Cold Link Africa January / February 2020 | Page 40

CONTRIBUTORS
INCORPORATING COLD CHAIN
the termination in terms of clause 38.3 is excluded from the original n/s agreement In NSSA clause 38.5.7, the principal employer to the contractor, remains
based only on the fact of the termination but subsequently paid for in the agent is peremptorily required to so and the subcontractor is required
of the principal contract and therefore subsequent subcontract and other similar certify the value of the n/s works and to recover such amounts from the
the subcontractor’s summary termination theoretical losses. materials and goods for payment by the contractor (subject of course to the
employer. A comparison of NSSA clauses right to request direct payment by
could raise questions of liability.
Clause 38.5.7 36.5.10 and 38.5.7 clearly indicates reference to liens and reservations of
with whom the subcontractor had a ‘The principal agent shall continue to that the latter is intentionally differently ownership as discussed hereunder).
contract and, if the principal contract certify the value of the n/s works executed drafted, presumably to deal with the has been improperly terminated by by the subcontractor and the value of case of an innocent subcontractor uncertified n/s work completed prior
either the employer or the contractor, materials and goods for payment by the caught in the contractor’s or employer’s to termination (together with materials
such damages will form part of the one’s employer.’ default which results in the collapse and goods per clause 38.5.5) is no
The contractor is the only party
damages claim against the other.
Broadly speaking, damages for breach
of contract is a monetary sum which is
calculated as the difference between
NSSA clause 38.5.7 differs substantially
b. After termination, payment for
of the underpinning provisions of the longer certified through the principal
from the similar provisions in the PBA and principal building agreement. There contractor but is made directly by the
NSSA at clause 36.5.10. is no mention of the interim and final PBA clause 36.5.10 provides: payment certificate. The wording of
‘The principal agent shall continue to issue
employer in terms of the subcontract.
c. The final account of the contractor must
NSSA clause 38.5.5 to the effect that include the total value of the n/s works
have been in if the contract had been interim payment certificates in a nil amount materials and goods should be handed and materials and goods which includes
properly executed and the position that until the quantum of damages [36.5.8] has over to the employer who is liable to the sums paid directly to the subcontractor
results from the breach. It will include the been determined and the final account subcontractor also support the direct after termination. Such a final account
mark-up on work not executed, the costs [36.5.3] has been completed. The final liability of the employer for payments must be processed in terms of clause
incurred in this termination including costs payment certificate shall then be issued.’ due after the termination. 34.0 and any direct payments to n/s
the position the innocent party would
of suspension and dealing with superfluous NSSA clause 36.5.10 (termination by staff, plant, office overhead costs, special contractor of the n/s subcontract due to wording indicates that the following
security, balance of contract works and the subcontractor’s default) provides: situation therefore results:
3 rd party insurance costs, extension of
‘The principal agent shall continue to
The conclusion from the above differing
subcontractors reflected in the recovery
statement (PBA clause 33.2.6).
d. None of these provisions suggest that
the provisions of clause 38.5.1 (the
a. Whatever has been certified for
warranties on installed equipment, etc. issue interim payment certificates in a nil the n/s works through the principal works must cease) are removed and
The reality is, however, that it is easier to amount until the issue of the final payment building agreement prior to that the subcontractor is required to
try to incorporate such costs in the price certificate.’ termination and has been paid by the continue with the n/s works.
charged to the employer to complete the
PBA clause 36.5.10 on further interim
n/s works if the opportunity arises and to certification after termination is clear and
avoid litigation. peremptory - the contractor is not entitled
A subcontractor who completes the
to any further payments and might well
subcontract works would have trouble not be entitled to payment of any unpaid
claiming loss of profits on the n/s works interim payment certificates 3 .
3.
See Thomas Construction (Pty) Ltd (In Liquidation) v Grafton Furniture Manufacturers (Pty) Ltd 1988 (2) SA
546 (A) 563C, but this judgment was on the basis of the wording of clause 22.3.4 ‘until after completion of
the works under this clause no payment shall be made to the contractor under this contract’. In terms of
the JBCC 2007 editions’ contract wording, the principal agent must continue to issue monthly payment
certificates in a nil amount until the final payment certificate is issued – this is different from the provision
‘no payments shall be made’ in the judgment even if it amounts to the same and may influence future
judgments.
9 - 11 JUNE 2021
GALLAGHER, CONVENTION CENTRE, JHB
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40
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COLD LINK AFRICA •
January/February 2020