There is a certain amount for contingency in a contract and due to Force Majeure circumstances a delay has been happened in the implementation of a construction contract and the contractor claims for contingency payment.
What should be done?
2 replies
Mar 11, 2020
First, evaluate whether the risk of this contingency was anticipated in a different part of the contract and allocated there. A.K.A. see if another part of the contract talks about this scenario and says who is responsible. If the contract is silent as to this scenario, proceed to #2.
Second, evaluate whether the contingency clause itself talks about this scenario or is limited solely to other scenarios. If the contingency clause is worded broadly, you may consider paying the contingency. If the contingency is silent, evaluate your relationship with the contractor.
At the end of the day, it may come down to the nature of the relationship. If paying out the contingency keeps this contractor around and happy, that may be a better use of funds than any potential delay caused by searching for a new contractor.
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Helpful
Mar 12, 2020
Thank you so much dear Aaron Cartwright, it was very helpful.