143

12

Termination and Suspension

The FIDIC contracts in both editions set out certain rights of each party to terminate
the Contract and provide for payment and other consequences following termination.
These contractual rights and consequences are to be distinguished from the right a party
might have to terminate the Contract in accordance with the governing law. In common
law systems, for example, a breach of contract which is fundamental, goes to the ‘root’
of the contract or demonstrates an intention not to be bound by it, may give rise to
the other party’s right to bring the contract to an end as well as claim damages.1 The
innocent party might have this right in addition to any right he has to terminate under
some specific provision of the contract.
Clause 15.2 in both editions of the FIDIC contracts sets out a list of Contractor defaults
entitling the Employer to terminate the Contract.2 The Employer may also terminate
where he wishes to do so for his own purposes, typically where the project is no longer
viable or for some other extraneous reason. This right to terminate ‘for convenience’ is
set out in clause 15.5 in both editions of the Books and is exclusive to the Employer.
In both editions of the FIDIC contracts, clause 15.2 provides that the Employer’s right
to terminate pursuant to that clause is without prejudice to any other rights he has under
the Contract or otherwise. Thus the Employer may terminate on some ground other than
one of those set out in clause 15.2 if under the governing law he is permitted to do so;
and his right to compensation or other relief in the event of a termination may be wider
than that set out in the Contract if the governing law so permits. The same provisions
apply to the Contractor by clause 16.2 in both editions.
The Contractor may terminate where a ground specified in clause 16.2 applies, and
with one exception,3 these grounds involve a default of some sort by the Employer. The
Contractor might have other rights to terminate under the governing law.

1 Heyman v Darwins Ltd [1942] AC 356; Johnson v Agnew [1980] AC 367, 373.
2 In addition to these grounds, the Employer under the 1999 forms has the right to terminate under clause
9.4(b) (failure to pass tests on completion) and clause 11.4 (failure to remedy defects); either party has a right
to terminate under clause 19.6 (optional termination, payment and release/force majeure) and clause 19.7
(release from performance under the law). These grounds are preserved in the 2017 forms, by clauses 9.4,
11.4, 18.5 and 18.6 respectively.
3 The exception is where there is a prolonged suspension affecting the whole of the works (but not the
responsibility of the Contractor) under clause 8.12(b) (16.2 ground (h)). In addition to the grounds set out in
clause 16.2, the Contractor under the 1999 forms has the right to terminate under clauses 19.6 (optional
termination, payment and release/force majeure) and 19.7 (release from performance under the law). These
additional grounds are preserved in the 2017 forms, by clauses 18.5 and 18.6 respectively.

The 2017 FIDIC Contracts, First Edition. William Godwin QC.

© 2020 William Godwin QC. Published 2020 by John Wiley & Sons Ltd.
144 12 Termination and Suspension

As well as giving the Contractor rights to terminate the Contract, the FIDIC Books
in both editions give the Contractor a right to suspend the works in certain defined cir-
cumstances, set out in clause 16.1.4 The Contractor might have other rights to suspend
the works under the governing law.

12.1 Employer Termination: For Contractor Default

The 2017 Books include more grounds on which the Employer might terminate the Con-
tract due to the Contractor’s default than the 1999 editions, as well as setting out in more
detail and with some modifications the procedures to be followed for terminating and
the consequences of the termination. The 1999 editions are considered first.
• The 1999 Books
Clause 15.2 of the 1999 editions is in the same terms in all three Books, except that
the 1999 Silver Book lists one fewer ground of termination for Contractor default than
the other two Books.
The 1999 Red and Yellow Books entitle the Employer to terminate if the Contractor5 :
(a) fails to provide the performance security required under clause 4.2 or fails to comply
with a notice to correct under clause 15.1;
(b) abandons the works or otherwise plainly demonstrates an intention not to continue
performing his obligations under the Contract;
(c) without reasonable excuse (i) fails to proceed with the works in accordance with
clause 8 or (ii) fails to comply with a notice under clause 7.5 (rejecting the works) or
7.6 (as to executing remedial work), within 28 days after receiving it;
(d) subcontracts the whole of the works or assigns the Contract without the required
agreement;
(e) becomes bankrupt or insolvent, goes into liquidation, has a receiving or adminis-
tration order made against him or other specified insolvency-related acts or events
occur;
(f ) gives or offers to give, either directly or indirectly, any of a number of specified
inducements or rewards in relation to the Contract, other than lawful inducements
and rewards to contractors’ personnel.
In the event of any of the above events or circumstances the Employer may termi-
nate the Contract on giving 14 days’ notice to the Contractor, except that in the case
of sub-paragraphs (e) and (f ) above the Employer is entitled to terminate the Contract
immediately.
Clause 15.2 of the 1999 Silver Book differs from the other two 1999 Books only in that
a failure to comply with a notice under clauses 7.5 or 7.6 after 28 days (sub-paragraph
(c)(ii) in the Red and Yellow Books) does not entitle the Employer to terminate. The
Contractor still has the obligation under those clauses to make good the defect and
ensure compliance with the Contract or to comply with instructions as to remedial
works respectively but, perhaps reflecting the lesser degree of control which the con-
tract administrator in general has over the execution of the works under a Silver Book

4 As we have seen in Chapter 7 above, the Engineer/Employer has a right to instruct the suspension of the
works under clause 8.9 in both editions.
5 The same sub-paragraph letters are used as in clause 15.2.
 12.1 Employer Termination: For Contractor Default 145

contract, the Employer is not entitled to take the step of terminating where there has
been a failure to comply after the 28-day period provided for under the Red and Yellow
Books.

12.1.1 The Grounds of Termination: Clause 15.2, 1999 Editions

• Sub-paragraph (a): Performance security; notice to correct
Sub-paragraph (a) of clause 15.2 refers, as well as to the failure to provide the required
performance security under clause 4.2, to a failure to comply with a notice to correct
under clause 15.1. Clause 15.1 provides in turn that if the Contractor fails to carry out
‘… any obligation under the Contract…’ the Employer may by notice require him to
make good the failure and to remedy it within a specified reasonable time. Given that
the Employer has the right to terminate on notice if a notice to correct is not com-
plied with by the specified reasonable time, the consequences of failing to carry out ‘any
obligation’ under the Contract are potentially extremely serious for the Contractor. The
governing law might qualify the words ‘any obligation’ by some requirement of mate-
riality before the right to terminate under sub-paragraph (a) arises6 ; but on the face of
the sub-paragraph the right to terminate may arise on even a trivial breach or failure
by the Contractor. As examined below, this has been changed in the 2017 editions by
an express requirement that the right to terminate only arises where there has been a
material breach of the Contractor’s obligations under the Contract.
In addition to potential uncertainty as to when precisely the right to terminate for
failure to comply with a notice to correct arises, there may well be uncertainty about the
specified reasonable time. This is a general point that arises in connection with the use
of the word ‘reasonable’ in the 1999 editions, implying a judgment to be exercised by
the contract administrator which may be open to dispute. As also examined below, the
2017 editions go some way to mitigating this potential uncertainty by spelling out the
circumstances to which the Engineer/Employer is to have regard in specifying the time
within which the Contractor is to remedy the failure or breach.
• Sub-paragraph (b): Abandoning the works or otherwise plainly demonstrating an
intention not to continue performance of Contractor’s obligations under the Contract
Sub-paragraph (b) of clause 15.2 gives a general right to terminate where the works
have been abandoned or where the Contractor otherwise plainly demonstrates an inten-
tion not to continue performing his obligations under the Contract. This ground will
therefore apply only in extreme cases. It may be difficult to determine whether the works
have been abandoned, which implies an intention not to continue performing them as
a whole, or whether the Contractor otherwise ‘plainly demonstrates’ an intention not
to continue performing his obligations under the Contract.7 Before taking the step of

6 See, for example, the English High Court decision in Obrascon Huarte Lain SA v Attorney General for
Gibraltar [2014] EWHC 1028 (TCC) ([317]–[325]) in which it was held, in the context of the 1999 Yellow
Book, that clause 15.1 relates to significant contractual failures by the Contractor which require to be
established as such; immaterial or insignificant failures or any act or omission by the Contractor that has not
yet become a failure to comply with the Contract are insufficient.
7 See the Obrascon decision, op. cit. at [321] ff for a discussion of the interpretation of this provision, at least
according to English law. According to the decision this ground for termination must relate to significant
defaults by the Contractor, not minor or immaterial ones.
146 12 Termination and Suspension

termination under this sub-paragraph the prudent contract administrator may consider
giving a notice to correct under clause 15.1 in respect of the default.
• Sub-paragraph (c): Failure to proceed in accordance with clause 8; non-compliance
with clause 7.5/7.6 notice
Sub-paragraph (c)(i) of clause 15.2 entitles the Employer to terminate where ‘without
reasonable excuse’ the Contractor fails to proceed with the works in accordance with
clause 8. That clause, as discussed in Chapter 7 above, contains an express obligation on
the Contractor to proceed with the works with due expedition and without delay. It may
be thought that due expedition implies that the Contractor has no reasonable excuse
for delay in any event; but the sub-paragraph highlights the importance of the Engineer
or Employer’s being confident that the Contractor has no reasonable basis for failing to
maintain progress before taking the step of terminating the Contract.8
Sub-paragraph (c)(ii) of clause 15.2 in the Red and Yellow Books entitles the Employer
to terminate on notice where the Contractor without reasonable excuse fails to comply
with a notice under clause 7.5 rejecting any plant, materials, design or workmanship
which is defective or otherwise not in accordance with the Contract; or fails to comply
with an instruction under clause 7.6 for the removal and replacement of any plant or
materials which do not comply with the Contract or for the removal and re-execution
of any work which fails to comply, and the execution of any work urgently required for
the safety of the works. Clauses 7.5 and 7.6 are important tools available to the Engineer
to control the quality of the works as they progress and their importance is underlined
by the right to terminate if the Contractor fails to comply, but only if the non-compliance
is for a fairly extended period of 28 days; it is only after that period that the Engineer
can give a notice under sub-paragraph (c)(ii), terminating the contract 14 days later. As
noted above, this ground of termination does not apply in the 1999 Silver Book.
• Sub-paragraph (d): Subcontracting the whole of the works or assigning without
agreement
Sub-paragraph (d) provides for termination if the Contractor subcontracts the whole
of the works or assigns the Contract without the required agreement. Although not
expressly referred to, this provision relates to clauses 1.7 and 4.4, which prohibit assign-
ment of a whole or any part of the Contract without prior agreement of the Employer
and subcontracting the whole of the works respectively.
• Sub-paragraphs (e) and (f ): Corruption and insolvency
Sub-paragraphs (e) and (f ) cover corruption and insolvency respectively and are
drawn in wide terms. There may be particular difficulty with sub-paragraph (f ), as the
distinction between lawful inducements and rewards, which do not entitle termination,
and doing or forbearing to do anything which might give any person directly or
indirectly any inducement or reward, which do entitle it, may be hard to draw in

8 Again the Obrascon decision, op. cit. at [317]–[325] and [357]–[359] provides useful guidance on the
interpretation of this provision as a matter of English law. The Contractor’s liability to pay liquidated
damages is quite separate from the right to terminate under this provision for failure to proceed with due
expedition and without delay. As with the other grounds for termination considered in Obrascon, the
Contractor must have been guilty of significant defaults before termination can be justified and minor
failures or delays are not sufficient.
 12.1 Employer Termination: For Contractor Default 147

practice. However, Particular Conditions may often be drafted dealing specifically with
corruption and bribery, particularly in jurisdictions containing strict rules on these
matters.9

12.1.2 The Termination Procedure Under Clause 15.2, 1999 Editions

As noted above, if any of the events listed in sub-paragraphs (a) to (f ) apply then the
Employer under the 1999 editions may terminate the Contract upon giving 14 days’
notice to the Contractor, except that if sub-paragraphs (e) or (f ) apply (corruption or
insolvency) the Employer may by notice terminate the Contract immediately.
Upon termination, the Contractor is to leave the site and deliver any required goods,
all the Contractor’s documents and any other design documents made by or for him to
the Engineer/Employer, except that the Contractor is to use his best efforts to comply
immediately with any reasonable instructions included in the termination notice for the
assignment of any subcontract and for the protection of life or property or safety of the
Works. This is an obviously important proviso, designed to minimise disruption to the
works following the termination and to safeguard life or property and maintain safety.
The Employer is entitled to complete the works and/or arrange for other entities to
do so and in that event the Employer and such entities may use any goods, Contractor’s
documents and other design documents made by or on behalf of the Contractor. Again
this is an entitlement designed to minimise disruption to the works following the termi-
nation. After any such use the Employer must notify the Contractor that his equipment
and temporary works will be released to him at or near the site, whereupon the Con-
tractor is to arrange promptly for their removal at his own risk and cost. The proviso
to this is that if the Contractor has failed to make a payment due to the Employer, for
example in respect of the additional cost of completing the works,10 then the Employer
has the right to sell the Contractor’s equipment and temporary works to recover such
payment, the balance of the proceeds then being due to be paid to the Contractor.

12.1.3 Valuation and Payment After a Clause 15.2 Termination

Clause 15.3 in the 1999 editions provides that as soon as practicable after a notice of
termination under clause 15.2 has taken effect, the Engineer/Employer is to proceed
in accordance with clause 3.5 to agree or determine the value of the works, goods and
Contractor’s documents and any other sums due to the Contractor for work executed
in accordance with the Contract.
Clause 15.4 then provides for the Employer’s right to withhold from the Contractor
any further payments until the costs of remedying defects, damages for delay in com-
pletion and other costs have been established and for the Employer’s right to recover
any loss or damage he incurs and any extra cost of completing the works to be deducted
from the sums due to the Contractor under clause 15.3.

9 See, for example, the UK Bribery Act 2010, which imposes severe penalties for a wide range of improper
financial or other inducements and has a very wide jurisdiction, allowing individuals or companies with links
to the UK to be prosecuted irrespective of where the offence occurred.
10 Pursuant to clause 15.4(c).
148 12 Termination and Suspension

• The 2017 Books

Unlike the 1999 contracts, clause 15.2 is in the same terms in all three of the 2017
Books. Thus in the 2017 Silver Book the same grounds for terminating for Contractor
default are available to the Employer as in the Red and Yellow Books.
Clause 15.2 in the 2017 Books also differs from its 1999 counterpart in breaking up the
termination process and procedure post-termination into four distinct sub-clauses. The
first sub-clause, 15.2.1, draws a distinction, unknown in the 1999 editions, between a
notice of the Employer’s intention to terminate the Contract and a notice of termination
as such. In each case the notice must state that it is given under clause 15.2.1. The clause
then goes on to set out in eight sub-paragraphs, (a) to (h), the circumstances in which
the Employer is entitled to give one or other of these two types of notice.
The effect of triggering a notice of intention to terminate is to give the Contractor a
14-day period to put right his non-compliance before a notice to terminate as such is
given, under clause 15.2.2 (see Section 12.1.5 below); the Contractor therefore knows
where he stands and has an opportunity to correct his default before the drastic step of
termination is taken. This is a significant improvement on the 1999 contracts, where it
was never entirely clear what was to happen at the end of the 14-day notice period under
clause 15.2. Was a second notice required, for example, if the Contractor had failed to put
right the non-compliance? In the 2017 contracts a second notice is expressly required
under clause 15.2.2 except in the case of sub-paragraphs (f ), (g) and (h) (see below).
Clause 15.2.1 of the three 2017 Books entitles the Employer to give a notice of his
intention to terminate the Contract or, in the case of sub-paragraphs (f ), (g) or (h), a
notice of termination, if the Contractor11 :
(a) fails to comply with (i) a notice to correct under clause 15.1 or (ii) a binding agree-
ment or final and binding determination under clause 3.7 or (iii) a decision of the
DAAB under clause 21.4 whether binding or final and binding, and in each case
such a failure amounts to a material breach of the Contractor’s obligations under
the Contract;
(b) abandons the works or otherwise plainly demonstrates an intention not to continue
performance of his obligations under the Contract;
(c) without reasonable excuse fails to proceed with the works in accordance with clause
8 or, if the Contract Data provide for a maximum amount of delay damages, the
Contractor’s failure to complete in time would entitle the Employer to delay damages
exceeding that amount;
(d) without reasonable excuse fails to comply with a notice rejecting the works under
clause 7.5 or an Engineer’s/Employer’s instruction under clause 7.6 (as to remedial
works), within 28 days after receiving it;
(e) fails to comply with clause 4.2 as to performance securities;
(f ) subcontracts the whole or any part of the works in breach of clause 4.4 or assigns
the Contract without the required agreement under clause 1.7;
(g) becomes bankrupt or insolvent, or goes into liquidation, or other specified acts or
events of insolvency occur; or is subject to a reorganisation; or any act is done or
event occurs analogous to or having a similar effect under applicable laws; or, if the
Contractor is a joint venture (JV), any of the specified matters apply to a member
of the JV and the other members do not promptly confirm to the Employer that (in

11 The same sub-paragraph letters are used as in clause 15.2 of the 2017 editions.
 12.1 Employer Termination: For Contractor Default 149

accordance with clause 1.14(a)) that member’s obligations under the Contract are to
be fulfilled in accordance with the Contract;
(h) is found, based on reasonable evidence, to have engaged in corrupt, fraudulent, col-
lusive or coercive practice at any time in relation to the works or to the Contract.

12.1.4 The Grounds of Termination: Clause 15.2.1, 2017 Editions

• Sub-paragraph (a): Notices to correct, agreements/determinations and DAAB deci-
sions
Sub-paragraph (a) (i) refers to a failure to comply with a notice to correct and thus
relates to clause 15.1. This clause has been substantially revised in the 2017 editions.
Whereas the 1999 editions referred merely to the Contractor’s failing to carry out any
obligation under the Contract as entitling the Engineer/Employer by notice to require
the Contractor to make good the failure and remedy it within a specified reasonable
time, the 2017 Books in addition require the Engineer/Employer to (a) describe the Con-
tractor’s failure, (b) state the sub-clause and/or provisions of the Contract under which
the Contractor has the obligation and (c) specify the time within which the Contractor
is to remedy the failure, which must be reasonable taking due regard of the nature of the
failure and the work and/or other action required to remedy it.
Thus more detail is provided in the 2017 Books as to the content of the notice to cor-
rect and as to the reasonableness of the specified time within which the Contractor is
obliged to correct the failure. There is, moreover, a new requirement for the Contrac-
tor, after receiving a notice to correct, immediately to respond by giving a notice to the
Engineer/Employer describing the measures he will take to remedy the failure and stat-
ing the date on which he will commence such measures in order to comply with the time
specified in the notice to correct. This focuses the Contractor’s mind at an early stage
and may help ensure he puts right the problem within the time specified.
It is also expressly provided that the time specified in the notice to correct does not
imply any extension of the time for completion.
As well as referring to a failure to comply with a notice to correct, clause 15.2.1
sub-paragraph (a) adds two significant grounds of termination to those under the 1999
contracts by providing for a notice of intention to terminate to be given if the Con-
tractor (i) fails to comply with a binding agreement or final and binding determination
under clause 3.7/3.5 or (ii) fails to comply with a decision of the DAAB under clause
21.4, whether that decision is binding or final and binding (as it would be if no notice
of dissatisfaction were given in time12 ). These provisions strengthen the remedies
available to the Employer in the event of the Contractor’s failure to comply with clause
3.7/3.5 determinations or DAAB decisions and will be welcomed by many users of the
contracts.
Under clause 15.2.1 sub-paragraph (a) of the 2017 contracts the relevant
non-compliance has to constitute a material breach of the Contractor’s obliga-
tions under the Contract before a notice of intention to terminate can properly be
given. The 2017 contracts therefore, as mentioned in Section 12.1.1 above, remove the
uncertainty that exists with the 1999 forms about whether the Employer can terminate

12 See Section 16.2.6 below.

150 12 Termination and Suspension

for the Contractor’s failure to comply with, in particular, a notice to correct even where
the breach of obligation concerned was not material or significant.
• Sub-paragraph (b): Abandoning the works or otherwise plainly demonstrating an
intention not to continue performance of Contractor’s obligations under the contract
This is in the same terms as the 1999 editions. Again, it is to be noted that the Con-
tractor has a 14-day cure period after the notice of intention to terminate is given.
• Sub-paragraph (c): Failure to proceed in accordance with clause 8; maximum delay
damages amount exceeded
The Contractor’s failure without reasonable excuse to proceed in accordance
with clause 8 is also a ground for termination in the 1999 editions and is discussed
above. An important additional ground is added, however, in the 2017 Books, namely
where the Contractor’s delays are such that the Employer would be entitled to delay
damages greater than the maximum (if any) specified in the Contract Data. This new
provision provides Employers with some protection against periods of uncompensated
delay, and reflects amendments which are not unusual in many construction contracts.
It is important to note the wording of the provision: ‘… the Contractor’s failure to
comply with Sub-Clause 8.2 [Time for Completion] is such that the Employer would
be entitled to Delay Damages that exceed this maximum amount’. Thus before the
sub-paragraph applies the Contractor must have failed to comply with clause 8.2
such that the Employer would be entitled to delay damages that exceed the maximum
amount. The Employer’s entitlement to delay damages, if not agreed, is ultimately
determined by a DAAB decision or arbitral award, which may reduce the delay damages
to below the maximum by the award of an extension of time. Where the Contractor
claims an extension of time the Employer may therefore be inclined not to invoke this
ground of termination unless he is confident that the Contractor is not entitled to the
claimed extension (or until the Contractor’s entitlement is determined).
• Sub-paragraphs (d)–(f ): Failure to comply with notice of rejection or Engi-
neer’s/Employer’s instruction under clause 7.6 within 28 days; failure to comply
with clause 4.2 relating to performance securities; subcontracting in breach of clause
4.4 or assignment without required agreement under clause 1.7
With the exception of sub-paragraph (d), which does not apply in the 1999 Silver Book,
these grounds apply under the 1999 contracts and have been discussed above. It is to
be noted that the sub-paragraph (f ) ground entitles a notice of termination itself to be
given under clause 15.2.2 rather than an intention to terminate; the effect of this is that
the termination may take place immediately and the date of termination is the date the
Contractor receives the notice (clause 15.2.2). This is different from the 1999 forms,
since subcontracting or assigning the Contract without the required agreement is not a
ground for immediate termination as opposed to termination on 14 days’ notice under
those forms.
• Sub-paragraph (g): Events of insolvency or reorganisation
This ground for termination in the 2017 Books is essentially the same as in the 1999
forms, except that sub-paragraph (g) in the 2017 Books includes a reorganisation as a
notice-triggering event, whereas this does not appear in the 1999 forms, and contains
 12.1 Employer Termination: For Contractor Default 151

express provision for the situation where the Contractor is a joint venture. In that situ-
ation, if any of the matters set out in the sub-paragraph applies to a member of the JV
then the other members have to confirm to the Employer that the affected member’s
obligations under the Contract will be fulfilled, otherwise the sub-paragraph (g) ground
will apply. As with sub-paragraph (f ), the Employer may give a notice of termination as
such as opposed to a notice of intention to terminate.
• Sub-paragraph (h): Corruption
This sub-paragraph is shorter than the 1999 equivalent, but it gives guidance on the
standard of proof which is absent in the 1999 forms, namely that the Contractor should
be found, based on ‘reasonable evidence’, to have engaged in the specified corrupt activ-
ities. Thus it is made explicit that no requirement to prove beyond reasonable doubt or a
similar higher burden applies but that merely reasonable evidence is needed before this
ground can be relied upon by the Employer. As with grounds (f ) and (g), the Employer
may give a notice of termination if ground (h) applies as opposed to a notice of intention
to terminate.

12.1.5 Termination: Clause 15.2.2, 2017 Editions

As described above, termination itself takes place either (a) when the Contractor fails to
remedy the matter described in a notice under clause 15.2.1, that is a notice of intention
to terminate, within 14 days of receiving the notice and the Employer gives a second
notice after that period has expired terminating the Contract or (b) one or other of the
sub-paragraphs (f ), (g) or (h) grounds applies and the Employer has given a notice of
immediate termination. In the first case, (a) above, the date of termination is the date
the Contractor receives the second notice and in the second case, (b) above, that date is
the date when the Contractor receives the termination notice under clause 15.2.1.

12.1.6 Termination Procedure Under Clauses 15.2.3 and 15.2.4, 2017 Editions
The procedure under these clauses is essentially the same as under clause 15.2 in the
1999 editions. Clause 15.2.3 in the 2017 Books, however, provides that after termination
the Contractor is immediately to comply with any reasonable instructions included in a
notice given by the Employer under the clause for the assignment of subcontracts and
protection of life or property or safety of the works; whereas in the 1999 contracts the
Contractor’s obligation is merely to use best efforts to comply immediately with any
reasonable instructions for the assignment of subcontracts and protection of life and
property or for the safety of the works.

12.1.7 Valuation and Payment After a Clause 15.2 Termination

More detail is provided than in the 1999 Books on the valuation and payment position
after a clause 15.2 termination under the 2017 Books.
Clause 15.3 in the 2017 contracts provides guidance about the valuation which is to
take place, in particular that (a) it is to include any additions and/or deductions and the
balance due, if any, by reference to the matters set out in sub-paragraphs(a) and (b) of
clause 14.13, relating to issue of the Final Payment Certificate/Final Payment13 and (b) is

13 See Section 10.5.5 above.

152 12 Termination and Suspension

not to include the value of any Contractor’s documents, materials, plant and permanent
works to the extent that they do not comply with the Contract.
Clause 15.4 in the 2017 contracts also sets out in more detail the payment position
after termination pursuant to clause 15.2. As with the 1999 contracts, the Employer
may withhold payment of amounts due to him under clause 15.3 until the costs, loss
or damage set out in clause 15.4 have been established. These are in turn largely the
same as in the 1999 contracts, except that certain matters such as clearing, cleaning and
reinstating the site are included, and specific provision is made for delay damages to be
recoverable by the Employer if the works or section have not yet been taken over and
the Contract is terminated after the completion date; in that situation delay damages
are to be paid for every day that has elapsed between those two dates. This provision
fills an important gap which existed in the 1999 contracts, where it was unclear what
the Employer’s entitlement to delay damages was when the Contract was terminated
before taking over but after the date for completion since, under clause 8.7, the enti-
tlement to such damages is defined by reference to the date stated in the Taking-Over
Certificate. This definition still applies under clauses 8.8 and 1.1.24 in the 2017 Books,
as we saw in Chapter 7 above, but clause 15.4 now fills the delay damages gap for the
Employer where the works have not been taken over at the date when the Contract is
terminated.

12.2 Employer’s Termination: For Convenience

Clause 15.5 in both editions of the Books provides for the Employer to terminate the
Contract for his own convenience, that is, without any fault on the part of the Contractor.
In general the 2017 Books provide the Contractor with more protection than is provided
under the 1999 forms where the Employer chooses to terminate for his own purposes.
• The 1999 Books
In all three of the 1999 forms the Employer is entitled to terminate for convenience by
giving notice of termination to the Contractor, which is to take effect 28 days after the
later of the notice or when the performance security is returned to the Contractor. The
only constraint on the Employer’s right to terminate for convenience is that he cannot do
so in order to execute the works himself or arrange for them to be executed by another
contractor.
Upon termination, the Contractor (in accordance with clause 16.3) is to stop work,
hand over Contractor’s documents, plant, materials and other work for which he has
received payment and proceed to remove his equipment from site. He is to be paid
in accordance with clause 19.6, relating to optional termination, payment and release
where there has been a termination by reason of force majeure in the 1999 forms. One
important omission from this payment is that the Contractor recovers no loss of profit
on the balance of the work remaining to be executed under the Contract at the date of
the Employer’s termination or other loss or damage resulting from the termination. This
has often been said to be anomalous by contractors, who question why the Contractor
should be in the same position in terms of compensation where the Contract is termi-
nated by reason of supervening force majeure events as where the Employer chooses for
his own purposes to end the Contract. As we shall now see, the 2017 Books substantially
change this position.
 12.2 Employer’s Termination: For Convenience 153

• The 2017 Books

Clause 15.5 in the 2017 contracts provides for the Employer’s entitlement to terminate
for convenience in more detail and gives the Contractor more protections than under
the 1999 forms, except that the Employer is no longer prohibited from terminating in
order to have the works carried out either by himself or by another contractor. That
prohibition has now been removed in the 2017 Books. Instead, however, the Contractor
is entitled to loss of profit and other loss or damage suffered as a result of the termination,
under clause 15.6. Moreover, under clause 15.5 the Employer is not entitled to execute
any part of the works or arrange for any part of them to be executed by other entities
unless and until the Contractor receives payment of the amounts due under clause 15.6.
This strengthens the Contractor’s hand in ensuring he receives payment where the
Employer intends to continue with the works either himself or by another contractor,
with the trade-off that the Employer is now permitted to take that path. In many cases,
however, the 1999 prohibition on the Employer’s undertaking the balance of the works
himself or by engaging another contractor was not very effective from the Contractor’s
point of view, since it was often difficult to determine in practice whether the Employer
was terminating with the intention of doing the work himself or having another con-
tractor do it or whether, for example, the financial circumstances in which the Employer
found himself meant that he had to stop work for a substantial period before resuming it
with another contractor when funds became available. The 2017 Books remove the old
prohibition and instead insert greater certainty by permitting the Employer to do what
was previously prohibited but at the price of ensuring that the Contractor is paid first.
As indicated above, termination for Employer’s convenience is covered not only by
clause 15.5 in the 2017 Books but by other clauses, in particular clauses 15.6 and 15.7.
These three clauses together set out in a far more structured way the entitlement to
terminate for convenience and its consequences.

12.2.1 Clause 15.5, 2017 Editions

Under clause 15.5 the Employer must give a notice of termination expressly stated to be
given under clause 15.5 and, after having given the notice, is immediately to:
(a) make no further use of the Contractor’s documents, which are to be returned to the
Contractor except for those for which he has received payment;
(b) where provision for cooperation has been made in the Employer’s Requirements or
Specification (if Red Book) under clause 4.6, lose the right to the relevant use of the
Contractor’s equipment, temporary works, access arrangements and other facilities
or services; and
(c) make arrangements to return the performance security to the Contractor.
The termination takes effect 28 days after the later of the date when the Contractor
receives the termination notice or the Employer returns the performance security; and,
as noted above, unless and until the Contractor has received payment of the amount
due to him under clause 15.6 the Employer is not to execute any part of the works or
arrange for them to be executed by anyone else. Following termination, the Contractor
is to proceed in accordance with clause 16.3, including stopping further work, delivering
the Contractor’s documents, plant materials and other work for which he has received
payment and leaving the site.14

14 See Section 12.4.6 below.

154 12 Termination and Suspension

12.2.2 Clauses 15.6 and 15.17, 2017 Editions

Clause 15.6 sets out rules for determining the Contractor’s financial entitlements after
the termination for convenience. As soon as practicable, the Contractor is to submit
detailed supporting particulars of the value of the work done at the date of termination,
including the matters described in clauses 18.515 and 14.3,16 as well as the amount of
any loss of profit or other loss and damage suffered by the Contractor as a result of the
termination. The Engineer or Employer’s Representative is then to proceed with a clause
3.7/3.5 agreement or determination and the Engineer is to issue a payment certificate
for the amount agreed or determined, or the Employer (if the Silver Book) is to pay the
amount so agreed or determined, without in each case any need for the Contractor to
submit a statement under clause 14.13.
Clause 15.7 then provides for the Employer to pay the Contractor the amount either
certified in the payment certificate under clause 15.6 (if Red or Yellow Book) or sim-
ply agreed or determined by the Employer’s Representative (if Silver Book) within 112
days after the Contractor has submitted details of the value of work done and loss of
profit or other loss and damage under clause 15.6. This improves on the position in the
1999 Books because it gives a definite time for payment of the agreed or determined
amounts, whereas under clause 15.5 of the 1999 forms the Employer was merely to pay
the Contractor the amounts due under clause 19.6 ‘after this termination’.

12.3 Contractor’s Right to Suspend

The Contractor under clause 16.1 in both editions of the FIDIC contracts has express
rights to suspend the works by reason of specified events of Employer default. In
the 2017 Red and Yellow Books this is permitted in four circumstances, specified in
sub-paragraphs (a) to (d), whereas in the 1999 contracts suspension is permitted only
where the Employer fails to comply either with the obligation to provide details of his
financial arrangements under clause 2.4 or with the timing of payments provisions
under clause 14.7. In the 2017 Silver Book three circumstances are specified, due to the
fact that no payment certification procedure exists under that contract.
In both editions, the Contractor before exercising his right to suspend must give 21
days’ notice to the Employer. In the 2017 Books the notice must state that it is given
under clause 16.1. Moreover, in both editions the Contractor, instead of suspending
the works outright, may reduce the rate of work until such time as the Employer has
remedied the default. One important proviso in the 2017 contracts is that any Employer
default must constitute a material breach of his obligations under the Contract. This is
missing in the 1999 contracts, although, as with the termination provisions, the govern-
ing law might qualify the Contractor’s right to suspend by a materiality requirement of
some sort.
The four circumstances specified in the 2017 Red and Yellow Books entitling suspen-
sion or reduced rate of work by the Contractor are:
(a) where the Engineer fails to certify interim payments in accordance with clause 14.6;
(b) where the Employer fails to provide reasonable evidence of his financial
arrangements under clause 2.4;

15 See Section 14.5 below.

16 See Section 10.5.1 above.
 12.4 Contractor’s Termination 155

(c) where the Employer fails to make payments as required by clause 14.7; or
(d) where the Employer fails to comply either with a binding agreement or a final and
binding determination under clause 3.7/3.5 or with a decision of the DAAB under
clause 21.4, whether binding or final and binding.
In each case, the right to suspend is qualified by the requirement that the failure should
constitute a material breach of the Employer’s obligations under the Contract.
With the same proviso, the 2017 Silver Book provides for three circumstances entitling
Contractor suspension or reduced rate of work; they are the same as those set out in
sub-paragraphs (b) to (d) in the Red and Yellow Books, above, the difference (as indicated
above) residing in the fact that there is no payment certification procedure provided for
in the Silver Book.
If any of the specified grounds apply, the Contractor has the right on giving 21 days’
notice (the notice stating that it is given under clause 16.1) to suspend the work or reduce
the rate of progress unless and until the Employer has remedied the specified default. It is
expressly provided that this action by the Contractor is not to prejudice his entitlements
to financing charges under clause 14.8 and to his right to terminate under clause 16.2
(see next section); and further that if the Employer subsequently remedies the default
specified in the notice before a notice of termination under clause 16.2 is given then
the Contractor is to resume normal working as soon as reasonably practicable. This
provision mirrors the 1999 provision in clause 16.1 of those forms.
As in the 1999 forms, the Contractor, subject to making a claim (under clause 20.2 in
the 2017 Books), is entitled to an extension of time and/or payment of cost plus profit
if he suffers delay and/or incurs cost as a result of suspending the work or reducing the
rate of work in accordance with clause 16.1.

12.4 Contractor’s Termination

Clause 16.2 in both editions of the FIDIC contracts provides for the Contractor to
be entitled to terminate the Contract in certain specified circumstances. As with
Employer’s termination, the 2017 Books identify more grounds for termination by
the Contractor than under the 1999 forms and draw a distinction between a notice of
intention to terminate and a notice of termination as such.
• The 1999 Books
There are seven grounds of termination open to the Red or Yellow Book Contractor
under clause 16.2 of the 1999 forms, which largely overlap those set out in clause 16.2.1
of the 2017 forms. The 1999 Silver Book has one fewer ground of termination, due to
the fact that no payment certification procedure is provided for in the Contract.
Clause 16.2 of the 1999 Red and Yellow Books provides that the Contractor is entitled
to terminate the Contract if17 :
(a) he has not received reasonable evidence of the Employer’s financial arrangements as
required under clause 2.4 within 42 days after giving a notice suspending or reducing
the rate of work under clause 16.1 for failure to comply with that obligation;
(b) the Engineer fails within 56 days after receiving a statement and supporting docu-
ments to issue the relevant payment certificate to the Contractor;

17 The same sub-paragraph lettering is used as in clause 16.2 of the 1999 contracts.
156 12 Termination and Suspension

(c) the Contractor does not receive the amount due under an interim payment certifi-
cate within 42 days after expiry of the time specified in clause 14.7 for payment to
be made (except for deductions in respect of Employer’s claims under clause 2.5);
(d) the Employer substantially fails to perform his obligations under the Contract;
(e) the Employer fails to comply with his obligation under clause 1.6 to enter into a Con-
tract Agreement or assigns the Contract without agreement in breach of clause 1.7;
(f ) there is a prolonged suspension affecting the whole of the works as described in
clause 8.1118 ;
(g) the Employer becomes bankrupt or insolvent, goes into liquidation, and similar acts
or circumstances of insolvency occur or any act is done or event occurs which under
applicable laws has a similar effect.
Clause 16.2 of the 1999 Silver Book provides for the same grounds of termination
save that ground (b) does not apply since the form includes no procedure for certifying
payments. It should also be noted that in the 1999 Silver Book ground (e) makes no
reference to a failure to enter into the Contract Agreement pursuant to clause 1.6 as
a ground of termination since in the Silver Book form the Contract only comes into
existence when the Contract Agreement is executed.19

12.4.1 The Grounds of Termination: Clause 16.2, 1999 Editions

• Sub-paragraph (a): Persistent failure to comply with obligation to provide evidence of
financial arrangements
If after 42 days from giving a notice suspending or reducing the rate of work under
clause 16.1 for breach of the obligation under clause 2.4 the Contractor still has not
received reasonable evidence of the Employer’s financial arrangements then he is able
to give 14 days’ notice terminating the Contract under all three of the 1999 forms. This
is therefore 42 days from the suspension notice, not 42 days from the request for evi-
dence of financial arrangements under clause 2.4. It is therefore a remedy available to the
Contractor in the case of a persistent or prolonged breach of this important obligation.
• Sub-paragraph (b): Engineer’s failure to issue relevant payment certificate (Red and
Yellow Books)
This is an important protection for the Contractor in the Red and Yellow Books against
a prolonged failure by the Engineer to issue the relevant payment certificate. The ground
applies if the certificate has still not been issued by 56 days after the Engineer receives the
Contractor’s statement and supporting documents under clause 14. The failure to issue
the certificate will by then have persisted for double the length of time within which it
should have been issued: under 14.6, the Engineer has 28 days after receiving the state-
ment and supporting documents to issue an interim payment certificate; and 28 days
after receiving the final statement and written discharge to issue the final payment cer-
tificate under clause 14.13.
18 See Section 7.9.3 above.
19 Clause 1.6 of the Silver Book in both editions refers to the Contract’s ‘coming into full force and effect’ on
the date stated in the Contract Agreement (after any conditions stipulated therein have been satisfied),
whereas in the 1999 Red and Yellow Books clause 1.6 provides for a time within which the parties are to
enter into the Contract Agreement, namely 28 days after the Contractor receives the Letter of Acceptance.
This is extended to 35 days in clause 1.6 of the 2017 Red and Yellow Books.
 12.4 Contractor’s Termination 157

• Sub-paragraph (c): Failure to receive payment due

This ground permits the Contractor to terminate on 14 days’ notice where he has
not received payment due under an interim payment certificate by 42 days longer than
the date he ought to have received such payment pursuant to clause 14.7, subject to
deductions arising from any Employer’s claims under clause 2.5.
• Sub-paragraph (d): Substantial failure to perform
This ground permits termination on 14 days’ notice where the Employer substantially
fails to perform his obligations under the Contract. The ground is therefore a general one
and can cover any failure to perform by the Employer provided the failure is a substantial
one. The wording may not be quite as clear as it could be, since it is not entirely clear
whether the obligation which is substantially unperformed must itself be a substantial
material one, or whether a substantial failure to perform a non-material obligation also
warrants the giving of the 14 days’ notice. This is clarified in the 2017 Books where the
corresponding ground is expressly to apply only where the substantial failure to perform
constitutes a material breach of the Employer’s obligations under the contract.20
• Sub-paragraph (e): Failure to comply with clause 1.6 (Contract Agreement – Red and
Yellow Books) or assigning without necessary agreement
This sub-paragraph combines two distinct grounds of termination, the first relating to
a failure to sign the Contract Agreement within 28 days as required under clause 1.6, and
the second to assigning without obtaining the agreement of the Contractor as required
under clause 1.7.
As to the first, this seems on the face of it a surprising basis for justifying termina-
tion, even if it is on 14 days’ notice, since the Contract in the Red and Yellow Books is
formed by the Employer’s acceptance of the Contractor’s Letter of Tender by the Let-
ter of Acceptance, the Contract Agreement being unnecessary to the creation of the
Contract. The fact that it is a ground of termination points, however, to the importance
attached by the contracts to the execution of the Contract Agreement, which sets out
the important if brief details of the agreement including the Contract documents and
the principal covenants by both parties.
As to the second ground, this reflects again the importance attached by the contracts
to enforcing the prohibition against assignment without agreement. The Contractor
cannot be obliged to accept any assignee of the Employer’s without his consent, just as
the Employer cannot be obliged to accept the Contractor’s assignee without agreement.
• Sub-paragraph (f ): Prolonged suspension
This ground does not refer to an Employer default, unlike the other grounds of termi-
nation, but gives the right to terminate where there has been a prolonged suspension of
the works under clause 8.11, pursuant to an Engineer’s or Employer’s instruction, pro-
vided this is to the whole of the works and a cause of the instructed suspension is not
the responsibility of the Contractor.
• Sub-paragraph (g): Insolvency and similar events

20 See Section 12.4.6 below.

158 12 Termination and Suspension

This is a provision common to many commercial contracts, construction or other-

wise, and entitles termination in the event of bankruptcy, or insolvency or similar events
occurring, or any act or event which according to the applicable laws has a similar effect.

12.4.2 Termination Under Clause 16.2, 1999 Editions

If any of the events or circumstances set out in clause 16.2 apply the Contractor has
the right, on giving 14 days’ notice to the Employer, to terminate the Contract. How-
ever, where sub-paragraphs (f ) or (g) applies the Contractor may by notice terminate
the Contract immediately. As noted above, the Contractor’s election to terminate under
clause 16.2 does not prejudice any other rights he has under the Contract or otherwise.
If, therefore, the governing law permits the Contractor to terminate on grounds other
than those set out in clause 16.2 he is able to do so and the scope of any compensation or
other relief to which he might be entitled consequent on the termination may be wider
than that set out in clause 16.

12.4.3 Effects of Termination and Payment

Clauses 16.3 and 16.4 of the 1999 contracts provide respectively for the steps the
Contractor is to take following a termination under clause 16.2 and his entitlement to
payment.
Following the clause 16.2 termination the Contractor is promptly to cease all further
work, except for such work as may have been instructed by the Engineer/Employer for
the protection of life or property or safety of the works; he is to hand over the Contrac-
tor’s documents, plant, materials and other work for which he has been paid; and he is to
remove from the site all other goods except those needed for safety and to leave the site.
The Employer under clause 16.4 must upon the notice of termination’s taking effect
promptly return the performance security to the Contractor; pay the Contractor in
accordance with clause 19.6 (relating to optional termination, payment and release);
and pay the Contractor the amount of any loss of profit or other loss or damage which
he has suffered as a result of the termination.
• The 2017 Books
Under clause 16.2.1 of the 2017 Red and Yellow Books, the Contractor may give a
notice (which must state that it is given under that clause) of his intention to termi-
nate the Contract or, if any of sub-paragraphs (g)(ii), (h), (i) or (j) below apply, a notice
terminating the Contract, if 21 :
(a) the Contractor still has not received within 42 days reasonable evidence of the
Employer’s financial arrangements under clause 2.4, despite having given a notice
under clause 16.1 suspending the works or reducing the rate of work for breach of
that requirement;
(b) the Engineer has not within 56 days after receiving a statement and supporting doc-
uments issued the relevant payment certificate;
(c) the Contractor has not received the amount due under any payment certificate
within 42 days after expiry of the time when such payment is to be made under
clause 14.7;

21 The same sub-paragraph letters are used above as in clause 16.2.1 of the Red and Yellow Books.
 12.4 Contractor’s Termination 159

(d) the Employer fails to comply with a binding agreement or final and binding determi-
nation under clause 3.7 or with a decision of the DAAB under clause 20.4, whether
binding or final and binding;
(e) the Employer substantially fails to perform and such failure constitutes a material
breach of the Employer’s obligations under the Contract;
(f ) the Contractor does not receive a notice of the commencement date under clause
8.1 within 84 days of receiving the Letter of Acceptance;
(g) the Employer (i) fails to comply with clause 1.6 (relating to the signing of Con-
tract Agreement) or (ii) assigns the Contract without the required agreement under
clause 1.7;
(h) there is a prolonged suspension affecting the whole of the works as described in
sub-paragraph (b) of clause 8.12;
(i) the Employer becomes bankrupt or insolvent, or goes into liquidation, or other spec-
ified acts or events of insolvency occur; or is subject to a reorganisation; or any act is
done or event occurs analogous to or having a similar effect under applicable laws;
(j) the Employer is found, based on reasonable evidence, to have engaged in corrupt,
fraudulent, collusive or coercive practice at any time in relation to the works or to
the Contract.
The same grounds are set out in the 2017 Silver Book, with the exception of ground
(b) since the Silver Book does not provide for any payment certification procedure (and
ground (c) similarly refers to payment rather than to any payment certificate).

12.4.4 The Grounds of Termination Under Clause 16.2.1, 2017 Editions

• Sub-paragraph (a): Persistent failure to comply with obligation to provide evidence of
financial arrangements
This is the same ground as is provided for under sub-paragraph (a) of clause 16.2 in
the 1999 contracts and has been discussed above.
• Sub-paragraphs (b) and (c): Engineer’s failure to issue relevant payment certificate/
non-receipt of payment due
These two grounds are the same as in the 1999 contracts and are discussed above.
• Sub-paragraph (d): Failure to comply with binding agreement or determination under
clause 3. 7/3.5 and non-compliance with DAAB decision
This is the mirror image of the clause 15.2.1(a)(ii) and (iii) ground of termination by
the Employer for Contractor default and is in keeping with the symmetry of treatment
between the parties which the 2017 Books seek to achieve. The aim again is to reinforce
the importance of compliance with agreements or determinations, or decisions of the
DAAB even if they are not final.
• Sub-paragraph (e): Substantial failure to perform
As discussed above in connection with the 1999 Books, this ground is a general one
applying where there is a substantial failure to perform by the Employer, but it is made
clear in the 2017 Books that such a failure must constitute a material breach of the
Employer’s obligations under the Contract before it is to justify termination.
• Sub-paragraph (f ): Non-receipt of notice of the commencement date
160 12 Termination and Suspension

This is a new ground in the 2017 Books and reflects the importance of the Contractor’s
receiving notice of the commencement date under clause 8.1. The right to terminate
by reason of non-receipt of the notice only arises 84 days after receiving the Letter of
Acceptance and therefore only after twice as long as the Contractor should have had to
wait.
• Sub-paragraph (g): (i) Failure to comply with clause 1.6 (Contract Agreement – Red
and Yellow Books) or (ii) Assignment without agreement in breach of clause 1.7
This ground is in the same terms in all three 2017 Books and contains two distinct
grounds for termination, one of which (the second) justifies immediate termination
under clause 16.2.2.22
The first ground relates to failure to comply with clause 1.6 concerning the Contract
Agreement. In the 2017 Red and Yellow Books clause 1.6 requires the parties to sign the
Contract Agreement within 35 days after the Contractor receives the Letter of Accep-
tance, unless they agree otherwise. If the Contractor comprises a JV, the authorised
representative of each member of the JV is to sign the Contract Agreement. The 35 days
is somewhat longer than the 28 days provided for under clause 1.6 of the 1999 Red and
Yellow Books but both editions reflect the importance which continues to be attached
to the signing of the Contract Agreement.
In the 2017 Silver Book clause 1.6 provides, as in the 1999 form, for the Contract to
come into full force and effect on the date stated in the Contract Agreement. As with
the 2017 Red and Yellow Books, clause 1.6 in the 2017 Silver Book also provides for the
authorised representative of each member of a JV to sign the Contract Agreement if the
Contractor comprises a JV.
• Sub-paragraph (h): Prolonged suspension
The Contractor is entitled to terminate immediately where there has been a prolonged
suspension affecting the whole of the works, as described in sub-paragraph (b) of clause
8.12. Clause 8.12 in the 2017 Books has been considered in Section 7.9.4 above. The
wording of that clause differs somewhat from clause 8.11 referred to in clause 16.2 of
the 1999 forms, but the 84-day period of prolongation is the same and the requirements
that the whole of the works be affected and that the cause of the suspension instructed
by the Engineer/Employer should not be the responsibility of the Contractor still apply.
• Sub-paragraphs (i) and (j): Insolvency or reorganisation and corruption
These grounds of termination have been considered above in connection with the
Employer’s right to terminate for Contractor default under clause 15.2.1 (see Section
12.1.4). It is to be noted that the 2017 contracts have added corruption by the Employer
as a ground of immediate termination.

12.4.5 Termination Under Clause 16.2, 2017 Editions

Clause 16.2.2 provides that unless the Employer remedies the matter described in a
notice given under clause 16.2.1 within 14 days of receiving it, the Contractor may by

22 This is by contrast with the 1999 Books in which only prolonged suspension and insolvency-related
events justify immediate termination.
 12.4 Contractor’s Termination 161

giving a second notice to the Employer immediately terminate the Contract, the date of
termination being the date when the Employer receives the second notice. However, if
any one or other of sub-paragraphs (g)(ii) (assigning the contract without agreement),
(h) (prolonged suspension), (i) (insolvency or reorganisation) or (j) (corruption) applies
the Contractor is entitled to terminate the Contract immediately by giving a notice of
termination as such, and again the date of termination is the date when the Employer
receives the notice.
Clause 16.2.2 then provides expressly for the Contractor to claim, subject to clause
20.2, an extension of time and/or payment of cost plus profit if he suffers delay and/or
incurs cost during the above notice period of 14 days. This is a new provision in the 2017
contracts. Like the 1999 contracts, however, clause 16.2.2 also provides that the Contrac-
tor’s termination under clause 16.2 does not prejudice any other rights he has under the
Contract or otherwise. This reflects the position with the Employer’s termination under
clause 15.2.

12.4.6 Contractor’s Obligations After Termination

Clause 16.3 in the 2017 Books provides that after termination under clause 16.2 the
Contractor is promptly to (a) stop all further work except for what he is instructed to
do for the protection of life or property or safety of the works; if he incurs cost as a
result of doing such instructed work the Contractor is to be entitled subject to making a
claim under clause 20.2 to be paid cost plus profit; (b) deliver to the Engineer/Employer
the Contractor’s documents, plant, materials and other work for which he has received
payment; and (c) remove all other goods from the site, except as needed for safety, and
leave the site.
Essentially, therefore, the Contractor’s obligations following a clause 16.2 termination
are to carry on to do only what he is instructed to do for the limited purposes set out in
sub-paragraph (a); to give the Engineer or Employer the Contractor’s documents, plant,
materials and other work for which he has been paid; and then to leave the site having
removed any other goods except those needed for safety.

12.4.7 Payment After Contractor’s Termination

After a clause 16.2 termination by the Contractor the Employer is promptly to (a) pay
the Contractor in accordance of clause 18.5,23 relating to optional termination; and, pro-
vided the Contractor has claimed in accordance with clause 20.2, pay the Contractor the
amount of any loss of profit or other loss and damage suffered by him as a result of the
termination.

23 See Section 14.5 below.