Contractual claims and dispute resolution

Description

The Brief – Contractual claims and dispute resolution

Background

In 2014, Reactor Assembly Co (RAC) engaged Unscrupulous Limited (UL) to assemble and install a nuclear reactor at a new nuclear power plant in England. The project is the first of three reactors which RAC intends to build at the site. RAC is currently reviewing the bids submitted by contractors, including RAC, for the other two reactors. The project is very high profile and RAC is keen to avoid negative press.

The project is being undertaken under the NEC3 Engineering and Construction Contract (Option A: priced contract with activity schedule) and associated sub- contracts. The total of the Prices was £100 million. The Contract provides for Delay damages (liquidated damages) at £1million per day from the Completion Date, as extended if appropriate.

The Works have not gone well. The Completion Date was 14 February 2019, but the Works are far from complete. No Compensation Events adjusting the Completion Date have yet been intimated.

Despite this, UL remains eager to work on the next two reactors. UL considers it may have claims for time and money due to:

  1. An email request by RAC to postpone the first slab pour by 5 days so it could arrange a ceremony with local dignitaries to witness the pour.
  2. Variations.
  3. Additional quantities of concrete which were required for the basement slab pour than UL expected.
  4. The failure by RAC, contrary to its contractual obligation, to deliver certain materials to the site on-time.

In turn, RAC has intimated that it is likely to make deductions or claims for:

(a) Delay damages. (b) Defective works.

UCL has not yet done more than set out its heads of claim. The value of its claims in time and money is not currently clear.

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