided always that the same is due to any negligence, omission,
default and/or breach of contract by the Contractor or of any Person for whom
the Contractor is responsible.
Clause 18.2: "The Contractor shall be liable for and shall
indemnify the Employer against any damage, expense, liability...due to loss
and/or damage of any kind whatsoever to any property real or personal,
including the Works and any other properly of the Employe1: .. "
This Clause is similar in application to that of Clause 18. l, except that the
indemnity will relate to claim for loss and/or damage to property real or
personal. In the event the Employer owns the adjoining property, the indemnity
will extend also to such property of the Employer.
Clause 18.2: ".. .provided always that the same is due lo any
negligence, omission, default and/or breach of contract by the Contractor or
ofany Person for whom the Contractor is responsible "
The Contractor's indemnity is subject to the proviso that the claim is as a
result of negligence, omission, default and/ or breach of contract of the
Contractor. The Contractor's indemnity will not include any claim arising out
ofneg].ig_ence, omission. default and/or breach of co~t of theEmployer. but
since the insw-ance will be in the joint names of the Employer and Contractor,
such Employer's risk will be covered by the insurance.
Clause 18.3 - Contractor's indemnity against claims by wo1·kmen
T he Contractor shall be liable for and shall indemnify the Employer against
any damage, expense, liability, loss, claim or proceedings whatsoever arising
out of claims by any and every workman employed in and for the execution
of the Works and for payment of compensation under or by virtue of the
Workmen's Compensation Act 1952 and the Employees' Social Security Act
1969.
Clause 18 .0 117
Clause 18.3: "The Contractor shall be liable for and shall
indemnify the Employer against any damage, expense, liability, loss, claim or
proceedings whatsoever arising out ofclaims by any and eve1y workman ... "
Every workman employed on the Site is entitled to be covered under the
Workmen's Compensation Act 1952 or the Employees' Social Security Act
1969. This Clause provides that if there is any claim against the Employer by
any workman, this indemnity provision will ensure that such risk is passed on
to the Contractor.
Clause 18.4 - Indemnities not to be defeated
The indemnities given by the Contractor under Clauses 18. 1 to 18.3 shall
not be defeated or reduced by reason of any negligence or omission of the
Employer, Architect, Consultant or other authorised representatives in failing
to supervise or control the Contractor 's site operation or methods of working or
temporaty work or to detect or prevent or remedy defective work or to ensure
proper performance of any obligation of the Contractor under the Contract.
The compliance with statut01y requirements and obligations as well as the
planning and execution of the building activities are the responsibility of the
Contractor. The activities of the Employer, Architect, Consultant or other
authorised representatives in the Contract do not extend to checking the
Contractor's office for statutory compliance with respect to his obligations to
his employees or workmen employed by him, nor does it extend to looking for
faults in either planning or execution methods for the Works and asking the
Contractor to rectify them, as that would be tantamount to interference.
This Clause prevents the Contractor from avoiding, or reducing his contractual
indemnities given under Clauses 18.1 to 18.3 by reason of the Employer, the
Architect, the Consultant or other authorised representatives in failing to
supervise or control the Contractor's site operation or methods of working or
tempora1y work; or to detect or prevent or remedy defective work. It is meant
to prevent or limit the Contractor from trying to get around an indemnity, by
suggesting that the Employer ought to have advised the Contractor or prevented
it from any foreseeable event. It maintains the obligation of the Contractor in
ensuring that there is proper performance of any of his contractual obligations.
 Clause 19.0 119

- - . tio - Insurance Against Injury To Person And Los~

-
And/Or Damage Of Property
· - - - - - - - - - •• --- - I

Clause 19.1 - Contractor to insure a2ainst injury to Person and loss and/
or damai:e of property

Without prejudice to his liability to indemnify the Employer under C lause

18.0, the Contractor shall, as a condition precedent to the commenceme nt of
any work under the Contract, take out and maintain in the j o int names of the
Employer, Contractor, sub-contractor and all interested parties in respect of
personal injuries or death and injury or loss and/or damage of properly real
or personal arising out of or in the course of or by reason of the execution of
the Works and whether or not such injury, death, loss and/or damage is caused
by negligence, omission, default and/or breach of contract by the Contractor,
Employer, sub-contractor and interested parties and any of their servants and
agents. S uch insurance policy shall provide cover in respect of third party
lia bility fo r personal injury or death and damage to p roperty fo r the amounts
slated in the Appendix. If the Contractor having regard to his indemnity to the
E mployer under Clause 18.0 desires to increase any of the insurance coverage,
he shall do so and allow for any additiona l cost. The insurance policy shall
include the following endorsements:

19.l (a) a "cross liability" endorsement to provide insurance cover to the

Employer and Contractor and any other parties involved in the
Works as though they are separately insured fo r their respecti ve
rights and interest;

19. l (b) an endorsement to the effect that the Architect, Consultant and any
other professional consultants (as applica ble) and their employees
and representatives, Si te Staff, employees and representatives of the
Employer, are deemed to be third parties;

19. l (c) an e ndorsement for waiver of all expressed or implied rights of

subrogation or recoveries against the insured; and

19.1(d) an endorsement fo r a utomatic extension or renewal of the insu rance

up to the issuance of the Certificate of M aking Good Defects.
 Clause /9.0 120
Clause 19.J: "Without prejudice to his liability to indemnify the
Employer under Clause 18.0, ... "
Since the Contractor akeady indemnifies the Employer under Clause 18, it is,
in fact, not necessary to contractually require the Contractor to purchase an
insurance policy, unless such insurance is a requirement by law.
The requirement for insurance under this Clause is to transfer the Contractor 's
risk to an insurance company, so that in the event of a claim against the
Contractor, he can pass this claim to the insurance company, and does
not have to pay out of his own resources. If a Contractor does not have
insurance coverage, a substantial claim may bankrupt the Contractor, and
if he does not have sufficient capital base to deal with the claim, it may
cause the Conh·actor to abandon the Works. If that happens, it may affect the
Employer 's commitment to purchasers, if for example, he has already sold
the houses in a housing development.
As a result of all these complications, the Contractor is required under the
Contract to provide insurance cover, and is also allowed to include the cost
of complying w ith the insurance requirement in the Contract Sum. Since the
Employer is in effect paying for the Contractor 's indemnity, it is only logical
that the minimum insurance cover should be dictated by the Employer.
Clause 19.1: "... the Contractor shall, as a condition precedent to
the commencement ofany work under the Contract... "
Insurance cover has to be effected before commencement of any work, to
avoid a situation where claims are rej ected or rendered void on the grounds
of execution before cover is effected and also to avoid a situation where an
accident or incident happens on the Site before the insurance is effective.
Ciame 19 1· "_..Jake-.oU1-01ui- rna-intain in- the-joint names of the
Employer, Contracto,; sub-contractor and a/1 interested parties... "
The insurance must be in the joint names of the Employer and the Contractor.
Futther, it is advisable to include 'sub-contractors' as well, as the term
' sub-contractors' (not capitalised) will include all sub-conh·actors, whether
domestic or nominated. Tf there is a requirement for other ' interested pmties'
to be named in the insurance policy, the identity of the ' interested patties'
should be mentioned in the insurance policy, for example: financial institution.
Clause 19.0 121
Clause 19.J: "... in respect ofpersona/ injuries or death and injwy
or loss and/or damage o_fproperty real or personal. .. "
The amount required for insurance cover for accidental bodily injury to, or
illness of third patties; accidental loss of, or damage to property belonging
to third pmties, must be specifically stated in the Contract Bill, othetw ise the
default amount of RM 1 million stated in the Appendix will apply.
Clause 19.1: "If the Contractor having regard to his indemnity
to the Employer under Clause 18. 0 desires to increase any of the insurance
coverage, he shall do so and allow.for any additional cost ... "
The Contractor has provided an indemnity to the Employer under Clause
18. Without prejudice to his indemnity, the Employer has stated that the
Contractor needs to comply with cettain insurance cover as stated in the
Contract Bill. The insurance required by the Employer may not be sufficient
in the event of a major claim. This Clause emphasises that, if the Contractor
requires additional insurance to that required by the Employer, he can do so,
and he is permitted to price for this additional insurance. The important thing
is that the Contractor is still fully responsible, even if the insurance payout
is insufficient for the claim.
Clause 19.J: "The insurance policy shall include the .following
endorsements:"
The following endorsements are recommended to be included in the insurance
policies:
Clause 19.1 (a): "a 'cross liability' endorsement to provide insurance
cover to the Employer and Contractor and any other parties involved in the
Works as though they are separately insured.for their respective rights and
interest;"
The cross liability endorsement treats all insured pmties under the policy as if
a separate pol.icy had been issued to each patty.
Clause 19. J(b): "an endorsement to the effect that the Architect,
Consultant and any other professional consultants (as applicable) and their
employees and representatives, Site Staff, employees and representatives of
the Employer, are deemed to be third parties;"
Insurance companies often contend that this endorsement is not necessary, as
they consider the Architect, Consultant, any other professional consultants; and
 Clause 19.0 122
their employees and representatives, Site Staff, employees and representatives
of the Employer as ' third parties' and therefore they are entitled to claim under
the insurance. However, as insurance companies are now prepared to provide
this endorsement, it is preferable that this be obtained to avoid the necessity to
prove 'third party' status in the event of any disputes.
C/a11se 19. l(c): "an endorsement for waiver of all expressed or
implied rights ofsubrogation or recoveries against the insured. .. "
This endorsement provides that in the event of a claim, the insurers agree
to waive any rights, remedies or relief to which they become entitled by
subrogation against any of the insured named in the insurance policy. This
endorsement avoids a situation, for example, where the insurance company
pays out the claims to the Employer, and then h·ies to recover the claim against
the Contractor. This endorsement is usually identified as 'FTRR&l' which
stands for 'For Their Respective Rights and Interest' and is often mentioned
with the insured parties.
C/a11se 19.J(d): "an endorsement for automatic extension or renewal
ofthe insurance up to the issuance ofthe Certificate ofMaking Good Defects. "
This endorsement avoids a situation where insurance companies require
evidence of extension of time being granted to the Contractor, before
extending their cover to a period beyond the initial period of cover. In a
situation where the Contractor is in a period of culpable delay, this should
not be used as a reason to deny extension of insurance coverage, as the
Contractor's role and liabilities have not changed.
The automatic extension of the insurance policy will be subject to additional
premium, but it will ensure that the insurance remains valid during the period
of culpable delay.
Clause 19.2 - Employees' social security scheme for local workmen
Without prejudice to his liability to indemnify the Employer under Clause 18.0,
the Contractor shall register or cause to register all local workmen employed
on the Works and who are subject to registration under the Employees' Social
Security Scheme (hereinafter referred to as "SOCSO") in accordance with
the Employees' Social Security Act 1969 and shall cause all sub-contractors
to comply with the same provisions. The Contractor shall make payment of
all contributions and cause all sub-contractors to make simi lar payments from
time to time when the same ought to be paid.
Clause /9.0 123
The Conh·actor has indemnified the Employer under Clause 18.3. This Clause
requires that he will comply with all the requirements of the Employees' Social
Security Scheme (' SOSCO' ) and he is also responsible to ensure that all sub-
contractors similarly comply. He must also make the necessaiy payments to
sosco.
Clause 19.3 - Insurance for local workmen not subject to SOCSO
Without prejudice to his liability to indemnify the Employer under Clause
18.0, the Contractor shall, as a condition precedent to the commencement
of any work under the Contract, take out and maintain in the joint names
of the Employer and Contractor and shall cause all sub-contractors to
take out and maintain a similar insurance policy for local workmen who
are not subject to registration under SOCSO. Such insurance policy shall
be effected and maintained as necessary to cover al l liabilities including
common law liability in respect of any claim which may arise in the course
of the execution of the Works. The insurance policy shall be valid up to
the Completion Date and the extended maintenance cover shall be for the
Defects Liability Period plus a further three (3) Months. If the Contractor
is unable to complete by the Completion Date or complete making good
the Defects within the insured period, he shall ensure that the insurance is
accordingly extended for the same period of delay. The Contractor shall
effect the said extension of the insurance cover not less than one (1) Month
before the expiry of the insurance currently in force .
Clause 19.3: "Without prejudice to his liability to indemnify the
Employe,:.. the Contractor shall take out and maintain ... and shall cause all
sub-contractors to take out and maintain a similar insurance policy for local
workmen who are not subject to registration under SOCSO... "
Even though the Contractor has already indemnified the Employer under
Clause 18, it is a requirement in law that the Contractor must purchase a
Workmen Compensation Insurance to cover those workers who are not
covered under SOSCO. The cover shall be based on the estimated wages
payable to workmen, and the insurance shall also be in the joint names of the
Employer and Contractor. Since the estimated wages can only be estimated
by the Contractor, the Contractor shall be responsible to atTange the insurance
cover. If the Contractor sub-contracts certain pmiion of the works, he must
also ensure that his sub-contractors similarly cover his workers.

Clause 19.0 124
Clause 19.3: "Such insurance policy shall be effected and
maintained as necessary lo cover all liabilities including common lav1< .. "
Although the compensation to workers will be in accordance with the
Workmen Compensation Insmance policy, there may be circumstances that
some workers may be dissatisfied with the compensation rates offered under
the insurance policy, and decide to sue the Contractor and the Employer. To
ensure that the insurance policy can cater for this contingency, the insurance
must also cover common law claims.
Clause 19.3: "The insurance policy shall be valid up lo the
Completion Date and the extended maintenance cover shall be for the
Defects Liability Period plus a further three (3) Months ... If the Contractor
is unable to complete by the Completion Date ..... he shall ensure that the
insurance is accordingly extended. .. "
The initial period of the insurance shall be valid up to the Completion
Period. If there is an extension of time, the insurance must be extended to
cover the additional period extended. The extension must be carried out l
Month before the Completion Date.
The extended maintenance cover is to cover the risk during the Defects
Liability Period. The further 3 months after the Defects Liability Period is to
ensure that the Contractor has insurance cover when he can'ies out rectification
work after the Defects Liability Period.
Clause 19.4 - Workmen's compensation insurance for forei~n workers
Without prejudice to his liability to indemnify the Employer under C lause 18.0,
the Contractor shall, as a condition precedent to the commencement of any
work under the Contract, take o ut and mai ntain in the name of the Contractor
and shall cause all sub-contractors to take out and maintain a similar insurance
policy for all foreign workers employed on the Works as required by the
Workmen's-Compcnsationr\tt l m--and Workrnt:n 's Compensation (Foreign
Worker's Compensation Scheme) (Insurance) Order 1998. Such insurance
policy shall be effected and maintained as necessary to cover al l liabilities
including common law liabi lity in respect of any claim which may arise in
the course of the execution of the Works. The insurance policy shall be valid
up to the Completion Date and the extended maintenance cover shall be for
the Defects Liability Period plus a fu1ther three (3) Months. If the Contractor
is unable to complete by the Completion Date or complete making good
the Defects within the insured period, he shall ensure that the insurance is
accordingly extended for the same period of delay. The Contractor shall effect
the said extension of the insurance cover not less than one (I) Month before
the expiry of the insurance currently in force.
Clause 19.0 125
Clause 19.4: "Without prejudice to his liability to indemnify the
Employe1:.. the Contractor shall... , take out and maintain in the name of the
Contractor and shall cause all sub-contractors to take out and maintain a
similar insurance policy_for all foreign workers employed on the Works ... "
Even though the Contractor has already indemnified the Employer under
Clause 18, it is a requirement in law that the Contractor must purchase a
Workmen Compensation Insurance to cover foreign workers. The cover needs
to be taken out by the employer of the foreign workers. lf the Contractor
sub-contracts certain portion of the works, he must also ensure that his sub-
contractors similarly cover his workers.
Clause 19.4: "Such insurance policy shall be effected and
maintained as necessa,y to cover all liabilities including common law... "
Although the compensation to workers will be in accordance with the
Workmen Compensation Insurance policy, there may be circumstances that
some workers may be dissatisfied with the compensation rates offered under
the insurance policy, and decide to sue the Contractor. To ensure that the
insurance policy can cater for this contingency, the insurance must also cover
common law claims.
Clause 19.4: "The insurance policy shall be valid up to the
Completion Date and the extended maintenance cover shall be for the Defects
Liability Period plus a further three (3) Months ... If the Contractor is unable
to complete by the Completion Date ..... he shall ensure that the insurance is
accordingly extended. .. "
The initial period of the insurance shall be valid up to the Completion Period.
If there is an extension of time, the insurance must be extended to cover the
additional period extended. The extension must be carried out one (l) Month
before the Completion Date. The extended maintenance cover is to cover the
risk during the Defects Liability Period. The further 3 months after the Defects
Liability Period is to ensure that the Contractor has insurance cover when he
carries out rectification work after the Defects Liability Period.
Clause 19.5 - Placin~ of insurance with licensed insurance companies
The insurance referred to in Clauses 19. 1, 19.2, 19.3 and 19.4 shall be
placed with licensed insurance companies approved by the Employer, and
the Contractor shall deposit with the Employer the policy and the receipt of
premiums paid with copies extended to the Architect and Consultant. lf the
Contractor makes default in insuring or continuing to insure as aforesaid, the
 Clause 19.0 126
Employer may (but is not obligated to) insure agai nst any risks in respect of
whi ch the defa ult has occurred and the amount of premiums and any other
cost incurred or paid by the Employer shalI be set-off by the Employer under
Clause 30.4.
Clause 19.5: "The insurance...sha/1 be placed with licensed
insurance companies approved hy the Employe,:.. "
All insurance companies operating in Malaysia are licensed by Bank Negara,
and should be able to produce the license ifrequired.
Clause 20.A 127
: Clause 20.A =.. ln~ur;nce Of New Buildings/Works i
- By The Contractor
L --- ------------- - -
Clause 20.A. l - Contractor's risks - new buildin~s/ works
Without prejudice to bis liability to indemnify the Employer under Clause
18.0, the Contractor shall, as a condition precedent to the commencement
of any work under the Contract, take out and maintain in the joint names
of the Employer, Contractor. sub-contractors and all interested parties
a CAR Insurance policy for a value not less than the Contract Sum, plus
the sum to cover professional fees for reinstatement and the sum to cover
the removal of debris all as stated in the Appendix. Unless covered by the
standard C AR Tnsurance po licy, the insura nce shall have endorsements to
cover against loss and/or damage by fire, lightni ng, explosion , earthquake,
volcanism, tsunami, storm, cyclone, flood, inundation, landslide, theft,
g round subsidence, existing underground cables and/or pipes or other
underground fac il ities, bursting or overflowing of water tanks, apparatus
o r pipes, aircraft and other aerial devices or arti cles dropped therefrom,
strike, riot and civil commotion, malicious damage, trespass, cessation of
work whether tota l or partial, vibration and weakening of support. Unless
otherw ise insured by the Contractor, the CAR Insurance po licy will exc lude
cover for construction plant, tools and equipment owned or hired by the
Contractor or any sub-contractors. T he Contracto r shall keep such Wo rks so
insured notwithstanding any arrangement for Sectional Completion under
C lause 2 1.0 o r Partial Possession under C lause 16.0. The insurance policy
shall be valid up to the Completion Date and the ex tended maintenance cover
shall be for the Defects Liability Period plus a fu rther three (3) Months. If the
Contractor is unable to complete by the Completion Date or complete making
good the Defects within the insured period, he sha ll ensure that the insurance
is accordingly ex tended for the same period o f delay. T he Contracto r shall
effect the said extension of the insurance cover not less than one ( I) Month
before the expiry of the insurance currently in force. Where deductibles are
specified in the Appendi x o r in the insurance policy, the Contractor shall bear
the amount of all deductibles. The insurance po licy shall also include the
endorsement under C lauses 19.l (a) to (d).
Clause 20 has three options. Clause 20.A is where the Contractor is required
to take out a CAR Insurance for New Buildings/ Works. If this option is
selected, then it would be necessary to cancel Clauses 20.B and Clause 20.C.
Clause 20.A.l: " Without prejudice to his liability to indemnify the
Employe,:.. the Contractor shall...take out and maintain in the joint names of
 Clause 20.A 128
the Employe1; Contracto1; sub-contractors and all interested parties a CAR
insurance policy. .. "
The Contractor is required to obtain the insurance to cover his indemnity under
Clause 18. The insurance must be in the joint names of the Employer and the
Contractor. Furthermore, it is advisable to include 'sub-contractors.' The tenn
'sub-contractors' will be more inclusive, as it will include all types of sub-
contractors, whether domestic or nominated. If the endorsement is extended to
only 'Nominated Sub-Contractors', the insurance will not cover all other types
of 'sub-conh·actors '. If there is a requirement for other ' interested parties' to
be named in the insurance policy, the identity of the 'interested parties' should
be mentioned in the insurance policy, for example: financial institution.
Clause 20.A.J : " .. for a value not less than the Contract Sum, plus
the sum to cover professional fees for reinstatement and the sum to cover the
removal ofdebris ... "
The insurance cover shall be for the Contract Sum. As the Contract Sum includes
the value of all Nominated Sub-Conh·act Works, it will be unnecessa1y for the
Nominated Sub-Contractor to cover insurance for the Sub-Conh·act Works, or
for the Contractor to charge the Nominated Sub-Contractor their portion of the
premium. However, the provisions in PAM 98 NSC Clause 3.1 stating that:
' The Conh·actor and Sub-Contractor respectively shall...keep in force during all
material times policies of insurance ...such an amount as shall be approved by the
other. Such insurance policies shall be for thefr respective liabilities ... ' means
that the Nominated Sub-Contractor will either be duplicating the Contractor's
insurance, or as would most probably be the case, the Contractor may require
the Nominated Sub-Conh·actor to contribute a portion of the insurance premium.
This does not appear fail- to the Employer as he has to pay the Contractor the
insurance premium priced in the main contract.
Tf the..insurar.ice..pays ou.t on-a-c;laim, it will be-for th@---Gost efreinstatement. It
will not include any professional fees that may have to be incurred for the re-
construction. If it is required to cover the professional fees for the reinstatement
works, this should be expressly stated in the Contract.
Fmiher, in the event of damage to the Works, considerable cost may be
incurred in removing the debris of the damaged work. Ifit is required to cover
removal of debris, this should be also expressly stated in the Contract.
Clause 2 0.A.J: "Unless covered by the standard CAR Insurance
policy, the insurance shall have endorsements to cover against loss and/or
damage by fire, lightning, explosion, earthquake, volcanism, tsunami, storm,
Clause 20.A 129
cyclone, flood, inundation, landslide, theji, ground subsidence, existing
underground cables and/or pipes or other underground facilities, bursting
or ove,flowing of water tanks, apparatus or pipes, aircraft and other aerial
devices or articles dropped therejiwn, strike, riot and civil commotion,
malicious damage, trespass, cessation of work whether total or partial,
vibration and weakening ofsupport. "
PAM 2006 is a standard form of contract. As such, the provisions stated for the
CAR Insurance may need to be amended or expanded in scope, depending on
the location, size and complexity of the Works. The scope of insurance cover
is quite comprehensive and includes more than the cover under PAM 98.
Clause 20.A of PAM 98 covers only loss and damage by 'fire, storm, tempest,
lightning, flood, earthquake, aircraft or anything dropped therefrom, aerial
objects, riot and civil commotion' and does not provide the comprehensive
cover now available under CAR Insurance.
Clause 20.A.l : "Unless otherwise insured by the Contract01; the
CAR insurance policy will exclude cover for construction plant, tools and
equipment owned or hired by the Contractor or any sub-contractors. "
The Conh·actor should be advised to insure his construction plants on Site, if
he does not have a company policy that covers all construction plant owned
and operated by the Contractor. The Contractor should also ensure that any
hired conshuction plants are similarly insured.
Clause 2 0.A.J : "The Contractor shall keep such Works so insured
notwithstanding any arrangement for Sectional Completion under Clause
21.0 or Partial Possession under Clause 16.0. "
The provision in this Clause is different from the provision of PAM 98 Clause
16.l(iv) where it was provided that the Conh·actor shall reduce the value of
insurance, if there is Sectional Completion or Partial Possession. Under PAM
2006, the standard clause does not provide for a reduction of insurance value,
unless it is obvious from the scope of works taken over that a reduction of
insurance will be appropriate. For example, it would be approp1iate to reduce
the insurance if there is sectional completion for IO houses out of30 houses; but
it may not be appropriate to reduce the insurance value of a podium and tower
block by the value of the podium block upon sectional completion. The damage
to the tower block under construction could be caused by a fire in the podium
block or conversely, falling objects from the tower block might damage the
completed podium block. The Architect or Consultant should, therefore, decide
whether there should be any reduction of the insured value when drafting the
contractual requirements.
 C/ause20A 130
Clause 20.A.l : "The insurance policy shall be valid up to the
Completion Date and the extended maintenance cover shall be for the Defects
liability Period plus a further three (3) Months. (f the Contractor is unable to
complete by the Completion Date or complete making good the Defects within
the insured period, he shall ensure that the insurance is accordingly extended
for the same period of delay. The Contractor shall effect the said extension
of the insurance cover not less than one (1) Month before the expi1y of the
insurance currently in force. "
The initial period of the insurance shall be valid up to the Completion Period.
If there is an extension of time, the insmance must be extended to cover the
additional period extended. The extension of the insurance cover must be
canied out 1 Month before the Completion Date.
The extended maintenance cover is to cover the risk during the Defects
Liability Period. The further 3 months after the Defects Liability Period is to
ensure that the Contractor has insurance cover when he can-ies out rectification
work after the Defects Liability Period.
Clause 20.A.l : "Where deductibles are spec(fied in the Appendix
or in the insurance policy, the Contractor shall bear the amount of all
deductibles. "
It is consistent with the indemnity provisions in Clause 18 that the Contractor
shall bear the deductibles (or excess clause) for each insurance risk. The
deductibles should be specified in the Contract Bills.
Clause 20.A.2 - Additional risks to be covered under the insurance
Any addi tional risks or endorsements in addition to those stated in Clause
20.A. l which may be required to be covered under the CAR Insu rance policy
- - - - -= II be specified in the-enmrncti3tlls-. t fiheContractor hav mg regard tohis
inde mnity to the Emp loyer under C lause 18.0, desires to have any additional
e ndorsements to the insurance in addition to the risks specified, he shall do so
at his own cost.
PAM 2006 is a standard form of contract and the CAR insurance cover
specified in Clause 20.A is a standard cover. If there is a requirement that the
provisions stated for the CAR Insurance needs to be amended or expanded to
suit the Works, the requirements shall be amplified in the Contract Bills for the
risk to be priced by the Contractor.
Clause 20.A 131
In addition, if the Contractor, having regard to Clause .18 that he is
indemnifying the Employer against any damage, expense, liability, loss, claim
or proceedings, considers that the extent of CAR insurance required by the
Employer is not sufficient to cover his risk, the Contractor is at liberty to cover
the additional risk at his own cost.
Clause 20.A.3 - Placin2 of insurance with licensed insurance companies
The insurance referred to in Clause 20.A shall be placed wi th licensed insurance
companies app roved by the Employer, and the Contractor shall deposit with
the Employer the policy and the receipt of premiu ms paid. If the Contractor
makes default in insuring or continuing to insure as aforesaid, the Employer
may insure against any risks in respect of which the default has occurred and
the amount of premiums and any other cost incurred or paid by the Employer
shall be set-off by the Employer under C la use 30.4.
The Insurance shall be placed with licensed insurance companies, and the
policy shall be deposited with the Employer. If the insurance company allows
the Contractor to pay the insurance premium, this must be declared to the
Employer with the appropriate documentation.
If the Contractor makes default in insuring, or fails to renew the insurance on
time, the Employer may renew or extend the insurance, and all cost incurred
shall be set-off under Clause 30.4.
Clause 20.A.4 - Application of insurance claim proceeds
Upon the occurrence of any loss and/or damage to the Works or unfixed
materials and goods prior to Practical Completion of the Works from any
cause whatsoever, and notwithstanding that settleme nt of any insurance claim
has not been completed, the Contractor shall with due d iligence restore,
replace or repair the same, remove and dispose of any debris and proceed
with the carrying out and completion of the Works. All money if and whe n
received from the insurance under this clause shall be pa id in the first place
lo the Emp loyer. The Employer shall retain the amount paid by the insurance
companies in respect of professional fees for reinstatement and pay the
balance to the Contractor and/or Nominated Sub-Contractors by installments
u nder separate certificates to be issued by the Architect. The Contractor shall
not be e ntitled to any additional paym ents in respect of the restoration of the
damaged work and replaceme nt or repair of any unfixed materials and goods
and the removal and disposal of debris other than the monies received under
the aforesaid insurance.
 Clause 20.A 132
The Contractor is to proceed with restoration of the damaged works regardless
of the status of the claims settlement. As is often the case with insurance
claim, the amount paid out by the insurance company often falls sh01t of the
actual amount claimed. This Clause makes it clear that if there is a shortfall
between the cost of the restoration works and the settlement as paid out under
the insurance policy, the Contractor is to bear the difference.
The disbursement of the insurance payment shall be by way of separate
~ertificates to be issued by the Architect, strictly for the purpose of disbursing
msurance payment.
Clause 20.B 133
Clause 20.B - Insurance Of New Buildings/Works
- By The Employer
l
- ------ - --
Since the Contractor already indemnifies the Employer under Clause 18,
it is in fact not necessary to require the Contractor to purchase any CAR
Insurance policy and the decision to insure or not to insure should be at
the discretion of the Contractor. If there are any claims, the Contractor
shall be liable under the indemnity provided by him under Clause 18 and
have to pay out from his own resources to restore the damaged works.
This may not be beneficial to the Employer if there is substantial damage
and the Contractor is unable to shoulder the costs to restore the work in
the absence of any insurance payment. He may slow down the progress
of the work due to cash flow problems or even abandon the Work. If that
happens, it may affect the Employer's commitment to purchasers if he has
already sold the project. Insurance is therefore the passing of risk from
one party to another for the cost of the insurance premium.
Under Clause 20.A, the Contractor pays for the insurance premium and
recovers the cost back from the Employer by way of the Preliminaries priced
by him. Under Clause 20.B, the Employer pays the premium direct to the
insurance companies. Whether the insurance is covered by the Contractor or
the Employer, the insurance policy is substantially the same. It is therefore
puzzling why under PAM 98 Clause 20.B, when the Employer purchases
the insurance, it is stated that any loss or damage is at the sole risk of the
Employer. This means that if the claims paid by the insurance company are
insufficient to restore the damage work, the Employer shall be responsible
for the additional cost, as evident in the following clause in PAM 98:-
Clause 20.B.1: 'All works executed and all unfixed materials or goods intended
for and delivered to or placed on or adjacent to the Works ( excluding temporary
buildings, plant, tools and equipment owned or hired by the Contractor or any
Sub-Contractor) shall be at the sole risk of the Employer as regards to loss or
damage under Clause 20 A risks. '
Clause 20.B.4: 'If the loss or damage to the Works or any part thereof or to
any unfixed materials and goods refe1Ted to in Clause 20.B.1 is occasioned by
any one or more of the risks stated in Clause 20 A, then the occurrence of such
loss or damage shall be disregarded in computing any amounts payable to the
Contractor under this Contract.'
Clause 20.B.5: 'The Contractor shall with due diligence restore the damaged
work, replace or repair any unfixed materials or goods destroyed or damaged,
remove and dispose of any debris and proceed to carry out and complete the
 Clause 20.B 134
Works. The restoration of damaged work, the replacement or repair of unfixed
materials or goods, and disposal of debris shall be deemed to be a Variation
required by the Architect. '
In Scottish Special Housing Association v Wimpey Construction 31 BLR
17, in the Scottish Court of Session, the contractor submitted that it was
clear in the contract that even if the damage was caused by fire due to the
contractor's negligence, the contractor would be paid by the employer for
setting the prope11y on fire and reinstating it and that the reinstatement would
be a variation under the contract. The court initially held that a fire caused by
the contractor would render the contractor liable to the employer under the
indemnity clause. Lord Brand said in this case:
' .. .I would only add that the court must, where possible adopt a
construction of a contract which makes commercial sense ..... the
construction contended by the contractor would produce a "bizaITe"
consequence in respect that it would enable the contractor negligently
to burn down the employer's property and thereafter to reinstate it
all at the full expense of the employer. Such a result would be so
patently absurd that no court would adopt a construction which leads
to it unless driven to do so by clear and unambiguous language. '
The decision by the Scottish Court of Session was reversed on appeal to
the House of Lords in Scottish Special Housing Association v Wimpey
Construction 34 BLR 1. The House of Lords held that on the true construction
of the clause, (the JCT 63 clauses were materially similar to the PAM 98
clauses), it was clearly intended that the employer was to bear the risk of fire,
including fire caused by negligence of the contractor. In this case, the clauses
are not ambiguous and even if the court considers that it would produce
" bizaITe" consequences mentioned by the Court of Session, it is not the
courts duty to re-write the contract for the paiiies simply because the correct
il:lkrpretation would lead ta an illogicaldecis.i on.-
To allocate the loss and damage to the Employer in PAM 98, simply because
the Employer purchased the insurance is illogical and is not conducive to
good contract management practices. This re-allocation of risk has now been
addressed in PAM 2006 to the effect that when the Contractor indemnifies
the Employer under Clause 18 for loss and/or damage to the Works, the
Contractor will be responsible for the risks irrespective of the fact that the
insurance may be purchased by the Employer. The insurance is intended to
ensure that the Contractor has the means to honour his indemnity. There is a
further provision that if the Contractor considers that the insurance coverage
by the Employer is insufficient to cover the Contractor's indemnity, the
Clause 20 .B I 35
Contractor is at liberty to cover additional insurance as prov ided in PAM
2006 Clause 20.B.2 and price the additional premium in the Contract Sum.
Clause 20.B. l - Insurance by Employer
Without prejudice to the Contractor's liability to indemnify the Emp loyer
under Clause 18.0, the Employer shall, as a condition precedent to the
commencement of any work under the Contract, take out and maintain in the
joint names of the Employer, Contractor, sub-contractors and all interested
parties a CAR Insurance policy for a value not less than the Contract Sum,
p lus the sum to cover professional fees for reinstatement and the sum to cover
the removal of debris all as stated in the Appendix. Unless covered by the
standard CAR Insurance policy, the insurance shall have endorsements to
cover against loss and/or damage by fire, lightning, explosion, earthquake,
volcanism, tsunami , storm, cyclone, fl ood, inundation, landslide, ground
subsidence, existing underground cables and/or pipes or other underground
facil ities, bursting or overflow ing of water tanks, apparatus or pipes, aircraft
and other aerial devices or articles dropped therefrom, strike, riot and civil
commotion, malicious damage, trespass, cessation of work whether total
or partial, vibration and weakening of support. Unless separately required
by the Contractor at his own cost, the CAR lnsurance policy w ill exclude
cover for constructi on plant, tools and equipment owned or hired by the
Contractor or any sub-contractor. The Employer shall keep such Works so
insured notwithstanding any arrangement for Sectional Completion under
Clause 21.0 or Partial Possession under C lause 16.0. The insurance policy
shall be valid up to the Completion Date and the extended maintenance cover
shall be for the Defects Liability Period plus a furth er three (3) Months. If
the Contractor is unable to complete by the Completion Date or complete
making good the Defects within the insured period, the Employer shall
ensure that the insurance is accordingly extended for the same period of
delay. The Employer shall effect the said extens ion of the insurance cover not
less than one ( I ) Mo nth before the expiry of the insurance currentl y in force.
Where deductibles are specified in the Appendix or in the insurance policy,
the Contractor shall bear the amount of all deductibles. The insurance policy
shall also include the endorsement under Clauses 19. l (a) to (d).
Clause 20 has three options. Clause 20.B is where the Employer decides
to take out a CAR Insurance for New Buildings/Works. If this option is
selected, then it would be necessary to cancel Clause 20.A and Clause 20.C.
Generally the provisions of this Clause are similar to the provisions of Clause
20.A. 1 except that it is the Employer who will be covering the insurance.
 Clause 20.B 136 Clause 20.B 137

Clause 20.B.2 - Additional risks required by the Contractor
Any additional risks or endorsements which vary from those stated in Clause
20.B.1 shall be specified in the Contract Bills, and the Employer shall ensure
that the risks specified in the Contract Bills are covered by the CAR Insurance
policy. Tf the Contractor having regard to his indemnity to the Employer under
Clause 18.0, desires to have further additional endorsements to the insurance
in addition to the risks specified, he shall do so at his own cost.
insurance under this clause shall be paid in the first place to the Employer. The
Employer shall retain the amount paid by the insurance companies in respect
of professional fees for reinstatement and pay the balance to the Contractor
and/or Nominated Sub-Contractors by installments under separate certificates
issued by the Architect. The Contractor shall not be entitled to any additional
payments in respect of the restoration of the damaged work and replacement
or repair of any unfixed materials and goods and the removal and disposal of
debris other than the monies received under the aforesaid insurance.

This Clause is similar to the provisions of Clause 20.A.2, and the comments This Clause is similar to the provisions of Clause 20.A.4, and the comments
on that Clause are equally applicable to this Clause. on that Clause are equally applicable to this Clause.

Clause 20.B.3 - Maintenance of policy

The Employer shall maintain a proper insurance policy against the aforesaid
risks and such policy and receipt for the last premium paid for its renewal
shall, upon the request of the Contractor, be produced for his inspection.

The Insurance shall be placed with licensed insurance companies, and the
policy shall be available for the Contractor's inspection when requested.

Clause 20.B.4 - Failure of Employer to insure

If the Employer at any time upon the request of the Contractor fa ils to
produce any receipt showing such a policy as aforesaid to be effective, then
the Contractor may take out and maintain in the joint names of the Employer,
Contractor, sub-contractors and all interested parties, the CAR Insurance
policy as required under Clauses 20.B . l and 20.B.2. The Contractor upon
production of the receipt of any premium paid by him shall be entitled to
have the amount added to the Contract Sum.

If the Employer defaults m msunng or fails to payfhe premmm, the ontractor

shall be able to recover the cost of the premium, if he himself makes such
payment. The cost paid shall be added to the Conh·act Sum.

Clause 20.B.5 - Application of insurance claim proceeds

Upon the occmTence of any loss and/or damage to the Works or unfixed
materials and goods prior to Practical Completion of the Works from any
cause whatsoever notwithstanding that settlement of any insurance claim has
not been completed, the Contractor shall with due diligence restore, replace or
repair the same, remove and dispose ofany debris and proceed with the carrying
out and completion of the Works. All money if and when received from the
 Clause 20.C 139

1. - - Cla~se 20.C - I~surancc Of Existing Building- ·- .

! Or Extension - By The Employer
--- -~------

Clause 20.C. l - Employer's risks - existin~ buildin~ or extension

Without prejudice to the Contractor's liability to indemnify the Employer

under Clause 18.0, the Employer shall, as a condition precedent to the
commencement of any work under the Contract, take out and maintain in the
joint names of the Employer, Contractor, sub-contractors and all interested
parties a CAR Insurance policy for a value not less than the Contract
Sum, plus the value of the existing structure together with all the contents
owned by the Employer or for wh ich he is responsible, the sum to cover
professional fees for reinstatement and the sum to cover the removal of
debri s all as stated in the Appendix. Unless covered by the standard CAR
fnsurance policy, the insurance shall have endorsements to cover against
loss and/ or damage by fire, lightning, explosion, earthquake, volcanism,
tsunami, storm, cyclone, flood , inundation, landslide, ground subsidence,
existing underground cables and/or pipes or other underground facilities,
bursting or overflowing of water ta nks, apparatus or pipes, aircraft and
other aerial devices or articles dropped therefrom, strike, riot and civil
commotion, malicious damage, trespass, cessation of work whether total
or partial , vibration and weakening of support. Unless separately required
by the Contractor al his own cost, the CAR Insurance policy will exc lude
cover for construction plant, tools and equipment owned or hired by the
Contractor or any sub-contractor. The Employer shall keep such Works so
insured notwi thstanding any arrangement for Sectional Completion under
Clause 21.0 or Partial Possession under Clause 16.0 . The insurance policy
shall be valid up to the Completion Date and the extended maintenance
cover shall be for the Defects Liability Period plus a further three (3)
Months. l f the Contractor is unable to complete by the Completion Date or
comp lete making good the Defects within the insured period, the Employer
shall ensure that the insurance is accordingly extended for the same period
of delay. The Employer shall effect the said extension of the insurance cover
not less than one (I) Month before the expiry of the insurance currently in
force . Where deductibles are specified in the Appendix or in the insurance
policy, the Contractor shall bear the amount of all deductibles. The insurance
pol icy shall also incl ude the endorsement under C lauses 19. 1(a) to (d).

Clause 20 has three options. If the Works is on an existing building, Clause

20.C will apply and it will be necessary to cancel Clause 20.A and Clause
20.B. Under this Clause, the Employer shall take out a CAR Insurance to
the value of the Contract Sum including the value of the existing structure
together w ith all the contents owned by the Employer. The value of the
 Clause 20.C /41
Clause 20.C 140

existing structure to be insured is the reinstatement value (including cost
of Consultants, removal of debris etc) and not the valuation of the property.
Generally, the provision of this Clause is similar to the provisions of Clause
20.A. l , except that it is the Employer who will be covering the insurance. The
comments on Clause 20.A.1 are equally applicable to this Clause.
Clause 20.C.2 - Additional risks reguired by Contractor
Any additional risks or endorsements which vary from those stated in Clause
20.C. l shall be specified in the Contract Bi lls, and the Employer shall ensure
that the risks specified in the Contract Bills are covered by the CAR Insurance
policy. Tfthe Contractor having regard to his indemnity to the Employer under
Clause 18.0, desires to have further additional endorsements to the insurance
in addition to the risk specified, he shall do so at his own cost.
This Clause is similar to the provisions of Clause 20.A.2, and the comments
on that Clause are equally applicable to this Clause.
Clause 20.C.5 - Application of insurance claim proceeds
Upon the occunence of any loss and/or damage to the Works or unfixed
materials and goods prior to Practical Completion of the Works from any
cause whatsoever notwithstanding that settlement of any insurance claim has
not been completed, the Contractor shall with due diligence restore, replace
or repair the same, remove and dispose of any debris and proceed with the
carrying out and completion of the Works including the reinstatement of the
existing structure. All money if and when received from the insurance under
this clause shall be paid in the first place to the Employer. The Employer shall
retain the amount paid by the insurance companies in respect of professional
fees for reinstatement and pay the balance to the Contractor and/or Nominated
Sub-Contractors by installments under separate certificates issued by the
Architect. The Contractor shall not be entitled to any additional payments in
respect of the restoration of the damaged work and replacement or repair of
any unfixed materials and goods and the removal and disposal of debris other
than the monies received under the aforesaid insurance.

Clause 20.C.3 - Maintenance of insurance by Employer This Clause is similar to the provisions of Clause 20.A.4, and the comments
on that Clause are equally applicable to this Clause.
The Employer shall maintain a proper insurance policy against the aforesaid
risks and such policy and receipt for the last premium paid for its renewal
shall, upon the request of the Contractor, be produced for his inspection.

The Insurance shall be placed with licensed insurance companies, and the
policy shall be available for the Contractor's inspection when requested.

Clause 20.C.4 - Failure of Emplover to insure

lfthe Employer at any time upon the request of the Contractor fails to produce
any receipt showing as aforesaid to be effective, then the Contractor may
tttke--ouhrnd maintain in ttJeiaint7rnmcsof The Employer, Contractor, sub-
contractors and all interested parties, the CAR Insurance policy as required
under Clauses 20.C. I and 20.C.2. The Contractor upon production of the
receipt of any premium paid by him shall be entitled to have the amount added
to the Contract Sum.

If the Employer defaults in insuring or fails to pay the premium, the Contractor
shall be able to recover the cost of the premium, if he makes such payment.
The cost paid shall be added to the Contract Sum.
 Clause 21.0 143

- - -- --- - --

Clause 21.0 - Date Of Commencement, Postponement And

'
L - ~
Completion Date
_ _ ____ _ -- _ I

Clause 21. t - Commencement and Completion

On the Date of Commencement, possession of the Site shall be given to the

Contractor who shall commence the execution of the Works and regularly and
diligently proceed with and complete the same on or before the Completion
Date. In the event there is a delay by the Employer in giving possession of
the Site to the Contractor, the Architect shall grant an extension of time under
Clause 23.8(f). Provided always that the delay in giving possession oftbe Site
does not exceed the Period of Delay stated in the Appendix, the Contractor
shall not be entitled to determine his own employment under the Contract.

Clause 21. 1: "On the Date of Commencement, ... the Contractor

... shall commence the execution of the Works and. ..complete the same 011 or
be.fore the Completion Date."

There are two impo1tant dates in a building contract that must be finnly
established beyond doubt. The Date of Commencement must be confumed in the
Letter ofAward, or if not confu-med in the Letter of Award, it must be confirmed
elsewhere in writing when the Contractor is eventually given possession of
the Site. Unless there is a Date of Commencement, it will not be possible to
establish the Completion Date. If the Completion Date is not established, the
Employer will have difficulties imposing any Liquidated Damages at a later
date. lf there is any doubt on the two dates, this must be promptly resolved
before it leads to serious contractual difficulties. It is also important to note that
even though the Date of Commencement may be established, the Contractor
will not be allowed to commence any work until he bas, under Clause 20.A. l
' ..take out and maintain in the joint names of the Employer, Contractor, sub-
contractors and all interested parties a Contractor's All Risk Insurance policy... '

Clause 2 1.1: " ... Completion Date... "

Note that Article 7(m) has defined Completion Date to mean: 'the date(s) for
completion of the Works stated in the Appendix under Clauses 21.1 and 21.3
or the last extended date granted under Clause 23.4;' In other words, the date
inc ludes the latest extension of time granted by the Architect.

Clause 21.1: ".. .possession of the Site... "

The term 'Date for Possession' used in PAM/ISM 69 was amended to ' Date of
Commencement' in PAM 98. The amended term has been adopted for PAM
 Clause 21.0 144
2006. Before the Date of Commencement, (which is the countdown date for
the Contract), a period of mobilisation needs to be provided for the Contractor.
This period should be spelt out in the tender document, and depending on the
size and complexity of the project, could range from 2 to 4 Weeks.
Possession of the Site is a fundamental term of the Contract. In defining
what is meant by ' possession of site', in London Borough of Hounslow
v Twickenham Garden Development 7 BLR 81, the court held that the
contractor only has a license to occupy the site as was necessary to enable
him to carry out the works. If the contractor's employment was determined,
the contractor has to vacate the site. This was also affirmed in Kong Wah
Housing Development Sdn Bhd v Desplan Construction Trading Sdn
Bhd{l991} 3 MLJ 269.
If due to unforeseen circumstances, there is a delay by the Employer in giving
the possession of the Site to the Contractor on the Date of Commencement,
this Clause provides for an extension of time to be granted by the Architect
under Clause 23.8(f). The Contractor will also have the right to recover any
loss and/or expense, if he has incurred any cost under Clause 24.3(b). The
Contractor, however, cannot use the delay in giving possession of the Site
to repudiate the Contract, as long as the delay in giving the possession does
not exceed the Period of Delay as stated in the Appendix. If the Period of
Delay as stated in the Appendix to the Contract is not amended, then the
default period stated in the Appendix is ' a continuous period of three (3)
Months.' Therefore, if there is a delay exceeding 3 Months in giving the
possession of the Site to the Contractor, the Contractor will have a right
to treat this breach as a repudiation of the Contract by the Employer. The
Contractor also has the right to determine his own employment under Clause
26. l (d)(i). If the Contractor chooses to determine his own employment, he
is advised to follow the procedure for determination provided in Clause 26.2
which is as follows: ' ... the Contractor shall give to the Employer a written
notice delivered by-hand- or by,egistercct-p-osrspecifying lhe default. If
the Employer shall continue with such default for fourteen (14) Days from
the receipt of such written notice then, the Contractor may within ten (1 0)
Days from the expiry of the said fourteen (14) Days, by a further written
notice delivered by hand or by registered post forthwith determine his own
employment under the Contract... '
Failure to give the Contractor entry to or exit from the Site insofar as this
relates to land in the possession or control of the Employer, is also a ground
for an extension of time under Clause 23.8(u) and loss and/or expense under
Clause 24.3(1).
Clause 2 1.0 I 45
Clause 2 1. 1: "...regularly and diligently proceed. .. "
Breach of this obligation is a ground for determination under Clause 25.l(c).
For a more detailed explanation of this Clause, see the cornmenta1y under
Clause 25.1.
Clause 21.1: "In the event there is a delay by the Employer in
giving possession of the Site to the Contractor; the Architect shall grant an
extension of time under Clause 23.8(/) ... "
If the Employer is unable to provide the Site to the Contractor on the Date
of Commencement stated in the Letter of Award, it may be possible to
change the Commencement Date during the mobilisation period, and make
the appropriate adjustment to the Completion Date. In such an event, the
Contractor most probably has not incurred any cost and as such will not be
entitled to loss and/or expense under Clause 24.3(b). If the adjustment to the
Date for Commencement is made after the mobilization period, the Contractor
will be entitled to an extension ohime under Clause 23.8(f), and loss and/or
expense under Clause 24.3(b).
Clause 21.2 - Sectional Commencement Dates
Where there are different Dates of Commencement for sections of the Works,
these shall be stated in the Appendix.
This Clause envisages that the whole of the Site be handed over to the
Contractor on the Date of Commencement. If the Employer planned that the
whole of the Site would not be provided to the Contractor on the same date,
but instead, different sections of the Site were to be made available to the
Conh·actor on different dates, it would be appropriate for this information to
be properly documented and made known to the Conh·actor in the Contract
Bill, so that the Contractor can price for the Employer's requirement. Giving
possession of only sections or part of the Site to the Contractor, when there
are no provisions in the Conh·act Bill to do so, is a breach of contract. The
Sectional Completion can arise regardless of whether the Site was handed
over to the Contractor as a whole or in sections. The Architect must ensure
that the details on Sectional Completion are also recorded in the Appendix to
the Contract.
Clause 21.3 - Sectional Completion Dates
Where there are different Completion Dates for sections of the Works stated
in the Contract Documents, the Architect shall issue a Certificate of Sectional
 Cla11se 2 I.O
Completion when the sections of the Works are Practically Completed. The
provisions 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.
When Sectional Completion occurs, all the provisions in the Contract with
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; wi ll apply to each
section of the work with the appropriate adjustments.
Clause 21.4 - Postponement or suspension of the Works
The Architect may issue an AI in regard to the postponement or suspension of
all or any part of the Works to be executed under the Contract for a continuous
period not exceeding the Period ofDelay stated in the Appendix . Ifthe insurance
is covered by the Contractor under Clauses 19.0 and 20.A, the Contractor
shall ensure full insurance coverage for the whole period of postponement or
suspension or if the insurance is covered by the Employer under Clause 20. B
or 20.C, the Employer shall ensure similar insurance coverage.
This Clause empowers the Architect to issue an AI to postpone or suspend, all
or any part of the Works for a continuous period not exceeding the Period of
Delay stated in the Appendix. Unless the period is amended in the Appendix
to the Contract, the default period is a continuous period of 3 Months. If the
period is exceeded without the parties agreeing to a separate arrangement, the
Contractor will be entitled to determine his own employment under Clause
26. 1(d).
During the period of postponement or suspension, if the insurance is under the
Contractor's obligation, the Contractor would be advised to obtain an AI from
the Architect to cover cessation insurance for all the risks specified in Clauses
19 and 20A. If the insurance is under the Employer's obligation, the Architect
should ensure that the Employer anange to cover cessation insurance for the
same risk.
146 Clause 22.0 147
- I
Clause 22.0 - Damages For Non-Completion ,
- - - -~ --- .
Clause 22.1 - Liguidated Dama2es and Certificate of Non-Completion
If the Contractor fails to complete the Works by the Completion Date, and
the Architect is of the opinion that the same ought reasonably so to have
been completed, the Architect shall issue a Certificate of Non-Completion.
Upon the issuance of the Certificate of Non-Completion, the Contractor
shall pay or allow to the Employer a sum calculated at the rate staled in
the Appendix as Liquidated Damages for the period from the Completion
Date to the date of Practical Completion. The Employer may recover such
sum as a debt or may deduct such sum from any monies due or to become
due to the Contractor under the Contract or the Employer may recover such
sum from the Performance Bond. The Employer shall inform the Contractor
in writing of such deduction or such debt due from the Contractor. !he
imposition of Liquidated Damages by the Employer shall_not be taken 1_nto
account by the Architect in the issuance of payment certificates and Final
Certificate, and is not subject to the set-off procedures under Clause 30.4
and adjudication.
Clause 22.1: "((the Contractor.fails to complete the Works by the
Completion Date...and the Architect is of the opinion that the same ought
reasonably so to have been completed. .. "
Note the definition of ' Completion Date' in Article 7(m) as follows:
' Completion Date means the date(s) for completion of the Works stated in
the Appendix under Clauses 21. 1 and 21.3 or the last extended date granted
under Clause 23.4'.
Before the Architect can come to the conclusion that the Contractor had failed
to complete the Works by the Completion Date, he must have consi~ered all
the Contractor 's applications for extension of time. Ifby the Complet10n Date
( whether the original Completion Date or extended by virtue of an extension
of time granted by the Architect), the Contractor has failed to co~plete ~he
Works, then the Architect shall issue a Certificate of Non Completion statmg
that, in the Architect's opinion, the Contractor ought to have completed the
Works by the Completion Date.
Clause 22.1: "... the Architect shall issue a Certificate of Non-
Completion ... "
There was no requirement in PAM 98 that the certificate needed to _be ~n a
specific form, as long as the facts are stated in some form of commurncat10n.
 Clause 22.0 148
Unless the communication states clearly the requirement of PAM 98 C lause
22.1, there may be dispute whether it is a proper cettification of non-
completion by the Contractor. Most architects, in fact, do issue a formal
certificate, and therefore to regularise this practice, and also to avoid dispute
whether the communication is a proper ce1tification of non-completion, it is
now a requirement in PAM 2006 that a proper Certificate ofNon Completion
must be issued. For a sample copy of the Certificate of Non Completion,
please refer to Annexure ' A'.
Clause 22.1: "Upon the issuance of the Certificate of Non-
Completion, the Contractor shall pay or allow to the Employe1: .. Liquidated
Damages ... The Employer may recover such sum as a debt or may deduct
such sum fimn any monies due or to become due to the Contractor under
the Contract or the Employer may recover such sum from the Pe1forma11ce
Bond."
There are various venues for the Employer to recover Liquidated Damages
from the Contractor. The Contractor can pay the Employer the Liquidated
Damages on the Employer's demand, but often the Liquidated Damages are
deducted from the Contractor's payment. If there is insufficient balance in
the Contractor's payment, the Employer can recover the Liquidated Damages
from the Performance Bond, provided the Employer has made provision in
the Performance Bond for such an eventuality. If all else fails, the Employer
can recover from the Contractor the Liquidated Damages as a debt.
Clause 22. J: "The Employer shall inform the Contractor in
writing ofsuch deduction or such debt due.from the Contrac/01: .. "
When the Architect issues the Certificate of Non Completion, he must also
advise the Employer on the amount of Liquidated Damages the Employer is
entitled to deduct from any sums payable to the Contractor.
The Liquidated Damages will be at the rate of RM... per Day stated in
the Appendix. Note that 'Day' has been defined in Article 7(w) to mean:
'calendar day including the weekly day of rest but excluding gazetted
holidays in the location where the Works is carried out.' Therefore, any
imposition of Liquidated Damages will have to be adjusted to exclude the
gazetted holidays in the location where the Works is caITied out.
Under PAM 98, there was no provision that the Employer needs to inform
the Contractor of the deduction of Liquidated Damages, and therefore when
the Employer defers the deduction of damages, it may give the Contractor
a false sense of security that the Employer may have waived the damages.
Clause 22.0 149
Under PAM 2006, the Employer must inform the Contractor in writing of his
intention to impose the Liquidated Damages, even if the Employer chooses
not to deduct any of the damages during the progress of the work. This is
because if the Contractor had been informed of the damages, the Employer
will be entitled to interest under Clause 30.17 after the date of written
notification. An extract of Clause 30. 17 states that: ' ... if the Contractor
owes a debt or fails to pay any sum due and owing to the Employer w ithin
twenty-one (21) Days after receipt of written notification by the Employer
of such debt or amount owing, a simple interest based on the Maybank Base
Lending Rate plus one (1) percent shall be payable ... on such outstanding
amount until the date payment is made.'
It would be advisable to follow the pronouncement in Finnegan v Community
Housing 65 BLR 103 that a notice should
' indicate at least some basic details which are being relied upon to
justify the deduction including the period of overrun and the figure
for deductions which is claimed. These details then become a matter
of records and not left to the memories of men several years later
as to why a specific figure was claimed for deduction. Such details
would not only concentrate the mind of the employer when making
the deduction but also will allow the contractor to know precisely
why that deduction is being made and give him an opportunity to
challenge it, if he so desires. '
Clause 22. 1: "The imposition of Liquidated Damages by the
Employer shall not be taken into account by the Architect in the issuance of
payment certificates and Final Certificate... "
This C lause makes it clear what was already practiced by architects under
PAM/ISM 69 and PAM 98, in that it is the Employer (and not the Architect)
who is responsible to deduct Liquidated Damages from the Contractor's
payment, or demand the payment from the Contractor as a debt.
This Clause also clears the ambiguity in PAM 98 Clause 30.7 where in the
Final Certificate, it is stated that the Contractor is entitled to the Final Account
Sum less ' ... the sum paid to the Contractor under Interim Certificates... ' . The
'sum paid' will therefore be nett off Liquidated Damages, which would raise
the question of bow the deduction of Liquidated Damages under PAM 98 was
to be resolved.
 Clause 22.0 150
Clause 22.1: "... and is not subject to the set-off procedures under
Clause 30.4 and adjudication."
Under PAM 98, the Liquidated and Ascertained Damages as provided in
Clause 22. l can be interpreted as a set-off clause under Clause 30.3(i) which
states that ' Unless otherwise expressly provided in these Conditions, the
Employer shall not be entitled to withhold or deduct any amount ce1tified as
due under any Architect's certificates by reason of any claims to set-off... '
An example of a set-off clause in PAM 98 is Clause 2.2 on the failure of the
Contractor to comply with an Architect's instruction. The Clause provides that
in that event 'the Employer may employ and pay other persons to execute any
work ... Any additional costs incurred ... shall be recoverable from the Contractor
by the Employer as a debt or may be deducted by him from any monies due or
to become due to the Contractor under this Contract. '
Note the set-off language in Clause 2.2 is similar to PAM 98 Clause 22.1
on Liquidated and Ascertained Damages: 'If the Contractor fails to complete
the Works ... then the Contractor shall pay to the Employer...Liquidated and
Ascertained Damages ... The Employer may deduct such sum as a debt from
any monies due or to become due to the Contractor under this Contract.'
Under PAM 98 Clause 30.3(ii) further provides that: 'In the event of any
disputes or differences as to any rights of the Employer to set off...then such
disputes or differences shall be referred to an arbitration ... ' and
PAM 98 Clause 34.5 also states that: 'Such reference ... shall not be opened
until after Practical Completion or alleged Practical Completion of the Works
or termination or alleged termination of the Contractor's employment under
this Contract, or abandonment of the Works. '
Sn--it7nay-be711terpreted-rhar underPA:tr9s-; e Impos1t10n of riquictatecf
and Ascertained Damages is a set-off clause, and any dispute on the set-off
shall be referred to arbitration. This then begs the question: If the Contractor
disputes the amount of damages, can the Employer still set-off the damages
against the Contractor before the dispute is resolved by arbitration?
For the avoidance of doubt, PAM 2006 Clause 22. I now expressly states that
the deduction of the Liquidated Damages is not a set-off, and such deduction
is not subject to the set-off procedures stated in Clause 30.4. What this means
is that the Employer will be entitled to deduct Liquidated Damages after the
Architect has issued the Certificate of Non Completion.
Clause 22.0 [51
Clause 22.2 - Agreed Liquidated Damages amount
The Liquidated Damages stated in the Appendix is a genuine pre-estimate of
the loss and/or damage which the Employer will suffer in the event that the
Contractor is in breach of Clauses 21.0 and 22.0. The parties agree that by
entering into the Contract, the Contractor shall pay to the Employer the said
amount, if the same becomes due without the need for the Employer to prove
his loss and/or damage unless the contrary is proven by the Contractor.
Clause 22.2: "The Liquidated Damages ... "
Section 74 of the Contract Act states that in the event a party breaches the
contract, the other party is entitled 'to compensation for any loss or damage
caused to him thereby, which naturally arose in the usual cause of things from
the breach, or which the party knew, when the party made the contract, to
be likely to result from the breach. ' This is often referred to as 'Liquidated
Damages' in case law, even though the actual wording used in the contracts
was 'Liquidated and Ascertained Damages.' Liquidated Damages is also the
tenn used in most recent contracts, such as the CTDB 2000 Contract, the
international FIDIC suite of contracts, the NEC3 suite of conh·acts, the ICE
suite of contracts, the JCT suite of contracts, the PSSCOC and the REDAS
contracts in Singapore.
Clause 22.2: ...1s a genuine pre-estimate of the loss and/or
damage which the Employer will sujf eJ'. .. "
The basic essence of Liquidated Damages is that the amount mentioned in the
Contract as Liquidated Damages, must represent the Employer's genuine pre-
estimate of the loss or damage which the Employer will suffer in the event the
Contractor fails to complete the Works by the Completion Date. Both parties
thus enter into the Contract fully aware of the monetaiy rights and liabilities,
and the amount that the Contractor could price for the risk.
Clause 22.2: "The parties agree... the Contractor shall p ay to the
Emp loyer the said amount, ff the same becomes due without the need.for the
Employer to prove his loss and/or damage"
In Selvakumara/l Murugiah Thiagarajah all Retnasamy [1995} 2MLJ 817, the
Federal Court held that in Malaysia, there is no distinction between liquidated
damages and penalty, and that Section 75 of the Conh·act Act 1950 puts the
obligation of the party wishing to impose the liquidated damages clause to
prove his loss. Section 75 states that:
 Clause 22.0 152
'When a contract has been broken, if a sum is named in the contract as
the amount to be paid in case of such breach, or if the contract contains
any other stipulations by way of penalty, the party complaining of the
breach is entitled, whether or not actual damages or loss is proved to
have been caused thereby, to receive from the party who has broken
the contract reasonable compensation not exceeding the amount or, as
the case may be, the penalty stipulated for. '
In the June 2009 decision by the Federal Court onJohor Coastal Development
Sdn Bhd v Costrajaya Sdn Bhd [2009} 4 CLJ 569, the court was asked to
consider the question whether the parties, having agreed to have the following
clause in their contract:
' Both patties hereby unconditionally and irrevocably acknowledge
that the sums stipulated in this Agreement to be payable by the
defaulting pa1ty would constitute reasonable compensation to the non-
defaulting party and each party hereto waives any objection it may
now or hereafter have that those sums would be othe1wise than fair and
reasonable compensation',
were entitled to contract out of the provisions of Section 7 5 of the Contracts
Act 1950. Unfortunately the court by a majority decision decided that, as
there was an ambiguity between the above clauses with another clause in the
contract, the case could be decided under the contra proferentum rule, and
therefore did not have to make a decision whether the parties were entitled
to contract out of the provisions of Section 75. However, in the only judicial
comment in the case on Section 75 of the Contracts Act, Judge Hashim
Yusoff FCJ did provide a glimpse of hope when he expressed his opinion
that the agreement by both parties to agree on the damages is not contrary to
Section 75 of the Contracts Act.
'fhe Clause-in PAM-20fr6 exp, essly-state"SLtmttlre eon1'i"acfor has agreed with
the Employer that the Liquidated Damages is a genuine pre-estimate of the
loss or damage and further agreed that the Employer will not be required to
prove his actual loss or damage in the event of a claim by the Employer. The
above case may provide some consolation that the Clause is not contrary to
Section 7 5 of the Contracts Act and may be enforceable.
Clause 22.2: "...unless the conlra,y is proven by the Contracto,:"
This Clause makes it expressly clear that in the event, after having agreed
on the amount of Liquidated Damages, the Contractor wishes to contest that
the Liquidated Damages is, in fact, a penalty, then, the onus will be on the
Clause 22 .0 153
Contractor to prove that the sum stipulated is excessive and not a genuine
pre-estimate of the loss and/or damage.
Clause 22.3 - Certificate of Non-Completion revoked by s ubsequent
Certificate of Extension of Time
l n the event the Architect issues a Certificate of Extension of Time under
Clauses 23 .4, 23 .9 and 23. 10 which has the effect of fixing a Completion
Date which is later than the date stated in a Certificate of Non-Completion
previous ly issued, such certificate shall have the effect of revoking the
Certifica te of Non-Completion earlier issued. T he Employer shall then revise
the amount of Liquidated Damages he is entitled to reta in. In the event the
amount of Liq uidated Damages retained exceeds the amount the Employer is
entitled to retain, he shall repay the surplus amo unt to the Contractor within
the Period of Honouring Certificates from the date of the lates t Certificate of
Extension of Time. If the Works is not completed by the Completion Date
stated in such Certificate of Extension of Time, the Architect shall issue a
further Certificate of Non-Completion.
Clause 22.3: "In the event the Architect issues a Certificate of
Extension of Time ... which has the effect offixing a Completion Date which
is later than the date stated in a Cert[ficate of Non-Comp letion previously
issuecl, such certificate shall have the effect ofrevoking the Certificate ofNon-
Completion earlier issued. .. "
Hudson's Eleventh Edition on page 1175 states that: 'It has been seen that a
great majority of construction contracts at the present day make no express
provisions for extensions of time due to later events after the period of culpable
delay has commenced, or for the subsequent adjustments to the deduction or
recovery of liquidated damages which any such fu1ther extensions of time
would require.' In common with a lot of contracts, PAM 98 has no provision
to cater for the problem envisaged in Hudson's.
PAM 2006 has now rectified this deficiency and provides that if the Architect
has to grant a further extension of time after he has issued a Certificate of
Non Completion, the effect of the later Ce1tificate of Extension of Time will
automatically revoke the earlier Ce1tificate of Non Completion. There is no
necessity to withdraw the earlier Ce1tificate of Non Completion.
The Employer must then re-assess the amount of Liquidated Damages he is
entitled to deduct based on the new Completion Date. If Liquidated Damages
has been deducted and the new Certificate of Extension of Time results in a
reduction in the Liquidated Damages, the Employer shall repay any amount
 Clause 22 .0
over- deducted together with interest to the Contractor. The amount should
be repaid within the Period of Honouring Certificates stated in the Appendix,
calculated from the date of the new Certificate of Extension of Time.
Clause 22.3: "(f the Works is not completed by the Completion
Date stated in such Cert(ficate ofExtension of Time, the Architect shall issue
a fi1rther Certificate ofNon-Completion. "
This Clause preserves the Architect's right to issue a further Certificate of Non
Completion in the event the Contractor fails to complete the Works within the
newly extended time. There was no such express provision in PAM 98.
154 Clause 23 .0 I 55
Most Employers believe that extension of time clauses are generally for the
benefit of the Contractor. On the face of it, by providing the Contractor more
reasons for extensions of time, it would reduce his liability for liquidated
damages. They do appear to be one-sided. This view is fmther reinforced,
when the extension of time clauses are linked to the Contractor's right to claim
loss and/or expense caused by matters affecting the regular progress of the
Works.
This in fact is not the position. An extension of time clause is, for all intents
and purposes to preserve the Employer's right to Liquidated Damages, in the
event the Contractor fails to complete by the Completion Date due to some
action for which the Employer (or Architect acting as agent for the Employer)
is responsible.
There are a string of cases to confirm that the comts will not uphold Liquidated
Damages where the Employer has prevented the Contractor from completing
on time, unless there is an express provision in the Contract to extend time
for the Employer's default. For example, in a contract based on PAM 98, the
Architect, on instructions from the Employer, deleted the whole of Clause
23 on extension of time from the Contract. When the Architect, during the
construction, issued an instruction for a variation of the Works, the Contractor
applied for an extension of time. The Architect innocently replied that as the
clause for extension of time had been deleted from the Contract, the Contractor
had no basis to apply for an extension of time and thus the Architect was
unable to consider the Contractor's application. This may appear logical to the
Architect, but in fact, the absence of extension of time provision meant that
time was ' at large', and it was caused by the Architect (acting as an agent for
the Employer) preventing the Contractor to complete on time. The Employer
would, therefore lose the right to impose Liquidated Damages, even though
some of the blame for the delay may rest with the Contractor.
This point is summed up in Lord Fraser's comment in Percy Bilton v GLC 20
BLR 1, when he said:
'The general rule is that the main contractor is bound to complete
the work by the date for completion stated in the contract. If he fails
to do so, he will be liable for liquidated damages to the employer.
That is subject to the exception that the employer is not entitled to
liquidated damages if by his acts or omission he has prevented the
main contractor from completing his works by the completion date.'
 Clause 23 .0 156
When the term ' time at large' is used, it means that the Contractor shall not be
bound to complete the Works before the completion date stated in the Contract,
but he must still complete the Works within a reasonable time without the threat
of being held in culpable delay and therefore being liable to the Employer for
Liquidated Damages. In order to fix a ' reasonable time,' all the circumstances
of the delay will be taken into account and this often means that the amount
of delay caused by the Employer will be added to the old completion date.
Although the Contractor is no longer liable for Liquidated Damages, this does
not mean that he is no longer liable for any damages whatsoever. He will in
fact still be liable to pay general damages under common law, if he fails to
complete the Work within a 'reasonable time' so established.
It is accepted that some neutral events, such as Clause 23.8(a), (b), (c), (d),
(n), (p) and (q), may operate to the Contractor's benefit. Neutral events are
events that are beyond the conh·ol of either party. If the Employer desires
to delete these grounds from the Contractor's entitlement and pass all risk
related to these events to the Contractor, this can be done, but there is a need
to consider whether allocating these risks totally to the Contractor will result
in the Contractor pricing in an amount to cover Liquidated Damages in the
event any of these events caused a delay. The Employer must also consider
that if Clause 23.8(a) on delay caused by 'exceptionally inclement weather'
is deleted, the Architect will not be able to grant an extension of time based
on this ground should there be a delay caused by other concurrent events,
say Clause 23.8(e) 'delay as a result of late Architect's instructions.' Note
also that extension of time under Clause 23.8(e) will entitle the Contractor
to a claim for loss and/or expense under Clause 24, whereas the Contractor
will not be so entitled, if the extension of time was granted under Clause
23 .8(a).
Clause 23.1 - Submission of notice and particulars for extension of time
Tf the Contractor is of the opi nion that the completion of the Works is or will
be uelayed beyond the Completion Date by any of the Relevant Events stated
in Clause 23.8, he may apply for an extension of time provided always that:
23.l(a) the Contractor shall give written notice to the Architect his
intention to claim for such extension of time together with an initial
estimate of the extension of time he may require supported with
all particulars of the cause of delay. Such notice must be given
within twenty eight (28) Days from the date of the Al, CAI or the
commencement of the Relevant Event, whichever is earlier. The
giving of such written notice shall be a condition precedent to an
entitlement of extension of time; and
Clause 23 .0 157
23. I (b) within twenty eight (28) Days of the end of the cause of delay, the
Contractor shall send to the Architect his final claim for extension
of time duly supported with all patiiculars to enable the Architect
to assess any extension of time to be granted. If the Contractor
fails to submit such patticulars within the stated time (or within
such longer period as may be agreed in writing by the Architect), it
shal I be deemed that the Contractor has assessed that such Relevant
Event will not delay the completion of the Works beyond the
Completion Date.
Although PAM 98 Clause 23.1 and 23.2 is ' intended'to convey the impression
that the giving of notice by the Contractor is a condition precedent before
the Architect can grant an extension of time, a reading of both clauses do
not convey such an impression. For example, PAM 98 Clause 23.1 merely
states: 'If and when it becomes reasonably apparent that the progress of the
Works is ... delayed ... the Contractor shall forthwith ... notify the Architect... '
and PAM 98 Clause 23.2 continued that: ' Upon receipt of the Contractor's
notice ... the Architect shall...consider the relevant events ... and by written
notice to the Contractor give a fair and reasonable extension of time .. .'
In Bremer v Vanden [1978] 2 Lloyds's Rep 109 HL, the House of Lords has
provided authority for the preposition that, for a notice requirement to rank
as a condition precedent, it must state the time for service and make clear
that failure to serve the notice will mean loss of right. In this case, notice was
required to be given ' without delay'. To explain what 'without delay' means,
Lord Salmon has this to say:
' In the event of shipment proving impossible during the contract
period, ... the seller to advise the buyers without delay of the
impossibility and the reasons for it. It has been argued by the
buyers that this is a condition precedent to the sellers' right under
that clause. I do not accept this argument. Had it been a condition
precedent I should have expected the clause to state the precise time
within which the notice was to be served within the time, the seller
would lose their rights under the clause .. .'
To avoid this possible problem, PAM 2006 has included a time provision
for the submission of notices. This is also in line with the drafting approach
adopted by NEC3 suite of contracts, the ICE suites of contract and the FIDIC
Contracts.
 Clause 23.0 158
Example:
NEC 3 core Clause 61.3:
'The Contractor notifies the Project Manager of an event which has happened
or which he expects to happen as a compensation event if:
the Contractor believes that the event is a compensation event and
the Project Manager has notified the event to the Contractor
If the Contractor does not notify a compensation event within eight weeks of
becoming aware of the event, he is not entitled to a change in the Prices, the
Completion Date or a Key Date ...... '
Clause 23. I : "Jfthe Contractor is ofthe opinion that the completion
ofthe Works is or will be delayed. .. he may apply.for an extension of time... "
Under the Contract, the Contractor is responsible to program, execute and
complete the Works by the Completion Date. As such, the Contractor will be
the first to !mow if the completion of the Works is or will be delayed. If the
Contractor is of the opinion that the completion of the Works is or will be
delayed beyond the Completion Date by any of the Relevant Events stated in
Clause 23.8, he may apply for an extension of time, provided that he follows
the procedure stated under Clause 23 . l(a) and Clause 23. l(b).
Clause 23. 1(a): "... the Contractor shall give written notice to the
Architect his intention to claim for such extension oftime... The giving ofsuch
written notice shall be a condition precedent to an entitlement ofextension of
time."
Under PAM 2006 Clause 23.1 , the Contractor must give notice, ifhe wishes
to apply for an extension of time, and the giving of such notice is a condition
precedent before the Architect needs to assess the Contractor's claim. The
Contractor will lose his entitlement to an extension of time, if he fails to
submit the proper notice.
This 1s consistent with Hudson JI'" Edition paragraph 4.132:
'Building and engineering contracts frequently contain prov1s10ns
requiring a contractor to give notice within a reasonable time of events
occmTing which he considers may entitle him to claim additional
payment under the te1ms of the contract. Since the pmpose of such
provisions is to enable the owner to consider the position ofits financial
consequences (by canceling an instruction or authorising a variation,
for example, he may be in a position to reduce his financial liability
if the claim is justified)...there is no doubt that in many if not most
cases, the comts will be ready to interpret these notice requirements as
Clause 23 .0 159
a condition precedent to a claim, so that failure to give notice within
the required period may deprive the contractor of all remedy. '
Under PAM 2006, the Contractor is therefore obliged to alert the Architect
within the stated time, of any delay to the completion of Works beyond the
Completion Date. The objective is to give the Architect the earliest possible
opportunity to discuss with the Employer on any measures to be adopted to
mitigate or neutralise the delay, or to cancel out the cause of the delay entirely.
The notice must identify the Relevant Events causing the delay and include
an initial estimate of the extension of time, and the application should also
be supported with all particulars of the cause of delay and the effect of
any concurrent delay. The notice must be given to the Architect within 28
Days from the date of the AI, CAT or the commencement of the Relevant
Event, whichever is the earlier. To ensure that the Contractor will so alert the
Architect, the Clause makes the giving of such written notice by the Contractor
a condition precedent to an entitlement of extension of time.
In the Australian case of Gaymark investment v Walter Construction Group
(J 999) NT Supreme Court 143, the contractor claimed for variations,
prolongation and disruption. The employer counterclaimed for liquidated
damages. The arbitrator found that the contractor was entitled to an extension
of time by causes for which the employer was responsible, but his application
for extension was barred because of the failure of the contractor to meet the
notification requirements stated in the contract. Jn this case, the court refused
to uphold the ' notice condition precedent' provision, but instead relied on the
' prevention principle' that a party cannot take advantage of its own wrong in
enforcing a contract.
In the Scottish case of City Inn v Shepherd Construction [2001] Scot CS 187,
when the contractor failed to comply with the procedure that notice was a
condition precedent to an extension of time, the judge has this to say:
' If the contractor, having formed the opinion ... elects not to do what the
clause requires of him, he not only deprives himself of any entitlement
he would otherwise have had to an extension of time; he also deprives
the architect the opportunity... of reviewing the instruction in light of
the contractor's opinion of its consequences, and of choosing whether
to insist in it, or withdraw it. In reviewing the instrnction, the architect
would be entitled to have in mind not only the effect of the instruction
in producing delay, but also its effect on the contract sum and any
claim for direct loss and expense.
 Clause 23.0 160
It therefore seems to me that the clause is of material value to the
employer, and that it would not be right to constrne the apparently
obligatory words in the clause ... as merely confening an option, rather
than imposing an obligation on the contractor. I am therefore of the
opinion that failure on the part of the contractor to comply with... the
provisions ... is properly regarded as a breach of contract on his part...'
The English Court had the occasion to express a view on the same issue dealt
with in the Gaymark and City Inn cases, in the case of Multiplex Construction
(UK) Ltd v Honeywell Systems Ltd [2007} 447 (TCC) 6 March 2007. In
this case, a sub-contractor on the Wembley Stadium project argued that the
liquidated damages clause was not valid, and that time was at large because
its failure to comply with a condition precedent requirement in an extension
of time clause had the effect of allowing the employer to benefit from its own
wrong. The sub-contractor quoted Gaymark in support of its argument.
Jackson J in Multiplex doubted that the Gaymark principle represents English
law, as under English legal tradition, a contractor may lose his entitlement
to an extension of time if, under the terms of the contract, it is an express
precondition to the contractor's entitlement that he submits his claim for
extension of time within the specified period, and the contractor fails to do
so. Although there is a principle in law that a party to a contract should not
benefit from its own breach, there is also a requirement that the judge in
law must give effect to the express terms of the contract agreed between the
parties. Therefore, if the parties have expressly agreed in the contract that the
other party's rights and remedies arising from a breach shall lose his claim,
if not claimed within a specified time, then applying English law principles,
it is difficult to find any reason why the comt should not give effect to that
agreement.
It would therefore seem that English law is prepared to enforce conditions
- - - -~ _r_ecedent in extension of time clauses against a contractor, e_y_en where the
event giving rise to the entitlement to the extension of time is a breach of
contract or some other act of prevention by the employer. The decision in
Multiplex is of significance, as the NEC 3 suite of contracts has also, for the
first time, introduced such conditions precedent into an English standard form
of contract. The conditions precedent in extension of time clauses has also
been incorporated in the most recent editions of the FIDIC suite of contracts.
In order to further ensure that the prevention principle, similar to the Gaymark
case, does not apply to PAM 2006, a new provision has been expressly drafted
to allow the Architect to grant an extension of time, if the Contractor had
failed or deliberately declined to make an extension of time application based
Clause 23 .0 161
on a Relevant Event. The provision is found in PAM 2006 Clause 23.5 which
provides that in assessing the extension of time, the Architect may take into
account ' any other Relevant Events which in the Architect's opinion will have
an effect on the Contractor 's entitlement to an extension of time.'
For example: Tfthe Employer fails to pay the Contractor, the Employer would
be in breach of Clause 23.8(m). If the Contractor deliberately declines to
apply for an extension of time, this Clause empowers the Architect to grant
the Contractor an extension of time, therefore preventing a Gaymark situation.
Clause 23. 1(a): "... Such written notice must be given within twenty
eight (28) Days fi'om the date of. . "
PAM 2006 requires the Contractor to give notice of his intention to claim
extension of time within 28 Days. lf it is necessary to vary the notice period,
it is preferable that the period should not be unreasonably short. There is an
example of a contract in the Middle East, where it was stated that the contractor
must apply for an extension of time within 24 hours of the event. Clearly, a
provision such as this is designed to frustrate the contractor. If challenged, the
arbitrator or court may try to find reasons to distinguish this provision from
case law, and not enforce the intention.
That said, the time period of28 Days for the Contractor to give notice stated in
PAM 2006 may be varied by the Employer depending on the size, complexity
and time perfonnance to suit the project. In the event the period of 28 Days
is varied, care must be taken that any changes must also be reflected in PAM
2006 NSC Clause 21. l (a). For example, if the period of 28 Days is changed
to 2 1 Days, then it is advisable to change the time period in PAM 2006
NSC Clause 21.l(a) to 14 Days, thereby allowing the Contractor 7 Days in
accordance with PAM 2006 NSC Clause 21.l(b) to inc lude the Nominated
Sub-Contractor's extension oftime application to the Architect.
ClDB 2000 also requires the Contractor to submit notice of any claim within
a specified time. Clause 24.2(a) states that: ' lfthe Contractor is of the opinion
that the progress or completion of the Works ..... is or will be or has been
delayed... he shall forthwith notify the Superintending Officer. .. within 30 Days
of the occurrence of the event. ..'
Clause 23.l(b): '... within twenty eight (28) Days of the end of the
cause of delay, the Contractor shall send to the Architect his final claim for
extension oftime duly supported with all particulars to enable the Architect to
assess any extension o,f time to be granted. .. '
 Clause 23.0 162
After having given the Architect the required written notice under Clause
23. l(a), the Contractor shall send to the Architect his final claim for extension
of time within 28 Days of the end of the cause of delay. In the event the
period of28 Days is varied, care must be taken that any changes must also be
reflected in PAM 2006 NSC Clause 21.l(c). For example, if the period of28
Days is changed to 21 Days, then it is advisable to also change the time period
in PAM 2006 NSC Clause 2 1.l(c) to 14 Days.
The final claim must clearly show how the Relevant Event cited by the
Contractor has delayed, or will delay the completion of the Works by the
length of extension of time claimed by him. The requirement of a timely
submission from the Contractor is to ensure that the Architect is able to
assess the claim before the facts surrounding the claim become blurred by the
passage of time.
Clause 23. 1(b): ".. .If the Contractor fails lo submit such particulars
within the stated time (or within such longer period as may be agreed in
writing by the Architect) ... it shall be deemed that the Contractor has assessed
that such Relevant Event will not delay the completion of the Works beyond
the Completion Date. "
It is recognised that the Contractor may take longer than 28 Days to submit the
details and particulars of his final claim for extension of time. In that event,
he shall agree with the Architect an extended time to submit such details and
paiticulars. If the Contractor does not submit his details and particulars of his
final claim within the stipulated time, or attempt to agree with the Architect an
extended time for such submission, then it w ill be deemed that the Contractor
has re-evaluated that, despite his notice under Clause 23 .1 (a), he does not
require an extension oftime.
Clause 23.2 - Delay by Nominated Sub-Contractor
Where the particulars of the written notice given under Clause 23 . 1 include
references to Nominated Sub-Contractors, the Contractor shall forthwith send
a copy of such written notice and particulars to the Nominated Sub-Contractor
concerned.
This provision ties up with the provision in PAM 2006 NSC Clause 21,
requiring the Sub-Contractor to give written notice to the Contractor (with
a copy to the Architect and Consultant) of the Sub-Contractor 's intention
to claim for any extension of time. The Contractor shall within 7 Days of
receipt of such written notice by the Sub-Contractor, infotm the Architect and
Consultant (with a copy to the Sub-Contractor) and include the Contractor's
Clause 23.0 163
comment on the Sub-Contractor's application. The Contractor shall also
extend to the Sub-Contractor a copy of his application to the Architect.
Clause 23.3 - Insu fficient information
Ifthe Architect is of the opinion that the particu lars submitted by the Contractor
are insufficient to enable him to decide on the application for extension of
time, the Architect shall within twenty eight (28) Days from receipt of the
Contractor 's particulars under Clause 23. 1(b), inform him of any deficiency
in his submission and may require the Contractor to provide such fu1ther
patticulars within a further twenty eight (28) Days or within such period of
time as may be stated by the Architect in writing.
Tf the pa1ticulars submitted by the Contractor are insufficient to enable
him to decide on the application for extension of time, the Architect must
respond to the Contractor, pointing out the area of such deficiency, within
28 Days from receipt of the Contractor's patticulars. He may then require
the Contractor to provide such fwther particulars within a further 28 Days
unless the Contractor requests for more time. If the Architect agrees to give
the Contractor more time, it will be necessary to confirm the revised time in
writing. If the A rchitect does not write to the Contractor within 28 Days from
receipt of the Contractor's particulars, it shall be deemed that the particulars
so submitted are sufficient to enable the Architect to decide on the application
for extension of time. If it is necessary to change the period of 28 Days, the
Clause can be amended.
Clause 23.4 - Certificate of Ex tension of Time
When the Contractor has submitted sufficient particulars for the Architect's
consideration, the Architect shall subject to Clauses 23.5, 23.6 and 23 .8,
consider the Contractor's submission and shall either reject the Contractor's
application or issue a Certificate of Extension of Time within six (6) Weeks
from the receipt of sufficient particulars. The Architect may issue the written
notice of rejection or the Certificate of Extension of Time before or after the
Completion Date.
This Clause must be contrasted with PAM 98 Clause 23.3: 'Provided always
the Contractor submits to the Architect bis application for extension oftime
... the Architect...shall ascertain and fix such new Date for Completion within
a reasonable time ... ' The use of the term - that the Architect shall grant an
extension of time within a 'reasonable time' - has provided architects with
a false sense of complacency, and has led to procrastination and delay in
processing the extension of time claimed by the Contractor. It bas been
 Clause 23.0 164
mistakenly interpreted by some architects to mean ' anytime considered
reasonable by the Architect. '
In Perini C01poration v Commonwealth o.fAustralia I 2 BLR 82, the contractor
had made a number of applications for extensions of time within fourteen
days as required under the contract. There was no provision in the contract
specifying when the employer had to info1m the contractor of any decision on
extension of time. In the absence of any provision, the judge decided that the
employer must make his decision within a reasonable time, and he went on to
explain that:
'The measurement of a reasonable time in any particular case is always
a matter of fact. Plainly, the employer must not procrastinate, and in
my opinion he is not simply entitled to defer a decision ...... When the
investigation is complete, I am of the opinion that the decision should
then be made.'
The term 'reasonable time' therefore does not mean ' anytime considered
to be reasonable by the Architect', as has been incorrectly interpreted by
some architects. Reasonable time under PAM 98 may, depending on the
circumstances, mean that the Architect may have less than 6 Weeks to make
a decision on the extension of time upon receipt of sufficient particulars from
the contractor. In CIDB 2000 Clause 24.3(a), the Superintending Officer 'shall
notify the Contractor in writing within a reasonable time but in any case not
exceeding 30 Days of the receipt of the notice ... ' . In this case, reasonable time
is defined as ' less than 30 Days' .
PAM 2006, where possible, has intentionally replaced 'reasonable time' with a
definite period to avoid subjecting it to argument. The time period of 6 Weeks
is the provision allowed in a standard form of contract. Depending on the size
and complexity of the Works, the period could be shmtened or lengthened.
It should be noted that in the Perini C01poration case, the contractor was able
to succeed in claims for acceleration cost, caused by the failure of the architect
to make a decision on extension of time. In the case, the contractor accelerated
the works in order to avoid liquidated damages when he was unsure of the
completion date.
Clause 23.4: "When the Contractor has submitted sufficient
particulars for the Architects consideration, "
The Architect shall consider whether the particulars submitted by the
Contractor support his claim of delay to the completion of the Works, and
Clause 23.0 165
whether such delay was caused by one or more of the Relevant Events
stated in Clause 23 .8. In assessing the effect of the Relevant Events on the
completion of the Works, the Architect shall base his assessment of such
effect at the time when the Works were actually being executed, and not when
they were programmed to be executed. Further, in assessing the extension of
time due to the Contractor, the Architect may, under Clause 23.S(a), take into
consideration the effect or extent of any work omitted under the Contract,
and Clause 23.S(b), which deals with 'any other Relevant Events which in
the Architect's opinion will have an effect on the Contractor's entitlement
to an extension of time.' Effectively, the Architect has to, at all times, look
at the overall impact caused, not just by that event for which a claim for
extension of time has been made, but also to include other events for which
a claim may not have been made, and assess the issues of concurrent events,
dominant events and such other considerations like omitted scope of works.
Clause 23.4: "...the Architect shall...consider the Contractors submission
and shall either reject the Contractors application or issue a Certificate
of Extension o,f Time within six (6) Weeks from the receipt o,f sufficient
particulars ... "
In practice, architects often delay reaching a decision on issues of extension
of time until a very late stage in the works, or even after actual completion.
In many instances, the delay by the Architect may suit the Contractor,
since for the time being, it averts the prospect of any imminent deduction
of Liquidated Damages, while giving the Contractor more time to prepare
further grounds of claim. On the other hand, where the Liquidated Damages
is substantial, Contractors may wish to have an early decision on their
application for extension of time, as it will affect their decision whether
to incur cost to accelerate the works, or face the prospect of substantial
Liquidated Damages.
In PAM 2006, the Architect shall infonn the Contractor, within 6 Weeks
from the receipt of sufficient particulars, whether he rejects the Contractor's
application; or if the Architect is of the opinion that the Contractor is entitled
to an extension of time, he shall issue a Certificate of Extension of Time.
The Architect has 6 Weeks, i1Tespective whether the 6 Weeks occur before
or after the Completion Date. In this regard, the ClDB 2000 also requires
the Superintending Officer to inform the Contractor within a specified time.
Clause 24.3(a) states that: ' ... the Superintending Officer shall notify the
Contractor in writing within a reasonable time but in any case not exceeding
30 Days ... whether in his opinion the event of delay is one which in principle
entitles the Contractor to an extension of time. '
 Clause 23.0 166
PAM 2006 did not want to confuse matters by the use of the term 'within a
reasonable time but in any case not exceeding 30 Day' as adopted in CIDB
2000. It prefers to use 6 Weeks as a guide to reasonable time. If the 6 Weeks
is considered insufficient, or too long for the Architect to make a decision, this
period could be altered by the Architect or Consultant when the tender is being
prepared, but care must be taken that the period is not unreasonably long for
a short term contract.
Extension of time made under this Clause can be considered as an interim
decision of extension of time. As such, it should not be too difficult for the
Architect to grant an interim extension within the 6 Weeks as under Clause
23.1 , the Contractor must submit his claim for extension of time for delay
caused by 'any of the Relevant Event' one at a time. As the extension of
time is an interim extension of time, there is no reason why time should be
at large, even if the Architect exceeded the 6 Weeks, as the Architect has
an opportunity to review the extension of time after Practical Completion.
Clause 23. 10 states: ' The Architect may... within twelve (12) Weeks after the
date of Practical Completion review and fix a Completion Date later than that
previously fixed, if in his opinion the fixing of such later Completion Date is
fair and reasonable having regard to any of the Relevant Events, whether upon
reviewing a previous decision or... '
This case was demonstrated in Tem/oc v Errill Properties 39 BLR 30. The
court was asked to interpret whether the delay would mean that time was at
large, when the architect in this case took more than the stipulated time to
review the extension of time. In this case, the contract prov ision stated that the
architect shall: ' not later than the expiry of 12 weeks from the date of Practical
Completion, the architect shall... either fix a Completion Date later than that
previously fixed or... ' The architect took more than 12 weeks to review the
extension of time, and the contractor submitted that compliance with the
review of the extension of time within the period is a condition precedent to
the operation of the liquidated damages clause. This argument was t~ected by
e JU ge w o sa1 :
' ... the clause... is directory only as to time and is not something which
wo uld invalidate the calculation and payment of liquidated damages. '
To distinguish whether compliance with the time stated in the clauses are
' mandatory' or' directory ' in nature, one has to look at the overall circumstances
of the case if the Architect failed to act within the time. For example, in this
Clause it is stated that: ' .. the Architect shall . .. either reject the Contractor's
application or issue a Certificate of Extension of Time within 6 Weeks' and
later in Clause 23 .10, it is further provided that the Architect has the auth,ority
Clause 23.0 167
to either review or not to review the extension of time granted. Clearly in such
circumstances, the time for the Architect to act would fall under the category
of ' directory' compliance as there is a provision for a review later on ...
Another example where time stated would be considered ' directory' would
be PAM 2006 Clause 15.4: 'Any Defects in the Works which appear within
the Defects Liability Period shall be specified by the Architect in a schedule
of defects which he shall deliver to the Contractor not later than fourteen (] 4)
Days after the expiration of the Defects Liability Period. ' Jf the Architect fai!s
to deliver the Schedule of Defects within 14 Days, it does not mean he 1s
estopped from providing the Schedule to the Contractor at a later date. The 14
Days is considered ' directory' in nature as the Contractor has a fundamental
responsibility under the Contract not to carry out works with Defects in the
first instance and this Clause merely provides that he must be given the first
right ofrefusal to attend to any Defects before the Employer can employ third
parties to attend to the same.
Contrast the PAM 2006 clause with the provision of PAM 98 Clause 15.2:
' Any defects, shrinkages or other faults which appear within the Defects
Liability Period ... shall be specified by the Architect in a Schedule of Defects
and delivered to the Contractor not later than fomieen (14) days after the
expiration of the Defects Liability Period', and later in Clause 15.3: 'No such
instructions shall be issued after deli very of a Schedule of Defects or after
fourteen ( 14) days from the expiration of the Defects Liability Period. ' Clearly
in PAM 98, the time for the Architect to act would fall under the category of
' mandatory' as there is an express provision preventing the Architect from
issuing any instructions requiring Defects to be made good if he fails to issue
a Schedule of Defects or after 14 days from the expiration of the Defects
Liability Period. Therefore, in accordance with the provisions of PAM 98, the
Contractor would be released from his contractual liability to carry out the
Works in accordance with the Contract merely on account of the Architect
not issuing the Schedule of Defects within the 14 days, a position that is
inconsistent with the Contractor 's primary obligation as stated in Article I
and Clause 1.1.
A futther example of how the comt resolves this sort of problem can be found
in BR & EP Cantrell v Wright & Fuller Ltd [2003} BLR 436. In this case,
when the contractor failed to complete the works on the date fixed in the
contract, the architect did not issue any certificate of non-completion nor did
he issue a ce11ificate for extension of time. When the contractor completed the
work the architect also did not issue a certificate of practical completion and
furth; r failed to issue a schedule of defects at the end of the defects liability
 Clause 23 .0 168
period. Since no schedule of defects was issued by the architect, no certificate
of making good defects could be issued. However, upon agreement of the
final account with the contractor, the architect proceeded to issue a final
payment certificate, but termed it as 'final certificate' in his covering letter.
The contractor therefore contended that the ' final payment certificate' was
the ' final ce1tificate' required to be issued under clause 30.9 of the JCT 80
Fo1111. The employer disagreed and contended that the payment ce,tificate is
not the final ce1tificate referred to in Clause 30.9. The final certificate under
Clause 30.9 would have released the contractor from certain liabilities under
the contract whereas the final payment certificate would not. In considering
the issues, the judge had to consider, inter alia, whether the issuance of the
certificate of practical completion, the ce1tificate for extension of time, the
certificate of non completion were conditions precedent before the architect
could issue the final certificate, and if these certificates were not issued
whether the time provisions in the contract would have prevented such issue.'
The judge said:
' ... the time limits imposed on the parties for each of the successive
events in the working through of the JCT contract conditions are
neither rigid nor immutable. The events are intended to enable the
contract to be worked through to a conclusion but the contract would
become unworkable unless each event takes place and in sequence. As
a result, the parties and the architect must work together and mutually
co-operate if the contract is to be brought to a successful conclusion
If the effect of the conditions is that none of these events can occur if
the date or period of time involved in the issuing of a cettificate or in
unde1taking any other event linked to the issue of the final ce1tificate
has passed without the relevant step being taken, the contract would
often break down. Moreover, if a particular ce,tificate cannot be
validly issued if the date for its issue has passed, there would be no
point in the employer instructin g the archirecLtiLissu.ut,_yelthereJs
an implied obligation, derived from the duty to co-operate, imposed on
the employer that he should give such an instmction albeit out of time'
The editor of the Building Law Report on the same case on page 41 5 put it
very nicely as follows:
'By necessary implication therefore, any certificate may still be issued
even though the time for issuing it has passed. This implication arises
because the contract would become unworkable unless the various
certificates and other events that the architect is required to issue or
initiate, could still be issued or initiated out of time. It would be very
Clause 23.0 169
easy to imagine scenarios where the time limit were just missed for
perfectly innocent reasons; accident, illness, or minor administrative
failure as simple examples. If, once the 28 days had lapse for whatever
reason, no final certificate could thereafter ever be validly issued, then
a reasonable (but most important) amount of the contract between
the parties would become otiose. That would hardly accord with
commercial reality. '
Although the case was based on the JCT 80 Fann, it is suggested that it
would be equally persuasive to apply the same logic to PAM 2006, that is,
that the time limits imposed on the parties in the Contract is neither rigid nor
immutable, unless there is an express provision that failure to comply with the
time provision has an adverse implication. One such example is PAM 2006
Clause 23.l(b) where it is expressly provided that the giving of written notice
within 28 Days shall be a condition precedent to an entitlement of extension of
time. In this case, the time provision is a mandatory requirement.
However, regardless of whether compliance with some time provision is
directory or mandatmy, Architects administering contracts under PAM 2006
are encouraged to adopt good practice and, whenever possible, tty to give
a decision within the time stipulated in the Contract in order to facilitate
progress of the Works. This will also avoid disputes arising over this issue
as there is always the likelihood that the Contractor may submit a claim for
acceleration costs which were incurred to avoid the possible imposition of
Liquidated Damages due to the uncertainty caused by the Architect's delay in
granting or denying a claim for extension of time.
The situation would be entirely different if the Work was executed under JKR
Fo1m 203A (rev 2007) as Clause 78 expressly states that: ' Time whenever
mentioned shall be the essence of this Agreement.' The JKR clause would
mean that all time provisions whenever stated in the contract would fall under
the catego1y of 'mandatory ' compliance.
Clause 23.4: "... The Architect may issue the written notice of
rejection or the Certificate o_fExtension of Time before or after the Completion
Date. "
If the Architect received sufficient pa1ticulars from the Contractor close to
or after the Completion Date, the Architect still has a period of 6 Weeks to
either reject the extension of time claim or issue the Certificate of Extension
of Time. lt is irrespective that such action will carry the decision well past the
Completion Date.
 Clause 23 .0 170
Clause 23.5 - Other consideration for extension of time
Tn assessing lhe extension of time, the Architect may take into account the
fo llowing
23.S(a) the effect or extent of any work omitted under the Contract, provided
always that the Architect shall not fix a Completion Date earlier than
the Completion Date stated in the Appendi x; and
23.S(b) any other Relevant Events which in the Architect's opinion wi ll have
an effect on the Contractor 's entitlement to an extension of time.
Clause 23.S(a): "...the effect or extent ofany work omitled under the
Contract... "
Under PAM 2006, there is now an express provision that, in the evaluation
of additional time claims, the Architect can take into consideration the time
saved if there is omission of works, provided that the Completion Date stated
in the Appendix is not reduced.
Clause 23.S(b): "... any other Relevant Events which in the Architect's
opinion will have an effect on the Contractor's entitlement ... "
Under PAM 2006, the Architect can also take into consideration any Relevant
Events which the Contractor has not applied as a basis for his extension of time
claim. For example, if the Employer fails to pay the Contractor his progress
payment, the Contractor may deliberately choose not to apply for an extension
of time under C lause 23 .8(111) which is for delay caused by an Employer's
breach of contract. If the Architect cannot grant an extension of time due to
the Employer's breach because the Contractor chooses not to apply for an
extension, the time of completion will be at large, and the Employer loses his
right to impose Liquidated Dama es. The rovision in PAM 2006 ensures that
this cannot happen. This was not the position in PAM 98.
Under PAM 98, the Contractor is responsible for identifying the relevant
events causing delay, w hile the Architect is to evaluate the reasons submitted
by the Contractor and grant the appropriate extensions of time accordingly.
There is no provision allowing for the Architect to consider any other grounds
not presented by the Contractor. PAM 98 has in fact, deviated from the
provisions in PAM/ISM 69 where under a similar C lause 23, it is provided
that if the Architect is of the opinion that the completion of the Works is
delayed by any reasons stated in the C lause, the Architect shall grant an
extension of time.
Clause 23 .0 171
Clause 23.6 - Contractor to prevent delay
The Contractor shall constantly use his best endeavour to prevent or reduce
delay in the progress of the Works, and to do all that may reasonably be
required to the satisfaction of the Architect to prevent and reduce delay or
further delay in the completion of the Works beyond the Completion Date.
Clause 23.6: "constantly use his best endeavour to prevent or
reduce delay in the progress of the Works ... "
Contractors have an obligation, subject to the te1111S ofthe Contract, to proceed
regularly and diligently with the works, and they must therefore not adopt an
inactive approach to their obligation. The Contractor must manage any delay
by responding when the spectre of a delay arises, and by constantly using
his best endeavours to prevent or reduce delay. Unfo rtunately, there is little
case Jaw to establish what is meant by ' constantly use his best endeavour ' .
According to Keating Seventh Edition page 730, it can mean: ' how far the
contractor must take other steps depends upon the circumstances of each
case, but it is thought that the proviso does not contemplate the expenditure
of substantial sums of money. '
Clause 23. 6: "to do all that may reasonably be required to the
satisfaction of the Architect "
The Architect is entitled to expect the proper management of delay, but this
does not mean that the Architect can order the Contractor to accelerate the
progress of the work, which will cause the Contractor to expend substantial
sums of money on preventing or reducing delay. The Contractor however,
has a duty to do what any prudent and reasonable Contractor will do; for
example, by redeploying pa1t of the workforce to other sections of the work.
Acceleration of the work can only be achieved by agreement between the
Contractor and Employer. If the Architect makes a reasonable suggestion
to speed up the progress of the works, the Contractor should take note, but
he is not required to incur additional expenses unless, having regard for the
estimated Liquidated Damages that he is likely to incur should he allow a
delay to persist, he decides that it is economically more prudent to incur costs
to reduce or eliminate the delay, rather than incur Liquidated Damages to be
imposed by the Employer.
Clause 23.7 - otification to ominated Sub-Contractors
T he Architect shall notify every Nominated Sub-Contractor in writing of each
decision of the Architect when fixing a later Completion Date.
 Clause 23.0 172
This Clause requires the Architect to notify every Nominated Sub-Contractor
when he makes a decision on any extension of time. This is to enable the
Nominated Sub-Contractor, whose Work Programme may be affected by the
extension of time, to agree the necessary adjustment to the programme with
the Contractor.
Clause 23.8 - Relevant Events
The following are the Relevant Events refeJTed to in Clause 23.0:
23.8(a) Force Majeure;
23.8(b) exceptionally inclement weather;
23.8(c) loss and/or damage occasioned by one or more of the contingencies
referred to in Clause 20.A, 20.B or 20.C as the case may be, provided
always that the same is not due to any negligence, omission, default
and/or breach of contract by the Contractor and/or Nominated Sub-
Contractors;
23 .S(d) civil commotion, strike or lockout affecting any of the trades
employed upon the Works or any of the trades engaged in the
preparation, manufacture or transportation of any materials and
goods required for the Works;
23.8(e) the Contractor not having received in due time the necessary Al
(including those for or in regard to the expenditure of P.C. Sums
and Provisional Sums, further drawings, details, levels and any
other information) for which he had specifically applied in writing
to the Architect. The Contractor's application must be submitted
to the Architect in s ufficient time before the commencement of
construction of the affected warks_to_enab.le..the-A rchitect to i.ssue-
the necessary Al w ithin a period which would not materially affect
the progress of the affected works, having regard to the Completion
Date. Provided a lways that the AI was not required as a result of
any negligence, omission, default and/or breach of contract by the
Contractor and/or Nominated Sub-Contractors ·
' due to any negligence, omission, default and/or breach of contract
23.8(f) delay by the Employer in giving possession of the Site or any
section of the Site in accordance with Clauses 21. 1 and 21.2 ;
23.8(g) compliance with AI issued by the Architect under Clauses 1.4, 11.2
and 21.4;
Clause 23 .0 173
23 .8(h) delay on the part of Nominated Sub-Contractors for the reasons set
out in C lauses 21.4(a) to 21.4(w) of the PAM 2006 Sub-Contract;
23.8(i) re-nomination of Nominated Sub-Contractors as set out in Clause
27.11;
23.8(j) delay on the part of craftsmen, tradesmen or other conh·actors
employed or engaged by the Employer in executing work not
fonning part of the Contract or the fai I ure to execute such work;
23.8(k) delay or failure in the supply of materials and goods which the
Employer had agreed to supply for the Works;
23.8(1) the opening up for inspection of any work covered up, testing any
materials, goods or executed work in accordance with C lause 6.3,
unless the inspection or test:
23 .S(l)(i) is provided for in the Contract Bills;
23 .8(l)(ii) shows that the works, materials and goods were not
in accordance w ith the Contract; or
23 .8(l)(iii) is required by the Architect in consequence of some
prior negligence, omission, default and/or breach of
contract by the Contractor;
23 .8(m) any act of prevention or breach of contract by the Employer;
23 .S(n) war damage under C lause 32. 1;
23.8(0) compliance with Al issued in connection with the discovery of
antiquities under Clause 33.1;
23 .8(p) compliance with any changes to any law, regulations, by- law or
terms and conditions of any Appropriate Authority and Service
Provider;
23 .8(q) delay caused by any Appropriate Authority a nd Service Provider
in carrying out, or failure to carry out their work which affects the
Contractor's work progress, provided always that such delay is not
by the Contractor and/or Nominated Sub-Contractors;
23.8(r) appointment of a replacement Person under Articles 3, 4 , 5 and 6;
23.8(s) compliance with Al issued in connection with disputes with

Clause 23.0 174
neighbouring prope1ty owners provided always that such dispute
is not caused by negligence, omission, default and/or breach of
contract by the Contractor and/or Nominated Sub-Contractors·,
23 .8(t) delay as a result of the execution of work for which a Provisional
Quantity is included in the Contract Bills which in the opinion of
the Architect is not a reasonably accurate forecast of the quantity of
work required;
23 .8(u) fail ure of the Employer to give in due time entry to or exit from
the Site or any part through or over any land, by way of passage
adjoining or connected to the Site and in possession or contro l of
the Employer;
23.8(v) suspension by the Contractor of his obligations under Clauses 30.7
and 30.8;
23 .8(w) suspension of the whole or part of the Works by order of an
Appropriate Authority provided the same is not due to any
negligence, omission, default and/or breach of contract by the
Contractor and/or Nominated Sub-Contractors; and
23.8(x) any other ground for extension of time expressly stated 111
Contract"
A fundamental issue to bear in mind is that the Completion Date can only
be adjusted strictly in accordance with the provisions of the Contract. If
delay is caused by som e events which the Contract does not cover then the
Contractor cannot claim more time, nor can the Employer grant an ;xtension
of time. lfthe parties agree to adjust the Completion Date, even though there
are no provisions for such extension of time, this can be documented by a
~eparn~e-ttg feemen l'-.- - - - -
PAM 2006 has increased the number of Relevant Events, and thi s has led
to some suggesting that the increase in the number of Relevant Events has
effectively reduced Contractors' risk and prop01tionately increased the
Employers' risk. In fact, if one examines the new Relevant Events, one will be
aware that the new Relevant Events are in fact, to deal with some commonly
encountered situations, where no provisions can be found in PAM 98. For
example, Clause 23.8(w) provided that an extension of time will be granted
to the Contractor if the Work was suspended by an order of an Appropriate
Authority, provided that the suspension order by the authority was not issued
as result of any negligence, omission, default and/or breach of contract by the
Clause 23 .0 175
Contractor and/or Nominated Sub-Contractors. It clarified the situation that if
the order by the authority was due to the Contractor's negligence, omission,
default and/or breach of contract, the Contractor would not be entitled to
an extension of time. As such, there is no basis to say that the increase in
the number of Relevant Events benefited only the Contractor. For a detailed
commentary of each Relevant Event, please see below.
Clause 23.S(a): "Force Majeure"
This is a tenn derived from French law and is used to refer to all circumstances
which are beyond the will and the control of man. It normally means ' Acts
of God' but most commercial contracts have now expanded the definition to
include other matters outside the control of the parties. In a shipping case, force
majeure was defined as including ' any change in the operating environment
due to occuiTence beyond the control of the parties involved. ' It was argued
that this definition includes circumstances, such as an economic recession,
where it was no longer viable to continue the contract. When the foot and
mouth disease broke out in the UK a few years ago, it was argued that this
was force majeure because it affected the movement of vehicles transporting
construction materials for a road project.
PAM 2006 attempts to naITow down the definition so that it will be easier to
the interpret the m eaning of this term instead ofleaving it as undefined and subject
it to argument. PAM 2006 Article 7 (ad) has now defined 'Force Majeure' as:
' any circumstances beyond the control of the Contractor caused by terrorist
acts, governmental or regulatory action, epidemics and natural disasters.'
If the parties do not require this provision, this Clause can be deleted.
Clause 23.S(b): "exceptionally inclement weather "
This would be a Relevant Event if:
(i) the weather at the Site had been exceptionally inclement and not
just inclement, or which would be expected at the time of year in
question. Therefore, heavy rainfall during the monsoon period would
not be classified as exceptionally inclement weather, as the Contractor
would have been expected to factor in some allowance for the type
of weather during the period in his Works Programme. The effect of
the weather is also assessed at the time the work is actually carried
out and not w hen it should have been carried out in accordance to
the ' Works Programme. Meteorological records of the area over the
past five years, is normally a good g uide whether the weather is
 Clause 23 .0 177
Clause 23 .0 176

exceptionally inclement for the Site; and "

ln ord er to ,oun
d a claim u nder this Clause, the Contractor must have:-
(ii) the nature of the affected works was weather-sensitive.
(i) specifically applied in writing to the Architect for the necessary Al;
Therefore, if the works to be carried out is already protected from the weather, and
such as the installation of indoor light fittings, exceptionally inclement weather
w ill not be a Relevant Event. . f to the Architect 'in sufficient time before
(ii) submitted such apphca ion . ction of the affected Works, to enable
the commencement of const1 u . . a eriod which would
If the pa1ties do not require this provision, this Clause can be deleted. the Architect to issue the necess_a ry A~ ~~:h1;ffe~ted Works, having
not materially affect the prog1, ess o
Clause 23.B(c): "loss and/or damage occasioned by one or more of regard to the Completion Date.
the contingencies referred to in Clause 20.A, 20.B or 20.C. . .provided always
li ence omission default and/or breach
that the same is not due to any negligence, omission, default and/or breach of Any Al issued as a result of any dn/e g Ng . 'ated Sub-Contractor will not be
contract by the Contractor and/or Nominated Sub-Contrac/01: " ti1 Contractor an or omm
of contract b Y e . . f time as the Contractor cannot
ground s fi01. a valid clall11 for extension o ,
The Contractor will be entitled to an extension of time if there was damage benefit from his own default.
to the Works resulting in an insurance claim. However, unlike in PAM 98
where the Contractor will be entitled to an extension of time even if the loss . "delay b11 the Employer in giving possession of the
Clause 23.8(/). J

and/or damage resulting in an insurance claim is caused by the Contractor's Site or anv section of the Site... "
negligence, default and/or breach of contract, under PAM 2006, the Contractor
. . .111 con "tmction with Clause 21. l and 21.2 where the
is only entitled to an extension of time if the Contractor did not cause the This Clause 1s to be iead J fA ·d fir,ds that the Employer is unable
loss and/or damage. Basically, the Contractor cannot benefit from his own • f1 . · ·ng the Letter o wai ,
Architect, a te1 isslll . f of the Site to the Contractor. In
default; otherwise it could mean that he could negligently set fire to the Works to give possession of _the Site or_ any ;;c wn ill be given to the Contractor for
and obtain an extension of time to complete the damaged works using the that event, an appropnate extension o ime w
insurance funds. any delay.
. . . d to ensme that all conditions precedent to
Clause 23.8(d): "civil commotion, strike or lockout affecting any of However, contracto1s a1e advises · I been complied with or it may be
the trades employed upon the Works... " the commencement of works on ite rnlvle ble to stait even if the Site had
were not contractua Y a '
reasoned t hat they h cement of works For example,
Civil commotion, strike or lockout at the Site (for example, Contractor . to them for t e commen .
been han d ed over . ct for ot to purchase the necessary
induced strike by the Contractor's personnel or workmen) themselves does if the Contractor through his ow~l negl~ t o~mence work even if the Site
not fall within this ground. Civil commotion in the country or a national strike insurance, then he would not be a owe o c
affecting any of the trades employed in the Works, or engaged in preparation, had been handed over to him.
1llill1.Ufacture._or transpo1tation 0f any materials and goods required for the
Works would be covered. /,.\ , . Al isSlle
"co,npliance with • d b:Y the Architect under
Clause 23. 8 15,1•
Clauses J.4, 11.2 and 21.4. "
lf the parties do not require this provision, this Clause can be deleted.
The relevant Architect's Jnstructions are:-
Clause 23.8(e): "the Contractor not having received in due time the
necessary Al. .. " Instructions arising from discrepancies in, or
(i) Clause 1.4
divergences between any of the Contract Docu~ent~
and any subsequent documents issued by the Architect,
 C/a11se 23.0 178
(ii) Clause 11.2 Instructions requiring a Variation; and
(iii) Clause 21.4 Instructions postponing or suspending the executing of
all or any patt of the Works.
Clause 23.B(g): "delay on the part of Nominated Sub-Contractors
for the reasons set out in Clauses 21.4(a) to 2!.4(w) of the PAM 2006 Sub-
Contract."
The extension of time provisions in PAM 98 C lause 23.7(vii) was for ' delays
on the patt of Nominated Sub-Contractors or Nominated Suppliers for the
same reasons as set out in the clauses 23.7(i) to 23 .7(vi) and clauses 23.?(viii)
to 23.?(xii).' ft is to be noted that there is no ' mutatis mutandis' rule (which
means: 'with the necessary changes.' For example, the term 'Employer' is to
be read as 'Conh·actor' and the term 'Contractor ' is to be read as 'Nominated
Sub-Contractor') in this clause. Without the 'mutatis mutandis ' rule, this would
mean that if the Contractor was entitled to an extension of time under Clause
23.7(xi) for ' any act of prevention or breach of contract by the Employer. ..'
the Nominated Sub-Contractor would also be entitled even though the act
of prevention or breach of the main contract did not affect the sub-conh·act
works.
In addition to the grounds provided in PAM 98, the Nominated Sub-Contractor
is also entitled to an extension of time under PAM 98 NSC Clause 8.2:
'If the Architect upon receipt of such information and representations is of the
opinion that the completion of the Sub-Contract Works is likely to be or has
been delayed beyond the period ...fi xed under this clause as follows:
(i) By reason of any of the matters specified in Clauses 4.1 and 6.1 of this
Sub-Contract or by any act or omission of the Contractor, his Sub-
Contractors, his or their respective servants or agents; or
(ii) For any reason (except delay on the part of the Sub-Contractor) for
which the Contractor could obtain an extension ohime for completion
under the Main Conh·act.
The Architect shall g ive his written consent to the Contractor to grant the
extension of time to the Sub-Contractor. '
While this Handbook is not the place to discuss in detail the inconsistencies
of this clause in PAM 98 w ith PAM 98 NSC, it is imp01tant to note that
the Architect bas to give bis written consent to the Contractor to grant an
Clause 23 .0 179
extension to the Nominated Sub-Contractor if the delay was caused by ' any
act or omission of the Contractor.' Presumably, any such extension consented
by the Architect would be taken into consideration in the extension of time for
the main conh·act. Consider how inequitable this would be for the Employer:
the Architect has issued a Nominated Sub-Contract insh·uction through the
Contractor on time, so there is no delay or entitlement to extension of time;
but the Conh·actor failed to pass the same instructions to the Nominated Sub-
contractor, so there is an ' act or omissio n of the Contractor.' In accordance
with PAM 98 NSC, the Architect would have to consent to an extension of
time to the Nominated Sub-Contractor. Such extension would mean that the
Contractor will also be entitled to an extension of time caused by his own act
or omission.
PAM 2006 NSC took the view that the Nominated Sub-Contractor should
be entitled to extension of time only if the Relevant Events affect the sub-
contract works. Therefore, the extension of time which the Nominated Sub-
Contractor will be entitled to is provided in detail in PAM 2006 NSC Clauses
2 l.4(a) to 2 1.4(w). Further, the Nominated Sub-Contractor has to comply w ith
the procedures laid down in the Sub-Contract, in order to be entitled to an
extension of time .
If the Contractor caused any delay to the Nominated Sub-Contractor due to
any negligence, omission, default and/or breach of conh·act by the Contractor,
the Nominated Sub-Contractor's claim for any extension is assessed by
the Contractor, and the Contractor shall grant the extension of time to
the Nominated Sub-Contractor under PAM 2006 NSC Clause 2 1.5. The
extension granted under this clause by the Contractor has no effect on the
overall completion time of the Contractor 's work. The extension granted by
the Contractor to the Sub-Contractor effectively shields the latter from any
imposition of apportioned Liquidated Damages by the Contractor.
Clause 23.B(i): "re-nomination ofNominated Suh-Contraclors m set
out in Clause 27.11 . "
lf the Employer chooses the ' nomination' route to appoint a sub-contractor,
then the risk of default of the Nominated Sub-Contractor should be the
Employer's responsibility. If the employment of a Nominated Sub-Conh·actor
is determined by the Contractor (with the written consent of the Architect),
the Architect shall re-nominate another N ominated Sub-Conh·actor, and an
extension of time under this Clause may be granted to the Contractor.
Clause 23.B(j): "delay on the part of cra.fismen, tradesmen or other
contractors emoloyed or engaged by the Emp!oye1: .. "
----------------------
Clause 23.0 180
It is not unco1mnon for the Employer to exclude part of the works which will
be carried out by others, under separate arrangement made by the Employer.
If these works are lmown early, it is preferable that the requirements are
made known in the Contract Bills, so that the Contractor has an opportunity
to price for it. Otherwise, it will be necessary to make an-angements with the
Contractor to accommodate the works within the Contractor's programme.
If there is any delay caused by the Employer's work, it is a ground for an
extension of time and will result in not only an extension of time, but also a
claim for loss and/or expense
C/{luse 23.B(k): "delay or.failure in the supply ofmaterials and goods
which the Employer had agreed to supply for the Works. "
If the Employer intends to supply any materials and goods for the Work, it is
preferable that the requirements are made lmown in the Contract Bills and an
agreement made with the Contractor regarding the timing and delivery of such
materials; including the responsibilities for items such as unloading, storage,
security and insurance, for which there are invariably items of costs involved.
Further, if there is any delay in delivery of any materials and goods, the
delay may impact upon the Contractor's programme and result in not only an
extension of time, but also a claim for loss and or expense by the Contractor.
Clause 23.8(/) : "the opening up for inspection of any work covered
up, testing any materials, goods or executed work. .. "
The Architect is entitled to open up and test any work if it is already provided
in the Contract Bills. In such an event, an extension of time does not have to
be considered.
The Architect can also open up and test any work if he has any doubt that the
work has been executed in accordance with the Contract. ff after such opening
up, it was found that the works are in accordance with the Contract, then the
Contractor shall be entitl.e.d.....t,win...extens.ion of tim€l--if- such opening up and
testing caused delay to the Works.
Ifthe Architect, after such opening up, found that the work is not in accordance
with the Contract, the Contractor will not only be entitled to no extension of
time, he shall also not be entitled to an extension of time for further opening
and testing as required by the Architect.
Clause 23.B(m): "any act ofprevention or breach of contract by the
Employe,: "
Clause 23 .0 18 1
This Clause is to ensure that the Architect is empowered to grant an extension
of time to the Contractor, for delay in the completion of the Works caused by
any event for which the Employer is responsible. lf there is no provision to
issue extension of time due to an act of prevention or breach of contract by
the Employer, time will be at large, and the Employer will lose his rights to
Liquidated Damages. This provision therefore, preserves the Employer 's right
to Liquidated Damages.
Clause 23.B(n): "war damage under Clause 32. I. "
This Clause is self-explanato1y.
Clause 23.B(o): " ... compliance with Al issued in connection with the
discovery ofantiquities under Clause 33.1. "
This Clause is self-explanato1y.
Clause 23. B(p): " ... compliance with any changes to any law,
regulations, by-law or rerms and conditions ofany Appropriate Authority and
Service Provider. "
The compliance with any changes to any law, regulations, by-law or te1ms and
conditions must affect the Contractor's work progress before the Contractor is
entitled to an extension of time. This same principle of ' cause and effect' also
applies to all the Relevant Events stated in Clause 23.8.
Clause 23.B(q) : " ...delay caused by any Appropriate Authority
and Service Provide,'. ..provided always that such delay is not due to any
negligence, omission, default and/or breach of contract by the Contractor
and/or Nominated Sub-Contractors. "
Any delay caused by any Appropriate Authority and Service Provider must
affect the Contractor's work progress before the Contractor is entitled to an
extension of time, and the delay must not be due to any negligence, omission,
default and/or breach of Contract by the Contractor. This same principle of
' cause and effect' also applies to all the Relevant Events stated in Clause
23.8.
Clause 23.B(r) : " ... appointment of a replacement Person under
Articles 3, 4, 5 and 6. "
The Contractor is only pennitted to carry out works ifsuch works are supervised
by a Person, who falls under the definition of ' Qualified Person' under the
 Clause 23 .0 182
Uniform Building By-laws. If such a Qualified Person is being replaced, and
this results in the Contractor not being able to cany out the works on Site, the
Contractor will be entitled to an extension of time.
Clause 23. 8(,"): " ... compliance with Al issued in connection with
disputes with neighbouring property owners ... "
Two examples can be provided to demonstrate this Clause:
Example 1
The neighboring property owner obtained an injunction against the Employer
due to a land border dispute, and as a result, the Architect issues an AI to the
Contractor to suspend work. As the suspension is not due to the negligence,
omission, default and/or breach of contract by the Contractor, he will be
entitled to an extension of time.
Example 2
The neighboring property owner obtained an injunction against the Employer
due to danger caused by falling debris arising from the constrnction works
being carried out. As a result of the injunction, the Architect issues an AI to
the Contractor to suspend work. As the suspension is due to the negligence,
omission, default and/or breach of contract by the Contractor, he will not be
entitled to an extension of time;
C/(luse 23.8(t) : " ... delay as a result of the execution of work for
which a Provisional Quantity is included in the Contract Bills which in the
opinion of the Architect is not a reasonably accurate forecast of the quantity
of work required."
Provisional Quantities are often used where it is difficult to estimate the
amount of works to be executed. For example, the Engineer may estimate
the length of piling to be an average of 10 metres deep and, based on this
qnantity;- tne-Gontra:etor---may--sehedule---hi-s-eompl-etfon time. If the final
quantity of pile increased to an average of 25 metres deep, the time taken
by the Contractor will be considerably increased. The increase in the piling
depth is not a Variation under the definition of Clause 11 , nor does it fall
under any other grounds under Clause 23.
However, an increase in quantity does not always warrant an extension
of time. For example, the Conh·act Bills may have allowed a provisional
quantity of 100m3 for rock excavation, and when the quantity increased to
150m3, it does not mean that significant time will be required, in particular, if
the project is large or where the works are not on a critical path causing delay
Clause 23 .0 183
to the follow on trades. The increase of rock excavation quantities could
be confined to drain excavations which can proceed concurrently with the
execution of the superstructure works to a high rise building.
The Clause is drafted to give the Architect discretionary power to decide
whether the provisional quantity of work included in the Contract Bill is a
reasonably accurate forecast of the quantity of work required, bearing in mind
the extent of the overall work.
Cf(luse 23.8(11): ''.failure of the Employer to give in due time entry to
or exit_fi'om the Site ... "
The cause of delay is not the same as failure to give possession of the Site,
although it may have the same effect, in that the Contractor is unable to take
possession of the Site. For this Relevant Event to apply:
(i) The entiy to or exit must have been defined in the Contract Bills;
or
(ii) The land connected to the Site must be in the possession or control of
the Employer.
lf the Conti·act Bills have included provisions such as 'The contractor shall
be deemed to have visited the site of the Works and satisfied himself as to the
means of access .... ' then this Clause will not apply.
Clause 23. 8(v): "suspension by the Contractor of his obligations
under Clauses 30. 7 and 30.8. "
This Clause is self-explanatory.
Clause 23. 8(w): "suspension of the whole or part of the Works
by order of an Appropriate Authority provided the same is not due to any
negligence, omission, default and/or breach of contract by the Contractor
and/or Nominated Sub-Contractors. "
Two examples can be provided to demonstrate this Clause:
Example 1
The Authority issues a suspension order because the Employer has not
obtained the necessa1y approval before starting work. In this example, the
Contractor will be entitled to an extension because the suspension order was
not issued as a result of any negligence, omission, default and/or breach of
conh·act by the Contractor.

Clause 23 .0
Example 2
The Authority issues a suspension order because of an accident on Site due to
failme by the Contractor to comply with the Occupational Safety and Health
Act 1994 and the Factories and Machinery Act 1967. In this example, the
Contractor will not be entitled to an extension because the suspension order
was issued as a result of the negligence, omission, default and/or breach of
contract by the Contractor.
Clause 23.B(x): "any other ground for extension of time expressly
stated in the Contract. "
Thi s is a ' catch all' Clause which will apply to any other grounds expressly
stated io the Contract, but not under Clause 23.
Clause 23.9 - Extension of time after the issuance of Certificate of Non-
Completion
Where a Relevant Event occurs after the issuance of the Certificate of Non-
Completion, the Architect shall grant an extension of time. The extension
of time granted shall be added to the Completion Date of the Works or any
section of the Works.
In Baljour Beatty Building Ltd v Chestermount Properties 62 BLR J, the facts
are as follows:
May 1989 - the conb·actor failed to complete the building work (without
fit out) by the contract completion date.
Between February to July 1990, when the contractor was already several
months in delay in the building works, the architect issued a series of
instructions for fit out works.
October 1990 - the contract0r completed the building works.
February 199 I - the fit out works was completed.
The architect granted an extension of time for 199 days for the fit out works.
--nieT9'9 days were added to May 1989, the origfnal date for completion of the
building core works. The new completion date was accordingly extended to
November 1989.
It must be noted that the extended completion date of November 1989 was
before the date of the insb·uction for the fit out works. The instruction for the
fit out work was issued between Feb - July 1990.
In the litigation that ensued, two questions were put to the court:
whether the architect had the power to issue a va1iation instruction when
the contractor was already in culpable delay;
Clause 23 .0 185
-
184
the effect of this instmction on the extension of time.
The contractor submitted the fol lowing argument:
that the effect of issuing a variation instruction during a period of culpable
delay rendered time at large and that the employer would lose his right to
levy liquidated damages.
Alternatively, the contractor contended that the architect should have
granted an extension of time on a gross basis, that is to say that the extra
period for executing the work, which was 199 days, should have been
calculated from the date when the variation instruction was given.
Court's decision:
Under the JCT 1980 Form, the architect has the power to grant extensions
retrospectively for all the grounds provided under Clause 25.3, and not merely
to those which would be classified as 'acts of prevention.'
The court fmther held that any extension of time should be on a nett basis; that
is, by taking a date cun-ently fixed and adding to it the number of days which
the architect regarded as a fair and reasonable extension of time.
Clause 23.9 is drafted to expressly allow the Architect to issue an extension
of time, after the issue of a Certificate of Non Completion for delays due to
the fault of the Employer. For example, the Architect may issue an instruction
for a Variation required by the Employer during a period of culpable delay.
The absence of this provision would render the contract time to be at large
as the Architect is not empowered to issue an extension of time. This Clause
therefore provides a mechanism to extend the time by adding the appropriate
extension of time to the last Completion Date, to cater for a Balfour Beatty
situation.
Clause 23.10 - A rchitect's review of extension of time after Practical
Completion
The Architect may (but not obliged to) within twelve (12) Weeks after the
date of Practical Completion review and fix a Completion Date later than that
previously fixed, if in his opinion the fixing of such later Completion Date is
fair and reasonable having regard to any of the Relevant Events, whether upon
reviewing a previous decision or otherwise and whether or not a Relevant
Event has been specifically notified by the Contractor under Clause 23 .1. No
such final review of extension of time shall result in a decrease in any extension
of time already granted by the Architect. In the event the fixing of such later
Completion Date affects the amount of Liquidated Damages the Employer is
entitled to retain, he shall repay any surplus amount to the Contractor within
the Period of Honouring Certificates.
 •

Clause 23 .0 186 Clause 23 .0 J87

Clause 23.10: "The Architect 111ay (but not obliged to) within twelve Clause 23.10: "...whether upon reviewing a previous decision or
(12) Weeks after the date ofPractical Completion review and.fix a Co111pletion otherwise and whether or not a Relevant Event has been specifically notified
Date later than that previously .fixed, ... " by the Contractor"

This Clause allows the Architect to review extension of time, previously
granted, within 12 Weeks after the issuance of the Certificate of Practical
Completion. As the earlier grant of an extension of time under Clause 23.4
is an interim extension of time, the Architect should take this opportunity to
review his earlier decision in light of all the actual events. It is not mandatory
that the Architect must review the extension of time previously granted, but
it is recommended that if the Architect is not reviewing the extension of time,
he shall confirm this to the Contractor, so that the Contractor knows what the
Architect has decided. The time period of 12 Weeks is the provision allowed
in a standard fonn of contract. Depending on the size and complexity of the
Works, the period could be shortened or lengthened.
The Clause provides the Architect an opportunity to review the Certificates
of Extension of Time previously granted after Practical Completion of the
Works. If the Contractor thereafter has futiher dispute on the Architect's
grant of any extension of time, the dispute may be referred to arbitration. In
arbitration, the Arbitrator has the power under Clause 34.8(d) ' to open up,
review and revise any cetiificate ... ' and this will include any Certificates of
Extension ofTime.
The Architect in his review, can take into consideration all Relevant Events
that may have affected the Completion Date, irrespective of whether or not
any Relevant Event has been considered in a previous decision, and whether
or not such a Relevant Event has been notified by the Contractor. In the review,
the time can be further extended, but any previous extension granted cannot
be reduced.
Clause 23.10: "In the event the fixing ofsuch later Completion Date
affects the amount ofLiquidated Damages... "
If Liquidated Damages has been deducted and the review of extension of
time results in a reduction in the Liquidated Damages, the Employer shall
repay any amount over- deducted together with interest to the Contractor. The
amount should be repaid within the Period of Honouring Certificates stated
in the Appendix, calculated from the date of the Architect's last Certificate of
Extension of Time.

In Temloc v Errill Properties 39 BLR 30, the court, in deciding a JCT Contract
Clause 25.3.3: 'After the Completion Date, ... the Architect may, and not later
than the expiry of 12 weeks after the date of Practical Completion ...fix a
Completion later than that previously fixed .. .' decided that:

' in my view, ... Clause 25.3.3 .. .is directory only as to time and is not
something which would invalidate the calculation and payment of
liquidated damages.'

Although the Architect exceeded the period of 12 weeks provided in the

contract, it was not held to be so detrimental that time was at large. Even
though the case shows that strict compliance with the time is not mandatory, it
is always better if the Architect endeavours to give a decision within the time
stipulated.
• -
Clause 24.0 189

Clau;;-24.0 - Loss And/Or E~i>enses Caused By Matters J

Affecting The Regular Progress Of The Works

--~
1

- -- -- - - -- - - - ~--~-
J

PAM 2006 contains detailed provisions under which the Contractor can claim
against the Employer for loss and/or expense suffered, if the regular progress
of the work is disrupted due to the specified causes stated in Clause 24.3(a)
to (n). Although such provisions bear some resemblance to the grounds under
which the Contractor can claim for an extension of time, there are however
two distinctions.

Firstly, the Architect can grant an extension of time if the Architect is of the
opinion that regular progress has been affected, whereas compensation for
loss and/or expense does not depend on such extension of time. Secondly,
the Contractor is only entitled to compensation for delays which are the
Employer's responsibility and not those caused by neutral events.

A claim for loss and/or expense made under Clause 24 of the Contract is a
contractual claim. The Architect is empowered under Clause 24.4 to assess
the loss and/or expenses.

A claim under common law is a claim for damages under Section 74 of the
Contracts Act, when there is a breach of an implied or express term of the
contract by one paity. Section 74 provides two limbs of damages:

(a) when a contract has been broken, the paity who suffers by the breach
is entitled to receive, from the party who has broken the contract,
compensation for any loss or damage caused to him thereby, which
naturally arose in the usual course of things from the breach; and

(b) which the parties knew, when they made the contract, to be likely to result
from the breach of it.

Whilst both claims are made against the Employer, the Architect can only deal
with contractual claims, as his authority and duty are set out in the Contrnct.
Contractual claims are usually more advantageous to the Contractor than claims
under common law for damages. Claims under the Contract are ascertained
from time to time by the Architect or Quantity Surveyor, and the monies so
ascertained are included in payment ce1tificates as provided in PAM 2006
Clause 24.4: ' ....., the Architect or Quantity Surveyor shall ascertain the amount
of such loss and/or expense. Any amount so asce1tained from time to time .. ... .
shall be added to the Contract Sum, and if an Interim Ce1tificate is issued after
the date of ascertainment, such amount shall be included in the certificate.'
 -.....
~-.....
Clause 24.0 190
The Architect does not have power to deal with claims made under common
law, unless the Employer expressly g ives him the power as an agent. As such,
if the Contractor makes a common law claim, he must not expect the Architect
to deal with it, and it is advisable that he direct his c laims to the Employer. Any
disputes on these claims w ill have to be resolved in arbitration or litigation.
Loss and/or expense claimed under the Contract is similar to claims made
under the first limb of damages under Section 74 of the Contracts Act. The
items of claim arising out of a construction contract, whether it be a contractual
claim for loss and/or expense or a claim under common law for damages, are
well established in case law.
So, if it is advantageo us to exercise a conh·actual claim, why does the Contractor
need to pursue a claim in common law? When the Conh·actor pursues a
common law c laim, it is probably because he had not made any earlier claim,
or his claim had been rejected by the Architect. The rejection could be due to
his failure to comply with the provisions of the Contract regarding notice or
other condition precedent procedure. Pursuing a claim under common law is
us ua lly a second recomse.
It is interesting to note the evolving changes in the following PAM Conh·acts.
In PAM/ISM 69, there was a provision in C lause 24(2): ' T he provisions of
this Condition are without prejudice to any other rights and remedies which
the Contractor may possess. ' This provision basically means that if the
Conh·actor fails to make his claims in accordance with the express provisions
of the Contract, it does not prevent him from pursuing the same claim under
common law, and he can do this at a ny time before the settlement of the Final
Account.
The provision in PAM/ISM 69 was rather unsettling, and the c lause was
deliberately excluded from PAM 98. However, by excluding the clause
from PAM 98, there is a lso doubt that this w ill e sufficient t_0 tak~e away the
Contractor 's right to make a c la im under common law.
To confuse matters further, a similar clause was also deliberately included in
PAM 98 NSC w hen it was not in the earlier PAM/ISM 69 NSC. PAM 98 NSC
C lause 9.5 states that: ' The provisions of Clause 9.0 are without prejudice
to any othe r rights and remedies which the Sub-Contractor may possess.' In
other words, under PAM 98 NSC, the Sub-Contractor can pmsue damages
under common law against the Main Contractor, even if he has lost his rights
to claim in accordance w ith the provisions of the conh·act. PAM 98 is therefore
not consistent w ith PAM 98 NSC.
- - - - - - -- - - -- - ---
Clause 24.0 /9 /
Clause 24.1 - Loss and/or expense caused by matters affecting the regular
progress of the Works
Whe re the regular progress of the Works or any section of the Works has been
or is like ly to be materia ll y affected by any of the matters expressly referred to
in C lause 24 .3, and the Contractor has incurred or is likely to incur loss and/or
expense which could not be re imbursed by a payment made under any other
prov ision in the Contract, the Contractor may make a cla im for such loss and/
or expense provided always that:
24 . 1(a) the Contractor sha ll give written notice to the Architect of his
intention to c laim for s uch loss and/or expense together w ith an
initia l estimate of his c laim duly suppo1ted with all necessary
calc ulations. Such notice must be given w ithin twenty eight (28)
Days from the date of the Al, CAI or the start of the occurrence of
the matters referred to in C lause 24 .3, whic hever is the earlie r. The
g iving of s uch written notice sha ll be a condition precedent to any
entitlement to loss and/or expense that the Contractor may have
under the Contract and/or C ommon Law; and
24 . 1(b) w ithin twenty eig ht (28) Days after the matters referred to in C lause
24.3 have ended, the Contractor s ha ll send to the Architect a nd
Qua ntity Surveyor, complete partic ulars of his claim for loss and/
or expense together w ith all necessary calculations to substantiate
his claims. If the C ontractor fails to submit the required particulars
w ithin the stated time (or w ithin s uch longer period as may be
agreed in writing by the A rc hitect), it s hall be deemed that the
C ontractor has waived his ri ghts for loss and/or expense.
Clause 24. 1: "... Where the regular progress ofthe Works ...is likely
to be materially affected by any of the matters expressly referred to in Clause
24.3... '
It is vital that the Contractor makes the application as soon as he is aware
that the regular progress of the Works has been affected by any of the matters
expressly referred to in Clauses 24.3(a) to (n). Note that not all the reasons
w hich entitle the Contractor to an extension of time under Clause 23.8 w ill
give rise to a claim for loss and/or expense.
Clause 24.1: "and the Contractor has incurred or is likely to incur
loss and/or expense
In F.G. Minter v WHTO 13 BLR 1, the court held that loss and/or expense is
 Clause 24.0 192
the same as the first limb in Hadley v Baxendale (J 854) 9 Ex 34. The definition
has been incorporated in the Contracts Act under Section 74:
'When a contract has been broken, the patty who suffers by the breach
is entitled to receive, from the party who has broken the contract,
compensation for any loss or damage caused to him thereby, which
naturally arose in the usual course of things from the breach ... '
The claims resulting from the breach will include amongst others:
Increased preliminaries
Overheads
Loss of profit
Loss of productivity or uneconomic working
Fluctuations
Financing charges
Clause 24. I: "... which could not be reimbursed by a payment
made under any other provision in the Contract "
The Contractor can make a claim only if the nature of such loss and/or expense
is not recoverable under any other provision in the Contract.
Clause 24.1: "... the Contractor may make a claim for such loss
and/or expense provided always that:"
In order to make a successful claim, the Contractor must comply with the
claim procedures in Clause 24. l (a) and (b ).
Clause 24.l(a): "... the Contractor shall g ive written notice to the
Architect of his intention to claim for such loss and/or expense together with
an initial estimate ofhis claim duly supported with all necessa,y calculations.
Such notice must be given within twenty eight (28) Days from the date of the
Al, CAI or the start ofthe occurrence o(the matters referred to in Clause 24.3,
whichever is the earlier"
If it is necessa1y to va1y the notice period, it is preferable that the period
should not be unreasonably sho1t. That said, the time period of 28 Days for the
contractor to give notice stated in PAM 2006 may be varied by the Employer
depending on the size, complexity and time performance to suit the project. In
the event the period of 28 Days is varied, care must be taken that any changes
must also be reflected in PAM 2006 NSC Clause 22.l(a). For example, if
the period of 28 Days is changed to 21 Days, then it is advisable to change
the time period in PAM 2006 NSC Clause 22.1 (a) to 14 Days, thereby still
Clause 24.0 193
allowing the Contractor 7 Days to include the Nominated Sub-Contractor's
claim in his application to the Architect.
Clause 24. l (a): "... The giving of such written notice shall be a
condition precedent to any entitlement to loss and/or expense that the
Contractor may have under the Contract and/or Common Law."
It is expressly provided that giving a written notice is a condition precedent to
the Contractor's entitlement to claim for loss and/or expense. The necessity
to give notice shall apply irrespective of whether the claim by the Contractor
is based on contract or common law. The objective of such a notice is to
give the Architect the opportunity, as far as possible, to issue instructions
to overcome the difficulty or to take measures to mitigate the claim or to
arrange for proper and detailed records to be kept. The Architect cannot act
without being aware of the likely consequences caused by the difficulty.
It is important to note here that if the Contractor desires to pursue any claim
based on common law, he must still also comply with the notice condition
precedent and time procedure; otherwise he will also lose his right to claim
under common law.
Clause 24.1 (b) : "... within twenty eight (28) Days after the matters
referred to in Clause 24.3 have ended, the Contractor shall send. .. complete
particulars of his claim for loss and/or expense... "
The submission of claim within the time period is to ensure that the
Contractor's claim for loss and/or expense is processed by the Architect
and Quantity Surveyor expeditiously and accurately, while the particulars
and suppo1ting evidence are still fresh. The time period of 28 Days is the
provision allowed in a standard form of contract. Depending on the size and
complexity of the Works, the period could be shortened or lengthened. In the
event the period of 28 Days is varied, care must be taken that any changes
must also be reflected in PAM 2006 NSC Clause 22. l(b). For example, if
the period of 28 Days is changed to 21 Days, then it is advisable to change
the time period in PAM 2006 NSC Clause 22. 1(b) to 14 Days, thereby still
allowing the Contractor 7 Days to include the Nominated Sub-Contractor's
claim in his application to the Architect.
Clause 24.l(b): "...(( the Contractor fails to submit the required
particulars within the stated time (or within such longer period as may be
agreed in writing by the Architect), it shall be deemed that the Contractor has
waived his rights for loss and/or expense. "
 Clause 24.0 194
It is recognised that the Contractor may take longer than the 28 Days to submit
the details and particulars of his final claim for loss and/or expenses. In that
event, he shall agree with the Architect an extended time to submit such details
and particulars. If the Contractor does not submit his details and particulars
of his final claim within the stipulated time, or attempt to agree with the
Architect an extended time for such submission; then it will be deemed that
the Conh·actor has re-evaluated that despite his notice under Clause 24. l (a),
he has no claim for loss and/or expenses and it will be deemed that he has
waived any rights to any claim whether under the Contract or common law.
Clause 24.2 - Access to Contractor's books and documents
The Contractor shall keep contemporaneous records of all his claims for loss
and/or expense and shall submit all particu lars to the Arch itect. The Architect
and Quantity Surveyor shall have access to all books, documents, reports,
papers or records in the possession, custody or control of the Contractor that
are material to the claim and the Contractor shall provide free of charge, a
copy each to the Architect and Quantity Surveyor when requested. All such
documents shall remain available in accordance with this clause until all claims
have been resolved. The Contractor shall use his best endeavour to ensure that
all such documents in the possess ion, custody or control of sub-contractors
and/or suppliers tha t are material to the claim are similarly available.
It is the responsibility of the Contractor to ensure that all the records and
documents material to the claim are available for and accessible to the
Architect and Quantity Surveyor. These records must be kept until all claims
are resolved, which will include any arbitration or litigation. In addition, the
Contractor must take due care to inform all sub-contractors and/or suppliers to
preserve the documents in the event it is needed.
Clause 24.3 - Matters materially affectin2 the re2ular pro2ress of the
Works
The following are the matters referred to in Clause 24. 1:
24.3(a) the Contractor not having received in due time the necessary AI
(including those for or in regard to the expenditure of P.C. Sums
and Provisional Sums, further drawings, details, levels and any
other information) for which he had specifically applied in writing
to the Architect. The Contractor's application must be submitted
to the Architect in sufficient time before the commencement of
construction of the affected works, to enable the Architect to issue
the nccessa1y Al within a period which would not materially affect
Clause 24.0 195
the progress of the affected works, having regard to the Completion
Date. Provided always that the Al was not required as a result of
any negligence, omission, default and/or breach of contract by the
Contractor and/or Nominated Sub-Contractors;
24.3(b) delay by the Employer in giving possession of the Site or any
section of the Site in accordance w ith Clauses 21.l and 21.2;
24.3(c) compliance with a written instruction issued by the Architect in
regard to the postponement or suspension of all or any part of the
Works to be executed under Clause 21.4;
24.3(d) delay on the part of craftsmen, tradesmen or other contractors
employed or engaged by the Employer in executing work not
forming part of the Contract or the failure to execute such work;
24.3(e) delay or failure in the supply of materials and goods which the
Employer had agreed to supply for the Works;
24.3(f) the opening up for inspection of any work covered up, testing any
materials and goods or executed work in accordance with Clause
6.3, unless the inspection or test showed that the works, materials
and goods were not in accordance with the Contract or was in the
opinion of the Architect required in consequence of some prior
negligence, omission, defau lt and/or breach of contract by the
Contractor;
24.3(g) any act of prevention or breach of contract by the Employer;
24.3(h) delay as a result of a compl iance with Al issued in connection with
the discovery of antiquities under Clause 33. 1;
24.3(i) appointment of a replacement Person under Articles 3, 4, 5 and 6;
24.3U) compliance with a written instruction issued by the Architect in
connection with disputes with neighbouring property owners
provided always that the same is not caused by negligence,
omission, default and/or breach of contract by the Contractor and/
or Nominated Sub-Contractors;
24.3(k) by reason of the execution of work for which a Provisional
Quantity is included in the Contract Bills which in the opinion of
 Clause 24.0 196
the Architect is not a reasonably accurate forecast of the quantity of
work required;
24.3(1) failure of the Employer to give in due time entry to or exit from
the Site or any part through or over any land, by way of passage
adjoining or connected to the Site and in the possession or control
of the Employer;
24.3(m) suspension by the Contractor of his obligations under Clauses 30.7
and 30.8; and
24.3(n) suspension of the whole or part of the Works by order of an
Appropriate Authority provided always that the same is due to
negligence or omission on the part of the Employer, Architect or
Consultant.
The matters in Clause 24.3 reflect some of the Relevant Events in Clause 23.8,
the detailed commentaries of which will also apply here.
Clause 24.4 - Loss and/or expense to be included in certificate
Subject to the Contractor complying with Clause 24. 1, the Architect or
Quantity Surveyor shall ascertain the amount of such loss and/or expense.
Any amount so ascertained from time to time for such loss and/or expense
shall be added to the Contract Sum, and if an Interim Certificate is issued after
the date of ascertainment, such amount shall be included in the ce1tificate.
Clause 24.4: ".. .shall ascertain... "
These words mean that the Architect or Quantity Surveyor must assess the
claim based on the patticulars and calculations submitted by the Contractor,
and not merely to make a general assessment. As the loss and/or expense claim
is a contractual claim, it will be included in interim ce1tificates and the Final
Account, ifit is found to be valid.
Any claim under common law is outside the jurisdiction of the Architect and
Quantity Surveyor, and the Contractor has to resolve this with the Employer.
Clause 25.0 197
~Clause -25-.0 - Dete~mination Of Cont-ractor's Emplo-yment
l _ ___ _Bt -~_mployer
Clause 25.1 - Defaults by Contractor
The Employer may determine the employment of the Contractor if the
Contractor defaults in any of the following:
25 .1(a) if without reasonable cause, he fails to commence the Works in
accordance with the Contract;
25.l(b) if without reasonable cause, he wholly or substantially suspends
the can-ying out of the Works before completion;
25 .l(c) ifhe fails to proceed regularly and/or diligently with the Works;
25 .l(d) ifhe persistently refuses or neglects to comply with an Al;
25. 1(e) ifhe fails to comply with the provisions in Clause 17.0; or
25. l(f) if he has abandoned the Works.
Clause 25.1: ''The Employer may determine the employment ofthe
Contracto1: .. "
The provision in PAM 98 Clause 25.1 states that in the event the Contractor
makes a default, 'the Employer may determine the Contract.' lf the Contract
is determined, it would mean that the Contract will cease to apply, and the
Employer would then have to rely on common law for his remedies.
Under PAM 2006, if the Contractor makes a default, the Employer may
'detennine the employment of the Contractor.' Upon the determination of
the Contractor's employment, the Contract does not come to an end, but will
remain in force. The patties' rights and obligations continue to be governed
by the Contract.
It is impmtant to note that it is expressly provided in this Clause that the notice
to determine the Contractor's employment is to be issued by the Employer.
The Architect therefore, must refrain from issuing the notice of determination,
unless the Employer has given him an expressed authorisation to do so. If
he issues the notice to the Contractor, he must obtain the authority from the
Employer, and he must make it known to the Contractor that he has been
 Clause 25.0 198
authorised by the Employer to issue the notice of determination. The notice
of determination can only be issued after the Employer, or Architect on behalf
of the Employer, has issued the notice of default as provided in Clause 25.2.
Clause 25.1: "... ifthe Contractor de.faults in any ofthe.following: "
The Contract provides for determination of the employment of the Contractor
under the stated circumstances. The notice of determination ofthe Contractor's
employment must clearly establish which grounds the Employer relies on to
exercise the dete1mination.
Clause 25. l(a) : "... if without reasonable cause... "
The Contractor must act in accordance with the provisions of the Contract.
If he acts outside the Contract, he may be acting without reasonable cause.
In Lubenham v South Pembrokeshire District Council 33 BLR 39, when the
employer failed to honour an interim certificate as provided in the contract,
the contractor would have reasonable cause to determine his own employment
under the contract. The contractor however, elected to withdraw his labour
from the site when the architect did not heed his protest that there were
unauthorised deductions for liquidated damages and defects in the interim
certificates. The court held that the employer's obligation was to pay what
was certified and that whatever the cause of an undervaluation, the proper
remedy of the contractor was to request the architect to make an appropriate
adjustment in another certificate or to take the dispute to arbitration. The
withdrawal by the contractor in this case was without reasonable cause.
Clause 25.J(a): " ...he fa ils to commence the Works in accordance
with the Contract. "
This is a new ground for determination not found in PAM 98. It is to cater
for a situation where, after receiving the Letter of Award, the Contractor
fails to commence a.!!Y. work on site after a reasonable mobilisation period.
Clause 25. l(b) : '·... he wholly or substantially suspends the canying
out of the Works he.fore completion. "
Under PAM 98, the ground for determination was if the Contractor 'wholly'
suspends the carrying out of the Works before completion. However, proving
that the Contractor has 'wholly' suspended the work may be difficult if the
Contractor maintains a skeletal labour force on site without much tangible
activity directed towards achieving progress in the Works, and does not move
all his resources off the site. For example, the Contractor maintains a skeletal
Clause 25.0 199
crew on the site, but the only activity being caITied out is general cleaning
and striking offormwork. This Clause has therefore been amended to include
the term ' substantially' suspending the work before completion, so that the
Employer can determine the employment of the Contractor, if the Contractor
has 'substantially' reduced his labour and other resources ..
Clause 25. l(c): "... if he fails to proceed regularly and/or diligently
with the Works. "
To explain the meaning of'regularly and/or diligently', it would be appropriate
to refer to the following case law:
In West Faulker Associates v London Borough of Newham 71 BLR 1, Judge
Newey defined ' regularly and/or diligently' in the following tenns:
' contractors must go about their work in such a way as to achieve
their contractual obligations. This requires them to plan their work, to
lead and to manage their workforce, to provide sufficient and proper
materials and employ competent tradesmen, so that the works are fully
carried out to an acceptable standard and that at all times, sequence
and other provisions of the contract are fulfilled. '
The Court of Appeal however, did not accept the above definition in its
entirety. Judge Simon then offered further comments in the following terms:
'Taken together the obligations upon the contractor is essentially to
proceed continuously, industriously and efficiently with appropriate
physical resources so as to progress the works steadily towards
completion substantially in accordance with the contractual
requirements as to time, sequence and quality of works ... '
Taking the judicial comments together, it means that the work must comply
with the time and quality requirement stated in the Contract. The Contractor is
required under Clause 3.5 to provide a Works Programme showing the order
in which he proposes to carry out the Works; and under Clause 3.7, it is further
provided that the Works Programme may be used by the Architect to monitor
the progress of the Work. The Works Programme is therefore, an essential
tool to determine as a matter of fact, whether the Contractor is progressing
regularly and/or diligently with the Works.
 Clause 25.0 200
Clause 25.l(d): "...[( he persistently refi1ses or neglects to comply
with an Al''
U nder PAM 98, the Al must relate to ' re move or re medy defective work,
improper materials or goods and by such refusal or neglect the progress
of tbe Works is materially affected. ' W hether the defective works will
' ma terially affect' the overall Works may itself be a source of di spute. An
example is w he re a contractor persistently refuses to demolish a lift core (for
which he had conceded the use of conta minated aggregate for concreting),
a nd the arc hitect then issues a notice of default. The contractor responds
that the contaminated aggregate does not affect the quality of concrete in
the lift core and therefore does not materially affect the work. As such, the
contractor arg ued that the notice of defa ult was defective and not a reason to
demolish the lift core. An instance such as this, w here the contractor refuses
to demolish the lift core, would be catastrophic fo r the project. While the
construction is progressing at a fl oor every 10 days, what then should the
architect do?
PAM 2006 improves upon PAM 98 by re moving the proviso that the
contrac tor 's refusal to comply with the arc hitect's instructio n must materially
affect the work. Under PA M 2006, the notice of default can be issued if
the Contractor persiste ntly refuses or neglects to comply with an Al. There
is no necessity to decide w hether the refusal or neglect to comply with the
instruction w ill materially affect the work. However it must be noted that a
mere refusal or negligence by the Contrac tor to comply with an Al will not be
sufficie nt ground to issue the notice of default to determine the Con tractor's
emp loyment. The Archi tect sho uld only issue the notice of dete1mination if
the Contractor has persistently refused or neglected to comply with reminders
instructing him to comply immediately with the Al.
Clause 25.l(e): "... [( he Jails to comply with the provisions in Clause
17.0"
There is a p rohibition in Clause 17.2 that the Contractor shall not assign his
rights, interest or benefits under the Con tract to any other parties without the
written consent of the E mployer (such consent shall be at the sole disc retion of
the Employer.) Any assignment witho ut the wri tten consent of the E mployer
is a ground for determination.
There is also a prohi bition in Clause 17.3 that the Contractor 'shall not w holly
or substantially sub-contract the Works.' Works as defined in Article 7 (bf)
to mean: ' the works described in the Articles of Agreement and referred to
in the Contract D ocuments and includes any changes made to these works in
Clause 25.0 201
accordance with the Contract.' Wholly or substantially sub-contracting the
Work is a ground for determination. However, there is no prohibition against the
Contractor sub-contracting, say, the Lift Installation Works or the Aluminium
Curtain Walling works, as it is recognised that with increasing specialisation
in the construction indushy , it is accepted that the Contractor does not possess
all the skills within his own organization to unde1take a major project and that
it is almost a universal practice for much of the work in a building contract to
be sub-contracted out as specialist trades or installations.
Clause 25. 1(/): ''.. .[lhe has abandoned the Works. "
If the Contractor abandons the Works, it would mean that he has no intention
to continue performance of his obligation under the Contt·act. If the action
was carried out without just cause, he would be deemed to have repudiated
the Contract and the Employer would be justified to formally determine the
Contractor's employment under the Contrac t or alternatively under common
law.
Clause 25.2 - Procedure for determination
Upon the occurrence of any defau lt under Clause 25.1, and if the Employer
decides to determine the Contractor's employment, 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. If the Contractor shall continue
with such default for fourteen (14) Days from the receipt of such written
notice, then the Employer may, within ten ( 10) Days from the expiry of the
said 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.
Clause 25.2: "...[[ the Employer decides to determine the
Contractors employment"
Detennination is a drastic step, and should be contemplated only as a last
recourse by the Employer. If the Contractor contests the determination, it is
likely that the arbitrator or the court will lean against the Emp loyer, if proper
procedures are not followed. It is therefore essential that the procedures
for detennination provided in the Contract be strictly followed; firstly, by
complying meticulously w ith the time table, and secondly, maki ng sure that
the notice must be clear as to w hat is being notified. It is recommended that
the notice must n ot only state clearly the Contractor 's default, but also the
applicable clauses of the Contract. If the determination was exercised without

Clause 25.0 202
complying with the contractual provision, it may amount to determination at
common law.
It should be noted any default by the Contractor under Clause 25 .1, may
provide the grounds for the Employer to dete1mine the employment of the
Contractor under the provisions of the Contract. This means that the parties
remain bound by the provisions in the Contract, and have to abide to any
provisions setting out the post determination process. If there is a repudiation of
the Contract or a determination of the Contract (as opposed to a determination
of the Contractor 's employment under the Contract), it will mean that the
parties are no longer bound by the provisions of the Contract, and their claims
will be based on common law and the Contracts Act. In some contracts, the
provision refers to 'termination' instead of 'determination. ' There is basically
no difference between the two terms.
Clause 25.2: ".. .the Employer or Architect on his behalfsha/1 give
to the Contractor a written notice delivered by hand or by registered post... "
In practice, if the Contractor defaults on any of the provisions provided in
Clause 25.l(a) to (f), the Architect should advise the Employer and obtain
his approval in writing before he issues any notice to the Contractor: setting
out the defaults and the Employer's intention to determine the Contractor's
employment if the Conh·actor continues the default. In West Faulker, the
architect failed or refused to issue the notice of default under the contract
to the contractor, and as a result, the employer was not able to determine the
contractor's employment. The court held that the architect should have issued
the notice, and as a result of his failure to issue the notice, the architect was
liable to the employer for losses flowing from the failure of the employer to
determine the contractor's employment.
The provision in PAM 98 Clause 25.2 provides that: 'The Architect may
then give the Contractor notice ... , ' means that the architect is the only paiiy
ernpo~1~ 4--uedm:--th€l--J:>A-M--98 to i"'su&---th~ notice. If the architect failed or
refused to issue the notice, the employer will be unable to detennine the
contractor's employment. This was what happened in West Faulke,: where the
employer was advised to sue the architect for the resulting loss.
PAM 2006 has avoided this problem by providing that: ' ... the Employer or
Architect on his behalf shall give to the Contractor a written notice ... ' It is now
expressly provided that the Employer can himself issue the notice of default
if the Architect refuses for any reason not to comply with the Employer's
instruction to issue the notice. For example, the Architect may hold a
different opinion from that of the Employer as to whether the Contractor was
--
Clause 25.0 203
in default. He may hold the opinion that the Employer may not have the right
to exercise the determination Clause if the Employer has, in the first place,
caused the Contractor's breach by not honouring the payment certificates.
In such a scenario, the Contract provides that the Employer can himself
issue the notice, and that the Employer will therefore not be able to hold the
Architect liable, similar to the West Faulker case. It is also relevant to note
that Clause 25.1 does not require the opinion of the Architect as to whether
the Contractor has defaulted. The Clause will only be set in motion when the
Contractor has defaulted in any of the grounds stated in Clause 25. l(a) to (e).
If the notice is served by any other means such as by facsimile, the Employer
must still ensure that the proper mode of serving this notice, which is by hand
delivery or by registered post must be strictly adhered to.
Clause 25.2: "...such default for fourteen {f 4) Days... then the
Employe1; may within ten (10) Days ... "
Note the definition ' Day' in Article 7(w): ' Day' means: ' calendar day
including the weekly day of rest but excluding gazetted holidays in the
location where the Works is carried out. ' lt is therefore important to take
into consideration that if the notice is given over a period where there is a
gazetted holiday, the time of the notice should be appropriately adjusted to
include the gazetted holiday.
The notice of default to the Contractor may be issued by the Employer or the
Architect. After the expiry of 14 Days from receipt of such notice, only the
Employer (not the Architect) is empowered under this Clause to serve the
actual notice of determination. The notice of determination must be issued
within ten (10) Days from the expiry of the said 14 Days.
Under PAM 98 Clause 25.2: 'If the Contractor continues with such default
for fomteen (14) days after receipt of such notice or at any time thereafter
repeat such default (whether previously repeated or not), then the Employer
may within ten (10) days after such continuance or repetition by letter...
determine the employment of the Contractor... ' There is uncertainty
whether the court would support the Employer's action to determine the
Contractor's employment without repeating the notice of default; if for
example, the Contractor repeated a default which occurred a year ago. Tf
the notice of determination is served without repeating the notice of default,
the Contractor may be caught by surprise, and the Employer's action could
also be considered unreasonable and vexatious, and may also be a breach
of natural justice. Determination is a drastic step and it is always better to
give the Contractor an opportunity to rectify his defaults before a formal
determination. To avoid disputes in this matter, PAM 2006 requires that the
 Clause 25.0 204
Employer or the Architect (on his behalf) has to serve a notice of default
eve1y time before the Employer determines the Contractor's employment.
Clause 25.2: " ...written notice delivered by hand or by registered
post... "
PAM 98 Clause 25.2 states that: 'the Employer may... by letter sent by
registered post or recorded delive1y fo1tbwith determine the employment of
the Contractor ..... 'In Fajar Menyensing Sdn Bhd v Angsana Sdn Bhd [1998}
6MLJ 80, the employer delivered the notice of determination by hand, and
the court had to consider whether the mode of delive1y was in accordance
with the contract. After considering the submissions by the parties, the comt
ruled that notices delivered by hand contravened the express provision of the
clause in the contract, and was therefore invalid. The court said that the mode
of service provided in the contract was a mandatmy provision, which must be
strictly observed. The court further said that recorded delivery service only
exists in the United Kingdom, pursuant to their Recorded Delivery Service
Act 1962, but such a service is non- existent in Malaysia. Therefore, the mode
of delivery refe1red to as ' recorded delive1y' which appeared in the PAM/ISM
69 (also applicable to PAM 98), adopted from the contract forms in the United
Kingdom, were meaningless in Malaysia and should be ignored.
PAM 2006 has now amended this provision to provide that determination
notices are to be sent either ' by hand or by registered post. ' For more details
regarding the provision of notices and delive1y, reference should be made to
Clause 36. The te1m ' recorded delivery' is not used in PAM 2006 as there is
no Recorded Delivery Act in Malaysia.
Clause 25.2: "...specifying the default... "
If a default occurs, the Employer, or the Architect on behalf of the Employer,
should issue to the Contractor a warning notice specifying the default. It
i-S-importanLno.Lto-J.nake-the....same....mistake...made....by the. architect in Fajar
Menyensing case. Instead of serving a notice specifying the contractor's
default, the architect gave notice, that 'in his opinion the contractor had failed
to proceed regularly and diligently in the execution of the works.' The court
held that the contract did not empower the architect to issue a notice of default
based on his opinion, but only if the contractor had as a matter of fact made a
default in one or more of the matters provided in the contract. The court held
that by reason of the words 'in my opinion' in the architect's notice, the notice
of default was invalid.
Clause 25 .0 205
Clause 25.2: "if the Contractor shall continue with such default
..for.fourteen (14) Days... then the Employer may, within ten (JO) Daysfimn
the expily of the said fourteen (I 4) Days...determine the employment of the
Contractor "
The Contractor has 14 Days from the receipt of the notice to rectify his default.
If the Contractor fails to rectify the default, the Employer has IO Days to
give a fu1ther written notice to forthwith determine the employment of the
Contractor under the Contract. The patties are to take notice and be mindful of
strict time limits. Note also the definition of ' Day' earlier mentioned.
Clause 25.2: "... such notice shall not be given unreasonably or
vexatiously. "
If a notice is given unreasonably or vexatiously, it will be void. To understand
the meaning of 'unreasonably', it is appropriate to refer to Hills v Camden 18
BLR 31. Ormrod LJ in the case said:
'But what the word " unreasonably" means in this context, one does
not know. I imagine that it is meant to protect an employer who is a
day out of time in payment, or whose cheque is in the post, or perhaps
because the bank has closed, or there has been a delay in clearing the
cheque, or something - something accidental or purely incidental so
that the Court could see that the contractor was taking advantage of the
other side in circumstances in which, from a business point of view, it
would be totally unfair and almost smacking of sharp practice. '
In John Jarvis v Rockdale Housing Association [1986} JO Con LR 51, the Court
ofAppeal further suggested that it might be helpful in determination, to compare
the benefit to the contractor against the burdens to the employer of that action.
The contractor's exercise ofhis rights to determine would not be 'unreasonable',
unless there is a gross disparity between the benefits and burden.
Bingham LJ in Jarvis also defined ' vexatiously' when he said:
'it must mean something different from ' unreasonably'. I think it
imports an intention to harass or dish·ess.'
Clause 25.3 - Contractor's insolvency
fn the event oftbe Contractor becoming insolvent or making a composition or
an-angement with his creditors, or have a w inding up order made, or (except
for purposes of reconstructio n or amalgamation) a resolution for voluntary
 Clause 25.0 206
winding up, or having a liquidator or receiver or manager of his business
or undertaking duly appointed, or having possession taken by or on behalf
of the holders of any debentures secured by a floating charge, o r of any
property comprised in or subject to the floating charge, the employment of the
Contractor shall be forthwith automatically determined.
Insolvency is the inability to pay debts. Insolvent individuals may be declared
bankrupt under the Bankruptcy Act 1967. If the company is insolvent, there
are a number of ways to deal with the insolvency. The company may make
a composition or anangement with the creditors; or the company may be
voluntarily wound up; or the court may, in response to a petition, liquidate the
company and have a receiver, liquidator or manager take over his business; or
the company may be taken over by holders of debentures. Unless the Contractor
infom1s the Employer that such an event has taken place, it is sensible that the
Employer confirms with the Contractor (or with the receiver or liquidator)
the fact that such an event has taken place. If so confumed, the employment
of the Contractor shall be deemed to be fo1thwith automatically dete1mined
and no notice or other fomrnlities is required. Neve1theless, to ensure that the
Contractor (or his receiver or liquidator) is aware of the detennination, the
Employer is advised to notify the Contractor (or his receiver or liquidator) in
writing, that the Contractor's employment has been determined in accordance
with this clause.
Clause 25.4 - Rights and duties of Employer and Contractor
lo the event that the employment of the Contractor is determined under Clause
25.l or 25.3, the following shall be the respective rights and duties of the
Employer and Contractor:
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
Eerson ma¥-entew1pGn--tl~ks-and use all t@mporary buildings,
construction plant, tools, materials and goods intended for, delivered
to and placed on or adjacent to the Site (except those construction
plant that is on hire by the Contractor) and may purchase all materials
and goods necessary for the 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 wi thin twenty one (21)
Days of the date of detennination, 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 25.0 207
25.4(b) the Contractor if so required by the Employer or Architect, shall
within twenty one (21) Days of the date of determination, assign to
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;
25.4(c) the Contractor when instructed in writing by the Architect shall
remove from the Works any temporary buildings, construction
p lant, tools, equipment, materials and goods belonging to or hired by
him. lf within a reasonable time after any such instruction has been
issued to the Contractor, and he has not complied therewith, then 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;
and
25.4(d) the Contractor shall allow or pay to the Employer all cost incu1Ted
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 not yet paid when the
employment of the Contractor was determined. Upon completion of
the Works, an account taking into consideration the value of works
carried out by the Contractor and all cost incurred by the Employer
to complete the Works including loss and/or expense suffered by
the Employer shall be incorporated in a final account prepared in
accordance with Clause 25 .6.
Clauses 25.4(a) to (d) sets out the rights and duties of the Employer and the
Contractor upon determination of the Contractor's employment.
Clause 25.4(a): " ...the Contractor shall vacate the Site... "
This is an express provision that the Contractor shall vacate the Site and
return possession of the Site to the Employer. After the determination of his
employment, the Contractor no longer has the legal right to remain on the
Site, and if he does, he will be trespassing. It used to be thought that if the
Contractor disputed the determination, he had the right to remain on the site
until the detennination was shown to be valid. Clause 25.7 now expressly
provides that the Contractor shall yield possession of the Site within 14 Days
from the receipt of the notice of dete1mination from the Employer. rt avoids the
problem of having to obtain a court order to remove a recalcitrant Contractor

Clause 25.0 208
from the Site. Where the Contractor has difficulty vacating the Site within
14 Days, and if the Contractor has requested for more time, it is reasonable
to expect the Architect to consider this seriously, and if any additional time
is agreed, this should be confirmed by the Architect in writing. For a similar
proviso, please refer to Clause 26.4(a).
Clause 25.4(a): "...may employ and pay other Person to cany out
and complete the Works and to make good any d(!fects ... "
This Clause gives the Employer the right to employ and pay other Persons
to carry out and complete the Works, including the rectification of any
defective works cmTied out by the Contractor before the determination of his
employment. The Employer can employ direct labour to complete the Works
or tender out the completion of the Works. How the Works are completed
will be at the discretion of the Employer, but irrespective of the procurement
methods, proper records of cost must be kept. The cost of the works will also
include the cost of any rectification works.
Clause 25.4(a): " ... use all tempor01y buildings, construction plant,
tools, materials and goods intended/01; delivered to and placed on or adjacent
to the Site (except those construction plant that is on hire by the Contractor) ... "
The Employer will also have a rig ht to use any temporary buildings,
construction plants, and tools on the Site belonging to the Contractor, except
those construction plants that are on hire by the Contractor.
Where the construction plants are hired by the Contractor, the Employer may
have proble ms using these plants, unless he bas an agreement with the hirer. If
the Employer wishes to continue using the construction plants, the Architect,
on behalf of the Employer, shall within 2 1 Days, either request the Contractor
to assign the benefit of any agreement for the continuation of the hire of such
construction plant and equipment (which will be subject to the agreement of
the~hirer-kor-request-forsuch const1 action plannooe removed from the Site.
If the Employer decides to utilise any, or all of the Contractor's construction
plants to complete the Works, it will be necessary to take a record and sign an
agreement on the number, condition, age and other details of the construction
plants left on the Site. On completion of the Works, the Employer must infmm
the Contractor to remove such construction plants from the Site, or wherever
it was stored, and give a reasonable time for the Contractor to effect such
removal.
To ensure that there will be no dispute on the receipt of this notice, it is
I
Clause 25.0 209
suggested that the Employer should arrange to deliver the written notice by
registered post or by hand. If within a reasonable time of having info1med the
Contractor and the Contractor has not removed the facilities, the Employer
may remove and sell any such property belonging to the Co?tractor, except
those that are on hire; and hold the proceeds, less all costs mcmTed, to the
credit of the Contractor. It is suggested that proper legal advice be obtained
before any action is taken to dispose of any of the Contractor 's equipment or
facilities, as there may be other legal complications.
If the Contractor had canied out any alternative design to any of the works
specified in the Contract, the Architect shall, upon d~te1minatio~ of the
Contractor's employment, request the Contractor to provide all drawmgs and
calculation of the designs, unless these had been previously provided, to enable
the Employer to continue and complete the Works without any problems.
Clause 25.4(b): "the Contractor [f so required. ..assign to the
Employa .. the benefit of any agreement for the supply of materials, goods
and/or.for the execution of any work. .. "
Upon determination of the Contractor's employment, the Architect should
request the Contractor to furnish him with a list of sub-contractors and
suppliers that the Contractor has committed and who are w illing to accept
an assignment of their contracts to the Employer. As any contracts between
the Contractor's sub-contractors and suppliers with the Employer will be
subjected to agreement between the pmiies, this Clause merely facilitates the
possibility that such an mnngement can be mutually concluded as it would be
beneficial to all the parties.
Clause 25.4(c): "the Contracto1:.. shall remove fi'om the Works any
tempora,y buildings, construction plant, tools, equipment, materials and
goods belonging to or hired by him.. "
If the Employer decides not to utilise any, or all of the Contractor's facilities
as provided in Clause 25.4(a), he shall instruct the Contractor to remove such
facilities from the Site and give the Contractor a reasonable time to do so.
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. .. "
The Contractor is obliged to pay the Employer all costs incuITed to complete
the Works. It is important to note that the contractual damages extend to
 Clause 25.0 210
,...
include all loss and/or expense suffered by the Employer. Examples of the
items of costs will include:
Amount payable to the completion contractor;
Additional professional fees;
Legal fee;
Managerial time expended in dealing with the detem1ination;
Protection of uncompleted Works;
Cessation Insurance before appointment of completion contractor;
A dditional finance;
Inflation;
Damages for delay in completion.
Clause 25.4(d): "... the Employer shall not be bound by any provision
in the Contract to make any further payment to the Contracto1; including
payments which have been certified but not yet paid when the employment of
the Contractor was determined. .. "
The provisions in PAM 98 Clause 25.4(iv) stating that: ' .. .Until after the
completion of the works ... the Employer shall not be bound by any provision
in this contract to make any further payment to the Contractor.. .' have been
interpreted by some Employers to mean that once the Contractor 's employment
was determined, the Employer did not have to make any further payments to
the Contractor, including payments previously certified and already overdue
for payment. It is submitted that this assumption is wrong.
For the Employer to exercise his right to determine the Contractor's
employment, the Employer must not be in breach of the payment provisions.
If the Employer breached the payment provisions, and in particular the
provisions under Clause 26. 1(a) stating: ' if the Employer fails or neglects
to pay the Contractor the amount due on any ce1tificate .. .w ithin the Period
for Honouring Certificates,' the Employer w ill lose his rights to determine
the Contractor's emplo,ym.enLundeL.the.....:pre.vention principle'. In short, this
means that the Employer cannot take advantage of his own breach in enforcing
the Contract. Under PAM 2006, reference to the Employer not being obligated
to make any payments is referring to payments which had been certified but
not yet paid to the Contractor because the period for honouring the certificate
had yet to expire.
Clause 25.5 - Records of Works
The Architect or Quantity Surveyor shall w ithin twenty eight (28) Days of the
determination of the Contractor 's employment, give a w1itten notice to the
Clause 25.0 211
Contractor of the date of insp ection on Site to jointly record the extent of the
Works executed and the materials and goods delivered to the Site. The Contractor
shall prov ide all necessaiy assistance to the Architect and Quantity Surveyor to
perfo nn the ir task. Upon comple tion of the record by the Architect or Quantity
Surveyor, a copy shall be sent to the Contractor and such records shall fo1111 the
basis for the evaluation of the value of the works executed and materials and
goods delivered to the Site by the Contractor up to the date of detennination.
This is a new provision for parties to jointly record the extent of the Works
executed and the materials and goods delivered to the Site, before a new
completion contractor is appointed. The action is usually carried out by the
Quantity Surveyor and will u sually include photographic records as welt. It
is to the advantage of both parties to mutually agree on the extent of works
carried out, so that the costs can be worked out without any disagreement on
the records .
On completion of the records, the Quantity Surveyors w ill send copies to the
Contractor, and if there is any disagreement, it is important that any challenges
by the Contractor to the record of works is made as soon as possible, when it
is still possible to verify any discrepancies before too much work is carried out
by the contractor completing the terminated work.
The records shall form the basis for the evaluation of the cost of the Works
executed by the Contractor up to the date of determination.
Clause 25.6 - Final Account upon determination
T he Architect or Quantity Surveyor shall w ithin six (6) Months on completion
o f the Works, submit to the Employer and Contractor for the ir ag reement,
a final account for all cost incurred to complete the Works inc luding the
s ums previously certified to the Contractor before the date of determination,
Liquidated Damages, set-off and all other loss a nd/or exp ense suffered .
25 .6(a) lf nothing in the said final account is disputed by the Employer
or Contractor within three (3) M onths from the date of receipt of
the fi na l account from the Architect or Quantity Surveyor, the final
account shall be conc lus ive and deemed agreed by the parties. l f
the amount in the fi nal account exceeds the total amount which
would have been payable on completion in accordance with the
Contract, the difference sha ll be a debt p ayable to the Employe r
by the Contractor or w here applicable, the Employer may recover
such sum from the Perfo rmance Bond. Tf the said amount is less
than the sa id total amount, the diffe re nce s ha ll be a debt payable to
the Contractor by the Employer.
 ....
Clause 25.0 21 2
25.6(6) If either patty has any dispute on the fi nal account, the patty
disputing the final account shall by written notice to the other party
(with copies to the Architect and Quantity Surveyor) set out any
disagreement complete with particulars within three (3) Months of
the date of receipt of the final account from the Architect or Quantity
Surveyor. The Architect or Quantity Surveyor within three (3)
Months from the date of receipt of the grounds of dispute shall either
amend or not amend the final account. Any party disagreeing with
the amended final account or decision not to amend the final accoun t
shall refer the dispute to arbitration under Clause 34.0 within tlu·ee
(3) Months from the date of receipt of the amended final account or
decision not to amend the final account. Failure to refer the dispute
to arbitration within the stipulated time, the final account or amended
final account shall deem to be conclusive and agreed by the patties.
25 .6(c) Any dispute on Liquidated Damages, set-off and interest which the
Employer is entitled to make under the Contract shall be referred
to arbitration.
Clause 25.6: "The Architect or Quantity Surveyor shall...submil to
the Employer and Contracto1'. .. aflnal account for all cost incurred to complete
the Works including the sums previously certified to the Contractor before the
date of determination, Liquidated Damages, set-off and all other loss and/or
expense suffered. "
The final account shall be submitted to both the Employer and the Contractor for
agreement. The final account should include all costs incurred to complete the
Works, including all loss and/or expense suffered by the Employer. Although
the time period for the preparation of the Final Account is 6 Months from the
completion of the remaining works, it may be necessary for the Architect or
Quantity Surveyor to prepare the final account earlier, if the documents are
required for arbitration or litigation.
Clause 25.6(a): "Ifnothing in the said.final account is disputed. .. "
If the Employer or the Contractor has any disputes on the final account, they
must raise it to the Architect or Quantity Surveyor within 3 Months, otherwise,
according to this condition the final account shall be conclusive and deemed
agreed by the parties. Thereafter, the balance due from either party will be
established.
Clause 25.0 213
Clause 25. 6(b): "ff either party has any dispute on the.final account,
the party disputing the.final account... "
If either party has any dispute on the final account, they will need to set out
their disagreement to the Architect or Quantity Surveyor who will, within 3
Months, look into the disagreement and decide whether to amend, or not to
amend, the final account and will inform the parties accordingly.
Either patty who is dissatisfied with the revised final account, or the un-
amended final account, has 3 Months to refer any disagreement on the final
account to arbitration. It is important to note that if the disagreement is not
referred to arbitration by either patty, it will be deemed conclusive and agreed
by the parties.
Clause 25.6(c): "Any dispute on Liquidated Damages, set-off and
interest... "
If there is no dispute on the final account, Liquidated Damages, set-off
amounts and interest payment due from either party, it will be possible to
include all these items in the final account. However, as is often the case,
there may be agreement on the final account, but disputes on Liquidated
Damages, set-off amounts and interest payment. It would then be appropriate
fo r the Architect and Quantity Surveyor to sign off on the final account,
leaving the remaining disputes to be resolved in arbitration by the parties to
the Contract.
Clause 25.7 - Remedy limited to damages only
Upon receipt of a written notice by the Contractor from the Employer to
determine the employment of the Contractor, the Contractor shall yield
possession of the Site within fourteen (14) Days from the receipt of the
said written notice and shall remove his personnel and labour force (but
not construction plant, tools and equipment unless so instructed by the
Architect) from the Site. Irrespective of the validity of the said written notice
the Contractor's remedy shall be limited to compensation for damages only.
This Clause makes it clear that regardless of any challenges by the Contractor
on the validity of the determination, the Contractor's remedy is to recover
damages only if the determination is invalid or wrongful. The Contractor
cannot dispute the determination and remain on the Site, thereby causing
inconvenience and cost to the Employer. If the Contractor refuses to yield Site
 Clause 26.0 2 15
Clause 25.0 214

possession back to the Employer, the Employer can institute proceedings in Clause 26.0 - Determination Of Own Employment -By I
court and raise Clause 25.7 in his action against the Contractor. This Clause Contractor I
is consistent with Kong Wah Housing Development v Desplan Construction r - -- - - - - --

[ 1991J 3 MLJ 269, where the court held that the contractor could have his
Clause 26.1 - Defaults by Employer
remedy in damages ifhe proved that his determination was wrongful, and for
him to remain on the site might lead to stalemate and might cause the project
The Contractor may determine his own employment if the Employer defaults
to be abandoned by the employer, thereby affecting other third parties.
in any of the following:
Clause 25.8 - Employer's ri~hts and remedies not pre judiced
26.l(a) if the Employer fails or neglects to pay the Contractor the amount
due on any certificate (less any Liquidated Damages and set-
The provisions of Clause 25 .0 are without prejudice to any other rights and/or
off which the Employer is expressly entitled to make under the
remedies which the Employer may possess.
Contract) within the Period for Honouring Certificates;
The Employer may determine the employment of the Contractor by adhering
26.l(b) if the Employer interferes with or obstructs the issue of any
strictly to the contractual procedures laid down in the Contract. As an
certificate by the Architect;
alternative, the Employer may terminate the Contract under common law if
the default and conduct of the Contractor so justify it. The Employer may have
26. l(c) if the Employer fails to nominate a succeeding Architect or
to rely on common law termination, if for some reason he has defaulted or did
Consultant in accordance with Articles 3, 4, 5 and 6; or
not comply with the procedures laid down in the Contract.

26. l(d) if before the date of Practical Completion, the carrying out of the
whole or substantially the whole of the uncompleted Works is
suspended for a conti nuous period of time exceeding that stated in
the Period of Delay stated in the Appendix by reason of:

26.1(d)(i) AT issued by the Architect under Clause I .4, 21.1

or 2 1.4 unless the instruction is issued to rectify
any negligence, omission, default and/or breach
of contract by the Contractor or Nominated Sub-
contractors;

26. l (d)(ii) the Contractor not having received in due time the
necessary Al (including those for or in regard to the
expenditure of P.C. Sums and Provisional Sums,
further drawings, details, levels and any other
information) for which he had specifically applied in
writing to the Architect. The Contractor's application
must be submitted to the Architect in sufficient
time before the commencement of construction of
the affected works, to enable the Architect to issue
the necessary AT within a period which would not
materially affect the progress of the affected works,
having regard to the Completion Date. Provided

Clause 26.0 216
always that the Al was not required as a result of
any negligence, omission, default and/or breach of
contract by the Contractor and/or Nominated Sub-
contractors;
26.l(d)(iii) delay on the part of craftsmen, tradesmen or other
contractors employed or engaged by the Employer in
executing work not forming part of the Contract or
the failure to execute such work; or
26. l(d)(iv) the opening up for inspection of any work covered up
or to arrange for or cany out any testing of any work,
materials and goods in accordance with Clause 6.3
unless the inspection or test showed that the work,
materials and goods were not in accordance with
the Contract, or the inspection and/or test was in the
opinion of the Architect required in consequence
of some prior negligence, omission, default and/or
breach of contract by the Contractor.
This Clause provides the Contractor the right to determine his own employment
if the Employer defaults on any of the grounds specified in sub-clause (a) to
(d).
Clause 26.J (a): "... the amount due on any certificate (less any
Liquidated Damages and set-off which the Employer is expressly entitled to
make under the Contract) ... "
This Clause makes it expressly clear that the Employer is entitled to deduct the
amount of Liquidated Damages from the certificate of payment and removes
any doubt that the Employer needs to pay the full amount as shown on the
certificate.
Contrast this with PAM 98 Clause 26.1 ' the Employer does not pay the
Conh·actor the amount due on any certificate... '. In interpreting the same plu·ase
in the JCT 63, the court in Lubenham v South Pembrokshire District Council
33 BLR 39, held that 'the amount due' was the amount stated as due on the
face of the interim certificate. Since the amount shown on the certificate will
not include any Liquidated and Ascertained Damages, which may have been
deducted by the Employer, the Employer would be in breach of this clause if
he does not pay the full amount due as shown on the certificate. PAM 2006
expressly provides that the Employer is entitled to deduct Liquidated Damages
from the amount shown on the certificate, and that the amount payable will
a
Clause 26.0 21 7
also take into consideration any set-off provisions. This avoids the situation
which can arise under PAM 98, when a Contractor can legitimately determine
his own employment when he is in delay, and the Employer in deducting
Liquidated Damages, breaches this Clause in not honouring the amount shown
on the certificate.
Clause26.J(b) : "ifthe Employer inte1feres with or obstructs the issue
of any certificate by the Architect... "
The Architect has two roles when he administers the Contract. In issuing
an instruction for a Variation, he is the agent of the Employer. In forming a
professional opinion, be is acting as an independent certifier. When he acts as
a certifier, he is required to act fairly and professionally and without any bias.
The definition ofCertificate in this Clause is not restricted to payment certificates.
It applies to certificates such as: Interim Certificates, Certificate for Extension
of Time, Certificate of Non Completion, and Certificate ofPractical Completion
etc. When the Architect issues such a certificate, he must act independently and
without interference or obsh11ction by the Employer. If the Employer interferes
or obstructs the Architect when he issues any certificate, this would be grounds
for the Contractor to determine his own employment under the Contract. If the
Employer insh11cts the Architect not to cany out a certifying function, or directs
the Architect as to the amount to be issued for an interim valuation, or dictates
the date of Practical Completion, this would be tantamount to interference or
obshuction with the Architect's certification duties.
Clause 26.l(c): "...if the Employer fails to nominate a succeeding
Architect or Consultant in accordance with Articles 3, 4, 5 and 6. "
Under the Uniform Building By-laws, the Contractor cannot carry out the
construction activities on Site, if there is no 'Qualified Person' (QP) supervising
the work. Under the Contract, the Architect and Engineer named in Article 3
and 4 are the QP, and as such, if any one of them ceases to be the QP, the
Employer has an obligation to appoint a succeeding QP within 28 Days. In
the absence of any QP, the Contractor will be obligated, under Clause 30.8, to
suspend tbe relevant work under that particular QP.
For example, the Contractor will suspend the carrying out of any structural
works, mechanical and elech·ical work, if there is no Stmctural Engineer or
Mechanical and Electrical Engineer; and suspend the whole of the Works if
there is no At·chitect. Failure by the Employer to appoint a succeeding QP
within 28 Days will entitle the Contractor to detennine his own employment.
The situation is slightly different, if the Employer fails to appoint a succeeding
 Clause 26.0 218
Quantity Surveyor named in Article 5. As the Quantity Surveyor is not a QP, it
may not affect the Contractor's ability to continue with the construction work,
but, if the Architect refuses to undertake the issuance of Interim Certificates
without the Quantity Surveyor 's valuation of the work can-ied out under Clause
30.1, the Employer will be in breach of contract if no Interim Certificate is
issued by the Architect when due.
The failure by the Employer to appoint a succeeding Specialist Consultant
named in Article 6 will very much depend on the specialty of the consultant.
If the specialty consultant's work affects the Contractor 's progress of the
work, such as a geotechnical engineer, the Contractor may have ground to
determine his own employment as his work will be materially affected. But,
if the specialty consultant is a landscape consultant, and the landscape work
is not affecting his constrnction work, the Contractor should be cautious in
exercising his rights under this Clause.
Clause 26.J(d): "The Contractor may also determine if...the... Works
is suspended for a continuous period of time exceeding that stated in the
Period of Delay stated in the Appendix... "
The Architect (most probably acting on instructions from the Employer) can
only suspend work under Clause 26.1 (d)(i) to (iv) for a time not exceeding
the Period of Delay stated in the Appendix. If the Period of Delay as stated in
the Appendix to the Contract is not amended, then the default period stated
in the Appendix is 'a continuous period of three (3) Months.' This means
that the Architect can only suspend the work under Clause 26.l(d)(i) to (iv)
for a continuous period not exceeding 3 Months. If this period is exceeded,
the Contractor will have a right to determine his own employment under the
Contract.
Clause 26.J(d) (i) : "Al issued by the Architect under Clauses 1.4, 11.2,
21 . I or 2 I. 4.. "
The work may be suspended due to instruction issued by the Architect in
regard to:
Clauses 1.4 - discrepancy or divergence between documents;
Clause 11.2 - instructions requiring a Variation;
Clause 2 1.1 - commencement and completion; and
Clause 21.4 - postponement or suspension of the Works.
As long as the suspension period does not exceed the Period of Delay stated
in the Appendix, the Contractor will not have the right to dete1mine his own
employment under the Contract.
Clause 26.0 219
The grounds for determination will not apply if any of the above AI was issued
as a result of any default and/or breach of Contract by either the Contractor or
Nominated Sub-Contractors.
Clause 26.J(d)(ii): "the Contractor not having received in due time
necessary Al including Al for PC. Sums and Provisional Sums, further
drawings, details, levels and any other information... "
The Architect has an obligation to provide all necessary drawings, details,
levels and all information for the Contractor to carry out the Works. If the
Contractor has any such requirements he must apply to the Architect and give
the Architect sufficient time to provide the necessary drawings, details levels
and information. If the Architect is still unable to comply with the Contractor's
request and this resulted in the Contractor having to suspend work on Site,
the Contractor will have a right to determine his own employment under the
Contract, if the suspension period exceeds the Period of Delay stated in the
Appendix. The grounds for determination will not apply if the delay of the
Architect's instruction was required as a result of any default and/or breach of
Contract by either the Contractor or Nominated Sub-Contractors.
Clause 26.2 - Procedure for· determination
Upon the occurrence of any default under Clause 26. I, and if the Contractor
decides to determine his own employment then, the Contractor shall give to the
Employer a written notice delivered by hand or by registered post specifying
the default. 1f the Employer shall continue with such default for fomteen ( 14)
Days from the receipt of such written notice then, the Contractor may within
ten ( I 0) Days from the expiry of the said fourteen ( 14) Days, by a further
written notice delivered by band or by registered post fo1thwith determine his
own employment under the Contract. Provided always that such notice shall
not be given unreasonably or vexatiously.
Clause 26.2: "... if the Contractor decides to determine his own
employment... "
Determination is a drastic step, and should only be contemplated as a last
recourse by the Contractor. It is therefore essential that the procedures for
determination provided in the Contract be strictly followed, firstly, by complying
meticulously with the time table and, secondly, making sure that the notice
must be clear as to what is being notified. It is recommended that the notice
must not only state clearly the default of the Employer, but also the applicable
clauses of the Contract. If the determination was exercised without complying
with the contractual provision, it may amount to determination at common law.
 Clause 26.0 220
It should be noted any defaults by the Employer may provide the grounds for
the Contractor to determine his own employment under the Contract. This
means that the parties remain bound by the provisions in the Contract, and
have to abide to any provisions setting out the post detennination process. If
there is a repudiation of the Contract or a determination of the Contract it will
mean that the parties are no longer bound by the provisions of the C~ntract
and their claims will be based on the common law and the Contracts Act. In
some contracts, the provision refers to ' termination ' instead of' determination. '
There is basically no difference between the two terms.
Clause 26.2: "... the Contractor shall give to the Employer a
written notice delivered by hand or by registered post... "
If the notice is served by any other means such as by facsimile, the Contractor
must still ensure that the proper mode of serving this notice, which is by hand
delivery or by registered post must be strictly adhered to.
Clause 26.2: "... (f the Employer shall continue such default for
fourteen (14) Days... then the Contracto,; may within ten (JO) Days from the
expi,y of the saidfourteen (1 4) Days ... "
Note the definition Day in Article 7 (w):
Day means 'calendar day including the weekly day of rest but excluding
gazetted holidays in the location where the Works is carried out.'
It is therefore, imp01tant that if the notice is given over a period where there
is a gazetted holiday, that the time of the notice is appropriately adjusted for
the gazetted holiday.
Clause 26.2: "...written notice delivered by hand or by registered
post... "
Under PAM 98, the written notice must be sent by registered post or recorded
delivery. There was no definition of what was meant by ' recorded delivery'
and the mode of delive1y of this important notice was disputed in the case of
Fajar Menyensing v Angsana mentioned earlier. Under PAM 2006, the written
notice must be delivered only by hand or by registered post.
Clause 26.2: "... specifying the default... "
If a default occurs, the Contractor should issue a warning notice specifying
t~e defaults. The Employer has 14 Days from the notice period to rectify
his default. Thereafter, the Contractor has 10 Days to g ive a further written
Clause 26.0 221
notice to forthwith determine his own employment under the Contract.
The parties are to take notice and be mindful of strict time limits. Note the
definition of ' Day' earlier mentioned.
Clause 26.2: "... such notice shall not be given unreasonably or
vexatiously. "
Please refer to the comments previously made on Clause 25 .2.
Clause 26.3 - Employer's insolvency
Tn the event of the Employer becoming insolvent or making a composition or
arrangement with his creditors, or have a winding up order made, or (except
for the purposes ofreconstruction or amalgamation) a resolution for voluntary
winding up, or having a liquidator or receiver or manager of his business
or undertaking duly appointed, or having possession taken by or on behalf
of the holders of any debentures secured by a floating charge, or of any
property comprised in or subject to the floating charge, the employment of the
Contractor shall be forthwith automatically determined.
Reference should be made to Clause 25.3 for the comments on insolvency.
Unless the Employer informs the Contractor ofhis insolvency, it is sensible that
the Contractor confams with the Employer (or with the receiver or liquidator)
the fact that such an event has taken place. If so confirmed, the employment of
the Contractor shall be deemed to be fo1thwith automatically determined, and
no notice or other formality is required. Nevertheless, so that the Employer
( or his receiver or liquidator) is aware of the determination, the Contractor is
well advised to notify the Employer (or his receiver or liquidator) in writing,
that the Contractor's employment has been determined in accordance with
this Clause.
Clause 26.4 - Rii:hts and duties of Contractor and Employer
In the event that the employment of the Contractor is determined under Clause
26.1 or 26.3, the follow ing shall be the respective rights and duties of the
Contractor and Employer:
26.4(a) the Contractor shall within fourteen (14) Days or within such
longer period as may be agreed in writing by the Architect, remove
from the Site all his temporary buildings, construction plant, tools,
materials and goods and shall give facilities for his Nominated Sub-
Contractors to do the same; and
 Clause 26.0 222
26.4(b) the Employer shall allow or pay to the Contractor the total value of
work properly executed and the value of materials and goods supplied
incl uding any loss and/or expense suffered by the Contractor caused
by such determination.
Clause 26.4(a) and (b) sets out the rights and duties of the Contractor and the
Employer upon determination of the Contractor's employment.
Clause 26.4(a): "the Contractor shall... remove from the Site all his
tempora,y buildings, construction plant... and shall give .facilities for his
Nominated Sub-Contractors to do the same"
Immediately after determination ofhis own employment, the Contractor should
arrange to demobilise and remove all his temporary buildings, construction
plant, tools, materials and goods from the Site, and also give facilities to his
Nominated Sub-Contractors to do so.
Although not expressly stated, the Contractor should a1nnge to return
possession of the Site to the Employer as soon as possible, so that he will
not be held responsible should there be any unforeseen happenings, such as a
fire breaking out or vandalism on the Site. In Kong Wah Housing v Desplan,
mentioned earlier, the court held that the contractor must vacate the site upon
determination, and ifhe proved that his determination was wrongful, he would
be entitled to damages.
Clause 26.4(b): "the Employer shall allow or pay to the Contractor
the total value ofwork properly executed and the value ofmaterials and goods
supplied including any loss and/or expense suffered by the Contractor caused
by such determination. "
As the determination by the Contractor is based on the Contract, the
Contractor's claim for work executed will be based on the Contract Bills·
anc:ftfieva ue of materials and goods will be based on the invoice value afte;
taking into consideration the level of pricing made by the Contractor for such
materials in the Contract Bills. In addition, the Contractor will be entitled to
any loss and/or expense suffered. Examples of the items of costs will include:
Claims consultancy fees;
Legal fee;
Managerial time expended in dealing with the determination;
Loss of profit.
Clause 26.0 223
Clause 26.5 - Records of Works
The Contractor shall within twenty eight (28) Days of the determination of his
own employment, give a written notice to the Architect and Quantity Surveyor
of the date of inspection on Site to jointly record the extent of the Works
executed and the materials and goods delivered to the Site. Upon completion
of the record by the Contractor, a copy shall be sent to the Employer, Architect
and Quantity Surveyor and such records shall fonn the basis for the evaluation
of the value of the works executed and materials and goods delivered to the
Site by the Contractor up to the date of determination.
This is a new provision for pmiies to jointly record the extent of the Works
executed and the materials and goods delivered to the Site, before a new
completion contractor is appointed. The action is initiated by the Contractor
who will give a notice to the Architect and Quantity Surveyor to attend on
Site, to jointly record the extent of the Works executed, and the materials and
goods delivered to the Site (unless such materials have been removed by the
Contractor). The record will usually include photographic records. It is to the
advantage of both pmiies to mutually agree on the extent of works carried out,
so that the costs can be worked out without any disagreement on the records.
On completion of the records, the Contractor shall send copies to the
Employer, Architect and Quantity Surveyor, and if there is any disagreement,
it is important that any challenges to the record of works be made as soon as
possible, by the Architect or Quantity Surveyor (on behalf of the Employer)
when it is still possible to verify any discrepancies, before too much work is
carried out by the Employer in completing the tenninated work.
The records shall fonn the basis for the evaluation of the cost of the works
executed by the Contractor up to the date of dete1mination.
Clause 26.6 - Settlement of accounts
The Contractor shall within six (6) Months after determination of his own
employment, submit to the Employer, Architect and Quantity Surveyor for
the Employer's agreement, a final account for the total value of work properly
executed, the value of materials and goods supp lied and loss and/or expense
suffered by the Contractor caused by such determination.
26.6(a) If nothing in the said final account is disputed by the Employer within
th ree (3) Months from the date of receipt of the final account from
the Contractor, the final account shall be conclusive and deemed
agreed by the parties. If the amount in the final account exceeds the

Clause 26.0 224
sums previously paid to the Contractor under the Contract (less any
Liquidated Damages and set-off which the Employer is expressly
entitled under the Contract), the balance shall be a debt payable to
the Contractor by the Employer within the Period of Honouring
Certificates. If the said amount is less than the said sum, the
difference shall be a debt payable to the Employer by the Contractor
or where applicable, the Employer may recover such difference from
the Performance Bond.
26.6(b) Tf the Employer disputes the final account, the Employer shall
give written notice to the Contractor setting out any disagreement
complete with particulars within three (3) Months of the date of
receipt of the final account from the Contractor. The Contractor
shall within three (3) Months from the date ofreceipt of the grounds
of dispute, either make such amendment to the final account as in
his opinion may be appropriate, or decide not to amend the final
account. In the event the Employer disagrees with the amended
final account or the decision not to amend the final account, the
Employer shall refer the dispute to arbitration under Clause 34.0
within three (3) Months from the date of receipt of the amended
final account or decision not to amend the final account. Failure to
refer the dispute to arbitration within the stipulated time, the final
account or amended final account shall deem to be conclusive and
agreed by the parties.
Clause 26.6: "The Contractor shall within six (6) Months after
determination ...submit to the Employe,; Architect and Quantity Surveyor
... a final account for the total value of work properly executed, the value
of materials and goods supplied and loss and/or expense suffered by the
Contracto,"·· ".
The final account shall be prepared by the Contractor and submitted to
he- Employer, Archirectarni7'.2Ua11tity" Surveyor wiinin o MonThs after
determination. The final account shall include the total value of work properly
executed, the value of materials and goods supplied, and loss and/or expense
claims.
Clause 26.6(a): ''If nothing in the said.final account is disputed. .. "
The final account will be checked by the Architect or Quantity Surveyor, and
the Employer will be duly advised. If, after such checking, the Employer has
any dispute on the final account submitted by the Conh·actor, they must raise
it to the Contractor w ithin 3 Months. Otherwise, according to this Clause, the
•
Cla11se 26.0 225
final account shall be conclusive and deemed agreed by the pait ies. Therea fter,
the balance due from either party will be established.
Clause 26. 6(b): "{f the Employer disputes the final account... "
Tf the Employer has any dispute on the final acco unt, the Employer will need
to set out the area of disagreement to the Contractor who w ill within 3 Months,
look into the disagreement and decide whether to amend, or not to amend the
final account, and will inform the Employer accordingly.
Tfthe Employer is dissatisfi ed with the revised fi nal account, or the un-amended
final account, he has 3 Months to refer any disagreement to arbitration. lt is
important to note that if the disagreement is not referred to arbitration by the
Employer within the stipulated time, it will be deemed conclusive and agreed
by the parties.
Tt must be emphasised here that although the Employer may request the
Architect or Quantity Surveyor to check the final account and highlight any
areas of disagreement to the Employer, it is the Employer (and not the Architect
or Quantity Surveyor) w ho has to highlight the areas of disagreement to the
Contractor. F urther, it is only the Employer (and not the Architect or Quantity
Surveyor) who can request or refer any dispute to arbitration.
Clause 26.7 - Contractor's rii:hts and remedies not prejudiced
The provisions of Clause 26.0 are without prejudice to any other rights and/or
remedies which the Contractor may possess .
The Contractor may determine his own employment by following sh·ictly to
the procedures laid down in this Clause. As an alternative, the Contractor may
also terminate the Contract under co1mnon law if the default and conduct of
the Employer so justifies it; for example, the Employer consistently breaching
the payment terms. The Contractor may have to rely on what is sometimes
referred to as common law termination, if for some reason he has defaulted on
the procedures laid down in the Contract.
 Clause 27.0 227

- - - - -- ......-c

Clause 27.0- Nominated Su

--- - - - - - - -

Malaysian contractors do not generally own all the resources to can-y out the
entire construction works. They also do not directly employ all the labour
resources for trades such as, inter alia, concrete work, carpentry, joine1-y, or
plasterwork within their organization and have to depend on sub-letting these
works out to independent labour sub-contractors. For this reason, PAM 2006
Clause 1. 7.3 has clarified that the term ' sub-contracting' does not include the
sub-letting of labour.

Malaysian contractors also do not generally own the resow-ces to carry out
such works as, inter alia, electrical, plumbing, fire fighting, lift or curtain
walling installations and have to reso1i to sub-contracting to can-y out these
works. Fu1iherrnore, some of these sub-contractors need to be registered with
the Appropriate Authority or Service Providers before they can be permitted
to can-y out such works and most contractors do not possess the technical
expe1iise to qualify or obtain these registrations.

The main types of sub-contracting are (i) Domestic Sub-Contracting and (ii)
Nominated Sub-Contracting.

(i) Domestic Sub-Contracting

In this scheme of arrangement, the Contractor is totally responsible for the

price and performance, as well as default or breach of contract by the sub-
contractor. Both the Contractor and sub-contractor have no recourse to the
Employer if the sub-contractor fails or is unable to perform. As domestic sub-
contracting is an arrangement between the Contractor and sub-contractors, the
parties will be responsible to agree all the te1ms and conditions and incorporate
them into a bespoke agreement, which may be based on the contractor's own
in house sub-contract or the ClDB model form of sub-contract. The Architects
and Consultants have no part in determining the price or the contractual terms.

The appointment of Domestic Sub-Contractors can fall into two main

categories: firstly, the choice of the sub-contractors is the sole prerogative
of the Contractor and no consent is required from the Architect before the
Contractor appoints the sub-contractor. If the contract requires for example,
that the plumbing works must be canied out by registered plumbers, the
contractor must ensure that the plumbing sub-contractor is so registered.
Secondly, the choice of sub-contractors may be confined or reshicted to a
list of named or designated sub-contractors which had been pre-approved
by the Architect and included as such in the Contract Bills. In such a case,
if the Contractor chooses one of the named or designated sub-contractors,
 Clause 27.0 228
he would have complied with the Contract. The Contractor remains totally
responsible for the price, performance and default or breach of contract by the
sub-contractor, and both the Contractor and sub-contractor have no recourse
to the Employer if the chosen sub-contractor fails to perform.
As domestic sub-contTacting is purely an issue to be resolved between the
Contractor and sub-contractor and does not involve the Architect or Employer,
it is not necessary to include any special conditions for Domestic Sub-
Contracting in PAM 2006.
(ii) Nominated Sub-Contracting
The Nominated Sub-Contracting aITangement can best be described by
quoting from the case of Bickerton v N. W Metropolitan Regional Ho::,pital
Board [1970} l All ER 1039, which is a case based on the JCT 63 Form. (The
clauses in PAM 98 and PAM/ISM69 are identical to the JCT 63 Form except
for PAM 98 Clause 27.7 referred to below):
'The scheme for nominated sub-contractors is an ingenious method of
achieving two objects which at first sight might seem incompatible.
The employer wants to choose who is to do the prime cost work and
to settle the terms on which it is to be done, and at the same time to
avoid the hazards and difficulties which might arise if they entered
into a contract with the person they have chosen to do the work. The
scheme creates a chain ofresponsibility. Subject to very limited rights
to object, the principal contractor is bound to enter into a contract
with the employer 's nominee, but it has no concern with the te1ms
of that contract, for those terms are settled by the employer and his
nominee. '
In the Bickerton case, the nominated sub-contractor for heating work went into
voluntary liquidation after catTying out very little work on site. The liquidator
for the nominated sub-contractor refused to perform the sub-contract works
and the architect also refused to re-nominate another sub-contractor to continue
with the work. Subsequently the contractor, having a heating division capable
of can-ying out the work, completed the work without prejudice to its legal
rights. The question before the court was whether the architect (as agent of
the employer) was required to re-nominate another sub-contractor to continue
with the sub-contract work. The position was very well explained by Lord
Reid when he said:
'But I see no great difficulty in holding that the contract requires a
second nomination if the original nominated sub-contractor drops out.
Clause 27.0 229
Tt is said that there is no express provision for this. But then neither
is there any express provision for the first nomination. Indeed, the
absence of any such provision has led to a view, which has attracted
considerable support, that the employers have no duty to make any
nomination but only a right or option to do so. But that cannot be
right. The contract provides that the prime cost work shall be done,
and it may be that the contractor cam10t do that or at least cannot finish
its own work until it is done. The prime cost work is not even defined
until the nominated sub-contractor is brought in. No one suggests that
the principal contractor has any concern with prime cost work until
it is required to make a contract with a nominated sub-contractor. It
would be a clear breach of contract by the employer if their failure to
nominate a sub-contractor impeded the contractor in the execution of
its own work.
Once it is accepted that the principal contractor has no right or duty to
do the work itself when the nominated sub-contractor drops out any
more than it had before the sub-contractor was nominated, then equally
it must be the duty of the employers to make a new nomination when
a nominated sub-contractor does drop out. For otherwise the contract
work cannot be completed. Moreover, condition 27 requires payment
for prime cost work shall be expended in favour of nominated sub-
contractors. So if the first drops out, no payment for the prime cost
work still to be done can be made under the contract unless that work
is done by a second nominated sub-contractor.'
The concept of ' Domestic Sub-Contracts' and 'Nominated Sub-Contracts'
described above has been changed under PAM 98.
Nominated Sub-Contracting under PAM 98
PAM 98 Clause 27. 7 is a new provision that provides that: 'The Contractor shall
be fully responsible for all Nominated Sub-Contractors .... and for any default
or breach of contract on their part and the Employer shall in no circumstances
be liable to the Contractor.' The impact of this provi sion might have been
missed out by some practitioners using the PAM 98 as the provisions in PAM
98 Clause 27 is almost similar to the provisions of PAM/ISM 69 Clause 27
except for the provision in PAM 98 Clause 27.7 stating that the Contractor is
fully responsible for the default or breach of contract by the sub-contractor.
As a result of this provision, the Contractor's responsibility for the sub-
contractor is equivalent to his responsibilities for a Domestic Sub-Contractor
but retaining the nomination provisions. The scheme of arrangement under
PAM 98 can briefly be summarised as follows:
 Clause 27.0 230
(i) The Employer has the right to nominate any sub-contractor and the
Contractor must accept the Employer's nomination subject only to
limited rights of objections.
(ii) The Employer, often without the pa1ticipation of the Contractor, is
responsible for settling the price and all terms and conditions directly
with the sub-contractor;
(iii) The Contractor and sub-contractor must enter into a sub-contract
based on the PAM 98 NSC, and not based on the Contractor's own
bespoke agreement.
(iv) Once the Conh·actor accepts the nomination of the sub-contractor, the
Contractor shall be fully responsible to the Employer to ensure that
the sub-contractor performs his obligations, and the Conh·actor is also
responsible for any default or breach of contract by the Nominated
Sub-Contractor. (PAM 98 Clause 27.7).
(v) Although there is no express provision that the Contractor is to be
responsible to complete the sub-contract works if there is a default or
breach of contract by the Nominated Sub-Contractor, it is probable
that if the Contractor is to be fully responsible for the defaults or
breach of contract by the Nominated Sub-Contractor, the Contractor
will have to carry out and complete the sub-contract works even if the
Architect/Employer does not re-nominate another sub-contractor. It is
also probable that the Contractor will not be entitled to extra cost and
time to complete the defaulting Nominated Sub-Contractor's work as
there are no express provisions in this regard.
As a result of clause 27.7, the Nominated Sub-Contractor under PAM 98 is
essentially a Domestic Sub-Contractor. Despite this, PAM 98 and PAM 98
NSC have retained from PAM/ ISM 69 and PAM/ISM 69 NSC the following
features associated with nomination:
(i) The Contractor has no discretion, but must pay the Nominated Sub-
Contractor the amount certified by the Architect. (PAM 98 Clause
27.3).
(ii) The Conh·actor must make payments to the Nominated Sub-
Contractor within 14 days of the receipt of any payment certificate
from the Architect. The payment to the Nominated Sub-Contractor
is not dependable upon the Contractor receiving payments from the
Employer. (PAM 98 NSC Clause 11.3).
Clause 27.0 231
(iii) If the Contractor fails to pay the Nominated Sub-Contractor the
amount certified by the Architect, the Employer reserves the right to
pay such amount to the Nominated Sub-Contractor and deduct the
same from the Contractor's payment. (PAM 98 Clause 27.4).
(iv) If the Nominated Sub-Contractor requests for any extension of time,
the Contractor must provide the information for the Architect's
consideration. The Contractor shall not grant any extension of time
to any Nominated Sub-Contractor without the written approval of the
Architect. (PAM 98 - Clause 27.5).
(v) If the Nominated Sub-Contractor has any claim for loss and/
or expense, the Contractor shall submit all infom1ation for the
Architect's assessment. All such loss and/or expense assessed by the
Architect shall be added to the sub-contract sum. This may mean that
the Employer will also be paying for the loss and/or expense caused
by the Contractor's acts or omission. (PAM 98 NSC - Clause 8.2, 9.3
and 9.4).
(i) lf the Nominated Sub-Contractor has achieved Practical Completion,
the Architect is responsible to issue a Certificate of Practical
Completion. The issue of the certificate by the Architect marks the
end of the Sub-Contractor's liability to the Contractor for loss or
damages for delay. (PAM 98 NSC - Clausel 0. I).
(vii) If the Nominated Sub-Contractor causes delay to the Contractor, the
Architect has to issue a Certificate of Non Completion of the sub-
contract works before the Contractor is entitled to deduct any loss
or damage for delay by Nominated Sub-Contractor. (PAM 98 NSC
- Clause 7.2)
(viii) The Architect has the discretion to make final paymentto the Nominated
Sub-Contractor before final payment is due to the Contractor. (PAM
98 - Clause 27.6)
(ix) The Architect can discharge the Nominated Sub-Contractor from all
liabilities except for latent defects when he issues the final payment to
the Nominated Sub-Contractor. (PAM 98 - Clause 27.6). Note that the
Contractor will remain responsible to the Employer if any Nominated
Sub-Contractor's work is later found not to be in accordance with the
Contract. (PAM 98 Clause 30.8).
- -- - . -- - '
 Clause 27.0 232
As can be seen from the above, the approach to sub-contracting in PAM
98 is neither Domestic Sub-Contracting nor Nomi nated Sub-Contracting.
Under PAM 98 Clause 27.7 the Contractor shall be fully responsible for
his Nominated Sub-Contractors including any default or breach of contract
by the Nom inated Sub-Contractor. This means that in the event of a default
by the Nominated Sub-Contractor, the Employer has no obligation to re-
nominate. By retaining all the clauses from PAM/ ISM 69 in PAM 98 Clause
27, the principle findings from the Bickerton case may still be valid i.e. the
employer bas an obligation to re-nominate another sub-contractor if the first
sub-contractor defau lts, as the contractor bas no right or duty to carry out
the sub-contract works. There is therefore a possibi lity that there may be
an ambiguity within PAM 98 C lause 27. If there is such an ambiguity, the
court may apply the contra pro.ferentum rule, and construe the ambiguous
terms against the Employer, thereby obligating the Architect to re-nominate
a replacement sub-contractor.
PAM 2006 has reconsidered the approach adopted in PAM 98 and has reverted
to the approach previously adopted in PAM/ISM 69 by expressly providing
for re-nomination of a sub-contractor under different circumstances in Clause
27 .11 and 27. 12. That said, if a employer wishes to avoid the problems of
re-nomination of sub-contractors, he could always adopt the Domestic Sub-
Contracting procurement system whe re all sub-contractors are the Contractor's
responsibility. There are advantages and disadvantages to both Domestic Sub-
Contracting and Nominated Sub-Contracting and constructional professionals
should be able to offer the proper advice to their Employer to suit the pa1ticular
needs of each project.
Clause 27.l - P.C. Sums and Provisional Sums - Nominated Sub-
Contractors
T he fol lowing provis ions shall apply whe re P.C. Sums are included in the
Eon-tract Bill s or arise as a iesalt of ar1 Al g iven i~ atd LO the expenditure
of Provisional Sums in respect of a Person to be nominated by the Architect
to supply and fix materials and goods or to execute works. Such sums
shall be expended in favo ur of such Person as the Architect shall instruct
and such Person who is nominated by the Architect is hereby referred to a~
"Nominated Sub-Contractor" employed by the Contractor. lf the Nominated
Sub-Contractor proposes any alternative design to the sub-contract draw ings
or if the sub-contract leaves any matter of design, specification or choice of
mate rials, goods and workmanship to the N ominated Su b-Contrnctor, the
Nominated Sub-Contractor and not the Contractor shall be responsible to
ensure that such sub-contract works are fit for its purpose.
Clause 27.0 233
Clause 27.J " JVhere P C. Sums are included in the Contract Bills
or arise as a result of an Al g iven in regard to the expenditure of Provisional
Sums ... "
P.C. Sum is defined in PAM 2006 Article 7(as) to mean: ' the sums provided in
the contract for works or services to be executed by Nominated Sub-Contractor
.... ' As such, the item of work must be clearly identified in the Contract Bill.
A Nominated Sub-Contractor can only be appointed if there is a P.C. Sum
or a Provisional Sum included in the Contract Bills. If a P.C. Sum has been
allowed in the Contract Bill, the Architect must nominated a sub-contractor to
carry o ut the works as the Contractor has neither the right nor the obligation
to carry out such work. This principle was established in the Bickerton case
explained earlier. lf the Architect does not want to appoint any Nominated
Sub-Contractor, he must enquire whether the Contractor is prepared to accept
the work as a Variation, bearing in mind that the Contractor is not obligated
to carry out such work. However, if the item of work is covered under a
Provisional Sum, the Contractor cannot refuse to carry out the work if so
instructed by the Architect. lf the Contractor participate in the tender for
works where there is a P.C. Sum, the Contractor if successful will execute
such work as a Variation in accordance with Clause 27. 14.
Clause 2 7.1: "If the Nominated Sub-Contractor proposes any
alternative design lo the sub-contract drawings or if the sub-contract
leaves any matter of design, specification or choice of materials, goods and
1vorkmanship to the Nominated Sub-Contrac/01: .. "
The PAM 2006 and the PAM 2006 NSC Fonns are both drafted as construction
only contracts (not design and build contracts), so the liability of the Contractor
and Nominated Sub-Contractor are to carry out the work with 'skill and care. '
If the Nominated Sub-Contractor undertakes any design function in any way
(whether as an alternative to the Consultant's design or if the sub-contract
leaves any matter of design to the Nominated Sub-Contractor), the Nominated
Sub-Contractor w ill be under an obligation to cany out the work which w ill
be ' fit for its purpose. ' lf, as in Independent Broadcasting Authority v EMI
Electronic and 8/CC Construction 14 BLR 1, the Contractor accepts the
nomination of a Sub-Contractor who has agreed to carry out certain design and
build responsibilities, it was held that, in the event of failure of the Nominated
Sub-Contractor 's design, the ' fit for purpose' liability of the Nominated Sub-
Contractor will be passed on to the Contractor. As the Employer only has
a Contract with the Contractor, he will sue the Contractor to recover any
damages, and the Conh·actor will in turn join the Nominated Sub-Contractor

Clause 27.0 234
in any legal proceedings. However, if the Nominated Sub-Contractor is
insolvent, the Contractor will find himself liable to the Employer without the
opportunity to recover the damages from the Nominated Sub-Contractor.
If the Contractor is not to carry this liability, there needs to be a clause in
the Contract to exempt the Contractor from such a liability, otherwise, the
Contractor can always refuse to accept the nomination, because there is
no reason why the Contractor should accept the onerous liability without
the opportunity to price for the risk. The notional percentage of profit and
attendance allowed for in the Contract Sum was priced based on the Prime
Cost Sum provided in the tender document and at that time, the Contractor
will have no knowledge of the identity of the sub-contractor, his track records,
financial standing and whether the price offered by the sub-contractor was a
reasonable price to ensure that the sub-contractor will not suffer any insolvency
problems which will increase the Contractor's liability to the Employer.
Clause 27.1: "...the Nominated Sub-Contractor and not the
Contractor shall be responsible to ensure that such sub-contract 11•orks are fit
for its plllpose... "
The above is a provision to exempt the Contractor from the ' fit for purpose'
liability in the event there is a design failure in the Nominated Sub-
Contractor's Work. If it is desirable to strike out this Clause and make the
Contractor responsible for the 'fit for purpose' liability of the Nominated Sub-
Contractor's work, then the Contractor must be given an opportunity to price
in the additional risk imposed. However, the Employer should be aware that
if the Contractor is insolvent, he wil I not be able to hold the Nominated Sub-
Contractor responsible because there is no privity of contract between the
Employer and Nominated Sub-Contractor.
An alternative way to secure the Nominated Sub-Contractor's liability is for
the Employer and the Nominated Sub.=.C.o.ntractar to ente.Li.nto a_CoUateraL
Agreement providing amongst other terms, that the Employer can have direct
recourse against the Nominated Sub-Contractor for 'fit for purpose' liabilities
insofar as any design is carried out by the Nominated Sub-Contractor. A
sample of the Collateral Agreement can be found in Annexure ' C'.
Clause 27.2 - Nomin ation of sub-contractor
The Architect shall not nomi nate any Person as Nominated Sub-Contractor
aga inst whom the Contractor makes reasonable objection in accordance with
Clause 27.3. T he Contractor shall make such reasonable objection in writing
not later than fo urteen ( 14) Days from receipt of the nomination instruction
Clause 27.0 235
fro m the Architect. The Archi tect shall not nominate (except where the
Architect and Contractor otherwise agree) any Person who w ill not enter into
a contract with the Contractor based upon the terms and conditions of the
PAM Sub-Contract 2006 which provides inter a lia:
27.2(a) that the Nomi nated Sub-Contractor carry out and complete the sub-
contract works in eve1y respect to the reasonable satisfaction of
the Contractor and Architect and in conformity with all reasonable
directions and requirements of the Contracto r;
27.2(b) that the Nominated Sub-Contractor observe, perfo1111 and comply
w ith aU the provisions of the Contract which the Contractor is
obliged to perform and comply with so fa r as they relate and apply
to the sub-contract works;
27.2(c) that the Nominated Sub-Contractor indemnify the Contractor against
the same liabilities in respect of the sub-contract wo rks as those for
which the Contractor is liable to indemnify the Employer under the
Contract;
27.2(d) that the Nominated Sub-Contractor indemni fy the Contractor
against claims in respect of any negligence, omission or default of
his sub-contractors, his serv ants or agents or any misuse by him
or them of any construction plant, access, scaffolding, temporaty
works, appliances or other property belonging to or provided by the
Contractor;
27.2(e) that the sub-contract works be completed w ithin the period or
periods specified and the Contractor shall not without the written
recomm endation of the Architect grant any extension of time for the
completion of the sub-contract works caused by any of the Relevant
Event stated in C lause 2 1.4 of the PAM Sub-Contract 2006. Where
the delays are caused by any negligence, omission, defau lt and/
or breach of the sub-contract by the Contractor, the Contractor is
solely responsible under Clause 2 1.6 of the PAM Sub-Contract 2006
to assess and grant an extension of time to the N ominated Sub-
Contractor;
27.2(1) that when the Contractor and Nominated Sub-Contractor consider
that the sub-contract works have been practically completed, they
shall request the Architect to issue a ce11ificate to the effect, and
if the Architect is of the opinion that the sub-contract works have
been completed in accordance with the provisions of C lause 17.1
 Clause 27.0 236
of the PAM Sub-Contract 2006, the Architect shall forthwith issue a
certificate to the effect;
27.2(g) that if the Nominated Sub-Contractor fails to complete the sub-
contract works within the sub-conh·act completion date or within
any extended time granted by the Contractor, and the Contractor
after having given a written notification to the Nominated Sub-
Contractor that the sub-contract works ought reasonably so to have
been completed, the Nominated Sub-Contractor shall pay or al low
to the Contractor loss and/or expense suffered by the Contractor or
an agreed Liquidated Damages;
27.2(h) that payment to Nominated Sub-Contractor shall be made withi n
seven (7) Days after the Period of Honouring Certificates and shall
be subject to the retention and deductions expressly provided under
the PAM Sub-Contract 2006; and
27 .2(i) that the Architect, Consultants and their authorised representatives
shall have the right of access to the workshops and other p laces of
the Nominated Sub-Contractor in accordance with the provisions of
Clause I l .2 of the PAM Sub-Contract 2006.
Clause 27.2: "...against whom the Contractor makes a reasonable
objection... "
If the Contractor has any objection to the appointment of a Nominated
Sub-Contractor under Clause 27.3, he must, within 14 Days from receipt
of the nomination instruction from the Architect, notify the Architect of his
objection. Provided the reasons of the Contractor's objection are valid, the
Architect will still have time to consider other Nominated Sub-Contractors
before informing them that their tenders were unsuccessful. '
CTause 21.2: '·Jhe Architect shall not nominate (except where the
Architect and Contractor othenvise agree) any Person who will not enter into
a contract with the Contractor based upon the terms and conditions of the
PAM Sub-Contract 2006... "
The Nominated Sub-Contractor is required to enter into a sub-contract with
the Contractor based on the terms and conditions of PAM 2006 NSC which has
incorporated, inter alia, Clause 27 .2(a) to (i). The Architect shall not nominate
any Sub-Contractor whose tender contains te1ms and conditions which are at
odd with the Main Contract.
Clause 27.0 237
Clause 27.3 - Objection to nomination of sub-contractor
Subject to C lause 27.4, the Contractor shall not be required to enter into
a sub-contract with any Nominated Sub-Contractor against whom the
Contractor has made a reasonable objection based on available known
facts and documented evidence that the financial standing or solvency or
technical competence of the Nominated Sub-Contractor is such that a
prudent contractor, having regard to the scope of sub-contract works would
be justified in rejecting tbe nomination .
PAM 98 Clause 27 .3 states that: 'The Architect shall not nominate any person
or company as a Nominated Sub-Contractor against whom the Contractor
makes reasonable objection ..... ', without defining what is meant by
reasonable objection. In the Bickerton case, which is a case based on the same
provision in PAM 98, the judge said that the contractor could object to the
person nominated as the sub-contractor but not on the sub-contractor's price
and specification, these being matters which were within the Architect's and
Employer's discretion. The conceivable grounds of objection would therefore
be restricted to the technical competency and the financial standing of the
prospective sub-contractor. PAM 2006 has therefore expressly incorporated
these provisions.
Clause 27.4 - Action following objection of Nominated Sub-Contractor
Where the Architect is of the opinion lhat the Contractor has made a reasonable
objection, the Architect may either issue further written instructions to remove
the objection so that the Contractor can enter into the sub-contract, or cancel
such nomination instruction and issue an instruction omitting the work which
was the subject of the nomination instruction or re-nominate another sub-
contractor for the sub-con tract works.
Upon receipt of an objection to a nomination by the Contractor, the Architect
has several courses of action.
Where the objection is over a minor issue such as any special a1nngement
for on-site storage and protection specialist components or equipment, the
Architect may issue further instructions to remove the objection. ln such
instances, the Architect has to ensure that any additional liabilities arising are
dealt with so that the Employer does not acquire additional risks. There may
also be instances where the Contractor's liability to the Employer is accordingly
reduced when the Architect decides to nominate the sub-contractor over his
objections.

Clause 27.0 238
If the objection is insurmountable, the Architect will have to issue a new
instruction to cancel the nomination and re-nominate another Nominated Sub-
Contractor to the Contractor.
Clause 27.5 - Payment by Contractor to Nominated Sub-Contractors
The Architect shall direct the Contractor as to the total value of work properly
executed and include the percentage of the value of the materials and goods
stated in the Appendix in the calculation of the amount stated to be due in
any certificate issued under Clause 30.0, and shall at the same time when the
certificate is issued, infom1 the Nominated Sub-Contractor in writing of the
amount of the said total value. The sum representing such total value (less any
retention and deductions expressly provided under PAM Sub-Contract 2006)
shall be paid by the Contractor to the Nominated Sub-Contractor within seven
(7) Days after the Period of Honouring Certificates.
The Contractor is required under PAM 2006 Clause 30. l to submit payment
applications complete with details and particulars, as required by the Architect
and Quantity Surveyor for them to prepare a valuation. The application shall
also include the payment application details relating to the Nominated Sub-
Contractor's claim. When the Architect issues the payment certificate, he shall
at the same time, notify the Nominated Sub-Contractor of the amount of his
payment. A sample for the notification of payment to the Nominated Sub-
Contractor can be found in Annexure 'A'. The Contractor has to discharge his
payment obligation to the Nominated Sub-Contractor 7 Days after the Period
of Honouring Certificate stated in the Appendix. There is provision in PAM
2006 Clause 27.2(h) that the payment to the Nominated Sub-Contractor will
be subject to normal rules of retention stated in the PAM 2006 NSC Clause
26. The Contractor is also entitled to set-off any items that are valid as long
as he has complied with the set-off procedures set out in the PAM 2006 NSC.
Clause 27.6 - Failure of Contractor to pay Nominated Sub-Contractors
The Architect may at any time before the issuance of any Interim and
Penultimate Certificate, request the Contractor to furnish to him reasonable
proof that all amounts stated as due and included in the previous certificates
have been discharged. The Contractor shall provide such proof within fourteen
(14) Days of the Architect's request. lf the Contractor has any reasons for
withholding any Nominated Sub-Contractor's payments under Clauses 16. 1
and 26.13 of the PAM Sub-Contract 2006, he sha ll provide the Architect written
details of his compliance. Tfthe Contractor fails to comply with the Architect's
request within fourteen (14) Days, the Architect may (but not obliged to) issue
a certificate stating the amount in respect of which the Contractor has fai led
•
Clause 27.0 239
to provide such proof. Where the Architect has so ce1tified, the Employer
may (but not obliged to) pay such amounts directly to the Nominated Sub-
Contractor and deduct the same from any sums due or to become due to the
Contractor. The Architect may issue the aforesaid ce1tificate irrespective of
whether or not an Interim Certificate under Clause 30.0 is due for issuance.
This Clause makes it obligatmy for the Contractor to furnish proof that he
has paid all the amounts due in the previous certificates to the Nominated
Sub-Contractors, before the issuance of any further Interim and Penultimate
Cettificate. The Contractor is obliged to submit such proof within 14 Days
from the Architect's request. If the Contractor has any reason to withhold any
of the Nominated Sub-Contractor's payment under Clauses 16.1 and 26.13 of
the PAM Sub-Contract, the Contractor is also required to provide the Architect
with the details.
lf a Nominated Sub-Contractor, after having received the Architect's
notification of the amount to be paid to him by the Contractor, repo1ts to
the Architect that the Contractor has not made such payment, the Architect
may request the Contractor to provide proof of payment to such Nominated
Sub-Contractor. If within 14 Days, the Contractor fails to provide reasonable
and valid justification why payment was w ithheld, the Architect may issue a
certificate, stating the amount and the name of the Nominated Sub-Contractor
that the Contractor has failed to make payment to. A sample of the ce1tificate
is included in Annexure 'A'. This certificate can be issued by the Architect at
any time, irrespective of whether or not an Interim Certificate under Clause
30.0 is due for issuance. The Employer may then pay such amount to the
Nominated Sub-Contractor directly, and deduct the same from any sums due
or to become due to the Contractor.
It is clear that the provisions in PAM 2006 Clause 27.6 that: ' The Employer
may (but not obliged to) pay such amounts directly to the Nominated Sub-
contractors ' means that the Employer has no contractual obligation under
the Contract to make any direct payment to Nominated Sub-Contractors. The
Employer 's liability is fi.uther reinforced by Clause 27. IO that there is no
privity of contract between the Employer and any Nominated Sub-Conh·actor.
Similarly, there is no provision in PAM 2006 NSC, to provide the basis for
a contract between the Contractor and the Nominated Sub-Contractor which
can bind the Employer legally to make payment direct to Nominated Sub-
Contractors in the event the Contractor defaults.
Nominated Sub-Conh·actors often rely on the Employer to make payments
direct to them if the Contractor fails to honour his payment obligations.
Unless the Employer has expressly undertaken to make direct payment to any
- ----------
 Clause 27.0 240
Nominated Sub-Contractors, it is to be noted that the provisions in PAM 2006
and PAM 2006 NSC does not oblige the Employer to pay tbe Nominated
Sub-Contractors directly in the event the Contractor defaults. Unless there
is a contractual understanding between the Employer and Nominated Sub-
con tractors, the Nominated Sub-Contractor will have to depend on the
goodwill of the Employer to help him out if the Contractor makes default in
any payment to the Nominated Sub-Contractors.
Clau se 27. 7 - Final payment to Nominated Sub-Contractors
If the Architect wishes to make final payment to any Nominated Sub-
Contractor before final payment is due to the Contractor, and if the N ominated
Sub-Contractor has indemnified the Contractor aga inst all of his liabilities
under the Nominated Sub-Contract, the Architect shall issue a certificate to the
Contractor and the Contractor shall pay to such Nominated Sub-Contractor
the amount so certified less any retention and deductions expressly provided
under PAM Sub-Contract 2006. Upon such final payment, the amount stated
in the Appendix as Limit o f Retention Fund shall be reduced by the sum of the
retention released to the N omina ted Sub-Contractor.
Clause 27. 7: ".. . ff the Architect wishes to make .final payment to
any Nominated Sub-Contractor before.final payment is due to the Contracto,;
and if the Nominated Sub-Contractor has indemn[fied the Contractor against
all ofhis liabilities under the Nominated Sub-Contract... "
This Clause empowers the Architect with the discretion to make final payment
to any Nominated Sub-Contractor, before the fina l payment is due to the
Contractor. This is usually applicable to works by Nominated Sub-Contracts
that are completed well in advance of the Works by the Contractor. Example
will include, inter alia, earthwork and piling works.
Under PAM 98 NSC Clause 11.10, it was provided that: ' Such final payment
__ _sha LLonly- he-rnade-if---the-Sub-GentraGt-or inElemnifies- .. ... the Contractor
against all latent defects in the Sub-Contract Works and ifby such final payment
the Contractor will be discharged under the Main Contract from all liabilities
in respect of the Sub-Contract Works except for any latent defects.' This would
mean that after the Nominated Sub-Contractor has received his final payment,
the Contractor and the Nominated Sub-Contractor would be discharged from
all liabilities, except for latent defects in the Sub-Contract Works. The reduced
liability is not consistent with PAM 98 Clause 30.8: ' .... No ce1tificate of
the Architect shall of itself be conclusive evidence that any work, materials
or goods to which it relates are in accordance with the Contract', which is
implicit that the Contractor (which includes the Nominated Sub-Contractor)
Clause 27.0 241
-
continues to be liable if it was later found, after final payment had been made
to the Nominated Sub-Contractor, that the Nominated Sub-Contractor had
executed work, materials or goods not in accordance with the Sub-Contract.
To tie in with the Contractor's liability to the Employer, the Nominated Sub-
Contractor 's liability under the PAM 2006 NSC Clause 26.9, now provides
that: • If...the Architect w ishes to certify the final payment to the Sub-
Contractor before the issuance of the Final Certificate to the Contractor... ,
the Sub-Contractor shall provide an indemnity acceptable to the Contractor
against all of his liabilities under the Sub-Contract. .... ' The provision of this
Clause w ill ensure that the Nominated Sub-Contractor will still be responsible
to the Conh·actor, not only for latent defects, but all of his liabilities under the
Sub-Contract.
Clause 27. 7: " ...the Architect shall issue a certificate to the
Contractor and the Contractor shall pay to such Nominated Sub-Contractor
the amount so certified less any retention and deductions expressly provided
under PAM Suh-Contract 2006. ... "
Tf theArchitect issues a certificate to release the final payment to the Nominated
Sub-Contractor, the Conh·actor shall pay such sum to the Nominated Sub-
c ontractor. The Contractor can further set-off any sum that is provided
expressly in the Sub-Contract. The Defects Liability Period for the Contractor
and the Nominated Sub-Contractor is the same period. Tfthe Architect released
the Nominated Sub-Contractor 's retention before the expiration of the Defects
Liability Period, then the Contractor 's Retention Fund should be appropriately
adjusted for such amount released to the Nominated Sub-Contractor.
Clause 27.8 - Determination of the Nominated Sub-Contractor's
employment
The Contractor shall not determine the employment of any Nominated Sub-
Contractor without the written consent of the Architect. lf the Contractor
intends to determine the employment of the Nominated Sub-Contractor, the
Contractor shall send to the Architect a written report stati ng the Nominated
Sub-Contractor's default w ith a copy to the N ominated Sub-Contractor. The
Architect may request that the Nominated Sub-Contractor respond to the
Contractor 's repo1t before he decides whether or not to give his written consent.
This Clause was not in PAM 98. In the absence of this Clause, it means that the
Contractor can determine the employment of the Nominated Sub-Contractor,
without any reference to the Architect. Perhaps this is consistent with the
approach in PAM 98 Clause 27.7 that, once the Nominated Sub-Contractor

Clause 27.0 242
is appointed, the Contractor is totally responsible for any default or breach
of contract by the Nominated Sub-Contractor, and the Employer shall in no
circumstances be liable to the Contractor. This w ill be fu1ther discussed below.
Clause 27.8: "The Contmctor shall not determine the employment
of any Nominated Sub-Contractor ll'ithout the 11'/"itten consent of the
Architect. . "
There was no provision in PAM 98 that the Contractor requires the consent
or approval of the Architect before he determines the employment of any
Nominated Sub-Contractor. This lacuna in PAM 98 needs to be addressed, as
determination of the employment of any Nominated Sub-Contractor is a drastic
and serious matter and will affect the Contractor's overall obligation to proceed
with the Works To prevent abuse by the Contractor, PAM 2006 now requires
the Contractor to secure the consent of the Architect before he is allowed to
dete1mine the employment of any Nominated Sub-Contractor. ln the event
the Contractor wishes to detennine the employment of any Nominated Sub-
contractor, he must first repmt to the Architect the defaults of the Nominated
Sub-Contractor, and gives the Architect an opportunity to obtain the Nominated
Sub-Contractor's views and responses to the Contractor's allegation. This way,
the Architect is able to consider all the facts presented from both sides, before
he decides whether or not to give his written consent.
Clause 27.9 - Contractor's responsibility for Nominated Sub-Contractors
The Contractor shall be ful ly responsible to ensure that a ll Nominated Sub-
Contractors carry out the sub-contract works in accordance with the Nominated
Sub-Contract and in compliance therewith provide designs (if any), materials,
goods and standards o f wo rkmanshi p of the quality and standard specified
therein to the reasonable satisfaction or the Architect.
The Contractor's obligation under PAM 2006 Clause 1.1 is to ' ... carry out
and complete the Works in accordance with the Contract Documents and in
compliance therewith provide materials, goods and standards of worlananship
of the quality and standard described in the Contract Documents and/or
required by the Architect in accordance with the provisions of the Contract.'
This is consistent with Clause 27.9 that in canying out the Works, the
Contractor also ensures that all Nominated Sub-Conh·actors carry out the sub-
contract works in accordance with the Nominated Sub-Conh·act Documents,
and complying with any Sub-Contractor's designs (if any), as well as using
materials, goods and standards of workmanship of the quality and standard
specified in the Sub-Contract Documents.
C
Clause 27.0 243
for thi s, the Contractor prices in an allowance for profit and attendance based
on the amount of Prime Cost Sum included in the Contract Bills. At the stage
of committing the Contract Sum, the Contractor does not know who any of
the Nominated Sub-Contractors w ill be, or their level of pricing, or technical
competency.
Yet, in PAM 98, it is provided in Clause 27.7 that: ' The Contractor shall be
folly responsible to all NSC or Suppliers and for any default or breach of
contract on theiJ· part and the Employer shall in no circumstances be liable to
the Contractor. Neither the existence nor the exercise of the foregoing powers
nor anything contained in these Conditions shall render the Employer in any
way liable to any Nominated Sub-Contractor.'
The provision of PAM/ISM 69 Clause 27(f) was different. lt states only:
'Neither the existence nor the exercise of the foregoing powers nor anything
else contained in these Conditions shall render the Employer in any way liable
to any Nominated Sub-Contractor. '
lt is obvious that the additional sentence in PAM 98 Clause 27.7: 'The
Contractor shall be fully responsible to all NSC or Suppliers and for any default
or breach of conh·act on their part and the Employer shall in no circumstances
be liable to the Contractor.' is intended to allocate the risk to the Contractor,
and that he shall be totally responsible for any N ominated Sub-Contractor's
default or breach of contract. One example of this is the Contractor assuming
responsibility for the Nominated Sub-Contractor 's insolvency. If that happens,
the Employer need not re-nominate another Sub-Contractor.
Clause 2 7.9: 'The Contractor shall befi1lly responsible to ensure
that all Nominated Sub-Contractors cany out the sub-contract works in
accordance ll'ith the Nominated Sub-Contract... "
The provisions in PAM 2006 now expressly provide that the Conh·actor 's
obl igation is to ensure that the Nominated Sub-Contractors carry out the sub-
contract works in accordance with the Nominated Sub-Contract.
If the Nominated Sub-Contractor fa ils to perfonn his obligation, then the
provision of Clauses 2 7. l l or 27. 12 will apply.
Clause 27.10 - Employer no privity of Contract with Nominated Sub-
Contractors
Neither the existence of or the ~xercise of the foregoing provisions nor anything
else contained in the Contract shall create a pri vily of contract between the
Employer and any of the Nominated Sub-Contractors.
 Clause 27.0 244
- Clause 27.0
This is an expressed provision to clearly state that there is no privity of contract
between the Employer and the Nominated Sub-Contractors. This means
that the Employer and the Nominated Sub-Contractor have no respective
contractual rights, legal rights and liabilities against each other. Any claim
that the Employer has against the Nominated Sub-Conh·actor, or any claim
that the Nominated Sub-Contractor has against the Employer must go through
the Contractor.
However, collateral agreement can be entered into between the Employer
and Nominated Sub-Contractor to create a specific contractual relationship
between the Employer and a Nominated Sub-Contractor, in the event the
Employer desires to preserve the rights to go after the Nominated Sub-
Contractor directly on design, material and workmanship executed by the
Nominated Sub-Contractor. For a sample of the Collateral Agreement, see
Annexure ' C ' .
Clause 27. 11 - Re-nomination of sub-contractor due to determination by
the Contractor
lf the employment of a Nominated Sub-Contractor is determined by the
Contractor with the written consent of the Architect, the Architect shall re-
nominate another Nominated Sub-Contractor. l n the event, the Contractor
shall be entitled to be paid such d ifference (if any) between the sum payable to
the Contractor and the new Nominated Sub-Contractor and the sum payable to
the previous Nominated Sub-Contractor after taking into consideration of any
sum that will be recoverable from the defaulting Nominated Sub-Contractor
under Clause 27.13. An extension of time under Clause 23.S(i) may be granted
to the Contractor but the Contractor shall not be entitled to any damages, loss
and/or expense.
IftheA.rchitect is satisfied that the Nominated Sub-Contractor is not performing
his contractual obligation, he will give written consent to the Contractor
to cleten-ni·ne-the-Nomimrtect--Sub=6mtJ.act01 's employment. In the even r
the Nominated Sub-Contractor's employment is detennined, the Architect
is obliged to re-nominate another Nominated Sub-Contractor and the re-
nomination is required to be made expeditiously. The Contractor is entitled to
be paid for any increase in the Sub Contract Sum (i.e., the difference between
the sum payable to the new Nominated Sub-Conh·actor and the sum payable to
the previous Nominated Sub-Contractor), after taking into consideration the
sum that will be recoverable from the defaulting Sub-Contractor under Clause
27.13. The Contractor is also entitled to claim for extension of time, but he
will not be entitled to claim for any damages, loss and/or expense.
245
Cla use 27.12 - Re-nomination of sub-contractor due to determination by
the Nominated Sub-Contractor
lf a Nominated Sub-Contractor determines his own employment under the
Nominated Sub-Contract due to negligence, omission, default or breach
of the Contractor, the Architect shall re-nominate another Nominated Sub-
Conlractor. In the event, the Contractor sha ll be paid the same sum as would
have been payable to the previous Nominated Sub-Contractor. The Contractor
will be liable to pay the new Nominated Sub-Contractor any additional
cost to complete the Sub-Contract Works and to pay the Employer for all
additional costs incurred in re-nomination and loss and/or expense suffered
by the Employer by such determination. T he Contractor shall not be entitled
to any extension of time unless and until the Contractor has established that
the determination by the Nominated Sub-Contractor of his own employment
is invalid. In the event the detem1ination by the Nominated Sub-Contractor
of his own employment has been established to be invalid by arbitration or
litigation, Clause 27.11 will apply.
Clause 27. 12: "Jf'a Nominated Suh-Contractor determines his own
employment... "
If a Nominated Sub-Contractor determines his own employment due to
negligence, omission, default or breach of the Contractor, the Architect is also
obligated to nominate another Nominated Sub-Contractor. However, unlike
Clause 27 .11 , the Contractor is now liable to pay for any increase in cost
to complete the Sub-Contract Works, and also to pay the Employer for all
additional costs incmTed in re-nomination and loss and/or expense suffered
by the Employer by such determination. The Contractor is also not entitled
to any extension of time unless and until the Contractor establishes that the
determination of the Nominated Sub-Contractor of his own employment is
invalid. In the event the determination by the Nominated Sub-Contractor
of his own employment has been established to be invalid by arbih·ation or
litigation, the provisions of C lause 27 .11 will apply.
Clause 27.13 - Contractor to recover additional expenses from Nominated
Sub-Contractor
In the event the Architect consents to determine the employment of the
Nominated Sub-Contractor under Clause 27. 1I, the Contractor shall recover
all additional expenses (including any additional expenses incurred by the
Employer) from the Nominated Sub-Contractor as a debt or from any monies
due or to become due to the Nominated Sub-Contractor and fa iling which,

Clause 27.0 246
the Contractor may recover such sum from the Nom inated Sub-Contractor's
Perfo rmance Bond.
The Contractor is required to pursue all avenues to recover all additional
expenses _(including the additional expenses incurred by the Employer) from
the Nommated Sub-Contractor. Upon the determination of the Nominated
Sub-Contractor 's employment, it is probable that the Contractor will also
call on the perfonnance bond provided by the Nominated Sub-Contractor to
him under PAM 2006 NSC Clause 32.1 in order to offset any exh·a cost to
cany on the Sub-Contract Works. Jf necessary, the Employer may also join
the Contractor as claimant against the Sub-Contractor under the Collateral
Agreement entered into between the Employer and the Nominated Sub-
c ontractor. Refer to Annexure ' C' for a sample of the Collateral Agreement.
Cla use 27. 14 - Contractor permitted to tender for P.C. Sums
Where the Contractor carri es out works for which P.C. Sums and Provisional
Sums are included in the Con tract Bills , the Contractor shall be pe rmitted to
~ender for the same. 1f the tender of the Contractor for such work is accepted,
1l shall be conside red as a Variation and the Contractor shall not be e ntitled
to profi t and attendance charges as p riced under the relevant P.C. Sum,
notwithstanding the provision of Clause 30.1l (c).
If the Contractor is permitted to tender for those works for which P.C. Sums
and Provisional Sums are included in the Contract Bills; the tender, if accepted,
shall be treated as a Variation to the Contract. As such, it is expressly stated
th~t the Co~tractor shall not be entitled to the profit and attendance charges, as
pnced by him under the relevant P.C. Sum.
Clause 28.0 247
C lause 28.1 - P.C. Sums and Provisional Sums - Nominated Suppliers
The following provisions of this clause shall apply where P.C. Sums arc
included in the Contract Bills or arise as a result ofa n Al given in regard to the
expenditure o f Provisional Sums in respect o f Person to be nominated by the
Archi tect to supply any materials and goods to be fixed by the Contrac tor. Such
Person as the Architect shall instruct is referred to as "Nominated Supplier."
The term Prime Cost Sum or P.C. Sum was defined in PAM 98 Clause 28.2 to
mean: ' ... the net cost to be defrayed as prime cost after deducting any h·ade
or other discount and shall include the cost of packing, caiTiage and delivery.
Where in the opinion of the Architect the Contractor has incurred expense for
special packing and/or special caniage, such special expense shall be allowed
as part of the sums actua11y paid by the Contractor and added to the Conh·act
Sum.'
The above definition was defined in standard forms in the UK many years ago
and is no longer applicable to modern day construction contracts.
P.C. Sum has now been defined in PAM 2006 Aliicle 7(as) to also mean: ' ...
the sums provided in the contract for materials and goods to be supplied by
Nominated Supplier.'
A Nominated Supplier could be nominated when there is a P.C. Sum provision
or a Provisional Sum included in the Contract Bills.
C lause 28.2 - Nominated Suppliers and their obli2ations
The Architect shall not nominate any Person as a Nominated Supplier against
\,Vhom the Contractor makes a reasonable objection in accordance w ith Cla u<;e
28.3. The Contractor shall m ake such reasonable objection in writing not later
than fourteen ( 14) Days from receipt of the nomination instruction from the
Architect. The Architect shall not no minate (except where the Architect and
Contractor otherwise agree) any Pe rson who will no t enter into a contrac t of
sale which provides inter alia:
28.2(a) that the materia ls and goods to be supplied shall be of the quality
and standard specified, provided always that where approval of
the qua lity and standard of material is a matter of opinion of the
Architect, such quality and standard shall be to the reasonable
satisfaction of the Architect;
- -- -- --- - · - - -- ...
 Clause 28.0 248
28.2(b) that the Nominated Supplier shall make good by replacement or
otherwise any defects in the materials and goods supplied which
appear within the De fects Liability Period and shall bear any expenses
reasonably incurred by the Contractor as a direct consequence of
such defects provided always that:
28.2(b)(i) where the materials and goods have been used or
fixed, such defects are not such that examination by
the Contractor ought to have revealed them before
using or fixing; or
28.2(b)(ii) such de fects are due solely to defective workmanship,
materials and goods supplied and not caused by
misuse, improper storage or any act or neglect by the
Contractor ;
28.2(c) that the deli very of the materials and goods supplied shall commence
and be completed in accordance with a de livery programme to be
agreed between the Contractor and Nominated Supplier, o r at such
times as the Contractor may reasonably direct;
28.2(d) that the ownership of materials and goods sha ll pass to the Contractor
upon delivery by the Nominated Supplier, whether or not pay ment
has been made in full ; and
28.2(e) that pay ment to Nominated Supplier shall be made withi n seven (7)
Days after the Period of Honouring Certificates and shall be subject
to the retentio n by the Contractor under C lause 28.5."
A sample of the Nominated Supplier Agreement is shown in Annexure 'B'. It
has been drafted to comply with the provisions of Clause 28.
Clause 28.2: "... against whom the Contractor makes a reasonable
objection... "
Under PAM 98, there was no provision to enable the Contractor to object to the
appointment ofa Nominated Supplier even if the Contractor has valid reasons.
In the absence of this provision, it would be difficult to imply that upon the
Employer's nomination of the Supplier to the Contractor, the Contractor must
enter into a contract with such Suppliers and will be held fully responsible if
such Suppliers default or breach the contract. The Contractor must continue to
perform the Supplier's contract as if the Supplier is the Contractor's domestic
supplier.
C!a u:,e 28.0 249
In order that the Contractor can accept this allocation of risk, he must be
given an opportunity to voice his objection if he has any doubts as to the
capability of the Supplier to fulfill his contract. PAM 2006 rectified this lacuna
in PAM 98 by providing the Contractor the right to object to any nomination,
provided that the Contractor notifies the Architect of any objection within 14
Days from receipt of the nomination instruction from the Architect. Provided
the objection reasons are valid, the Architect will still have time to consider
other suppliers before informing them that their tender was unsuccessful. This
is consistent with the provisions of PAM 2006 Clause 28.7 which provides
that: 'The Contractor shall be fully responsible for any negligence, omission,
default and/or breach of contract by the Nominated Supplier and the Employer
shall in no circumstances be liable to the Contractor.' In other words, he is
responsible for the Nominated Supplier in the same way that he is responsible
for his domestic supplier.
Clause 28.2: "... The Architect shall not nominate (except where
the Architect and Contractor otherwise agree) any Person who will not enter
into a contract ofsale which provides... "
The Nominated Supplier also needs to comply with certain terms in his
agreement with the Contractor. In the event that the Nominated Supplier
refuses to incorporate the following terms stipulated in (a) to (e), the
Architect shall not nominate such a company unless the Contractor agrees
otherwise.
Clause 28.2(a): '· ...that the materials and goods to be supplied shall
be of'the quality and standard :,pecified, ... "
Compliance with this provision should not be a problem for the Nominated
Supplier.
Clause 28.2(b): " .. .that the Nominated Supplier shall make good by
replacement or othen,vise any defects in the materials and goods supplied
which appear within the Defects liability Period... "
This is consistent with his responsibilities to the Contractor under Clause 15.4.
Clause 28.2(c): " .. .that the delive1y of the materials and goods
supplied shall commence and be completed in accordance with a delive1J1
pmgramme to be agreed between the Contractor and Nominated Supp/ie1'. .. "
The Contractor should program the delivery of the materials in advance, and
to allow some leeway for delay, but must also ensure that the materials are not
- - ·- - - .. --· --- .....
 Clause 28.0 250
delivered prematurely (see Clause 30.2), so much so that the value cannot be
included in the Contractor's interim payment claim.
Clause 28.2(d): " ... that the ownership of materials and goods shall
pass to the Co11tractor upon delive,y by the No111inated Supplie,; whether or
not payment has been made in.fii/1. "
This is a new provision not found in PAM 98. It requires the Nominated
Supplier to agree that he does not impose a Retention of Title claim on the
materials and goods until he receives payment in full from the Contractor.
Firstly, the payment to the Nominated Supplier will not be in full as the
payment will be subject to retention in accordance with Clause 28.5;
Secondly, it would cause the Contractor to breach his warranty under Clause
14.4 which states that ' .. . the Contractor shall be deemed to have warranted
that he has title free from encumbrances for such materials and goods upon
inclusion of the value of such materials and goods in any applications for
payments under Clause 30.1;' and
Thirdly, the Employer has a requirement under Clause 14.2 that where the
value of material has been included in the Interim Certificate, such materials
and goods shall become the property of the Employer.
Clause 28.2(e): "... that payment to No111inated Supplier shall be
made within seven (7) Days a_fier the Period of llonouring Certificates and
shall be subject to the retention by the Contractor under Clause 28.5."
There was a requirement under PAM 98 Clause 28.4 that the Contractor
'shall pay in full for the materials or goods supplied by a Nominated Supplier
within 30 days of the end of the month during which delivery is made. '
This means that the Contractor will have to make payment in full to the
Nominated Supplier; that is, without retention, even if the payment claims by
the Nominated Supplier are not yet included in any Interim Ce1iificate. This
follows the provisions in the JCT Fonns of Contract in the UK, except that
under the provisions in the JCT Forms, the Contractor is encouraged to make
payment within 30 days in return for a 5% cash discount from the Nominated
Supplier.
In the drafting of the PAM/ISM 69 and PAM 98, the old RIBA Forms of
Contract (which is the predecessor of the JCT Fonns) were followed, but
there were no provisions in both the local standard forms for the Contractor to
receive any cash discount from the Nominated Supplier for early payment. As
Clause 28.0 25 1
a result of this deficiency, Contractors are required to make payment in full to
Nominated Suppliers within 30 days of delivery. To further complicate matters,
PAM 98 Clause 30.3 further provides that: ' The amount stated as due in an
Interim Certificate shall ..... be the total value of the work properly executed
and where the Contractor had paid to the supplier the full cost of the materials
and goods ... ' ln a nutshell, this means that after the Contractor has paid the
Nominated Supplier in ful I within 30 days of delivery, he has to show proof of
payment to the Quantity Surveyor, before the Quantity Surveyor can include
the amount already paid to the Nominated Supplier in the interim Certificate.
The Contractor will thereafter receive his payment from the Employer within
the Period of Honouring Certificates provided in the Contract, which may be
another 90 Days. The PAM 98 Clause is not practical, and most Contractors
ignored the contractual provisions and the Nominated Suppliers are forced to
accept the ' pay when paid ' procedures.
The new provision in PAM 2006 addressed this practical problem, by providing
that the Contractor is not obligated to make payment to the Nominated Supplier
unti I within seven (7) Days after the Period ofHonouring Certificates. This is not
a ' pay when paid' provision. The Contractor is obligated to pay the Nominated
Supplier within the period, and he has to make the payment, whether or not
he receives any payment from the Employer. This chain of liability means
that if the Nominated Supplier sues the Contractor for the payment, and the
Contractor has not received the payment from the Employer, the Contractor
can always resort to the contract1rnl remedies against the Employer's default
that are available to him under the Contract.
There is also the additional provision that the payment to the Nominated
Supplier will be subject to retention by the Contractor, otherwise it would
mean that the Contractor will be bearing the Nominated Supplier's retention;
the Retention Fund being calculated based on a percentage of the Contract
Sum, includes all the P.C. Sums for Nominated Suppliers. The level of
retention may be different for the Contractor and Nominated Supplier at
different stages of the construction. For example, the Contractor may reach
the Limit of Retention Fund, say 5% of the Contract Sum, but the Nominated
Supplier may still be subject to a higher retention based on say, 10% of the
certified value of materials and goods.
Clause 28.3 - Objection to nomination of suppliers
Subject to C lause 28.4, the Contractor shall not be required to enter into a supply
contract with any Nominated Supplier against whom the Contractor has made
a reasonable objection based on the available known facts and documented
evidence that tl~e financial standing or solvency or technical competence of
- -- - - - ·-- . -- - . -

Clause 28.0 252
the Nominated Supplier is such that a prudent contractor, having regard to the
scope of the supply contract would be justified in rejecting the nomination.
Under PAM 98, Clause 27.7: ' The Contractor shall be fully responsible for
all...Suppliers and for any default or breach of contract on their pait and
the Employer shall in no circumstances be liable to the Contractor... ' If the
Contractor is to be fully responsible for the Nominated Supplier, it is only
reasonable that if the Contractor has any misgiving about any nomination,
he should be given an opportunity to voice any objection to the Architect.
PAM 2006 addressed the deficiency in PAM 98 by providing Contractor
an opportunity to object to any nomination, but only on grounds that 'the
financial standing or solvency or technical competence of the Nominated
Supplier is such that a prudent contractor, having regard to the scope of the
supply contract would be justified in rejecting the nomination '. Without this
provision, there is doubt whether the Contractor can be held fully responsible
for the default of any Nominated Supplier.
The comments made under Clause 27.3 are equally applicable to this Clause
and will therefore not be repeated.
Clause 28.4 - Action following objection of suppliers
Where such reasonable objection is made, the Architect may either issue
fu 1ther instructions to remove the objection so that the Contractor can enter
into the supply contract or cancel such nomination or instruction and issue
an instruction omitting the materials and goods which was the subject of the
nomination instruction or re-nominate another Nominated Supplier.
The comments made under Clause 27.4 are equally applicable to this Clause
and will therefore not be repeated.
Clause 28.5 - Value of materials and goods supplied by Nominated
Suppf
The Architect shall direct the Contractor as to the total value of materials
and goods supplied by a Nominated Supplier which has been included in
any ce1tificate issued under Clause 30.0, and shall at the same time when the
ce,tificates are issued, infonn the Nominated Supplier in writing of the amount
of the said total. The Contractor shall retain from the sums included for the value
of materials and goods the percentage of such value stated in the Appendix as
Percentage of Certified Value Retained up to an amount not exceeding five (5)
percent of the Nominated Supplier 's sum. The Contractor's interest in any sums
so retained shall be fiduciary as trustee for the Nominated Supplier (but without
Q
Clause 28.0 253
obligation to invest); and the Contractor's beneficial interest in such su ms
shall be subject only to the right of the Contractor to have recourse from time
to time for payment of any amount which he is entitled under the nominated
supply contract to deduct from any sum due or to become due to the Nominated
Supplier. Upon the Architect having certified the release of the Retention Fund
under Clause 30.6, such sums shall be released to the Nominated Supplier within
seven (7) Days after the Period of Honouring Certificate and that if and when
such sums are released to the Nominated Supplier, they shall be paid in full.
Although the Contractor is responsible for the Nominated Supplier, this
provision makes it necessary for the Architect to notify the Nominated
Supplier at the same time the payment certificate is issued on the amount
of payment included for each Nominated Supplier; so that proper payment
obligation can be discharged by the Contractor. For a sample of the payment
notification, refer to Annexure 'A'. There is no provision for the Employer to
make payment directly to the Nominated Supplier, and in the event of failure
by the Contractor to pay the Nominated Supplier, he will have to depend on
the normal legal recourse. The rest of the Clause is self explanatory.
Clause 28.6 - Payment to Nominated Suppliers
All payments in respect of the val ue of materials and goods supplied by a
Nominated Supplier shall be made within seven (7) Days after the Period of
Honouring Certificates and shall be subject to the retention by the Contractor
under Clause 28.5.
Although the Architect may inform the Nominated Supplier of the value of
materials and goods included in payment certificates, it is to be noted that
there is no provision for a Nominated Supplier to be paid directly by the
Employer in the event of the Contractor failing to pay the Supplier. Under
Clause 28.7 the Contractor is fully responsible for the Nominated Supplier
and this includes making payments in accordance with their agreement. In the
event of any payment dispute, the Nominated Supplier will have to reso1t to
the remedies provided by law to recover the amount from the Contractor.
For further explanations of the payment provision, refer to the earlier
commentary under Clause 28.2(e).
Clause 28.7 - Contractor's liability for Nominated Suppliers
The Contractor shall be full y responsible for any negligence, omission, default
and/or breach of contract by the Nominated Supplier and the Employer shall
in no circumstances be liable to the Contractor.
- - ~- ....... -- ... ·- -· - .
 Clause 28.0 254
The Contractor is responsible for the Works overall, and is therefore
responsible for any negligence, omission, default and/or breach of contract by
the Nominated Supplier.
Clause 28.8 - Employer no privity of Contract with Nominated Suppliers
Neither the existence ofor the exercise of the fo regoing provisions nor anything
e lse contai ned in the Contract shall create a priv ity of contract between the
Employer and any of the Nominated Suppliers.
This Clause is complementmy to C lause 28.7. It emp hasised that there is no
privity of contract between the Employer and the Nominated Supplier. The
Nominated Supp lier therefore has no recourse against the Employer in the
event of non-paym ent by the Contractor, but it also means that any claim
against the N ominated Supplier by the Employer, say, fo r defective works, has
to be channe led through the Contractor.
Clause 29.0 255
~
~-
e 29.0 - Works By Craf
_ ntractors Emp~?yed_()
C lause 29. 1 - Wo rks by Employer's Craftsmen
The Contractor shall permit the execution of work not forming part of the
Contract on the Works by craftsmen, tradesmen or other contractors engaged
by the Employer. Such craftsmen, tradesmen or other contractors engaged
by the Employer shall be deemed to be a Pe rson for whom the Employer is
respons ible and not to be a sub-contractor of the Contractor.
It is common that at times, the Employer wishes to engage ce11ain craftsmen,
tradesmen or other contractors directly to execute certain works that do not
form part of the Contractor 's scope of work at the site. Although the Contractor
has possession of the site, this Clause provides that the Contractor shall permit
the execution of the work not fonning part of the Contract by craftsmen,
tradesmen or other cont.actors so engaged by the Employer. However, the
Employer is responsible for this group of people, and they are not considered
as the Contractor's sub-contractors.
Under this Clause, the Contractor is only required to grant permission and
access to the Site for this group of people to execute their respective work, and
the Contractor is not contractually bound to coordinate the ir work, to provide
facilities, and to indemnify the Employer against their works. The Contractor
will also be entitled to claim for extension oftime, loss and expense should the
progress of the Works be de layed by them.
 Clause 30.0 257

.---------- - ---
Clause 30.0 - Certificates And Payment
- - -- - - - - - - - - - - - - - - - - - - - - - - - - - -

Clause 30.1 - Payment application and issuance of Architect's certificate

T he Con trac tor s ha ll s ubm it a paym e nt appli catio n at th e Inte rim C la im

Interval stated in the Appendix w ith comple te detai ls an d particulars
as required by the Arc hitect and Q uantity S urveyor, to e na ble them to
cons ider and ascertain the amount to be included in an Interim C ertificate .
Upon rece ipt of the Con tractor's deta ils and partic ulars, the Arc hi tect after
having received the paym ent va luati o n fro m the Quanti ty Surveyor sha ll,
wi thin twenty o ne (2 1) Days fro m the date of receipt of the Contracto r 's
app licat ion, issue a n In terim Cer tificate to the E m ployer w ith a copy to the
C ontracto r, a nd the Employer sha ll therea fter pay the amo un t cer tified to the
Contracto r w ithin the P e ri od of Ho nouring Certificates. Any failure by th e
C ontractor to su bm it a payment application sha ll be deem ed to be a waiver
of his contractua l ent itle ment fo r th at Interim Certificate , and the A rchi tect
may or may not issue a n Inte r im Certificate un der the c ircumstances. After
the issuance of the Certificate of P ractical Completion, inte rim Certificates
s h a l I be issued as and whe n fu rther amounts are ascerta ined by the Architect
and Q ua ntity S urveyor as payable to the Contractor by the Employer.

Clause 30. 1: "The Contractor shall submit a payment application

... complete details and particulars as required by the Architect..."

Tt is the Contractor's respons ibility to submit payment applications at the

interim Claim Interval stated in the Appendix. The details and documentation
required to be submitted shall be agreed by the Architect or Quantity Surveyor
before any payment application is made.

T he application shall also include complete details and pa1ticulars for the
N ominated Sub-Contractors ' payment. The Contractor has a responsibility to
vet all payment applications s ubmitted by the Nominated Sub-Contractors,
and not merely fo1ward whatever he has received to the Architect and
Q uantity Surveyor. If he finds any claims which are not in order, he must
make the necessary con-ections with relevant comm ents on the Nominated
Sub-Contractor 's claim, before sending them to the Architect and Quantity
Surveyor.

Clause 30.1: "the Architect ...shall, ·within twenty one (21) Days
ji-om the date of receipt of the Contractor s application, issue an interim
Certificate ... "
 Cla11iie 30.0 258
PAM 98 Clause 30.3 states that: 'The amount stated as due in an Interim
Certificate shall, ... be the total value of the work properly executed ... up to
and including a date not more than seven (7) days before the date of the said
certificate... ' This means that the payment ce1tificate must be issued 7 days
after the site valuation. This provision is not practical as it often takes more
than the total of 7 days for the Consultants to record the site activities jointly
with the Contractor, calculate the works done by reference to the Contract Bills
and forward the valuation for the Architect to issue the payment certificate.
If the record of site activities was carried out earlier than 7 days, it will be
necessary to project the value of the Contractor's work up to a date not more
than 7 days before the date of the payment certificate. lf this is done, then the
payment will be based on a projection of work anticipated to be achieved,
rather than an accurate assessment of value of work actually carried out on
site. lf the Architect over certifies the value of work based on the projection
of anticipated progress, and the Contractor fails to achieve the promised
progress, the Architect may be liable to the Employer. On the other hand, if
the Architect under certifies, he will be responsible if such under certification
affects the Conh·actor's cash fl.ow, and consequently also affects the progress
of the Works.
To ensure that this problem does not happen, the Architect is now required
to issue the interim Ce1tificate within 21 Days from the date of receipt of the
Contractor's payment application. PAM 2006 prefers to use a time period of
21 Days rather than using the term 'a reasonable time,' as the pa1ties may have
a different perception on what is meant by a ' reasonable time' . The period
of 21 Days is considered sufficient time for the Architect and Consultant to
jointly record the site activities with the Contractor, calculate the works done
by reference to the Contract Bills and forward the valuation for the Architect to
issue the payment certificate. Tt would be advisable for the various Consultant
to agree with each other on the time each will require for the preparation
of their respective portion of work, before sending the valuation to the
Architect, and that the Architect must ensure that the payment certificate is
issued within the time frame stipulated. The Architect must therefore establish
with all concerned, whether the stated 21 Days is adequate during the tender
documentation stage. If it is a small project, the time stipulated could be
changed to a shorter period, and similarly, if it is a large complex project, the
Architect and Consultant may consider increasing the period of21 Days.
As the prov1s10n now provides that the Architect must issue an Interim
Ce1tificate within 2 1 Days from the date of receipt of the Contractor's
application, the question that is being asked is; what would be the situation if
the Architect took more than 21 Days? If such a situation occurs, one can rely
Clause 30 .0 259
on the judgment in the case of Temloc v £nrill Properties 39 BLR 39 referred
to earlier. Interpreting the case, one can submit that if the Architect took more
than 21 Days to send out the Tnterim Certificates, the Architect would have
breached the time stated in the Contract; but according to Temloc v Enrill
Properties, the time stated is only ' directory', and further; as the Employer
can still make payment to the Contractor within the Period of Honouring
Certificate less the extra days that the Architect took in issuing the ce1tificate,
the Contractor would have suffered no loss, so the breach is ofno consequence.
Clause 30.J: "received the parn1ent 1•oluatio11 fi mn the Quantity
S1111·e1,or "
The Quantity Surveyor w ill co-ordinate with all the other Consultant as to the
timing each will require carrying out the valuation relating to their portions
of the work. On completion of all the va luations, the Quantity Surveyor will
forward this to the Architect for him to issue the payment certificates. In the
event the Quantity Surveyor cease to be on the Contract, the Employer has an
obligation to appoint a succeeding Quantity Surveyor, so that valuations can
continue to be issued to the Architect for him to issue the payment certificates.
Clause 30. 1: " the Architect... issue l /17 Interim Certificate to the
Employer ll·itl, a copy to the ContractOJ; and the Employer shall thereafier
pay the amount certified to the Contractor ll'ithin the Period o/ IJo11011ring
Certificates "
Under PAM98 Clause 30. 1 states that: 'Certificates to be issued by the
Architect under these Conditions shall be issued to the Contractor with a copy
to the Employer'. Th is means that all ce1tificates including I nteri 111 Certifi cates
are to be issued to the Contractor, and the Employer will receive a copy of the
certificate for him to present to his bank or financial institution when making
the payment arrangement. Although there is no requirement that such a copy
needs to be ce1tified by the Architect as a ' true copy' , it is probable that banks
or financial institutions will not make payment unless the certificate is an
' original ' or a ' certified trne copy'. PAM 2006 reviewed this provision and
now provides that the Interim Certificate is to be issued by the Architect to the
Employer, with a copy to the Contractor to comply with the requirements of
most banks or financial institutions to s ight the ' original' certificate. Refer to
Annexure 'A' for a sample of the payment certificates.
The Employer is contractually obligated to pay the amount certified in the
Interim Certificate to the Contractor, w ithin the Period of Honouring of
Certificate. Following the changes adopted in PAM 98, the Contractor is
also not required to present the Interim Certificate to the Employer. The
- - - ·- --- --
 Clouse 30.0 260
arrangement is that the Employer must now pay the Contractor within the
Period of Honouring of Certificate, commencing from the date shown on
the Architect's certificate. Unless there is any amendment to the Period of
Honouring Certificate stated in the Appendix, the default period is 2 1 Days
for the Employer to make payment. If there is a requirement to amend the
time for the Period of Honouring Certifi cate, appropriate amendments must
be carried out to prevent the default period applying.
As the Employer now has an obligation to make payment to the Contractor
commencing from the date shown on the Architect's certificate, as opposed to
the PAM/ISM 69 provision w hich is from the date of the Contractor presenting
the certificate to the Employer; it is now necessary for the Architect to ensure
that the Employer receives the payment certificates on time so that the Employer
has enough time for payment arrangement. The Employer's failure to pay on
time due to delay in receiving the payment ce1tificate from the Architect is not
an excuse ror delay in payment to the Contractor. In order that the Employer
is aware of the date he must make payment to the Contractor, the sample of
the payment ce1tificate shown in Annexure ' A' has a space for the Architect
to ind icate the latest date that the Employer must honour the Certificate. The
Archi tect must calculate this date carefully and allow any gazette holidays in
the time available for the Employer to make the necessary payment.
Clause 30.1: "Any failure by the Contractor to submit a payment
application shall be deemed to be a waiver of his contractual entitlement
... and the Architect may or may not issue an Tnterim Cert(ficate under the
circumstances"
While it was not clear from PAM 98 as to whether the Architect is obligated
to issue a payment certificate if the Contractor did not submit a payment
application, it is expressly provided in PAM 2006 that in the event the
Contractor fa ils to submit a payment application, it shall be deemed that he has
waived his right to that particular a ment certificate. There may be a scenario
where the Contractor may have several applications from the Nominated Sub-
Contractors for payment pending, when he has no outstanding claim of his
own; in which event he has no incentive to make an application for payment.
In that event, the Architect can sti ll issue a payment certificate to include
payments to Nominated Sub-Contractors (who had submitted their claims/
applications to the Contractor), but with no payment due to the Contractor.
Clause 30. I: "After the issuance of the Certificate of Practical
Completion, Tnterim Certificates shall be issued as and when further amounts
are ascertained by the Architect and Quantity Surveyor as payable to the
Contractor by the Employe1: "
Clause 30.0 26 1
PAM 2006 allows the Architect not only to issue Interim Certificates before
the issuance of Certificate of Practical Completion; it also empowers the
Architect to issue Interim Certificates after the issuance of Certificate of
Practical Completion, as and when any fmther amounts are ascertained by the
Architect and Quantity Surveyor as payable. Interim Ce1tificates issued after
the issuance of the Certificate of Practical Completion do not have to comply
with the Interim Claim Interval. For example, after the Certificate of Practical
Completion has been issued, the Architect may still issue instructions for the
Contractor to caiTy out certain works as required by the Statutory Authorities,
and after these works are executed, the Architect can then issue an Interim
Certifi cate for payment to the Contractor.
Clause 30.2 - Amount due in Architect's certificate
The amount stated as due in an Interim Certificate shall, subject to any
agreement between the parties as to stage payments, be the total value of the
work properly executed and include the percentage of the value of materials
and goods stated in the Appendix up to the date of the Contractor's payment
application less any amount which may be retained by the Employer under
Clauses 30.5 and 30.6 and, less the amounts previously certified under Clause
30. l . The materials and goods must be for incorporation into the permanent
works and have been delivered to and properly stored at the Site and be
protected against loss, damage or deterioration, and be in accordance with the
Contract. The certificate shall only include the value of materials and goods
which are reasonably, properly and not prematurely brought to the Site .
Clause 30. 2: "...subject to any agreement between the parties as to
stage payments... "
This Clause allows the parties to agree on stage payments, and any such
agreement made will supersede the interim payment rules as outlined in
Clause 30. The stage payment agreement can take many different forms. It can
be tied to the schedule of payments under the Housing Development (Control
and Licensing) Regulation for residential development, or correspond to
various stages of construction; or tied to completion of various elements or
components of the building. It is therefore prudent for the stage payment tenns
(i.e., manner and period of certification) to be clearly spelt out to avoid any
misunderstanding, argument and dispute.
Invariably, most stage payment agreements entail an element of financing on
the pa1t of the Contractor. As such, it is advisable to clearly state the terms that
have to be satisfied before stage payments are released so that the Contractor
can factor in any costs of fi nancing.
 Clause 30.0 262
The proposed Construction lndustry Payment and Adjudication Act (CJ PAA)
proposed by the Construction Industry Development Board (CIDB) will soon
outlaw 'pay when paid' clauses, and as such, it is best that the stage payment
clause to the Contractor must not be subject to similar conditions such as the
Contractor will only be entitled to payment after the Employer has collected
the monies from purchasers.
Clause 30.2: ".. .the total value a/the ll'ork... up to the date of'the
Contrnctor ~- payment application ... "
The provisions in PAM 98 clause 30.3, which is s imilar to the provisions of
JCT 80 clause 30.2.2 provides that the valuation of the work was to include
the total value of work and material ' up to and including a date not more than
7 days before the date of the said certificate.' This provision was a great cause
of concern, because it means that the Contractor will be entitled to claim an
amount in anticipation of value to be achieved 7 days before the date of the
certificate, and similarly, the Consultant may have to adjust their valuation
for the same period. This is not a practical approach. PAM 2006 Contract
therefore provides that the Contractor must base their va luation up to the date
when the application is submitted.
Clause 30.2: "... the total l'lllue of'the irnrk proper~r executed. .. "
The Interim Certificate is only an estimation of the value of work. Although it
is supposed to only include those works 'properly executed,' it does not mean
that including the value of the work is a verifi cation that the works executed
comply fully w ith the Contract. However, in the event that the A1·chitect is of
the opinion that certain work executed does not comply with the specification,
or are rejected for whatever reasons, the Architect should inform the Quantity
Surveyor to exclude such works from the payment valuation. It is important
that the Architect exclude the value of work not properly executed from the
Interim Cettificate. However, if the Interim Certificate included value for
work which was subse uentl found not to be pro~ y executed then the
value of such work should be adjusted in subsequent certificates. Pending
such adjustment, the Employer is obliged under the Contract to honour such
ce1tificate in full. If the Employer elects to unilaterally deduct the value of
such work from the certificate, it may be construed to be a set off.
Clause 30. 2: "...and include the percenrage of' the value of'
materials and goods stated in the Appendix... "
Previously, under PAM 98, the Contractor is only entitled to be paid the total
value of materials and goods after the Contractor has paid the supplier in full.
Clause 30.0 263
This has caused difficulties to the Contractor (and Nominated Sub-Contractors)
because it means that the Contractor (and Nominated Sub-Contractors) has to
finance the purchase of all materials and goods and receive payments for the
amount paid a few months later. It also means that the Contrnctor will have to
pay the Nominated Suppliers within 30 days of delive1y of the mate1ial and
goods, and the Architect will only include the amount in the payment certificate
after the Contractor has paid the Nominated Suppliers. These provisions, if
strictly implemented, will cause undue hardship and increase construction costs.
Besides being impractical, it also does not solve the ' retention of title' problem.
PAM 2006 has reverted to the PAM/ISM 69 proviso and the Contractor will
now be paid a percentage of the cost of materials and goods upon delivery to
the Site.
Clause 30. 2: "... The materials and good~ 111ust be.for incorporntion
into the permanent works and have been delivered to....the Site ... "
The value of material and goods to be included in the Interim Ce1tificate shall
only cover for those materials and goods to be incorporated in the pe1manent
works. This means that material and goods for temporary works; such as
scaffolding, timber for formwork materials, tempora1y sheet piles and other
temporary items if they are not incorporated as part of the pe1manent works,
will not be valued for payment.
PAM 2006 has no provision for payment of materials and goods delivered off
the Site. If the Employer intends to make payment for materials and goods
off the Site, it is advisable to ensure sufficient precaution to be taken in the
event there is a loss or damage to the goods where it is stored; and also that
the Employer has the proper retention of title in the materials and goods paid.
In such an event, it may be appropriate to consider incorporating some of the
provisions in Option Module B of CIDB 2000.
PAM 2006 has however extended the definition of Site. Under Article 7 (az),
Site has now been defined to include: ' ... the land and other places ... provided
by the Employer...including other land and places obtained by the Contractor
and accepted by the Employer as fotming part of the Site. ' This means that,
besides the site provided by the Employer, if the Contractor secures other
land (whether adjoining or a distance from the project site) for the execution
of work, fabrication and storage of materials and goods, and if the Employer
accepts the land obtained by the Contractor as forming part of the Site, then,
for the purpose of the Contract, all work and all materials and goods stored
on the land shall be considered as work executed and materials and goods
on Site for the purpose of Interim Certificates. The Architect and Consultant
 Clause 30.0 264
shall also be entitled to have access to such land at all reasonable times, to
inspect work and materials or goods stored on such land. If any such land is
accepted by the Employer as forming pa1t of the Site, it is advisable to make
it a condition to the Contractor that such land must be dedicated for canying
out only the works and the storage of material and goods for the Works, and
should not be mixed up with the Contractor's work and material and goods for
other projects. The Arc hitect or Consultant must also advise the Employer or
Contractor, to inform the Insurance companies of the Employer 's acceptance
of such land as fom1ing patt of the Site, and ensure that an endorsement from
the Insurance Company is obtained to recognise such land as forming part of
the Site, so that the Insurance Company is aware of such an atTangement in the
event of any insurance claims.
Clause 30.2: "... The certificate shall only include the value of
materials...not prematurely brought to the Site."
There is no definition of ' prematurely brought to the Site', and this very much
depends on the type of material and whether time is of the essence in the
completion of the Works. It is recommended that, depending on the type of
project, the period for which materials on site will be considered as 'premature'
should be amplified in the Contract Bill.
Value for those materials and goods that are brought in prematurely ( example:
roof tiles, floor and wall tiles when the Contractor is still doing sub-structure
works) shall also be excluded from the Interim Ce1tificate. For the materials
and goods to be inc luded in Interim Ce1tificates, the Architect has to be satisfied
that the materials are properly stored and protected against loss, damage and
deterioration.
Clause 30.3 - Errors in payment certificate
Save for clerical, computational or typographical error or errors of a similar
nature, the Architect shall not be entitled to revise or correct any 2ayment
certificate issued by him under the Contract. Provided always that the Architect
may, by a later certificate, make correction or modification in respect of any
valuation errors in any earlier certificate.
Clause 30.3: "Save for clerical, computational or typographical
error or ermrs.. .the Architect shall not be entitled to revise or co/'/'ect any
payment certificate... "
If after issuing the certificate, the Architect discovered that he had made some
clerical, computational or typographical error, he can issue a revised certificate
with the corrected figures.
Clause 30.0 265
Clause 30.3: '' ... the Architect may, by a later certificate, make
correction or mod[fication in respect of any valuation errors in any earlier
certificate."
The provision in PAM 98 Clause 30.1 provided that: ' The Architect may by
any certificate correct any en-or or discrepancy which has been discovered
in any previous certificate, or may modify any previous certificate ... ' The
concern here is that the Architect has unlimited authority to ' modify any
previous certificate', which will include the authority to modify any previous
payment certificates.
In Lojan Properties v Tropicon Contractors (1991) 2 MLJ 70, which was
a contract under the SIA Fonn of Contract, the contractor brought court
proceedings against the employer for summary judgment, after the employer
had failed to honour twelve interim payment ce11ificates. Whilst the application
for summary judgment was pending, the architect issued modification to
the twelve certificates, which resulted in the contractor owing money to the
employer. The court rejected the new ce1tificates, which w ere intended to revise
the ce1tificates issued two years earlier and decided that these ce1tificates were
flawed and invalid, and further took a suspicious view of the conduct of the
architect in the discharge of his duties as a certifier under the contract. Whilst
we are not concerned with the merits of the L~jan case as it was not based on
the PAM Forms, it does appear that PAM 98 has now expressly sanctioned
the Architect with expressed power to modify any certificates that has been
issued, including payment cettificates.
There may be circumstances where the Architect may wish to revise an
earlier payment ce1tificate; for example, to deduct for work included in an
earlier certificate which the Architect has now discovered was ' not properly
executed' . PAM 2006 now prov ides that if after issuing the certificate, the
Architect has adjustment to make to the value of work which is ' not properly
executed', the Architect needs to issue an AI under Clause 6.3 a nd carry out
any conection or modification in respect of any valuation etTors in a later
certificate.
If the Architect discovers any error in the certificate which is not a clerical,
computational or typographical en-or, he may by a later ce1tificate make any
correction necessaiy. This is consistent with Lubenham v South Pembrokeshire
District Council 33BLR 39 where the colllt found that the contractor was
wrong when he suspended work when the architect failed to amend an obvious
error in the interim ce1tificate. The court said that: ' the proper remedy of the
contractor was to request the architect to make an appropriate adjustment in
another ce rtificate .. .'
 Clause 30.0 266
Clause 30.4 - Set-off bv Employer
The Employer shall be entitled to set-off a lI cost incurred and loss and expense
w he re it is express ly provided unde r Clauses 2.4, 4.4, 5. 1, 6 .5(e), 6.7, 14.4,
l 5.3(b) 15.3(c), 15.4, 15.5, 19.5 and 20.A.3 . Noset-off underth is clause may
be made unless:
30.4{a) the Architect or Quantity Surveyor ( on behalf of the Employer) has
submitted lo the Contractor comple te details of the ir assessment of
such set-off; and
30.4(b) the Employer or the A rc hitect on his behalf has given the Contractor
a writte n notice delivered by hand o r by registered post, specifying
his intention to set-off the amount and the grounds on w hic h such
set-off is made. Unless expressly stated e lsewhere, suc h written
notice shall be given not la te r tha n twenty e ight (28) Days before
any set-off is deduc ted from any payment by the Employer.
Any set-off by the Employer sha ll be recoverable fro m the Contractor as a
debt or from any monies due or to become due to the Contractor under the
Con tract and/or from the Pe rformance Bond.
If the Contractor after receipt of the written notice from the Employe r or the
Architect o n his behalf, disputes the a mount of set-off, the Contrac tor sha ll
within twenty one (2 l ) Days of receipt of such written notice, send to the
Employer de livered by hand or by reg istered post a statement setting out the
reasons and partic ulars for such disagreement. If the parties arc unable to agree
on the amount of set-off w ithin a further twenty one (2 1) Days after the receipt
o f the Contractor's resp onse, either party m ay refer the dispute to adjudication
under Cla use 34 . I . The Employer sha ll not be entitled to exe rc ise any set-off
unless the amount has been agreed by the Contracto r or the adjudicator has
issued his dec ision.
Under common law, the Employer is entitled to set-off any amount from
any payment due to the Contractor, even if the amount set-off is not agreed
by the Contractor. The only recourse the Contractor has is to submit the
dispute to arbitration, and the PAM Contracts provide that such arbitration
can only commence after the completion of the Works. This not only is
an unsatisfactory state of affairs, but it has encourage d some Employers
to set-off exorbitant amounts under the slightest pretext, causing a ripple
effect on the Contractor's performance of the Works, and encouraging a
culture of c laims in the construction industry, as well as increasing the cost
of construction projects when contractors resort to including the cost of
Clause 30.0 267
potential set-off in their tender price for projects. Eventually, these costs are
passed back to developers, who will in turn to pass it on to the purchasers.
As a matter of fact, the Government will soon be tabling the Construction
Industry Payment and Adjudication Act ('CTPAA') in Parliament in an
attempt to c urb this proble m.
PAM 98 Clause 30.3(i) states: 'Unless otherwise expressly provided in
these Conditions, the Employer shall not be entitled to withhold or deduct
any amount certified as due under any Architect's certificates by reason
of any claims to set-off or counterclaims or allegation of defective works,
materials or goods or for any other reasons whatsoever.. .'. Under PAM 98,
the Employer can only set-off any amount from the Contractor's payment, if
there are express provisions in the Contract. Unfortunately, under PAM 98,
there is no provision to resolve dispute in the amount of set-off during the
construction stage. The Contractor is still left with submitting the dispute to
arbitration after the completion of the Works.
PAM 2006 aimed to improve on PAM 98 by firstly, identifying all the set-off
clauses in the Contract; and secondl y, by providing procedures that have to be
followed before any amount can be set-off. It is anticipated that the procedures
will lead to less abuse of the set-off clause, and consequently, may be reflected
in lower tender prices.
The procedures for set-off in PAM 2006 are as follows:
(i) the Architect or Quantity Surveyor has to submit the complete details
of their assessment of the amount to be set-off to the Contractor;
(ii) the Employer or the Architect has to give the Contractor a written
notice specifying his intention to set-off the amount. Such written
notice must be given not later than 28 Days before the set-off is
deduc ted from any payment by the Employer.
(iii) If the Contractor disputes any set-off, be shall within 2 1 Days of
receipt of the w ritten notice from the Employer or Architect, set out
the reasons and pa1ticulars of his disagreement.
(iv) If the parties are unable to agree on the amount of set-off, w ithin 21
Days after the Contractor 's statement of dispute, either paity may
refer the dispute to adjudication if the Works has not reached Practical
Completion. If the Works has reached Practical Completion, any
dispute will be refe1Ted to arbitration.
- - - --- ··-- ·--- a..:::.--..
 Clalfse 30.0 268 Clause 30.0 269

The Employer shall be entitled to set-off on the undisputed amount and refer The time provisions in PAM 2006 on set-off dispute and adjudication are as
only the disputed amount to adjudication. follows:

The PAM 98 and the PAM 98 NSC did not have compatible clauses on set-off. Set-off notice required to be issued by Employer to Contractor 7 Days
Tn PAM 98, the Employer is not allowed to set-off, unless there are express Contractor to respond/dispute 7 Days
provisions in the Contract. ln PAM 98 NSC, the Contractor has unrestricted Period for parties to negotiate 7 Days
set-off rights against the Nominated Sub-Contractor - see PAM 98 NSC Assuming no agreement, period to agree on adjudicator 7 Days
- Clause 11.4 'Provided always that the Architect has been notified of the Assuming no agreement, refer to PAM to appoint an
amounts and reasons for the deductions or set-off, the Contractor shall be adjudicator (say) 21 Days
entitled to deduct from or set-off against any money due from him to the Adjudicator 's decision 21 Days
Sub-Contractor (including any Retention Monies) any sum or sums which the Total 70 Days
Sub-Contractor is liable to pay to the Contractor under this Sub-Contract.' The
provisions in the PAM 98 NSC has resulted in increased cost of Nominated Finally, the Employer will suffer no loss as be will also be entitled to interest up
Sub-Contractor tenders, as most of them have customarily priced in an amount to the date of payment, for any cost incurred if the adjudication took a longer
for the Contractor to set-off. time. Such interest will be awarded as part of the Adjudicator's Decision.

The time provisions in PAM 2006 on set-off dispute and adjudication are as Clause 30.5 - Retention Fund
follows:
The Employer may retain the percentage of the total value of the work,
Set-off notice required to be issued by Employer to materials and goods referred to in Clause 30.2, which is stated in the Appendix
Contractor. 28 Days as Percentage of Certified Value Retained. When the sum of the amounts so
Conh·actor to respond/dispute. 21 Days retained equals the amount stated in the Appendix as Limit of Retention Fund
Period for pa1ties to negotiate if there is a dispute. 21 Days or that amount as reduced under Clauses 16.l(d) and 16. l(f) and/or Clause
Assuming no agreement, period to agree on adjudicator. 21 Days 27.7, as the case may be, then no further amounts shal l be retained by virh.te
Assuming no agreement, refer to PAM to appoint an of this clause.
adjudicator (say) 21 Days
Adjudicator's decision. 21 Days The main purpose of the Retention Fund is to ensure that if the Contractor
Total 133 Days fails to perform his obligation, such as the failure to carry out any works as
instructed by the Architect, failure to rectify Defects, delay or other breaches
Some Employers have expressed concern that if they have already paid for of the Conh·act, the Employer will have available to him the Retention Fund
works which the Contractor had failed to do properly, they should then be able to pay third parties employed to ca1Ty out the default works or recover his cost
to re-coup the amount immediately as a set-off, rather than have to wait for and loss. It is also a safety provision against re-possession of material and
the ad"udicator's decision 133 Days later. On the matter of ayrnent for work goods by the Contractor 's suppliers if the 'retention of title ' in the materials
not properly executed, issue of set-off does not arise. The amount of work and goods are not transfe1Ted to the Contractor after it has been included in
not properly executed should not, in the first place, be included in Interim Interim Cettificates.
Certificates. On the issue of work which the Employer had employed third
parties to cany out, the Employer should be able to set-off the amount not The Retention Fund is the sum retained from the Contractor's payment in
disputed and refer only the disputed amount to adjudication. accordance with Clause 30.5. On the issue of eve1y Interim Certificate, I 0%
of the value of work executed and value of material on Site will be deducted
That said, PAM 2006 is a standard fom1 of contract. If the Employer requires a as Retention Fund to arrive at the amount to be certified for payment to
more speedy resolution on set-off dispute, this can be easily done by changing the Contractor. When the Retention Fund has reached an amount which is
the time period stated in this Clause to a sho1ter time frame. For example, the equivalent to 5% of the Contract Sum, no further sum will be retained . If
dispute and adjudication process can be reduced to 70 Days by changing the the Employer wishes to vaiy the amount of the Retention Fund, it will be
following:

- - ---------- ---
 Clause 30.0 270
necessary to amend the default percentage stated in the Appendix. The limit
of the Retention Fund is to be expressed in monetary terms applying the
percentage stated in the Appendix. The Retention Fund is a fixed sum, and is
not subj ect to change whenever the Contract Sum is adjusted consequential
to a Variation.
C lause 30.6 - Ru les regarding Retention Fund
The amount retained under Cla use 30.5 shall be subjected to the following
rules:
30. 6(a) Lhe Employer 's interest in a ny amount so retained shall be
fidu ciary as trustee for the Contractor, Nominated Sub-Cont ractors
and Nom inated S uppl iers (but without obligation to invest) and
the Contractor 's, Nom inated Sub-Contractors' and Nominated
S uppli ers' benefi cial inte rest shall be subject only to the right of
the Employer to have recourse from time to ti me for payment of
any amount as the Arc hitect may certi fy that he is ent itled under
the Contract to deduct from such sum due o r to become due to the
Contracto r, No minated Sub-Contractors and No minated Suppliers.
ln the event any o f the party elects to demand in writing from the
E mpl oyer (w ith a copy to the Archi tect) for such Rete ntion Fund to
be paid into a trust accoun t, such fund shall be paid by the Employer
wi thin fourteen (14) Days into a n escrow account to be held by
a stakeho lder appointed by the pa rty maki ng the appl icatio n. All
incidental costs of setting up such a trust account shall be bo rne
by the Contractor or Nominated Sub-Contractors o r No mi nated
Suppliers as the case may be;
30.6(b) when the Employer exercises any right under the Contract to deduct
from any monies due to or become due to Lhe Contracto r or where
a pplicable, the Nominated Sub-Con tractors or N ominated Supp lie rs,
he shall mform the relevant party in wri ti ng of the reason for that
deduction;
30.6(c) upon the issuance of the Certificate of Practical Completion. the
Architect shall w ithin fourteen ( 14) Days issue a ce rtificate fo r the
release of one ha lf of the Retention Fund a nd the Contractor shall
be entitled to payment thereafter within the Pe riod o f Honouring
Certificates; a nd
30.6(d) upon the issuance of the Certificate o r Making Good Defects, the
Architect shall within fo urteen (1 4) Days issue a certifi cate for the
Clause 30.0 271
residue of the amount then so retained and the Contractor shall be
enti tled to payment within the Period of Honouring Certificates.
Clause 30. 6(a) "the Employer :S· interest in any amount so retained
shall be.fiduciw yas trustee.for the Contracto,; Nominated Sub-Contractors and
Nominated Suppliers (but without obligation to invest) and the Contractors,
Nominated Sub-Contractors' and Nominated Suppliers· beneficial interest... "
The Clause in PAM 2006 is almost identical to PAM 98 Clause 30.S(i). The
difference between the clauses is that in PAM 98, the Employer's interest in the
Retention Fund shall be fiduciary as trustee for only the Contractor; whereas
in PAM 2006, the Employer 's fiduciary interest also covers the Nominated
Sub-Contractors and Nominated Suppliers. This is because the Retention
Fund being a monetary amount based on a percentage of the Contract Sum
includes also the Nominated Sub-Contractors' and Nominated Suppliers'
retained monies.
Tt has been interpreted in Rayack v Lampeter l 2BLR30 that the words, ' the
Employer's interest in any amount so retained shall be fiduciary as trustee for
the Contractor. .. ' means that the Employer is a trustee and not a beneficiary
of the Retention Fund. The words in the clause, however, are not sufficient to
enable the Contractor to have a priority claim to recover the Retention Fund kept
in the Employer 's account, in the event of the Employer's insolvency. ln fact,
the Contractor 's position would not be any different from any other unsecured
creditor if the Employer declared insolvency. The Contractor can only have a
priority claim on the Retention Fund, if the retention has been set aside in a
separate account and designated to identify the Contractor as the beneficiary.
As there was no express provision in the Clause to require the Employer to
appropriate and set aside the retention as a separate fund, it is understandable
that most employers will resist setting up a separate trust account.
In Rayack v Lampeter 12BLR30, the judge put it this way: the Retention Fund
' is to protect both employer and contractor against the risk of insolvency of
the other. The employer is protected by his right to retain a proportion of the
sum ce1tified as due in respect of work done against the risk that claims in
respect of any failure to carry out the architect's instructions or in respect of
delay or other breaches of the contractor 's obligations will, in the event of the
contractor's insolvency, rank as unsecured debts. The contractor is protected
... against the risk that his claim for payment of monies retained by the
employer will similarly rank as an unsecured debt...Th us, both are protected
if and to the extent that the employer carries out his obligation to set aside as
a separate trust fund a sum equal to the retention monies. The contractor must
be exposed to some degree of risk jeopardy if that is not done ... '
- - - - - ·-- -- -
 Clause 30.0 272
On Condition 30(4), which is similar to PAM 98 Clause 30.5(i) the judge
continued: ' Clause 30.4.... does impose an obligation on an employer to
appropriate and set aside as a separate trust fund a sum equal to ... Unless
condition 30(4) is construed as imposing such an obligation, it cannot, as l
see it, have any practical operation. Further Condition 30(4) refers to 'the
contractor's beneficial interest therein' , and the predicated beneficial interest
could only subsist in a fund so appropriated and set aside."
It is also interesting to note the comments by the editors of the Building Law
Repo1t on the same case. They said:
'Clause 30(4) is to be criticised for failing expressly to provide for
the setting up of the contemplated trust fund .. .It appears from the
reasoning ofVinelott J (although it is nowhere expressly stated in his
judgment on the motion) that he was persuaded that the failure of the
draughtsman expressly to provide for the setting up of the trust fund
was to be remedied by the implication of an appropriate term in the
contract Such an implication being both reasonable and necessary to
give the contract 'business efficacy.'
Although there are now a number of cases to confirm that the employer has
to set up a separate trust fund for the Retention Fund, some professionals
continue to adv ise that under PAM 98, it is not necessary for the employer to
do so. The solution to this problem is easily answered by correctly interpreting
the ownership of the Retention Fund as presented in the following PAM 98
Clause 30.S(i): ' The Employer's interest in any amount so retained shall be
fiducia1y as trustee for the Contractor (but without obligation to invest) and
the Contractor's beneficial interest therein shall be subject only to the right of
the Employer to have recourse thereto from time to time for payment of any
amount as the Architect may ce1tify that he is entitled under the provisions of
this Contract to deduct from such sum due or to become due to the Contractor.'
As long as the Em lo er is solvent there is no roblem whether the Retention
Fund is set aside in a separate trust fund or kept in the Employer 's account.
However, if the Employer is insolvent, the trustee in bankruptcy or liquidator
will have to act in accordance with the Insolvency Act requiring the assets to
be shared equally amongst the Employer 's creditors under the 'pari passu'
principle.
The following are some cases relating to the above issues:
In Re Jartay Developments Ltd 22 BLR 134, the employer entered into an
development agreement with the trustee of a pension fund ('Fund') to cany
out the works, and there was a provision in the development agreement that
Clause 30.0 273
the employer would be entering into a building contract with a contractor and
that the Fund will pay the employer based on monthly certificates issued by the
employer 's architect. When the employer went into voluntary liquidation, the
contractor applied by vi1tue of the development agreement and the building
contract that the retention held by the Fund was to be set aside in a trust fund.
The court refused to make an order holding that if the contractor requires
the employer (and thereby the Fund) to place the retention in a separate
trust account, the contractor must obtain the order from the court when the
employer was still solvent.
In Henry Boot Building Ltd v Croydon Hore! & Leisure 36 BLR 41, the
court affirmed that the employer cannot be compelled to pay the retention in
a separate trust fund if the architect has already issued a certificate of non-
completion which entitles the employer to liquidated damages in excess of the
retention. However, the court may order the employer to place the retention in
a trust fund if the employer 's claims are speculative and unsubstantiated and
is not backed by a bona.fide certificate from the architect.
In Wares Cons/ruction v Franthom Property 53 BLR 2, Clause 30.5.3 of JCT
80 requiring the employer lo place retention in a separate bank account was
deleted, but retained the clause stating that: ' the employer 's interest in any
amount so retained shall be fiduc iary as trustee for the contractor and any
nominated sub-contractor (but without obligation to invest' . The court rej ected
the employer 's contention that the deletion of Clause 30. 5.3 meant that the
employer was not obligated to set up a separate trust account. The court held
that by retaining the clause stated above, the case was indistinguishable from
the case or Rayack v Lampe/er I 2BLR30 explained earlier. The cou1t went
on to suggest that if a separate bank account is not to be set up, clear express
provisions are needed.
In Mac-Jordon Construction v Brookmount Erostin 56 BLR 1, the employer
gave a floating charge over his assets including his interest in a building
contract to a bank. After the bank had appointed receivers of the employer 's
assets, the contractor applied for a court order to force the employer to set
aside the retention into a separate account. The essential issue was whether
the contractor 's right to have the retention fund set aside took priority over
the bank's equitable interest. The court refused the order on the ground that
when the bank took its floating charge, it was then not interfering with any
contractual right of the contractor and was therefore entitled, when the charge
crystallized, to the benefit of its security even though it may have had notice
of the contractor 's right to have the retention set as ide.
- - ---- - -•-- ·-- -- -

Clause 30.0 274
PAM 2006 is a standard fonn of contract and has adopted the same Retention
Fund clause that was in PAM/ISM 69 and PAM 98. If tbe employer or
professional consultant desires to amend the clauses on Retention Fund, care
must be taken when canying out any amendment or deletion in order to avoid
the problems as encountered in Wates Construction case.
The problems relating to Retention Fund does not arise in JKR Forms of
Contract, as there is no requirement for retention in government projects.
Clause 30.6(a): "... shall be subject on~v to the right of the Employer
to have recourse... .forpayment ofany amount as the Architect may certifj1that
he is entitled under the Contract... "
If the Employer intends to set-off any amount from the Retention Fund, the
Architect will need to certify the Employer's entitlement to cany out such
a deduction. This Clause ties in with Clause 30.6(b) for the Employer to
inform the relevant party in writing on the reason for the deduction. This is
to minimise abuse by the Employer in making any deduction without giving
reasons to do so.
Clause 30.6(a): "In the event any of the party elects to demand in
writing fi-om the Employe,:.jor such Retention Fund to be paid into a trust
account.. .AII incidental costs o_lsetting up such a trust account shall be horne
by the Contractor or Nominated Sub-Contractors or Nominated Suppliers ... "
Case law such as Rayack v Lampeter l 2BLR30 had established that clauses
similar to PAM 98 Clause 30.S(i): "The Employers interest in any amount
so retained shall be fiduciary as trustee for the Contractor (but without
obligation to invest) ..... " means that the employer will have to set up a
separate account if requested by the contractor. Unfortunately, there is no
provision in the conh·act to deal with issues such as how the trust account
is to be set-up, who is to administer the trust account and the legal cost
of setting up the account. PAM 2006 provides that if any party (that is,
the Contractor or a Nominated Sub-Contractor or a Nominated Supplier)
requires the Employer to set up a ttust account, they will have to bear the
cost incurred in the setting up of such an account. The cost will include
legal cost and the appointment of a trustee to administer the trust account.
It is clear that the Architect and Consultant should not have any role
supervising or monitoring the trust account, as it is not within the scope of
their professional appointments.
It is important to bear in mind that it is not mandatory under PAM 2006 that
the Employer must set up a separate trust account. If parties in the Contract
l
Clause 30.0 275
have confidence in the Employer's fi nancial standing, it is not necessary to set
up a separate tt·ust account.
Clause 30.6(b) : "1vhen the Employer exercises any right under the
Contract to deduct from any monies due to or become due lo the Contractor
... he shall i,?form the relevant parzi1in ,vriting o/the reason.for that deduction"
lf the Employer deducts any money from the Retention Fund belonging to
the Contractor, Nominated Sub-Contractor or Nominated Supplier, he must
inform the relevant party of his action. This is because although the Retention
Fund is held by the Employer, it does not belong to him. For example, the
Liquidated Damages c la imed by the Employer may be deducted from any
monies due to the Contractor, including the Retention Fund.
Clause 30.6(c): "... upon the issuance of the Certificate o/ Practical
Completion, the Architect shall withinfourteen (14) Days issue a certificate
for the release of one half()lthe Retention Fund. .. "
Upon the Architect having issued the Certificate of Practical Completion,
the Quantity Surveyor shall issue a payment valuation to the Architect, to
enable the A rchitect to issue an Interim Certificate to release half the amount
of Retention Fund to the Contractor. This should be done within a total of 14
Days upon the Architect's issuance of the Certificate of Practical Completion.
Clause 30. 6(d) : "... upon the issuance ol the Certificate of Making
Good Defects, the Architect shall... issue a certificate for the residue r?f the
amount then so retained. .. "
Upon the Architect having issued the Certificate of Making Good Defects, the
Quantity Surveyor shall issue a payment valuation to the Architect, to enable
the Architect to issue the Interim/Final Certificate in order to release residue of
the Retention Fund to the Contractor. This should be done within a total of 14
Days upon the Architect's issuance ofthe Certificate of Making Good Defects.
Clause 30.7 - Suspension of Works for· non-payment
Without prej udice to the Contractor's right to determine his own employment
under C lause 26.0, if the Employer fails or neglects to pay the Contractor
the amount due as shown in the payment certificate (less any Liquidated
Damages and set-off which the Employer is expressly entitled to make
under the Contract) and conti nue such default for fou rteen ( 14) Days from
the receipt of a written notice delivered by hand or by registered post from
the Contractor stating that if payment is not made within the fourteen (14)
.. - ·- . - - - -- ..... -- - ,._ - -.. . .

Clause 30 .0 276
Days, the Contractor may by a further written notice delivered by hand or
by registered post, forthwith suspend the execution of the Works until such
time payment is made. Provided always that such notice shall not be given
unreasonably or vexatiously.
The right of Nominated Sub-Contractors to suspe nd the execution of the Sub-
Contract Work in the event o f failure by the Contractor to make payments to
Nominated Sub-Contractors had been enshrined in PAM 98 NSC Clause 11.7:
'If the Contractor shall fail to make payment to the Sub-Contractor.. .then the
Sub-Contractor may (but without prejudice to any right or remedy) suspend
the further execution of the Sub-Contract Works until such payment shall be
made ... ' The same right was also previo usly provided under PAM/ISM 69
NSC Clause 11 (e).
It is only equitable that the same right shall be provided to the Contractor to
suspend the execution of the Works, in the event the Employer fail s to make
the appropriate payments to the Contractor. Consider the following situation
under PAM 98: the Employer fails to pay the Contractor and, as a result oftbe
Employer's failure, the Contractor fails to pay the Nominated Sub-Contractor.
lf that happens, the Nominated Sub-Contractor can suspend the execution of
the S ub-Contrac t Work, but the same failure by the Employer will onl y entitle
the Contractor to determine his own employment under C lause 26, but there is
no contractual entitlement to suspend the execution of the Works. The clauses
in PAM 98 and PAM98 NSC do not appear to be equitable. T his has now been
addressed in PAM 2006 and PAM 2006 NSC so that both contracts are now
consiste nt with each other.
Clause 30. 7: "Without pr~judice to the Contractors right to
determine his own employment under Clause 26.0... "
Under PAM/lSM 69 and PAM 98, in the event the Employer has defaulted
in any payme nt to the Contracto r, the only recourse is for the Contractor to
In PAM 2006, another option is now g iven to the Contractor. He can now also
choose to suspe nd his works, thereby g iving the Employer an opportunity to
remedy the breach, instead of dete rmining his own emp loyment immediately.
Clause 30. 7: ''if the Employer fails or neglects to pay the
Contractor the amount due as shown in the payment certificate (less any
Liquidated Damages and set-off which the Employer is express)y entitled to
make under the Contract) ... "
...
Clause 30 .0 277
Tt is clear that the amount of the Employer 's default must take into consideration
any Liquidated Damages and set-off which the Employer may be entitled to.
In this regard, the Employer must inform the Contractor in writing of any
deduction of Liquidated Damages in accordance w ith the requirements of
Cla use 22.1 , and set-off under Clause 30.4.
Clause 30. 7: ''Provided always that such notice shall not he given
unreasonably or vexatiously. "
For an explanation of ' unreasonably or vexatiously' please refer to the
explanation for Clause 25.2.
An example of ' unreasonably or vexatiously' would be if the Contractor
gave notice to suspend the execution of the Works over a late pay ment of say
RMl0,000 in a multi million ringgit Contract.
In the event the Contractor correctl y suspends the exec ution of the Works
under this C lause, he shall be entitled to exte nsion of time under Clause
23.8(v) and loss and/or expense unde r Clause 24.3(111).
Clause 30.8 - Compulsory suspension of Works
lf the Architect and/or Consultant inform the Contractor in writing of their
withdrawal from the supervision of the execution of the Works required under
the local building by-laws for whatever reasons, the Contractor shall forthwith
suspend the execution of the Works and continue such suspension until the
resumption of the said supervision.
The Architect and/or Consultant who are referred to as the ' Principal
Submitting Person ' (PSP) and or Submitting Person (SP) who are ' Qualified
Pe rson ' (QP) under the Uniform Building By Laws, will not be in the pos ition
to sign the various declarations required of them for the application of the
Certificate of Fitness or for the issuance of Ce rtificate of Completion and
Compliance, if works continued whe n the QP bas w ithdrawn from the
superv ision of the Work. Similarly, the new QP appointed to replace the
previous QP will not be in a pos ition to sign for works executed by the
Contractor without supervision before bis appointment.
The Contractor must therefore suspend the execution of the whole Works on site
if the 'QP' who is the " PSP ' (i.e. in most instances the Architect) informs him
of his withdrawal from the supervision of the Works and shall continue such
suspension until there is a resumption of supervision by a ' Qualifi ed Person ' .
 ----------------------------------------- C/a11se 30.0 278
The Contractor is only required to suspend the execution of the relevant
portion of the works on s ite if the relevant ' QP' who is the ' SP ' informs
him of their withdrawal from the supervision of that portion of the work.
The other works not under the superv ision of the affected ' QP' could still
continue at the Site. For exampl e, the Contractor is still allowed to continue
with the architectural and structural works if the M and E consultant
withdraws from the project. Similarly, the Contractor could still carry on
with the Architectural works and the M and E works when the structural
engineer withdraws his serv ice
In the eve nt the Contractor suspends the execution of his works under this
Clause, he shall be entitled to extension of time under Clause 23 .8(v) and loss
and/or expe nse under Clause 24.3(m).
Clause 30.9 - Cessation insurance resultin2 from suspension of the
Works
lf the Contractor suspends the Works in accordance with the provisions of
C lauses 30.7 and 30.8, he shall secure and protect the Works during the period
of suspension and ensure that there is separate cessation insurance cover for
all the risks specified in Clauses 19.0 and 20.A or 20 .8 or 20.C for the whole
period of suspension. The cost incurred for such protection and cessation
insurance cover shall be added to the Contract Sum.
In the event the Contractor suspends the execution of the works on site, he has
a duty to
(i) secure and protect the Works, which amongst other things include the
provision of adequate security on Site;
and
(ii) ensure that he has an insurance endorsement to the Contractor 's All
Risk ('CAR') Insurance policyio_cm.rer...fo.Lrisk during the period of
cessation of works on Site, as the normal CAR Insurance does not
cover this risk.
The Contractor is entitled to recover all the cost inc urred in connection with
this Clause.
Clause 30.10 - Final Account
Within six (6) Months after Practical Completion of the Works, the Contractor
shall send to the Architect and Quantity Surveyor, all documents necessa ry for
Clause 30.0 279
preparing the Fina l Account, including all documents relating to the accounts
ol'Nominated Sub-Contractors (if these had not been submitted earlier under
the Nom inated Sub-Contract) and Nominated Suppliers. Such documents
shall contain all the latest construction drawings and details (bound together),
details ofall quantities, rates and prices and any adjustment of the Contract Sum
and additiona l payment or compensation claimed by the Contractor under the
Contract together wi th any explanation and supporting vouchers, documents
and calculations, which may be necessary to enable the Final Account to be
prepared by the Architect and Quantity Surveyor. The Final Account shall be
completed within six (6) Months from receipt of all the documents from the
Contractor. The period fo r completion of the Final Account shall be adj usted
ifthere is any delay by the Contractor in sending the necessary documents. In
the event the Contractor fai ls to submit all documents necessary for preparing
the Final Account, the Architect or Quantity Surveyor shall nevertheless
complete and issue the same based on the information available within the
Period to complete the Final Accou nt stated in the Appendix. On completion
of the Final Account, the Architect or Quantity Surveyor shall then send a
copy of the document to the Employer and Contractor.
30.l0(a) If nothing in the said Final Account is disputed by the Employer
or Contractor within three (3) Months from the date of receipt
of the Final Account from the Architect or Quantity Surveyor,
the Final Account shall be conclusive and deemed agreed by the
parties.
30.1 0(b) If either party disputes the Final Account, the party disputing
the Final Account shall by written notice to the other party
(with copies to the Architect and Quantity Surveyor) set out any
disagreement complete with particulars within three (3) Months
of the date of receipt of the Final Account from the Architect
or Quantity Surveyor. The Architect or Quantity Surveyor
within three (3) Months from the date of receipt of the grounds
of dispute sha ll either am end or not amend the Final Account.
Any party disagreeing with the amended Fina l Account or
decision not to amend the Final Account shall refer the dispute
to arbitration under Clause 34.0 withi n three (3) Months from
the date of receipt of the amended F inal Account or decision
not to amend the Final Account. Failure to refer the dispute
to arbitration withi n the stipulated time, the Final Account or
amended Final Account shall deem to be conclusive and agreed
by the parties.
 Clause 30.0 280
- Clause 30.0 28 /
30.JO(c) Any d ispute on Liquidated Damages, sel-off and interest which
the Employer is entitled to make under the Contract sha ll be
refcn ed lo arbitration.
Clause 30.J 0: "Within six (6) Months afier Practical Completion o/
the Works, the Contractor shall send. .. all documents necesswy.for preparing
the Final Account... The Final Account shall be completed within six (6)
Months.from receipt of all the docwnentsfiwn the Contractm: The period.for
completion of the Final Account shall be adjusted tf there is any delay by the
Contractor: ..l n the event the Contractor fails to submit all documents .. .the
Architect or Quantity Surveyor shall nevertheless complete and issue the same
based on the il?furmation available within the Period to complete the Final
Account stated in the Appendix... "
T his explains the timetable that the Arc hi tect or Consu ltant must comply in
p repari ng the Final Account.
Clause 30.10: "... all documents ... inc/11ding all documents relating
to the accounts of Nominated Sub-Contractors... and Nominated Suppliers.
Such documents shall contain all the latest constrnction drawings and details
(bound togethe,), details o_fall quantities, rates and prices and any adjustment
of the Contract Sum and additional payment or compensation claimed by the
Contractor under the Contract together with any explanation and supporting
vouchers, documents and calculations... "
For the Architect or Consultant to prepare the Final Accounl wilhin the time
frame prov ided , the Contractor must now submit all the documentation and
information which he requires the Architect or Consultant to consider in
their preparation of the Final Account. T he Contractor must not submit his
in formation in a piecemeal bas is a nd the Arc hitect and Consultant are not
obligated to search beyond the info rmation and documentation su bmitted.
Clause 30.10: ··un completion oj the Final Account, the Architect
or Quantity Surveyor shall then send a copy of the document to the Employer
and Contracto,: "
When the F inal Account is comple ted, a copy would need to be sent to both
the Empl oyer and the Conlrnctor to obtain the ir agreeme nt.
Clause 30.10(11): "fl nothing in the said Final Account is disputed by
the Employer or Contractor within three (3) Months.fimn the date ofreceipt of
the F inal Account.fi'0/11 the Architect or Quantity Survey01; the Final Account
shall be conclusive and deemed agreed by the parties. "
Sometimes, for reasons only known to the parties, they may not respond with
any agreement/disagreement to the Final Account. Tn that event, this Clause
express ly provides that if both the E mployer and Contractor fail to notify any
dispute on the Final Account within 3 Months from date ofreceipt of Account,
the Final Account shall be conclusive and deemed agreed by the parties.
Clause 30.1 0(b): "If either party disputes the Final Account, the party
disputing the Final Account shall by written notice to the other party (with
copies to the Architect and Quantity Su111ey0J) set out any disagreement
complete with particulars within three (3) Months of the date of receipt of"the
Final Accountfi-0,11 the Architect or Quantity Surveyo,: "
This explains the actions required in the event there is any disagreement w ith
the F inal Accoun t.
Clause 30.l0(b): "The Architect or Quantity Surveyor within three (3)
Months _fi-0111 the date of receipt of the grounds of dispute shall either amend
or not amend the Final Account. "
This explains the actions required by the Architect or Q uantity Surveyor
following the notification of any disagreement on the F inal Account.
Clause 30.l0(b): "Any party disagreeing with the amended Final
Account or decision not to amend the Final Account shall refer the dispute to
arbitration under Clause 34.0 within three (3) 1\lfonthsfi'0/11 the date ofreceipt
of the amended Final Account or decision not to amend the Final Account."
The above Clause is self-explanatory.
Clause 30. J0(b): ''Failure to refer the dispute to arbitration within the
stipulated time, the Final Account or amended Final Account shall deem to be
conclusive and agreed by the parties."
The above C lause is self-explanatory.
Clause 30. 11 - lte ms in Final Account
T he F inal Account of the Works shall show:
30. l l (a) the adjustment made to the Contract Sum;
30. ll (b) the amounts to which the Architect considers that the Conlraclor
is entitled under the exp ress provisions of the Contract;
 Clause 30.0 282
30. 11(c) the omission of all P.C. Sums and the related profit provided by
the Contractor in the Contract Docume nts and the s ubstitution
of the amoun ts payable by the Employer to the No minated Sub-
Contrac tors and Nom ina ted Suppliers together w ith the pro-ra ta
amount for pro fit; a nd
30 . 11 (d) the adjus tment of Provisiona l Sums and omissio n of any
Prov isiona l Sums i r not ex pe nded.
The following s ha ll not be included in the Fina l Account and are ma tters to be
resolved separate ly between the Employer and Contractor:
30.Jl (e) any Liquidated Damages imposed by the Employer under C lause
22. 1;
30. 11( t) set-o rr by the Emp loyer w he re it is expressly prov ided 111 the
C ontract under C lause 30.4; a nd
30. 11 (g) in terest payable by e ither o f the parties to the othe r pa rty under
C lause 30 . 17.
With the exceptio ns of the items lis ted below, the F ina l Account sha ll inc lude
all the adj ustments necessary as provided in the Contract to mTive at the Final
Account.
The Final Account is prepared by the Architect and Consulta nt, based on the
amount of work executed under the Contract, and has to be carried out in
accorda nce with the time frame set out in Clause 30.10. There are however,
some items that may de lay the preparation of the Final Account, and these
items are not within the control of the Architect and Consultant. As s uch ,
provisions are made for the settlement of the F inal Account to exclude the
Liqt+idated---Dama ge&, set-off and interest,which w ill be furtl1er e laborated
below:
Clause 30.ll(e): "...any LiquidatedDamages imposed by the Employer
under Clause 22. I"
As is common with the provisions ofprevious editions of the PAM Contracts,
L iquidated Damages is a matter between the E mploye r a nd the Contractor.
A lthough the Arch itect has a duty to advise the Employer on the amount
of Liquidated Damages to be imposed after the Architect has issued the
Certificate of Non Completion, it is up to the E mployer whether to deduct
al l or part of the amoun t of Liquida ted Damages so advised by the A rchitect.
Clause 30.0 283
Clause 30. 11 (/): "...set-off' by the Employer \\'here ii is expressly
provided in the Contract under Clause 30.4 "
If there are any disputes on set-off during the Contract period, such disputes
w ill be refeJTed to an adjudicator for a dec ision. In the event a party disputes
the adjudicator 's decision, the disputed set-off s ha ll be referred to arbitration
after the completion of the Works. As the time for arbitration is beyond the
control of the A rchitect or Consu ltant, and the Architect or Consultant has to
complete the Final Account w ith in the time fra me provided in C lause 30.1 0, it
is expressly provided that the Final Account can be concluded without waiting
fo r the arbitration award.
Clause 30. ll (g): "... interest payable by either of the parties to the
other party under Clause 30. 17. "
The settlement on the amount of interest is a matter between the Employer and
the Contractor. Tf there is a dispute on interest payments, only the Employer
a nd the Contractor can fina lise this, and it may not be poss ible for the Archi tect
or Consultant to resolve this dispute if, for example , the matter of paym ent
records is itself disputed. Any dispute between the parties on this issue, w ill
therefore not delay the Architect or Consultant from completing the F ina l
Account w ithin the time frame provided in Clause 30. 10, as the interest is
excluded from the Final Account.
Clause 30.12 - Conclusiveness of the Final Account
Unless a w ritte n notice fo r arbitration sha ll have been given under C lause
34.0 by e ither party w ithin the stipula ted time s tated in C la use 30 . 10, the
Final Account or the last amended Final Account s hall be conc lus ive and
deemed agreed by the parties other than a ny outstanding items to be resolved
separate ly between the E mployer and Contrac tor under C lauses 30. 1 l (e) to
30 .1 l(g), except w here the F inal Account is eIToneous by reason o f:
30. 12(a) fraud, dishonesty or fraudulent concealment relating to the Works;
or
30. I 2(b) any ari thmetical errors in any computa tion .
Under PAM/ISM 69 C lause 30(7), the fina l certificate serves two functions:
firs tly, the final certificate shall be conclusive evidence ' ... that the Works have
been properly carried out and comp leted in accordance w ith the terms of this
Contract;' and secondly ' that any necessary effect has been given to a ll terms
of the Contract which requires an adj ustment to be made to the Contract Sum .'
- - - ~ - - --- - - - ·- -· - . ..

Cla11se 30 .0 284
The second part of the above clause in effect means that the final certificate is
conclusive on the value of the work, and the employer and contractor will not
be able to amend the sum named in the final ce1tificate, unless it is due to fraud,
dishonesty or fraudulent concealment relating to the Works and arithmetical
errors.
Under PAM 98 Clause 30.8, the clause has been revised to: ' No ce1tificate of
the Architect shall of itself be conclusive evidence that any work, materials or
goods to which it relates are in accordance with the Contract. '
Unfortunately, the revised clause in PAM 98 missed out the vital issue that
the final certificate is also conclusive on the value of the work. Without this
statement, the final ce1tificate will not be conclusive on the final value of the
works, and it will be possible for the contractor and the employer to raise all
sorts of issues to change the value stated in the final certificate. This situation
will possibly remain until the expiration of the statutory limitation period.
Clause 30.12: " ...the Final Account or the last amended Final
Account shall be conclusive and deemed agreed by the parties other than any
outstanding items... "
Under PAM 2006, the Final Account, or the last amended Final Account, is
conclusive on the value of Works, except for the Liquidated Damages, set-off
and interest, which were elaborated upon earlier.
The Final Account can be rectified only if:
(i) There is fraud, dishonesty or fraudulent concealment relating to the
Works; or
(ii) There is any arithmetical error.
Clause 30.13 - Issuance of Penultimate Certificate
The Architect may issue a Penultimate Certificate for the release of the retention
sums and any other outstanding sums for all Nominated Sub-Contractors and/
or Nom inated Suppliers not later than fo urteen (14) Days after the Ceriificate
of Making Good Defects has been issued .
The penultimate certificate referred to in PAM 98 Clause 30.6 is a reference
to the payment certificate issued after the conclusion of the final account and
before the issue of the final certificate. This te1m was abandoned in e~rlier
RlBA Forms of Contract, because it will mean that the Architect is pre-
empted from issuing any further ce1tificates after the issue of the penultimate
certificate.
a
Clause 30.0 285
The term ' Penultimate Ce11ificate' as defined in PAM 2006Article 7 (an) means
' the payment ce1tificate issued by the Architect for the release of the retention
sums and any other outstanding sums to Nominated Sub-Contractors and/or
Nominated Suppliers. ' A sample of the penultimate certificate can be found in
Annexure 'A'.
The Penultimate Certificate is therefore, to release monies to the Nominated
Sub-Contractor before the Final Certificate to the Contractor. In the event that
the Contractor fails to pay the Nominated Sub-Contractor, there is still the final
opportunity to pay the Nominated Sub-Contractor by direct payment in the
Final Ce1tificate.
If there are no Nominated Sub-Contractors and/or Nominated Suppliers, there
will be no Penultimate Certificate. Tf there is a need to issue the Penultimate
Certificate, it shal I be issued not later than 14 Days after the Ce1tificate of
Making Good Defects has been issued.
Clause 30.14 - Issuance of Final Certificate
The Final Certificate shall be issued :
30.14(a) within twenty one (2 1) Days after the Period of Honouring
Certificates for the payment of the Penultimate Certificate; or
30. l 4(b) within twenty eight (28) Days after the Certificate of Making Good
Defects has been issued, in the event no Penultimate Certificate
has been issued.
This Clause sets the time frame 111 w hich the Final Ce1tificate shall be
issued. The Architect shall take note that he must endeavour to issue the
Final Certificate within the time frame stipulated. After the issue of the Final
Certificate, the Architect will be.fimctus officio, in other words, his authority
to act and his role under the contract cease.
Clause 30.15 - Final Certificate
The Final Certificate shall state:
30.15(a) the Final Account; less
30.15(6) the total sums certified in previous payment certificates (whether
paid or not paid) to the Contractor;
 Clause 30.0 286
a nd the difference, if any, between the sums shall be the balance due to the
Contractor by the Empl oyer or conversely as the case may be. The balance
shall be payable by the E mployer to the Contractor w ithin the Period of
Honouring Certifi cates or if it is a debt payable by the C ontractor to the
Employer, s hall be payable by the Contractor within the Period o f Hono uring
Certifi cates. T he Architect s ha ll not be obl iged to issue the Fina l Certificate
before the issuance o f a Certificate of Making Good Defects.
Clause 30. 15(b): ··... the total sums cert[fted in previous payment
certificates (whether paid or not paid) ... "
In the Final Certificate, the adjustment for the balance due to the Contractor
shall take into consideration the total sums 'certifi ed' in previous payment,
whether paid or unpaid. The Architect will have a record of the amount
certified from previous certificates and, unless notified otherwise by the
Contractor, will deem that the Employer has made all the payments certified.
This Clause should be distinguished from the provisions of PAM 98 C lause
30.7(i) where ' the Architect shall issue a Final Certificate less "the sum
paid to the Contractor under Interim Certificates ... ' . The reference to the
' sum paid' means that the Architect has to seek agreement of the sum from
both parties. There may be disagreement on the 'sums paid' , if the parties
had agreed on other forms of payment, for example: contra payments on
property or materials and goods supplied by the Employer. If that happens,
there will be difficulties in establishing the balance due to the Contractor or
v ice versa .
Further, the reference to 'sums paid' will mean that any deduction for
Liquidated Damages and set-off by the Employer will not be taken into
consideration under ' sums paid' . Therefore, if the Architect took into
account only the sums paid to the Contractor, it will mean that the Liquidated
Damages and set-off w ill not have been deducted from the Fina l Account, and
the Contractor may be overpaid by the amount of the Liquidated Damages
imposed and the set-off sums deducted from the Contractor's payment.
The Architect should only issue the Final Certificate after the issuance of a
Certificate of Making Good Defects. This is to ens ure that the cost of making
good any Defects, if not disputed, can be deducted from the F inal Account.
C lause 30.16 - Final Certificate not conclusive
The Fina l Certificate shall be conclusive on the final value of the Works with
the excepti on of any o utstanding claims between the E mployer and Contracto r
Clause 30.0 287
under C la use 30.11 . The Final Certificate shall not be conclusive evidence that
any work, materials and goods to which it relates and designs (if any) executed
by the Contractor and/or No minated Sub-Contractors are in accordance with
the Contract.
This Clause makes it clear that the Final Certificate is only concl usive as far as
the final value of Works is concerned, and it shall not be conclusive evidence
that any work, materials and goods and designs (if any) by the Contractor and
Nominated Contractors are in accordance with the Contract. This means that
if it is subsequently discovered that some of the works executed (or materials
used) are not in accordance with the Contract, even though the Employer has
paid the Contractor fully, the Employer can still bold the Contractor and/or
Nominated Sub-Contractor responsible for such non-compliance.
Clause 30. 17 - l nterest
lf the E mployer fails to pay the Contractor the amount due on any certificate
(less any L iquidated Damages and set-off which the Employer is expressly
entitled to make under the Contract) after the Pe riod of Honouring Certificates,
or the Contractor owes a debt or fail s to pay any sum due and owing to the
Employer within twenty-one (2 1) Days after receipt o f written notification
by the Employe r of such debt or amount owing, a simple interest based on
the May bank Base Lending Rate plus one ( I) percent shall be payable by the
defa ulting party on such outstanding amount until the date payment is made.
In FG Minter v Welsh HTSO JJBLRJ, the court commented that:
'cash flow is vital to the contractor and delay in paying him for the
w ork he does naturally results in the ordinary course of things in
his being sh01t of working capital, having to bonow capital to pay
wages ...The loss of the interest which he has to pay on the capital he
is forced to bo1rnw and on the capital he is not free to invest would be
recoverable for the employer 's breach of contract... '
Tn Rees and Kirby v Swansea Corpomtion 30 BLR 1, the judge, in applying
the Minter principle went fu1ther and said that the contractor should also be
entitled to compound interest. The judge supported his comment as follows:
' ... It is notorious that banks .. .when calculating interest on overdrafts,
operate on the basis of periodic rests: on the basis of the principle
stated by the Court of Appeal in Minter's case .. .I for my part can
see no reason why that fact should not be taken into account when
calculating the contractor's claim ... '
. - - - ----·-- ·-·- .. -- ......::~ ..
 .,
Clause 30.0 288 Clause 30.0 289

PAM 2006 limits the interest rates to simple interest and at a rate to be Clause 30. 17: ... a simple interest based on the Maybank Base
fixed, rather than the commercial rates upon which the Contractor may have Lending Rate plus one (I) percent... "
borrowed the money.
T he contractual interest rate that the Employer can charge the Contractor is
If the Employer desires to delete this Clause, this will mean that in the event based on Maybanl< base lending rate plus 1% . If there is any change to follow
the dispute is referred to arbitration, the Arbitrator will have the liberty to the commercial rates, this must be expressly stated in the Contract.
decide on the rates of interest. Most will follow the High Court Rules, where
the court usually awards an interest based on a rate of 8%. For information, in
JCT 2005, the interest rate is 5% per annum above the official dealing rate of
the Bank of England cunent at the date that a payment due under the contract
becomes overdue.

Clause 30. 17: "fl the Employer fails to pay the Contractor the
amount due on any cert{ficate (less any liquidated Damages and set-ojfwhich
the Employer is expressly entitled to make under the Contract) ... "

The amount due to the Contractor will be shown in the payment ce1tificates.
If the Employer does not pay the Contractor such amount, the Contractor is
entitled to interest. The amount of interest is a matter between the Employer
and the Contractor, and is not included in payment certificates and the Final
Account. The reason for taking this approach is that patties may disagree on
the amount and the period of late payment, and if that happens, the Architect
will not be in a position to work out the proper interest amount to include this
in the payment ce1tificates and the Final Account.

The Employer is entitled to deduct the Liquidated Damages from the payment
certificates if the Architect has issued a Certificate of Non Completion, and
the Employer has informed the Contractor in writing of his intention to deduct
such Liquidated Damages.

The Employer is further allowed to deduct any set-off which is agreed or has
not been disputed, or where the Adjudicator has issued a decision.

Clause 30.1 7: " ...or the Contractor owes a debt orfails to pay any
sum due and owing to the Employe,: .. "

Ifthe Contractor owes a debt to the Employer or fails to pay any monies owing to
the Employer, the Contractor shall be liable to pay interest on such outstanding
amount. For example, if the Employer did not deduct the full amount of
Liquidated Damages and had infmmed the Contractor in writing that Liquidated
Damages in accordance with Clause 22 will be imposed, the Employer shall be
entitled to interest on the amount owing. To avoid any disputes, the Employer
should info1m the Contractor of his intention to levy interest.

- - - - -- -- • • -• • - • • II • ~ - - • • • •
 Clause 3 1 .0 29 1

- -Clause 31.0 - Outbreak Of Hostilities

1
----------- - -- - - --- - - -
Clause 3 l. I - Hostilities - determinatio n by Employer or Contracto r

If during the currency of the Contract there is an outbreak of hostilities

(whether war is declared or not) in which Malaysia is involved on a scale
involving the general mobilisation of the Malaysian Armed Forces in which
the Works are to be carried out, then either the Employer or Contractor may
at any time by written notice delivered by hand or by registered post to
the other, forthwith determine the employment of the Contractor under the
Contract.

When the Government orders the general mobilisation of the Malaysian

Armed Forces to counter an outbreak of hostilities or declare war on another
country, this would provide sufficient reasons for either the Employer to
determine the Contractor's employment, or for the Contractor to detennine
his own employment under the Contract. The Contractor's employment will
be considered as determined forthwith upon written notice delivered by hand
or by registered post to the other party.

Clause 3 1.2 - Notices of determination

Provided always that such written notice shall not be given:

31.2(a) before the expiration of twenty eight (28) Days from the date on
which the order is given for general mobilisation as aforesaid; or

3 L.2(b) after Practical Completion of the Works unless the Works have
sustai ned war damage as defined in Clause 32.2.

The notice of detennination by either party of the Contractor's employment

can only be given within 28 Days from the date on which the order is given
for general mobilisation or by the Employer after Practical Completion of the
Works unless the Works has sustained war damage.

Clause 31.3 - Al regarding protective work

After a written notice under Clause 31.1 has been given by either the Contractor
or the Employer, the Architect may within fourteen ( 14) Days issue AT to the
Contractorrequiring the execution of protective work and the Contractor shall
comply with such Al , as if written notice of determination had not been given.

- - - - • • ,. - • - - • - - - ,._ - - • • • . . . .. I -
 Clause 3 I .0 292 Clause 32 .0 293

If the Contractor for reasons beyond his control is prevented from completing
the work to which the said Al relate within three (3) Months from the date on
which the AT was issued, he may abandon such work.
Clause 32. l - Procedures followin2 war dama2e
The Architect is empowered by this C lause to issue an AI requmng the
fn the event of the Works or any unfixed materials and goods intended for,
Contrnctor to carry out protective work, even if the Employer or the Contractor
delivered to and placed on or adjacent to the Works sustain war damage then
has issued the written notice detennining the Contractor's employment,
notwithstanding anything expressed or implied elsewhere in the Contract:
provided such an Al is issued within 14 Days from the written notice. Su ch an
Al will still be considered as a Variation under the Contract. lfthe Contractor
32. l (a) the occurrence of such war damage shall be disregarded in computing
is unable to carry out the protective work within 3 Months from the date on
any amounts payable to the Contractor under or by virtue of the
which the Al was issued, he may infonn the Architect and aba ndon cany ing
Contract;
out the protective work.
32.1(b) the Architect may issue Al requiring the Contractor to remove and/
Clause 3 1.4 - Payment resultin2 from determination
or dispose of any debris and/or damaged work and/or to execute
such protective work as specified;
Upon the expiration of fourteen (14) Days from the date on which written
notice of determination has been given by either party un der Clause 31. 1,
32. l(c) the Contractor sha ll reinstate or make good such war damage and
or where on completion of the works required by the Architect under Clause
shall proceed with the carrying out and completion of the Works,
3 1.3, or abandonment as the case may be of any such work, the provisions of
and the Architect shall grant to the Contractor a fair and reasonable
Clause 26.4 sha ll apply.
extension of time for the completion of the Works; and
The settleme nt of the final account shall follow the provisions of C lause 26.4.
32. l (d) the removal and disposal of debris or damaged work, the execution
of protective works and the reinstatement and making good of
such war damage shall be deemed to be a Variation required by the
Architect.

This Clause is self explanat01y

Clause 32.2 - Definition of war dama2e

The expression "war damage" means:

32.2(a) damage occurring (whether accidentally or not) as the direct result

of action taken by the enemy or actio n taken in combating the
enemy or in repelling an attack by the enemy;

32.2(b) damage occurring (whether accidentally or not) as a direct resu lt of

measures taken under proper au thority to avoid the spreading of or
otherwise to mitigate, the consequence of such damage as aforesaid;

32.2(c) accidental damage occurring as the direct result of any precautionmy

or preparatory measures taken under proper authority with a view to
 Clause 32 .0 294 Clause 33 .0 295

preventing or hindering the canying out of any attack by the enemy or

of precautionmy or preparato1y measures involving the doing of work
in anticipation of enemy action involving a substantial degree of 1isk to
prope1ty. Clause 33. 1 - Antiquities property of E mployer

This Clause is self explanatory.

All fossils, antiquities and other objects of interest or value which may be
fou nd on the Site or in excavating the same during the progress of the Works
shall become the property of the Employer. Upon discovery of such objects
the Contractor shall forthwi th cease work and shal l not disturb the object and
take all necessary precautions to preserve the object in the exact position and
condition as it was discovered. He shall immediately notify the Architect or
the Site Staff of the discovery and the Architect shall issue written instruction
in this regard to what has to be done.

This Clause may not appear to be important in most construction contracts,

but nevertheless, contractual provisions are necessary to deal with the
circumstances if, during excavations for the Works, the Contractor discovers
fossils, antiquities and other objects of interest or value. This Clause makes it
clear that such fossils, antiquities and other objects of interest or value do not
belong to the Contractor. Although the Clause states that any such discovery
belongs to the Employer, the Employer will have to surrender the discovery
to the Government. If fossils, antiquities and other objects of interest or
value are discovered on the Site, the Architect has to issue such instruction
as is necessary to the Contractor on the preservation of such discovery. The
Contractor shall be entitled to an extension of time under Clause 23.8(0) if
such instruction from the Architect causes delay to the Works, and also for
reimbursement for loss and/or expense under Clause 24.3(h).
 Clause 34.0 297

-
Clause 34.0 -Adjudication And Arbitration

Clause 34.1 - Set-off disputes referred to adj udication

Reference to adjudication is a condition precedent to arbitration for disputes

unde r Clause 30.4. The parties by wri tten agreement are free to refer any
other disputes to adjudication. Any dispute under Clause 30.4 after the date of
Practical Completion shall be refe rred to arbitration unde r C lause 34.5.

With a few exceptions set o ut in C lause 34.1 0, all disputes or differences

w hich arise between the Employer and the Contractor are to be refe1Ted to
arbitration, and such a rbitration shall not commence until after Practical
Completion or alleged Practica l Completion of the Works. This is not very
practicable, if there is a dispute on set-off w hich needs to be resolved before
Practical Completion.

PAM 2006 bas mandated that any dispute on set-off shall be referred to
adjudication at any time during the progress of the work. Tf the parties desire
to refer othe r disputes to adjudi cation, rather than wait for arbitration after the
completion oftbe Works, they may enter into a written agreement in order that
the Adjudicato r has jurisdiction over that dispute.

Clause 34.1 : "Any dispute under Clause 30.4 a.fier the date of
Practical Completion shall be referred to arbitration under Clause 34.5. "

Any dispute on set-off after Prac tica l Completion shall not be referred lo
adjudication, but shall be referred to arbitratio n.

However, there may be circumstances that a dispute is referred to adjudication,

but the Adjudicator has yet to come out with a dec is ion, and the Contractor has
achieved Practica l Completion. For such circumstances, the PAM Adj udication
Rules has clarified in Rule 5. 1 that:

'An adjudication sha ll be deemed to have commenced before Practical

Completion under the PAM 2006 Contracts, as long as the party
initiating the adjudication gives a written notice to the other party
to concur on the appointment of an Adjudicator before the date of
P ractical Completion. For the avoidance of doubt, any Adj udicato r's
Decision arising out of such adjudication whether delivered before
o r after the date of Practical Completion shall be deemed to be an
adjudication conducted before the date of Practical Completion
a nd the parties shall be bound by the Adjudicator's Decision. Any

- . . . . -- - . ~ . ..
 Clause 34.0 298
dispute on the Adjudicator's Decision may be referred to arbitration
in accordance with the provisions of the Contract.'
Clause 34.2 - Notice to refer to adjudication
Wbere a party requires a dispute or difference under Clause 34.1 to be
referred to adjudication, such disputes or differences shall be referred to an
adjudicator to be agreed between the parties. If after the expiration of twenty
one (21) Days from the date of the written notice to concur on the appointment
of the adjudicator, there is a failure to agree on the appointment, the party
initiating the adjudication shal l apply to the President of Pertubuhan Akitek
Malaysia lo appoint an adjudicator, and such adjudicator so appointed shall
be deemed to be appointed with the agreement and consent of the parties to
the Contract.
Clause 34.2: '·...shall be referred to an adjudicator to be agreed
between the parties... "
The pa1ties are free to choose and agree on the person who shall be the
Adjudicator.
Clause 34.2: " __.shall apply to the Preside111 ofPertubuhan Akitek
Malaysia to appoint an adjudica/01'. .. "
lf the pa1ties fail to agree on an Adjudicator after 21 Days from the date of
the notice, the pa1ty initiating the adjudication shall apply to the President of
Pertubuhan Aki tek Malaysia to appoint an Adjudicator.
Clause 34.3 - Adjudication Rules
Upon appointment, the adjudicator shall initiate the adjudication in accordance
with the current edition of the PAM Adjudication Rules or any modification
or rev1s1on lo such rules.
The adjudication shall be carried out in accordance with the PAM Adjudication
Rules. For details of the adjudication mies, see Annexure ' D '.
Clause 34.4 - Decision of the adjudicator
If a pa1ty disputes the adjudicator's decision , he shall nevertheless be bound
by the adjudicator's decision until Practical Completion but shall give a
written notice to the other party to refer the dispute which was the subject
of the adjudication to arbitration within six (6) Weeks from the date of the
Clause 34.0 299
adjudicator's decision. The adjudicator's decision shall be final and binding
on the parties if the dispute on the adjudicator's decision is not referred to
arbitration within the stipulated time. The parties may settle any dispute with
the adjudicator's decision by written agreement between the parties or by
arbitration under Clause 34.5.
According to Rule 10.1 of the Adjudication Rules:
'The Adjudicator shall deliver his written reason Decision within
21 Days from the date of acceptance by him of his appointment as
adjudicator. If he is unable to deliver his written reason Decision
within the 21 Days, the Adjudicator may extend the time by informing
the parties, but the extension shall not exceed another 7 Days from the
expiration of the 21 Days. The pa1ties by written agreement may agree
to extend fu1ther time for the Adjudicator to arrive at his Decision. If
the Adjudicator fails to deliver his Decision within the time limit, or
within the extended time agreed by the parties, the Adjudicator's will
ha ve no jurisdiction to deliver the Decision beyond the date or agreed
date. In that event, the Adjudicator shall not be entitled to any fees. '
' Day' has been defined in Article 7(w) to mean: ' calendar day including the
weekly day of rest but excluding gazetted holidays in the location where the
Works is canied out.' This definition is important when it comes to the time the
Adjudicator has to deliver his decision. lfhe exceeds the time, the Adjudicator
will have no jurisdiction and his decision will not be enforceable. Further, the
Adjudicator will lose his right to his fees.
The intention of adjudication is that the parties are bound by the decisions of
the Adjudicator. If parties are dissatisfied with the adjudicator's decision, they
have two courses of action that they can follow:
(i) Any party, who is dissatisfied with the Adjudicator's decision, must
give a written notice of their intention to refer the same dispute which
was the subject of the adjudication, to arbitration after Practical
Completion. The notice must be given within 6 Weeks from the
date of the adjudicator 's decision. In the event that the adjudicator's
decision is not refen ed to arbitration within the stipulated time, said
decision shall be final and binding on the parties.
(ii) The parties may decide to settle their dispute and may use the
adjudicator's decision as a guide for settlement. If the parties succeed
in agreeing a settlement, the parties should record the agreement in
writing.
 Cla11se 34.0 300
Clause 34.5 - Disputes referred to arbitration
In the event that any dispute or difference arises between the Employer and
Contractor, either during the progress or after completion or abandonment of
the Works regarding:
34.5(a) any matter of whatsoever natu re arising under o r in connection with
the Contract;
34.5(b) any matter left by the Contract to the discretion of the Architect;
34.5(c) the withholding by the Architect of any certificate to which the
Contractor may c laim to be entitled to;
34.5(d) the rights and liabilities of the parties under Clause 25.0, 26.0, 31 .0
or 32.0; or
34.5(e) the unreasonable witW10lding of consent or agreement by the
Employer or Contractor,
then such disputes or differences shall be referred to arbitration.
Clause 34.5: "In the event that any dispute or d[[ference arises
between the Employer and Contrac/01: .. "
The provision in PAM 98 C lause 34. 1 states that: ' fn the event that any dispute
or d ifference arises between the Employer or the Architect on his behal f and
the Contractor .. .. . .. ' has g iven occasion for some Contractors to name the
Architect (rather than the Employe r) as the respondent in the arbitration
proceedings. PAM 2006 has now clarified that in an y arbitration proceedings,
the parties involved in the arbitration are the Employer and Contractor.
The rest of the Clause is self-explanatory.
C lause 34.6 - Procedures for appointment of arbitrator
Upon the disputes or differences having arisen then:
34.6(a) any party may serve written notice on the other party that such
disputes or differences shall be referred to an arbitrator to be agreed
between the parties; and
34.6(b) if after the expiration of twenty one (21) Days from the date of
the written notice to concur on the appointment of the arbitrator,
Clause 34.0 30 /
there is a fai lure to agree on the appointment, the party initiating
the arbitration shall apply to the President of Pe1tubuhan Akitek
Malaysia to appoint an arbitrator, and such arbitrntor so appointed
shall be deemed to be appointed with the agreement and consent of
the parties to the Contract.
Clause 34. 6(a) : " ... shall be referred to an arbitrator to be agreed
between the parties ... "
The parties are free to choose and agree on the person who shall be the
arbitrator.
Clause 34.6(b): " ... shall apply to the President of"Pertubuhan Akitek
Malaysia to appoint an adjudica/01: .. "
U nder PAM 98 C lause 34.3( ii), it was provided that the party making the
application may 'apply to the President or Deputy Pres ident for the time
being of Pertubuhan Akitek Malaysia to appoint an arbitrator. .. ' This was
interpreted by some parties initiating arbitration to mean that they have a
choice to apply either to the President or the Deputy President to appoint
an arbitrator, when in fact all appointment will be made by the President.
PAM does not want a situation where an application for an arbitrator's
appointment specifically addressed to the Deputy President was challenged
when it was made by the President. Under PA M 's constitution, the reference
to ' President' refers to whoever holds the post of President, and not to a
particular person holding the post. It is therefore unnecessary to include
any reference to ' Deputy President' as also having similar ri ght to appoint
an arbitrator. If the President of PAM is not in the country or is indisposed
for whatever reasons, the Deputy President w ill assume the functi ons of the
President, and the appointment made w ill therefore be valid.
The reference to ' Deputy President' in PAM 98 is therefore unnecessary.
Hence, PAM 2006 provides that if the parties fail to agree on an arbitrator
after 2 1 Days from the date of the notice, the party initiating the adjudication
shall apply to the President of Pertubuhan Akitek Malaysia to appoint an
arbitrator.
Clause 34.7 -Arbitration Act and Rules
Upon appointment, the arbitrator shall initiate the arbitration proceedings in
accordance with the provisions of the Arbitration Act 2005 or any statutory
modification or re-enactment to the Act and the PAM Arbitration Rules or any
modification or revision to such rules.
. .. . - -- .. .. ·-- ---- .
 Clause 34.0 302
The appointed arbitrator shall initiate the arbitration proceedings in accordance
with the provisions of the Arbitration Act 2005 or any statutory modification
or re-enactment to the Act, and shall apply the PAM Arbitration Rules or any
modification or revision to the Rules
Clause 34.8 -- Powers of arbitrator
The arbitrator shall without prejudice to the generality of his powers, have
power:
34.8(a) to rectify the Contract so that it accurately reflects the true agreement
made by the Employer and Contractor;
34.8(b) to direct such measurements and/or val uations as may in his opinion
be desirable in order to determine the rights of the parties;
34.8(c) to ascertain and award any sum which ought to have been the
subj ect of or included in any certificate;
34.8(d) to open up, review and revise any certificate, opinion, decision,
requirement, or notice;
34.8(e) to determine all matters in dispute submitted to him in the same
manner as if no suc h certificate, opinion, decision, requirement or
notice had been given;
34.8(f) to award interest from such dates at such rates and with such rests
as he thinks fit:
34.8(f)(i) on the whole or part of any amount awarded by him
in respect of any period up to the date of the award;
- - - - - - -__,,3.....4tt
.811-c(f)(l1}--ofl-t~0---whek-or part of-any amount claimed in the-
arbitration and outstanding at the commencement of
the arbitral proceedings but paid before the award
was made, in respect of any period up to the date of
payment; and
34.8(g) to award interest from the date of the award (or any later date) unti l
payment, at such rates and with such rests as be thinks fit on the
outstanding amount of any award.
The Contract gives the arbitrator the general powers and authority stated
above.
Clause 34 .0 303
Clause 34.9 - Consolidation of arbitration proceedin2s
Where any dispute arises between the Employer and Contractor and the
dispute relates to the works of a Nom inated Sub-Contractor and arises out
of or is connected with the same dispute between the Contractor and such
Nominated Sub-Contractor, the Employer and Contractor sha ll use their best
endeavour to appoint the same arbitrator to hear the dispute under Clause 29.3
of the PAM Sub-Contract 2006.
The weakness of arbitration is that it involves only two parties, unlike
litigation, where third parties may join in. The new provision in PAM 2006 is
to take advantage of the provisions in the Arbitration Act 2005 which allows
for consolidation of arbitration proceedings.
Section 40 ( 1) of the Act provides that:
The parties may agree -
(a) That the arbitration proceedings shall be consolidated with other
arbitration proceedings; or
(b) That concmTent hearings shall be held,
on such terms as may be agreed.
In the event of disputes between Employer and Contractor, which also
involve Nominated Sub-Contractors, it will be possible now to consolidate
the arbitration proceedings into one proceeding, instead of separate arbitration
proceedings before different arbitrators. The consolidation of the arbitration
proceedings is subject to the agreement of the pa11ies involved to such an
arrangement.
Clause 34.10 - Commencement of arbitration proceedin2
Unless with the written agreement of the Employer and Contractor, such
arbitration proceedings shall not commence until after Practical Completion
or alleged Practical Completion of the Works or determination or alleged
determination of the Contractor 's employment under the Contract or
abandonment of the Works except on :
34.1 0(a) the question of whether or not the issuance of an instruction is
empowered by these Conditions;
34.1 0(b) any dispute or difference under Clauses 31.0 and 32.0;
34. l 0(c) whether or not a ce11ificate has been improperly withheld or not in
accordance with these Conditions; or
- - - - -- - - - - .. -. - - -- ·- -
 Clause 34.0 304
34.l0(d) whether or not a payment to which the Contractor may claim to
be entitled bas been properly withheld in accordance with these
Conditions.
With the exception of circumstances indicated above, arbitration can only
commence after Practical Completion or alleged Practical Completion of
the Works, or determination or alleged determination of the Contractor's
employment under the Contract, or abandonment of the Works.
If the parties agree to refer a specific dispute to arbitration during the progress
of the work, the parties must enter into a written agreement to this effect, in
order that the arbitrator can have jurisdiction.
Clause 34. 11 - Arbitrator's award to be fin al and bindini: on parties
The award of such arbitrator shall be final and binding on the parties.
The provision in this Clause is in accordance with Section 36 of the Arbitration
Act 2005 which states: 'An award made by an arbitral tribunal pursuant to an
arbi tration agreement shall be final and binding on the parties and ... '
An arbitration award can be enforced under Section 38 of the Arbitration Act
2005 by the winning party registering the award in court as a judgment debt.
Section 38 provides: ' On an application in writing to the High Court, an award
made in respect of a domestic arbitration ... be recognized as binding and be
enforced by entry as a j udgment in te1111s of the award .. .'
Clause 35.0 305
Clause 35. 1 - Mediation under PAM rules
Notwithstanding Clause 34.0 o f these Conditions, upon the written a_greement
of both the Employer and Contractor, the parties may refer any dispute for
mediation. If the parties fail to agree on a mediator after twenty one_ (2_1) Days
from the date of the written agreement to refer the dispute to med1at1011, any
paity can apply to the President of Pertubuhan Aki_te_k _Malaysia to_ appoi~1t
a mediator. Upon appointment, the mediator shall 1111t1ate _the medt~tt_on m
accordance with the PAM Mediation Rules or any modification or rev1s1on to
such rules
Mediation is not mandatory under the PAM Contracts. If the parties are
agreeable to appoint a mediator to help them resolve a ~ispute, the partie~ must
enter into a separate written agreement to refer such disputes for mediatt~n. If
the parties fail to come to a mutual agreement on the ap~ointment o~ a medtat?r,
any party can apply to the President of Pertubuha~ P..k1t~k Malaysia to a~pomt
a mediator. The mediator shall carry out the mediation m accordance with the
PAM Mediation Rules or any amendment mutually agreed by the parties.
Clause 35.2 - Mediation does not prejudice the parties' ri2hts to
arbitration
Prior reference of the dispute to mediation under Clause 35.1 shall not be a
condition precedent for its reference to adj udication or arbitration by either the
Contractor or the Employer, nor shall any of their rights to refer the dispute
to adjudication or arbitration under Clause 34.0 of these Conditions be in any
way prejudiced or affected by this clause.
The above Clause is self-explanatory.
 Clause 36.0 307

- - - ~ ~ - - -Clause36~
- - - - - - - --- - - - - --
--7
The notice provision in PAM 98 can be found in Clause 2.6. It states that:
' ... the Contractor shall notify the Architect in writing of an address where
notices, Architect's instructions and other documents may be served upon
him. Tf the Contractor fails to so notify the Architect of such an address
... notices, Architect's instructions and other documents shall be deemed to be
served upon the Contractor if sent by registered post or recorded delivery to
his address ... '

The following is to be noted from the above clause: firstly, there is a

requirement that the Architect's notices, instrnctions and other documents
must be sent by registered post or recorded delivery for it to be deemed served
upon the Contractor. As a matter of query, how many architects have ever
sent Architect's instruction by registered post or recorded delive1y? Secondly,
in Malaysia, unlike the United Kingdom, as discussed earlier, there is no
Recorded Delivery Act. So, unless the Architect chooses to go to the UK and
send his Architect's instruction by recorded delivery from there, it may be
argued that he would not have complied with the method of delivery under
this Clause.

PAM 2006 has addressed the said deficiency in PAM 98, and the following
Clauses are specifically drafted to cater for the different types of notices and
the applicability to both pa1iies.

Clause 36.1 - Notice

Any written notice or other document to be given under the Contract shall be
given or sent by:

36. 1(a) hand;

36. l (b) ordinary mail or registered post; or

36. 1(c) facsimile transmission.

Under PAM 2006, the accepted communication delive1y mode is by hand,

ordinary mail or where specifically stated, registered mail. Although in
practice, a lot of communications are also transmitted by emails, there is no
provision to recognise this form of c01mnunication under PAM 2006. If patiies
desire to recognise electronic emails as an accepted form of communication
under the Contract, it is suggested that the parties specify the type of email

- - - . -- - - .,
 Clause 36.0 308 Clause 36.0 309

communication that will be acceptable so that disputes do not arise in the
future: for example, written notice to determine the Contractor's employment
under the Contract may not be acceptable if it is sent by email. Any changes to
the notice requirement under this Clause must be agreed in writing or specified
in the Contract Bills.
Clause 36.2 - Notice deem served
Any written notice or other document shall be deemed to have been duly
served upon and received by the addressee:
Clause 36.4 - Written communication
All written communication shall be sent to the address staled in the Articles of
Agreement unless otherwise notified in writing.
This Clause puts the onus on the party changing his address to notify the other
party of such change. In the absence of any notification, the proper address of
the parties is the address stated in the Articles ofAgreement, which may either
be the registered office address or the business address.

36.2(a) if delivered by hand, at the time of del ivery;

36.2(b) if sent by ordinary mail or registered post, after three (3) Days of
posting; or

36.2(c) if transmitted by way of facsimile transmission, at time of

transmission.

The above Clause is self-explanatory.

Clause 36.3 - Proof of Notice

1n proving the giving of a written notice or any other document under or in

respect of the Contract, it shall be sufficient to show:

36.3(a) in the case of hand delivery, a signed acknowledgement ofreceipt;

36.J(b) in the case of registered post, a receipt of posting from the Post
Office; or

36.J(c) in the case of facsimile transmission that the fucs.imi.1e transmission_

was duly transmitted from the dispatching term inal, as evidenced
by a transmission report generated by the transmitting equipment.

The proof of communication is self-explanatory. If the parties are agreeable to

have other forms ofcommunication such as electronic mails, it is recommended
that they agree in writing to accept such communication.

If there is a requirement that all written notices or any other document sent by
facsimile transmission must also be followed up with the same sent by hand
or ordinary post, this must be stated in the Contract Bills.
 Clause 37.0 31 I

Clause 37.0 - Performance Bond

Clause 37 . 1 - Submission of Performance Bond

The Contractor shall before the Date of Commencement of the Works, submit
to the Employer a Performance Bond for a sum equivalent to the percentage
stated in the Appendix as a security for the due performance and observance
by the Contractor of his obligations under the Contract up to Practical
Completion of the Works.

The Date of Commencement is usually fixed by the Employer in the Letter of

Award, after giving the Contractor sufficient time for site mobilisation. The
Contractor therefore has time to arrange the Performance Bond and submit
this to the Employer before the Date of Commencement. Unless the Contract
Document expressly provides otherwise, the Employer cannot prevent the
Contractor from commencing work before his submission of the Performance
Bond.

The amount of the bond is a fixed sum, and is based on the percentage of the
Contract Sum stated in Article 2.

Clause 37.2 - Form of Performance Bond

The Performance Bond shall be in the form issued in the terms and conditions
specified in the Contract or otherwise approved by the Employer.

If no format of the Performance Bond is included in the documents issued to

the Contractor, then it would have to be of a format approved by the Employer.
In order to avoid any disagreement over the format of the Performance Bond,
it is preferable that a specimen copy of the Performance Bond is included in
the tender documents issued to the Contractor.

Clause 37.3 - Validity of the Performance Bond

The Performance Bond submitted by the Contractor shal l remain valid until
three (3) Months after the Completion Date. Where the Works would not be
completed by the Completion Date, the Contractor shall before the expiry of
the Performance Bond, extend the duration of the Performance Bond to expire
three (3) Months after the projected Practical Completion of the Works.

'Completion Date' has been defined in Article 7(m) to mean: 'the date(s) for
completion of the Works stated in the Appendix under Clauses 21.1 and 21.3

- -- - - - - . - - - ·- -- -- -- . . . . -
 Clause 37.0 312 Clause 37.0 313

or the last extended date granted under Clause 23.4. ' Therefore, the Contractor
is required to arrange for a Performance Bond valid up to the initial date of
completion notified in the Letter ofAward plus a fwther 3 Months. Thereafter,
if there is any extension of time, the Contractor must renew the validity of the
Performance Bond to 3 Months after the last Completion Date.
In the event the Contractor determines his own employment in accordance
with Clause 26.0, the Employer must return the Performance Bond to the
Contractor for cancellation, within 28 Days of written notification from the
Contractor.

Clause 37.4 - Failure to extend validity

ff the Contractor fails to provide or maintain the validity of the Performance

Bond in accordance with th is clause, then without prejudice to any other rights
and remedies which the Employer may possess, the Employer shall be entitled
to withhold or deduct an amount equal to the Performance Bond from any
payment due or to become due to the Contractor.

The failure to provide the Performance Bond, or the failure to ensure the
validity of the Perfonnance Bond in the event of an extension of time, will
mean that the Employer shall be entitled to withhold or deduct an amount
equal to the Performance Bond from the Contractor's progress payments.

Clause 37.5 - Payment from Performance Bond

In the event the Employer detennines the employment of the Contractor in

accordance with Clause 25.0, or if there is any breach of the Contract, the
Employer may call on the Performance Bond and utilise and make payments
out of or deduction from the Performance Bond for the completion of and/
or rectification of the Works and reimbursement of loss, and/or expense
suffered by the Employer. On completion of the Works, any balance of monies
remaining from the Performance Bond shall be refunded to the Contractor
without interest.

In the event the Employer determines the employment of the Contractor, the
Employer ma call on the Performance Bond and utilise the amount recovered
from the Performance Bond to complete the Works and recover his loss and/or
expense. On completion of the Works, the Employer shall refund any balance
of the monies to the Contractor w ithout interest.

Clause 37.6 - Return of Performance Bond

In the event the Contractor determines his own employment in accordance

with Clause 26.0, the Employer shall within twenty eight (28) Days return the
Performance Bond to the Contractor for cancellation.
L-=
Clause 38.0 3 15

Clause 38.0 - Governing Law - ~

Clause 38. I - Governing Law

The law governing tbe Contract shall be the Laws of Malaysia.

This Clause sets out the law governing the Contract. It improves upon the tenn
' any written laws applicable to the territories of Malaysia ' which was used
in PAM 98 in a number of clauses, for example, PAM 98 Clause 4.4: ' The
Contractor shall pay and indemnify the Employer against liability in respect
of any fees or charges ... under any written laws applicable to the territories of
Malaysia ... '
 PAM2006 W!THOUTQUANTJTJES 317

-
PAM 2006 WITHOUT QUANTITIES

The PAM 2006 (Without Quantities) is a pure lump sum contract and the
Contractor's price will be based on the Architect's and Consultant's drawings
and specifications. If the Contractor makes any error or under-estimation on
the quantity of work to be carried out, he will not be able to recover the cost
from the Employer.

Most of the Clauses contained in the PAM 2006 are identical to PAM 2006
(without Quantities). This section will therefore cover only the areas where
the PAM 2006 (without Quantities) defers from the PAM 2006.

Articles of Agreement

The requirements in PAM 98 (without Quantities) that the Specifications

should be marked 'A' and the Drawings shall be listed in a Schedule marked
'B' are not adopted for PAM 2006 (without Quantities), as in practice these
requirements have seldom been complied with.

PAM 2006 (without Quantities) has streamlined the documentation that is

comprised in the Contract Bill. The Contract Bills and Contract or Contract
Documents have been defined as follows:

Article 7(r)
Contract Bills comprise the following documents (as may be applicable):
(i) Instrnctions to Tenderers;
(ii) Conditions ofTendering;
(iii) Form of Tender;
(iv) Preliminaries;
(v) Preambles and Specification;
(vi) Summary of the Tender (or Contract Sum);
(vii) Schedule of Rates; and
(viii) any other documents specifically mentioned in any of the above
documents;

Article 7(g)
Contract or Contract Documents comprise the following documents:
(i) the Letter of Award;
(ii) the Articles of Agreement;
(iii) the Conditions of Contract;
(iv) the Contract Drawings;
(v) the Contract Bills; and
 ....
PAM 2006 WITHOUTQUANTITTES 318
(vi) other documents incorporated in the Contract Documents, unless
expressly stated to be excluded therefrom;
lfthe Architect and Consultant desire to amend the contents of what constitute
the Contract Bill and Contract Document to suit their own office procedures,
this can be easily done by amending Article 7(q) and (r).
Clause 1.1 - Contractor's Obligations
The requirement in PAM 98 (without Quantities) that:
' The Contractor shall upon and subject to the Conditions carry out and complete
the Works (including all necessary ancillary works) in accordance with the
Contract Drawings and described by or referred to in the Specification ... '
has been streamlined in PAM 2006 (without Quantities) to read:
'The Contractor shall upon and subject to these Conditions cany out and
complete the Works in accordance with the Contract Documents .. .'.
The PAM 2006 (without Quantities) clarifies that the obligation of the
Contractor extends to complying with all the requirements stated in the
Contract Documents defined in Aiticle 7(q) (which includes the Letter of
Award) and not only to comply with the Conditions of PAM 98 (without
Quantities), the Contract Drawings and the Specification.
Clause 3 .1 - Contract Documents
PAM 98 (without Quantities) has defined the Contract Document to mean:
'The Contract Drawings, Specification, Descriptive Schedules, the Schedule
of Rates, F01m of Tender, Letter of Acceptance, Summary of Tender, Articles
ofAgreement, Conditions of Contract and the Appendix ... '
As the documents refe1Ted to in the above clause may not be the appropriate
documents, PAM 2006 (without Quantities) has redefined the documentation
compnse mt e ontract fo Article 7(q) above. ln common with PAM 2006,
there is also a provision for the priority of documents in the event of any
conflict.
Clause 12.1 -Quality and Quantity of the Works
The Contractor has to estimate the quality and quantity of work to be ca1Tied
out and he assumes the risk if he miscalculates the extent of the work involved
as PAM 2006 (without Quantities) has provided that the Contractor has to
carry out the Works in accordance with the quality and quantity of work shown
upon the Contract Drawings and/or set out in the Contract Bills.
C
PAM 2006 WITHOUT QUANTITIES 319
Also, to avoid different basis of measurement for Variations or Provisional
Quantities, PAM 2006 (without Quantities) provide that such measurement
shall be carried out in accordance with the Standard Method of Measurement.
Clause 12.2 - Lump Sum Contract
A new clause stating that:
'Unless otherwise expressly provided, the contract is a Lump Sum Contract
and shall be deemed to include all ancillaiy and other works and expenditure,
which may or may not have been specifically mentioned or described in
the Contract Documents, but which are either indispensably necessa1y to
be carried out to bring the Works to completion or which may contingently
become necessary to overcome difficulties before completion'
This Clause replaces the previous PAM 98 (without Quantities) clause
providing that: 'Nothing contained in the Contract Drawings or the
Specification shall override, modify or affect in any way whatsoever the
application or interpretation of that which is contained in these Conditions. '
Tt is difficult to see how the Contract Drawings or the Specification can have
any provisions that are capable of over-riding Conditions of Contract. This
provision, unlike the provision in PAM 98 (without Quantities) Clause 12.2,
does not contain anything to say that the Letter ofAward cannot over-ride the
said provisions of the PAM 98 (without Quantities).
The provisions in PAM 2006 (without Quantities) is consistent with the
principle that it is a Lump Sum Contract and the Clause futiher clarifies
that the Contractor's Lump Sum will include ' all ancillary and other works
and expenditure, which may or may not have been specifically mentioned
or described in the Contract Documents, but which are either indispensably
necessary to be carried out to bring the Works to completion or which may
contingently become necessary to overcome difficulties before completion.'
The provision in PAM 98 (without Quantities) that: 'Any error in desc1iption,
quantity oromission ofitems between the Contract Drawings and/or Specification
shall not vitiate this Conh·act but shall be corrected by the Architect' may
be a source of dispute. For example, the Contractor may submit a claim for
additional quantity if there is any conflicting provision between the Contract
Drawings with the Specification. The clause in PAM 98 (without Quantities)
does not contain any provision to detennine the priority of documents in the
event of conflict. This deficiency has now been addressed in PAM 2006 (without
Quantities) where Clause 3 .1 clarifies that in the event of any conflicts between
documents, the Contract Drawings will take precedence over the Contract Bills.
- A1111e:r11re A 321
◄

ANNEXURE 'A'

SAMPLES OF CONTRACT AND

ADMINISTRATION PROFORMAS
 Annex ure A 322 Annexure A 323

ARCHITECT'S INSTRUCTION (AI) CONFIRMATION OF ARCHITECT'S INSTRUCTION (CAI)

(Clause 2.2) (Clause 2.2)

To: To:

(Name and Address of 'the Contractor') (Name and Address of 'the Architect')

Architect's Instructions ('Al') No ............ .. .. Date: ..... . ...... . ..... . . Confirmation of Architect's
Instructions ('CAI') No ..... ...... .. .. . . .... ....... .. Date: .................. .. .
Works: ......... . ..... . .. . .................... ... ...................... . . ....... ... . . . ....... .
(Description of the Works) Works: .. .. ............. ..... ... ...... ... ..... ... . ...... .... ...... .. . ........................ .
at ................ . ... . .......... . ....... .. ... ... ....... ......... ........... ........ ............ . (Description of the Works)
for ···· ······ ··· · •·OO•• · ·· · ··········••oo••··••oo ••·" " · at ..... . .. ....... .. .. . ........ ····· ··· ·· ··········••
00
••· · ·· · · · ·••
00
• •· ···· · · •·"············ .. ..

(Name ofEmployer) for .. . .. . ..... . ... ......... .. .... .............. . .. . ............. .

(Name ofEmployer)
Clause Description of Instruction(s)
Insert the Description of Instruction(s)
We hereby issue the following instruction(s) in accordance
relevant with the Conditions for your action: We hereby confi rm the following written instruction(s) issued by you vide the
Clause attached document:

Architect's signature:
······· ························ ·· ·······
Contractor's signature: ... ... .. .. ... .. .. ...... ... .. .... . . .. ....
Name ········ ···· ········· ··· ········· · ·· ····
Name ·········· ···················· ·· ·· ······
Copies to:

D Employer D C & S Engineer D M & E Engineer

□ Quantity Surveyor D Resident Architect/Engineer/COW

□ .. ... . . ........ ... D
Copies to:

Employer D C & S Engineer D M & E Engineer

□ Quantity Surveyor D Resident Architect/Engineer/COW □ ... . . . . . . . . . . . . .

 An11ex11re A 324 A1111e.wre A 325

CERTIFICATE OF PRACTICAL COMPLETION SCHEDULE OF DEFECTS

(Clause 15.2) (Clause 15.4)

Ref: Ref:
Date: Date:

To: To:

(Name & Address of 'the Contractor') (Name & Address of 'the Contractor')

Works: ...... . .. ... ... ... .......................................... ....... .. ... ....... . ...... ................. . Works: .................. ... ............. ................... ....... .. ... . ... ... ... .. ... .. ... . .... . ......... .
(Description of the Works) (Description of the Works)
at . .. ... . .... .. .. .... .. .... .. ... ... .. .. . . . .. . .. ... .... .............. ... ...... ... ... .. . ... ... ...... ... .... .. .. . at .... .. .. ................... .... .............................................. . ..... ...................... .. ..
for ... .. . .... .. ...... ..................... ..................... ...... ...... ... ... ...... ... ...... ...... ..... ....... ...... .. for..... . .. ................ ... .... .... ..... .. . ........... ... ..... ... .. ........... ... ......... ... ...... ... ... ....... .
(Name ofEmploye1) (Name ofEmploye,)

Certificate of Practical Completion

*Section of the Works:
We refer to your written notice of Practical Completion of the Works ref. ... .. .......... ..
dated ............... .. and (Description ofSection ofthe Work:,)

*your letter of undertaking ref.. ....................... dated ... ... ... ... ... to made good and to Schedule of Defects
complete the works and defects listed therein w ithin ... . .......... .... Days from the date of
this letter, and Pursuant to C lause 15.4 of the Conditions, we attach herewith a schedule of Defects for
your attention.
your having complied with the pre-requisite req1irements stated in the Contract for Practical
Completion. You are required to make good all the Defects listed in the said schedule within * twenty-
eight (28) Daysi. ....................... ...... Days (longer period as agreed by the Architect, if
Pw-suant to Clause 15.2 of the Conditions, we hereby certify that the Works are Practically any) from the receipt of the said schedule.
Completed on .. ......... .... . ................. .

The Defects Liability Period in respect of the Works shall expire on

You shall fo1thwith return Site possession to the Employer.

Architect's signature

Name ...... ..... ........... . ...... .

Architect's signature

Name ..... .... ................... .. Copies to:

Copies 10: D Employer D C & S Engineer D M & E Engineer

D Employer D C & S Engineer D M & E Engineer □ Quantity Surveyor D Resident Architect/Engineer/COW □ Nominated Sub-Conh·aclor
/Nominated Supplierr
□ Quantity Surveyor □ Resident Architect/Engineer/COW □ Nominated Sub-Contractor
/Nominated Supplierr (* Delete if1101 applicable)

(* Delete if 110/ applicable)

- - - ~ . · - ., · - • ......... ( .. - ....... .____ • - -_:_ - =;

 Annexure A 326 A1111e.rnre A 327

CERTIFICATE OF MAKING GOOD DEFECTS CERTIFICATE OF PARTIAL COMPLETION FOR OCCUPIED PART
(Clause 15.6) (WITH CONTRACTOR'S CONSENT)
(Clause I 6.1)
Ref:
Date: Ref:
Date:
To:
To: ············· ·· ···· ···· ·· ··· ··· ·· ······· ·· ····· ····· ··· ··· ······· ···· ····· ···· ·· ···· ··· ········· ·· ··
(Name & Address of 'the Contractor') ·· · ···· ····· ··· ········· ······················· ···· ···· ········· ·· ···· ·· ······· ····· ·· ······ ········
(Name & Address of 'the Contractor ')
Works: ... .. .... . ... .... .. ... .. ... ............. ... ..... ... .. .. .. .. . . ........ . . ..... ...... ........ . ..... . .. ..
Works: ... . ..... .. . .. .. .... .. .. ........ . . . ... . . .. ... ....... ....... .. . ...... . .. .. ........... .. .... ......... ..
(Description ofthe Works)
(Description of the Works)
at ... .. .. . .... . ........ .... .. .. ............ . ................... .. .... . ..... ....... . . ...... ... . ...... . .... . ... ..
at .. .... .... .... .. ....................... . .......... . ... ............ ...... .... ........ . .. . ... . ....... . ........ .
for ......... ............ ........................... ... ... ... ......... ............... ............... ............... ....... .
for ...... ...... ................................ . ......... ......... ............ ............ ... .. .... ... ... ...... •·· ... .... .
(Name of Employer)
(Name ofEmploye,)

*Section of the Works: ................... ... ... ... ................ .. ........................ ... . .. .... .
(Description ofSection of the Works)
*Occupied Part: .......... ................................... .... ... ... .. .. .. ..... ..... .... ......... .. .
(Description of Occupied Part)
Occupied Part of the Works: .... . .... ..... ............... ... .... ..... .... ... .. . .. .. .. .......... . .... .
(Description of Occupied Part)
Certificate of Partial Completion
We refer to your letter ref. ......... ... .. .... ...... dated .. . . . . .. .. .. .. . consenting to the
Employer's request to take possession of the Occupied Pait of the Works specified above.

Certificate of Making Good Defects Pursuant to clause I 6.1 of the Conditions, we hereby certify:-

that Practical Completion of the Occupied Part is deemed to have occurred on

Pursuant to Clause I 5.6 of the Conditions, we hereby ce1tify that

* there is no Defects
that the estimated value of the Occupied Part is RM . . .............. ; and
* the Defects in respect of the *Works /Section of the Works have been made good on .... that the Defects Liability Period in respect of the Occupied Part shall expire on

You are hereby instructed to remove all the site facilities, construction plant/equipments,
materials and goods from the occupied part.

Architect's signature
Arch itect's signature
Name .. . .... . ... .. ....... .... ... . . .
Name ........ .. ..... ... . ... ... . ... .
Copies to:

D Employer D C & S Engineer D M & E Engineer

Copies to:

□ Quantity Surveyor □ Resident Architect/Engineer/COW □ Nominated Sub-Contractor

D Employer D C & S Engineer D M & E Engineer

/Nominated Supplierr □ Quantity Surveyor D Resident ArchitecllEnginecr/COW □ Nominated Sub-Contractor

/Nominated Supplierr
(* Delete if 11ot l/]Jplicabfe)
( * Delete if 11ot app/icl/ble)
 Annexure /\ 328 A1111e.rnre A 329

CERTIFICATE OF PARTIAL COMPLETION FOR OCCUPIED PART CERTIFICATE OF NON-COMPLETION

{WITHOUT CONTRACTOR'S CONSENT) (Clause 22.1)
(Clause 16.2)
Ref:
Ref: Date:
Dale:
To:
To:
(Name & Address of 'the Contractor')
(Name & Address c!f 'the Contractor')
Wo,·ks: . .. . ............. .... .. ......................................... . . . . . .. .. . .. .. . .... . . .. ....... ..... ..
Works: .... ....... .. ... . . .... . .............. . ..... . .............. . .. . .. . . ....... . .. .. ....... . .. . ... ........ . (Description <~(!he Works)
(Description of the Works) at . .. .... .... ... . . .. ....... ... . .. .. ................... ... . ....... . ................... .. ......... .. .... .... .... .
at .. ......... . ................... .. .............. . ..... .. .. .......... . ........... .. ... . .. ...... ........ .. ..... . for ... ... .. ......... ........................ .. .... . ... ... ................. .. ........ ..... . ... ... ... ...... ... ............. .
for ... ... ...... .............. . ....................... . .................. ... ......... ............... ...... ......... ........ (Name <!l E111ploye1)
(Name of Emp/oye1)
*Section of the Works: ...... . . ..... . ...... . ... ....................... . .. ... .. .. ... . ..... ............. ..
Occupied Part of the Works: ..................... .. ........ ........ . (Descriplion o_fSection o_fthe Work\)
(Description ofOccupied Part)

Certificate of Partial Completion Certificate of Non Completion

We refer to the Certificate of Non-Completion issued to you on ... . .......... .... and the
possession of the Occupied Part by the Employer on ........ . ...... .
Pursuant lo clause 16.2 of the Conditions, we hereby certify:-
that Practical Completion of the Occupied Part is deemed to have occurred on
that the estimated tota l value of the Occupied Part is RM ............. . ...... .. ; and
that the Defects Liabi lity Period in respect of the Occupied Part shall expire on
We hereby certify that you have failed to complete the *Works / section of the Works
specified above by the Completion Date of ... . . .. ...... . . . .... , and we are of the opinion that
the *Works / section of the Works ought reasonably to have been completed by the sa id
Completion Date.
Pursuant to Clause 22.1 of the Conditions, you shall pay or allow to the Employer a sum
calculated at the rate RM . ... ............. per Day as Liquidated Damages for the period
during which the *Works / section of the Works remain incompl ete . The Employer may
recover such sum as a debt or may deduct such sum from any monies due or to become due
to you under the Contract or from the Performance Bond.

You are hereby instructed to remove all the site facilities, construction plant/equipments,
materials and goods from the Occupied Pai1.

Architect' s signature

Name ................ .. ........... .

Architect's signature
Copies lo:
Name ... . ... .. ..... .. .... ... ...... .
D Employer D C & S Engineer D M & E Engineer

Copies to:
□ Quantity Surveyor □ Resident Architect/Engineer/COW D Nominated Sub-Contractor

D Employer D C & S Eng ineer D M & E Engineer

/Nominated Suppl ierr

D Quanlity Surveyor □ Residcnl Architect/Engineer/COW □ Nominated Sub-Contractor

/Nominated Supplierr
(* D elete if 1101 appliC11ble)

(* Delete if 1101 "/1plic"ble)

 Annexure A 330
- Am1e.rnre A 33 /

CERTIFICATE OF SECTIONAL COMPLETION NOTICE TO DEDUCT LIQUIDATED DAMAGES

(Clause 21.3) (Clause 22.1)

Ref:
Date: Ref:
Date:
To: ·· ···· ·· ···· ··· ·· ······ ····· ······ ·········· ·· ··· ········ · ········· •················· · ········· ·····
······· ·· ········· ······················· ··· ··········· ·· ················ ····· ··· ···· ····· ····· ··· ··
(Name & Address of 'the Contractor') To:

Works: . .. ........................ ............... ....... ... .. .. .................... ... ...... ....... . ...... .. (Name & Address of 'the Contractor')
{Description (~/the Works)
at. .................. .. ... ... .......... ... ..... ... .......... .. .. .. ......... .. ... .. .............. . .... . ........ .
for ......... ...... ....................... .................................. ............ ............... ... ................ . Works: .......................... .... ....................... ... ...... . ... ..... .... . .... . ....... ... ... ... ... .
(Name ~fEmployer) (Description of the Works)
at ...... ... .. . ... ... ... ................................. ..... .... ... ........... ... .. ... .. .................. .. ..
Section of the Works: . ... ...................... . ........ ... ...... .. . ....... . .... .
(Description ofSection of the Works)
Notice to Deduct Liquidated Damages
Certificate of Sectional Completion

We refer to your written notice of Sectional Completion of the section of the Works We refer to the Certificate of Non Completion issued by the Architect to you on
ref.............. dated ............ and

* your letter of undertaking ref.... ........... .... .. .. .. dated ........ .... ... to made good and to Pursuant to Clause 22 of the Conditions, we s hall be deducting Liquidated Damages
complete the works and defects listed therein within . .......... . ...... Days from the date of amounting to RM ....................... from any payment due or to become due to you under
this letter, and the Contract.

your having compl ied with the pre-requisite requirements stated in the Contract for
Sectional Completion.
Signature
Pursuant to Clause 21.3 of the Conditions, we hereby certify that the section of the Works Name of Employer. .................... .. .. .... .
are Practically Completed on ................................. .

The Defects Liability Period in respect of the section of the Works shall expire on
Copies to:

You shall fo1thwith return Site JK)Ssession of.tl:Le_s_ecJi.on..ofthe_Wm:ks to the-Employer_ D Employer D C & S Engineer D M & E Engineer

□ Quantity Surveyor □ Resident Architect/Engineer/COW D Nominated Sub-Contractor

/Nominated Supplicrr

Architect's signature

Name .. ........ . ..... ..... ... ..... .

Copies to:

D Employer D C & S Engineer D M & E Engineer

□ Quantity Surveyor □ Resident Architect/Engineer/COW □ Nominated Sub-Contractor

/Nominated Supplierr

(* Delete if1101 upplicabte)

 Annexure A 332 Annexure A 333

CERTIFICATE OF EXTENSION OF TIME NOTICE OF DEFAULT

(Clause 23.4) (For Purpose ofEmployer 's Determination of Contractor's Employment
under Clause 25)
Ref:
Date: Ref:
Date:
To:
To:
(Name & Address r~l 'the Contractor ')
(Name & Address of 'the Contractor')
Works: .... . .. ... .... ... ....... .... ...... .. ...... ...... . ............... . .... ......... . . .. ....... .. ........ ..
(Description of the Works) Works: ...... ... .... ........... ... ... ... .. .... ... ....... ..... .. .. ... . .... ..... ... .. .. ..... .. . .. ... .. . .. .... .
at ..... .. ... .. ... .. .................... ...... ... ... ..... ... .. ... .. .......... ... .... ...... ....... . .. ..... . ..... . (Description o_fthe Works)
for ......... ......... ... ........ . ............... ... ... .. .......... ...... ... ... ...... ...... ............... ...... ... ..... .. . at ...... . .. . . . . .. .... ... ... ........... ... ... .... . ....... ...... .. . .. ........ ... . .. .. .... . .... ... ..... ..... . .... .
(Name ofEmploye,) for ...... ............ ............... ..................... ...... .. ................... ...... ... ......... •··•··•··•··•·· ·· ···
(Name of Employe,)
*Section of the Works: . .. ... .... ..... ..................... ... . ............. .. ... .. .... ...... .. ....... .
(Description o.l Section o.lthe Work~)
Notice of Default
Certificate of Extension of Time No
On behalf of the Employer and pursuant to C lause 25.2 of the Conditions, we hereby put
We refer to your application for extension of time ref . . . . . . . .. .. . . . . . . .. . . . dated you on notice that you have defaulted in the following:-

Pursuant to Clause 23.4 of the Conditions, we are pleased to grant you an extension of (Specify any one or more of the defaults as outlined under Clause 25. 1(a) to 25. 1(/)) and
.. .. ... . .... Days to complete the *Works/section of the Works as per the attached details.
give the details of the default)
Accordingly, the Completion Date for the *Works/section of the Works has been revised as
follow:-
If you continue with the abovementioned default/defaults for fourteen (14) Days from the
Original Date for Completion (as stated in the appendix)
date of receipt of this notice, the Employer, without prejudice to any other rights or
*Previous Date for Completion (EOT .. .... )
remedies which he may possess, may within IO Days from the expi1y of the said 14 Days,
No. of Days extended by this certificate
by a further written notice, dete1mine your employment as the Contractor under the
Revised Date for Completion
Contract.
You are required to extend all the insurances and Performance Bond in accordance with the
above revised Completion Date and fo1ward to us the orig inal endorsements and premium
receipts in respect thereof before the expiry of your CUITent insurances and Performance
t3ond. 1f you default 111 so domg, the Employer may insure on your behalf and deduct all
costs incurred by him from any payment due or to become due to you.
Architect's signature

Name ..... ... . .............. .... . . .

Architect's signature
Copies to:
Name ............ . ... . ......... ... .
D Employer D C & S Engineer D M & E Engineer
Copies to:
□ Quantity Surveyor □ Resident Architect/Engineer/COW □ Nominated Sub-Contractor
D Employer D C & S Engineer D M & E Engineer /Nominated Supplicrr

□ Quantity Surveyor □ Resident Architect/Engineer/COW □ Nominated Sub-Contractor

/Nom inated Supplierr
(* Delete if 1101 «pplicllhle)
 Annexure A 334 Aw1e.rnre A 335

NOTIFICATION OF PAYMENT TO NOMINATED SUB-CONTRACTOR CERTIFICATE OF DIRECT PAYMENT TO THE NOMINATED SUB-
(Clause 27.5) CONTRACTOR DUE TO FAILURE OF PAYMENT BY CONTRACTOR
(Clause 27.6)
Ref:
Date: Ref:
Date:
To: .... .. ..... ..... ...... .... .. .... .... ....... .. .. .. ··· ······ ·· ·· ················ ····· ····•····· ····· ··
····· ····· ·· ··· ··· ········· ·· ······· ······ ···· ··· ··· To:
(Name & Address of 'the Nominat~d ;,;;b~C~~;;;.~~;o;:~· · · · · · · · · · · · · · · · ·· · · · · ··
(Name & Address of 'the Employer')
Works: .... .. .. .. ... .... ... ... .............. ..... . ..... ... ... .......... .. ... ..... ..... ... ..... .. .... .. ..... .
(Description ofthe Works) Works: .................................. .. .... .... ..... .. . ... . ....... . . .... . . ... .. . . . ....... .. ....... .... ..
at .. ... .. .. ... .. .... ... ......... .... .. .... .................. . .... .. ....... . ....... .. .... . . ... ..... .. ... ... .. .. . (Description of the Works)
for ........................ ............... .................. ............... ... ... ...................................... .. . at .. . ... .... .. .. . .... .... ... .... ... ... ... ... . .. .. .. ......... .... ...... ........... .. ... . ..... ... ... .. ........ ...
(Name ofEmployer)

SUB-CONTRACT FOR:
(Descripti~~; ·~/s~;b~C~;,~~;.;~~. w~,.icj ......... ..... .. ............... .. ......... .. . SUB-CONTRACT FOR: . .. .... .. ... ... .. ... .... .. ..... ........... .. .... . .... . .... . ................ . .
(Description ofSub-Contract Work)

CONTRACTOR: . .......... ..... . ... ..... .. .. .. ... . ... ... ..... ... .............. .. ................... . CONTRACTOR: ..... ... . .. . ...... .. .. . ... .... ... . ...... ... ..... . ...... .... .... ............. . ..... .. .
(Name of Contracto,) (Name ofContracto,)

Payment Notification
Certificate of Direct Payment to Nominated Sub-Contractor
Pursuant to Clause 27 .5 of the Conditions, we are pleased to inform you that we have
issued an * lnterim/Penultimate/Final Certificate no . .. ....... dated ........ ... .. for payment
We regret to inform you that the Contractor ............ ... ......... (Name of Contracto,) has
to be made by the Employer to the Contractor. An amount of Ringgit Malaysia: ... ......... .
failed to show proof that he has paid .................... ... ... (name of Nominated Sub-
•···· ········· ·········· ·· .. ..... (RM ......................) being the value of the Sub-Contract Contractm) the amount of RM ...... .. ..... . ... ....... . .. .... .... , which was payment du e and
Works executed and material and goods supplied by you has been included in this
payable to the Nominated Sub-Contractor included in the *Interim/Penultimate Certificate
Certificate.
No ........... dated ...... ... . ........ and also failed to provide any reasons for with holding the
Gross Value of Works RM Nominated Sub-Contractor's payment.
Less Retention Fund RM
Pursuant to Clause 27 .6 of the Conditions of Contract, you may, if you so desire, pay such
( I0% of the certi fied value retained
amount directly to the Nominated Sub-Contractor and deduct the same from any sums due
or a maximum retention of
or may become due to the Contractor.
RM ............. ....)
ess amounts previous ly certified ~
(Certificate No ............ to No ..... .. ... .. ) RM ...................
Amount Included in this Certificate RM
Architect's signature

Name ........ . ..... . .... . ......... .

Architect's signature
Copies to:
Name ............................. .
Copies to:
D Employer D C & S Engineer
□ M & E Engineer

□
□ Quantity Surveyor □ Resident Architect/Engineer/COW
D Employer D C & S Engineer D M & E Engineer

D Quantity Surveyor □ Resident Architect/Engineer/COW □ Main Contractor

(* Delete if 1101 applicable)

(* Delete if ,wt applicable)

 Annexure A 336 Anne.wre A 337

NOTIFTCATION OF PAYMENT TO NOMINATED SUPPLIER JNTERIM CERTTFICATE

(Clause 28.5) (Clause 30.1 )

Ref: Ref:
Date: Date:
To: To:

(Name & Address of 'the Nominated Supplier') (Name & Address of 'the Employer ')
Works: . . ...... .. ........... ... ... .. ... .... .. .... . ..... .. ..... .... . . . . ... ......... .. .. ................. .. .. .
Works: .. .. . . ............ ... ... .. ...... .... ..... .... . ........ ... . . .. .... . ........... . . .... ........ . ........ . (Description of the Works)
(Description of the Works) at. .. ... . .. . ..... ... ... .... ... ........ .... .. .................... ...... .... ..... .... .. ............... . ... . .... . .
at .... .. .. ....... .. . .... ........ ... ... ...... ... ... ........ . .. ... .. .... ............. .. ...... . .... . ............. .
Contract Sum RM ... . . ... ..... . . .. ....
for ...... ... ............... ........................... ..... . ... ............ ... ..... .... .. ................................ .
Net Addition/Omission RM ... ........ ..... .... .
(Name ofEmploye1)
Ad·usted Contract Sum RM ........ . ..... ... ... .
NOMINATED SUPPLIER FOR: ... ....... .. . ............... ...... .. ............. .. .. ... . ....... .
(Brie/description ofmaterial and goods supplied) Interim Certificate No :
Date of Certificate:
CONTRACTOR: ............. . . . ........ ... . .... . ... ....................... ....... . . ....... .. ....... .
(Name of Contractor) Valuation for Works up to: .. ................... . . .. . . . . .... .

Payment Notification This interim Certificate is issued pursuant to Clause 30.0 of the Conditions.
Pursuant to Clause 28.5 of the Conditions, we are pleased to inform you that we have Gross Value of Works RM
issued an *Interim/Penultimate/Final Certificate no ..... .... . dated ....... .. . ... for payment to (For detailed valuation, refer to QS' s
be made by the Employer to the Contractor. An amount of Ringgit Malaysia: ... . ........ .. .. . va luation as attached)
.. ..... . . . . . . . ..... .. ...... ... (RM ...................... ) being the value of the materials and Less Retention Fund RM
goods supplied by you has been included in the said Certificate. (10% of the certified value retained
or a maximum retention of
Gross Value of materials and goods RM RM ................. )
Less Retention Fund RM Less amounts previously ce1tified RM
( 10% of the ce1tified value retained (Ce1tificate No ............ to No RM
or a maximum retention of .. ..... ..... ... )
RM .. ... .. .. ... .. ...) Nett amou nt of payment certified RM
Less amounts previously certified RM We hereby ce1tify that the amount of Ringgit Malaysia: ... .. .......... . . ..... .. .... . ..... ... .. .
(Ce1tificate No ............ to No .. .... ... ... ) RM ................... is due and payable to the Contractor ... ... ... ... ... ... ... ... ... .. ... .. . ... ... ... ...... ... (name of
Amount Included in this Ce1tificate RM Contractor) under this Interim Certificate. The Employer shal l pay the Contractor the
amount within the Period of Honouring Certificates, which is ... ... ....... Days from the
date of this certi fi ca le.

Archi tect' s signature

Name ......... . ...... .... . .. .... .. . Architect's signature

Name ...... ..... .. ... .. ... ... .. ... .
Copies to:

D Employer D C & S Engineer D M & E Engineer

Copies to:
D D
□ Quantity Surveyor □ Resident Architect/ Engineer/COW □ Main Contractor
D Comractor C & S Engineer M & E Engineer

D
□
□ Quantity Surveyor Resident Architect/Engineer/COW
(* Delete if 1101 applicable)

- -·- ---····~--- - --~. -- • I, . . . . .' - - .......... • ••

 INTERIM CERTIFICATE
Nominated Sub-Contractors

Attachment to Interim Certificate No I. dated: ..... .

' Total Less

Less Amount
Sub-Contract Gross Amount Amount
Retention included in
Nom inated Sub-Contractor Sub{ ontract Work Sum Valuation Certified Previously
Fund this Certificate
Certified
I RM RM RM RM RM RM
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Architect's signature ')-:

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Name .. ),

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INTERThfCERTIFICATE
Nominated Suppliers

Attachment to Interim Certificate No ... . .. dated: ...... ... ... .

Included in the amount of this certificate is the value of material or goods supplied by Nominated Suppliers.

Total Less
Nominated Less Amount
Gross Amount Amount
Supplier's Retention included in this
Nominated Supplier Nominated Supplier Item Valuation Certified Previously
Sum Fund Certificate
Certified
RlvI RM RM RM RM Rlvl

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:::,

Architect's signature ~
>--
!::,
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Name ..... ...... ...... ... ......... ... .. . ),

Vu
Vu
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 A1111exure A 340 A1111ex11re A 341

2
HPENULTIMATE CERTIFICATE ..., "'
§ .5 ~
(Clause 30.13)
~-Ot:
" ~"' ~
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Ref:
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€ "'0
(Name & Address ol 'the Employer ') "' ~ <fl
0 0 t:
Works: ............ .. ..... .. .................... .. .. ... ....... .. .................. . .. . ........... . ... .. .... . 5 >~..., ~
vi· - (1)
0

(Description ofthe Works) ~ ~§

~ "
at ............ .. 0
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§ C
>-,
8..
Contract Sum RM ................... ..
Net Addition/Omission RM ... . ..... ... ...... . .. 0§
b"' 0CJ
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Ad"usted Contract Sum RM ................... .. C: CJ
O<t;
<:.? <ii
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Date of Penultimate Certificate: .... ... . . . ... .. .... . .. .. ... . ..... . Cl}

E ~
This Penultimate Certificate is issued pursuant to Clause 30.13 of the Conditions. "5
-0
ro C/:J ·~
-
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Gross Value of Works RM ........... . .. . E ~ ·c:
~ ~ ~
(For detailed valuation, r~/er to QS's
valuation as al/ached) "' l:l on
.§ § s
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Less amounts previously certified ;::,
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.........
-0 ;::,
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(Certificate No .... ...... .. to No RM <t: Cl}

............... )
Nett amount of payment certified RM ...,CJ
"'
We hereby certify that the amount ofRinggit Ma laysia: ... .. ........................ .. ........ .
(RM .. ...... .. .. .. ..............) is due and payable to the Contractor ........ .................... . u
~0 ~
............ ............ (name of Contracto,) under this Penultimate Certificate. The Employer ..6
;::, §
Cl} Cl}
shall pay the Contractor the amount within the Period o f Honouring Certificates, which is
............. Days from the date of this ce1tificate.
.-'4
....
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Architect's signature
c,i
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Name .. ... ............ . ........ .. . . Cl}

Copies to :

D Contractor D C & S Engineer D M & E Engineer -g

Cl}

□ -0 ....
□
□
Quantity Surveyor Resident Architect/Eng ineer/COW " 0
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**This proforma is prepared on the basis that the Architec/ has already issued a certificate f:'; C:
0 0
to release the residue amount ofthe Retention Fund as per clause 30.6(d). zu
 A1111e.rnre A 343
A1111ex11re A 342

FINAL CERTIFICATE
(Clause 30.15)

Ref:

To: ··· •··· ·········· ·· ············· ·················· ··· ··· ······ ··· ·· ·· ··· ······ ················ ·· ·· ··
············ ············ ·· ······· ·· ······················· ·· ·•···· ················· ·· ···· ····· ····· ·
(Name & Address of 'the Employer ')

Works: . .. . ..... ...... .. . .. .. ... ... . .. . .......... . .... .. . ....... . .. ... ...... . . .. . .... ......... .. ... . .. .. ....
(Description ofthe Works)
at ........... . ...... . ..... .. ................. .. .... ........ .. .... ... .. .... ...... . ................ ... ...... . ... .

Date of Final Certificate: ··································

-;
·c:
%]
a This Final Certificate is issued pursuant to Clause 30. 15 of the Conditions.
.s"'
..... RM
0 The Final Account (as enclosed)
.2 Less the total sums certified in previous
"'> RM ...................
certificate
Balance due to the Contractor RM
We hereby certify that the amount of Ri nggit Malaysia: ............... ...... ................. is
due and payable to the Contractor ...... . . .. .......... ....... (name of Contractor) under this
Final Certificate. T he Employer shall pay the Contractor the amount within the Period of
: Honouring Certificates, which is .. . . ... Days from the date of this certificate .
..
"O
~ .~
A E
"'
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E

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>-, u Architect's signature
0"' l
._
~ 0
..~ :=:s@ i
,,, Name .......................... . .. .

"'!;;
p..,
:,
CJ'.) 0
£ Copies to:
D
"Cl
.::!
(<I
5 .6
"O
D Contractor D C & S Engineer M & E Engineer
] "' D □
C
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"'
"O
::I □ Quantity Surveyor Resident Architect/Engineer/COW

z
0
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-·--- . -------- . _ .., , ~ . . . , _ _ _ - ............ J.11. L - ~~..............,_

 F1NAL CERTIFICATE
Nominated Sub-Contractm~

Attachment to Final Certificate No .. dated: .

Included in the amount of this certifi ate is the final account for work, material or goods executed by the Nominated Sub-Contractors:

Adjustm ent made to Total Sums

Sub-Contract Sub-Contract Sum Sub-Contract certified under Nett Amount
Nominated Sub- previous included in
Contractor Sub-Contract Viork Sum including variation, Final Account
etc payment this Certificate
certificates
I RM RM RivI RivI RM

I
I
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1
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:i,..

Architect's signature §
"',:::
)...

Name .. ~
::i,.

"'-1::.-1::.

F1NAL CERTIF1CATE
Nominated Suppliers

Attachment to Final Certificate No. dated: .

Included in the amount of this certificate is the final account for the value of the material or goods supplied by the Nominated Suppliers.

Total Sums
Adjustment made to
Nominated certified under Nett Amount
Nominated NS Contract Sum
Nominated Nominated Supplier's Supplier's previous included in
Supplier' s Sum including variation,
Supplier Item Final Account payment this Certificate
etc
certificates
Rl'vI RM RM RJvl Rl\lI

t
;;;
Architect's signature :..
~
r,;
Name .. . . .. .. .... ... ... ... ...... ... ... ... . .. ... .. :i,..

"'
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 4

Annexure B 347

ANNEXURE 'B'

SAMPLE OF THE NOMINATED

SUPPLIER AGREEMENT
 Anne:wre B 348
- A11nexure B 349
4

Articles Of Agreement Whereas

A . The Nominated Supplier has submitted a tender for the supply and
This Supply Agreement is made on the ..... .. day of ... ..... .. ........ 20 .. . .. ... delive1y of . ... ... . .... .... . ... .. .. . ...... . .... ................... ....... . .. . ... . . .
between .. . . ..... . .......... ..... .................................. ... ..... .. .. ........ ..... .. . .. ... ....... .
of (or whose registered office or business address is situated at) ... ..... . .. ... . (hereinafter referred to as the "Nominated Supply Materials").
... ... ... .. ..... . .... .... .................................. ........ .............................. ...... .......
·· · ······· ····· ····· ..................... .. .............. ....... .. ..... . ..... . .. . .......................... . B. And the Employer is desirous of instructing the Contractor to accept the
tender submitted by the Nomi nated Supplier.
.. ................. ...... .. ................................ ... (hereinafter called 'the Contractor')
and ...... ............................................................................................. ... C. And the Nominated Supplier has had reasonable opportunity to examine
and have full !mowledge of the Main Contract (except the detailed rates
of (or whose registered office or business address is situated at) ...... ....... . and prices) .
................... .............................................. ..... . ... ...... .... . ... .... ................ .

·· ······· ·························· ................................ ....... ............... .... ... .. .. .............. .

,
D. The term 'the Architect' in the Contract shall mean .......... ....... .. ... ....
.............................. ... ............... (hereinafter called 'the Nominated Supplier ').
of ... ................ .. .. .. .. ............. ..... .... ...... ....... ... .................. .... ....................... .

This Agreement is made pursuant to the agreement for (*) ... . .. ..... ..... . .. .

········ ···· · ·· ··· · ·· ··········· ··· ····· ···· ·· ···· · ··· · ··· ·· ···· ··· ····· ·········· ······ · ·
at . ......... . ....... ...... . . ........ ... ......... . . ... .. ..... .. . .. .. . ........... ... ....... . E. The term ' the Quantity Surveyor' in the Contract shall mean .... .... .... .

.............. . . .. ... ... ...... ... .... ...... .. ............ ... ............... . ... ..... ... .. ....
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... (hereinafter referred to as 'the Main Contract') of .................... ... .... ............... ..... ...... .. .. .... ........... .... ... .. ...... .................... .... .

made the ......... .... . day of ....... ....... 20 ...... .. ... . between .. . . . .. ... . .. . .. . ... .
································· ................ .. .. .. ........ ... .................. .. ................. .. ..... .. .
o or w 10se reg1steredof ice or busmess address is situated at) ........ ... ... .
.. ... ... ..... .. ... ........... ........ ... ............ .. .... ....... ...... ..... .... ............
············· ....... ............................................................. . ..... . ... ... ......... .. . .. ..
(hereinafter called ' the E mployer' ) and the Contractor.
 Anne.rnre B 350
Now it is hereby agreed as follows:
1. Nominated Supply Contract Sum
The Contractor shall pay the Nominated Supplier the sum of Ringgit
Malaysia: .................... . .. ..................................... .. ....... .. .. .
··············· ······················· ··· ·········· ··········· ··· ····· ·· ······· ·" ··· ···
··················································· · ····· (RM ) (e) that payment to Nominated Supplier shall be made within seven (7)
(hereinafter referred to as 'the Nominated Supply Contract Sum") or
such other sum as shall become payable hereunder at the times and in
the manner specified in the Agreement.
2. The delivery programme shall be in accordance with the details shown
in Appendix.
3. The following Clauses from the Main Contract shall be deemed
incorporated in the Nominated Supplier Agreement.
Clause 28.2 - Nomi nated Supplier agrees to the following terms:
(a) that the materials and goods to be supplied shall be of the quality and
standard specified, provided a lways that where approval of the
quality and standard of material is a matter of opinion of the
Architect, such quality and standard shall be to the reasonable
satisfaction of the Architect;
(b) that the Nominated Supplier shall make good by replacement or
otherwise any defects in the materials and goods supplied which
- - - - - - ---,,pp~a-r- w1Th1n he Defects Lia6il1ty Peno and shall bear any
expenses reasonably incurred by the Contractor as a direct
consequence of such defects provided always that:
(i) where the materials and goods have been used or fixed, such
defects are not such that examination by the Contractor ought to
have revealed them before using or fixing; or
(ii) such defects are due solely to defective workmanship, materials
and goods supplied and not caused by misuse, improper storage
or any act or neglect by the Contractor;
Annex ure B 351
(c) that the delivery of the materials and goods supplied shall commence
and be completed in accordance with a delivery programme to be
agreed between the Contractor and Nominated Supplier, or at such
times as the Contractor may reasonably direct;
(d) that the ownership of materials and goods shall pass to the
Contractor upon delivery by the Nominated Supplier, whether or not
payment has been made in full ; and
Days after the Period of Honouring Certificates and shall be subject
to the retention by the Contractor under Clause 28.5.
Clause 28.5 - Value of materials and goods
The Architect shall direct the Contractor as to the total value of
materials and goods supplied by a Nominated Supplier which has been
included in any certificate issued under Clause 30.0, and shall at the
same time when the certificates are issued, inform the Nominated
Supplier in writing of the amount of the said total. The Contractor shall
retain from the sums included for the value of materials and goods the
percentage of such value stated in the Appendix as Percentage of
Certified Value Retained up to an amount not exceeding five (5)
percent of the Nominated Supplier's sum. The Contractor's interest in
any sums so retained shall be fiduciary as trustee for the Nominated
Supplier (but without obligation to invest); and the Contractor's
beneficial interest in such sums shall be subject only to the right of the
Contractor to have recourse from time to time for payment of any
amount which he is entitled under the nominated supply contract to
deduct from any sum due or to become due to the Nominated Supplier.
Upon the Architect having certified the release of the Retention Fund
under Clause 30.6, such sums shall be released to the Nominated
Supplier within seven (7) Days after the Period of Honouring
Certificate and that if and when such sums are released to the
Nominated Supplier, they shall be paid in full.
C lause 28.6 - Payment to Nominated Suppliers
All payments in respect of tbe value of materials and goods supplied by
a Nominated Supplier shall be made within seven (7) Days after the
Period of Honouring Certificates and shall be subject to the retention by
the Contractor under Clause 28.5.
 Q

A1111ex11re B 352 Anne.wre B 353

Upon determination of the Supply Agreement, the Contractor sha ll be

entitled to damages on the same basis as if the Nominated Supplier had
4. Contractor's attendance on Nominated Supplier wrongfully repudiated the Supply Agreement.

The Contractor will have the following responsibilities relating to
materials and goods supplied by the Nominated Supplier:
(a) checking and taking delivery;
(b) storing and protecting;
(c) taking from store and placing in position including all handling and
hoisting;
(d) obtaining all necessary information from the supplier on installation
details and fixed in position;
(e) returning all chargeable packings to the Nominated Supplier caJTiage
paid and recovering all appropriate credits; and
(f) protecting the completed product.
7. Dispute Resolution
lf a dispute arises between the parties under, or out of or in connection
with this Supply Agreement, the parties shall endeavour to resolve the
dispute by mediation under the PAM Mediation Rules or alternati vely,
refer the dispute to an arbitrator to be agreed ben,veen the parties. If after
the expiration of twenty one (21) Days from the date of the w ritten
notice to concur on the appointment of the arbitrator, there is a failure to
agree on the appointment, the pa1ty initiating the arbitration shall apply
to the President of Pertubuhan Akitek Malaysia to appo int an arbitrator,
and such arbitrator so appointed shall be deemed to be appointed with
the agreement and consent of the parties to the Supply Contract. The
arbitration can be held at any time and in accordance with the provisions
of the Arbitration Act 2005 or any statutory modification or re-
enactment to the Act and the PAM Arbitration Rules or any
modification or revision to such ru les.

5. Warranties, Drawings, Manual and Documentation

The Nominated Supplier shall provide all necessary waiTanties,

drawings, operation and maintenance manuals and/or such other
documents as may be reasonably required by the Contractor and/or
Employer under the Main Contract.

6. Determination

If the Nominated Supplier is in breach of any of the tenns set out herein
OL.fails. to__comply with bis contractual obligations, the.Contractor s hall
give to the Nominated Supplier a written notice delivered by hand or by
registered post specifying the default. If the Nominated Supplier shall
continue with s uch default for fourteen (14) Days from the receipt of
such written notice, then the Contractor may, within ten (10) Days from
the expiry of the said fourteen (14) Days, by a further written notice
delivered by hand or by registered post, forthwith determine the
Agreement with the Nominated Supplier, provided always that such
notice shall not be given unreasonably or vexatious ly.
 An11ex11re B 354 A1111e.rnre C 355

IN WITNESS WHEREOF

* The hand of the Contractor has ) Signature of Contractor: .. .............. . , ANNEXURE 'C'
been hereunto set the day and year ) .............................. .. .......... . I
I
I
first above written in the presence )
of: ) Name: ...... . ... . ......... ... .......... .. SAMPLE OF A COLLATERAL
)
Signature of Witness: .. .... ......... . . )NRIC No: . .. . ......... ... . .... ... .... . AGREEMENT BETWEEN THE
Na111e: ...... . ........ ................. . EMPLOYER AND NOMINATED
NRIC No: .. ................ ........... . SUB-CONTRACTOR
*The Common Seal of .. .......... .
was hereunto affixed in the
presence of

Signature of Director: ................ . Signature of Director/Secretary* ... . .

Name: ....... ...... .... .. .. ............ . Nan1e: ....................... . .......... .

NRICNo: ........ .. . ... ...... . ...... .. . NRICNo: ........................ ... .... .

* The hand of the Nominated ) Signature of Nominated Supplier:

Supplier has been hereunto set the ) .............. ....... ........ .. ........ .. .
day and year first above written in )
the presence of: ) Name: ......... .. .... . ................. .
)
Signature of Witness: ...... .. . ..... . ) NRTC No: ............ . ..... . .. ...... .

Na111e: .. ..... .. ............ ... ........ .

NRICNo: .......... . ........... ......... ..

*The Common Seal of .............. .

was hereunto affixed in the
presence of

Signature of Director:....... ........... Signature of Director/Secretary* .. .

Name: . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . Name: ... ... ... .... .. ...... . ....... . . ... .

NRIC No:...... . ................ .. ... ..... NRlC No: .... ...... ....... . .. ......... ... .
 A1111e.rnre C 356 A1111ex11re C 357

FORM OF EMPLOYER/NOMINATED SUB-CONTRACTOR

The consultants for the Main Contract Works arc:
AGREEMENT
Architects: _ __ _ __ __ _ __ __ _ _ _ _ __ _ _ _ _
Main Conlract Works
- -- -- - - - - - - - - -- - -- -- Civil&
at _ _ _ _ _ __ _ _ _ _ _ __ _ __ _ _ _ __ _ _ _ __ Structural Engineers: _ _ __ __ _ __ _ __ _ __ _ _ _ _

Mechanical &
Sub-Contract Works: Electrical Engineers: _ _ __ _ __ __ _ __ __ __ _ __
- -- - -- --------------
Quanlity Surveyors: _ __ _ __ __ _ _ __ __ __ _ __
Main Contractor:
- - - -- - -- - -- - - -- - -- - - -
Whereas
Address:
- - - -- - - -- - -- - - -- -- - -- - -- (i) the Nominated Sub-Contractor has submitted a tender hereina~er to
carry out the Sub-Contract Works forming parl of the Main Contract
Works.

Nominated Sub-Contractor: (ii) The Nominated Sub-Contractor hereby acknowledged thal he is fully
- -- -- - -- - -- - -- -- -
aware of all the provisions of the Main Contract affecting the Sub-
Address: Contract.
- - - - -- - - - - - - - -- - -- - -- - --
(iii) Pursuant to the Main Contract, the Nominated Sub-Contractor has
been nominated by the Architect (as agent of the Employer) to enter
into a Sub-Contract with the Main Conlractor to can-y out _ _ _ __
This Agreement

is made the _ _ _ _ _ __ day of _ _ _ _ __ _ _ __ 20_ __

- - - - -- (hereinafter referred Lo as " the Sub-Contract Works").
between = = = = = = ~~ - - - -- -- - - -- - - - - -
(iv) The Nominated Sub-Contractor is a spec ialist in his field and the
of or whose registered office or business address is situated at Nominated Sub-Contractor acknowledge that the Employer is relying
- - - --
that he has such skill, judgment and expertise in his particular field in
nominating the Nominated Sub-Contractor to catTy out the Sub-
(hereinafter called " the Employer") Contract Works.

and
- - -- - -- - -- - - -- - -- - -- - -- - -- -
0 for whose regislered office or business address situated at
------

(hereinafter called "the Nominated Sub-Contractor").

 A1111e.rnre C 358
Now It Is Hereby Agreed As follows:
1. In consideration of the Architect (as agent of the Employer) nominating
the Nominated Sub-Contractor to unde1take the Sub-Contract Works,
the Nominated Sub-Contractor waii-ants and undertakes to the Employer
that:
1.1 the Nominated Sub-Contractor shall carry out and complete the
Sub-Contract Works in accordance with all the requirements
contained in the Sub-Contract;
1.2 in so far as any design is carried out by the Nominated Sub-
Contractor, the Nominated Sub-Contractor shall be full y
responsible for the adequacy and integrity of the design and the
Sub-Contract Works, and the Sub-Contract Works, when
completed, shall be "fit for its purpose" for w hich they are required
as part of the Main Contract Works;
1.3 the Nominated Sub-Contractor will so perform his obligations
under the Sub-Contract so that the Architect will not by reason of
any default by the Nominated Sub-Contractor be under a duty to
issue any extension of time to the Main Contractor under the terms
of the Main Contract;
1.4 the Nominated Sub-Contractor will so perfo1111 his obligations
under the Sub-Contract so that the Architect will not by reason of
any default by the Nominated Sub-Contractor be under a duty to
assess any loss and/or expense to the Main Contractor under the
terms of the Main Contract;
1.5 the Nominated Sub-Contractor will so perform his obligations
- -uafler-the-8-ub-Gftnt-1'tle-HO--thaH-he-Areh-iteet--will not by reason u-f
any default by the Nominated Sub-Contractor be under a duty to
issue an instruction to determ ine the employment of the Nominated
Sub-Contractor under the terms of the Main Contract; and
1.6 the Nominated Sub-Contractor will carry out a ll defects work
whenever instructed by the Architect.
Annexure C 359
2. Without prejudice to the generality of the foregoing or to any terms and
conditions implied by law, the Nominated Sub-Contractor fu1ther
warrants and unde1takes to the Employer the following:
2.1 the Nominated Sub-Contractor has exercised and will exercise all
proper skill and care to be expected of a specialist in the sphere of
expertise of the Nominated Sub-Contractor in:
(a) the design of the Sub-Contract Works insofar as the Sub-
Contract Works have been or will be designed by the
Nominated Sub-Contractor, his servants, agents, sub-
contractors or suppliers; and
(b) the selection of equipment, materials and goods for the Sub-
Contract Works insofar as such equipments, materials and
goods have been or will be selected by the Nominated Sub-
Contractor his servants , agents, sub-contractors or suppliers.
2.2 that the Sub-Contract Works and any equipment supplied and/or
installed by the Sub-Contractor will, when completed or installed,
satisfy any perfonnance specification or requirement insofar as
such perfonnance specification or requirement is included in the
Sub-Contract Works.
2.3 that the Sub-Contract Works and the equipment, materials and
goods used therein shall correspond as to description, quality and
condition with the requirements of the Sub-Contract and be of
sound manufacture and workmanship;
2.4 that, insofar as the Sub-Contract Works have been or will be
designed by the Nominated Sub-Contractor, his servants, agents,
sub-contractors or suppliers, they will, when completed, comply
with the statutoty requirements and the Sub-Contract.
3. The Nominated Sub-Contractor shall be liable for and shall indemnify the
Employer against:-
3.1 each and every liability which the Employer may have to any
person whatsoever and against any claims, demands, proceedings,
damages, costs and expenses sustained, incurred or payable by the
Employer; and
 Annex111·e C
3.2 any payment which the Employer is liable to make to the
Contractor in respecl of additional sums suffered or incutTed by the
Contractor or any other sub-conlractor or supplier engaged upon
the Main Contract Works.
insofar as and to the extent that the same has arisen by reason of any
breach by the Nominated Sub-Contractor, his servants, agents, sub-
contractors or supplie rs, of the Nomi nated Sub-Contractor's obligations
under lbe S ub-Contract or this WatTanty Agreement.
4. The Nominated Sub-Contractor agrees that he will not, without first
giving the Employer not less than thirty (30) days' prior notice in writing
by registered post, exercise a ny right he may have to determine his own
employme nt under tbe Sub-Contract or treat the same as having been
re pudiated by the Contractor or withhold performance of his obligations
under the S ub-Contract.
5.1 ln the event that the Main Contract is term inated or the employment of
the Contractor under the Main Contract is determined for any reason
whatsoever, the Nominated S ub-Contractor, if so requested by the
Employer, shall continue to caiTy out and complete his obligations under
this Agreement and shall enter into a novation agreement with the
Employer o r a new main contractor in which the Nominated Sub-
Contractor will unde1iake inter alia to perform the Sub-Contract and be
bound by its terms and conditions as if the Employer (or the new main
contractor) had originally been named as a contracting party in place of
the Contractor. The said novation agreement w ill be in such form as the
Employer may reasonably require.
5.2 In the event lhat the Employer does not require the Nominated Sub-
_ Contractor.J.o..eu.teci-l:i-t.Q-.a..U.0_¥a.W;)J1--3-g+e41T1~1.t-a s--1-e.q u in:d by Clause 5 . I ,
the Nominated S ub-Contractor shall have no claim wha lsoever against
the Employer for any non payment by the Contractor, damage, loss or
expense howsoe ver aris ing out of or in con nection with this Agreement.
6. In so far as the copyright or othe r intellectual property rights, in any
plans, calculations, drawings, documents, materials, know-how and
information relating to the Sub-Con tract Works shall be vested in the
Nominated Sub-Contractor, the Nominated Sub-Contractor shall grants
to the Employer, its successors and assigns a royalty free, non-exclusive
and irrevocable licence (carryi ng the right to grant sub-licences) to use
and reproduce any of the works des igns or inventions incorporated and
360 Annexur e C 36 1
referred to in such documents or materials and any suc b know-how and
information for all purposes relating to the Sub-Contract Works
(including without limitation the design, execution, maintenance,
reinstatement, extension and repair of th e Sub-Contract Works).
To the exte nt beneficial ownership of any suc b copyright or other
intellectual prope1ty rig ht is vested in anyone other than the Nominated
Sub-Contractor, the Nom inated Sub-Contractor shall en sure and procure
that such material shall be available to the Employer. For the avoidance
of doubt, any such licence granted shall not be determined if the
Nominated Sub-Contractor shall for any reason cease to be employed in
connection with the Sub-Contract Works.
7. The Employer sha ll be entitled at any time, without the consent of the
Nominated Sub-Contractor to assign or transfer the benefit of this
Agreement or a ny part thereof and any interest therein or any benefit
ari sing there unde r, whether past, ex isting or future to any third party
notified by the Employer. In the event of any such assignment or
transfer by the Employer, such assignee or transferee shall from the date
thereof have the same rights, powers and remedies as it wou ld have had
if it had at all times been the Employer under this Agreement. Without
prejudice to the generality of the foregoing, all losses, costs, demands,
claims, proceedings or any other rights or benefits whatsoever (whether
past, present or fu ture) of the Employer related to or in any way
conn ected with or arising out of t his Warranty Agreement are deemed to
be those of any assignee or transferee of the Employer.
8. The Nominated S ub-Contractor shall rectify at his own cost all defects
in the S ub-Contract Works, and if he fails so to rectify such works after
notification by the Contractor or Architect, be shall be liab le to the
Contractor a nd Employer for the costs of rectification, e tc. of any
omission, faults or defect in the Sub-Contract Works which the
Nominated S ub-Contractor is bound to rectify under Sub-Contract.
9. Where the Architect has been under a duty under the Main Contract
C onditions to issue an instruction to th e Main Conlractor to make a re-
nomination in respect of the Sub-Contract Works, the Nominated Sub-
Contractor shall be liable for and sh all inde mn ify the Employer against
any additional cost resulting from s uc h re-nomination.
10. in case any di spute or diffe rence shall arise between the Employer and
the Nominated Sub-Contractor, either during the progress or after the
 A1111ex11re C 362 A1111exure D 363

completion or abandonment of the Sub-Contract Works, as to the

construction of this Agreement, or as to any matter or thing of
whatsoever nature arising out of this Agreement or in connection ANNEXURE 'D'
therewith, then such dispute or difference shall be and is hereby referred
to the arbitration and final decision of a person to be agreed between the
parties, or failing agreement within fourteen (14) days after either party PAM ADJUDICATION RULES
has given to the other a written request to concur in the appointment of
the arbitration, a person to be appoi nted on the request of either party by
(2010 EDITION)
the President of the Pertubuhan Akitek Malaysia.

I I. Such reference shall not be opened until after Practical Completion or

alleged Practical Completion of the Main Contract Works or tetmination
or alleged termination of the Contractor 's employment under the Main
Contract or abandonment of the Main Contract Works, unless with the
written consent of the Employer.

Signed by or on behalf of Signed by or on behalf of

the Employer the Nominated Sub-Contractor

Name in full: _ _ _ _ _ __ _ Name in full: - -- - -- - -

NRIC No.: _ _ _ _ _ _ __ NRIC No.: _ __ _ __ __

In the capacity of: _ _ _ __ _ In the capacity of: _ _ __ _ _

W itness: _ _ _ _ _ _ __ __ Witness:
- - - - - - - -- -
Name in full: _ __ _ _ _ __ Name in full: _ _ _ _ __ _ _

NRIC No.: _ _ _ _ _ __ _ NRlCNo.:

- - -- - -- - -
Date: _ _ _ _ _ _ __ _ _ _ Date: - - - - - - - - - --
 A1111e.w re
PAM ADJUDICATION RULES (2010 EDITION)
Defmitions
[n these Rules:
(a) Adjudicator means a person mutually agreed and appoin ted by the
parties or the Adjudicator appointed by the Appointment Body pursuant
to the adjudication clause in the Contract.
(b) Appointment Body means the President of Pe1tubuhan Akitek Malaysia
or any other party named as the Appointment Body in the contract.
(c) Article means the Articles in the PAM Adjudication Rules.
(d) "Contract" means any of the contracts compris ing the PAM 2006 suite
or Contracts.
(e) " Days" means calendar day including the weekly day of rest but
excl uding gazetted holidays in the location where the Works is carri ed
out.
(f) Practical Completion is as defined in the PAM 2006 Contracts.
(g) " Rules" means the PAM Adjudication Rules (2008 Edition).
Article 1 - General Provisions
1.1
The Contract has provisions to refer disputes on set-off to
adjudication. Before any disputes can be referred to adjudication, the
- - - - - - --rti-es--mt1-s-t--eemp-ly--w-i#t-t-he-prov-isi-ons-st-ated -iTI the Con tract,
namely:
(a) that the patty making the claim must submit his grounds and
complete details of his claim to the other party;
(b) the party disputing any part or the who le o f the claim shall set out
the reasons and particulars of the disputed areas of claim; and
(c) onl y after the parties have failed to agree on the claim, either party
may then refer the dispute to adjudication.
D 364 A1111ex11re D 365
1.2 The patties may refer any other disputes besides disputes on set-off to
adjudication by entering into a separate written agreement to refer the
specific disputes to adjudication. ln order to ensure that the
Adjudicator has jurisdiction to decide such disputes, the written
agreement must be submitted and acceptable to the Adjudicator, or if
the Appointment Body is asked to appoint an Adjudicator, the written
agreement must be acceptable to the Appointment Body.
Article 2 - Adjudication Applications
2. 1 An adjudication application shall not be made unless the patt ies have
complied with Article 1.1.
2.2 Where an app lication is made to the Appointment Authority to appoint
an Adjudicator, the party making the application must furnish the
following:
(a) cettified true copies of the adjudication clause in the Contract;
(b) details of the dispute as set out in Article 1.1 ;
(c) documents detailing th e party's failure to agree a settlement on the
dispute; and
(d) correspondence to show that the parties have failed to agree on the
appoi ntment of an Adjudicator.
2.3 The patty making the application must also furnish to the other party
at the same time a copy of the application and a copy of the documents
referred to in Article 2.2 (b), (c) and (d).
Article 3 -Appointment of the Adjudicator
3.1 Upon a dispute arising, and upon failure of the parties to agree to the
appointment of an Adjudicator, any pa1ty may submit an app lication to
the Appointment Authori ty to appoint an Adjudicator. Such
Adjudicator so appointed shall be deemed to be appointed with the
agreement and consent of the patties to the Contract and both parties
agree to be bound by the Adjudicator' s Decision.
 A1111.e.rnre D
Article 4- PAM Adjudication Rules ('Rules')
4.1 The adjudication shall be carried out in accordance with these Rules
and/or any modified, amended or substituted Rules which PAM may
have adopted and which have come into effect before the
commencement of the adjudication. The parties may, by written
agreement, vary, modify or substitute the Rules or any part of them.
4.2 If the Adjudicator is appointed to decide on disputes not involving
set-off, the Adjudicator shall infom1 the parties of any new rules or
variations to the rules that he may require within seven (7) days of
acceptance by him of the Adjudicator's appointment. If there is any
disagreement by the parties to any of the Adjudicator's proposal within
the time specified by the Adjudicator, the Adjudicator shall be
empowered to decide the final rules by informing the parties of his
decision and proceed with the adjudication accordingly.
Article 5 - Commencement of adjudication
5.1 An adjudication shall be deemed to have commenced before Practical
Completion under the PAM 2006 Contracts, as long as the party
initiating the adjudication gives a written notice to the other patty to
concw- on the appointment of an Adjudicator before the date of
Practical Completion. For the avoidance of doubt, any Adjudicator's
Decision arising out of such adjudication whether delivered before or
after the date of Practical Completion shall be deemed to be an
adjudication conducted before the date of Practical Completion and the
patties shall be bound by the Adjudicator's Decision. Any dispute on
the Adjudicator's Decision may be referred to arbitration in
accordance with the provisions of the Contract.
5.2 If an appointed Adjudicator fails to deliver a Decision within the time
provision provided under Atticle l 0.1, and a new Adjudicator is
appointed for the same dispute, the Adjudication shall be deemed to
- - - - - - --f'le--amrdj utlrcati-on--commeneed-befure Pract-ica-1 eompl-etion.
Article 6 -Adjudication Procedures
6.1 The Adjudicator shall:
(a) act independently and impartially;
(b) proceed expeditiously and avoid incurring unnecessary expense;
and
(c) comply with the principles of natural justice.
6.2 An Adjudicator may do all or any of the following in relation to an
adjudication:
(a) conduct the adjudication in such manner as he think fit;
366 A11nexure D 367
(b) require further submission of documents from any party in addition
to the documents submitted in Article 2.2;
( c) set deadlines for the submission or documents to be provided by
any party and provide an opportunity for the other patty for
submission of any responses;
(d) appoint, if necessaiy and after notifying the parties, an independent
expett to inquire and report on specific issues relevant to the
adjudication;
( e) caII a conference of the patties;
(t) caJTy out an inspection of any work relevant to the issues;
(g) Issue such directions as may be necessary or expedient for the
conduct of the adjudication.
6.3 The parties to an adjudication shall comply expeditiously, with any
requirement made or direction issued by the Adjudicator in accordance
with this Article.
6.4 An Adjudicator's power to determine an adjudication is not affected
by the failure of any party to comply with any Adjudicator's direction.
In the event of any failure by a party to comply with any
Adjudicator's direction, the Adjudicator may determine his Decision
on the basis of the infonnation and documents available to him.
Article 7 - Party conference
7. I Where an adjudicator has called for a conference of the patties, no
patty shall be represented by any legal representative in such a
conference.
Article 8 - Adjudicator's Decision
8.1 The Adjudicator's Decision shall be binding on the patties and the
parties shall implement the Adjudicator's Decision without delay
whether or not the dispute is to be fi.11ther referred to arbitration later.
In the event any or both of the parties are dissatisfied with the
Adjudicator's Decision, written notice must be given to the other party
 Anne.rnre D
within six (6) weeks of the date of th e Adjudicator's Decision to refer
the dispute to arbitration in accordance with the Contract.
8.2 The Adjudicator Decision sha ll be in writing and shall include :
(a) the reasons for the Adjudicator's Decision;
(b) the amount to be paid by a party;
(c) the date of which the a mount is payable;
(d) th e interest payable on the a mount;
(e) the proportion of the costs of the adjudication payable by each
party to the Adj udication; and
(t) any other relevant matter that the Adjudicator reasonably considers
to be rel evant to the adjudi cation .
8.3 Any amount decided by the Adjudicator shall be paid by the paying
party w ithin twenty-one (2 1) days of the Adj udicator 's Decision.
Article 9 - Correction of the Adjudicator's Decision
9.1 If the Adjudicator's Dec ision conta ins:
(a) any computation, clerical or typograph ical errors or errors of a
si m ilar nature;
(b) an eITor arising from an accidental sli p or omission;
the Adjudicator may, on the Adjudicator's own ini tiative or on the
appl ication of any of the party, correct the mistake or error, as the case
may be.
Article IO - Time frame for Adjudicator's Decision
10.1 The Adjudicator shall deliver his written reasoned Decision with in
twenty one (2 1) Days from the da te of acceptance by him of his
appoi ntment as adj udicator. lf he is unable to del iver his written reasoned
Decision within the twenty-one (2 1) Days, the Adjudicator may extend
the time by informing the parties, but the extension shall not exceed
368 Annexure D 369
another seven (7) Days from the expiration of the twenty-one (2 1)
Days. The parties by written agreement may agree to extend further
time for the Adjudicator to arrive at his Decision . If the Adjudicator
fails to deliver his Decision within the time limit, or within the
extended time agreed by the parties, the Adjudi cator w ill have no
jurisdiction to deliver the Decision beyond the date or agreed date. In
that event, the Adjudicator shall not be entitled to any fees.
Article 11 - Interest
11 . I The Adjudicator shall award interest from such dates as he thinks fit
on the amount awarded based on the interest rate provided in the
Contract, and if no such rates are provided in the Contract, then at such
rate as the Adjudicator considers appropriate.
Article 12 - Exclusion of Liability
12. l The Appointment Body, the Adjudicator and any expert appointed by
the Adjudicator, shall not be liable to any patiy in the adjudication for
any act or omission in the discharge or purp0tied discharge of the
adjudication, unless the act or omission is fraudulent.
12.2 The patiies and the Adjudicator agree that statements or comments
w hether w ritten or oral made in the course of the adjudication shall not
be relied upon to found or maintain an action for defamation, libel,
slander or otber related complaints.
Article 13 - Confidentiality
13. l The patties and the Adjudicator must at all times treat all matters
relating to the adj udication (including the e xistence of the
adj udication) and the Decision confidential.
Article 14 - Enforcement of an Adjudicator's Decision
14. 1 The p arties agree that the Adjud icator's Decision can be summarily
registered and entered as a court judgment and thereafter be
en forceable in the same manner as a judgment debt.
 Annexure D 370
GUIDELINES OF GOOD PRACTICE FOR ADJUDICATORS
1. Appointment
An Adjudicator shall, before accepting an appointment ensure that he
must have the time to discharge his duties as an Adjudicator to deliver
his Decision to the parties, within twenty (21) Days from the date of the
acceptance of his appointment or within the extended time as provided in
Article I 0.
2. Professional Standard
An prospective Adjudicator shall not solicit appointment and shall
accept appointment if offered only if he is fully satisfied that he is able
to discharge his duties without bias or the appearance of bias; that he is
competent to detennine the issues in dispute and that he is able to give to
the adjudication the time and attention which the patties are reasonably
entitled to expect. For more detail information on the subject of bias, the
adjudicator is referred to the infonnation contained in the PAM Arbitration
Rule [2003 Edition].
3. Due Diligence
An Adjudicator should devote such time and attention as the parties may
reasonably require having regard to all the circumstances of the case and
shall do his best to conduct the adjudication in such manner that cost do
not rise to an unreasonable proportion of the amount in dispute.
Anne.rnre D 371
PAM ADJUDICATION RULES (2010 EDITION)
1. Adjudicator's fees
1.1 The Adjudicator's fees are charged at the rate of RM450.00 per hour
for PAM Standard Fo1ms of Building Contract or RM600 per hour for
other forms of contract, computed on the basis of time spent in studying
the issues, submissions, in conducting meetings and the hearings,
on the issuance of Orders for Directions, in the deliberation and the
publication of the Decision.
1.2 Cost of the issuance of Orders for Directions are computed at
RM450.00 per hour (or patt thereof) for PAM Standard Forms of
Building Contract and RM600 per hour (or pa1t thereof) for other
forms of contract and the costs for the issuance of Orders for Directions
are deemed to be inclusive of secretarial costs which may be required.
1.3 Cost of meetings are charged on a half-day basis (ifless than 4 hours)
and for hearing day/date are charged on a full-day (8 hour) basis.
1.4 The rates include the Appointment Body's charges (if any) but
excludes service tax if payable by the Adjudicator.
1.5 The Appointment Body 's administrative charge shall be 7.5% of the
Adjudicator's fees, if the appointment is made by the Appointment
Body.
2.0 Cost - Vacating Set Dates
2.1 Cost for vacating set dates for meeting(s)/hearings are chargeable at
the rate of 50% of the number of hours set aside by the Adjudicator.
3.0 Other Costs - Venues/Refreshment and Reimbursable Cost etc..
3.1 If proceedings are conducted in the Klang Valley or within town/
city of the Adjudicator's home/office location, no mileage claim shall
be charged.
3.2 If proceedings are conducted away from the Klang Valley or away
from the town/city of the Adjudicator's home/office location, actual
traveling and hotel acc01mnodation and meals expenses as incurred
 A1111e.rnre D 372

are chargeable. The Adjudi cator is allowed travel by airline in business

class. Cost, if any which may be incurred for the h"ansportation/
delivery of document to the venue of the proceedings are chargeable.

3.3 ln the event the Adjudicator used his own car for tra veling, mileage
claim (at current rate according to PAM's Guidelines) and toll charges
incwTed are reimbursable.

3.4 If proceedings are conducted away from the Klang Valley or away from
the town/city of the Adjudicator's home/office location, the
Adjudicator is entitled to charge a day's cost in respect of each return
trip made.

3.5 Costofhiring venue (and light refreshment, ifany) telephone, facsimile

charges, postages, as may be incurred in respect of the proceedings
are reimbursable.

4.0 Security towards Adjudicator's Fees and Cost

4.1 Each party is to provide an initial deposit of RMl0,000.00 to the

Appointment Body (or to the Adjudicator, if the appointment is not
made by the Appointment Body).

4.2 The parties to the adjudication shall be jointly and severally responsible
for the Costs of the Adjudication.

5.0 Adjudicator's Statement of Cost

5. 1 Upon the conclusio n of the proceedings by the publication of

the Adjudicator's Decision, the Adjudicator claim for the Cost of the
Adjudication is to be accompanied by a Statement of Adjudicator 's
Cost.

5.2 The statement of Adj udicator's Cost shall be an itemized statement

detailing the costs charged with regard to the heads of claims as set
out in this Rule.

5.3 The parties shall bear the proportion of the Cost of the Adjudication
to be decided by the Adjudicator and shall settle the cost upon
collectio n of the Adjudicator's Decision.
 A1111exure E 375

ANNEXURE 'E'

DOCUMENTS TO ASSIST THE

MIGRATION FROM PAM 98 TO PAM
Note to Reader
The following document has been prepared to assist practitioners familiar
2006
with PAM 98 to migrate to PAM 2006.

The document shall be read in accordance with the following

amendments

(a) Black - refers to the clauses in PAM 98

(b) Red - refers to the clauses in PAM 98 that has been deleted
(c) Blue - refers to the new provisions of PAM 2006
 A1111ex11re E 376 Annexure E 377

Now it is hereby agreed as follows:

PRIVATE E;D ITION PAM CONTRACT 2006 (WITH QUANTITIES)

Articles Of Agreement A rticle 1

This Agr·ecmcnt is made on the ......... ........ . .... .... day of . ... ....................... ...... .. ... 20 ... . . . . ....... .
For the consideration hereinafter mentioned the Contractor will upon and Contractor's
between .............................. .......................................................................... .............. ..... .. ... . . .... .
subject to the Contract 9 ocuments carry out and complete the Works shown O bligations
of(or whose registered office or business address is silualed at) ................................. ............ .. ... . . ... .
upon and described by or referred to in the Contracu host' Documents.

. . . . . . . . . . . . ....... . .. ... .. .. . ... ... .. ... . ... .. . . . .. .. . .. (hereinafter called ' the Employer')--04l-ie---ttf!rtfar+
and ........ . .. ...... .... ... ......................................... .... .... . ... ......................................................... . Article 2

of(or whose registered office or business address is situated al} .................... . . ... .. . .................... .. .. .
The Employer will pay the Contractor the sum of Ringgit Malaysia: ........ .. .. C ontract

........................ ........... .. .. ...... ...................... (hereinafter called ' the Contractor'). or the seco1~ Sum

Whereas
(RM ) (hereinafter referred to as 'the Contract

T he Employer is desirous of(*) ...... . . ........ ...... ... . ..... . .... . . Sum') or such other sum as shall become payable hereunder at the times and in
the manner specified in the ComlitiensContract.

(hereinafter cal led 'the Works') at .................................................................... . .. ... .. .......... .. . ... .. . Article 3

T he term 'the Architect' in the Contract Gentliiitm!rshal l mean llle-;;a.ie--.......... Architect

and has caused Gdrawings and Contract Bills of Qua111i11e!, showing and describing the work to be of ............................................................................................... .. . . ......... . .......
done to be prepared by ur under the direction of his Arch itect and Consultant .. ................................. .

or in the event of ~eatlt--efsuch Person ceasing to be the A rchitect for the

purpose of thets Contract, such other tJPerson as the Employer shall nominale
WHE:REASAnd W hereas the Contractor has supplied the Employer w ith a fully priced copy or the
atttl-appoinl w ithin twenty t:ighl (28) J Day therefrom -.n1eec:c:Ji11!': A,el1 il"d
said Bills of Qu,mtllles (,... h1ch eoJl) i ~ f t e r referreEI rn as ' lht:! Contract Bills.'-)
fuf...+lwl purpe,e. not liemg a person rn v, liom the ConlrnctoF-Shal l ohjecl for
A-NRAnd WIIE:REASWhe reas the said 9 d rawings numbered .......... . ................... . . ...... .. ... .... .. . n~a~ons co11,idt:'red le se sufficient hy an Arhltrator appoiAted in uceorElance
\ \ - l t ~ e 34 .U or the C0nd 11ions. Prev1deEI always thal--llNo f)ef<altt
······· ················"··· .................................................. .................... . SllBsequently Architect so appointed lo be the Ard1itee1 und0r !his C011tracl
inclusive (here inafter referred to as ' the Contract Draw ings') and ti;~· c;~;;:~·~;- ·Biii"~·i;~;~·;;~~;;··~;~~ed
shall be entitled to disregard or overrule any ce11ificate or opinion or decision
by or on behal r o r the patties hereto.
Nute: Tlus ugreement must lie duly srnm11e~l in uernrdmice with the laws Aflf)lie,1ble tn that part ol or approval or instruction given or exf)ressed liy 1he Arehileet for tl1e lime
Mal-aysitt-ttt-wluch 1he agreement 1s maEle anEI in tlrnt pan of l\falaysia 111 which lhe 1..Vorks
eemgby the preceding Architect.
an:! 10 Be earned out 1ftltfl:ert:'nt from th1: plu,~ iH which tlw contract is mude.
(*) Su,w1he-tfflf1tre8rie.f description r!f'the Works.
- A1111e.rnre E
Article 4
The term ' the Engineer' in the Contract (:-fm41w1ts-shall mean:
(a) Structural & Civil Engineer: .................................................................... .. .
of.................... ............... .. ............................................................. ........ . .
(b) Mechanical & Electrical Engineer: ................. ................................ . . .... . . .
of ..................................................................... .. . ...................................... ..
or in the event of hi•, dealh or such Person ceasing to be the Engineer for the
purpose of the+,, Contract, such other r Person as the Employer shall Alttllma~
aitd--appoint within twenty eight (28 ) d Days then: from. a--sttl~H,; eHgiAeer
fuF--thtll~urpo,e. nm being a per<,a11 lo 1, hom ltte-GoAt-FEH;te1'--Shall~hj~l--+f>r
r-1-dered te be •,uffieienl by--att-A-rb!lralAr ap1~om1ed 111 aceonlattee
w1lh Claus,· J,1.g or the ( flndlllOll'r. The Engineer shall perform the duties
e,pectcd or his profession. and the Architect may fro m time to time ddegate
such duties and authority of the Architect to the Engineer as the Arch11ect
deems lit.
1 he l·ng111eer ,hall <1:,sisl lht'---A-F€lttt-e€1---wtt-h- ,,i~itthst·---t>nt:,•ttteering ,, tirks
relalmg 10 strueiural ,md ef\•tl ,•,flri.s. nwelctanie;1I an.l t>leetncal \Hlfk'H'Httt)'
tither e11gineenng worJ.s..--as-m<ty be reEJuired by 1he----A-rehltet:1 under the
-------
rrottS-i•IAS•~f-1 he-tt!tlt-FB€1 .
Article 5
The term ' the Quantity Surveyor' in the Contract ~ttew-, shall mean .......
of ......... .................................. ... ........................................................... . .......... .
or in the event of lwr<kat-h--er-such Person ceasing to be the Quantity Surveyor
for the purpose of the15 Contract, such other ~ Person as the Employer shall
378
■------------------------
A11nexure E 379
OOttttAaft'---fillli appoint within t,,cnty eight (28 ) .l Days therefrom. - ~
QHantil)' Sun 1!)01' fof-ffiilt pttff!O',e. 1101 heing a persen tfl wlrnm the Cf111trnet0r
Eng ineer
,-haJ.l-.el~teet-for--rea;,005--tOAAJ~ed lfl be ,ufli1c-H.•ttt hy aft Arbi1ra1-0r arromted
tA-i\a'tlrthmt:e \\ 11h Clause .~<1.0 111 tile C-oitdtt-t~th, The Quantity Surveyor sha ll
perform the duties expeclcd of his protession, and the Architect may from time
to lime delegate such du1ies and authority of the Architect to the Quantity
Surveyor as the Architect deems fit.
fl-le Quunlil) Sun ey-OF--SHAll--flSSt, t the-Areh-itecHtt-1-htL-ttteMuring 11ml vuluA-t-iBFt Ro-le-m
flf !Re work. ftrnlenah aAd good•,. 11\ed er tmfi,.etl. brought to or atl.1acem hl rhe Qttttmit-y
,11e afttl sueh t-1ther \·aluatirnis as may !Je rt'EJUtred b)· the Ard111ee1 under th~ Su~
0
~10t\S--BJ l~ll-fa€·I .
Article 6
The term 'the Specialist Consultant' in the Contract C:=01tffitmtt!,--Shall mean Specialist
Consultant
(a) ................................................................................... .. . . .. ... . .. . . ..... . .. , ..... .
of .......................... ........................................................... ..... . ........... . .. ....... .
(b) .................................................................................. ......... . ............. . .... .
of ............................................................................................................... .
Ro!Hl-f
FAgtflffi·
( \'.) ................................................................................................................
of ............................................................................................ ....... ....... ..... ..
or in the event of ht.,.....i!eatlt--or such Person ceasing to be the Specialist
Q uantity
Consultant for the purpose of thetS Contract, such other p Person as the
Surveyor
Employer shall HtH-1-llllate nnd appoint with in twenty e ight (28) d Oays
therefrom. ~dmg---Speeinl1st C'fln,ullant for 1ha1 pUFf)flSe, net---betng--a
rer-,fln lo v. horn tlie Centraetor ,hall ob_jeet fur re11,tms eons1Efered lo be
~ 1 1 ay a11 l\rb1tralllr appornt~1ecerdnnce w11h Clau;e J<Ul of the
CeAd111on,. The Specialist Consultant shall pcrfonn the dullcs expected of his
 Annexure E 381
Annex11re E 380

profession, and the Architect may from time to time delegate such duties and '.'.f'orttFilt+'------Or---"'·C-llmrnct Documents" mca-ns the Art➔cle,--ef
Agreett~ttmmry of Tl.'11der, lorn, of Tender. Lettef----(t!"
authority of the Architect to the Specialist Consultant as the Architect deems t\£~1ee. Comliti~f-t6Hl+a€t. Contract Dra•,1111gs.
fit. ~ic~Hi»t+aet-B-ills m1<1 Appendiee,.

j-) ~tl+l-itm,;::;.neans the Conditions of Conrrnct.

~ffi+Hli~t-1-t-aHt--.sl-iatl--ass+s-t--the i\rd1itee1 with--s~#!il-ffiWb -i¥.> l«tte-ttf
may he requJred by 11,,.. An:l1i1ee1 111Hfor !ht! tir01·i•,iun ., of the Conl1Ml. Spffiitlist 10 ··contract Su1t~mean;,-the sum stat~-in !lte-1.euer sf Ac{:~tance and
-ttt-t+te--AHic~-of J\ greemenh
~ llllf

Article 7
Jn the Contract Documents as hereafter defined, the following words and
expressions shall have the meanings hereby assigned to them, except where the
context otherwise requires:
a-) ··e111ployer·· 1111.'ans the party-F1a+netl--i1H-lie-ti1'Sl-pa-rt sf the Anieles-af
Agreement.
··cantractor'" means the per.,011, lirm or company 11a111ed 111 the second
part of the Anides of Agreeme111. ,,1 he,;e-tender hus been acceph~tl-ay
fl.le-e~
"A-1'€lt1tect" means tl1e Architect registered with --\ttt'-Boaro----f>f
/\rehilecL Maluysia and desigm1led a!; !~1ch in Articlt' 3 aflhe Anieles
ef-Agreemettt-,
l-) ctontract Drawings" means the drawings -listed 111 the Art1de; ol
A-gree-me-11t emu set l l l t l ~ H., 10 the C:ontra,t I~
m) ~ € - l ~ n e a n ; the Contrnd Bills referred ta 111 the Article~-
A~~omprising:
Definitions i) li1structi<.ll1"> to Tendt!rers.
i1) Femi nl'Tender-and Conditions ofTendefittg
Spec1fo:ati011 To All Trades i11eorporat111g Trude Preamb~
and SpeE1tirat1011.
~il-\-\4)- ---¥Pfire~l+1111-1-i-ttaries a11d Ge11erall)
·,) Mt'a~,ured Works. Pm·, isional und Prn11e Cost St1111s 011d
i::i-nal Summary.
J,,.,.,1+)--""/'"·P"'P*e..,11,,diee,, 111eluding ilh'ff a//11 the Letter er Aeeeptm1ce.
"-A-jtj3roYt'8°· mean!, approved -tn--wf-itttig--by--tlw Arcliitecl. 111e-ltt4ttg
stt~e111 ,,., riHe-n--conlirmation 04ft'\ iou., 1·erbal apprornl. and
~a~Wffi,'l¼Hn writi11g, i11cllldi11g as afore.,aid .
-'-'+w.;frut'led"' mt'an·, 111strm:ted b) means of dra1\ ings;--eeFret,jJOtltktlce
or-other t.lon1ments i:st1ed hy tht' Architect.

·•Direeted"' means directea 111 writmg hy the Arrl111ec1 er l,i,;

'-'Engineer" mea11s 1he Eng1F1eerls registered with the-BuaHI----Bf
E11g111eers Mala)·sia and Elesignated as slleh in Article I or !he Arllele., ftt1thori·,ed represenlali•,ec
of-Agreen~Fltc
Ef1 ::Salisl'eetory" mean., 10 tl1e reasonable satisfaction 0f1he Arl'ttttC€t-c
"Qt1a111ity Sun eyai·" means-tbe-,0umllity s~,n t')OF-l'egis1ered .,.. iilHRt'
F-) " Duy"' means ea lenaar da). u11less athen~ise •;tated in the Cond iuons.
Board sf Surve) ors Malay!,ia and designated as sueli-it1 ,\111cle 5 or
an&-"tt10nlh"' shall mean calendar 1111111th. unless as uforesaid.
the Article., or ,<\gret:mt'nh

(a) Appendix means lhe Appendix to the Conditions of the Contract;

":>1aee1all!il L011SU IIUnl lll~ltllS 11,e L011'iUIIH11US reg1s1ered '•', lllt IIH.•tr
respt!elil't:! statutory Boards aml/or Prufossiothl-l--lt1stitHle.; m M,1fa>r51a
(b) Appropriate Authority means any statutory authority having
and designated as sueh 111 i\rtiele 6 nfthe A r l 1 < : ~ ~ -
jurisdiction over the Works;
·'Site" 111ea11s lhe Site desig11ated as !,ueh in the i\rticl~ o !c-Agreement
(c) Arc hitect means the Person named in Article 3 and shall be a
ane--inc-lmlt!s lhe lam! Dr BEhef--Jft,ice~ on. under. 111 or thnitt!.!h which
Professional Architect or any other form of practice registered under
tl1e Work•, are lo he e,.ecuted and any other laud er plae<?s pr;, ided by
the Architects Act 1967 and approved by the Board of Architects,
the [mployer as nrny be speei fieal I) .,tUl-L-'U-ttHhe-C-ontract Doell11k'Hts
as fon11111g 11mi or 1l1e Site. Malaysia;

(d) Architect's Instruction or Al - as described in Clause 2.2;

"-Works'" 111em1. the Works referred to in the Ar11eles o+-A-;;re-ement
and 1s the "hol-Hi-ie-- rnalt:!nals. labol-tF;-----jtlatt -a nd 01h;r 1hi1'1gs
(e) As-built Drawings means as-bui lt drawings for works designed
- a r y and requ1s11e for the prnper execution or the C--0nt-rat!--as
(including alternative design) by the Contractor and/or Nominated
sho·••• ll 011 thc~ll-l-faet Drawing!, and Eleserihed h) or rd'erred IA 111 the
Sub-Contractor and any other as-built drawings required to be
Hllttraet-B-1lls and the Cond111011s.
provided as specified in the Contract Documents;
 A1111e.rnre E 382 Annexure E 383

(t) Certificate of Extensio n of T ime means the certificate issued under (t) Co ntractor means the party named in the Articles or Agreement and
Clause 23.4; includes the Contractor's legal successors or personal representatiws
or any Person to w hom the rig hts and obl igations or the Contractor
(g) Certificate of Making Good Defects means the certifi cate issued have been transferred with the agreement of the Employer:
under Clause 15.6:
(u) Contractor's All Risks Insurance ('CAR Insurance') means an
(h) C ert ificate of Non-C omple tion 111eans the certifi cate issued under insurance policy whic h provides cover against any physical loss or
Clause 22.1 : damage to work executed and materials and goods under a standard
CAR Insurance policy. T he minimum insurance risks are specified
( i) Certificate o f Partial Completion means the certificate issued under under Clauses I 9.0, 20.A or 20.B or 20.C, and the insurance shall
C lause 16.1; have the appropriate endorsements. Any additional insurance risks in
addition to those stated in these Conditions that are requi red to be
U) Certificate of Prac tical Completio n 111eans the certificate issued covered under the C AR Insurance shall be stated in the Contract Bills;
under Clause 15.2;
(v) Date o f Commencement means the date(s) lixed and stated in the
(k) Certificate o f Sectiona l Completion means the certificate issued Appendix under Clauses 21 . 1 and 21.2:
under C lause 2 1.3;
(w) Day means calendar day includ ing the weekly clay of rest but
(I) Clause means the clauses in the Condi tions of the Contract; excluding gazetted holidays in the location where the Works is carried
out:
(111) Completion Date means the clate(s) for completion of the Works
stated in the Appendix under Clauses 2 1.1 and 21 .3 or the last (x) Defects means defects, shrinkages or other faults due to materials or
extended date granted under Clause 23.4; workmanship not in accordance with the Contract and Nominated
Sub-Contract and/or due to any faulty design (if any) unde rtaken by
(n) Co nditions means the Conditions of the Contract; the Contractor and Nominated S ub-Contractor;

(o) Co nfirmation o f Architect's Instruction or CA I as described in (y) Defects Liability Period means the period stated in the Appendix
Clause 2.2; under C lause 15.4:

(p) Co nsultan t means the Engineer. Quantity Surveyor and/or S pecialist (z) Employe r means the party na111ed in the Articles of Agreement _and
Consultant as appropriate; includes the r:mployer's legal successors or personal representatives
or any Person to who m the rights and o bl igations of the Employer
(q) Contract or Co ntract Docu ments comprise the following have been transtcrred w ith the agreement of the Contractor;
documents:
(i) the Letter of Award; (aa) Eng ineer means the Person named in Ar tic le 4 and sha ll be a
(ii) the Articles of Agreement; Professional Engineer or any other form of practice registered under
(iii) the Conditions of Contract; the Registration of Eng ineers Act 1967 and approved by the Board of
(iv) the Contract Drawings; Engineers. Malaysia:
(v) the Contract Bills: and
( , i) othc, do1.U111e11ts it11.orprn-d i11TlicContract Docu111e1rn., (ab ) Final Account means the document, ,how ing the adjustment of the
unless expressly stated to be excluded therefrom; Contract Sum issued under Clause 30. 1O:

(r) Co ntract Bills com prise the folJowing documents (as may be (ac) Final Certificate means the final certifi cate issued by the A rchitect
applicable): under Clauses 30.14 and 30. 15:
(i) Instructions to Tendcrers;
(i i) Conditions of Tendering; (ad) Force Maje urc means any circumstanees beyond the conrrol of the
(ii i) Form of Tender: Contractor caused by te rrorist acts, govern111ental or regulatory action,
( iv) Preliminaries; epide111ics and natural disasters;
(v) Preambles and Specifi cation;
(vi) Bills of Quantities; and (ac) Inte rim Certificates 111eans the progress payment certificate issued
(vii) any other documents specifically mentioned in any of the above by the A rchitect under Clause 30. 1:
documents;
(af) Letter of Awa rd means the letter o f acceptance of the Contractor's
(s) Contrac t S um means the sum stated in Article 2: tender issued hy o r on behalf of the Employer;
 Ann.e.rnre E 384
- Annexure E 385

(ag) Limit of Retention Fund means the amount as stated in the
Appendix under Clause 30.5;
(ah) Lump S um Contract means a fixed price Contract and is not suhjcct
to re-measurement o r recalculation except for Provisional Quantities
and Variations which shall be valued under Clause 11 .0;
(ai) Month means calendar month;
(aj) Nominated Sub-Contract means the contract entered into between
the Main Contractor and the Nominated Sub-Contractor pursuant to a
nomination by the Architect under Clause 27.2;
(ak) Nominated Sub-Contracto r means a sub-contractor nominated by
the Architect under Clause 27.1 ;
(al) Nominated Supplier· means a supplier nominated by the Architect
under Clause 28. I :
(am ) PAM Sub-Contract 2006 means the form of contract as published by
Pertubuhan Akitek Malaysia where the sub-contractor is nominated
under the PAM Contract 2006;
(an) Penultimate Certificate means the payment certificate issued by the
Architect for the release of monies to Nominated Sub-Contractors
and/or Nominated Suppliers under Clause 30. 13;
(ao) Performance Bond means the bond required to be provided by the
Contractor as a security for the due performance of the contract under
Clause 37.1;
(av) Quantity Surveyor means the Person named in Article 5 and shall be
a Registered Quantity Surveyor or any other form of practice
registered under the Quantity Surveyors Act 1967 and approved by
the Board of Quantity Surveyors, Malaysia;
(aw) Relevant Event means any one of the events for extension of time set
out in Clause 23.8;
(ax) Retention Fund means the sum retained in accordance with Clause
30.5;
(ay) Service Provider means any company or body authorised to provide
water, electricity, telephone, sewerage and other related services;
(az) Site means the land and other places on, in, under, over o r through
wh ich the Works are to be executed and is provided by the Employer
for the purposes of the Contract including other land and places
obtained by the Contractor and accepted by the Employer as forming
part of the Site;
(ba) Site Agent means the person appointed under Clause 8.1;
(bb) Site Staff means the person appointed under Clause I 0.1;
(be) Specialist Consultant means the Person named in Article 6 and such
Person shall be a Specialist Consultant appointed hy the Employer for
a designated scope of professional work;
(bd) Variation means changes made to the Works as defined under Clause
I I.I;

(ap) Period of Honouring Certificates means the period for honouring (be) Week means a period of seven (7) consecutive days;
certificates stated in the Appendix under Clause 30. 1;
(ht) Works means the works described in the Articles of Agreement and
(aq) Person means an individual, sole proprietorship, firm (partnership) or referred to in the Contract Documents and includes any changes made
body corporate; to these works in accordance with the Contract; and

(ar) Practical Completion or Practically Completed means the state of (bg) Works Programme means the works programme described in the
completion described in Clause 15.1 ; Contract Documents and in Clause 3.5.

(as) Prime Cost Sums (' P.C. Sums') means the sums provided in the
contract for works or services to be executed by Nominated Sub-
Contractor or for materials and goods to be supplied by Nominated
Supplier;

(at) Provisional or Provis ional Quantity means the estimated quantit ies
of work provided in the Contract Bills for work to be executed or for
the supply of any materials and goods which cannot be determined or
detailed at the time;

(au) Provisional Sums means the sums provided in the contract and/or the
Nominated Sub-Contract for work to be executed or for the supply of
any materials and goods which cannot be foreseen, determined or
detailed at the time;
 A1111ex11re
Art icle 8
In the interpretation of the Contract, unkss the context requirl!S otherwise, the
following shall apply:
(a) Gender - words of one gender include the other gendl!r. and words
denoting natural persons include corporauons and firms and all such
words are to he construed interchangeably in that 111am1er;
(bl Head ings and l\larginal 'otes - the headings and marginal notes in
the Condi tions are not to he taken into consideration in the
interpretation or construction of the Conditions or of the Contract;
(c) Reference to legislation - a reference to any Acts is deemed to include
references lo any subsequent amendments, consolidation or
replacement of the Acts;
(d) Singula r and Plum I - ,, ords importing the singular a lso include the
plural and vice versa where the context requires; and
(e) Where any word or phrase is given a defined mean ing. any other
grammatical form of that word or phrase has a corresponding meaning.
E 386 A1111e.wre E 387
IN WITNESS WHEREOF
lea nings
* The hand of the Employer has been hereunto set ) Signature of Employer. .. ........... ....... .
the day and year first above written in the presence of: )
) Name ... ... ...... ...... ............. .... ...... . .
)
) RlCNo ...... .....................................
Signature of Witness.............................................. .... .
the Contract.
Name
NRICNo ...................... ... ...... .................... .
* The Common Seal of ..................................... ...... ..
. . . . . . ... ...... .............................. ...... ............ was hereunto
affixed in the presence of:
Signature of Director.. ................................................. . Signature of Director/Secretary* ....... .... .
Name ................... ..................................................... .. Name .. ............................................... .. ..
9tfect~ ~ Secre1ary•
NRIC No ............. .. ......... .... ......... .............. . NRlC No ............... ................ . ...... .
IN WITNESS WHEREOF
* The hand of the Contractor has been hereunto set ) Signature or Contractor ...... ... ............ .
the day and year first above written in the presence of: )
) amc ............................ ........ .......... ..
)
Signature of Witness...................................................... ) NR TC NoSignatllrt:' ......................... .... .. .
➔
Name ) Nt11fl e .. ......................... .............. .
RIC No... ................................................ .
* The Common Seal of .................................................. ..
.. .. . .. . .. ... ... .. ........ ...... ..... ... .. . .. ... .. ..... .. ...... .... .... was hereunto
affixed in the presence of:
Signature of Director............... .................................... Signan1re of Director/Secretary* ........... ..
Name ........................................................................... . Name .. ........................................... .. ... .
~-¼el' D-irt!ctartSt!c ~
NRICNo ............... .................................... . NRlC 0 ...................................... .
* Delete as appropriate
The affixing of the Common Seal to be witnessed in accordance with the Memorandum & Articles of
Association ofthe Company.
 A1mex11re E 388
T he C onditions Of Contract
1.0 Contractor's Obligations
Completion of I.I The Contractor shall upon and subject to-the these Conditions
Works in carry out and complete the Works in accordance with the
accordance Contract Documents and in compliance therewith provide
with Contract materials, goods and standards of workmanship of the quality
and standard described in the Contract Documents and/or
Documents
<t-H-ly---6f required by the Architect in accordance with the provisions of
W&lckm-atlShljr, the Contracu l1erei11 •;peeified in eve1) respect IA the rea'.,onable
Mtttffiltis--a-ttt! satisfoction of the Arcl1i1ecl. The Contranor shall be fttl-l-y
Goodi; F£sponsible for the ade(!U!!ey, s1abilt ty ans safety of all sit~
011eratio11s ans tflethods of construction.
Temporary 1.2 Unless designed by the Architect or Consu ltant, the Contractor
work and shall be fully responsible for the adequacy, stability and safety
construction of all temporary works and of all methods of construction of the
Works, irrespective of any approval by the Architect or
method
Consultant.
Contractor's 1.3 lf the Contractor proposes any alternative design to that
design and specified in the Works or if the Contract leaves any matter of
responsibilities design, specification or choice of materials, goods and
workmanship to the Contractor, the Contractor shall ensure that
such works arc fit for its purpose. The copyright of the
Contractor's design and alternative design belongs to the
Contractor, but the Employer shall be entitled to use the design
and alternative design for the completion, maintenance, repair
and future extension of the Works. The acceptance by the
Architect or Consultant of the Contractor's design and
al ternative design shall not relieve the Contractor of his
responsibilities under the Contract.
Discrepancy or 1.41 The Contractor shall use the Contract Documents and any other
.()divergence subsequent documents issued by the Architect to plan the
B between Works prior to execution. If during the said planning and
Centroet subsequent execution of the Works, -If.the Contractor finds any
ocumen s 1screpancy in or I vergence Between any of tl1e -Contract
Documents and any subsequent documents issued by the
Architect, Hie Contract Draw111gs ans/or the Contract Bills he
shall 11nmed1a1ely give to the Architect a written notice in
sufficient time before the commencement of construction of the
affected works, specifying the discrepancy or divergence aooto
enable the Architect to sltttll-issue written instructions within a
period which would not materially delay the progress of the
affected works, having regard to the Completion Date.~
~ Such discrepancy or divergence shall not vitiate thetS
Contract.
Annexure E 389
2.0 Architect's Instructions ('AJ ')
Contractor to 2.1 The Contractor shall tsubject to Clauses 2.2 and 2.3 ans 2.5)
Gcomply with forthwith comply with all instructions issued to him by the
AIArel!iteet's Architect in writiAg in regard to any matter in respect of which
lnstru etiens tbe Architect is expressly empowered by tbese Conditions to
issue instructions.
Al 2.2 All instructions issued by the Architect shall be in writing
expressly entitled "Architect's instruction" ("AJ'). All other
forms of written instructions including drawings issued by the
Architect shall be an AI:
2.2(a) upon written confirmaLion from the Contractor
entitled "Confirn1at ion of Architect's Instruction"
('CA I'); or
2.2(b) upon subsequent confirmation of the written
instructions by the Architect with an Al.
Provisions 2.3 Upon receipt of a written instruction from the Architect, the
empowering Contractor may request the Architect to specify in writing
instruct ions which provision of these Conditions empowers the issuance of
the said instruction and the Architect shall forthwith comply
with such a request. If the Contractor thereafter complies with
the said instruction without invoking any dispute resolution
procedure under the Contract to establish the Architect' s power
in that regard, the instruction shall be deemed to have been duly
gi ven under the specified provision.
Failu,·e of If the time of compliance [which shall not be less than seven (7)
Contractor to Days from receipt of the A I] is stated by the Architect in the AI
f'.comp ly with and with111 se,e11 (7) days ttpon reeei13t of the Arehiteet's
Al Arehiteet's 1nsH'Hetio11 i11 •,1ri1ing.the Contractor does not comply therewith
~FUC-ffOHS then the Employer may, without prejudice to any other rights
and remedies which he may possess under the Contract, may
employ and pay other pPersons to execute any work which may
be necessary to give effect to such instruction. The cost of
employing other Person and A any additional costs I nr11rri>r1 in
this connection shall be reccwerable from the Co11trnetorset-off
by the Employer under Clause 30.4. u:, a tlebt or may be
sedttcted by htm from any 11101110s d1c1e or to become due 10 the
Centtaetef-ufltler tl1is Coolntct
,\rel1iteet's Ypen recetpl of what p1c1rpons to be an 111strnction from the
~~ Arel111ect, tile C0111ractor may request the Arel1itect lo Sflec,f)• 111
Instructions v, ritmg the provision III lhe:.e Condition whieh empower,; the
isstte of the said instruction. The Ard1itec1 shall fo1tlw,.ith
wmpl} ,11tl1 ~Hell a reEJuest.
 Annexure E 391
A1111ex11re E 390

~ ·Htfl£e 1r 1he Contractor iherealler does comply w i1h the said

with A rchitect's 1nstrue11on ('"''here neither 13arly. sefore such compliance, had 3.0
lnstrnetians gi,•en the oilier 13arty· a written request 10 conclir on !lie
apflointment of an Arbitrator lttlder Clause 3'1.0 of these Contract 3.1
Conditions 111 order that it may decide whether the provision Documents-and
specifi ed sy the Arcl1ilect empower, the issue of t ~ T he iF C uMooy-
1ns1me1ion) then the isstJe ef the said instrnetien shall se
deemed for all purpeses of this Co111rac1 to have been
empov,.ered sy the prevision of-.!l~dilion s1~eeilied by the
Architeel in miswer to the C01llrnetor', request.
Contract Documents, Prog ramme And As-built Drawings
The Co111ract Documents are to he read as mutually explanatory
of one another. In the event of any conflict or inconsistencies
between any of the Contract Document, the priority in the
interpretation of such documents shall be in the following
descending order:
3.l(a) the Lt:tter of Award;

~ All instrnc1ions issued A)' the Architect shall he in wnting. If the 3. l(b) the Articles of Agreement;
~ n W riting Architect isst1es an i11s1rnction 01hen; ise llum in writing it ska II
ht1·,·e no immediate effocl. eul shall be confirmed in w riting ey J . l(c) the Conditions of Contract;
1he Conlraelor 10 tlie Architect within •;e ;e1i (7) days. lf.w+Htttt
se, en (7) days upon receipt 0f the C01llracter's confirmation. !lie 3. l(d) the Contract Drawings;
Arcl1itee1 doe-1 Alli dis,enl to it i11 1Hiting, tken the C0111rac1or's
1confimm1ion shall ee deemed 10 ee 011 Arel1i1eei's insm1ctio11 , 3. 1(e) the Contract Bills; and
The saia instruction skall lw,e taken effect on 1he date wl1en the
Contrac10r's c011fim11Hien was issued. J. I(!) other documents incorporated in the Contract
Documents, un less expressly stated to be excluded
Afflt~ llro¥itled always that i r 1he Ardiiteet witl1in se,•en in any of the Contract Document.
Instructions (7) days ef g1vi11g instrnctieo otl1erwise than i11
Net G iven i:n wnting hi111self co11lirm the same in writing, then C ustody of 3.2 The origina l tender documents Cemraet Drawings. Certtraa
WFimtg tl1e Contractor •;hall not '3e osligea 10 rnnfirm in tende r Bills. Specification. Summar)' or Tender. Form or Tender.
"riling anEI tl1e iostruclio11 slrn ll take effect as doc uments Lefler of ,•,cce131ance. Articles of Agreemelll. C o n d i t ~·
fro m the date of the Architect's confiA11ation; or Co111rael and the Appendices are referreEI 10 collectively as the
Cetttract Documents ai1d shall remain in the custody or the
~ I l+--neitlier 1he Arcki1eel nor Con1rac1or eenfi rm Architect; the Engineer or I-he-Q uantity Surveyor so as tu be
Arehiteet's suek i11slrueli011 in the 111anner end al the time available at a ll reasonable times for inspection by the Employer
Jnstrnetion Net aforesaid hut tl1e Co11lrnctor ne•, ertheless eloes er-the--and Contractor.
G-iwn--in comply with the same, then the A rchi1ee1 may
Wi#mg confirm the same in "nting at 011y ti me prior to Copies of 3.3i Immediately after the execution of thei-s Contract.. the Architect
the issue or the Final Certificate, a11d !Re said !>documents or Quantity Surveyor shall without charge to the Contractor
1nstructi011 shall he deemed 10 ka•,e 1aken efl<!e1 shfHl provide him (u11less he liaEI eeen pre,·iously se pro,•itled)
on the dale when it was issued otkerwise than 10 with:
,~ riling ey tlie Arehi1ecl.
J.J (ai ) one of the two signed origi nal cupiesy ~ A
Seniees o-f M Wi1hjn fi.rnrteen ( 14 l tlays of the issue of the Letter of eelial f of 1he Employer o f the Contract
Notices and Aeeeprnnce, the Contrac1or shall 11elify the And1itec1 in writing Documents;,
A rehiteet's of ae a~ldress w l1ere notices, Architect's instruetioAS--!IR~
lnstruetians documents may ee served u13on l1im. Ir the Ceetrac1or fails to so 3.3(bti ) two (2) further copies of the Contract Drawings;
notify the Archi1eel or such an adElress or an)' cha11ge of and,
aEldress. neliees, Architect's i11s1ructions a11d other dornments
shall ee deemed 10 be ,er,•ed upen the Contracter 1r se111 lly J.3 (ci+i) two (2) copies of the unpriced Contract Bills.Bills
registered pest or reeenled delivery to his addres:; staled in this e f Quantities and (if reqt1ested by• llie Contractor)
Co11trac1, or if left at liis office on the site aml an ooe-cepy or the Contract Bill.;.
acknowleElgement or receipt is oe1ai11ed from 1he Contracter!5
site ageRt.
 Annexure E 392
Further 3.4J f'rom timt! 10 lime us may-be-When necessary, the Architect,
!)d rawings or shall withou t charge to the Contractor.--slnttl furnish him with
Dd etails two (2) copies of further drawings, ef-details, levels and any
other information as are reasonably necessary either to explain
and amp Ii fy the Contract Drawings or to enable the Contractor
to complete the Works in accordance w ith these Conditions.
.J!fO\ ided always 1ha1 1l1e CoAtracler shall give adequa1e notice
in wrilillg to ll1e Ard1i1ect of his rnt1u1re111ent of fur-!hef
llrawings or details!f the Contractor requires any fu11her
drawings, details, levels and any other information, he shall
specifically apply in writing to the Architect for these items in
suflicient time before the commencement of construction of the
affected works to enable the Architect to issue instructions
within a period which would not materially delay the progress
o f the affected works having regard to the Completion Date.
Wor ks 3.54 Within fourtee11 ( I I )twenty one (2 1) d Days upon issue t'rom
Programme receipt of the Letter of /\ward~ c ~ (or within such longer
period as may be agreed m writing by the Architect), the
Contractor. without eharge to the l:A1fJl0yer. shall provide to the
Architect for his information, w11h lv,osix (6) copies of the
Works Programme (unless a higher number is stated 111 the
Contract Documents) showing the order in which he proposes
to carry out for the e11cemHit111 of the Works. The Works
Programme shall comply w ith any requirements specified in the
Contract Documents. If the Works or any part of the Works is
delayed for whatever reason, the Architect may instruct the
Contractor to revise the Works Programme. The Contractor
without charge to the Employer, shall provide the Architect
from time to time with similar number of copies of any revised
Works Programme.
W6ffi 3.6~ T he Works Programme, whelher reE(lmed or nol by lhe
Programme CoAditions of Tender or the Comract Doeumenrn, shall not
Nnot ¥ part !tt' constitute aflj'-part of the Contract, whether physically
ln~tttetl incorporated or not Hne 1, not to be iA1:orpora1ed into the
ifl.tt) of C ontract Contract Documents.
Deeuments
ArchitecCs... -3..]1,_ _ T h~ 1 o n to nd apprrn;aJacceptance. by the ArchitecLoL
acceptance of ~ the Works Programme shall not relieve the Contractor of
programme his obligations, duties or responsibilities unde r the Contract.
C eHtreete r N-ot The Works Programme may be used by the Architect to monitor
Re lieved of progress and the Architect is entitled to rely on the Works
O hligatie ns or Programme as a basis for the assessment of extension of lime
Rt'Sp&f\Sthll~ and the effect of the delay and/or disturbances to the progress of
the Works.
Availability of 3.8+ The Contractor shall keep oirea copy of the Contract Drawings
W ocuments and the unpriced Contract Bills Docume1ns refeFft!H to Ill
Glauses 3.2, 3.3 and J. I on the sS ite,s&aS to be available to the
Architect and Consulta11t and their lor his authorised
representatives at all reasonable times.for his inspectioA and
\fSec
Annexure E 393
Rettlfllm ~iat-payment tmder Cla1c1se J0.7 of these CendifiOJ-¥.r.-4e
O eeuments Co111raclor shall, if so rt!quested hy tl1e Archiiecl. fortlw,ith
relum 10 him all Contract Doe11111ent, •,vhicl1 beHr the Aame of
the Areh itecl.
Limitation of 3.9 None of the Contract Documents mentioned in Clause 3.1 shall
ll-usc of be used by the Contractor for any purpose other than the-is
Dd ocuments Contract. Neitl~er the Employer. lhe Arehi teet, the EAg1neer nor
tl1e Quanuty Sun eyer- Except for the purpose of the Contract,
the parties shall not disclo~edivlllge or use, except for 1he
purpose of !hi, Co»~ any of the rates and prices in the
Contract Bills to any other party.
As-built 3.10 The Contractor shall supply and shall cause any Nominated
D rawings and Sub-Contractor lo supply As- built Drawings and/or operation
operation and and maintenance manuals specified in the Contract Documents
maintenance and/or Nominated Sub-Contract documents in the manner and
manuals within the time specified therein. Where these are not specified,
the Contractor shall supply and shall ensure that the Nominated
Sub-Contractor supplies four (4) copies of the above items
before the Completion Dalc.Withi1i three (3) mtinth, frnm 1he
eommeneement of 1he Defeels biahili1y Peried, lhe Cenlrnetor
:,,hall ,.., ithm11 ft1r1 her charge lo the Lmplo) er :a11lply for tlie
retention am! <1se ef the Emf)leyer. two espies ef sueh dnm iHgs
and 111forniatioA deserib111g the \I/orb as built and eonc~
the mainlemmet! and operauon of tht! Works, inelt1d111g any
insta llation c0111prised in the Works. as may lie required by the
Contract Doeu111ents.
4.0 Statutory Obligations, Notices, Fees And Cha,·ges
Statutory 4.1 The Contractor shall comply with and gi+esubmit all notices
R requirements required by any Wfittett-laws, applieable to the territo~f
Mala) ,ia in whieh the Works are eurrieEI Oltl. or any regulations,
or byela.,., by-laws, terms and cond itions of any Appropriate
Authority and Service Provider in respect of the execution of
the Works and all temporary works.leeal-i!ut-borit) or of any
stttt<110f)'-t!fleenalcer which lia, an) jurisdietion with regard re
the Werks or w ith ,,,, hose systems tlie same ure or v, ill be
eennected.
V erietiens from 4.2 If the Contractor finds any inconsistencies between the Contract
Cenlreel Documents ( including any subsequent documents issued by the
Drawings ta Architect) and any laws, regulations, by-laws, tem1s and
Meet conditions of any Appropriate Authority and Service Provider,
I nconsistc ncics he shall immediately specify the inconsistencies and give lo the
with Sstatutory Architect a written notice before commencement of
R requirements construction of the affected works.The Co111rae10r before
Htakillg any \'ariation from the Ceatruc! Draw11igs er the
Conlracr Bills necessitated by such eompli011ce shall gi\ e to the
Architt!cl a \~ ritlen nolice specifying uml gi\ ing lAt' reason for
~riatien aAd applying for the Architect's i11strnction!, i11
regare 11lere10.
 A1111ex11re E 394 Anne.:r;ure E 395

Conforming to 4.3 If w ith in seven (7) tl Days of having given 1-He--siHEl-written

Sstatutory notice to the Architect, arul-the Contractor does not receive any
Oo bligations A lmstttl€-ltffl!S in regard to the matters t-hefffil-specified in
Clause 4.2 , he shall proceed with the work &miforming to
conform Lo such the •,1•rme11 laws, Upfllicaale 10 the territories of S tandards of
Malaysia iA •,•,•hiell tile Werb are to ae earried mll, or any W works,
regulations, or bye law by-laws, terms and conditions of any M m aterials,
Appropriate Authority and Service Provider. lecal autko~ goods a nd
or any statutery-t111tlertuker which kas any jurisdiet1on with W w orkma nship
regard 10 the Works or with ..,, hast: ~ystems the same are or will end Ggaods
ae cmmected. Any changes ¥arfation thereby so necessitated
shall be deemed to be a v Variation required by the Architect. Provision
~ of
Fees, levies and 4.4 The Contractor shall pay and indemnify the Employer against ¥ vouchers
ttF-tc ha rges any liability in respect of any fees, levies and flf-charges
including any penalties which may arise rrum the Contractor' s
non-compliance wi th (including any rates er taxes) legally Inspection and
demandable u11tlef-any Wfi.Hett- laws, applicable to the territorie,. '.J'.t esting
of Malaysia in whid1 the Works are to be ca1Tied out, or any
regulations, er bye la11 by-laws, terms and conditions of any
Appropriate Authority and Service Providerlocal authority or of
any slRlutory undertaker in respect of the execution of the
Works and a ll temporary works. The am01c1n1 of any st1ch fees or
clrnrges (inclt1ding any rate er ta,.es) slmll ae added 10 the
Contract Sum unless tlley: I f the Contractor fails to pay, the
Employer may pay such amount and such amount together with
any add itional cost in this con nection shall be set-off by the
Employer under Clause 30.4.
4,4.fi-l arise in respeel of Works e1,eet1ted er materials or
goods supplied b) « local authont) or statutory
undertel,er for which a ,~rime e,ist sum is included
in the Co1nrac1 Bills or for whieh a f)rime toost
sum luts arisen as a result of the Arei'liteet's
instructions under Clause 11 .3: or
4Afi+) are priced or slated by WU)' efa flFO'<'is1onal sum in
tile Centraet Bills.
5.0 Lm-elS7\Tid Setting-Out--Offln, Wurk,
H¼Q{'ettffite 5 .1 T he Architect shall determine all levels w hich may be required
Setting O o ut for the execution of the Works, and shall provide the Contractor
ay---w<ty of aectirately dimensienetl-with drawings v.-ith sucll and C o ntract or' s
information S&-BS-to enable the Contractor to set out the Works. obligatio n not
al ground level. T he Contractor shall be re,prnlsiale for and relieved
shall entirely at his own cost llffieflti-rectify any errors arising
from h-is---ewit--any inaccurate setting out. Pro, ided always llrnt Works ,
With the consent of the Employer, the Architect may instruct Materials,
that such errors need not be rectified subject to an appropriate WoFk-mtUtSfltf}
deduction Lo be set-off by the Employer under Clause 30.4.a+ e nd Goods
liis discretion accept the e1Tors without amendment subject 10 N not in
such redue1i0n in the Centraet Sum as may ae reasonaale Aa ceordance
ha, ing regard 10 en) loss of l'alue suffered by the Emflloyer er with the
any reduced eosl 10 the C ontraetor. resulting frem the error. Contract
whichever shall ae greater.
6.0 Materials, Goods And Workmanship T o Conform To
Description, Testing A nd Inspection
6.1 All works, materials, goods and workmanship and goods shall
be of the respective k-tmlsquality and standards described in the
Contract Documents and required by the Architect in
accordance with the provisions of the Contract.
6.2 The Contractor shall, upon the request of the Architect, provide
him with vouchers or such other evidence to prove that the
materials and goods comply w ith Clause 6.1. and are in
aeeerdanee willl the instructions of the Arehitect.
6.3 The Contracto r shall provide samples of materials orand goods
for testing, before incorporation into the Works., !'or te., ting as
may ae selected Bild required ay the Arelli teet. Prn•,•ided always
Hta+-!T he Architect may issue an Alinstruetions requiring the
Contractor to open up for inspection any work covered up, or to
arrange for or can-y out any test ofo n any materials orand goods
(whether or net already incorporated in the Works~ or of any
executed work.. er if the inspection and/or tes1 is in rhe opinien
ef the /\rchileet requ ired in conseciuence ef some prior failure
or-breaell ofeontraet er oli'ler deli!ull of the Cent1'8ctor. The cost
of such opening up or testing (together with the cost of making
good in consequence theree I) shall be added to the Contract
Sum unless: fJfO'rieled !'or in the Co1llrac1 Bills er unless lae
inspeelien or test shows tllat ti'le works, ffiaterials er goods are
not in accordance with this Contrael
6.3(a) the cost is provided for in the Contract Bills;
6.3(b) the inspection or test shows that the works.
materials and goods were not in accordance with
the Contract; or
6.3(c) the inspection or test was in the opinion of the
Architect required in consequence of so me prio r
negligence, omission, default and/or breach of
contract by the Contractor.
6.4 The provisions of C lauses 6.2 and 6.3 sha ll not relieve the
Contractor of his o bligations to execute the work and supply
materials and goods in accordance with the Contract.
6.54 If the Architect during the flrBgress ef the WorlEs finds any
work.,;, materials, 'Norlmrnnsllip or goods or workmanship which
isar.- not in accordance with the Contract, the Architect
shallmay instruct the Contractor in writing:in wri liAg io do any
or all of tile following:
6.5{a) to remove from and not to bring to the Site such
materials and goods;
 J\.nne:wre E 396 Annexure E 397

6.5(b)-+H + to demolish and reconstruct attysuch work se

tl!at ii is Ill acrnrda1H:eto comply with the
7.0 Royalties And Inte llectual Property~ Rights
Contract;,

Indemnity to 7.1 Subject to Clause 7.2, ~ all royalties or other sums

6.5(c)4fi+j lo rectify such work as instructed by the Architect
Employer payable in respect of the supply and use in carrying out the
with no adjustment lo the Contract Sum; To
Against Claims Works as descrised by or relcrred lo in the Comraet Bills of any
remove from and 1or not ts aring lo the site aE1y
patented a11icles, processes, eF--inventions or drawings /-ffihef
materials or goods which in the UJ:liAion or the
than drawings provided sy tl1e ArclHEecl) shall be deemed to
Architect are and 1or 111ay not be in aceurd,1Ace
have been included in the Contract Sum. T he Contractor shall
with the Cu111rael.
indemn ify the Employer from and against all claims,
proceedings, damages, costs and expenses which may be
6 .5(d} to submit a me thod statement within seven (7)
brought uF--tttat!e--against the Employer or to-w-fl(:ffil which he
Days from receipt of the written instruction (or
may be J)Hlsubjected to by reason of the Contractor infringing o r
within such pe riod as may be s peci fied by the
being held to have infringed any J)itl-<ffltsuch inte llectual
Architect in the instruction) proposing how such
property rights. in relat1011 le uny :1uch articles, J:lFOEesses anti
works, materials, goods or wo rkmanship can be
i1we11l1011s.
rectified. If the Architect accepts the Contractor's
proposal, the Contractor shall carry out the Where in compliance with tl1e Archit~ct'~ a written instruction,s
~f 7.2
rectification work with no adjustment to the
Contractor's the Contractor s111~rly and U(,e in carrying 0111 the 1>.'erks any
Contract Sum or alternatively, the Architect may
b liability to J:lalented anieles. processes or i1wentions, has informed the
reject the proposal and issue any other written
Ppay for Patent Architect in writing that there may be an infringement o r
instruction under this c lause; or
Rigftts intellectual property rights but the Architect still instructs the
Contractor in writing to comply, the Contractor shall not be
6.5(e) with the consent of the Employer, to leave a ll or
liable in respect offor any such infringement. or alleged
any such works, materials, goods o r workmanship
i11fringemenl sf any J:latenl rights in rdution lo an) sueh articles,
in the Works subject to an appropriate set-off by proeeJses. and i1wemions. All royalties, damages or other
the Employer under Clause 30.4 and the
monies wh ich the Contractor may be liable to pay lo 1he persons
Contractor sha ll remain liable for the same. et1tttled----l&-for such infringementJ:lalenl nghb shall be added to
the Contract Sum.
No 6.6 Compliance by the Contractor with a written instruction issued
compensation under Clause 6.5 shall not entitle the Contractor to an extension
Government 7.3 Except where otherwise provided for in the Contract, the
fo r time and or lime nor compensation for any loss and/or expense that may
royalties Contractor shall pay all Government royalties, levies, renL and
cost be incurred.
all o ther payments in connection with the Works.

Failure of 6. 73 If the Contractor shetthl-fail s att4'or refuses to comply with an

8.0 Site Agent
Contractors to w ritten instruction of the Architect issued under itt+s-Clause
Geomply-with 6 .51:l, the Employer, may without prejudice to any other rights
Site Agent--oml 8.1 The Contractor shall appoint eonstaiHly keep Li-pen-t-l1e--WeffiS-ll
A-reh-ifet:t.!s or remedies which he may possess under the Contract, employ
Asm+lilltS suitab ly qualified and e~etteed Perso11 a competent person
l nstruetion and p ay other~ Person to carry out the subject matter of the ,,, ho shall he deemed to be the Site Age□ t. The Site Agent--6H-fle
written 111struct1011. All costs mcurred 1nclud111g any loss and Gentfectef for the purposes of the+;; Contract shall be deemed to
expense shall be set-off by the Employer under Clause
be the Contractor's authorised site representative. The Site
30.4.Any loss. e'<pense or damage thereby sulTere,1 or ineurred
Agent shal l be assisted by such assistants and , together '" ilh
by the Empie) er , hull be recm·erHsle from the Contractor.
such ,enior assistants and supervisory staff as necessary to
execute the Works efficiently and satisfactorily.in eaeh lrade as
Warranties in 6.8 If the Contract requires any manufacturer, sub-contractor or
may he neeessary as set eut IA 1he Contract Documents or as
respect of supplier to give a warranty or guarantee in respect of any
,nt1tmded from li1iie 10 time a Iler J:ll"IOF appro•,•al of the Areh 1teel.
ma terials a nd proprietary systems, materials and goods supplied, the
The Site Agent shall be employed full time on S ite and in the
goods Contractor shall procure such warranties o r guarantees and
event that he has to be temporarily absent from the Site, the
submit to the Employer. The provision of such warranties or
Contractor shall designate a deputy in his place.
guarantees shall in no way relieve or release the Contractor
from any liabilities under the Contract.
 A1111e.rnre E 398
Instructions to 8.2 The Contractor shall ensure that the Site Agent and such-5eftieF
Site Agent assistants and supervisory staff as aferesaid ore 13ers0ns ,1 ha are
capable of receiving -vemal-directions or instructions in English
or Bahasa Malaysia. T he S ite Agen t shall be deemed to be
a uthorised by the Contractor to receive any directions given
All)' diree1i011s er inslrueliens l:',iwn to sueh Si1e Agent aatllor
his oasislants by the Arellileet or sSite s Staff or instructions
given by t he Architcctin aeeerEianee witl1 Clause I 0.2 and any
such directions and instructions g iven shall be deemed to have
been given to the Contractor. 111 1rnrsuanee of Clauses 1.0 0110
2.0 hereot:
Exclusion of 8.3 The Architect may instruct rhe Contractor to remove the Sire
Person~ Agent or any Person under the employment or control of the
Eemployed on Contractor from the Site. The Architect shall not exercise this
the Wm·ks discretion unreasonably or vexatiously. On receipt of a written
instruction. the Contractor shall immediately remove and
replace such staff or any Person within a reasonable time and
such staff or Person so removed. shall not again be employed on
the Site. The Contractor shall not be entitled to any extension of
time and additional cost in respect of any instruction given by
the Architect under this clause.The appointme11t er the Site
Age111 anEi his remo.. al shall 13e at tilt! reasonasle diseretion of
the Arehiteel. The Arehiteel IA8)' also, bu1 not unreasonably or
ve1<atiously, issue i11strueti0ns requiring the dismissal A-om the
Works ofuny Persml em13loyed the,ffi!r.
9.0 Access For Arehiteet To The Works
Access to the 9.1 The Architect , Consultant and.ief....--lti.s their authorised
Works fuF representatives shall at all times have reasonable access to the
Arehiteet ur IJ is Works and to the factories, workshops or other places eHl1e
~resentMh·e Conlraetor where any construction p lant, materials, goods and
work isare being fabricated, prepared or stored for theis
Contract. When work is 10 ee :,a 13re13areEi in workshops o r other
13laees or a Sub Contrae1or (whether or not a ~Jominaled Sub
Contractor as El<:!finecl in Clause 27 .0), the C0111raet-or-4~
1enn i11 lhe sub eo111raet secure a si1111lar right ef aCl;ess lo 1h0se
worksho13s er 13iaces forThe Contractor shall ensure that a ll su b-
contracts contain provisions entitling the A rchitect, Consultan t
and!ef-.....ltts their authorised ~resentatives to have such
access.Tile Contmetor shall do all things reasonably 11eeessary
lo make s11eh right dTot:11 ~'e.
10.0 Site Staff
Duty of Site JO.I The Employer shall ee tmtilleEi may from time to time-lfl
Staff appoint such number of Site Staff a Resitlenl Arehitect,
R~sidenl Engineer, C lerks of 1.!/orl<S and ~eh others cm sile staff
as the Employer shall deem necessary . The Site Staff from 11n1e
10 lime whoJe Eiuiies shall ~ act as inspectors on selialf of
the E1tt13loyer under the direction of the Architect and the
Contractor sha ll provide reasonable faci lities for the
performance of such duties. The site staff s0 BflflBinted shall he
tmcler 1l1e direction of the Ard,iteet. T he Conlnit:lor sl1all afford
tliem e., ery mason able liteilily for 1he 13erfemrn1lee ef their tluty
Annexure E 399
Directions 10.2 Any directions given to the Contractor or his Site Agent llflOO
Ggiven by Site the Worl,s by the Site Staff shall be of no effect, unless g iven in
Staff writing in regard to a matter in respect of which the Arehrh:!el i,
e.·,pressly em11oweretl by-the Site Staff have been expressly
authorised in writing by the Architcct.f:endillons to issue
instrnctions A ll such directions involving a Variation shall be of
no effect, unless con firmed by an Al. anEi t111less confirmed i11
writing 13y 1he Arcl1i1ec1 with in three (3) worki ng Eiays nf such
Ei1reetion being gi, e11 . If 011)' sueh diree1ions are so giH!A ana
uonfirmetl ia writing by Ille A.ehiteet then as from Ille dale nf
issue of that conlirmation it shall be EieemeEi 10 be an Architect's
HtSI-R.lelffifu
11.0 Variations, Provisional And Prime Cost Sums
Definition of II.I The tenn " Variation" as used in these-Goml1+ioos-n1eans the
Vai-iation alteration or modification of the design, qua lity or quantity of
the Works including:
~+,..1-f-i) alteration or macl itieatien of the desig n. quality or
quantily of the Works as shn•,1 n i11 the Ctmtnrel
Drawings and cleseribetl by or referred to in lhe
Corllrnet Bills;.
11. l(ai-i) the addition, om1ss1011 or substitution of any
work ;a
1 1. l ( bti-i) the a lteration of the kind or standard of any
materials eFm1d goods lo be used in the Works ;s
11.l(ci-¥) the removal from the , Site of any work executed
or materials Ofand goods brought thereon by the
Contractor for the purposes of the Works other
than work. materials ornnd goods w h ich are not in
accordance with th cis Contract; and
t-he-atltlitio11, a lteratio11. or omission ef any
ex13ressed oeligatien or reslrielioAs i1Rp0sed-by
1he I 1111ilo)'er unEier 1'1e ConEl1t1011s of'a ny changes
lo the provisions in the Contract with regards
to :any limi1a11011 of working ho1-1rs, w0rk111g
s13ace, or aeeess to or utilisa1i ~R)' s13eeilie
part of Ille site or the e1,eeution and eomplelion of
t-he-weFIHtt-aAy s13eeifie ortler.
11 . l(d)(i) any lim itation of work ing hours;
11 . 1(d)(ii) working space;
11 . l(d)(iii) access to or utilisation of any
specific part of the Site; and
11. l(d)(iv) the execution and completion of
the work in any specific order,
 Anne.rnre E 400
+h--l+vB For the a1'01danee of dou0t the term --venation"
sha-l-1-i-nelude nny elmnges as aforesaid whieh ffit1Y
be designed ts alter the ultimate use to which 1he
Works will se put or cha11ges m tlie obliga11011s
aA<llor res1rietlons 1•, lm:h may he imposed on the
Contraetor's-----meH10ds nr working, hut -;hall
e.-.eluae any mstruetion .,,foch hos arisen due or-is
neeessi1a11:d by or is intended to eure any defoult
ef-attelor hreaeh of eon tract by-the Contractor
but shall exclude any changes intended to rectify any
negligence, omission, default and/or breach of contract by the
Contractor and such changes shall be executed by the
Contractor entirely al his own cost.
No Variations 11.2 T he Architect may issue in~1rnet1011s requiringan A l ordering a
R required by Variation a11d he mayor sanctioning iH writing any Variation
Architect Ss hall made by the Contractor.--0lherwise 1hall pmsuo1H to an
¥ vitiate instruetion or the Arehitect. No Variation ordered~ by
Contract the Architect or subsequently sanctioned by him shall vitiate
thetS Contract. Pending the valuation of the Variations, the
Contractor shall carry out with d ue diligence and expedition all
Variations so instructed.
Iss ue of 11,3 The Architect may issue instructions 111 wntmg requiring a
Variations after Variation at any time be fore the issuance of the Certificate of
Practical Practical Co mpletion. Therea~er, any A l requiring a Variation
Completion must be necessitated by obligations or compliance with the
requirements of any Appropriate Authority and Service
Provider.
A. ,·chiteet's I l .4J The Architect shall issue Al inslrne11ons in regard to the
l-ffst-R1ffiorn.Al expend iture of P.C. S ums and Provisional Sums included in the
on Prime Cost Contract Bills and of P.C. Sums which arise as a result of
fP.C.) Sums instructions issued in regard to the expenditure of Provisional
and Provisional Sums.+
Sums
++-,Jf+1 the ei,penditure or ,~rime eesl (P.C.) aml
provisional sums included in the Contraet Bills
-
and of pr1me eesl sum:, ansing out ef instrnetions
ts;;ued in regard to tlie expenii1me of pnwis1onal
the ex11e11dlture of provis1011al sums meluded- ttHl
su1'}--eenlffi&.
Annexure E 40 I
Valuation of 11.54 All Variations re{Jtnred by the Arelllteet er suaseEjuenlly
Variations and saneu,~ned by him 1H writing ans all worl, e•,eeuted by the
Provisional Gentraetor followi11g instru€tions of the An:liiteel a ~
Sums e1,pend1ture of Provisiom1I Stuns 111eluded in the Contraet Bills
shall be measured and valued by the Archilec1 or the Quantity
Surveyor.--a-s iHslrucwtl ay the Architect, Where any recording
of site information and/or site measurements are carried out at
the Site, the~ Contractor shall provide the Quantity S urveyor
with such assistance as may be necessary to carry out the works
and the Contractor shall be given the o pportunity to be present
al the time 0P.nt€1Hneast1remenl and may to take such notes and
measurements as he may require.
Valuation I 1.6i> The valuation of Variations and M-work executed by the
Rrules.fut, Contractor for which a Provisional Quantity prOI isimial sum is
-\4\ktttti~ ' included in the Contract B+Hs-and the expenditure of
Voriotions Provisional Sums (other than for work for w hich a tender had
been accepted under C lause ~ 27. 14) shall be made~
0tl1erwise agreed. be maae in accordance with the following
mies:
1l .6i>(ai) where work is of a simi lar character to, is
executed under similar conditions as, and docs not
significantly change the quantity of work as se1
out in the Contract Documents, the rates and
prices in the Contract Documents shall determine
the valuation;~iees in the Conlnwl Btlb shall
tlelem1ine 1he \'uft1t1tion of work of s11Hi-lar
eliaracler e•,eet1led unaer similar eondilion', as
\I orl, priced therein ,-,
I 1.6S(bi-1) where work is of a s imilar character to work
~ d as set out in the Contract
DocumentsB-i+l-s but-may is not-be executed under
sim ilar conditions or is executed under similar
conditions but there is a significant change in the
quantity of work carried out, the rates and prices
in the Contract Documents -B+l-l;;-shall . as far as
may 0e reasonable. be the basis for determining
the et-valuation, which shall include a fair
adjustment in the rates to take into account
allowance for thesuch difference; in conditieHs.
I l.6(c) where work is not of a simi lar character to work
as set oul in the Contract Documents, the
valuation shall be al fair market rates and prices
determined by the Quantity Surveyor;
 Annex11re E 402
11.6~(diti) W wbere work cannot be properly measured and
valued in accordance with Clause I I .6(a), (b) or
(c), the Contractor shall be allowed : da) work
ffiles
al !he prices prern1li11g as for as may ee
reasonael) asEenainetl al the time that s u ~
is carried AUi or at the day work rates ,lated Ill the
C'mmact Bills or if llA sueh rates are inelutled at
tht! aEtual prime cost l-0-!ht! Contractor of his
materials, lransporl and lahmc1r for the wArk
Etltlt'effied plus liftet!l1-J'let'€-enl ( I 5% ). which
percentage shall 1Hclutle for the use of all ordiHaF)'
~ - tools aAtl scaffolding, supen ision,
overheads and profit. Provided that in any case
~-.ers specifying the lime spt!nl daily upon !11e
work, lhe workers' names, the plant anEl tht>
materials employee shall lcle deliveree-------fur
,·erificati011 10 1l1e Areh1leel or lo tl1e Quantity
Surveyor as instructed hy the Archit-ee1-ttAf----iatef
lhm1 se, en (7) days after lhe "ork had bt>en
eompleted;.
l I .6(d)(i) the daywork rates in the Contract
Documents; or
l 1.6(d)(ii) where there arc no such daywork
rates in the Contract Documents, at
the actual cost to the Contractor of
his materials, additional construction
plant and scaffolding. transport and
labour for the work concerned, plus
fifteen (15) percent, which
percentage shall include for the use
of all tools, standing plant. standing
scaffolding, supervision. overheads
and profit.
In either case, vouchers specifying the time spent
daily upon the work, the workers' names,
------------------------1.llil·lll:rials.,_ additional Cill.lSlrnctior1 pl,mt.
scaffolding and transport used shall be signed by
the Site Agent and veri lied by the Site Staff and
shall be delivert:d to the Architect and Quantity
Surveyor at weekly intervals with the final records
delivered not later than fourteen ( 14) Days after
the work has been eo111p lctcd:
11.65(ew ) + the rates and prices in the Contract
DocumentsBi¼; shall determine the valuation of
items omitted. If omissions substantially vary the
cond itions under which any remaining items of
work are carried out, the prices of such remaining
items shall be valued under Sll&-€Clause
~ II .6(a). (b) or (c): and
Annex11re E 403
hffect shall be given 10 111e11sureme111 a11d
Yalt1a1ien ef al l Varia1io11s rn h1t.-rim Cerrilieates
and by adj ustmenl of.thc-Centra~
l 1.6(f) in respect of Provisional Quantity. the quantities
slated in the Contract Documents shall be re-
measured by the Quantity Surveyor based on the
actual quantities executed. The rates and prices in
the Contract Documents shall determine their
valuations.
Vnluotion of 11.76 Where a Variation has caused or is likely to cause the
Direet b oss Contractor to incur additional expenses for which he would not
omlhw be paid under any provisions in Clause 11 .6, the Contractor 111ay
Add itional make a claim for such additional expenses provided always
Ecxpense that:lfthe Comrncler applies le 1he Architect in wricing within a
caused by -1.tttH+IHC of the e\'e111 and the Arehiteet is of tlie-epittioo
Va riatio n lhac a VariatioA in respect of ,,,,•ork which has caused the
CeHlraetor din~el loss and/or expense for which he wotrld net lie
reimbursed under any proYisions in !he Cendi1ions, then the
Arch itect shall frem lime to time asce11a1n the e1Ho1mt of 5ll€H
loss aRdler expense •.vhieh amounr sl1all be added te lhe
Con era ct S1c1111 . If 011 ln1erim Certifieale is isst1ed 11Aer rl1e dale of
asce11aiAn1enl a11y s1c1eh amou111 sha ll be aElEleEl 10 lhe amount
·Nl1ieh would other,,,•ise be staled lo he due in the Cen ifieate.
I l.7(a) the Contractor shall give written notice lo the
Architect of his intention to claim for such
additional i:xpenses together with an initial
estimare of his claim duly supported with all
necessary calculations. Such notice must be given
within twenty eight (28) Days from the elate of the
Al or CA I giving rise to his claim. The giving of
such written notice shall be a condition precedent
to any entitle111enl to additional expenses that the
Contractor may have under the Contract; and
I l.7(b) within twenty eight (28) Days or completing such
Variation, the Contractor shall send to the
Architect and Quantity Surveyor complete
particulars of his claim for additional expenses
together with all necessary calculations to
substantiate his claims. If the Contractor fai ls to
submit the required paiticulars within the stated
lime (or within such longer period as may be
agreed in writing by the Architect), it shall be
deemed that the Contractor has waived his rights
to any such additional expenses.
 A11nexure E 404
Access to 11.8 :J. The Contractor shall keep contemporaneous records to
C ontractor's substantiate all his claims for additional expenses under Clause
books and 11 .7, and shall submit all particulars to the Architect and
documentsG&Af Q uantity Surveyor. The Architect and Quantity Surveyor shall
reetnr to have access to all books, documents, reports, papers or records
Sub-nlit in the possession, custody or control of the Contractor that arc
Neeessnry material to the claim and the Contractor shal I provide free of
charge a copy each to the A rchitect and Quantity Surveyor
when requested. All such documents shall remain available in
accordance with this clause until all claims have been resolved.
The Contractor shall use his best endeavour to ensure that all
such similar documents in the possession, custody or control of
sub-contractors and/or suppliers that are material to the claim
arc similarly avai lable.T he C1rntrnctor shall in sllppert ef Iii·,
applieat1011 su01111t le the Arel111ect upon r~i1t1esl such details ef
suclr loss H111.llor e.•,pense as an:! r~11s0nasly neeessai)' fer '.,uch
asee1tainme111 1111der Cla1c1se 11 .e ef this Condition.
Variations and 11.9 As soon as the Architect has ascertained the amount of
additional Variations and/or additional expenses claimed by the Contractor
expe nses added under Clause 11. 7, the amount so ascertai ned shall be added to
to Contract the Contract Sum. When an Interim Certificate is issued after
Sum the date of ascertainment, such amount shall be included in the
certificate.
12.0 Contract Bills
Measurement 12. 1 The quality and quantity of the work included in the Contract
of B building Sum shall be deemed to be thoseat which i-sarc set out in the
W works Contract Bills, and unless otherwise expressly stated,--tfl-reSj}eet
of a11y ,pee1lied item or items. shall be dee111ed le 11,n e l,een
prepared in accordance with the principles of the Standard
Method of Measurement of Building Works sanctioned by the
Institution of Surveyors, Malaysia and cu,Tently in force.
~ Net!iing-t:BtttttttietHtl the Contrnet Bills shall B'>'ernde, muddy
Conditions to or affect in any way what,ot', er the applieallon er interpretation
-Pre¥ltil uf-tlutt II hieh is eonlmttl!tHtl-lhe~c Co11dit1 0ns.
Corrc.ctio.ll..c 12.2:L_ Unless otherwise expressly prQ\illled.. the_ contract is ~l..wnp
E errors or Sum Contract. Any en-or in description, quantity or omission of
(}omissio ns items 0etwee11 the Cu111rnct Drnwi11g·, und in the Contract Bills
shall not vitiate thets Contract and ettt-shall be corrected by the
Architect or Consultant.
13.0 Contract Sum
C ontract Sum 13.1 The Contract Sum shall not be adjusted or a ltered in any way
Nnot to .Sbe whatsoever, otherwi-se than in accordance with the express
Aadjusted o r provisions of the Contract.Ce11d itions and su~ecl 10 C lause
A altered 12.3 an) e1Tor w hetl1er of arithmetic or 1101 in the eem puta1io11
ef the Contract Sum shall be deemed to hul"e be,m accepted sy
1he Jlarlies herelll. Any arithmetical errors or any errors in the
prices and rates shall be corrected and/or rationalised by the
Architect or Consultant without any change to the Contract Sum
before the signing of the Contract.
Annexure E 405
14.0 Materials And Goods-Ynlh ed Qr (}ff-Site
~ 14.1 Unli1<ed mMaterials and goods intended for ai1El delivered to the
Materials Site for incorporation into the permanent works shall not be
m-and G goods removed until completion of the Works unless prior consent in
N not to B be writing from the Architect has been obtained, which consent
R re moved shall not be unreasonably withheld or delayed.m placed
alljacenl 10 the Werks may e ni)' be re1110•, ed for u:,e 1c!JlOA the
Works exee1it where the Areh1tec1 hus conse1Hea 111 writing te
their reme¥al- for other purpo:,t>S·c-+he---A-R·hik!e½--;;i~
unrc:'aso111Jbly w11hhelll such eo11se11t.
Mate rials 14.2 Where the value of atty-such materials efand goods has in
...-and G goods accordance with Clause 30.2J been included in any Interim
included in Certificate under which the Employer has effected C0111racter
ccrtifica tesl¼id 1-rn, reeei,·ed payment such materials and goods shall become
for Becomes the property of the Employer.. ln1t su~ect to Clauses 20.B . l to
Effipl~ 20.B.5 or ?O.C. I lo 20.C.6, 1f applieah le, the Contraelor shall
Pro1ierty remain re,pon'.,ihle for less or damage to the same.
C onlraetor +-+.-;; Wilere---trn11crials and goods 1n1enaca i:or the 1Nerks mid whose
Cannot RemoYe val ue has in accordance with Clause J 0.3 been ineh!ded i11 any
Them Ec<eef)t .J.ateFi111 Certificate and has seen paid b) the I .mployer, Sllcl,
foF Use Upon 111atefHw.rlmd goods shal~me-th<:! prope11y of the Employer.
the WoFlcs Thereafler, the Cu111rae10r shall net, e,eepl for l!se upen -t-lie
1Nerlcs, remm e or permit them to be removed from the
premises where they are store&.-
~ e ttll' 14.34 The Contractor shall remaitt-be responsible for any loss and/or
Responsibilityle damage lo lltesuch materials and goods including materials and
-
for h6ss-tll' goods supplied by Nominated Suh-Contractors and Nominated
Damage lo Suppliers.ans fur the cost of storage, ha11Eil111g. and rnsuranee of
M materials
ffand G goods
Wa rranty of 14.4 The Contractor shall be deemed to have warranted that he has
title of goods title free from encumbrances for such materials and goods upon
and matuials inclusion of the value of such materials and goods in any
applications for payments under Clause 30.1 . ln the event that
the Contractor is found to have made a fa lse warranty, any loss
suffered by the Employer shall be made good by the Contractor
or shall be set-off under Clause 30.4.
15.0 Practical Completion And D efects Liability
Gttti f f ~ 15.l When the /\rch1lect is of tl1e opi111on that the W a r ~
Practical prnetical ly cempl~c:'ttning that the Contractor has
Completion perfom1ed and eempleted all the necessary Werl1s :,pecified in
the Contract an~atenl defect:, ex1s1in1,.'-tt1 s11ch Works are
"de 11u111,•111.;", the Architect sl1all forlhv, ith issw:! a Cerlilicate ef
Practieal Con!jtlet1-01r.-The Works sltall '3e deemed te be are
13Practically e Completed when : fer all pur13os,::, 0f1l1is Centracl
~ n such Ce111-H€at~

Aw1ex11re E 406
I 5.1 (a) in the opinion of the Architect. the Employer can
have full use or the Works for their intended
purposes, notwithstanding that there may be
works and defects of a minor nature still lo be
executed and the Contractor has given to the
Architect a written undertaking to make good and
to complete such works and detects within a
reasonable time specified by the Architect: and
I 5.1 (b) other requirements expressly slated 111 the
Contract Documents as a pre-requisite for the
issuance o r the Certificate of Practical Completion
have been complied with .
Certificate of 15.2 When the whole of the Works arc Practically Completed, the
Practical Contractor shall forthwith give wrillen notice to that effect to
Completion the Architect who shall within fourteen ( 14) Days do either one
of the following:
15.2(a) if the Architect is of the opinion that the Works
are not Practically Completed under Clause I 5. 1,
the Architect shall give written notice to the
Contractor with copy extended 10 the Nominated
Sub-Contractors stating the reasons for his
opinion; or
15.2(6) if the Architect is of the opinion that the Works
are Practically Completed under Clause 15. 1, the
Architect shall issue the Ceniticate of Practical
Completion. The date of Practical Completion
shall be:
l 5.2(b)(i) the date of receipt of the
Contractor's wrillen undertaking to
make good and to complete works
and defects of a minor nature,
where there arc such works and
defects: or
15.2(0)(11) the date of recc 1pt or 1l1e
Contractor's written notice, where
there are no works and defects of a
minor nature.
The Certificate or Practical Completion shall be
issued to the Contractor with copies extended to
the Employer and Nominated Sub-Contractors.
Upon the issuance of Certificate of Practical
Completion by the Archi tect, the Contractor shall
forthwith return Site possession to the Employer.
Annex ure E 407
Conti-actor's I 5.3 Where applicable, the Contractor shall comply with his
undertaking to attend to the works and defects ofa minor nature
failure to
comply with under Clause 15.1 (a) within the specified time. In the eve111 the
Contractor fails to comply with his undertaking. the Employer
1111de1·taking
may without prejudice to any other rights and remedies which
he may possess under the Contract do any one of the following:
grant the Contractor additional ex-gratia time to
I 5.3(a)
be specified by the Architect to enable the
Co111ractor to comply with his said unde11aking;
employ and pay other Person lo execute any work
15.3(b)
which may be necessary to give ef'fcct to the
Contractor's said undenaking. All costs incurred
including any loss and/or expense shall be set-off
by the Employer under Clause 30.4: or
accept to leave all or any such works and detects
I 5.3(c)
of a minor nature in the Works subject to an
appropriate set-off under Clause 30.4.
Any t!De fects. shrinkages--()f----6HteF----ra·UH-S in the Works which
Schedule of 15.4~
appears within the Defects Liability Period atttl-whiel~ are tlt1e-«1
Defects ftlKI
Shrinlrnges Ete m,Herials or wurlm1an:,hi11 not in acctirtlanee ,,,. ith this Contract
shall be specified by the Architect in a Sschedule of Qdefects
which he shall deliver and tleliverctl to the Contractor. not later
than fourteen ( 14) dDays after the expiration of the Defects
Liability Period. The Contractor shall make good the a Dcfccts
specified within a rcasonalile time twenty eight (28) Days after
receipt of the schedule of defects (or within such longer period
as may be agreed in writing witl-iby the Architect) al the
Contractor's cost. Setteattle- Of Defect,. ,hnnkagc·, and uthef
fuulls therein '.;pec1tiea make good such dcfea-s, sltttnh-ages--or
other faull'.; entirely ar hi, ovm eost, unless orherwise instrtlt'ted
ey the Areltttect-;----ttl-W+HCh ease the Contrnet Su1'!! sl1all be
oojw.rtctl aecortlingly. If the Contractor fails to attend to the
Defects. the Employer may. without prejudice to any other
rights and remedies which he may possess under the Contract,
employ and pay other Person lo rectify the Defects and all costs
incurred shall be set-off by the Employer under Clause 30.4. If
the Architect with the consent of the Employer. instructs the
Contractor to leave the Defects in the Works. then an
appropriate deduction for such Defects not made good by the
Contractor shall be set-off by the Employer under Clause 30.4.
 A11nex11re E 408
lnstruc tion to 15.5:. Notwithstanding Clause +➔.-± 15.4, the Architect may wheneYer
makeM&kiw.,: ht! eons,Elers it-neees,ary at any time during the Defects
Ggood Defects Liabil ity Period issue an Alffi'rtfl11llief!s requiring any critical
tlD efects which need urgent rectification. shrinkages or other
ful1lls ,,, hieh appear within 1he Detects L1abi~oo-aoo
•,1 l11ch are due 10 materials er 'l'orlunanshi11 1101 in !1€€eH!at1ee
1\ ilh !hi, Centrac1 to be made good,--+tte C01llracter shull within
a reasonable time specified by the Architect at the Contractor's
cost. lf the Contractor fai ls to attend to such Defects w ithin the
time specified by the Architect, the Employer may employ and
pay other Person Lu rectify such Defects and all costs incurred
shall be set-off by the Employer under Clause 30.4.afler receipt
or such rnsm1c11ons com1il)· w11h the same entirely al l11s e,,.. n
cesl. t111 less oll1erwise i11,1ruc1ed by the Arch,tecl. ill which case
1he Contract Sum shall be adjusted necordi11gly. J>Je such
H™-Fue1101l!l shall lie i,sueEI a tier ddi•, ery of a Sli-kemtle- ef
Defects er al't1!r-fourree11 ( I I) days from the e1<pirati011 ~ e
Defects Liability Period.
Certificate of 15.64 \.lllieR 111 the Ofllllifln 11r lht' Arch i1ec1 an; Upon completion of
M aking Good making good all dDefects~a-ges er ether limits which ~
Defects may have been required to be made good under Clause~
~ 15.4, the Contractor shall forthwith give written notice
to the Architect to that effect. The Architect shall within
fourteen (14) Days do either one of the following: haH been
made good he shall issue a Ce111ficate or Mal,i 11g Go11d Defects
atl{-H:empletien ormaking gfll-lEI defects shall be deemed~
taken 11lace 011 the day named in the Cer1itiea1e.
l 5 .6(a) if the Architect is of the o pinion that t here is no
Defects or the Contractor has made good all
Defects, the Architect shall issue a Certi fi catc of
Making Good Defects and the date of making
good Defects shall be the <late of receipt of the
Contractor's written notice. The Certificate of
Making Good Defects shall be issued to the
Contractor and copies shall be extended tu the
Employer and Nominated Sub-Contractors; or
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __.__
5,._6..,,(µ.b,.,.)_ __.j.._f...._th...,e......cA...c-c,..b1"' hc opinion lha1 I.he Defects
·1e~c.,L.....i..,_s....o,..f_,1.......
have not been made good, the Architect shall give
written notice to the Contractor with copies tu
Nominated Sub-Cont ractors stating the reasons
for the non -issuance of the Certificate of Making
Good Defects.
Annexure E 409
16.0 Partial Possession By E mploye1·
Possession of 16 .1 Jf at any time or limes before Practical Completion of the
~llflt Works, the Employer wishes to take- wttl+-t·he ~011,enl ol' the
Occ upied Part Cemracter takes possession and occupy Of'..any part ~ of
the Works (any sucl1 par! being her0inaf1er relimed lo as " the
with conse nt
Occupied Part")re-le•, aRl part'') and the consent of the
Contractor (whose consent shall not he unreasonably delayed or
w ithheld) has been obtained, then notwithstanding anything
expressed or implied e lsewhere in thc+s Contract, the Emp loyer
may take possession o f the Occupied Part and the following
shall apply:
~ L6. l (a i) W w ithin fo u1teen (14) dDays from the date on
Relenrnt Part which the Employer has taken possession of the
Occupied Part,Fele¥a!ll-fai1 the Architect shall
issue a Certificate of Partial Completion. The
Certificate of Partial Completion shall state the
A rchitect's f:erli lieate stating l11s estimate of the
approximate total value of the Occupied Part
rele,,.a1H part and for all purposes of Clause 16.0,
(!Jul far no etller}-the value so stated shall be
deemed to be the total value of the Occupied
Part;relevant pa~
P-FIH.4it!-ttl 16.l(b tt) H or the pu rposes of SHb-€C lauses 15.4, 15.5 and
C ompletion nod l 6 .1 (t'-vt+), and Clatise, 15.2 and 15 .3 Practical
Defeets Comp letion of the Occupied Part relevant 13art
Llahility el' shall be deemed to have occurred and the Defects
Rae·,onl Port Liability Period in respect of the Occupied Part
rele, a,11 part shall be deemed to have commenced
on the date wh ich the Employer has taken
possession;-4et,eef
16 . l(ci+i) the Liquidated Damages under Clause 22.1 shall
be reduced by the ratio of the estimated value of
the Occupied Part to the Contract Sum;Wheft-in
the opinion of the ArchiEeel a11y d ~
cfifr>i'aop, nr other fi~•ill •' in l11e relevAnl -j'flff
wlttd~ h;- n~ay lw, e rel.ju ired to be made geed
under C l a t ~ er Clause 15 .3 ha,·e liee11 made
good he shall issue a eertificate te 111 ~
~ The CeRtraetor !,hall reduce the value insured
lfOOef--Clause 2Q A (if applicable) b)' the rull-wt4te
of the rele,ant-J~rf-and the said rele•.anl part shall
frem-the date tlu,1 the employer take pessessio11
thereof 13e al the sele risk of th~eyer-as
regards 10 any ef'Clau,e 2Q.Q risks.
 -- --- - - --
------------
Anne.rure E 410
~ -1-t+-+ieu--ttf-tttt~u m 10 Be p,11 ti er a II oweti BY Ihe Possession of
~ 1 o r wuler Clause 22.0 1A re ,peel ~ Occ upied Pa rt
J}efiod-tluring wh1eh the Worl<s--tnll)' rema111 without consent
tfl€<llllj)iete after the-tlate ,, hteh the Employer ha,
tal.1:!n pe.,•,esmm of the rele,ant l'larl there shall he
~ ' -tttffi\\,-etl sueh sum H , hear., 1l1e ,ame moo
to 1l1e sum 11, h1cl1 woule he pme nr alloweG--ilf}Brt
0011 the pre·, i:imn, uf Clint ,e 16.0 us !lees the
Co111rae1 Sum le,s the 101al , alue ol the rdevarn
pafl-ltl- the Co 11 IFlld-Sttflr.c
16.l(dTt} \l,11h111 fourteen ( 11) aayG flfli1e !lute 011 \,hieh the
Emplflyer ha'., IHI.en 13osse ,1011 flf thl:! upon the
issuance of the Cert ificate of Partial Completion,
the Architect sha ll within fourteen ( 14) Days issue
a ccrtifkate to release half the amount rele¥at½1
pan th<! Con1rne1or shall hi:! pa1a frem the ·,um
retfttttetl u11der-(;lttus~1htttyt,~ne- t11eiety-ttt'
sueh ammm1 a•, hears 1he •,011u ratio It,! 1he Contractor to
Uflfet!tteea a1110un1 naml:!tl 11, 6111111 of 1hc remove
Retention Fund in the ratio of the est11na1ed value equipment
of the Occupied Part 10 the Contract Sum. The
Contrac1or shall be entitled to payment within the
Period of l lonouring Certificates.the ,\1ipemlt, e~
aoe., !ht' total , alue of the I de, 0111 p.lrt 10 the
Ge1tl-fttt:+---Mlllr. The amount of the Limit of
Retention Fund shall then be reduced by the same Assignment by
amount:ol sueh moiety:. Emplo)er
16.1(e) when in the opinion of the Architect all Defects in
the Occupied Part II hich he may have requin:d 10
be made good under Clause 15.4 or 15.5 haYe
been made good, he shall issue a Cenilicate of Assig nment by
Making Good Defects under Clause 15.6 in Co ntracto r
respect of the Occupied Part: and Ge¾lSefft
Required to
16. 1(f¥i+) 011 tl1e e,piration of the Del&ffi--h-tabtl,~I Assi~
i11 res1iee1 ef4e-!'tel~1r upon the issuance Inte rests or
of-the Certifieate of Ce ... , Lu•:i cf Making Good ~ eonsen1 af th.: t,!lher. ass1g11 his ngl11s, 1nt.:res1s or henefils tmder
Defects of the Occupied Part, the Architect shall
within fou1teen ( 14) Days issue a certificate for
the release of the remaining amount of the
Retention Fund in respect of the Occupied Pait.
The Contractor shall be entitled to payment within
the P.:riod of Honouring Certificate.relevant part
.,.. h1ehe, er 1s the later. the Co111rnc10r shilll he pauJ
li-0111 the :,ums reta111etl Lintier l'1111ctse 10. 1 (1fa11y)
tl1e otl1er 111~-e-H~111t referred to in sub
ela11se i <,i. I(vi) 0110 the Limit of Re1e1111011 F1md
amolint shall be reduced ii} the ameu111 l1f s1cteh
~
--- - - -- -- --..-- - - - · -· ------ -- -
Annexure E 411
16.2 The Employer may. without prejudice to any other rights and
remedies which he may possess under the Contract. enter and
occupy such pait or the Works prior to the completion of the
whole of the Works without the consent of the Contractor under
Clause 16. I provided always that:
I 6.2(a) the completion of the Works has been delayed and
a Certificate of Non-Completion has been issued
by the Architect under Clause 22.1: and
16.2(b) such entry and occupation of the Occupied Part
can be effected without any unreasonable
disturbance to the progress of the Contractor' s
remaining works.
In that event, the provisions of Clauses 16. l(a) to 16. l(f} shall
apply.
16.3 If' the Employer takes possession of the Occupied Part under
Clause 16. 1 or 16.2, the Contractor shall upon the written
instruction of the Architect remove his site factl111es.
construction plant or equipment. materials and goods from tht:
Occupied Part.
17.0 Assignment A nd Sub-ContractingOr " 11b Lenillj!
17. 1 Other than assigning his rights. interests or benefits under the
Contract to his linancial institution. the Employer shall not
without the writtt:n consent of the Contractor (such consent
shall not be unreasonably dclayt:d or withheld) assign the same
10 other parties.
17.2 ~ Other than assigning any payment due or to become due under
the Contract to his financial institution, the Contractor shall not
without the written consent of the Employer (such consent shall
be at the sole discrt:tion of the Employer) assign his rights.
interests or benefits under the Contract to other partics.Nei-t-kef
the Em!'lleyer nor the Csntraetor shall. withotll 111.: ·Mitll:!A
the Con1rae1.
 Anne.rnre E 412
No sub- 17.32- J:he.-t-ootm~l!al-l not---wtth~t!Htte--Wflften COllSt'AI +»:----t-he
contractingSu-b- •\Fehllt!el (~~ hieh EO!l',t!lll shall Hl'I! ~ - 1 i t h l y "1thht'IEI)
-bellitt~itm sua lei eny-J¾}fl1on er lht' .,,, lrnle Bl tht' Werk•,. eExcept where
af..Wm,k otherwise provided by the Contract, the Contractor shall not
wholly or substantially sub-contract the Works. ~FheAf-+l
g11 eA shall--tml- rt!l ie•, e the Cettlfll€leF- ffflrn- ,1tty--l-tttbtMy----ffl'
ob4ga-110A uetler the C\mtraet. I le shall lae res11on·,1blt! for the
acb, ElefauHs.---n~-bte;1d1 t1f contra~! of any Suh
Con1rae1er tlomesue tlr Aem111a1etl. h1.; agt!nl. seF\ anh-er
.,,,orl,11M1 t1s--ful.ly-i¼S--i-f1hey 11~1~-lr.J~uH;;-oF-neglt•els ol
the Ct111trae1er. his agents. St'F\a1w, or worl,111en. Where the
Contractor sub-contracts labour only of craftsmen, skilled or
semi-skilled workmen to carry out any portion of the wWorks,
this shall not constitute suh len,npub-contracting within the
meaning of this clause. ans hi! shttll rema111 full) resfJonsiblt? fo,
~ tality of 1he1r work ans crah.,lffiltlSfltJH!Hlt-Hlf-lltty-aets.
sefaults aAu negligt'Aee uf tht! ,,. orl.men
18.0 l njury To Person~ Or Loss And/Or Damage Of Property
A nd Effi.ill~ lndemnity To Employer
Contractor 's 18.1 The Contractor shall be liable for and shall indemnify the
Jindemnity Employer against any damage, expense, liability, loss, claim or
A-against proceedings whatsoever whether arising at common law or by
f l ~n statute in respect of personal injury to or 1-ht!-death of any person
-Enl-f»Uy-ff w h e l -arising out of or in the course of or caused by the
!injury or carrying out of the Works and provided always that the same is
Odeath flf due to any negligence, omission, default and/or breach of
~~ contract by the Contractor or of any Person for whom the
Contractor is responsible.,--ttnlt"ss 11 1s snlely-due HJ ilA) ad or
nt!gle.1 of the Lntp)O) er nr of ilny--flefS6H for 11 hom the
[-tllj}luyer i., respo11sihle. 111 Hlt!I <!lent, t~mplo)er shttJ.1.--be
1-tahle-
Contractor's 18.2 l·,cept for st1d1 lflss ,ir tlamage that i'., at rhe ..tile n:,k flf tlie
lindemnity btnployer tmtler Clat1Ge, 20 R I ttl 20.B ;; er-('Jaus~, 20.C. I lo
A-against Gl-nim W.C.6 (if af)plieablt?) the The Contractor shall be liable for. and
ml-Etli-pklYff shall indemnify the Employer against any damage, expense,
if»· loss and/or liability, loss, claim or proceedings due to ttl respect ef en)
damagelflftl-f·t tlljUt'Y loss and/or damage of any kind whatsoever to any
~~ property real or personal. including the Works and any other
property of the Employer, in so far as such ffi:lt!Fy-loss and/or
damage arises out of or in the course of or by reason of the
execution of WFl)'l ng tittl-the Works, and provided always that
the same is due to any negligence, omission, default and/or
breach of contract er default llf by the Contractor or of any
Person for whom the Contractor is responsible .. his •,en•an~'.rOf
,1gent., llr e., the ea•,e may be. ol a11) ,lib 1:omracwr. Im, ·,en a»!5
OHtgent!r.
Annexure E 413
C ontracto r's 18.3 The Contractor shall be liable for and shall indemnify the
indemnity Employer agai nst any damage, expense, liability, loss, cla im or
against claims proceedings whatsoever arising out of claims by any and every
by workmen workman employed in and for the execution of the Works and
for payment of compensation under or by virtue of the
Workmen's Compensation Act 1952 and the Employees' Social
Security Act 1969.
Indemnities not 18.4 The indemnities given by the Contractor under Clauses 18.1 to
to be defeated 18.3 shall not be defeated or reduced by reason of any
negligence or omission of the Employer, Architect, Consultant
or other authorised representatives in fa iling to supervise or
control the Contractor's site operation or methods of working or
temporary work or to detect or prevent or remedy defective
work or to ensure proper performance of any obligation of the
Contractor under the Contract.
19.0 Insurance Against I njury To Person~ And Loss And/Or
Damage O f P roperty
Contractor to 19. 1 Without any-prejudice to his liability to indemnify the
! insure Employer under Clause 18.0, the Contractor shall, as a
A-against condition precedent to the commencement of any work under
l injury to the Contract, take out and maintain in the joint names of the
Persons and Employer, Contractor,1uw-£!1~ sub-contractor and all
loss and/or interested parties lo mH1nta1n ·,ueh 111suranees 11!, aro? neee,•;aF)
damage of ro eo, er rh~ l1abtltl~he-G<tt1tr1H:lllr or, as the c;1se 11rny he. of
P property •,u.h suh eontraetor in respect of personal injuries or death and
ttf-ttt'-injury or loss and/or damage ofie property real or personal
arising out of or in the course of or by reason of the execution
caust:?tl by the carry111g out of the Works and whether or not
such injury, death, loss and/or damage is caused by atty
negligence, omission, default and/or breach of contract or
a,:'iaul1 of by the Contractor, Employer, sub-contractor and
interested parties or sub e1rn1rae10r as 1he e11se 1ltdj'-be--and any
of their servants andor agents. a11tl not sue ttl Oil)' ael or
~ 1 e e of 1he 1.mployer er of ,my f!ersen fer whoffl-ffie
I 111pltl) er 1 , res1rnnsi0le Such insurance policy shall provide
cover in respect of third party liability for personal injury or
death and damage to property for the amounts stated in the
Appendix. If the Contractor having regard to his indemnity to
the Employer under Clause 18.0 desires to increase any of the
insurance coverage, he shall do so and allow for any additional
cost. The insurance policy shall include the following
endorsements:
19.1(a) a "cross liability" endorsement to provide
insurance cover to the Employer and Contractor
and any other parties involved in the Works as
though they are separately insured for their
respective rights and interest;
 Ann.e.rnre E 414
19. l(b) an endorsemem to the eftect that the Architect,
Consultant and any other protcssional consultants
(as applicable) and their employees and
representatives, Site Staft: employees and
representatives of the Employer, arc deemed to be
third parties:
19.1 (c) an endorsement for waiver of all expressed or
implied rights of subrogation or recoveries against
the: insured; and
19.1 (d) an endorsement for automatic extension or
renewal of the insurance up to the issuance of the
Certificate of Making Good Defects.
E mplo,•ces' 19.2 Without prejudice to his liability to indemnify the Employer
socia l security under Clause 18.0. the Contractor shall register or cause to
sche me for local register all local workmen employed on the Works and who are
workm en subject to registration under the Employees' Social Security
E+i<l-f Scheme (hereinatier referred to as ..SOCSO'") in accordance
tttStlfltflee!i with the Employees' Social Security Act 1969 and shall cause
~ utffd all sub-contractors to comply with the same provisions. The
Contractor shall make payment of a ll contributions and cause
all sub-contractors to make similar payments from time to time
when the same ought to be paid.+he-tetnrneter. wht!H Ft!(jll!Ft!d
by the Areltiteet;-fil1t11l~e er eat1se .iny--stte-€ffilt-rae!~He
prod11ce fer inspecti,m by tl1e Architect 1he rele,•ant 111,11rmrne
t } e t t ~licies lagelher •1, 11'1 F1:lee1pt, lhl'reaf 111 respeet of
pre1111 Hms paid and 1he Arc'11tee1 may aha reasonably reEJrnre
on uny oeeasion lhe prod11etie n ey tlie Co11tractur of
doelimentdry e·,.idence 1ha1 sucli 1nst1rance policy or rehc1es are
properly ma1ntai11etl,
Insurance for 19.3 Without prejudice to his liability to indemn ify the Employer
loca l workmen under Clause 18.0. the Contractor shall. as a condition
not subj ect to precedent to the commenccmem of any work under the
socso Contract, take out and maintai n in the joint names of the
Afailffi>ltllflff,-(lf Employer and Contractor and shall cause all sub-contractors to
HWtfitftff take out and maintain a similar insurance policy for local
Jl&Hi;ies workmen who are not subject to registration under SOCSO.
Such insurance policy shall be effected and maintained as
necessary to cover all liabilities including common law liability
in respect or any claim which may arise in the course of the
execution of the Works. The insurance policy sha ll be ,·alid up
to the Completion Date and lhe extended mai ntenance cover
shall be for the Defects Liabi lity Period plus a further three (3)
Months. If the Contractor is unable to complete by the
Completion Date or complete making good the Detects within
the insured period, he shall ensure that the insurance is
accordingly extended for the same period of delay. The
Contractor shall effect the said e\tension of the insurance co, er
not less than one (I) Month before the expiry of the insurance
currently in force.
A1111exure E 415
Where a pro\ 1s1011al sum 1s 111dt11Jed 111 lhe Co11trat:t 8111-. 111
res~111,ur,rnee required 11t1der Glau ,e 19. 1 the ContraEL01
,hall---ma+11t-aitt---itt ~ I I names of -lhe--8¼nlrael0F--ilnd
employer 111:,11ranees for sueh u111ou111., of 11Hlemntl)' as may l~e
,½ated in the Contraet Bills 111 re ,peel ef e'.pe11,e. hab1h1y. les•,.
~1a11n er rreeeeding•, ,.., h1el1 the E1npleyer may meur - « i i o
hy reason of itljlll')' or lfamage le pref1et1)' real er Jlt!fWiltl-l
arisine mil of er 111 the co11r,e tif caFF) Ill~ OHi 1l1e V, orJ.s mld
caHS~ltleFWise 1ha11 b) 11eghge11ee. 1ut11·,•,m11 or default ef tl1e
~'l<:tor 11110/er sub contrac11:1r or or tl1etr sep, ants or ageni,.
--
ProYided aly,ays 1hat any-e'<€-klsiOO-fil--l+mildl-IBIHlt=-lta~
111s11ra11ee t!'<Cess u11~ 1 e y arc siatctl III the eert1t=ieates af
Without prejudice to his liabi lity to indemnify the Employer
\ Vorkmen's 19.4
under Clause 18.0, the Contractor shall. as a condition
compensation
precedent to the commencement of any "ark under the
insurance for
Contract, take out and maintain in the name of the Contractor
foreig n workers
and shall cause all sub-contractors to take out and maintain a
Attttro~ 111 of
similar insurance policy for all foreign \\ orkers employed on
ffiSffFttffff
the Works as required by the Workmen's Compensation Act
~111}11ilie!.
1952 and Workmen's Compensation (Foreign Worker's
Compensation Scheme) (Insurance) Order 1998. Such insurance
policy shall be effected and maintained as necessary to cover all
liabilities including common law liabili ty in respect of any
claim which may arise in 1he course of the execution of the
Works. The insurance policy shall be valid up to the
Completion Date and the extended maintenance cover shall he
for the Defects Liabil ity Period plus a further three (3) Months.
If the Contractor is unable to complete hy the Completion Date
or complete making good the Defects wi1hin the insured period.
he shall ensure that the insurance is accordingly extended for
the same period of delay. The Contractor shall erfect the said
extension of the insurance co1er not less than one (I) Month
before the expiry of the insurance currently in force.Any
tnsunmee rel1?rred w m Clause 19.3 ·,hall be plneed w11h
in:,uren, LO be aprro, ed hy 1lw Arehite,1. and the Centractor
·,hall depo,t1c-¥rtth-htm the polic) or paheies and tl1e receip~
rc.,pecl ul 1rnmm1111•, pa14
Placing of 19.5 The insurance referred to in Clauses 19.1, 19.2. 19.3 and 19.4
insura nce II ith shall be placed with licensed insurance companies approl'ed by
licensed the Employer. and the Contractor shall deposit with the
insu ranee Employer the policy and the receipt or premiums paid "ith
companies copies extended to the Architect and Consultant. If the
Contractor makes default in insuring or continuing to insure as
aforesaid. the Employer may (but is not obligated to) insure
against any risks in respect of which the default has occurred
and the amount of premiums and any other cost incurred or paid
I
by the Employer sh.ill be set-off by the Employer under Clause
30.4.

A1111ex11re E 416
C0 t ~ Shuu ltl Ille C 011IF~lHH!y-•,ut>-£01ttrat'tt'l'--ffil¼k~dt!H---ifl
De-fttttlt..iff 1ftSUrt~1'--tft--€0!H111u111g 10 tt1,n1re-a-s--prev-1dt'll +A-( ~ ~
fo!>U Ftl-ttff ~tte--1~~ mrlo~ er ma~ h1m-.elHfl"+1r.!--agtt11h!--<lH~
Pooc~ wft.h ~ I 10 which the tlelirnh ,hdll ha, e ueeurred--.tntHht!
- ~ id or p~)'!!Ale B) 1he--l•mployer 111 re ,peel of r remi-utt¥,
,ha! I l>e tlt't.!uc«!tl-f f o l f l - ~ l ~ Hf--tt+ ~ n i e - ~
8tttl fl\€WI .
20.,U Insure nee Oµ.\..or~inst--MR',---Ek:
..20.A lnsurance Of cw Buildings/Works - By The Contractor
Contractor's Without prejudice to his liability to indemnify the Employer
Rrisks -- !\new 20.A. I under Clause 18.0, the Contractor shall, as a condition
Bbuildings/ precedent to the commencement of any work under the
works Contract, take out and maintam in the jomt names of the
Employer, Contractor, suh--contractors and all mterested parties
a CAR Insurance policy for a value not less than the Contract
Sum, plus the sum to cover professional fees for remstatement
and the sum to cover the removal of debris all as stated in the
Appendix. Unless co,·crcd by the ~tandard CAR Insurance
policy, the msurancc shall have endorsements to cover against
loss and/or damage by fire, lightning, explosion, earthquake,
volcanism, tsunami, storni, cyclone, flood, mundation,
landslide, theft. ground subsidence, exi,ung underground cables
and/or pipes or other underground facililles, bursting or
overflowing of water tanks, apparatus or pipes, aircraft and
other aerial devices or articles dropped therefrom, strike, not
and civil commotion. malicious damage, trespass, cessation of
work whether total or partial, vibration and wcakenmg of
support. Unless otherwise msured by the Contractor, the CAR
Insurance policy will exclude cover for construction plant, tools
and equipment owned or hired by the Contractor or any sub-
contractors. The Contractor shall keep such Works so insured
notwithstanding any arrangement for Sectional Completion
under Clause 21.0 or Partial Possession under Clause I6.0. The
insurance policy shall be val id up to the Completion Date and
the extended maintt:nance cover shall be for the Defects
Liability Period plus a further three (3) Months. If the
C--omrector ~ u1lftble- t<H:omple!e by-- the Compleuon Date or
complete making good the Defects within the insured period, he
shall ensure that the 111sunmce is accordmgly extended for the
same period of delay. The Contractor shal l effect the said
extension of the insurance cover not less than one (I) Month
before the expiry of the insurance currently 111 force. Where
deductibles are specified in the Appendix or 111 the insurance
policy, the Contractor shall bear the amount of all deductibles.
The insurance policy shall also include the endorsement under
Clauses 19.l(a) to (d).
A1111exure E 417
l-lie--C1ttlffi1Ctt+f- ••httll tt1 ~ 1 t 1- 11<1me, of the-1,mployeF-it!ld
Co1tlfilt:IOl- i1Nlft'-tlt!ilt!¥,\-ltt'>'i--tttllhl11n~h:,-~i1e-c---•,1w11r.
H!mpe,t. hgill ning.-4lood, ..-afthtj ualt~ --ittfffit A--ot i!HYllttftg
1lrttptlt'd-thelffltlftt. -OefttlH.l~- 11Af-il1llk-iHI ~nMi,111 -k+f
1he--ttt#-+alue- Hlt'r~hi,,-a--p,.•ffftll~ 11111flt!ti 11Hl~llt'<
lt>--€0v~<'Wt>Hill ~ .t!'.-.tll-e'(t'€ttled-wt»* ltflll .all-t!Hli-'
Hldtt!liah-atltl !!Ot•th 1nt~~11..ffie--\l.'t)Ht'T •utltl-tlt!hTt'H'u-ffi
1tt1&f•tt1e~~lji!t'~-«:Hlie--W,,rk,,..h111.e'<cl~lffitfll!n'tfy
h1-ttk!ing0r.-pli11lls-lOOb ltfld..-t•(jt1+p1~ {tYrflt!O vf-lm~ 1l1e
(~1&-~---llfl-r~tlr8€1ffl'.i¼ff4 ..JntH- ["1lhJ.-.:l---ttt ,ui:l-
£iau ,e 16.1 {t~ l] i.t't'll ~ut'l1 ,, ork. n½Afeflill-;.-0r ~ooJ'i-SO-ttt',uretl
lllllil r~aJ.-Com1lleW.ttt--Hf tllt'-\1.'ofl-.-.
Additional risks 20.A.2 Any additional risks or endorsements in addition to those stated
to be covered 111 Clause 20.A. I which may be required to be covered under the
under the CAR Insurance policy shall be speci fied in the Contract Bills. If
insurance the Contractor having regard to his indemnity to the Employer
under Clause 18.0, desires to have any additional endorsements
to the msurance in addition to the risks specified, he shall do so
at his own cost.
Placing of 20.A.3 The insurance referred to in Clause 20. A shall be placed with
insu r anee with ~ licensed insurance companies11httrer, approved by the
licensed Employer, \rdttlel+-and the Contractor shall deposit with the
insurance Employerltttt1 the policy t+f--J'<ttl€-!.-.. and the receipt of premiums
companies paid. If the Contractor makes default in insuring or continuing
Appf'ftWlH)l to insure as aforesaid, the Employer may insure against any
lnlffifffl,
risks v.-11-hin respect of which the default has occurred and
Wtlffi.'-l ,.......ui~>l+Wllt~the amount ...-ttl---e, 1 fffi-tt • ~ of
premiums and any other co~t incurred or paid by the Employer
shall be set--off by the Employer under Clause 30.4.tft."' ilf¼Y
H l t l l ~ t tHtl--9&'~1~ -lt+-lltt 8' lHtldtH
l\kttnte-ftillll:~ - lf-Htt.> -tttttl+il<.'IOF---t~k-111-ly~IS- • ~ - t t l l l k - t- t!H.,
(~'l---lflil+lllHin·, II fllllll~· ifl 111am:e. frt11H- tt¥iHH~P,
1ftWi IIIH'e
0
I ¼ ~ ~ '!he- Aft:lttlt'it. whiclt--eF~ (m1<•1· t1l1a)-ff~d-ia
Pelky
wetk- mttfffia!., tlfl~~ttifl'.;t llte--tti,~l-+t,.,i-.-, itt--Glitt~
~~1~-v~hek'1,4Pitt~~~1~<!!1~
a»ys--ttH-he- A·p1lt'fttlt>. HhetHhe-ttlilttttt'tlAR~ H)tltftH.'lttf
~it-pt>llc-y-•,ttaH,-i-Hh,!--£t11piey~et1"",1--t e11ef'r,t!d
tlu.:, .. u.1. te- ii th...chnrg1.. ot th~ Cc;n:·uctor·~tb "' ,,. '" 111• w :~
ttHlle-jHtflt-Rilffit>.......f1he+.mpltlyt'l atJtl-..C-•'lllftlt' tor-,
1-¾!-frtltlttt:tIB!l hy-llie (_.:t>nlltlt-l-tll ih--iltlll Yrh-.!n ffii!Y- r,~&.,enal>I;,
~ \ - f f l 1 1 t e d tll" B lt'ftlli~'itlt!-- ef 111·,UFAllt:e
~•½- t'lllk.tf-.eJ--allll-ffiiltttlrtifletl ,,hall l>e-tl dr,;!hilfgt' ltlt' ~*
l'untractllr'crtmlH=illltm «Hk:'j'IOSl-1th the Emph:lyer--tt-fhll-iey-t.•1
,,ol ll!lt'. llllO-l~ittJl-t'ft'ffill.tltrrei'.etfllc
~-r U1mn 1l1e eule1ltef!H>I any-.:loim 1111eeHllt'-ilbttfil-;tfure-.u1tl
1h,•- Gtltll 1--,ha11 " 1I h ,hte--tlI I ~~1e--ttt1y--Ja111ngetl
Oltll~eti--\\-oFk
I
- k:-fffl!rltce t"lf rerair--aHy-ttttft-'"rtl Rldlt'fiols or -geod-,
~ro~+ ttf--lt~ft+reJ:--ft!lllOW!---a-nJ-4,,11the--&f <111) tlehn• -aml
tlftteeed- ttt-t'llff}' t>ttt---m1t~11llelest llt'-Wtlrh
 A1111e.rnre E 418
Application of 20.A.4 Upon the occurrence of any loss and/or damage to the Works or
insurance claim unfixed materials and goods prior to Practical Completion of
proceeds the Works from any cause whatsoever, and notwithstanding that
Pnyme11t fur settlement of any insurance claim has not been completed. the
D1tuH1ged Worl, Contractor shall with due diligence restore, replace or repair the
same. remove and dispose of any debris and proceed with the
carrying out and completion of the Works. All money if and
when received from the insurance under this clause shall be
paid in the tirst place Lo the Employer. The Employer shall
retain the amount paid by the insurance companies in respect of
professional fees for reinstatement and pay the balance to the
Contractor and/or Nom inated Sub-Contractors by instal I ments
under separate ce1titicates to be issued by the Architect. A-11
monies rl!ee1n!u frulH sueh in;,urnncl!s (ll!ss 1he aforesaid
~cee111age. 11' any, i11 the Af!pemli'<) shall he 1iaid~
Getttra€tor by in:,tallrnettts u11<ler tltt!--jlenouie liHerim
Centfleales issued by the Ard11l{!€tr-The Contractor shall not be
entitled to any add itional payments in respect of the restoration
of the damaged work and replacement or repair of any unfixed
materials !:Wand goods and the removal and disposal of debris
other than the monies received under the aforesaid insnrances.
" 20.B Insurance Of New Bu ildings/W orks - By T he Employer
Ins urance by Without prejudice to the Contractor's liabi lity to indemnify the
E mployer 20.B.1 Employer under Clause 18.0, the Employer shall, as a condition
prect:dent to the commencement of any work under the
Contract, take out and ma intain in the joint names of the
Employer, Contractor, sub-contractors and all imerested parties
a CAR Insurance policy for a value not less than the Contract
Sum, plus the sum to cover professional fees for reinstatement
and the sum to cover the removal of debris all as stated in the
Appendix. Unless covered by the standard CA R Insurance
policy. the insurance shall have endorsements to cover against
loss and/or damage by llre, lightning, explosion, earthquake.
volcanism, tsunami. storm, cyclone. nood, inundation.
landslide, ground subsidence, existing underground cables
and/or pipes or other underground faci lities, bursting or
overflowing of water tanks. apparatus or pipes, aircraft and
ofuer a5ia1 <lt!v1ce, 01 afficlesuroppeJ Cherefrorn, strikt:, riot
and civil commotion, malicious damage. trespass, cessation of
work whether total or pa1tial, vibration and weakening or
support. Unless separately required by the Contractor at his own
cost, the CAR Insurance policy will exclude cover for
construction plant, tools and equipment owned or hired by the
Contractor or any sub-contractor. The Employer shall keep such
Works so insured notwithstandi ng any arrangement for
Sectiona l Completion under Clause 2 1.0 or Partial Possession
under Clause 16.0. The insurance policy shall be valid up to the
Complet ion Date and the extended maintenance cover shall be
for the Defects Liability Period plus a further three (3) Months.
Anne:rnre E 4/9
If the Contractor is unable Lo complete by the Completion Date
or complete making good the Defects within the insured period.
the Employer shall ensure that the insurance is accordingly
extended for the same period of delay. The Employer shall
effect the said extension of the insurance cover not less than one
( 1) Month before the expiry of the insurance CLIITently in force.
Where deductibles are specified in the Appendix or in the
insurance policy, the Contractor shall bear the amount of all
deductibles. The insurance policy shall also include the
endorsement under Clauses 19. l(a) Lo (d) ..'\11 wnrlv; e·.eeutetl
and all icmfi•,ed materials or goods llltenaed for Etnd delivered to
ar plaee<l flA or acijaEe111 tu the Works (e•,cludmg temporary
s uildings, plant, 1u0L, and ef!uipment owned or liired by the
Contriletor or any Sub Comrae10r) sliall be al the sole risk af the
1':mt1loyer as regards ta loss or damage under Clause 20 A risks.
Additional risks 20. B.2 Any additional risks or endorsements which vary from those
req uired by the stated in Clause 20.B. I shall be specified in the Contract Bills,
Contractor and the Employer shall ensure that the risks specified in the
Contract Bills arc covered by the CAR Insurance policy. If the
Contractor having regard to his indemnity LO the Employt:r
under Clause 18.0. desires to have further additiona l
endorsements to the insurance in addition to the risks specified,
he shall do so at his own cost.
Maintenance of 20.B.3 The Employer shall maintain a proper insurance policy against
P policy 2 the aforesaid risks and such policy and receipt for the last
premium paid for its renewal shall, upon the request of the
Contractor, be produced for his inspection.
Failure of 20.B.4 If the Employer at any time, upon the request of the Contractor
Employer to J fai ls to produce any receipt showing such a policy as aforesaid
linsure to be effective. then the Contractor may take out and maintain
in the joint names and on belialr of the Employer, Contractor,
sub-contractors and all interested part ies. the CAR Insurance
policy as required under insure all •.-,ork e-.ecuted a1ul all
materials and goods as afuresi!id ilgain,t l6>S-itttdt or da1Hage
arising all the risks stated in Clauses ~ 20.B. I and 20.B.2.
The Contractor upon production of the receipt of any premium
paid by him shall be entitled to have tbthc amount added lo the
Contract Sum.
Applicatio n of 20.B. 5 Upon the occurrence of any loss and/or damage to the Works or
insurance claim 4 unfixed materia ls and goods prior to Practical Completion of
proceeds the Works from any cause whatsoever notwith standing that
Com11uting settlement of any insurance claim has not been completed, the
Amellflt--ot=--boss Contractor shall with due diligence restore, replace or repai r the
or Da1Hage samt!, remove and dispose or any debris and proceed with the
Oeensio ned by carrying out and completion of the Works. All money if and
lHs ured Risl,s when received from the insurance under this clause shall be
paid in the first place to the Employer. The Employer shall
retain the amount paid by the insurance companies in respect of
protessional fees for reinstatement and pay the balance to the
 Annex11re E 420
Contractor and/or Nominated Sub-Contractors by installments
under separate certificates issued by the Architect. The
Contractor shall not be entitled to any additional payments in
respect of the restoration of the damaged work and replacement
or repair of any unfixed materia ls and goods and the removal
and disposal of debris other than the monies received under the
aforesaid insurance.If the loss er dttmage to the Works ur any
part ll1ereof or to any unli•,ed nmtenals and good., referred ttHn
Clause 20.8 . 1 1s oeettsioneEi by a11y UHe ur more eF tl1e risks
stated in Clause 20 A. tl1en the occun-enee of such less or
da1nago.: ·,httll be di·,regttrded Ill computing Hllj-ttlttutmlt, payable
lo the Contractor under this Contrnet.
~ The Co1Hractur sl1t1II with due d1ligeRce restore the dttmaged
l)emoged Wot4' v. ork. replace or repair any 1c111tixeEI materials or goods
destroyed-er damaged, renrnYe and dispose of Bil)' debric, and
proceed to carry out and complete the Works. Tl1e reswratio~
ffilffttlged werk. the replaceme11t or rel'lair of unfo,ed materials
or goods. and Elistiosal of EJebris shall be deemeEI to be a
Vam1t1011 required by the Arch~
Ins urance Of Existing Building Or Extension - By The
E mployer
Employer's Without prejudice to the Contractor's liability lo indemnify the
R risks --E 20.C.J Employer under Clause 18.0, the Employer shall, as a cond ition
existing precedent to the commencement of any work under the
Strueture~ Contract, take out and maintai n in the joint names of the
building or Employer, Contractor, sub-contractors and a ll interested parties
extension a CAR Insurance policy for a value not less than the Contract
Sum, plus the value of the existing structure together with all
the contents owned by the Employer or for which he is
responsible, the sum to cover professional fees for reinstatement
and the sum lo cover !he removal of debris a ll as staled in the
Appendix . Unless covered by the standard CAR Insurance
policy, the insurance shall have endorsements to cover against
loss and/or damage by fire, lig htning, explosion, earthquake,
volcanism, tsunami, stonn, cyclone, nood, inundation,
landslide, ground subsidence, existing underground cables
and/or ~ or other undei:ground facilities, burstil)g_ or
overflowing of water tanks, apparatus or pipes, aircrafl and
other aerial devices or articles dropped therefrom, strike, riot
and civil commotion, malicious damage, trespass, cessation of
work whether total or partial, vibration and weakening of
support. Unless separately required by the Contractor al his own
cost, the CAR Insurance policy will exclude cover for
construction plant, tools and equipment owned or hired by the
Contractor or any sub-contractor. The Employer shall keep such
Works so insured notwithstanding any arrangement for
Sectional Completion under Clause 21 .0 or Partial Possession
under Clause 16.0. The insurance policy shall be valid up to the
Completion Date and the extended maintenance cover shall be
for the Defects Liability Period plus a further three (3) Months.
Annexure E 421
If the Contractor is unable to complete by the Completion Date
or complete making good the Defects within the insured period,
the Employer shall ensure that the insurance is accordingly
extended for the same period of delay. The Employer shall
effect tbe said extension of the insurance cover not less than one
(I) Month before the expiry of the insurance currently in force.
Where deductibles a re specified in the Appendix or in the
insurance policy, the Contractor shall bear the amount of all
deductibles. The insurance policy shall also include the
endorsement under Clauses 19.1 (a) to (d).The existing
structures wge~her-W-i-lh all eonlents therein o•;, ned hy the
la,mployer or for w hich he is resriensible. i1ieluEl ing all tmfixed
ma1erials and gellli', intended for the Work;; and Elelivered 10 or
ttej-a{,,ent lo the Werk!; [hut exclud111g temporary lrnild111gs.
~ 1 e ~ r hirctl by tlle-8ttttf!l€tef
uH1ny-&t0-Co11traetor] shall be at the sole nsk of the Employer
as regards to loss or tlumuge ans111g from the risks staktl in
~
Additional ris ks 20.C.2 Any additional risks or endorsements which vary from those
required by stated in Clause 20.C. I shall be specified in the Contract Bills,
Contractor and the Employer shall ensure that the risks speci fied in the
Contract Bills are covered by the CAR Insurance policy. If the
Contractor having regard to his indemnity to the Employer
under C lause 18.0, desires to have further additional
endorsements to the insurance in addition to the risk specified,
he shall do so at his own cost.
Maintenance of 20.C.3 The Employer shall maintain a proper insurance policy against
!insurance by ± the aforesaid risks and such policy and receipt for the last
Employer premium paid for its renewal shall, upon the request of the
Contractor, be produced for his inspection.such nsks stated in
Clause 2UA aREI t1p01i reqt1esl by !he C01Hrac1or sl1all proEJt1ee
the la•;l reeeipl of premium pai4
Failure of 20.C.4 If the Employer. at any time upon the request of the Contractor
Employer to J ut-ttny-littte-fails to produce any receipt showing as aforesaid to
Hnsure be effective, :,ueh a pol icy then the Contractor may take out and
maintain in the joint names and en bel1al r of the Employer,
Contractor, sub-contractors and all interested parties, the CAR
Insurance policy as required under Clauses 20.C. I and
20.C.2.i11sure the struetures together v, iLll tlie aforesaid eo11lenls,
the Works. a11d all unli,ed materials and gueEJs as uforesaw
agamst loss or Elamage 0eeas101l<!d by the event expressed i11
Clau:,e 20A. P:er thi:; riurpo.,e the Contrncler sl1all lian! the----ttgltt
to enler unu inspect us RJa)' be necessary to iiiake a s~1p,ey and
i1n ento1) tif the e-.isting structtires anEI all their conle1Hs ttnd
The Contractor upon production of the receipt of any premium
paid by him shall be entitled to have the amount added to the
Contract Sum.
 Anne.rnre E 422
A pplication of 20.C.5 Upon the occurrence of any loss and/or damage to the Works or
insurance claim unfixed materials and goods prior to Practical Completion of
proceeds the Works from any cause whatsoever notwithstanding that
settlement of any insurance cla im has not been completed. the
Contractor shall with due diligence restore, replace or repair the
same, remove and dispose of any debris and proceed with the
carrying out and completion of the Works including the
reinstatement of the existing structure. Al l money ir and when
received from the insurance under this clause shall be paid in
the first place to the Employer. The Employer shal l retain the
amount pa id by the insurance companies in respect of
professional fees for reinstatement and pay the balance to the
Contractor and/or Nominated Sub-Contractors by installments
under separate certificates issued by the Architect. The
Contractor shall not be entitled to any additional payments in
respect of the restoration of the damaged work and replacement
or repair of any unfixed materials and goods and the removal
and disposal of debris other than the monies received under the
aforesaid insurance.
Less er D1tm11ge ~ Any less er Elamage affecting the Warks er any )'!R rt thereef or
Oeees ieoed by any unfi'<ee materials er g00Els referreEI lo in C lause 10.C. I
ooured Risl,s tl€€aS-ie11ee by ene er more ef the risks slfHed in Clause 20 A
!hew.
20.C.'l( i) tl1e oeeurrenee sf Jueh loss er damage shall be
d-is-regareed in eom)'luting any amount- l"ayable 10
the Contraetur under tl1is Cufl-lffleh
20.C.4(ii) if i1 is j ust and equitable to Els se the em)'IIUJment
al' the Centracwr tinder this Cen1rae1 may be
detem1i11ed at the oplio11 of eitl1er )'!Bil)' within
twe,11y· e1gllt (28) says s f tile eeeurrenee sf sueh
less er eamage. With in seven (7) days of
reeei·<'ing sueh a netice (blll 1101 thereafter) eitl1er
)'! Rrt)' may gi, e netiee le lhe ether a wrilteH
request 10 EBneur 011 the ap)'leintmeAI ef an
arl3itrater uneer Clause 311.0 tu eecide whether
sueh Eleterm iHatio11 is just Bild equitable.
Uren the giving er re e ~ ~ he Em_pleyer sf a no1~ ·
ae1erminatien er wl1ere a refen:>11<-'e----te-a-rhi1ra1ien iJ made as
aforesaid Bild 1f 1l1e Arbitrator ll)'lheles the notice af
ae1ermina1ien. tl1en tile )'IF0visiens sf Clause 26.2 (e1,ce)'lt sub
clat1se 26.2( ii)(t)) shall apply.
If ne notiee sf determi,mtien is sen t:!e under sub elause
20.C.4(ii) er where a refure11ee tu arbitration is made as
a.feret,a-ttl- a-HEI if the Arbitrator dec1Ele aga111st the 1101,ee sf
aete1111inat i0n, then:
20.C.6(i) the Cen1raet0r shall, with sue diligence. reinst~te
ef--tlliike ge0d such less er damage and )'IFOEeed le
carry eut a11d eem)'llete the works;
Annexure E 423
20.C.6(i1) the ,\rch11eet may 1,Ale instructions requ1r111g the
~-en+rn<.:tur 10 n:!lllfl\ .- ans Elispose of un)4-delwt-r,
aoo
20.C.6(iii) t-he--rei+l!s-1ateme111 and moking geed ef such loss or
damage mid the n::•mo, ul ond Elispo:,al of-ee0~
shall be dee111ee lo he a Variation requires by the
Architeet.
21.0 Date Of C ommencement, Dates Of C emmeneemenl G i, en
Fer Seeti1111s,-Postponement And Date f er Completion Date
~ 21.J On the Date of Commencement. sliHetl in the App~
Commencemen possession or the sSitc shall be given to the Contractor who shall
t and commence the execution of thenwpun begin the Works, and
C ompletion regularly and diligently proceed with 1+1e---1nttne---and complete the
Date same on or before the E:la½t'----fur-Completion Date. In the t:Vt!nt
there is a delay by the Employer in giving possession of the Site
to the Contractor, the Architect shall grant an extension of time
under Clause 23.8(f). Provided always that the delay in giving
possession of the Site docs not exceed the Period or Delay stated
in the Appendix, the Contractor shall not be entitled to determine
his own employment under the Contract.statee--i-R--+hp~1dto\
suhjecl 10 e11y e~,tensi011 sf tin~ in aucerda11ce 1, uh Clause 23.0
andleHttH+ause 32. 1(ii,). 1+--t-ttKWt--Date-ef..Cenm1e11t::ement---+s
states in the Appendi., er 1f llw da1e i11 the Ap11enaix 0ee0mes
i-twe1idtt1ed Air UH)' reasen v, hieh is net the resp011t,tlm-tty---o.f---tht.>
Conlrncter. then the E:late of Cemmeneemenl shall be such other
date a, 1m,tructea hy the Architect and the Date of Cu11~ien
shall be apprn)'l rio1ely mea,fiee or re calculates.
~ 21.2 Prev1ded always thatWhcre there are different Dates of
Sectional Commencement may be gi•, en for sections or fer pans of the
Commenccmen Works--antl----at-iy----elher res1ne1ions upon cemmeneernem en the
t D atesGwefl site, these shall be stated in the Appendix. lo these Cond itions or
Ht!'--Se£-tions in tl1e Centraet 90€tlfllt.'ffi!r
** I Clause 20A applies 10 new buikli11gs ifC011trne10r is required te in;,ttre,-
**2 Clauses 20.B. I te 20.Q.5 apply 10 new 0u ile1ngs 1fEmpl0yer is relju irea le 111sure.
**3 Clattses 20.C. I ltt 20.C.6 a)'lply 10 alteratiens er elilensiens to existing buileings: therefore
strike eul Clauses A. B or C as ap)'lr~
Strike out Clause 20.A. 20.B or 20.C as appropriate
**
 A11nex11re E 424
0-ifkr-etH 21.3 Where there are different 1,C ompletion d Dates for SH€fl-sections
Sectional l ~of the Works are-stated and 1de111ified in tht' Appendi!Hlf
Completion dscwhere in the Contract Documents, a11d different alltl separatt:
Dates--fff Liquidated ,md Aseenainetl IRl+flilgt:S ,ire pro•,•ided---f~
St:'Eilen nr pait sf the \1/erks. the prev1smns nf this the Architect
-ldetttil=ietl
Sff-mttllHH' shall issue a Certificate of Sectional Completion when the
¥fl.Fts--M-\.~ sections of the Works are Practically Completed. The provisions
in the Contract in regard to 1l1e Ct:rti lieate of Practical
Completion and the Defects Liability Period under Clause 15.0,
leextension of + time under Clause 23 .0 , Liquidated aoo
~1tt<!d Damages under C lause 22.0 and the Defeeb
hiability Period release of Retention Fund under Clause 30.6-flmt
not lnsurann· of the Works Hgai11st Hfe,e\€,-1.rntler Clause 20.0
and I inal Certificate- under Clnt1se 30.0 hereot) shall~
ahsenee efany express pro·,·isi011 ta the ee1Hrary elsewhere in the
t ; : t m ~ s apply with the-necessary changes m---peinh
~ 1 1 -as if each such section 0f---j¾lfl-was the subject of a
separate and distinct contract. between the E11lf)k:tyef--affe-Hle
~'-lef,
Postponement 21.4 The Architect may issue an A l111s1rue1ions in regard to the
or suspension of postponement or suspension of all or any part of the w Works to
the Works be executed under ll~e 13rovisi0m. of the-i,; Contract for a
continuous period not exceeding the Period of De lay stated in the
Appendix. If the insurance is covered by the Contractor under
Clauses 19.0 and 20.A, the Contractor shall ensure full insurance
coverage for the whole period of postponement or suspension or
if the insurance is covered by the Employer under Clause 20. 8 or
20.C, the Employer shall ensure similar insurance coverage.
22.0 Damages Fo,· Non-Completion
Liquidated m1d 22.1 If the Contractor fails to complete the Works by the f)ate...fef
A-seeFtttiflM Completion Date, or 'ntthin any e•,tended lime fo,ed--tttl6ff
Damages and f'lau.,e 1 3.0 or sub elattse 32.l(+i-i-) and the A.rchitect~s-i-n
Certificate of v,Ttling that Ill his opinion is of the opinion that the same ought
Non- reasonably so to have been completed, the Architect shall issue a
Com I tion Certificate Qf Non-ComJJ.letion. then the. Upon the issuance of
the Certificate of Non-Completion, the Contractor shall pay or
allow to the Employer a sum calculated at the rate stated in the
Appendix as Liquidated an,l Aseertttitlt!d-Damages ~ } for the
period from the ~ Completion Date to the date of Practical
Completion. or any e·aended elate wi1crc 111313lie110le to the date of
Prm:11eal Completion. The Employer may rccoverdeettet such
sum as a debt or may deduct such sum from any monies due or to
become due to the Contractor under thei5 Contract or the
Employer may recover such sum from the Perfomiance Bond.
The Employer shall inform the Contractor in writing of such
deduction or such debt due from the Contractor. The imposition
of Liquidated Damages by the Employer shall not be taken into
account by the Architect in the issuance of payment certi ficates
and Final Certificate, and is not subject to the set-off procedures
under Clause 30.4 and adjudication .
Annexure E 425
-bA-DAgreed 22.2 The Liquidated 111ltl-AS€t'fltttllea-Damages stated in the Appendix
Liquidated is to be deemed to ee as a genuine pre-estimate of the !1€flla-l-loss
and/or damage w hich the Employer will suffer in the event that
Damages
the Contractor is in breach of the-Clauses 21.0 and 22.0hefee.f.
A amount
The parties agree that Centractor by entering into thei5 Contract,
Deemed A.-s
the Contractor shat I agrees to pay to the Employer the said
~
amount.ts-) if the same becomes due without the need ttlfor the
Employer to prove his !1€¼Ha-lloss and/or damage unless the
contrary is proven by the Contractor.--erloss-c
Certificate of 22 .3 In the event the Architect issues a Certificate of Extension of
T ime Linder Clauses 23.4, 23.9 and 23 . 10 which has the effect of
Non-
fix ing a Completion Date which is later than the date stated in a
Completion
Certificate of Non-Completion previously issued, such certificate
revoked by
shall have the effect of revoking the Certificate of Non-
s ubsequent
Completion earlier issued. The Employer shall then revise the
Certificate of
amount of Liquidated Damages he is entitled to retain. ln the
Extension of
event the amount of Liquidated Damages retained exceeds the
T ime
amount the Employer is entitled to retain, he shall repay the
surplus amount to the Contractor within the Period of Honouring
Certificates from the date of the latest Certificate of Extension of
Time. If the Works is not completed by the Completion Date
staled in such Certificate of Extension of T ime, the Architect
shall issue a further Certificate of Non-Completion .
E:xtension Of T ime
23.0
If u11tl '" hen il become~ reaso11abl) upparem that Ike progress of
Submission of 23.1
the Worl,s is being or likely 10 be delayed be) ond the Dt1te for
notice and
C'Bm13letinn tlie Co111ra1;tor shall for1l1with of the eeet1rreAee -ilf
particulars for
:,ueh e,,enl netify the Architeet in 'Nriting i<lenii l_ying the rele\allt
extension of
timc Notil':,'ing eveHls causi11g 1he delay. g1v111g pnrt1et1lars of the e·,peeted effocl
and an esti1rn11e or the e1,tensif1H of time required. The neH£e
~ lfS
Causing Deh1y shall eontain suffictellt infonm!l10A and reasen why delay to
eompletioll will resul l.l f the Contractor is of the opinion that the
completion of the Works is or wi ll be delayed beyond the
Completion Date by any of the Relevant Events stated in Clause
23.8, he may apply for an extension of time provided always that:
23.1 (a) the Contractor shall give written notice to the
Architect his intention to claim for such extension
of time together with an initial estimate of the
extension of time he may require supported wi th
a ll particulars of the cause of delay. Such notice
must be given w ithin twenty eight (28) Days from
the date of the A l, CAI or the co111111encc111cnt of
the Relevant Event, whichever is earlier. The
giving of such wrillcn notice shall be a condition
precedent to an entitlement of extension of time;
and
 A1111e.rnre E 426 Annexure E 427

23. l(b) within twenty eight (28) Days of the end of the
cause of delay, the Contractor shall send to the
Archi tect his final claim for extension of time
duly supported with all pa11iculars to enable the
Architect to assess any extension of time to be
granted. If the Contractor fails to submit such
particulars within the stated time (or with in such
longer period as may be agreed in wri ting by the
Arch itect), it shall be deemed that the Contractor
has assessed that such Relevant Event will not
delay the completion of the Works beyond the
Comp letion Date.
O the r 23.5 In assessing the extension of time, the Architect may take into
co nsideration account the following:
fo r extensio n of
time 23.5(a) the effect or extent or any work omitted under the
Contract, provided always that the Architect shall
not fix a Completion Date earlier than the
Completion Date stated in the Appendix; and
23.5(b) any other Relevant Events which in the
Architect's opinion will have an effect on the
Contractor's entitlement to an extension of time.

Delay by 23.2 Where the particulars of the written notice givt:n under Clause Contracto r to 23.64 The Contractor shall constantly use his best endeavours to
Nominated 23.1 include references to Nominated Sub-Contractors, the Pp revent prevent or reduce delay in the progress of the Works, ~
Suh-Co ntracto r Contractor shall forthw ith send a copy of such written notice and D delay Cffi!SeG;-and to Jo all that may reasonably be required to the
particulars to the Nominated Sub-Contractor concerned. satisfaction of the Architect to prevent and reduce delay or
further delay in the completion of the Works beyond the ~
Ins ufficient 23.3 If the Architect is of the opinion that the particulars submitted by Completion Date .
information the Contractor arc insufticient to enable him to decide on the
application for extension of time, the Architt:ct shall within l,imitoti1;1n in ~ The Arckileel shall R OI lrnder Claw,e 23.3 lilt a Dale for
twenty eight (28) Days from receipt of the Contractor' s ~ ,., Com13letion earlier than the Date fur Comp letion slated m-t-he
particulars under Clause 23.1 (b), inform him of any deficiency in C1:1m1iletian -A-p~
his submission and may require the Contractor to provide such Dute
funhcr particulars within a further twenty eight (28) Days or
within such period of time as may he stated by the Architect in N otification to 23.7€, The Architect shal l notify every Nominated Sub-Contractor in
writing. Nominated writing or each decision of the Architect when fix ing a new Date
Sub- fur-later Completion Date.
A Fair on!I 23.41 When the Contractor has submitted sufficient pal1iculars for the Contractors
R~esoneble Architect's consideration, Uprni receipl of 1he Co1llrneLor's notic:t!
Certificate of 1het !her~ are e\'eAls callSiAg dduy and tlie eomplelion~ Relevant 23.8+ The rele,·aHt e,•eHts cat1sing delay where the CoAtractor may-be
Extension of Works ,s likely 10 be clelayed beyoAd the Date for Com1iletion Events tlHlSfflg gi•.'eR a lair and reaso1iable eNlensinn of time-itt,e;-The following
Time ttten the Architect shall, subject to Clauses 23.5, 23.6 and Dela)' for are the Relevant Events referred to in Clause 23.0:
23.8,23.3, 23. 'I u11cl 23.7 hereof consider the Contractor's Wh-ieh
submission releYant C\"enls cat1sing clday and by wrillen E,~tension of 23.8'.7-(ai) fForce mMajeure;,
oot-i€eand shall either reject the Contractor's application or issue Time Me)' be
a Certificate of Extension of Time with in six (6) Weeks from the GweH 23.8'.7-(bi-i) exceptionally inclement weather;,
receipt of sufficit:nt particulars. The Architect may issue the
written notice of rejection or the Ccrti fica te of Extension or Time 23.8'.7-(ciii) loss and/or damage occasioned by one or more of
before or af'k r ~ mplcuu1i Dak.~ t t h i ,·actc, gi.c cl :~,; . the contingencies referred to in Clauses 20.A,
aAd reasonable eKtension of 11me by rixiAg such later dale as the 20.R+ or 20.C~ as the case may be, provided
De1e for CompletioA.The Co,mactor shull nut he entitled to any always that the same is not clue to any negligence,
ec'tlension of time ,,,, here instrnctions or acts of the Employer omission, default and/or breach of contract by the
and 'or the 1\rd1itect are necessitated by or i11hmde!I 10 ctire aAy Contractor and/or Nominated Sub-Contractors:,
cldi.wlt of or breach tif contract b)' the Contractor.
23.8'.7-(di-v) civil commotion, stTi ke or lockout affecting any of
Hffi{' Prm ided always lh<! Cunlrac1or submits to the Arcliitect liis the trades employed upon the Works or any of the
Limitelion As a13plication for e'<lension of time com13lete "ilh particulars and trades engaged in the preparation, manufacture or
t&-Gt-viflg esti1t1ates iH a reasonable time befere 1he Date ofCompletirn+;-Hie transp01tation of any gootls or materials and
E:!itension of ArehiteeL liaving regard to the sllfficiency of the partin1larn and goods required for the Works;,
'.J'.iflH! esumates of the aforesaid notiee sliall asce11ain and lix such 11ew
Date for Com13letioH wi!lii1rn reasonab le Lime from the reeeipt of complianee of Arehi1ect's instrnc11011s ~m!ler
the said noueeThe ArchileeL may fo, a He'N Date for Complet-iett Cl1c11c1ses 1.2. 11.2 . 21.1 or 21 .4
re1rospectively uptin foilure of 1he Contractor to submit bis
~ieatio11 for e•aensioA of time eoniplete with particu lars a,id
estimates in accordance wi1h the aforementioned period.
 ' ---- - - - - - -

A1111ex11re E 428 Annexure E 429

23 $ 7(e-v-i) the Contractor not having received in due time the

necessary Al iMslnc1cli011; (including those for or in 23 .S(I)(ii) shows that the works, materials and
regard to the expenditure of P.C. Sums a □d goods were not in accordance with
Provisional Sums, further drawings, detai Is, ef the Contract; or
levels and any other infom1ation)--frem-tlle
Architect for which he had specifically applied in 23.S(l)(iii) is required by the Architect in
writing to the Architect. The Contractor's consequence of some prior
application must be submitted lo the Architect in negligence, omission, default and/or
sufficient time before the commencement of breach of contract by the Contractor;
construction of the affected works, to enable the
Architect to issue the necessary Al within a period 23.81(111* ) any act of prevention or breach of contract by the
which would not materially affect the progress of Employer; nol m,mtionee 111 this Clause 23 .7;.
the affected works, having regard lo the
Completion Date. pProvided a lways that the 23.S(n) war damage under Clause 32.1;
appl icarion was 1m1Ele on a da1e ha, 111g regard to
1+te-t6ffij3lelion was neither unreasonably dis1ant 23 .8(0) compliance wi th Al issued in connection with the
AOF uAreasonabl) eluse to the Elate oA •,•, hich ii 'wit', discovery of antiquities under Clause 33. 1;
Aeeessary for hiin IA r e e e i ~ Al was not
requ ired as a result of any negligence, omission, 23 .S(p) compliance with any changes to any law,
default and/or breach of contract by the Contractor regulations, by-law or terms and conditions of any
and/or Nominated Sub-Contractors;c Appropriate Authority and Service Provider;

23 .8(f) delay by the Employer in giving possession of the
Site or any section of the Site in accordance with
Clauses 21.1 and 21 .2;
23.8(g) compliance with Al issued by the Arch itect under
C lauses I .4, 11 .2 and 21.4;
23.81 (h¥+i) delays on the pa1t of Nominated Sub-Contractors
or NomiAuled Suppliers for the 50ffie-reasons as
set out in lhe still clauses 23 .7(1) lo 2J .7(v1) and
Sl-18 elat1se:, 23.7(, iii) LO 23 .7(xii)Clauses 2 I.4(a)
to 2 1.4(w) of the PAM Sub-Contract 2006;
23.8(i) re-nomination of Nominated Sub-Contractors as
set out in Clause 27. 1I;
23.81 (jtti-i) delay on the patt of llffi.slscraftsrnen, tradesmen or
ot11er, conlracT"on, .:mployed or engaged by lh.:
Employer in executing work not forming part of
the1~ Contract or the failure to execute such work;,
23.81 (ke.) delay or failure in the supply of materials and
goods which the Employer had agreed to supply
for the Works;,
23.81 (b,) the opening up for inspection of any work covered
up, ~ testing ef'.-any ~ materials, OF-goods
or executed work in accordance with Clause 6.3,
( inel11ding making i:;00d in eonsequenee of sueh
23.8(q) delay caused by any Appropriate A uthority and
Service Provider in carrying out, or fa ilure to
carry out their work which affects the Contractor's
work progress, provided a lways that such delay is
not due to any negligence, omission, default
and/or breach of contract by the Contractor and/or
Nominated Sub-Contractors;
23 .S(r) appointment of a replacement Person under
Articles 3, 4, 5 and 6;
23.8(s) compliance with Al issued in connection with
disputes with neighbouring property owners
provided a lways that such dispute is not caused by
negligence, omission, default and/or breach of
contract by the Contractor and/or Nominated Sub-
contractors;
23.8(t) delay as a result of the execution of work for
which a Provisional Quantity is included in the
Contract Bills which in the opinion of the
Architect is not a reasonably accurate forecast of
the quantity of work required;
23.8(u) fai lure of the Employer to give in due lime entry
to or exit from the Site or any part through or over
any land, by way of passage adjoining or
connected lo the Site and in possession or control
of the Employer;

I
011e11ing up or histing) unless the inspection or
test: sl1o·Nee lhal 1he w0rks. malerials or gaods 23.8(v) suspension by the Contractor of his obligations
~ - witl1 lhe Ctmlrnel. under C lauses 30.7 and 30.8;

23.8(1)(i) is provided for in the Contract Bills;

 Annexure E 430
23.8(w) suspension of the whole or pan of the Works by
order of an Appropriate Authority provided the
same is not due to any negligence. omission,
default and/or breach of contract by the Contractor
and/or Nominated Sub-Contractors; and
23.8-7(x.'<+i) any other ground for extension of time expressly
ffit:!tltttffie&-stated in the Contract.
Extension of 23.9 Where a Relevant Event occurs after the issuance of the
time aftu the Certificate of Non-Completion. the Architect shall grant an
issuance of extension of time. The extension of time granted shall be added
Certificate of lo the Completion Date of the Works or any section of the
Non- Works.
Completion
Architect's 23.10 The Architect may (but not obliged to) within twelve ( 12) Weeks
review of after the date of Practical Completion review and fix a
extension of Completion Date later than that previously fixed, if in his opinion
time after the fixing of such later Completion Date is fair and reasonable
Practical having regard lo any of the Relevant Events, whether upon
Completion reviewing a previous decision or otherwise and whether or not a
Relevant Event has been specifically notified by the Contractor
under Clause 23.1. No such final review of extension of time
shall result in a decrease in any extension of time already granted
by the Architect. In the event the llxing of such later Completion
Date affects the amoun t of Liqui dated Damages the E111ploycr is
entitled to retain, he shall repay any surplus amount to the
Contractor within the Period of Honouring Certificates.
24.0 Loss And/Or Expense Caused By Dislurbonee Of Matters
Affecting The Regular Progress Of The Works
AtJ11lieotio11 to 24.1 If a11d when tl1e Cenlrneter netifies the Architect in wnting that
Aseerluin-Loss Where the regular progress of the Works or any section ~ of
and/or the Works it-has been or is likely to be materially affected by any
Eexpense of the matters expressly referred to in Clause 24.3, and Htat-hethe
caused by Contractor hasd incurred or is likely to incur t!tree+--loss and/or
matters expense ffif--Which he wmild could not be rei111bursed by a
affecting the payment macTetincler any other provision e-t\n thei;, Contract.
regular then the Architect er the Qua11tit)' £urYe)·er as iAslructed by the
progress of the Arehiteet shall as m1d when IH!cessary from time w time ascertain
Works the m11ount of the Contractor may make a clai111 for such loss
and/or expense 1•, h1ch had 0ee11 i11eH1-red B)' lht! Colllraeter.
provided always that :
Annexure E 431
24.1 (ai) the Contractor shall give written notice to the
Architect of his intention to claim for such loss
and/or expense together with an initial esti111atc of
his claim duly supported with all necessary
calculations. Such notice must be given within
twenty eight (28) Days from the date of the Al,
C/\J or the start of the occuJTence of the matters
referred to in Clause 24.3. whichever is the earlier.
The giving of such written notice shall be a
condition precedent to any entitlement to loss
and/or expense that the Contractor may have
under the Contract and/or Com111on Law; andIBe
Contractor"s Bflfllica11on is nrndt! Ill'•'• nti11g as soon
as ii laeeemes or should be reasenably a1111arent te
lttm--thut tlw regular progrt!ss or the Works or any
11art of it had bcc11 or is likely to 13c affeeted; an<l
24.1 (bii) within twenty eight (28) Days after the matters
referred to in Clause 24.3 have ended. the
Contractor shall send lo the Architect and
Quantity Surveyor, complete particulars of his
claim for loss and/or expense together with all
necessary calculations to substantiate his claims.
If the Contractor fails to submit the required
particulars within the stated time (or within such
longer period as may be agreed in writing by the
Architect), it shall be deemed that the Contractor
has waived his rights for loss and/or expense.IBe
Ctt!Hractor subm11s LOge1her with his applieation
releva111 ,n lonnation suss1an1ia1111g his claim so as
10 enable the Arehiteet or tl1e Quanltty Surveyor
as 1ns1n1eted sy tl1e i\n:hiteet to lorm an 011inion;
8Afi
~ the C'oHtrncter u11011 request Sllbmit lo the
Arehi1ee1 or the Qui!fltity Surveyor as i11structed
sy the Architeet any other ad<lit-i~eta+k-4
ffiSS-Bfldl or e:,11e11:,e as are reasonably 11ccessary
fur aseerrn111me111
Access to 24.2 The Contractor shall keep contemporaneous records o f al I his
Contractor's claims for loss and/or expense and shall submit all paiiiculars to
books and the Architect. The Architect and Quantity Surveyor shall have
documents access to all books. documents, reports, papers or records in the
possession. custody or control of the Contractor that are material
to the claim and the Contractor shall provide free of charge. a
copy each to the Architect and Quantity Surveyor when
requested. All such documents shall remain available in
accordance with this clause until all claims have been resolved.
The Contractor shall use his best endeavour to ensure that all
such documents in the possession. custody or control o f sub-
con tractors and/or suppliers that arc materia l to the claim are
similarly available.
 r ---- -- - ~

A1111exure E 433
Annex11re E 432

24.3;!(ftt) the opening up for inspection of any work covered

Matters~ 24.3± The Co1mac1or 1s not etH-itled 10 loss aAdlor e"ipeAse excep1 in
up, er-testing ef-any Wfilk~ materials andfH' goods
st-ltflffS aerordanct: 11•11h the express proYisions of 1l1e CuFIH'Af't--:---T he
or executed work in accordance with Clause 6 .3,
M materially follo wing are the matters circumstances materially affecting ti~
~ tHa-k+ng gosd 111 rnnsequen~uc-h
A-affecting the regular progress oftlie Works referred to in Clause 24.1:
openi11g up Llfte<;t-ing,-unless the inspection or test
regular showed that the works, mate rials ,wand goods
.Pprogress of 24.3;!( a+) the Contractor not having received in due time the
were not in accordance with tltisthe Contract, or
the Works necessary A I (including those for or in regard to
was in the opinion of the Architect required in
the expenditure of P.C. Sums and Provisional
consequence of some prior negligence, omission,
Sums, further drawings, details, levels and any
default and/or breach of contract by the
other information) for which he had specifically
Contractor;
applied in writing to the Architect. The
Contractor's application must be submitted to the
24.3(g) any act of prevention or breach of contract by the
Architect in sullicient time before the
Employer;
commencement of construct ion of the affected
works, to enable the Architect to issue the
24.3:;!(hiti) delay as a result ofa compliance with Al issued in
necessary Al within a period which would not
connection with the discovery of antiquities under
materially affect the progress of the affected
Clause 33. 1;any dis,-rt>paney in tir di1ergence
works, having regard to the Completion Date.
hetween tht: Contract Drawings andlof----lhe
Provided always that the A I was not required as a
Con1rac1 Bills.
result o f any negl igence, o mission, default and/or
breach of contract by the Contractor and/or
24.3;:!(iv ) appointment of a replacement Person under
Nominated Sub-Contractors;!l1e Co1Hrae1or not
Articles 3, 4, 5 and 6;t:le!ay-en tlw part of art1Sb.
h11Yi11g received 111 due time the nel.~
tradesmen. or others engaged hy the E011~
instruc1io11s. dniwmgs. details or levels from-the
Arei1i1ee1 for which he lmd specifically applied iii
nernt111g work not form1ttg-1Jorl or1his Con1ract.

Wftti.ttg-provided thul s,1cl1 apflilcation was made

24.3;:!(jv ) compl iance with a written instruction issued by
un a dale which having regard lo the Dale for
the Architect in connection with disputes with
~le1ie11 slated in 1l1e ,\ppendi, or aR)
neighbouring property owners provided a lways
e•,lension of time llllder Clause 23.Cl or sue cla11se
that the same is not caused by neg! igence,
32. l(iii) was neither unreasonably distant from omission, default and/or breach of contract by the
11or unreasonasly close to the date on •which it wos
Contractor and/or Nominated Sub-Contractors;~
necessary Rir hi111 10 receive them.
Areh11ee1's 1ns1ructmns 1ss-ued in regmd--tfr--t-he
P17!Apunemen1 of Ul1) work to be' e\ec111ed undef
24.3(b) delay by the Employer in giving possession of the
the p ro1· isions-i~Hh·Hi··~lHlftt*-
Site or any section of the Si te in accordance with
C lauses 21 . 1 and 2 1.2;
24.3;:!(k\-i) by reason of the execution of work for w hich a
Provisional Quantity is included in the Contract
24.3(c) compliance w ith a written instruction issued by
Bills which in the opinion of the Architect is not a
the--Arwitea in regard to the postponcmenLor
reasonably accurate forecast of the q uantity of
s uspension of all or any part of the Works to be
work required;delay-ur l'ai lure B)' 1l1e Employer te
executed under Clause 21.4;
qupply or pm\ 1de nmtern1I·, and ;oeds which 1he
E+npki)er had agreed 10 provide or supply lor--¼l1e
24.3(d) delay on the part of craftsmen , tradesmen or other
Wlll'k,
contractors employed or engaged by the Employer
in executing work not forming part of the Contract
24.32'(1vtt) failure of the Employer to g ive in due time entry
or the fa ilure to execute such work;
to or exit from the sSite ltf-the-Werks-or any part
thereef--through or over any land, by way of
24.3(e) delay or failure in the s upply of materials and
passage adjoining or connected lo the sS ite and in
goods which the Employer had agreed to supply
the possession atttlor control of the Employer;-tfl
for the Works;
f\effiffu'\Hee-v.ith !he Contra€\ DrnwiRgs and 'or the
~~

24.3;:!( m½it suspension by the Contractor of his obligations

) under Clauses 30.7 and 30.8; andan) ttCI of
pre~·enurn1 or breach ef~o111rac1 by the ~1~
 A1111e.r11re E 434
24.3(n) suspension of the whole or part of the Works by
order of an Appropriate Authority provided
always that the same is due to negligence or
omission 0 11 the part of the Employer. Architect or
Consultant.
A-sefffll•tttflettf ±4:3 +H1Ad when the ( 011trnctor makes ,.,, ritten appl1cotion withiA a
01" bass e nd/ff reasenaltle-+ime of it beeoming-aflf)Hrenl tl1aL the prCY_;;fCSt, ol" the
~e Wttrk or any pan of it has seen affoeced as aforesaia, then 1he
A-ffi!-ikcl or 1he Quantity Sun e)or a, 1n,truc1ea by tht! Architect
t,hall ascertmn 1he amo~mt ef such loss antl 1or e>q1en;,~
failure by 1he Contractor to enmply with the requirements 0f
Glause 2,1.0 slmll enlille tht' ,<\rehi1ect or the Quanlity Suneyor
as---in,trueted lly the Arehiteet to a ,certain the qua1Hu111 of suelt
kwriulalor e-.pe11se on 1he llasi:, of inlor+ntltion a, ailable-t~
Loss and/or 24.4 Subject to the Contractor complying with Clause 24. 1, the
expe nse to be Architect or Quantity Surveyor shall ascertain the amount of such
incluclecl in loss and/or expense. Any amount so ascertained from time to
ce rti ficateA-mau time for such loss and/or expense shall be added to the Contract
~~med Sum, and if an Interim Certificate is issued after the date of
A-dtlee--ttl ascertainment, ·i!HJ' such amount shall be added 10 1he amount
Contrnet S- wlueh woulcJ otherwise Ile slated as dueincluded in Stl€lt---the
Gcertificate.
25.0 Determination Of Contractor' s E mploy ment By E mployer
Defaults by 25.1 The Employer may determine the employment of the Contractor
Contractor the Centraet \\ ithouf--p1~l1aiet! to any other rights ,rntl remedteS
1, hieh he may pC1ssess if the Contractor ~ defaults in any
0110 or mere of the follow ing: instances:
25. l(a) if without reasonable cause, he fai ls to commence
the Works in accordance with the Contract:
25.l (bi)
if without reasonable cause, he wholly or
substantially suspends the can-ying out of the
Works before completion: thereof. Reasonable
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __e 1,
eaw1~1sifeccsS1li :JAl:l:lll::llDJlfe~an13::1~a1·tttimB1pl.iiiu~e i1h an iu~1ruc1ion
from the Architect or rnm11l10nce witl1 a airecliett
or 011 orcJer li·om a Slolul01')' or Governmental
eedy-,
25. l (cti) if he fai ls to proceed regularly and/or diligently
with the Works;,
25. l (dtti) if he persistently refuses or neglects to comply
with an Al ;a ,,. rilltm Hulice frum 1he Arel1itect
requmng him tC1 remow m 10 remedy aefecti,'e
worlc impr0per mttlt'ttab or goods and by -;uel1
refusal or Heglect 1he 11rogress of tl1e '>lmks is
ma1enally afTee1ed,
25. l (ei-\-) if he fails to comply with the provisions in Clause
17.0;, or
Anne.rnre E 435
25.l (f.v) ifhe has abandoned the beHtfa€tWorks.
'J-"-l.L.,~ I
~ if has persisteHtly reftisea or fa iled to eoniply with
a ,,, rillen instroctio11 fr01n the Areh11ect.
Procedure fo r 25.2 Upon the occurrence of any default under Clause 25.1, and if the
Dd etermination Employer decides to determine the Contractor's employment, the
of Employ ment Employer +lteor Architect on his behalf shall moy-!11en- give to
of C entreeter the Contractor a written notice delivered by hand or by registered
post or recorded aeli•,ery specifying the default. subject lir that
such notice is net given unrtlasonably or ,·exatioosly. If the
Contractor shall continues with such default for fourteen ( 14)
a Days aAef-from the receipt of such written notice, or at any time
thereafter repeal sueh Elefault (·Nhether prt!viou:,ly repeill~'ti-ef
net+,--then the Employer may, within ten (10) dDays from the
expi1y of the said fou rteen ( 14) Days, by a ti.111hcr written notice
after such continoanee or repe1i1ion hy leller sent delivered by
hand or by registered post, er---reeeJ'tieHleli..-t?ry forthwith
determine the employment of the Contractor under thei-s
Contract. Provided always that such notice shall not be given
unreasonably or vexatiously.
Contractor' s 25.3 ln the event of the Contractor becoming insolvcnt~ t or
insolvency making a composition or an-angement with his creditors. or have
~lffig a winding up order made, or (except for purposes of
&-nl.r11t-1t, Ele reconstruction or amalgamation) a resolution for volunta1y
winding up. jn¼SSffi-Or having a liquidator or receiver or manager
of his business or undertaking duly appointed, or having
possession taken by or on behalf of the holders of any debentures
secured by a floating charge, or of any property comp1ised in or
subject to the floating charge, the employment of the Contractor
uncJer this Cotllracl shall be forthwith automatically detem1ined.
but the said employment may he reinsla1ed and coHtinued with
the agreement of the Employer and the CoHln:etor, liis trnslee in
bankrnpte~·- ~ifjuiaator. rtlcei~·er er manager as the ease may be.
Rights and 25.4 In the event that the employment of the Contractor is determined
Dcluties of under Clauses 25.1 , 25.2 or 25.3, ,md so long as it has not heen
Employer and rein,tated and eon1im1etl the following shall be the respective
Contractor-&11 rights and duties of the Employer and I-he-Contractor:
Oetenfl-ifl-lNtttlt
 , ~ ---- --------- --
A1111ex11re E 436 Annexure E 437

ol" t;111fll0y111ent 2S.4(a+) ➔ the Contractor shall vacate the sS itc and return 25.4(cii-i) + the Contractor when instructedref}Hifed in
ei' Cantrnet&F s+ie-possession of the Site to the Employer who writing by the Architect te-d ~ l net 13efore)
may employ and pay other 13 Persons to carry oul shall remove from the Works any temporary
and complete the Works and to make good any buildings, construction plants , tools, equipment,
defects. -1-~ieySuch Person may enter upon materials ffi'and goods belonging to or hired by
the Works and use all te111porary buildings, him. If w ithin a reasonable lime atier any such
construction plant, tools, etftttl3~1llatcrials and ret1t1irements instruction has been issuedmade to
goods intended for, delivered to and placed on or the Contractor, and he has not complied therewith,
adjacent to the Site (except those construction then the Employer may (-bul-without liability'3eitig
plant that is on hire by the Contractor) that belong respens-113\e---fur-eny loss or da1na~) remove and
lo tl1e Co111rae1or mlenEleEI tor and deli, ered 10 anEI sell any such property belonging to the Contractor
13laced OR or atljaccnl t0 the Works. and 111ay except those that are on hire and hold the proceeds
purchase all 111aterials and goods necessary for the less all costs incun-cd to the credit of the
carrying out and the completion of the Works. Contractor; and,
The Contractor if so required by the Employer or
by the Architect on behalf of the E111ployer shall 2S.4(di¥) =Fthc Contractor shall allow or pay to the
w ithin twenty one (2 1) Days of the date of Employer all cost incurred to complete the Works
determination, assign to the Employer the benefit H1-thc manner herci1rnfler a1ipeari11g the amount
of any agreement for the continuation of the hire 1ttincluding all loss and/or expense suffered by
of construction plant and equipment already on causeEI le the Employer.-by-- tl1e detennmallon.
the Site; Until after the completion of the w Works under
Stlb-€C lause 2S.4(ai), the Employer shall not be
2S.4(b+i) =Fthe Contractor shaH, if so required by the bound by any provision in thc+s eContract to make
E111ployer or Architect, shall within futmeffi-fl-4} any further payment to the Contractor, including
twenty one (21) d Days of the date of payments which have been certified but not yet
determination, assign to the Employer without paid when the employment of the Contractor was
payment the benefit of any agreement for the determined. Upon completion of the Works, an
supply of materials, 01~goods and/or for the account taking into consideration the value or
execution of any work for the purposes of thetS works carried o ut by the Contractor and all cost
Contract to the extent that the same is incurred by the Employer to complete the Works
assignable;lmt en the terms that a :,upplier er stib including loss and/or expense suffered by tbe
W!Hftlclor :,lrnll be enlllletl to 1m1k-- a11y Employer shall be incorporated in a final account
reasenable ebjectien le any forther assignment prepared in accordance with Clause 25 .6.~ 1 1
thereof hy the l.m1il0yer. In any ease tl1e such eompletieH and veritieatien ef the accounts
Empleyer may pay any suppher or :,uh eentractor withm a reasonahle tune the Archilecl shall certify
fur any materials or geod, Jeliveretl or werb tche amount of c.\ pense properly anti actually
exeeuleJ Air the jlt+rpuses or this Cumracl inrnrred 13y !he Employer aml the ammtt~
(whether hefore or a lier 1he da1e of delerminattttn1 loss eauseEI 10 tb.- I .mployer ily the Elelen1111'h.1tien
ilH;e-flir as lhl:' price thereef ha,, not alreatly heen and. if stwh am0ut1b .itlded 10 the menie, paid to
l-R I h~r ii-it? Coe, 1roetor The EA~i=-ln~wr'r;;, rirJu,1.- the Cootraetor before the dale of determination
llntler tliis 1iaragrniih are 111 atldit1011 to liis righ1s le exceed tl1e total amotmt which "eultl ha~e heen
fla)' NominaleEI Suh Contracters m, prm·idl:'8--tfl payable en cumplet10n III accordance ...,jth th+;,
Clause 27 .6<1 and payme1m made tinder this Cuetniet. lhe difference shall be a deht 1rnyal31e to
f)aragraph may be deducted frem a11) sum tl-tte--ef the Employer 13y the Contractor: anEI 1f the said
tu become due to the Contractor. 8ffiou11ls v, hen added ta the said monies be less
than lhe said lolal amoui1l. lhe difference shall be
a-debt payable hy the Emplo)er to the Contracter.
 Annexure E 439
Annexure E 438

final account or decision not to amend the final

Records of 25.5 The Architect or Quantity Surveyor shall within twenty eight
account. Failure to refer the dispute to arbitration
Woi·ks (28) Days of the determination of the Contractor' s employment.
within the stipulated time, the Jina! account or
give a written not ice to the Contractor of the date of inspection
amended final account shall deem to be
on Site to jointly record the extent of the Works executed and the
conclusive and agreed by the parties.
materials and goods delivered to the Site. The Contractor shall
provide all necessary assistance to the Architect and Quantity
25.6(c) Any dispute on Liquidated Damages. set-off and
Surveyor to perform their task. Upon completion or the record by
interest which the Employer is entitled to make
the Architect or Quantity Surveyor, a copy shall be sent to the
under the Contract shall be referred to arbitration.
Contractor and such records shall form the basis for the
evaluation of the value of the works executed and materials and
Remed y limited 25.7 Upon receipt of a written notice by the Contractor from the
goods delivered to the Site by the Contractor up to the date of
to d amages only Employer to detennine the employment of the Contractor, the
determination.
Contractor shall yield possession of the Site within fourteen ( 14)
Days from the receipt of the said written notice and shall remove
F inal Account 25.6 The Architect or Quantity Surveyor shall within six (6) Months
his personnel and labour force (but not construction plant. tools
upon on completion of the Works, submit to the Employer and
and equipment unless so instructed by the Architect) from the
determination Contractor for their agreement, a final account for all cost
Site. Irrespective of the validity of the said written notice the
incurred to complete the Works includ ing the sums previously
Contractor' s remedy shall be limited to compensation for
certified to the Contractor before the date of determ ination,
damages only.
Liquidated Damages, set-off and all other loss and/or expense
suffered. The provisions of Clause 25 .0 are without prejudice to any other
Emp loyer's 25.8
righ ts and rights and/or remedies which the Employer may possess.
25.6(a) If nothing in the said final account is disputed by
the Employer or Contractor within three (3) remedies no t
Months from the date of receipt of the final prejudiced
account from the Architect or Quantity Surveyor.
26.0 Determination O f Own Em ployment By C ontractor
the final account shall be conclusive and deemed
agreed by the parties. If the amount in the final
Defaults by 26.1 The Contractor may determine his own employment 1-lle-teAlfflef
account exceeds the total amount which would
E mployer 1~ilhmn prejudice to any other righ1s and remedies wh1cl1 lie may
have been payable on completion in accordance
~ if the Employer defaults in any of the following:
with the Contract, the difference shall be a debt
payable to the Employer by the Contractor or
26.1 (ai) if the Employer fails or neglects to does not pay
where applicable. the Employer may recover such the Contractor the amount due on any ce1tificate
sum from the Performance Bond. lf the said
(less any Liquidated Damages and set-off which
amount is less limn the said total amount, the
the Employer is expressly entitled to make under
di ffcrcnce shall he a debt payable to the the: Contract) within the Period for Honouring
Contractor by the Employer. Certificates; named in the Appemli·, aAd coAtmues
sucli tlelauh for se,·en (7) tla)S after receipt by
25.6(b) If either party has any dispute on the Jina! regis1eretl post or r~corded delivery or a notice of
acca11at the_parcy disputing the .final account shall detc111,i11c1liu11 fraui the Contractcr stiti-ng that lf
by written notice to the other party (with copies to Jn¼Yffielll 1s not made---wtt-ffifl-tie, en (7) days fron~
the Arch itect and Quantity Surveyor) set out any reee1pt of neliee of deicnni,iatioH. determina11on
disagreement complete with particulars within
under tins claust! may be e·,ercised. Then-:----t-ht-
three (3) Months of the date of receipt of the final C0111rac10r m~y by letler sent by registered post or
account from the Architect or Quantity Surveyor. recorded deliver) lo the emplo) er or 1he
The Architect or Quantity Surveyor within three Arclutecl. fenhwith detennille hrs employment
(3) Months from the date of receipt of the grounds
umler !he Contrncl.
of dispute sh al I either amend or not amend the
final account. Any party disagreeing with the
26. l (bi-i) if the Employer improperl y or--frattdttleitHy
amended fina l account or decision not to amend
interferes with or inAuences. or obstructs the issue
the fina l account shal I refer the dispute to
of any certificate by the Architect; or !here is
arbitration under Clause 34.0 within three (3) ~ I l l eollusioA betv.·ee,i the Employer and
Months from the date of receipt of the amended
the Areh1tec1; or
 Annexure E 440
26.i(w i) if the Employer fails to nom inate a succeeding
Architect or Consultant in accordance with
Articles 3, 4, S and 6; or 1-ltt.•-f+npl~F-beeeme,;
bm1kn11u or mal,es a eempes1tio11 or a1T0 11gen1cnl
11 ith his creditors or ha·, a wim.li11g up order made
~cept for the purpm,es ef ree011stnH..~
ama lgama1i011) a resoluiion for , olu111a11· •,•. ins iog
~ d or a reee1•, er er mm1ager ef his busi11ess
of-tlndertaking is duly a111min1e';;i 0r possessien i~
tal,e11 hy nr on tiehn lf ef tl1e holders or any
de0t!11tures secured by a floating charge, or any
prepe11y e0mpnsed in or sH~el lo tl1e ll0ating
\.'+ltt~
26.1 (di-, ) if before the date of Practical Completion, the
carrying out of the whole or substantially the
who le of the uncompleted ef.the remaming Works
(other tha 11 the e.,en1tion or 11 erk re4tures under
Claw.e I 5.0) is suspended for a continuous period
of time exceeding that stated in the Period of
De lay ~ stated in the Appendix by reason of:
26.1 (d)(i)(- J\-n..411tec1·s inslruc+ioHSAJ issued by
~ the Arch itect under Clauses -1-,;h
+h-1 1.4, 21.1 or 21.4 unless the
instruction is issued to rectify any
negligence, omission, default and/or
breach of contract by the Contractor
or Nominated Sub-Contractors;
26. 1(d)(ii) the Contractor not having received
~ in due time the necessary Al
(including those for or in regard to
the expenditure of P.C. Sums and
Provisional Sums, HtSIHl€1ffitt5-:
further drawings, details, 9F--levels
and any other information) lmm-t-he
Architect for which be had
specifically applied in writing to the
Arcmfect. on u l11He v. liid1 The
Contractor's application must be
submitted to the Architect in
sufficient time before the
commencement of construction of
the affected works, to e nable the
Architect to issue the necessary A l
within a period which would not
materially affect the progress of the
affected works, having regard to the
Date l'or Completion Date. Provided
always that the Al was not required
as a result of any ncgl igence,
omission, default and/or breach of
Annexure E 441
contract by the Contractor and/or
Nominated Sub-Contractors;-stated
in the Appencli" or 10 any e?,1Cnsio11
of time foted under Clause 23 .Q er
sllb clause 32.l( ii i) was neither
ll-t-lfe!ffienably dista111 from 11or
unreasona l:i ly elose to the date on
which ii v, as neeessary fer him to
recei•,e 1he sa1nc;
26. l(d)(iii delay on the part of art-i-s!scraftsrnen,
)f€-:l tradesmen or others contractors
employed or engaged by the
Employer in executing work not
forming part of the i-5 Contract or the
failure to execute such work; or
26. I (d)(iv the opening up for inspection of any
) work covered up or to arrange for or
carry out anythe testing of any work,
materials efand goods in accordance
with Clause 6.3. (inehidmg making
geud iA eonsequenee ar ~uch
opeH-Hlg up er testing) unless the
inspection or test showed that the
work, materials ttfand goods were
not in accordance with thets
Contract,, or the inspection and/or
test was in the opinion of the
Architect required in consequence of
some prior negl igence, omission.
default and/or breach of contract by
the Contractor.
Procedure for 26.2 Upon the occurrence of any default under Clause 26.1, and if the
determination Contractor decides to determine his own employment then, the
Contractor shall give to the Employer a written notice delivered
by hand or by registered post specifying the default. If the
Employer sha ll continue with such default for fourteen (14) Days
from the receipt of ~uch written notice +then, the Contractor may
within ten (10) Days from the expiry of the said fourteen (14)
Days, by a further written notice delivered by hand or by
registered post or reeorded selivery to the Employer or 1\rehiteel
forthwith determine l-lfehis own employment of lhe Cu11trac1ur
under th+stbe Contract.~ pProvided always that such notice shall
not be given unreasonably or vexatiously.
I
 A1111e:wre E 442
E mployer's 26.3 In the event of the Employer becoming insolvent or making a
insolvency composition or arrangement with his creditors, or have a winding
up order made, or ( except for the purposes of reconstruction or
amalgamation) a resolution for voluntary winding up, or having a
liquidator or receiver or manager of his business or unde11aking
duly appointed, or having possession taken by or on behalf of the
holders of any debentures secured by a floating charge. or or any
property comprised in or subject to the floating charge, the
employment of the Contractor shall be forthwith automatically
determined.
Yjffin l,ueh deterrninatio11, then without prejt1d1ee to tlie--a~
Rights and 26.4~
d uties rights of either party er fO any liallility or the elasses mentioned
Liollililies U1rnn in Cla11se 18.0 whieh ma)' aeerue either bdo re the Conlffi~
any sull eontrnctors shall ha•,•e removed his or thei1~f!tfY
Delerminotien
byof buildings. plant. lOAls, eEJuipment, materials or good~ or by
reaso11 uf hi, Ar their so removing the same. In the event that the
C ontractor and
E mployer employment of the Comractor is dete1111ined under Clause 26.1
or 26.3. the following shall be the respective rights and
dutiesJ.tabi+it.ie5 of the Contractor and t-lle-Employer: shall be as
~
tbe Contractor shall within fourteen ( 14) Days or
26.42(at)
within such longer period as may be agreed in
writing by the Architect, all reasenable dispatch
and 111 sueh lllanper and w1tl1 ~ueh preeautiu11s as
wi II prevent inj ury, death or damage of th~asses
in resfJee1 of which before !he date Al
delenll1nation he was liable le i1ulemnify the
Employer tmder Clut1se I!LO remove from the
s Site all his temporary buildings, construction
plant, tools, ~lt!flt:-materials and goods and
shall g ive facilities for his Nominated s Sub-
e Contractors to do the same : and. but always
sub_jee1 te the provisiens of suh clause 26.?(ii)(iit.-
26.42(bi-i)
the Employer shall allow or pay to the Contractor
the total value of work properly executed and the
value of materials and goods supplied including
any loss and/or expense suffered by the
- -- - - - - - - - - - - - - - - - - - - - - -.,...,,0==
111raffir causcaby such ,ktermination.Afltt
tailing 11110 aeeo:11H ammmts previeusly flBld under
this Cunlraet, !he t6flffileler ~lrnl I be paid b)' the
Fmployer.
fa-) the totul ·,'()lue of werk eomfJll:lted at the
elate of determination.
~ 1l1e 101al value Af werl, llegun and e.\ ecuted
b1c11 nut eompletecl at the dale er
determinatien, tl1e \'a iue being ascertained
ill aeeunlanee w ith Clause J 1.5 as if st1eh
v,•orl( were a Variation reqt1ired by tht:'
/\rehiteel;.
Annexure E 443
fe-) any sum a~certained in respect of direct lo~"
ai1d!or e,,pense under C la1c1ses I I .a. 2 1I.O
and 33.2 [whether ascertained before or
after the date of detennination].
~ the eo~l of Rlaterials or geods prnperly
ordered ror the WArks for \\ hid1 1he
Contraeter had pau.l er for which the
f"onlracter is legally bottnd lo pay. and on
sm:h 11ayA1ent by the E1llpleyer any
materials AF goods so paid shall become the
pro11erty ef the Emf)loyer.
fe} the reaso11a0 le east of removal under sttlr
clause 26.2(i).
(-8 direct loss and/or damage caused to the
OR)'
Controetor lly the detern1inallon .
In additien to all other remedies the Cenlracter upon such
detenn inatiOfl--lllllj'-lake possessioR ef and shall have a lien upun
all unfil,ed malerials and goods Y,hieh lllB)' ha\'e eeeeme the
property of the Employer uiuler Clause 14.0 1c1ntil payment of all
monies due 10 1he Contrnctor from 1he Elllployer.
Records ol' 26.5 The Con1raclor ~hall within twenty eight (28) Days of the
Works determination of his own employment. give a written notice to
the Architect and Quantity Surveyor or lhe date of inspection on
Site to jointly record the extent of the Works executed and the
materials and goods delivered to the Site. Upon completion or the
record by the Contractor, a copy shall be sent to the Employer,
Architect and Quantity Surveyor and such records shall form the
basis for the evaluation of the value of the works executed and
materials and goods delivered to the Site by the Contractor up to
the date or determination.
Settlement of 26.6 The Contractor shall within six (6) Months after determination of
a ccounts his own employment. submit to the Employer, Architect and
Quantity Surveyor for the Employer's agreemelll, a final account
for the total value of work properly executed, the value of
materials and goods supplied and loss and/or expense suffered by
the Contractor caused by such determination.
26.6(a) If nothing in the said fina l account is disputed by
the Employer within three (3) Momhs from the
date of receipt of the fina l account from the
Contractor. the final account shall be conclusive
and deemed agreed by the parties. If the amount in
the final account exceeds the sums previously
paid to the Contractor under the Contract (less any
Liquidated Damages and set-off which the
Employer is expressly entitled under the
Contract), the balance shall be a debt payable to
 - -
A1111e.rnre E 444
the Contractor by the Employer within the Period
of I lonouring Certificates. If the said amount is
less than the said sum, the difference shall be a
debt payable to the Employer by the Contractor or
where applicable, the Employer may recover such
difference from the Performance Bond.
26.6(b) If the Employer disputes the final account, the
Employer shall give written notice to the
Contractor setting out any disagreement complete
with paiticulars within three (3) Months of the
date of receipt of the final account from the
Contractor. The Contractor shall within three (3)
Months from the date of receipt of the grounds of
dispute, either make such amendment to the final
account as in his opinion may be appropriate, or
decide not to amend the final account. In the event
the Employer disagrees with the amended final
account or the decision not to amend the final
account, the Employer shall refer the dispute to
arbitration under Clause 34.0 withm three (3)
Months from the date of receipt of the amended
final account or decision not to amend the fi nal
account. Failure to refer the dispute to arbitration
within the stipulated time, the final account or
amended final account shall deem to be
conclusive and agreed by the parties.
Contractor's 26.7 The provisions of Clause 26.0 are without prejudice to any other
rights and rights and/or remedies which the Contractor may possess.
remedies not
prejudiced
27.0 Nominated Sub-Contractors
Mf)Cllffiffir-4° 27. 1 The following provisions shall apply where flFll11e co·,I stnR,P.C.
P.C. Sums and Sums arc included in the Contract Bills or arise as a result of an
Provisional am! Al Affltitt!el'·, mstrnc--1-ieHS-givcn in regard to the cxpenditmc of
¥fftne-+est ~ Provisional sSums in respect of a 13Persons or eA1Hfla111es to be
fP£,tSums - nominated by the Architect to supply and tix matenals erand
Nominated goods or to execute works. Such sums shall be expended in
Sub- favour of such Person as the Architect shall instruct, and such
Contractors Person who is nominated by the Architect is hereby referred to as
"Nominated Sub-Contractor" employed by the Contractor. If the
Nominated Sub-Contractor proposes any alternative design to the
sub-contract drawings or if the sub-contract leaves any matter of
design, specification or choice of materials, goods and
workmanship to the Nominated Sub-Contractor, the Nominated
Sub-Contractor and not the Contractor shall be responsible to
ensure that such sub-contract works are fit for its purpose.
-
--=- - -
A1111exure E 445
~ bt!eh- ~,;,m1s shall be e·,penclecl Ill liwour of ,uch
~ons AF ClllflllBHie~ d', tl1e ;\rel111eet shall
m.,truu. all stit:h f)cr llfl'• er <'tllllfJil11ies who
11110
by the i\rehitect are hereb)
are--tlt:ttltHHll etl
eeelared lo be "l>loFAmated ~uh Co111rae1on··
ernf)IAyed b) the Co,HracEOr.
Nomination of 27.2 The Architect shall not nominate any j3Person er company as a
NmH-iflllte{j Nominated Sub-Contractor against whom the Contractor makes
Ssub- reasonable objection in accordance with Clause 27.3. The
(;contractor Contractor shall make such reasonable objection in writing not
~ - later than fou rteen (14) Days from receipt of the nomination
NtimiRtlteff instruction from the Architect. The Architect shall not nominate.
Sub tontroclar ttr (except where the Architect and Contractor otherwise agree)
any Person who will not enter into a sttb--contract with the
Contractor based upon the terms and conditions of the PAM Sub-
Contract 2006 which provides {inler alia}:
27.2(ai) that the Nom inated Sub-Contractor carry out and
complete the sub-contract works in every respect
to the reasonable satisfaction of the Contractor
and t-h-Architect and in conformity with all
reasonable directions and requirements of the
Contractor;,
27.2(lm ) that the Nominated Sub-Contractor observe,
pctform and comply with all the provisions of
thet'. Contract which the Contractor is obliged to
perfo,m and comply with (other than ( l;1u•,e 20 /'.
tH¼Jl~ so far as they relate and apply to the
sub-contract works;~an) pArtifln ef ii,
27.2(ctti) that the Nominated Sub-Contractor indemnify the
Contractor against the same liabilities in respect
of the sub-contract works as those for which the
Contractor is liable to indemnify the Employer
under thc15 Contract;,
27.2(dPr) that the Nominated Sub-Contractor indemnify the
Contractor against claims in respect of any
negligence, omission or default of 'rtlffihis sub-
contractors, his servants, or agents or any misuse
by him or them of any sea fielding or other
construction plant, access, scaffolding, temporary
works, appliances or other property belonging to
or provided by the Contractor;!ltlHha~
h1m•,t'lf 0ga111•,1 !Ill) ,uch da1111.o aAe rrodtiet' the
polte)' or pelw,es aRd recetf!lS IA re ;peer el
f)FeffiH1111s 13aie as t111e •Nhen reEJ1meil by eitl1er the
:\rehitt>el or the ContraelAr.
I
 Ar111e.rnre E 446
27.2(e¥) that the sub-contract works be completed within
the period or (where ticte;· are lo be comple1ed iA
paw.;t--periods t ~speci fied;-tttat and the
Contractor shall not without the written
cetl;,t'lttrecommcndation of the Architect grant
any extension of time for the completion of the
sub-contract works caused by any of the Relevant
Even t stated in Clause 21.4 of the PAM Sub-
Contract 2006, 0F-any par! !hereat: aAd llmt tl1e
Cf!Alraetor shall mform tl1e Arehitect ef a11y
represe111a1io11 made by the N0mrna1ed Sub
Con1rae1or as 10 the cause ef any delay i11 ll1e
progress or completion er ll1e sub contract 'Norks
or of ariy pan thereof. Where the delays arc
caused by any negl igence, omission. default
and/or breach of the sub-contract by the
Contractor. the Contractor is solely respons ible
under Clause 21.6 of the PAM Sub-Contract 2006
to assess and grant an extension of time to the
Nominated Sub-Contractor;
27.2(1) that when the Comractor and Nominated Sub-
Contractor consider that the sub-contract works
have been practically completed, they shall
request the Architect to issue a certi ticate to the
effect, and if the Architect is of the opinion that
the sub-contract works have been completed in
accordance with the provisions of Clause 17. I of
the PAM Sub-Contract 2006, the Architect shall
forthwith issue a cenificate to the effect;
27.2(g¥1) that if the Nominated Sub-Contractor fails to
complete the sub-contract works or (where 1l1e
sue eo111rac1 worlcs are 10 ee eompleles i11 parts)
011y pan thereof within the sub-contract
completion dateperiod speeitied or within any
extended time granted by the Contractor, and the
Contractor after having given a~ written
notification to the Nominated Sub-Contractor that
lffi:,rr1J-fo1iffacf works eonse11t 01 1he /\ rd1nee1,
a11d the Arcliitect ee1tifies in ',\ riling to the
C011trae10r that !he same ought reasonably so to
have been completed, the Nominated Sub-
Contractor shall pay or allow to the Contractor
e-tther a sum calculated al the ra1e therein agrees
as bif!u isaled a11d Aseenai11etl Damages fer 1l1e
periua suring which the said 1\ orlcS, or any part
thereat~ as the case may be. remain or have
remairied incemplete or (wliere no sueh rate baa
seen agreed) a sum etjui1·alen1 to any loss and/or
expcnset!atttage suffored er iActirres by the
Contractor or an agreed Liquidated Damages;a-ne
caused B)' the failure of the ~lomina1ed Sub
Co111ractor as aforesaid.
Annexure E 447
27.2(h¥i-!) that payment in respeel of any work, materials or
geeds-«)mpri,ed in !he sub em11racl to Nominated
Sub-Contractor shall be made within~urleen ( I <I)
seven (7) dDays after the Period of Honouring
Certificates reee1p1 sy the Con1rac1or or !he
A-t'{;liiteel's certificule unaer Clause 30~€li
s1a1es as sue an ameuot ca letrla1ed by i11cluding
the totul I alue of sueh work. m11terials or guods.
and shall wl-1~be subject to the retention and
deductions expressly provided under the PAM
Sub-Contract 2006; and s) the Cenlrnetor of su111s
111e1Hio11ed in sub clause 27.1(\ iii).
27.2(1 iii) 1ha1 1he Conlractor slia ll relai,i from !he sum
ffife€-les B)' the Architect as hav111g heen i11cl11ditig
in the cakulalion ef !he amount ,1med as due in
any cer1i ticate issues tmder Clause JQ.O in respeel
of the total \ alue or works. matt!riul; or goods
e1,ec111es or suppl itia liy the Nominaled Su0-
Contrae1or 1he pereentage er sueh value named 111
tlie AppeAa i•, as Percentage of Certifieu Va lue
Re1ai11ed up to a 10tal amou111 not e,ceeding a sum
1•, h1eh sears !he same ra1io 10 ll1e s,1b eo111rac1
pnce as the-unred11ced sum named in the
Apperidi·, as LimH of Relenlion 1·,111d hears 10 !he
C011traet Stun; and !hat 1he Con1ractoi'.-i11terest--+n
dn) stuns so retained (B)' I\ hu1moever held) sha ll
be fis11eia1y as 1nis1ee for the Nom+nuled Sue
CorHractor bm wi1lrnu1 ollligation to invest; and
1-ltaf..-.IBe Num111a1ed Sub Conlraetor's B'-'nefieial
in1eres1 rn such smns shall Ile sulaject only to the
nght of the Contractor 10 have recourse tl1ere10
from time to 1ime rur paymem of any 0mo11n1
wt1i<;~1- he is eAti1led under 1h1:: suh eo111rae1 10
deduct from 811)' st1111 due or 10 lleeome d ~
Nemina1ed Sua Cc111tractor; and 1ha1 if a11d when
such s11111s 0r any part thereof are released Ill 1he
Neminaletl Suh Contractor they shall- he paid in
ful.h
27.2(i*) that the Architect, Consultants and htstheir
authorised representatives shall have the right of
access to the workshops and other places of the
Nominated Sub-Contractor in accordance with the
provisions of Clause 11.2 of the PAM Sub-
Contract 2006.as 1ne111ioned in Clause--9,-Q,
Objection to 27.3 Subject to Clause 27.4, the Contractor shall not be required to
nomination of enter into a sub-contract with any Nominated Sub-Contractor
sub-contractor against whom the Contractor has made a reasonable objection
based on available known !acts and documented evidence that
the financ ial standing or solvency or technical competence of the
Nominated Sub-Contractor is such that a prudent contractor,
having regard to the scope of sub-contract works would be
justified in rejecting the nomination.
 Annex11re E 448
Action 27.4 Where the Architect is of the opinion that the Contractor has
fo llowing made a reasonable objection, the Architect may either issue
objection of further written instructions to remove the objection so that the
Nom inated Contractor can enter into the sub-contract, or cancel such
Sub-Contractor nomination instruction and issue an instruction omitting the work
which was the subject of the nomination instruction or re-
nominate another sub-contractor for the sub-contract works.
Payme nt by 27.SJ The Architect shall direct the Contractor as to the total value of
Contractor to the-work properly executed and include the percentage of" the
Nominated value of the. materials 0fand goods stated in the Appendix
Sub- e1ieet1ted or SUfJplied sy a Nominated Sub Cn111raclor i11eluded in
Contractors the calculation of the amount stated to be due in any certificate
issued under Clause 30.0 and shall at the same lime when the
certificate is issued,~flttw-iili inform the Nominated Sub-
Contractor in writing of the amount of the said total value. The
sum representing such total value (less any retention and
deductions expressly provided under PAM Sub-Contract 2006)
shall be paid by the Contractor to the Nominated Sub-Contractor
w ithin fot111een ( I I) seven (7) Days after the Period of
Honouring Certificates.days or reee1ving fro m the An:hi teel 1he
cernfieate less only any rdent1on 1110Rey w l1iel1 1he ContrnclOF
FAA)' be e11ti1led 10 deduct under the terms of the ,ub eoRtraet. and
less any sum lo 11 hich tlie ConlraelOF ma) be entitled in respect
of delay in the completi011 of the suA eo1Hrne1 wori(S or any flal1
t-ttereef,
F ailure of 27 .64 The Architect may, at any time before the issuance of any
C ontractor to Interim and the Final Penultimate Ce1t ificate, may-request the
P-pay Contractor to furn ish to him reasonable proof that all amounts
Nominated stated as due and included in the previous certificates in respeel
Sub- o-Hhe--totol •111lue ef the werl< e.,ecuted. materials OF ~oods
Contractors supplies by the +slominuted Suh C011lraetor have - been
discharged. The Con tractor shall provide such proof within
fou1teen (14) Days of the Architect's request. If the Contractor
has any reasons for withholding any Nominated Sub-Contractor's
payments under Clauses 16.1 and 26.13 of the PAM Sub-
Contract 2006, he shal l provide the Architect written details of
his comp liance. If the Contractor fails to comply with llflY
Sll€flthe Architect's request within fourteen (1 4) Days, the
Architeck nay--(but not obliged lo) issue--a ce1tificate te thul ,·ffeel
stating the amount in respect of which the Contractor has failed
to provide such proof. Where the Architect has so certified,aml
therettjffin the Employer may (but not obliged to) ~ pay
such amounts directly to l\flj'thc Nominated Sub-Contractor
eoncemed and deduct the same from any sums due or to become
due to the Contractor. Whett-tThe Architect i;..-o-Hhe opinion that
it is appropriate 10 tlo so, he may issue the aforesaid certificate
inespective of whether or not an Interim Certificate under Clause
30.0 is due for issuance.
Annexure E 449
fai lure af J"lie Cun1ructuF-c,-l1t1ll 1101 grant Hl ,my Nrnn111a1ed--Sttlr-f'.ffi~
Nontt n-ated aH)'-<:!-M-H-lffi~th111 whieh-tlie s11b co1Hnn:1 ,,, orl.s ur
Sttb-- (v.-here the ·,uJ,i co1Hract worb are lo he completed in--paFed-any
t{Hlff'-llet<H+to pun thereof is 10 be et11n11leted ,11lhuu1 the wnHen appro, al of"
Complete the A rchitect. T he Contrat'ltlf- shall 111form the--Architea--oi'--il!l)'
~RliH-tBllS--lttttde by any Noini11111ed S ub Co111rac10r--a5--½&-l-lie
caust:> or any delay 111 tht:> prngress 81~.:u11~1on er the :,uh
eomraet ,., orb or any part tht:>reo C a11d the appn..wal ot'.....+he
Affhit-ect shall 1101 be u11ret1.,011ably 11 ithlield.
If any Nominalt!d Suh Contractor fails !fl
e011111lete the sub contract ,, urks or (v. lien,•---tht>
SIJ&-l!enlrnel works are le he completed 111 pa,1s)
any part tltereur 11i1hin the ttmt'-->luletl 111 lht' sub
eontrael or w1thiA any t:'.,te11ded time granted by
1i1e Contrador, w i1l1 the wnt1oe1i apprornl or the
Arnh itect, then if tlw ·;a11ie ought reasonably :,u-ltl
ha~en cempleted, the Archllet.½ltttll t;t'rtil~· in
writmg accmdingl) : immediately upett--t;;stte t-he
J\rch itecl shall send e dttpricute ol any such
eeR+fo:ute 10 the Nominated Sub Contractor.
Final P-payment 27.7(, If the Architect wishes to make final payment to any Nominated
to Nominated Sub-Contractor before final payment is due to the Con tractor,
Sub- and if the Nominated Sub-Contractor has :;ati:,laetoFil)
Contractors indemnified the Contractor against atty--all of his liabilities unde r
~ Hll the Nominated Sub-Contract, latent defects. then the Arch itect
Poy ment to rnoysha ll issue a certificate to the Contractor in an lnter➔ m
C011ln1et0r C'eniliente inc lude an amount lo co1er the said tinal payment.
ans thereupon and the Contractor shall pay to such Nominated
Sub-Contractor the amount so ce1tified less any retentio n and
deductions expressly provided under PAM Sub-Contract 2006.
Upon such final payment, the amount slated in the Appendix as
Limit of Retention Fund shall be reduced by the sum of the
retention released to the Nominated Sub-Contractor.wlH€1t--beaP.>
the s111ttt:' ralm to the ,aid mttot1nt--w.Hloes such sub eonlnK'+-jtH€e
lo the Contract Sum and ext:<'f)l for late111 defects lht'tenl-ffie-ltlf
shull bt' d ischarged from all liability-f-oHhe ·.1nrk. materials or
goods exec~1ted or sup13lietl by such Nominated S u ~
tmder tl1e suh contract.
Determination 27.8 The Contractor shall not dete nnine the em ployment of any
o f the Nominated S ub-Contractor w itbout the written consent of the
N ominated A rchitect. lf the Contractor intends to determine the employment
Sub- of the Nominated Sub-Contractor, the Contractor sha ll send to
Contractor's the Archi tect a written report stating the Nominated Sub-
employme nt Contractor's default w ith a copy to the Nominated Sub-
Contractor. T he Architect may request that the Nominated Sub-
Contractor respo nd to the Contractor 's report before he decides
whether or not to g ive his written consen t.
 Anne.rnre E 450
E:m1iloyer Not 27. 9+ The Contractor shall be fu lly responsible fuf-.to ensure that all
iff...A.tl y-\+&y Nominated Sub-Contractors carry out the sub-contract works in
-bi-allle--w-!chi> accordance with the Nominated Sub-Contract and in compliance
Contractor's therewith provide designs (if any), materials, goods and
responsibility standards of workmanship of the quality and standard specified
fo r -6f'-A.lty therein to the reasonable satisfaction of the Architect.or Suppliers
Nominated and for any defol1 h or breaffi-Qf contract on their part--afH:1--the
S ub- Employer shall in no circumstances he liable le the Contractor.
Contractm·s N~theF-½h-islenee Atir the e~,erci;,e-efilIB--HJregoing r owers
nor anything else rnnm-ittee-in these Condi1ions shall render the
¥ffittteyertt~ till)' 11ay lialcJle to any No111i1h'lted-St10 Co111rae1or.
Employer no 27 .1 0 Neither the existence of or the exercise of the foregoing
privity of provisions nor anything else contained in the Contract shall
Contract with create a privity of contract between the Employer and any of the
Nominated Nominated Sub-Contractors.
Sub-
Contractors
Re-no mination 27.11 If the employment of a Nominated Sub-Contractor is determined
of sub- by the Contractor w ith the written consent of the Architect, the
contractor due Architect shall re-nominate another Nominated Sub-Contractor.
to ln the event, the Contractor shall be entitled to be paid such
determ ination difference (if any) between the sum payable to the Contractor
by the and the new Nominated Sub-Contractor and the sum payable to
Contractor the previous Nominated Sub-Contractor after taking into
consideration of any sum that will he recoverable from the
defaulting Nominated Sub-Contraclor under Clause 27.1 3. An
extension of time under Clause 23.8(i) may be granted to the
Contractor but the Co111ractor shall not be en titled to any
damages, loss and/or expense.
Re-nomination 27.12 If a Nominated Sub-Contractor determines his own employment
of sub- under the Nominated Sub-Contract due to negligence, o mission,
contractor due default or breach or the Contractor. the Architect shall re-
to nominate another Nominated Sub-Contractor. ln the event, the
detumin ation Contractor shall be paid the same sum as would have been
by the payable to the previous Nominated Sub-Contractor. The
Nominated Contractor will be liable to pay the new Nominated Sub-
utl-C'---mttra~ Goot-Fattoi:-any- -addiiional -cost to complele the Sub-Contract
Works and lo pay the Employer for all additional costs incurred
in re-nomination and loss and/or expense suffered by the
Employer by such determination. The Contractor shall not be
entitled to any extension of time unless and u nti l the Contractor
has established that the determination by the Nominated Sub-
Contractor of his own employment is invalid. In the event the
determination by the Nominated Sub-Contractor of his own
employment has been established to be invalid by arbitration or
litigation, Clause 27.11 will apply.
Am,e.rnre E 451
C ontractor to 27.13 111 the event the Architect consents to determine the employment
recover of the Nominated Sub-Contractor under Clause 27.11 , the
additional Contractor shall recover all additional expenses (including any
expenses from additional expenses incurred by the Employer) from the
Nominated Nom inated Sub-Contractor as a debt o r from any monies due or
S ub-Contractor to become due to the Nominated Sub-Contractor and failing
which, the Contractor may recover such sum from the Nominated
Sub-Conu·actor's Performance Bond.
C ontracto r 27. 14& Where the Contractor m lhe 0rdimtr) esun,e of his lrnsines~,
Slmll-Be EHfe€t-ly-can-ies out works for which P.C. Sums and Provisional
P permitted to SumS-JlFOYisisnal er prime cost st1111.; are included in the Contract
'.J=tender for Bills, and where items of sueh v, orks are sel Olll in the Aflptmdix
P.C. S ums f!Afl-.Hie Arehi1ect is prerared lo receive lenders frem lhe
Co1Hraetor for such items. lhen the Contractor shall be permitted
to tender for the same . or a11y ef 1hem em wilhout pre_juEliee lo
tl1e Eml)IO)•er"s rights 10 rejeel tl1e lowesl or u11y lt:1Ader. If the
tender of the Contractor~ for such work is accepted, heit
shall be considered as a Variation and the Contractor shall not be
e111itled to profit and attendance charges as priced under the
relevant P.C. Sum. notwithstand ing the provision of Clause
30.11 (c).FHll--Slls le! lhe work or any pan thereof without the
approval of the Arehiteet.
\l/h~re u prime eesl sum arises 1cmder ll1e
Arcl1itecl ·s 111strnetions issueEl llAder Clause l 1.3
il sl1all se deemed Jar the purposes of llli'; Clau:;e
tn have Ileen inell1detl io the Cootraet Bills; und
the item of '"''ork 10 whiel1 it relates sha ll likewise
he deemed to bave seen sel 0t1l in the App~
~ IL shall he a eond-i+ion of any le11der ueeepl<'d
u11Eler this Clause liiat Clause l 1.3 shall apply 111
respeet of tlcie ilen1s ef Y, erk ineluded i11 !he lenEl(!f
as if I-Or lhe reference therein 10 the Contract
Drawings aoEl the Contract Bills there were
refere11ees to !be equivale11l deeuments incluttt!a
in or referreEl te i11 the lender.
28.0 Nominated Supplier s
Exl)enditure ef 28.l The following provisions of this clauscGeod-i+ion shall apply
P.C. S ums and where f)rime eost suo1s P.C. Sums are included in the Contract
Provisional Bills or arise as a result of thean Al A rehiteet's instrnctiens given
S ums - in regard lo the expenditure of fl Provisional sSums, in respect of
N ominated Person to be nominated by the Archi tect to supply any materials
S uppliers--Of' 0Fand goods to be fixed by the Contractor. Such Person as the
Prime Cast Architect shall instruct is referred to as "Nominated Supplier".
(P.C.) S ums
 An11ex11re E 452
I\ le1111ing1tf The term prn11e ce:,l when includeu or an;;mg a;, aforesaid, :,l1all
-P-Fi~ mean the net co,t to be defra) eu t1s p1ctnie-w,t after ueduct-i11g
an) traue or other d1scoulll 0110 shall i11cl1c1de the cest ef packing.
carriage and deliYery. Where 111 t h ~ e n ef the Architeet the
Cm1traetor has i11rnrred e .. pense fur special pacl1ing and 1er
speE-i-al earrit1ge. suel1 •;pecial ei..pense sl1all he alle•Ned as pai1 of
tlu s11ms actually pais hy tl1e Contracter--it-Hs auses te the
Centrael Sum.
Defini lie n of 28.2:,0 The Architect shall nut nominate any Person as a Nominated
Nominated Supplier against whom the Contractor makes a reasonable
Suppliers and objection in accordance with Clause 28.3. The Contractor shall
:t=their make such reasonable objection in writing not later than fourteen
Qo bligations (14) Days from receipt of the nomination instruction from the
Architect. 1\II specialists. merchants, tradesmen or others,,, ho are
nominated by -the-Arehite€t-l~ply material:, or goods te---the
Contractor are refen-es lO as " l>lommated St1ppliers" . The
Architect shall not nominate (except where the Architect and
Contractor otherwise agree~!WffiC) nominate as supplier a any
pPerson er eempany who will not enter into a contract of sale
whicb provides Un/er alia1:
28.2J(a+) that the materials Ofand goods to be supplied shall
be of the quality and standard specified, provided
always that where approval of the qual ity and
standard of material is a matter of opinion of the
Architect, such quality and standard shall be to the
reasonable satisfaction of the Architect;,
28.2J (bi-i) that the Nominated Supplier shall make good by
replacement or otherwise any defects in the
materials et-and goods supplied which appear
within the Defects Liability Period w1tl1i11 such
13erio£l as is therei11 111entiones 3Dd shall bear any
expenses reasonably incun-ed by the Contractor as
a direct consequence of such defects
~ provided always that: where the 11101£rials
or gooss ha,·e bee11 useu or fo,eu anEI the defect.;
are 1101 sucli that e)<amination hy the Contractor
uuj;hl tB il'l"e revealed ll1ea1 before usi1lf.:llr fuu11i::.
e r where sucl1 uefeets are sue selel)' w uelec1ive
wurlu11a11ship or materials 111 the goads sup~
and not hal'e been t:EH!Sed by 11npreper storage by
the Contrncter or tiy misuse or by any ad or
neglect of either the Contractor. the /\rchllect or
the Em1ileyer or by any per., on or per,om, for
whem they may be resJIBRSIB!ec
28.2(b)(i) where the materials and goods have
been used or fi xed, such defects are
not such that examination by the
Contractor ought to have revealed
them before using or fixing ; or
Annexure £ 453
28.2(b)(ii) such defects are due solely to
defective workmanship, materials
and goods suppl ied and not caused
by misuse, improper storage or any
act or neglect by the Contractor;
28.2J (ctt-i) that the delivery of the materials eFand goods
supplied shall commence and be completed in
accordance with a delivery programme to be
agreed between the Contractor and Nominated
Supplier, or at such times as the Contractor may
reasonably direct;,
28.2(d) that the ownership of materials and goods shall
pass to the Contractor upon delivery by the
Nominated Supplier, whether or not payment has
been made in full; and
28.2(c) that payment to Nominated Supplier shall be
made within seven (7) Days after the Period of
Honouring Certificates and shall be subject to the
retention by the Contractor under C lause 28.5.
Objection to 28.3 S ubject to C lause 28.4, the Contractor shall not be required to
nomination o f enter into a supply contract with any Nominated Supplier against
suppliers whom the Contractor has made a reasonable objection based on
the available known facts and documented evidence that the
financial standing or solvency or technical competence of the
Nominated Supplier is such that a prudent contractor, having
regard to the scope of the supply contract would be justified in
rejecting the nomination.
Actio n 28.4 Where such reasonable objection is made, the Architect may
following either issue further instructions to remove the objection so that
objection of the Contractor can enter into the supply contract or cancel such
s uppliers nomination or instruction and issue an instruction omitting the
materials and goods which was the subject of the nomination
instruction or re-nominate another Nominated Supplier.
Va lue o f 28.5 The Architect shall direct the Contractor as to the total value of
materials and materials and goods supplied by a Nominated Supplier wh ich has
goods supplied been included in any certificate issued under C lause 30.0, and
by Nominated shall at the same time when the certificates arc issued, in form the
S uppliers Nominated Supplier in writing of the amount of the said total.
The Contractor shall retain from the sums included for the value
of materials and goods the percentage of such value stated in the
Appendix as Percentage o f Certified Value Retained up to an
amount not exceeding five (5) percent of the Nominated
Supplier's sum. The Contractor's interest in any sums so retained
shal l be fiduciary as trustee for the Nominated Supplier (but
without obligation to invest); and the Contractor's beneficial
interest in such sums shall be subject only to the right of the
 Anne.rnre E 454 Annexure E 455

Contractor to have recourse from time lo time for payment of any
amount which he is entitled under the nominated supply contract
to deduct from any sum due or lo become d ue to the Nominated
Supplier. Upon the Architect having certified the release of the
Retention Fund under Clause 30.6, such sums shall be released to
the Nominated Supplier within seven (7) Days after the Period of
Honouring Cenificate and that if and when such sums are
released to the Nominated Supplier, they shall be paid in full.
Payment to 28.64 All payments in respect of the value of materials and goods
Nominated supplied by a Nominated Supplier shall be made within seven (7)
S upplie rsfof Days atler the Period of llonouring Certificates and shall be
Mnterials anEI subject to the retention by the Contractor under C lause 28.5.+ke
bll9ffS 11,, Contractor s hall f)ay iii r~i11 for the materials or goods , ul)f) lied ay
Controelor a Nrnflimtted !.Uf)f)lier withiH J(l days of the end of tlie month
during w liic h deli•;ery is made .
Contractor's 28.7 The Contractor shall be fully responsible for any negligence,
liability for omission, d efault and/or breach of contract by the Nominated
Nominated Supplier and the Em ployer shall in no circumstances be liable to
S uppliers the Contractor.
Employer no 28.8 Neither the existence of or the exercise of the foregoing
privity of provisions nor anything else contained in the Contract shall
Contract with create a privity of contract between the Employer and any of the
N ominated Nominated Suppliers.
Suppliers
29.0 Artists Ana T rnElesmenWorks By C raftsmen, Tradesme n Or
Other Contractors E mployed Or Engaged By Employer
E1.ieeuti011 of 29.1 The Contractor shall permit the execution of work not fom1ing
Works by pa1t of thei;; Contract on the Works by arustscraftsmen,
Employer's tradesmen or others contractors engaged by the Employer. e-1-'efY
craftsmenNot s uch f)ersoASuch craftsmen, tradesmen or other contractors
Forming Perl engaged by the Employer shall for the purposes of Cla1c1se IS.Cl
of..Gtlfl 1-Faet be deemed to be a f)Person for whom the Employer is responsible
and not to be a sub-contractor of the Contractor.
30.0 Certificates And Payment
~- ~ Gerti ficales lo be issued by the Architeet under these Conditions
Afl.4titeet-'-5 sfcia ll be issued to the Comraetor w ith a COf))' lo th.; [mployer.
~erlifieetes T ile /\rehitecl may, by BA)' eerti fieate eorrecl any error or
Eliscrep1mcy whic ll Aas see!l discovered in a A) ' f) re\•ious
eemtieate, or ma)• n1odify Oil)' previous certificate, other than a
Certificate of Practical Co1ttpletion or tAe F1Aal Certifica te which
has lieen issued El)' h im.
Payment 30. 12 During the Periotl of Interim Cer11firn1t·, states III the A p ~
Aapplica tion tThe Contractor shall submit a payment application at the Interim
a nd ! issuance of Claim Interval stated in the Appendix with complete details and
Ar chitect's particulars ieas required by the Architect and Quantity Surveyor,
Hl-tff-Hll su-tlieiem for the Arelliteet to enable them to consider and
Gcertificate ascertain the amount to be s-!AfeElincluded in an Interim
Certificate. Upon receipt of the Contractor's detai ls and
particulars, the Architect after having received the payment
valuation from the Quantity Surveyor shall, within twenty one
(21) Days from the date of receipt of the Contractor's
application, issue an Interim Cc11iticate to the Employer
ContraC!ur with a copy to the empleyet'Contractor, and the
Contractor Employer shall be entitled Lo payment thereafter pay
the amount certified to the Contractor wi th in the Period of
Honouring Certi ficates.~1111ed ill the Apf)endi\ . Pnn ided al•,, U)"•
that the A rchitect sl1all ha'.'e tho! d~oFt---1&--FAillice---it»eF-Hll
¥ttllli!l-itti¥..i-Whern:>,er he ennsider., neeessa1y for ascertaining the
amoun t to be stated as due in an lntenm Cert ili l'ate. Any railure
by the Contractor to submit a payment application shall be
deemed to be a waiver of his contractual entitlement for that
Interim Ccrtitieate, and the Architect may or may not issue an
Interim Certificate under the circumstances. After the issuance of
the Certificate of Practical Completion, Interim Certificates shall
be issued as and when li.Jrthcr amounts arc ascertained by the
Architect and Quantity Surveyor as payable to the Contractor by
the Employer.
Amount » d ue 30.2J The amount stated as due in an i nterim Certificate shal I, subject
in Architect ' s to any agreement between the parties as to stage payments, be the
lmffim total value of the work properly executed and include the
Gcertificate percentage of the value of materials and goods stated in the
Appendix up to the date of the Contractor's payment application
less any amount which may be retained by the Employer unde r
Clauses 30.S and 30.6 and. less the amounts previously certified
under Clause 30. I . The materials and goods must be for
incorporation into the permanent works and have been delivered
to and properly stored at the Site and be protected against loss,
damage or deterioration. and be in accordance with the Contract.
The certificate shall only include the value of materials and
goods wh ich are reasonab ly, properly and not prematurely
brought to the Site .where the Contrnctrn'--fltld--j-Jitffi---1-&--H~p-tter
the ful l eost e r the mt1leri;1b and gAAds deli,·ered lo or adjacent lo
tl-!e--Wetck-s--for use tllereon up HHmd ineluding a date not more
than seven (7) da)s liefore the date of the said eerlifieate less any
atl!Ottflt--Wlti€l+ may be retained b)• tile Emf)IAyer (as f)FBI idea in
Clause J0.'1) and less any 111s!allmenb f)reviaus ly eertified-tHWef
ur
the CoRd itioHs. T ile t'erli fi<0ttle shall 011ly i1lclude the ,;a Jue tlw
sa id m,Heria ls a lld goods fro Hl sueh time as tile)· are reusttlt!lbly.
preperly and not premawrely broughHIM:lr-f)ltteed-aEl_jaeenL lo the
Works mul--th-ly-if-adet11c1alel) protected again 1L •1, eathef--Bf
e ther easualt1es.
 A1111.e.rnre E 456
~11---Ent-Hli"ml'ttf bn1ess-------oth<!P.\ i ,e e·,pre·;,ly~et!-------m- 1-irese
to-Set-OU~ C'tHHlition ,, the I rnplO) er ~ha-l-H-1t~1----he-~ru+t-lt'tHe
Ettlj}lO:ffi'-itl wttltliultl tlr deducl-it11) dlHAUAt eert1tietl es dth!
R~r-:•~ ttl-ltlef--any----Arc-h-itee~ka~r~--tltlj'
A-motffit ~ L'+dllW, IA ,el off o r ~ ~ ~ -
•11-ff1Wt'tlll tlcie€tt've "'orb. n1a!enal-.--of----g eed., or for 011y
tt>'t#kMt'S othff-feil'iotts--\\-ltab-wlHeltt1e may purpert--ta
e->iRl,;,t.tt-im from 111a-kittg--j1d;,-met1b-of41le-itffi0llilt
·~~-
Oi fffft.1tt>ettR
R-espeet -o f
Ri~~-
~ in an li11erim-( 'erti-tt.:ilft"c
111 the eHnt or an) dis11u1e•, ur tliffere11ces 11·, te
a») nghl, ef the [,rnjtlo;er 10 ,et nlf or to <tflY
ffiltAtefL'+<Hm- ,uw alle1:?at1011 of del'o!eti\e
11 orks. rnutenals er~itl·, nr lor any--0!tteF-fea,tm<;
Oll.--f6 ~ h 111 13ute Ar tl1ffere111:e., hall be rek!-ffee
,\ ffitfFII 1-ifm lo an arh1tra10r fer _iut~ltH!tl4:!F-8attse-cl+H.
Errors in 30.3 Save for clerical, computational or typographical error or errors
payment of a similar nall.irc, the Architect shall not be entitled to revise or
certificate correct any payment certificate issued by him under the Contract.
Provided always that the Architect may, by a later certificate.
make correction or modification in respect of any valuation
errors in any earlier certilicate.
Set-off by 30.4 Tbe Employer shall be entitled to set-off all cost incurred and
Employer loss and expense where it is expressly provided under Clauses
2.4, 4.4, 5.1, 6.5(e), 6.7, 14.4, 15.J(b) 15.3(c), 15.4, 15.5, 19.5
and 20.A.3. No set-off under this clause may be made unless:
30.4(a) the Architect or Quantity Surveyor (on behalf of
the Employer) has submitted to the Contractor
complete details of their assessment of such sct-
off; and
30.4(b) the Employer or the Architect on his behalf has
given the Contractor a written notice delivered by
hand or by registered post, specifying his intention
to set-off the amount and the grounds on which
--such ..set-off ...is made. Unless expressly stated
elsewhere, such written notice shall be given not
later than twenty eight (28) Days before any set-
off is deducted from any payment by the
Employer.
Any set-off by the Employer shall be recoverable from the
Contractor as a debt or from any monies due or to become due to
the Contractor under the Contract and/or from the Performance
Bond.
Annexure E 457
If the Contractor after receipt of the written notice from the
Employer or the Architect on his behalf, disputes the amount of
set-off, the Contractor shall within twenty one (21) Days of
receipt of such written notice, send to the Employer delivered by
hand or by registered post a statement setting out the reasons and
particulars for such disagreement. If the parties arc unable to
agree on the amount of set-off within a further twenty one (21)
Days after the receipt of the Contractor's response, either party
Retention Fund 30.54
may refer the dispute to adjudication under Clause 34. 1. The
Employer shall not be entitled to exercise any set-off unless the
amount has been agreed by the Contractor or the adjudicator has
issued his decision.
The Employer may retain the percentage of the total value of the
Cerlit=ied \'olu.- work, materials and goods referred to in Clause 30.2J , which is
Reloined stated in the Append ix as Percentage of Certified Value
Retained. When the sum of the amounts so retained equals the
amount stated in the Appendix as Limit of Retention Fund or tbat
amount as reduced under m flllF ,uanee or .,uh cClauses 16.1 (d"½)
and 16.l(f'rtt) and/or Clause 27.7e , as the case may be, then no
further amounts shall be retained by virtue of this f:clause.
Rules 30.63 The amount retained hy virtue ofunder Clause 30.54 shall be
Rregarding subjected to the following rules:
Retention Fund
EttljlleyeA 30.63(a,) 1 the Employer's interest in any amount so
Interest i» retained shall be fiduciary as trustee for the
Retention l-' 1rnd Contractor, Nominated Sub-Contractors and
S!ttt-l-1---De Nominated Suppliers (but without obligation to
Fiduei1u-y As invest) and the Contractor's, Nominated Sub--
~ Contractors' and Nominated Suppliers' beneficial
interest ~ shall be subject only to the right of
the Employer to have recourse ~ from time
to time for payment of any amount as the
Architect may certify that he is entitled under the
pnw1s1011•; of this Contract to deduct from such
sum due or to become due to the Contractor,
Nominated Sub-Contractors and Nominated
Suppliers. In the event any of the party elects to
demand in writing from the Employer (witb a
copy to the Architect) for such Retention Fund to
be paid into a trust account, such fund shall be
paid by the Employer within fourteen (14) Days
into an escrow account to be held by a stakeholder
appointed by the party making the application. All
incidental costs of setting up such a trust account
shall be borne by the Contractor or Nominated
Sub-Contractors or Nominated Suppliers as the
case may be;c
 A1111e.rnre E 458
C ontreetor to 30.63(bti) W when the Employer exercises any right under
~('6---tfl thet~ Contract to deduct from any monies due lo
Writing of or become due to the Contractor or where
Deduetion from applicable, the Nominated Sub-Contractors or
Monies Due or Nominated Suppliers, he shall inform the relevant
ta-Bewn,e--Dttt! partyC0111raelor in writing of the reason for that
deduction;,
lkle11se of One 30.63(c-i-i-i) l:}upon the issuancee of the Certificate of Practical
Moiety of Completion. the Architect shall within fourteen
Relenlion f1rnd ( 14) Days issue a C.certificate for the release of
one hal r of the Retention Fund moiety of the total
arnounl so retained and the Contractor shall be
entitled lo payment thereafter within the Period
fur of Honouring Certificates; stated in the
Appentlii, and,
Releflse-ttf 30.63(dw ) On 1l1e e:,pirn1ie11 ef the Defeets Liusility Period
Seeend ·M oiety sHHed in the Al')pendix or on upon the issuance of
of Relent ion the Certificate of Con1pletim1- of Making Good
~(I Defects, 'Nhiehe\•er is 1l1e la1er, the Architect shall
within fourteen (14) Days issue a Gee11ificale for
the residue of the amounts then so retained and
the Contractor shall be entitled to payment within
the Period of Honouring Ce11ificates. sta1ed in !he
Appendiic
S uspension of 30.7 Without prejudice to the Contractor's right to determine his own
Works for non- employmen t under Clause 26.0, if the Employer fails or neglects
payme nt to pay the Contractor the amount due as shown in the payment
certificate (less any Liquidated Damages and set-off which the
Employer is expressly entitled to make under the Contract) and
continue such default for fourteen ( 14) Days from the receipt of a
written notice delivered by hand or by registered post from the
Contractor stating that if payment is not made within the fourteen
(14) Days, the Contractor may by a further written notice
delivered by hand or by registered post, forthwith suspend the
execution of the Works until such time payment is made.
Provided a lways that such notice shall not be given unreasonably
- - - ~ - - - - - - - - - - - --on=tmmly-:---
Compulsory 30.8 If the Architect and/or Consultant inform the Contractor in
s uspension of writing of their withdrawal from the supervision of the execution
Works of the Works required under the local building by-laws for
whatever reasons, the Contractor shall forthwith suspend the
execution of the Works and continue such suspension until the
resumption of the said supervision.
Cessation 30.9 If the Contractor suspends the Works in accordance with the
insurance provisions of Clauses 30.7 and 30.8 , he shall secure and protect
resulting from the Works during the period of suspension and ensure that there
s uspension of is separate cessation insurance cover for all the risks specified in
the Works Clauses I 9.0 and 20.A or 20.B or 20.C for the whole period of
suspension. The cost incurred for such protection and cessation
insurance cover shall be added to the Contract Sum.
Annexure E 459
Final Account 30. 106 Within six (6) Months afrer Practical Completion of the Works,
Completion or the Contractor shall send to the Architect and Quantity Surveyor,
Me$~ al I documents necessary for preparing the Final Account,
end Vnluntion including all documents relating to the accounts of Nominated
end Ce,·tifieoles Sub-Contractors (if these had not been subm itted earlier under
the Nominated Sub-Contract) and Nominated Suppliers. Such
documents shall contain all the latest construction drawings and
details (bound together), details of all quantities, rates and prices
and any adjustment of the Contract Sum and additional payment
or compensation claimed by the Contractor under the Contract
together with any explanation and supponing vouchers,
documents and calculations, which may be necessary to enable
the Final Account to be prepared by the Architect and Quantity
Surveyor. The Final Account shall be completed within six (6)
Months from receipt of all the documents from the Contractor.
The period for completion of the Final Account shall be adjusted
if there is any delay by the Contractor in sending the necessary
documents. In the event the Contractor fails to submit all
documents necessary for preparing the Final Account, the
Architect or Quanti ty Surveyor shall nevertheless complete and
issue the same based on the information available within the
Period to complete the Final Account stated in the Appendix. On
completion of the Final Account, the Architect or Quantity
Surveyor shall then send a copy of the document to the Employer
and Contractor.The measHre111e1H aHd •,<alut11io11 of !lie Works
sha-11 be eompleted wi111in tlie Period of F'inal Meas1c1remen1 and
Valuation stated in tlie Aptie11clix and tlie Arehiteel shall theA
issHe a 11c1rnllimatc ~ertifieate of tiayme111 together with a cop} of
the sHm111aF)' of the measiiFe111en1 011d valua1i011 ne1 later 1han the
e11d efthe said period and befoFe the issue of the FiAal Certificate
undeF Glause 30.7.
30. I 0(a) lf notliing in the said Final Account is disputed by
the Employer or Contractor withi n three (3)
Months from the date of receipt of the Final
Account from the Architect or Quantity Surveyor,
the Final Account shall be conclusive and deemed
agreed by the pa11ies.
30.I0(b) If either party d isputes the Final Account, the party
disputing the Final Account shall by written notice
to the other party (with copies to the Architect and
Qua111ity Surveyor) set out any d isagreement
complete w ith particulars within three (3) Months
of the date of receipt of the Final Account from the
Architect or Quantity Surveyor. The Architect or
Quantity Surveyor within three (3) Months from
the dale of receipt of the grounds of dispute shall
either amend or not amend the Final Account. Any
party disagreeing w ith the amended Final Account
or decision not to amend the Final Account shall
refer the dispute to arbitration under Clause 34.0
 Annexure E 461
A1111e.rnre E 460

30.ll(c) the omission of all P.C. Sums and the related profit
within three (3) Months from the date of receipt of
provided by the Contractor in the Contract
the amended Final Account or decision not to Documents and the substitution of the amounts
amend the Final Account. Failure to refer the payable by the Employer to the Nominated Sub-
dispute to arbitration within the stipulated time, the
Contractors and Nominated Suppl iers together w ith
Final Account or amended Final Account shall
the pro-rata amount for profit; and
deem to be conclusive and agreed by the parties.
30. 1 l(d) the adjustment of Provisional Sums and omission
30.1 0(c) Any dispute on Liquidated Damages, set-off and of any Provisional Sums if not expended.
interest which the Employer is entitled to make
under the Contract shall be referred to arbitration.
The fol lowing shall not be included in the Final Account and are
matters to be resolved separately between the Employer and
-Ref!~ either before or within six months after ~
Contractor:
Cumputing Compleuon of 1l1e Works the Centractor ·,hall se11d
le---i-he Architect al l documents necessary for the
30.1 l(e) any Liquidated Damages imposed by the Employer
fJUrp0ses of the comfJulati011s required by th~,e
under C lause 22.1;
Gettd1ti0ns mcluding all dornments relaung tu
accolmts of ~/om111atea SHh Co111ractors anEi
30. l l(f) set-off by the Employer where it is expressly
Nominated Suflpliers.
provided in the Contract under Clause 30.4; and

Computoti611--6f In tl1e seHlement of accounts 1l1e amounts paid or 30.II (g) interest payable by either of the parties to the other
C{mwaet--Sufll 1iayable under th~ Bflflrepriate sub contracts by the
party under Clause 30.17.
f'.ontractor 10 Nominates Sub Contractors or
Nominat<:!cl Sup1~liers, tl1e amount paid or I ~ Unless a written notice for arbitration shall have been given
Conclusiveness 30.12
by virtue of Clause 11 .4 111 respect of fees or charges
of the Final under Clause 34.0 by either party within the stipulated time
for which a flFB\'isional slim is 11ieluded in the
Account stated in Clause 30. 10, the Final Account or the last amended
Contracr Bills. the amm1111:, paid or payabl~ 111
Final Account shall be conclusive and deemed agreed by the
respect ef any 1nsurai1ces maintained i11 c0mfJliai1ce
parties other than any outstanding items to be resolved separately
with ClaHse 19.3. tht! leRder ,um (or SllCh otl1er
between the Employer and Contractor under Clauses 30.11 (e) to
sum as is appropnale in accerEianee with the term;
30. I I (g), except where the Final Account is erroneous by reason
of Lemler) fer •.,,.h,ch a t~nder made under Clause
of:
27.8 is accepted and 1l1e \'alue of any worl.
execllleEi by Hie Conlraetor fer which <1 prnvisional fraud, dishonesty o r fraudulent concealment
30. I2(a)
sum is included in the Centract Bills shall be set
relating to the Works; or
against the relevant flrime eosl er provisional sum
stated in the Contract Bills er ari,ing lmder the any arithmetical errors in any computation.
30. 12(b)
/\rchlleet's i11struetio11> issHed under Cla1c1se 11 .3 as
tht:' case may be. anEi the balanee. alter allewing in
l ssuance of 30.1 3 The Architect may issue a Penultimate Certificate for the release
all cases "pro rnlt." for the C0n1rac10r's profit al the of the retention sums and any other outstanding sums for all
rates shown i11 the Contrad Bills shall be adEied to
Penultimate
Certificate Nominated Sub-Contractors ancVor Nominated Suppl iers not
or ilt!ilumeil lrum iii"' Crn111ac1::Su111. j,,u Jeduccllult
later than fourteen ( 14) Days after the Certificate of Making
shall lie macle in respect ef !Ill) damage, paid or
Good Defects has been issued.
~ I to the Contractor by any sub c01Jtrnctor er
~ Issuance of 30. 14 The Final Certificate shall be issued :
Final
Items in Final 30. 11 The Final Account of the Works shall show : 30.14(a) within twenty one (2 1) Days after the Period of
Certificate
Accoun t l lonouring Certificates for the payment of the
30. 1 l(a) the adjustment made to the Contract Sum; Penultimate Certificate; or

30.ll(b) the amounts to which the Architect considers that within twenty eight (28) Days after the Certificate
30. 14(b)
the Contractor is entitled under the express of Making Good Defects has been issued, in the
provisions of the Contract; event no Penultimate Certificate has been issued.
 A1111ex11re E 462
~{HHff 30. 151 Belere 1l1e e1<piration of lluee (3) n101Hhs from the end of the
Final Defects Liability Perios slates in the Appensi1, or from
C ertificate eompletiOA of mal<i11g goos defee1s u nder Clat1se 15.0 or fro m
receipt by the A rchi1ec1 of tl1e dornm ents retim-es to in sub
clause 30.6(i) w h icl1ever is the later the Arch ileel shal l isst1e
a The Final Certificate wht€tt-shall state:
30. 151-(ai) the Final Account; lessthe stun paid to the
Genlraetor unEler Interim Ce11itiea1es and the
anrnunt staled i11 the Appendik as Limit of
Rele11ti on i::uns .
30. 1S+( bti the total sums certified in previous payment
) certificates (whether paid or not paid) to the
Conlractor;the Contract Sum aEijusted as necessary
i11 accordance 'n'ilh the pre.,,ision m these
Cottd+!iens-c
~ the difference. if a11y, between 1he two shall be
e1<presses as a bala11ce dth! 10 lbe Ce1Hractor fi·om
the Ei11p loyer or to the Employer from lhe
Conlraelor as 1l1e case 111ay Ile. Subject lo any
Elesucti011s au1l10rised by these Cons itions, !he
llala11ee as from leuneen ( I <I ) says atier the issue
of the 1-ina l Cert ificate sha ll ee a s eb1 13ay0ble by
!he employer to !he Contrnctor or as lhe case may
be from 1l1e Con1rac10r lo the E-:mp loyer.
and the difference, if any. between the sums shall be the balance
due to the Contractor by the Employer or conversely as the case
may be. The balance shall be payable by the Employer lo the
Contractor within the Period of I lonouring Certificates or if it is a
debt payable by the Contractor to the Employer. shall be payable
by the Contractor within the Period of Honouring Certificates.
The Architect shall not be obliged to issue the final Certificate
before the issuance of a Certificate of Making Good Defects.
F inal 30. 16& No certificate of lhe /\rehi1ee1 sha ll of itself Ile The Final
Certificate n ot Certificate shall be conclusive on the final value of the Works
co nclusive with the exception of any outstanding claims between the
No C ertifieote
Employer and Contractor under Clause 30. 11 . The Final
of' • •ehiteet Cet1ifteH~h11l! not be-conclusive-evidence that any-work;
Shell of h self materials 0fand goods to which it relates and designs (if any)
be Con elus i~·e executed by the Contractor and/or Nominated Sub-Contractors
E ~·idenee are in accordance with the Contract.
Interest 30. 17 If the Employer fails to pay the Contractor the amount due on
any ce11ificate (less any Liquidated Damages and set-off which
the Employer is expressly entitled to make under the Contract)
atler the Period of Honouring Certificates, or the Contractor
owes a debt or fails to pay any sum due and owi ng to the
Employer within twenty-one (21) Days after receipt of written
notification by the Employer of such debt or amount owing. a
simple interest based on the Maybank Base Lending Rate plus
one ( l ) percent shall be payable by the defaulting party on such
outstanding amount until the date payment is made.
Annexure E 463
31.0 ii.O utbreak Of Hostilities
Hostilities - 31.1 If during the cu1Tency of thei5 Contract there is an outbreak of
Odetennination hostilities (whether war is declared or not) in which Malaysia is
by Employer or involved on a scale involving the genera l mobilisation of the
Contractor Malaysian Anned Forces of the Go, emmenl in lhe Stale or
Stales of Malaysia in which the Works arc to be carried out. then
either the Employer or Contractor may at any time by written
notice delivered by hand or by registered post 0F--l'eeerdea
~ to the other, fo11hwith determine the employmelll of the
Contractor under theis Contract.
Notices of 3 1.2 Provided a lways that such w rilten notice shall not be given:
Odetermination
3 I .2(at) B before the expiration of twenty eight (28) d Days
from the date on which the order is given for
general mobilisation as aforesaid; or
3 l .2(bti) A after Practical Completion of the Works unless
the Works or a11y pa1t !hereo f' have sustained war
damage as defined in Clause 3-2-4-32.2.
Arehiteet's 31.3 After a written notice under Clause 3 1. 1 has been given by either
1-ffst-ffiettons-A r the Contractor 10 the Arehitect---er-f8 or the Employer, the
R regarding Architect may within fou11een ( 14) s Days issue i11s1ructions .'\I to
Pprotective the Contractor requiring the execution of Stl€1+-protective work as
Wwork spec ified in the inslrt1cl io11s and the Contractor ~ shall comply
with such i11s1n 1eli0FtS-AI, as if wrillen notice of dete1111ination
had not been given.
If the Contractor for reasons beyond his control is prevented
from completing the work;, to which the said ifl51-rtlc1-ie11-A I relate
within three (3) m M onths from the date on which the instrnctions
were A l was issued, he may abandon such work.
*In the e,·enl of outbreak of hostilities lhe 13arties may at any lime l:ly agreement between lhe111 make
such ltniher or other an-angemenls as !hey ll1i11k fit EB meet the ein,umslances.
Puyment ~ Upon tl1e e1,pira1ion of fm111een ( I I) days from 1l1e
Resulting from sale on which notice of determirmlion has Ileen
Oeterminet1011 gi''e11 by the Lmilrnelor to 1he l\ rch rleel or 10 the
Employer unaer Clause 31.1 or v, here the works
are reEjuires l:ly 1he /\rehitect unser Cla11se 31 .J ans
upon completion or abanson1ne1ll as the ea,e niay
~ y such works, 1l1e previsions of Clause 31.3
(elieepl sub dause 26.2(ii)(s) of lhe,e C0nsi1io11s)
shall apply ans the Coillraetor sliall Ile pais by the
Employer the , alue of any work e1<eet1tes pursuant
lo in,trnction given unscr Clause 31.3, the \'Hlue
lleing aseenai11ea in aceoraanee witl1 Clause 11.5
as if sut:h work;; were a Variation requires b)' the
Arcllllect.
 A1111e.wre E 464 Annexure E 465

Payment 31.4 Upon the expiration of fo urteen (14) Days from the date on 32.24(a,) damage occurring (whether accidentally or not) as
resulting from which written notice of determination has been given by either the direct result of action taken by the enemy, or
determination party under Clause 31 . 1, or where on completion of the works action taken in combating the enemy, or m
required by the Architect under Clause 31.3, or abandonment as repelling an ttlutg-+tlt.W-attack by the enemy;,
the case may be of any such work, the provisions of Clause 26.4
shall apply. 32.24(btt) damage occurring (whether accidentally or not) as
a direct result of measures taken under proper
32.0 War Damage authority to avoid the spreading of, or otherwise to
mitigate, the consequence of such damage as
Procedures 32.1 In the event of the Works OF--any- pan-tl½er~or any unfixed aforesaid;,
Ffo llowing materials 0fand goods intended for, delivered to and placed on or
Wwar adjacent to the Works sustain war damage then not withstaoding 32.24(ctti) accidental damage occurring as the direct result of
Ddamagc «, aoything expressed or implied elsewhere in lheis Contract: any precautionary or preparatory measures taken
~ under proper authority with a view to preventing or
:\leteriuls 11nd 32.l(at) the occurrence of such war damage shall be hindering the carrying out of any attack by the
~ disregarded in computing any amounts payable to enemy or of precautionary or preparatory measures
the Contractor under or by virtue of theh Contract;, involving the doing of work 61t-tt¼nd end 1at.t!A
1111der proj:ler autheFH) 111 a11> wa> in anticipation of
32.1 (btt) the Architect may issue t1¥..tfl1t.'t-ww.,-AJ requiring enemy action herng in either e111,e measures
the Contractor to remove and/or dispose of any involving a substantial degree of risk to property.;
debris and/or damaged work and/or to execute such provitl1ng tl1at the measure, menllone!l !lo 1101
protective work as specified;, ~ h e imposing of re,1ne11u11•; on 1l1e disple>
of ligl11s or measuret; lelte11 for 1re1n111g purposes.
32.1 (ctti) the Contractor shall reinstate or make good such
war damage and shall proceed with the carrying out For the purpose of 1h1s sub ce11d11io11, sueh ttellon ageHlSl-t-l-ie
and completion of the Works, and the Architect ene111y 1s reforre!l 10 111 sub elause 32. l(i) shall in relelien 10 eny
shall grant to the Contractor a fair and reasonable sh ip or e1rcraA talci11g part 1n sueh ae11011. be !leeme!l 10 eo11111rne
extension of time for the completion of the Works; u111il Ille ship ar aircraft Ile, relumed 10 ba, ~ ens ineludes na, a l,
and mtl llel)' or air reeo1me1ssanees mid patrols.

32.l(dw) the removal and disposal of debris or damaged 33.0 Antiquities

work, the execution of protective works and the
reinstatement and making good of such war Antiquities, 33.1 All foss ils, antiquities and other objects of interest or value which
damage shall be deemed to be a Variation required ~ may be found on the sSite or in excavating the same during the
by the Architect. 8e ¥ property progress of the Works shall become the property of the
()of Employe,· Employer. Upon discovery of such objects the Contractor shall
Arehilecl's If al any lmcie 111ier 1l1e occ~1rrence of •nar dirniage under 8attse fm1hwith cease work and shall not disturb the object and take all
l-tts-miet-H11l'i 32.0 the e.\pres,1011 --pro1ect1•, e 1H1rk" e·, u•,ed m tht! saitl Clau,e necessary precautions to preserve the object in the exact position
-"'ftc. W!t1 sllall ee EleemclLitt.±tlelu!l~ 11~ maller , 111 n:",pe.1 of ,, l11cl1 tilt! and condition as it was discovered. He shall immediately notify
I}~ Arel111ec1 ct1n 1s,ue ms1n1c11011s uneer Chrnse 31.J a11d sui'l elt1us.- the Architect or the Site Staff of the discovery and the Architect
Jb.l(ii) llRG aAy 111slructio11, ·,o is,ue!l prior to Lhe dnte on-whid1 shall issue rele-vttm--written instruction m this regard to what has
Ftet«:t! of determt-RAf-ffin 1s gi.•en or recened by 1he 1-.mpltl)t'F and to be done.
whieh lw,e HOl been completely e,mci11lietl ·N1th shall be deemed
lo ha,•e been gn e11 un l i t ? ~ ~ C'ontroeter's If i11 the 0pi111on ef 1l1e Areh11t!el e0mpl11111ee wilh his i11strue11ons
Lass end/or 1A regar!l oh, 11111 Ila, 10 be do11e 111, olved the Contrt1ctor ttt--4reef
Emj}J&yeP! ~ c e 10 BR) eompe11sa11on .... 1m:h mt1} E;1,pe11se i11 less en!l 1or expense for which he would 1ml he re1111buned by a
EtttHlemenl lo al any time become payelile mu of monie., t')rDY1tled b) Campli11nee payment made ~mder BR) ether provis1011 IA 1his Ce1llraet lhe11 the
~SIHWR Parliame111 in Ft!.,peel of ·war damage ·,u.,tamed b) the Works tlr with A.rehiteet's Archi1ee1 shall hi1n,elf eseertem or 1nstrllel the Quan1i1y
in Respeet of any pan thereof or a11y unli\ee matenab or goods 111le11ded for lnstruetia11~ SuF\ eyor lo esceflein the emount of such less andler expense end
-WM-Dttmage the Worb wh1el1 shall el any time beeomt! the rropefly of the any erneunl fr01ci1 time 10 11me so eseenai11ed shall lie edae!l 10
e mt')loyer. the Co111rac1 Sum. !fen Interim Cenifiee1e is 1ss~1e!l after the de1e
of aseefle inment BR)' s~1ch emou111 sl1all be added 10 the tllllotllH
Definition of 32.24 The expression "war damage" means: whieh weul!l otherwise be s1<11e!l a, due in such eenifieale.
\+war
Odamage
 Anne.rnre E 467
Ann.exure E 466

Contrnetor to ;H Tile Co111rnelor shall s1c1bmi1 lo tile Arehileet of s1c1eh details of

the 111easmeme1ll a11d ~'aluation 111 sub ela1c1se
Subm# s1c1eh direel loss aml,lor ellflense as are reasonably necessary I-Or
!Re aseertai1rn1ent under s1c11l el1rnse 33.2 of this Cond ition. 30.5(i): or
Neeessur,•
Det&ik 34.5+(dw ) the rights and liabilities of the parties under Clauses
25 .0, 26.0, 31.0 or 32.0; or
34.0 Adj udication And Arbitration

34.5+(cv) the unreasonable withholding of consent or

Set-off disputes 34.1 Reference to adjudication is a condition precedent to arbitration
agreement by the Employer or the Arehiteet 011 his
re ferr ed to for disputes under Clause 30.4. The parties by written agreement
behalf or by the Contractor,,
adjudication are free to reter any other disputes to adjudication. Any dispute
under Clause 30.4 after the date of Practical Completion shall be
then such disputes or differences shall be referred to arbitration.
referred to arbitration under Clause 34.5.

Procedui·es for 34.62 Upon the disputes or differences hav ing arisen then:
Notice to r efer 34.2 Where a party requires a dispute or difference under Clause 34.1
to a djudication to be referred to adjudication, such disputes or differences shall A a ppointment
of A ai·bitrator 34.62(ai) any pmiy may serve written notice on the other
be referred to an adjudicator to be agreed between the parties. If
patty that such disputes or differences shall be
after the expiration of twenty one (21) Days from the date of the
referred to an arbitrator to be agreed bel:\veen the
written notice lo concur on the appointment of the adjudicator,
parties; andeF
there is a failure to agree on the appointment, the pai1y initiating
the adjudication shall apply LO the President of Pertubuhan
34.62(bi-i) failing agree111e11t or i11 ti'te absence er reply er
Akitek Malaysia to appoint an adjudicator, and such adjudicator
relueta11ee le act by the ether flBFty, the11 the pa1ty
so appointed shall be deemed to be appointed with the agreement
ser>,.ing ti'te written netiee 1f!U)' if after the
and consent of the parties to the Contract.
expiration of fcmrteen ( 14) twenty one (21) a Days
from the date of the written notice to concur on the
Adjudication 34.3 Upon appointment, the adjudicator shall initiate the adjudication
appointment of aRthe Aa rbitrator, there is a failure
Rules in accordance with the current edition of the PAM Adjudication
to agree on the appointment. the party initiating the
Rules or any modification or revision to such rules.
arbitration shall apply to the President ~ l t y
President ftir the ti1He aeing of Pe1iubuhan Akitek
Decision of t he 34.4 If a party disputes the adjudicator's decision, he shall
Malaysia to appoint an arbitrator, and such
a djudicator nevertheless be bound by the adjudicator's decision until
arbitrator so appointed shall be deemed to be
Practical Completion but shall give a written notice to the other
appointed with the agreement and consent of the
party to refer the dispute which was the subject of the
parties to thcts Contract.
adjudication to arbitration within six (6) Weeks from the date of
the adjudicator's decision. The adjudicator's decision shall be
"Et. Porte" 34.7~ Upon appointment, the A arbitrator shall. •1, ith desfla,eh, initiate
final and binding on the parties if the dispute on the adjudicator' s
Hellfll½g the arbitration proceedings in accordance withl-Ollnwing the
decision is not referred to arbitration within the stipulated time.
Arb itration Act provisions of the Arbitration Act 2005 1952 (Revised 1972) or
The parties may settle any dispute wilh the adjudicator' s decision
a nd Rules any statutory modification or re-enactment to the Actthereef fer
by written agreement between the parties or by arbitratio n under
the li111e being in Foree and the PAM Arbitration Rules or any
Clause 34.5.
modification or revision to such rules.thereof. The hearing 111ay
be lield " ex flane" slHm ld either flarty. aAer he,,.i11g been g1ve11
Disputes ffi' 34.5+ 1n the event that any dispute or difference arises between the
flF0fler netice, tai I lo attend.
Differences to Employer, er the Arehiteet 011 his lielmlf, and lile-Contractor,
be--R-referred to either during the progress or after completion or abandonment of
Powers of 34.84 The A arbitrator shall, without prejudice to the generality of his
Aarbitration the Works regarding:
A arbitrator powers, have power:
34.S+(ai) any matter er thit1g of whatsoever nature arising
34.84(ai) to rectify the Contract so that it accurately reflects
thereunder or in connection lflefewith the Contract;,
the true agreement made by the Employer and I-Ire
including any metier or !hillg leA by this Co11trae1
Contractor;
le tile discretion of ti'te Architect; or
34.8.J.(bit) to direct such measurements and/or valuations as
34.5(b) any matter left by the Contract to the discretion of
may in his opinion be desirable in order to
the Architect;
determine the rights of the parties;
34.5+(cit) the withholding by the Architect of any certificate
to which the Contractor may claim to be entitled to;
Of
 Anne.rnre E 468 Annexure E 469

34.8-1-(cii-i) to ascertain and award any sum which ought to 34. 1O~ (cii whether or not a certificate has been improperly
have been the subject of or included in any i) withheld or not in accordance with these
certi ficate;--a-ttt:l Conditions; o r

34.S+(dw ) to open up, review and revise any certificate,
opinion, decision, requirement, or notice; lHffi
34.8-1-(ev) to dete1111ine all matters in dispute submitted to him
in the same manner as i r no such certi ficate,
opinion, decision, requirement or notice had been
given;
34.8+(f¥i) to award interest from such dates at such rates and
with such rests as he thinks fit:
34.8( I)( i)a on the whole or part of any amount
➔ awarded by him in respect of any
period up to the date of the award;
34.8(f)(ii) on the whole or part of any a mount
&) claimed 111 the arbitration and
outstanding at the commencement of
the arbitral proceedings but paid
before the award was made, in
respect of any period up to the date of
payment; ands
34.8+(g-¥H to award interest from the date of the award (or any
) later date) until payment, at such rates and with
such rests as he thinks fit on the outstanding
amount of any award.
Consolidation 34.9 Where any d ispute arises between the Employer and Contractor
of arbitration and the dispute relates to the works of a Nominated Sub-
proceedings Contractor and arises out of or is connected with the same
dispute between the Contractor and such Nominated Sub-
Contractor, the Employer and Contractor shall use their best
endeavour to appoint the same arbitrator to hear the dispute
under Clause 29.3 of the PAM Sub-Contract 2006.
34. IO(d) whether or not a payment to which the Contractor
may claim to be entitled has been properly withheld
in accordance with these Conditions.
sl1all not Ile 013eHee until afteF Prnctical C01tt13letio11 o r ~
Practical Completio11 of lAe Works er 1em1111atio11 or alleges
1ern1inotio11 of 1l1e Contracto1, , em13l0y1ne11l u11tler lA1, Contract,
or abaneenment of tl1e WeFlrn. ui1less with the writcten eensenl of
~ e y e r or the Architect on his llehalfanEI tl1e Contraeter.
Arbitrator's 34. 1 l e The award of such A arbitrator shall be final and binding on the
Aaward to be parties.
_.;'fi nal and
Bbinding on
Pparties
35.0 Mediation
Mediation 35.1 Notwithstanding Clause 34.0~ of these Conditions, upon the
lfo nder PAM written agreement of botb the Employer and "'1e-Contractor, the
R ru les parties may refer thetrany dispute as to any matter um1Ag ttneer
er out of e r in eo1111 ee1ioA with the carrying et1I of the Works an El
whetl1er in eentract er in lt,rl, or as 10 any e irectien er i11s1rne1ion
or certificate of lAe Architect Br as to contents of or granti11g Br
rel:usal of or reesoes for 011y suel1 Elireetion, instnietio11 or
certifieate for mediation. If the parties fai l to agree on a mediator
after twenly one (21) Days from the date of the written
agreement to refer the dispute to mediation, any parly can apply
to the President of Pertubuhan Akitek Malaysia to appoint a
mediator. Upon appointment, the mediator shall initiate the
mediation in accordance with the PAM Mediation Rules or any
mod ification or revision to such rules. uneer 1l1e Mt!eiatiol1---R-ttles
of tl1e Perlusulum Akitek Mala)·s ia before a meemtor to be
ap13oimeEI hy 1he Presieeut or Defluly Presiee111 ti111.: beiAg of
Pe#Hettlten A kitek Malaysia.

Commencemen 34. IO~ Unless with the written agreement of the Employer and Prier Referenee 35.2 !<or the e•,·oitlanee of eoull1. p P rior reference of the dispute to
!Opening of Contractor, such arbitration proceedings shall not commence ta-Mediation mediation under Clause 35.1 shall not be a condition precedent
A arbitration until atrer Practical Completion or alleged Practical Completion -Ddoes Nnot for its reference to adjudication or arbitration by either the
¥ proceeding of the Works or dete1111ination or alleged determination of the Ppre,judicc the Contractor or the Employer, nor shal l any of their rights to refer
Contractor's employment under the Contract or abandonment or P parties' the dispute to adjudication or arbitration 111 11urs11ant re under
the Works except 011 :Sueh FefeFe11ees eirne13t OR Artiele 3, I or 5 R rights to Clause 34.0 of these Conditions be in any way prejudiced or
of the Artieles of AgreemeAl or on: Aarbitration affected by this clause.

34. 1O~(ai) the q uestion of w hether or not the issuance of an 36.0 Notice
instruction is empowered by these Conditions; sr
Notice 36. 1 Any written notice or other document to be given under the
34. 1O~( btt any dispute or difference under Clauses 31.0 and Contract shall be given or sent by:
) 32.0;--&
36.1 (a) hand;

36. l(b) ordinary mail or registered post; or

 Anne.wre E 470 Annexure E 471

Failure to 37.4 If the Contractor fails to provide or maintain the validity of the
36.l(c) facsimile transmission . e xtend the Pcrfonnance Bond in accordance with this clause, then without
validity prejudice to any other rights and remedies which the Employer
36.2 Any written notice or other document shall be deemed to have may possess, the Employer shall be entitled to withhold or deduct
Notice deem
been duly served upon and received by the addressee: an amount equal to the Perfonnance Bond fro m any payment due
se1·ved
or to become d ue to the Contractor.
36.2(a) if delivered by hand, at the time of delivery;
Payments from 37.5 ln the event the Employer determines the employment of the
36.2(b) if sent by ordinary mail or registered post, after the Contractor in accordance with Clause 25.0, or if there is any
three (3) Days of posting: or Performance breach of the Contract, the Employer may call on the
Bond Perfonnance Bond and utilise and make payments out of or
36.2(c) if transmitted by way of facsimile transmission, at deduction from the Performance Bond for the completion of
time of transmission. and/or rectification of the Works and reimbursement of loss,
and/or expense suffered by the Employer. On completion of the
Proof of Notice 36.3 In proving the giving of a written notice or any other document Works, any balance of monies remaining from the Perfomiance
under or in respect of the Contract, it shall be sufficient to show: Bond shall be refunded to the Contractor without interest.

36.3(a) in the case of hand delivery, a signed Return o f 37.6 In the event the Contractor determines his own employment in
acknowledgement of receipt; Performance accordance with Clause 26.0, the Employer shall within twenty
Bond eight (28) Days return the Performance Bond lo the Contractor
36.3(b) in the case of registered post, a receipt of posting for cancellation .
from the Post Office; or
38.0 Governing Law
36.3(c} in the case of facsimile transmission, that the
facsimile transmission was duly transm itted from Governing L aw 38. 1 The law governing the Contract shall be the Laws of Malaysia
the dispatching terminal. as evidenced by a
transmission report generated by the transmitting
equipment.

Written 36.4 All written communication shall be sent Lo the address stated in
communicatio n the Articles of Agreement unless otherwise notified in writing.

37.0 Performance Bond

S ubmission of 37. 1 The Contractor shall bt!fore the Date of Commencement of the
Pe rformance Works, submit to the Employer a Perfom,ance Bond for a sum
Bond equivalent to the percentage stated in the Append ix as a security
for the due performance and observance by the Contractor of his
obligations under the Contract up lo Practical Completion of the
"Wurl<,.

Form of the 37.2 The Performance Bond shall be in the fo rm issued in the terms
Performance and conditions specified in the Contract or otherwise approved
Bond by the Employer.

Validity of the 37.3 The Performance Bond submitted by the Contractor shall remain
Performan ce valid until three (3) Months after tbe Completion Date. Where
Bond the Works would not be completed by the Completion Date, the
Contractor shall before the expiry of the Performance Bond,
extend the duration of the Performance Bond to expire three (3)
Months after the projected Practical Completion of the Works.
 Annexure E 472 A1111ex11re E 473

Appendix Period of Delay [if none stated is a 21.0 and 26.0

continuous period of three (3) Months]

Clause Interim Claim Interval [if none stated is one 30.1 and
(I) Month] 30.13
Defects Liability Period [if none other stated 15.4
Period of Honouring Certificates [if none 30. 1
is twelve ( 12) Months from the day stated in
stated is twenty one (21 ) Days from the date
the Certificate of Practical Completion of the
of the Certificate]
Works]
Percentage of the value of materials and 30.2
Insurance cover for accidental bodily injury 19.l and RM ... ...... .... .............. .
goods included in the Certificate [i f none
to or illness of third parties (whether fatal or 20.A or 20. B
seated is I 00%]
not), accidental loss of or d amage to property or 20.C
belonging to third parties (the aggregate
Percemage of Certified Value Retained [if 30.5
liability of the insurers shall be limited by
none stated is I0% of the value of work
twice the limit of indemnity caused by any
executed and materials on site included in the
one occurrence) [if none stated the insured
certificate subject to the L imit of Retention
liability shall be not less than RM I million]
Fund]
Insurance deductible amount [if none stated 19.J and RM ...... ..... .. .... .......... .
Lim it of Retention Fund [i r none stated is 5% 30.5 RM ......... ............ ... ... .
shall be not more than RMS0,000 an 20.A or 20.B
of the Contract Sum]
occurrence] or 20.C
Period lo complete the Final Account [if none 30. 10
Percentage 10 cover Professional lees for 20.A or 20.B RM ........................... .
stated shall be fifteen ( 15) Months from the
reinstatement [if none stated is a sum or 20.C
date of Practical Completion]
equivalent to I 0% of the Contract Sum]
Amount of Performance Bond [if none stated 37. 1 RM ......................... ... ..
Amount for removal of Debris [if none stated 20.A or 20.B RM ....... ..... ..... .......... .
is 5% of the Contract Sum]
is a sum not less than the equivalent of l % of or 20.C
the Contract Sum]
(*) Footnote - This is to be used when there are d/ffere11/ complelion dc11e.1·.fe1r identified sections or
parts ofworks
Value of existing structure together wi th a ll 20.C RM. ...... .... ...... .. ....... ..
the contents owned by the Employer or for
which he is responsible

Date of Commencement 21.0

Completion Date 21.0

L 1qu1datcd Damages 11.cr at the .-ate of RM ... ....... .

per Day

Sectional Completion(*) 21.0

Brief description of section of the Date of Completion Liquidated

Work Commencement Date (21.0) Damages at the
(21.0) rate of (22.0)

RM ...... . per Day

2 RM ....... per Day

3 RM ..... .. pe r Day
 Index 475
A1111e.wre E 474

Index I
Claims By Employer
Adjudication 105
298 defects rectification
appointment of adjudicator 102,147
298 delay in completion
decision 59
299,300 diminution in value
disputing a decision 39
266,268,298 failure to comply with Al
reterral of disputes 55
lS,0, lti.O end J O.II ....................................... . 298 common law (damages)
Defect~ b1ebtl ity Penee (1ft1ene ether stlltee is <i rules
f!IBfllhs frem the eay Homes m the CeA1tieah.• er Claims by Contractor
Preeueal Cempleuen efthe Werb.] Arbitr:ltion 190
common law
appointment of arbitrator, 189
300 contractual
•••••••••••••••·•u••••••••••••••••••••••••••••••••••••••••••••• procedures 189, 191
Perce1Hllge 10 ee, er Pref~ssHllldl -h!eS 301,302 Loss and Expense
Arbitration /\ct 2005
304 EOT (see EOT)
····························································•"' award
Dote efCemmence1~ commencement 303
consolidation of proceedings 303 Conflict
21 .0 ····························· ................................. . between contract documents 41
Dole fur Carnple11011 powers of arbitrator 302
267,300 between specifications and
22.Q el lhe rele e f RM per .............. . referral of disputes 51
statutory requirements

2-1-AI Architect Construction Operations 24

Secuenal Cemplemrn (' ) Architects Act 1967 5, 11
certification duties 257,259
~ Contra Proferentum 152.232
Date efCom111enee1T1eill (2-hO) definition 5, 11
Ascertametl Da1T1oges at
the rah! ef (22,0) Contract Documents
Architect's Instructions 10
35 App1rndix
generally Articles of Agreement I, 21,4 1
confirmation of 36
+ copies 42
emai ls, minutes etc 35
custody 42
fa ilure to comply 38
Conditions of Contract 11, 21
power to issue 37
Contract Drawings 41
discrepancy 31
Assignment 113,361 41
Letter of Acceptance/Award
printed form 83,84
Bills of quantities (see Contract Bills)
Pened eftleloy (1fn0ne s101ed 1s 011e (I) mo11tl1 ) ~ .-0 ··········--·····••"·····"···························"·'···
Contractor's Alternalive
Pnrne ces1 su1ns--fef-whieh the Ce,111rae1er tles1r ~ 27.8 ... ·············"················--············--········· Bonds Design (CAD) 25,26
Performance bond 311
tetlaef, requirements 311
retention Fund 269 Contractor 's Design Portion (CDP) 25, 26
Penetl ef Interim CeAifieatesftf none stotetl is ene J O. I ••••••••••••••••••••••••• •••u••• • ••••••••••••••u•••••••••
312
return of
moot-h-J validity 31 1, 312 Contract Act
contract ing o ut 152
JO.I ............................................................. . 24. 51. 53
P..!.: »rl nf tlA1uu1nng •>fC.-r1 ilicates CJDB
[~lated 1s 14 tlay, frem the earn of the Contract Bills
lmenm CeA11ica1ej. Certificates Definition 12
Errors 264 General 83
Pereeetage ef Ceruliee Value Retltitletl
JOA ............................................................. . 163
Extension of Time
( l+-!l{me ·,tawl is net e>,eeeeieg I0 ~o ef CeritHK4 Final Certificate 27,285,287 Contract Sum
interim Payment 257 Definit ion 5,89
Mltll)
Making Good Defects 106 adjustment 89
J0.1 RM ......................................... . Non Completion 147, 148
~l-Fttml 109 355
(+Hlonl! ·,laletl is nol e>,ceeeing Mo 0fC0etrae1 Partial Completion Collateral warranty
Payment to Nominated Supplier 252,253
Sumi Completion Date II, 143,145,151,153,166
Payment to Nominated Sub
Penotl af Fieal \ 4easuremeRl &Rd Valua!ieA [if
~ .............................................................. Contractor 23 8
Penultimate Certificate of Payment 14, 284
noaej stah!d is 6 meeths from the day eametl 1n the
Ceft+Hea~:+Praetieel C:0mple11on ef 1he Works! Practical Completion 98, IOI
Sectional Completion 11 0, 145
(tJ Poo/110/e TJ,i~ is 10 he 11..etl w!te11 1,lfef'f! HH tliffeHnl eo1t1ple1i1m dale~for- itleHli:{+etHeelions 11,
flHi'I~ II/ w11rks,
 lnde.r 476 Index 477

Contractor determination by NSC 24 1 Fin al Account Materials

Al's failure to comply 38 effect on sub contractors and s uppliers 209 Defin ition 13,278 generally 91
bankruptcy/insolvency 206 effect on performance bonds and conclusiveness 283 insu rance for 94
design responsibility 21, 22, 27 guarantees 2 1I timetable for IOI, 2 12,280 retention of title 93
duty regarding material and wrongful determination 2 13, 222 upon determination 2 11 not brought on site prematurely 250,264
work manship 21 , 22,247 wa rranty of title 94
duty regarding programmes 45, 47 Determination by Contractor Final Ce rtificate
duty 10 give notices 44, 5 1, 155, 191 , for interference/obstruction Definition 13 Nominated S ub Contractors (NSC)
291,307, 308 by Employer 2 17 Issuance 285 generally 227
duty to indemnify Employer 63, I I 5 for non payment 2 16 conc lusiveness 286 Contractor 's objection to nomination 237
insurance ob ligations 11 9, 127, 278 for suspension of Works 2 18 effec t on role of Architect 285 Contractor 's responsibi lity for works 242
oral instructions, for Employer's insolvency 221 delays caused by 162
confirmation of 36 procedure for. 21 9 Functus Offic io 285 determination of employment 2 41
right lo suspend works 71, 275,276,277 obligations and duties post extension of time for 17 1
statutory obligations 52 determination 221 Implied Terms fi nal payment to 240
valuation of works done after 223 retention of title on materials paid fo r 94 nom ination 234
C onstruction Industry fi tness for purpose 27 payment to 238,240
Development Board (Cll)B) 24, 51 ,53 Detei-mination by Employer reasonable skill and care 27 Penultimate Certifica te o f
for fai lure to commence works I 98 payment 14,284
Consultant for suspending works 198 I nsurance re-nomination 244,245
generally II for fai lure to proceed regu larly and All risk. insurance 12, 127, 135, 139 suspension of works 276
Specialist 9 di ligently I I 99 by Contractor II 9, 127,278
for refusing to comply with A l 200 by Employer 133, I 35, I 39 Nominated Supplie rs
C ommencement for abandonment of works 20 I cessation 278 Contractor's objection 248,251
for insolvency 205 exist ing structures and their payment 10 253
Date of 143 post determination rights and duties 206 contents 139 re-nomination 252
Sectional 145 procedure for 20 I fai lure to insure 131,136, 140
record of works 210 foreign workers 124 Notices
Damages remedy 2 13 indemnity not reduced by insurance 12 1 Generally 307
liquidated 147, 151 payment of proceeds from claims 131 of determination 202,204,29 1
inform in writing 149 Drawings (see Conti-act drawings) personal injury or death 119 to authorities 51
pena lty 15 1 Workmen 's Compensation 123
recovery 148 Employer Novation 11 4,360
159 definition 19 Interest 149, 154, 21 2,2 13,269,283, 289
set off
assignment of rights II 3 Partial Possession
Defects
contractual obiigations 4, 5, 9, 55, 145 Interim Certificates (see Certificates) with consent 109
insolvency 22 1 amount due 26 1 without consent 110
Certificate of Mak ing Good 106
Liabil ity period 19, 103 interference/obstruction by 11 7, 2 17 errors 264
rectificat ion during liabi lity period 103
workmen directly employed by 173, 180 payment on 259 Payment
period of Interim Certificates 257 direct payment ofNSC 's 239, 285,335
Engineer valuation of 262 Final accounts 149
Delay
definition 7, 13 work done by NSC's 238 interest on non payment 283,289
caused by relevant events 172
concurrent delay 156, 159 Interim payment 259, 26 1
Errors, Discrepancy and Divergence notice to set off 266
JJJJ.~la_y_ 74 153. 185 Liability
157
morrirr CtmtratrBills 87
Notices of delay duty of care 27
162
in and between documents 41 PC Sums
caused by NSC fit for purpose 26,29,30,31
priority of documents 41 Definition 14, 233, 247
reasonable skill and care 28,29
Design Instructions 74
Extension of time
by Architect and Consul tants 2 1, 23 Liquidated Damages (see Damages)
genera l principles 155 Possession of site
by Contractor 2 1, 22, 25, 27
claims procedures 156, 159 Dale o f Possession 143
fitness for purpose 26, 29, 30, 31 Loss and Expense
Certificate of EOT 163 deferment o f giving 144
reasonable skill and care 28, 29
157 application by Contractor 191
condition precedent to entitlement
delay byNSC 162 Architect to ascertain matters
Determination Practical completion
effect of amending or deleting giving rise to 19 1, 194
automatic determination Certificate of 98
clause 23 155 Notices 193
by the Contractor (see determination Certificate of Non Completion 147, 148
insufficien t in fonnation .163 procedures 192
by Contractor) 221 effect on right 10 commence
neutra I events 189 arbitration 304
by the Employer (see determination other considerations 170 Lump Sum C ontract 13, 87,3 17,3 19
by Employer) 206 meaning of 14, 95
relevant events (see relevant events) 172
common law determination 60,197,2 14 review of 185
 Index 478

Programme of works Appropriate authority I 83

not part of contract documents 47 other grounds 184
tracking progress 48
EOT 48 Removal of non conforming works and
materials 58
Provisional sums
Generally 74, 75,247 Retention
Definition 14,247 sums subject to 269
[nstructions 74 limit ofrelention 269
fiduciary duty 270
Quality of materials and workmanship fund 269
acceptance of non conforming work 58 trust 272, 273
Architect's duties 59
Contractor 's obligations 22, 58 Retention of Title
effect of Final Certificate 61 93
inclusion of 11011 conforming works
in certificates 58 Risk allocation
removal of non con.forming works 58 XXV

Quantity Surveyor Set Off

definition 8, IS dispute subject to adjudication 267
express rights 266
Relevant events notice to 266
generally IS, 174 rights under general law 266
Force majeure 175
exceptional ly inclement weather 175 Setting Out 55
loss and/or damage due to
insurance claims 176 Standard Method of Measurement 86
civil commotion 176
Contractor not having received Suspension
in due time of rerfonnance by
in formation necessary 33 Contractor 71 , 275, 276, 277
delay in giving possession of site 177 of works ordered by
compliance with A[ 177 Appropriate Authority 174
delay byNSC 178 of works due to Architect
re-nomination ofNSC 179 or Consultant renomination 6, 277
delay on part of craftsman etc of works due Al 178
employed by Employer 180 compulsory 277
delay or fa ilure in the supply
of materials and goods by Employer 180 Valuation
opening for inspection of works 181 Interim certificates 258
act of prevention or breach of variations 75
by Employer 181 rules 75
war damage 181
-ant i¥ it ies 1--lU- \lai:iations
changes in statutory requirements access to Contractor's books
delay caused by Appropriate Authority and records 80
and Service Provider 181 additional expense caused by 79,81
appointment of replacement to after Practical Completion 73
Architect or Consultant 181 Architect's power to order 71 , 72
disputes with neighbouring owners 182 Definition 71
execution of works allowed in valuation of 75
provisional sums 182
entry to and ex it from site, Vouchers
failure to g ive 183 dayworks 76
suspension by contractor 183 materials 22, 57
suspension of works by order of
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