It is important to avoid being in breach of the requirements in the warranty and thus liable to the beneficiary for its losses. For instance, the step in provisions may require the contractor to continue working during the period of notice to be given to the party with step in rights. If step in rights are included check what provision if any has been made in relation to any outstanding payments.
Such payments may need to be paid by the party exercising the right to step in.
Check whether any form of payment protection was agreed in the contract with the insolvent party. Also check the exact terms of that protection.
The JCT 05 Standard Building Contract : Law and Administration
Examples of this include payment guarantees and retention bonds. Our article considering retention of title in more detail is here. Check the terms of the contracts with your supply chain including for:.
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Termination may not be the best option and there may be an appetite to complete the project, either through exercise of step in rights or by the insolvency practitioners. The exception to this is if they confirm that any further work will be payable as an expense of the administration.
If you are entering into a new deal, you may want to consider what terms you would like to include. You may require additional financial protection such as payment guarantees, advance payment and payment on delivery of goods. This will hinge on what bargaining power if any you have. This depends whether the other party is in liquidation or administration. If administration, then consent of administrator or permission of the court is required.
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If liquidation, then adjudication is not normally available. Any decisions that may need to be taken in this scenario are not straightforward and depend on the particular circumstances and terms of the contract and any collateral contracts. Moreover you may need to ascertain your position very quickly.
If you need any further and specific advice please contact us. Read more articles.
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Ruth Wilkinson Partner. E: rwilkinson clarkslegal. Clarkslegal Online.
Legal Updates Your client is insolvent — six practical steps 17 January Construction. Can you suspend or terminate your works?
Right to suspend There is a statutory right to suspend for non-payment in section of the Construction Act. Right to terminate You should always consider whether termination is the best option in all the circumstances. It is important that the definition covers the relevant form of insolvency or the clause will not apply.
The employer must notify the contractor immediately if he makes any proposal, gives notice of any meeting or becomes subject to any proceedings or appointment relating to any matters in clause 8.
Standard Building Contract
The contractor may terminate the contract if the employer is insolvent clause 8. SKU View Details. More Information Weight 1. All Rights Reserved. Website by Webberz.
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