Default on Progress Payment

Default on Progress Payment

Our Ref: xxx

Date: xxx

To                    :           xxx Contracting Middle East,

                                   P.O.Box xxx,

                                   Dubai, UAE 

Attention          :           Ms. xxx

                        :           Project Director

Project             :           xxx Tower Views, Dubai

Subject                 : Default on Progress Payment

Dear Mr. Chen,

We refer to Xxx letter Ref: xxx dated xxx and your reply letter No. xxx dated xxx.

Subcontract Agreement – Appendix 1, Interim Payment, Clause B states “Payment shall be released within 60 days by PDC from the receipt of respective payment from the Employer by the Main Contractor for the same.  The Employer shall certify the Main Contractor’s payment application within 28 days and pay within 15 days after certification”.  Subsequently, the due date for issuing the progress payment PDC, in accordance with the above clause is maximum 43 days (28+15) from the submission of our IPA

Default on payment of IPA No. 07

As noted in our letter referenced above, we again put on record that xxx is in default on Xxx progress payment against IPA No.7 for the month of February xxx submitted on the 23rd of February xxx.  Release of PDC was due on the 6th of April xxx(43 days).  Your default in issuing the PDC is 35 days.

Your failure to secure your payment from the Employer does not relieve you from your obligations to Xxx under the terms of our Subcontract Agreement, otherwise you are inferring that if you are not getting paid by the Employer, Xxx is supposed to continue to finance your project without being paid. This is of course unreasonable and impossible.

Default on certification and payment of IPA No. 08

Certification for the works done for the month of March xxx through IPA No. 8 submitted on the 23rd of March xxx was due on the 20th of April xxx (IPA submission plus 28 days) . The due date for issuing the PDC for this IPA is 5th of May xxx (28 days plus 15 days).

We have received on the 5th of May xxx your delayed draft certification for our IPA No. 8 and we record the following:

  • Your draft certification includes, again, an unjustified and unilateral short certification of 5% across all work done which is in blatant breach of our Subcontract Agreement. We again object to this arbitrary short certification to work done which amounts to a value of xxx AED, and we request that you certify these works fully with immediate effect.
  • Your draft certification again leaves out the detention charges included in our IPA and which should be settled by xxx. These detention charges are due solely to your site’s failure to off load the trailers on time. These detention charges amount to a value of xxx AED.
  • Lack of offloading on site means trailers are stuck on site for extended periods of time which lead to detention charges. Your further lack of payment of these resulting detention charges is leading to major disruptions to our trailer supply chain as suppliers are no longer willing to deliver to your site.

Despite such payment delays, we have 358 completed pods available for you in our factory. However, if such delays in delays persist it will have severe repercussions on our cash flow and on our ability to maintain our supply chain. Consequently, Xxx will not be liable for any impact this may have to pod production and delivery and we reserve our right for an Extension of Time (EOT) equivalent to the same number of days by which our progress payments are delayed.

We further reserve our rights to claim any and all costs or loss of profit associated with your unjustified retentions, and your persistent lack of certification of the due trailer detention charges.

We again urge you to settle our overdue progress payments immediately.

On behalf of xxx LLC


Project Manager       

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