Fourteen days between a letter and the end.

Fourteen days between a letter and the end

Sixteen weeks of this track have assumed the job carries on. Notices get served, determinations get made, money arrives late and then arrives.

Sometimes it stops. And the distance between a project in difficulty and one that has ended is shorter than most people on site imagine: two letters, and a fortnight in between.

This is also where doing it correctly and doing it in temper produce completely different outcomes. A termination carried out properly is expensive. One carried out badly becomes a repudiation, and the party who ended the contract is the party who breached it.

The document that starts the ladder

Before termination for default there is usually a notice to correct, and it has rules of its own that most people never check.

Where you fail to carry out an obligation, the Engineer may require you to make good the failure and remedy it within a specified time. That notice has to do three things: describe the failure, state the sub-clause or provision carrying the obligation, and specify a time to remedy it which is reasonable, having regard to the nature of the failure.

Read that as a limit on the employer rather than a threat to you. A vague complaint about progress isn't a notice to correct. Neither is one that gives you three days to do something that takes three weeks. And a notice that can't name the obligation is asserting a duty that may not exist.

The structure is the same one Week 8 described for claims: describe the event, name the clause, and be specific. The contract asks both parties for the same discipline.

Two notices, fourteen days apart

If the failure persists, termination for default runs in two stages.

The employer gives a first notice identifying the ground relied on. If the matter isn't remedied within fourteen days of you receiving that notice, a second notice terminates the contract immediately, and the date of termination is the date you receive it.

The grounds include failing to comply with a notice to correct, failing to comply with a binding agreement or a final and binding determination under sub-clause 3.7, and failing to comply with a DAAB decision.

Look at what that means in practice. The determination machinery from Week 3 isn't merely a way of settling a valuation. Ignoring a determination that has become final and binding is a termination ground. So is ignoring a DAAB decision, whether or not it is final.

Three of the grounds don't get the fourteen days at all. Where those apply, a single notice terminates immediately on receipt.

They are the grounds where waiting would be pointless: insolvency and similar events, and corrupt, fraudulent, collusive or coercive practice in relation to the works or the contract.

Worth knowing that the corruption provision isn't one-directional. Elsewhere in the conditions you can require the employer to remove any of its own personnel, or any of its other contractors' people, found on reasonable evidence to have engaged in the same practices. It's one of the few genuinely symmetrical remedies in the book.

Your own exits

The contractor has two, and Week 5 introduced the first of them.

Suspension under sub-clause 16.1 comes after a notice stating that it is given under that sub-clause, and not less than twenty-one days. It is available where the employer fails on its financial arrangements, fails to pay, or fails to comply with a binding agreement, determination or DAAB decision — and only where the failure amounts to a material breach.

Termination under 16.2 works from the same family of failures. The notice has to state that it is given under sub-clause 16.2.1, and for several of the grounds it is a notice of intention rather than of termination. For others, termination is immediate.

That labelling requirement is Week 1's rule about identifying a notice as a notice, arriving at the most consequential moment in the contract. A letter that suspends work without saying which sub-clause authorises it isn't a suspension. It's a contractor who has stopped work.

Termination for convenience

And then the exit that has nothing to do with fault.

The employer is entitled to terminate at any time for its own convenience, by a notice stating that it is given under sub-clause 15.5. No default, no ground, no remedy period. The scheme stopped making sense, the funding went, the politics changed.

There is one restriction that matters commercially: after such a termination the employer has no right to further use the contractor's documents. The guidance also notes that in many jurisdictions the applicable law may not permit termination for convenience at all, which is a reminder that the governing law sits above the conditions.

For project controls people the practical point is that this can happen on a job where nothing has gone wrong. The valuation that follows is different from the default case, and the difference is the whole reason the distinction exists.

What happens to the money

Each route has its own valuation and payment provisions, and the pattern is worth carrying even without the detail.

After termination for your default, the employer values what was done and what completing the works costs, and you can end up owing money. After termination for convenience, you are paid for the work and for the consequences of stopping. And after your own termination, the position is closer to the convenience case than to the default one.

Which is why the classification is the entire argument. Everything in this track — the notices, the periods, the records from Week 8 — exists to establish which of those three situations you are actually in.

Practical insight

If a notice to correct arrives, do three things before you reply. Check that it describes a specific failure, that it names the obligation, and that the time given is reasonable for the work involved. If any of those is missing, say so in writing that week. Every step above it in the ladder depends on it.

Keep a termination-grounds register on any job that is going badly. One line per open item: what the ground would be, which clause, whether a notice has been served, and when the period expires. It sounds pessimistic. It is the same discipline as the determination log from Week 10, and it is the difference between fourteen days of options and fourteen days of surprise.

Never suspend or slow work without a notice that names the sub-clause. This is the single most common way a contractor with a good position converts it into a bad one.

And if you are on the other side of it, take the same care. A termination that skips a step, or leans on a ground the notice never mentioned, hands the other party a case that outlives everybody who was there.

Key takeaways

✔ A notice to correct has to describe the failure, name the sub-clause carrying the obligation, and give a reasonable time — which is a limit on the employer as much as a demand on you.

✔ Termination for default takes two notices with fourteen days between them, and takes effect when the second is received.

✔ The grounds include ignoring a notice to correct, a final and binding determination under 3.7, or a DAAB decision.

✔ Three grounds skip the fourteen days entirely: insolvency and similar events, and corrupt, fraudulent, collusive or coercive practice.

✔ The corruption remedy runs both ways — you can require the employer to remove its own people on reasonable evidence.

✔ Contractor suspension needs a notice stating it is given under 16.1, then not less than twenty-one days, and only for a material breach.

✔ The employer may terminate for convenience at any time with a single notice and no reason. What follows is a different valuation, which is why the classification is the whole argument.

What's coming next

One route out of this track has been mentioned in almost every week and never opened: the DAAB. It is the step between a determination you disagree with and an arbitration nobody wants, and the 2017 editions changed it from a board you appoint when there is trouble into one that is supposed to exist from the start. Next week we look at dispute avoidance rather than dispute resolution — how the board is constituted, what a notice of dissatisfaction actually starts, what happens when a decision is ignored, and why the most valuable thing the DAAB does is the work it never gets asked to do.