15.1 TERMINATION FOR CONTRACTOR DEFAULT
We should first mention an important provision in clause 15.1 of both Books:
the general right of the Employer or Engineer to issue a notice to the Contractor
to make good and remedy any failure and carry out any obligation under the
contract within a specified reasonable time. As we shall now see, Failure by the
Contractor to comply with such a notice to correct is a ground of termination
under clause 15.2.
Clause 15.2 of the Silver Book provides that the Employer can terminate the
contract if the Contractor:
●
fails to provide the performance security as required by clause 4.2;
●
fails to comply with a notice to correct under clause 15.1;
●
abandons the works or otherwise plainly demonstrates an intention not to
continue performance of his obligations under the contract;
●
without reasonable excuse fails to proceed with the works in accordance
with clause 8;
●
subcontracts the whole of the works or assigns the contract without the
required agreement;
●
becomes bankrupt or insolvent, goes into liquidation, or one or other
listed event of insolvency occurs;
●
commits any one of a long list of corrupt acts or the Contractor ’ s personnel
or agents commit such acts.
In the Yellow Book, a similar list of grounds applies but with the addition of
the Contractor ’ s failure to comply, within 28 days of receiving it, with a notice
under clause 7.5 to make good rejected plant, materials or workmanship or an
instruction under clause 7.6 to carry out remedial works.
Where any of the grounds apply, the Employer can give 14 days ’ notice to
the Contractor of termination. Immediate notice can be given in the event of
an act either of insolvency or of corruption (as specified in clause 15.2).
The Employer should take legal advice before giving notice of termination.
The consequences of issuing a notice when the ground relied on is not
made out could be serious and it is not always possible for the Employer to
withdraw a notice once given.
After expiry of the Employer ’ s notice the Contractor is to leave the site and
deliver any required goods and the Contractor ’ s documents and other design
documents to the Employer or Engineer. He should also seek immediately to
assign any subcontracts as required in the notice and comply with any reasonable
instructions to secure the works or avoid harm or damage to persons or property.
Following termination, the Employer may complete the works himself or
arrange for others to do so; and he or his other contractors can use any of the
Contractor ’ s goods and design material as needed.