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Offshore Construction Contracting Principles

Suspension by Contractor

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Principles

It is recommended that the following contract principles be applied in relation to contractor's right to suspend under offshore construction contracts:

In the event that Company

  • has failed any of its payment related obligations; or
  • has lost its creditworthiness; or
  • has committed a material breach of its contractual obligations,

Contractor shall have the right to suspend all or part of the Work,

and Company shall reimburse Contractor as if the Work had been suspended by Company for convenience.


Clarifications / Considerations

This clause will prevent that Contractor would be obliged to perform the Work fully in accordance with the Contract and the Contract Schedule without Company's guarantee of payment and performance.


Example Clause for Suspension by Contractor

The following is an example of an article covering the possibility for suspension by Contractor.

X. CONTRACTOR'S RIGHT TO SUSPEND

In the event that Company

  1. has failed to pay any of the lump sums or other amounts on or before the dates or within the periods specified in the Contract; or
  2. has failed to pay any of the lump sums or other amounts on or before the dates or within the periods specified in the Contract; or
  3. has failed to arrange any of the required Payment Guarantees fully in accordance with the Contract on or before the dates or within the periods specified in the Contract; or
  4. has failed to fulfil any of Company's information and/or Approval related obligations under the Contract; or
  5. has failed to fulfil any of Company's schedule related obligations under the Contract; or
  6. has become bankrupt; or
  7. has an execution levied on his goods; or
  8. has a receiving order made against him; or
  9. has presented his petition in bankruptcy; or
  10. has made an arrangement with or assignment in favour of his creditors; or
  11. has agreed to carry out the Contract under a committee of Inspection of his creditors; or
  12. has gone into liquidation other than a voluntarily liquidation for the purpose of amalgamation or reconstruction; or
  13. has assigned the Contract without the consent in writing of the Contractor being first obtained,

Contractor shall have the right to suspend all or part of the Work after giving not less than (7) calendar days written notice to Company of its intention to suspend, and indicating the grounds upon which it intends to suspend, suspend the Works unless within such seven (7) calendar days Company has fully corrected the grounds upon which Contractor intends to suspend.

Contractor shall, after such seven (7) days written notice, be entitled to suspend all or part of the Work, and/or to temporarily demobilise all or part of Contractor's Marine Spread, and/or to exercise its rights to draw the bank guarantees, all without incurring any liability towards Company and without prejudice to any of Contractor's rights under the Contract.

In the event of suspension by Contractor in accordance with the Contract, Company shall have the same obligations and liabilities and Contractor shall have the same rights as if the Work had been suspended by Company under the provisions of Articles [TBA] and [TBA].