Cold Link Africa January / February 2020 | Page 41

CONTRIBUTORS
INCORPORATING COLD CHAIN
With regards to (a) the employer is possibly subcontractor’s services to complete approves the opus, he absolves the entitled to elect to make direct payments the works without delays, and the like or builder from liability for all defects, latent to subcontractors [PBA 21.6 and 35.1.2] alternatively, where the subcontractor is as well as patent. and to recover such direct payments interested in completing the n/s works, by from the contractor as expense or loss allowing the subcontractor to effectively defect that a reasonable inspection of the provide the employer and principal
[PBA 35.2, 33.2.8]. The n/s agreement in add it to its price for completing the n/s n/s works by the principal agent would not agent with a cut-off which enables
turn also provides for an election by the works after termination. have revealed before the issue of the defects them to finalise and pay the n/s works
A latent defect is defined in clause 1 as ‘a
and obtain a contract instruction for the
correction of the defect.
3. Alternatively, and possibly
concurrently, it is also intended to
list.’ The defects list is a list issued in terms final account leaving the liability for
subcontractor upon receipt of a request Clause 38.5.8 of clause 26 Final Completion. Clause 27.1 any unobserved defective work in
from the subcontractor on 2 grounds. ‘The security [14.5] shall expire and provides for a latent defects liability period of the n/s works within the ambit of a
These are: be returned by the employer to the 5 years from the date of the final completion reduction to the price for the principal
1. Clause 35.1.1 - A failure to provide subcontractor’. certificate but sub-clause 27.2 distinguishes contractor’s works final account
two different liability periods in the event of or a recovery in the final payment
employer to make direct payment to the
an n/s payment guarantee in
The security due in terms of clause 14.5
terms of clause 3.1.1 or 3.1.2 – advance payment guarantee - must termination. Clause 38.5.9 therefore provides certificate as between the contractor
(right to a payment guarantee be returned to the subcontractor. This that the latent defects liability period ends on and employer and thereafter a final
for the outstanding balance of guarantee is issued by the subcontractor the date of termination in accordance with recovery statement adjustment as
the subcontract value where the to the employer specifically to cover clause 27.2.2. between the contractor and the
contractor has defaulted on a the value of advances by the employer payment in terms of clauses 31.9.2, which would typically terminate when for negotiating direct payment or as a correct place for these adjustments to
31.15, 34.10.2 and 34.14 ). the principal building agreement is negotiating tool in establishing the cost keep the employer out of that [sub]
terminated but it is submitted that there of completing the n/s works. However, contractual relationship. The further
payment of an amount paid to the would simultaneously have to be a form it is submitted that it does not displace benefit of this latter interpretation is
contractor for the subcontractor. of delivery of all the goods covered by the provisions regarding the terminated that the liability for correction of the
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2. Clause 35.1.2 - A failure to make
This provision can be used as a basis
subcontractor which is patently the
such advance payment guarantee. As the contractor’s obligation to ensure the defects then resides in its proper place
This election that is available to the principal contract and the subcontract work executed by specialised trades is and, insofar as it affects the employer,
employer is not a right that is available to have been terminated the subcontractor correctly done and an entitlement for is subject to the principal building
the subcontractor but one available to the no longer carries the liability for the the employer to recover any costs of agreement’s termination provisions
employer to protect its own interests. These n/s works and has no further interest in making good defective work in the work which differ between terminations
interests could be anything from delays to protecting them once delivered to the completed prior to termination by way resulting from either the employer’s or
the execution of the n/s works, prejudice it employer. of a reduction to the value of the work the contractor’s default.
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may suffer if the subcontractor is not paid
This clause makes no reference to the
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completed 9 or by a claim for damages
and/or exercises a lien over any of its works n/s construction guarantee/retentions nor against the contractor (see also discussion It is up to the subcontractor to price for
and materials provided probably that does it refer to the payment guarantees under bullet 4). this risk or to stipulate for any limitation to
there has been no supervening liquidation due in terms of clause 3.1, both of which 1. The purpose/consequence of the its liability in a subsequent agreement for
of the contractor 6 , loss of manufacturers’ have been discussed under bullet 4 warranties and maintenance, and so above. on. It is incumbent on the subcontractor Clause 38.5.9 eventual latent defect liability on the to act swiftly and decisively to ensure ‘The latent defects liability shall end new contractor completing the works as that the employer has an interest in [27.2.2]’. it is possible for this contractor to inspect
and elects to make direct payment by
Principles of South African Law 7 at p.
other guarantees, rejecting any calls for 945 the principles of contracts of locatio
liability for latent defects, encouraging conductio operis in the Roman-Dutch
the employer to continue to use the common law provide that if the employer
January/February 2020
2.
completion of the n/s works.
CLA
To provide a cut-off point placing the
the works, report work that is defective
According to Du Bois et al, Wille’s
exercising liens, withholding product and
COLD LINK AFRICA •
provision could be:
*This is not a legal opinion and no
liability for reliance on its contents
attaches to the writer or sender.
7. 9th Edtn, Juta, Feb 2007.
8. See Minister of Public Works and Land Affairs v Group Five Building Ltd 1999 (4) SA 12 (AD)
9. Refer dicta in BK Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk 1979 (1) SA 391 (A)
generally at pp. 438-440.
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