What happens in the event a winding up order is made against a Contractor under the PAM Contract?
Automatic Determination: Under the PAM Contract 2006 / 2018, in the event a winding up order is made against a Contractor, the employment of the Contractor shall be forthwith automatically determined1 (comes to an end).
What happens after under the Contract?
- Return Site Possession: The terminated Contractor shall return possession of Site to the Employer.
- Employ New Contractor: Employer may employ a new Contractor to carry out and complete the balance works and to make good any defects.
- Joint Inspection: Within 28 days from the date of determination, the Architect / QS shall give a written notice to the Contractor of the date of joint inspection to record works executed and materials & goods delivered to Site up to the date of determination.
- Assignment: If required by the Employer, the Contractor shall, within 21 days from the date of determination, assign benefit of any agreement for the continuation of the hire of construction plant on Site, and benefit of any agreement for supply of materials, goods, and/or for execution of the works to the extent that it is assignable.
Is the Employer required to immediately settle Payment Certificate(s) which have been certified?
No, the Employer is not be bound to make any further payment to the terminated Contractor, including payments which have been certified but not yet paid when the employment of the Contractor was determined.
The final account which will be prepared at the completion of the works, will include the sums previously certified to the terminated Contractor before the date of determination, Liquidated Damages, set-off and other loss and/or expense suffered by the Employer.
As an Employer, are we required to issue a termination letter to the Contractor?
While the employment of the Contractor is deemed ended, it may be prudent to issue a letter to the Contractor putting on record that the employment of the Contractor has been automatically determined on the date the winding up order is made, followed with reservation of the Employer’s rights and remedies.