This month’s contract clinic comes from a developer of a set of warehouses who has had to remove the contractor for non-performance. Senior consultant Aqeel Haque explains how to calculate sums due.
The question:
As a developer of a set of warehouse units converted from old factories in North Manchester, we’re keen to ensure everyone performs to their best. The contractor we had working for us to redevelop the building was, in our view, underperforming. We therefore kicked them off the project for non-performance. How do we now establish the sums due to the Contractor after contract termination?
The answer:
In the intricate world of construction contracts, the termination of a contract is a pivotal yet complex manoeuvre. It’s often viewed as a last resort. The decision to terminate, while necessary under certain circumstances, brings a multitude of legal, financial, and practical implications.
Termination of a construction contract arises typically under dire circumstances. These include non-performance, insolvency, or breach of a critical contract term. Termination is designed to protect against prolonged disputes and financial losses. However, it requires careful navigation to avoid complications.
Calculating Sums Due to the Contractor
Most standard construction contracts include provisions for terminating a Contractor due to default or insolvency. Following termination, the Contract Administrator must calculate sums due to the Contractor. The process of calculating the amount due can vary across different contract forms.
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