We are a contractor engaged under ECC option C on a project with assets in two different locations. One of the asset location works has been stopped in its entirety under instruction for over 12 months now. We would like to partially terminate, that is terminate only the stopped works. We consider the works that have been stopped represent ‘substantial’ work under clause 91.6. We would, however, like to continue with the remaining works – is this possible?
Answer
The simple answer to your question is no, you cannot terminate a part of a contract – it is all or nothing. It seems likely that the stopped works will be substantial and therefore likely to give you the right to terminate under clause 91.6, as long as it was not caused by your default. However, which of the reasons would apply (R19 or R20) will depend upon the circumstances, and the amounts you get paid will depend upon which of those reasons apply. But whichever reason applies, clause 90.1 makes it clear you are terminating your obligation to provide the works and, from the definition of that term in clause 11.2(13), that means all of those obligations, not just some.
However, it is also important to understand that an instruction to stop part of the works is a compensation event under clause 60.1(4). In those circumstances the project manager should have already notified you of that compensation event under clause 61.1, and instructed you to provide a quotation. As part of that, the project manager should have instructed you as to what assumptions are to be made for that quotation – see clause 61.6.
It seems the best action here is really to be discussing the matter with the project manager and pointing o ut how much it could potentially cost the employer by keeping your resources on indefinitely while the employer makes up its mind, the defined cost of which will be included in the assessment of the compensation event and therefore added to the target.
