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Contract - Extension of Time (EOT) and Loss and Expense (L&E)

posted Jul 30, 2019, 7:58 AM by jeffery jim   [ updated Jul 30, 2019, 8:04 AM ]

It has been a while since I played contractual game and most of these issues are about to be deleted from my memory. I will only use these two clauses for some of my tactical planning work for exclusive clients. So here is a short write-up about both clauses in JKR Form 203 and Form 203A.

First of all, before we enter into the agreement, all parties should understand the concept of "True Intent" which binds the whole covenant as mutually explanatory for all the avoidance of discrepancies and divergence which may frustrates the original contract. The lack of Instructions by Client is not deem valid if the Contractor acted badly by sitting on the issue or showed negligence.

Two, the contract always end with time where time is of the essence of any agreement and time should take precedence for instruction(s) and reason(s).

Contractual game is an interesting game but one have to be smart and tactical enough when playing it. Showcasing outright ill intention and deep-rooted prejudice will not bring the Contractor anything good or even relieve the Contractor from his duties and discharging his obligations. In case Contractors forgot about their main duty, it would be to indemnify the Client at all time, which mean the Contractor shall be a partner and forefront of the Project in a professional manner.

Now, the case is about a Contractor who is trying to win loss and expense after granted extension of time by the client. Can the Contractor be paid for the loss of his time? It depends.

Loss and expense can only be granted if it fits certain caveats highlighted in the following paragraphs.

a) The main obligation the Contractor should perform is to notify through writing in event where certain factor(s) or event(s) (usually in the CPM) which lead to unforeseen possible delays to justify their EOT submission as well as THE HIGHLIGHT OF INCURRED COST DURING THE DELAY and to DISPLAY POSSIBLE DELAY TIME AND COST BY DAYS IN A WORK PROGRAM. The Contractor also should demonstrate the cost of delays through Schedule of Rate and where needed, to breakdown rate or price or cost.

b) If evidence cannot be produced within one month, it is good enough that the Contractor just send in a notice and subsequently furnish with supporting documents and dossiers as mentioned in the paragraph above. Contractor should also notify the Client on their intention for EOT only or both EOT and L&E. Failure to this may disqualify the Contractor from claiming incurred cost under L&E. Similar to EOT, Contractor should notify the Client in one calendar month. Final submission for L&E can be done after the completion of the project when finalizing the Final Account.

c) L&E can only be considered due to the followings;-
(i) Suspension of Works by the Client unless the Contractor failed to protect, store and secure works from deterioration; or to take necessary action to mitigate expenses incurred.
(ii) The Contractor discharged his obligation during a dispute due to neighboring owners - as long it is not the fault of himself, sub-contractor(s) or NSC.
(iii) Delay of Instructions provided that is not issued due to any act, negligence or default by the Contractor and co. Apart from that if Instruction was relayed late or not received in due time.
(iv) Delays in unavoidable or unforeseen or not catered for due to the delays by third party engaged by the Client.

It is dire important that the Contractor should stand true to the original intention of the Contract and properly relay notice(s) in order to be entitled for claims, both EOT and L&E.

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