SINGAPORE Law and Practice Contributed by: Dorothy Marie Ng, Monica Yip, Tay Peng Cheng and Tan Shao Tong, WongPartnership LLP
In some cases, employers may also require a parent company guarantee from the contractor. Payment mechanisms in the building contract are usually designed to provide payment for works that have already been done, rather than in advance. A contract administrator is often tasked with certifying that the works have been done, whilst reserving the right to require any rectification of defects, or to dispute any such works that fall short of the employer’s require - ments. Furthermore, the employer usually reserves rights to have access to and inspect the works, or to request the opening up of the works for inspection. The employer usually also incorporates a contractual right to require the main contractor to rectify defects in the works that might surface during a period of a year or 18 months from the date of completion (usually referred to as a maintenance period or defects liability period). Typically, the employer would also have various contractual rights to terminate a construction contract in certain pre-agreed events (the bank - ruptcy of the contractor, failure to start works, failure to comply with material obligations under the contract, etc). The exercise of such rights is usually subject to strict compliance with the contractual provisions (eg, notice requirements and cure period). Contractors are usually obliged to provide certi - fication and warranties for certain types of works (eg, fire-rating certificates for doors, and water - proofing warranty to guarantee the watertight - ness of the roof and wet areas). Insurance is also particularly crucial in build - ing contracts for managing risks. The employer often requires contractors to procure contrac - tors’ all-risks insurance, public liability insurance
and other insurances as may be prudent, having regard to the work. Employers usually require consultants to obtain professional indemnity insurance. Workers’ compensation insurance is required to be taken out by all parties (including the employer and the contractor) by law under the Work Injury Compensation Act 2019 to com - pensate employees for any personal injury by accident. 7.4 Management of Schedule-Related Risk Most building contracts will contain provisions allowing for extensions of time and providing for the payment of liquidated damages by the con - tractor in the event of delay in the completion of the project. Allowance for valid grounds for extensions of time is crucial to prevent time from being set at large, where, for example, a delay is caused by the employer. A liquidated damages clause gives the employer a remedy of receiving an agreed sum, usually accrued on a daily basis, based on a genuine pre-estimate of the loss in the event that there is a delay in the completion of the project. Contrac - tors may negotiate a limitation of delay-related liability with the employer, or the exclusion of certain liabilities (eg, indirect and consequential losses). If it appears that there is going to be a delay in the works, the employer’s first course of action would usually be a request for the con - tractor to expedite its works. Depending on the form of contract used, the employer may also request that the contract administrator issues an instruction or direction to the contractor setting out the delay and requiring that the works be expedited. The contractor will not be allowed to claim any additional losses or expenses arising from a delay if the delay is not excusable under
882 CHAMBERS.COM
Powered by FlippingBook