Cold Link Africa January / February 2020 | Page 38

CONTRIBUTORS
INCORPORATING COLD CHAIN
Consequences of termination
of principal building agreements
By Edwin Giesteira
Building agreements and the issues around keeping them have been a popular
topic with SARACCA. The association has taken efforts to educate the
industry on how to empower themselves in order to prevent liquidation.
(Part 3 of 3)
T
he following is a continuation from for payment) before relinquishing the its willingness to make delivery to the
Part 2 that appeared in the lien and this matter has already been employer and then issue a notice that the
November/December issue of Cold canvassed in preceding bullets. A employer is in breach of its contract and
subcontractor wishing to exercise any take necessary steps to protect its interests.
lien should issue notice thereof and mark This may include removal to safe storage.
Link Africa.
Furthermore, owing to sub-contractors
being taken for a ride by main contractors, all property over which the lien is to be all for lack of knowledge or funds to exercised. Records of such marks should question are related to bespoke or
get a lawyer to fight for what is rightfully be kept for use in the event a party tries to special items not normally held in stock
theirs, I share some thoughts on the remove them. by the supplier but it could relate to stock
consequences of termination of principal
Materials and goods on site, including
Normally the undelivered orders in
items not prematurely ordered where
building agreement by the employer due those ordered but not yet delivered but the supplier insists on and is entitled to a
to contractor’s default. which the subcontractor cannot cancel cancellation amount (say a bulk order for
(or which the employer does not want copper piping at a reduced price for bulk).
Clause 38.5.5 the subcontractor to cancel), must be NSSA clause 31.6 limits the ability to place
‘The employer shall be liable to the handed over to the employer who is orders for goods prematurely and without
subcontractor for the cost of materials liable for taking delivery and paying the justification and provides a very good
and goods including those ordered before subcontractor for them. This means the reason why subcontractors should ensure
such termination where the subcontractor subcontractor must ensure there is a that the placing of such orders should be
is bound to accept and make payment. signed proof of delivery for them from the covered by notice to the employer and
The subcontractor shall deliver such employer or his designated agent – such contractor and their agreement thereto
materials and goods to the employer in designation must be in writing from the even where it is necessary as part of a
good order’. authorised signatory for the employer, price fixing agreement. The subcontractor
As already raised above, materials and
for example, the principal agent. Where has a common law obligation to mitigate
goods on site can be the subject of a lien the employer refuses or fails to properly damage and may have to communicate
exercised by the subcontractor who can take delivery of goods, the subcontractor with the contractor and employer on
then demand payment (or a guarantee should submit the list of goods and declare preference for a termination fee rather
38
www.coldlinkafrica.co.za
Edwin Giesteira qualified with
a BSc (QS) at the University of
Pretoria in 1978. He acquired an
MSc (Real Estate) at the same
university in 2011. Edwin became
a Fellow of the Association of
Quantity Surveyors (Southern
Africa) in April 2013 and has
worked for various building
contractors mainly as senior
quantity surveyor. Projects include
Unitas, Muelmed and Pretoria
Heart Hospitals and the Carousel.
He was a director of Stocks
Leisure Developments for five
years. He has stood in as lecturer
for Quantities to BSc Construction
Management Honours students
at the University of Pretoria for
a semester. Edwin has been
consulting to project managers
and contractors for 10 years but
now only consults on construction
disputes or acts as adjudicator or
arbitrator in disputes. 
COLD LINK AFRICA •
January/February 2020