Notice of Default
Our Ref: xxx
Date: xxx
To : xxx Contracting Company LLC
P. O. Box xxx, Dubai, U.A.E.
Attention : Mr. xxx, Senior Project Manager
Project : xxx Tower, Dubai – U.A.E.
Subject: Notice of Default
References: a) Main Contractor’s letter: xxx dated 28 January xxx
b) M/s xxx (Contractor Name) letter xxx dated 09 December xxx
c) M/s xxx (Contractor Name) letter xxx dated 10 January xxx
d) M/s xxx (Contractor Name) letter xxx dated 02 March xxx
e) M/s xxx (Contractor Name) letter xxx dated 28 March xxx
f) M/s xxx (Contractor Name) letter xxx dated 18 May xxx
g) M/s xxx (Contractor Name) letter xxx dated 13 June xxx
Dear Sir,
We are writing to you again following the receipt of the payment certificate No. 08 on 21 June xxx (appendix 1) for the works done up to April xxx and we would like to raise our serious concerns on the delay in certification, short certification, deduction and LC discrepancies.
- Delay in certification:
The 261 pods under M/s xxx (Contractor Name) scope are delivered, installed, approved and handed over to the Main Contractor as recorded in our letters ref. (d) & (e) since 28 March xxx and the only comment on rejected finishing IRs of 147 pods is related to marble which is solely the Main Contractor’s responsibility.
Accordingly full certification of work done was supposed to be received against IPA #6 for March works.
Our IPA #6 was submitted on 25 March xxx (appendix 2) and the relative certification was supposed to be received by 9 May xxx.
However, PC #7 is received on 7 June xxx (appendix 3) & PC #8 on 21 June xxx (appendix 1).
- Delay in payment certification of 29 days for PC #7.
- Delay in payment certification of 43 days for PC #8.
- Short Certification:
Please refer to our letter ref (g) in which we notified you on the short certification received in PC #7.
Disappointingly, the Main Contractor ignored our letter and the several Email reminders (appendix 4) and issued PC #8 with a short certification amounting AED xxx from the work done value.
This is a blatant default and a complete disregard to your obligations and commitment clearly stipulated in your letter ref (a) dated 28 January xxx point 2, in which you have confirmed to M/s xxx (Contractor Name) that “if the contractor’s rejection is only due to marble material, then respective pods will be certified to the subcontractor”.
M/s xxx (Contractor Name) scope of 261 pods is fully completed and must be fully certified and such short certification is unjustifiable, rejected and has no basis.
- Other Deduction
We refer to our letter ref (f) and we totally reject the deduction amounting AED xxx defined as adjustment for bad workmanship.
Such deduction is unfair, unjust and has no basis.
We remind you that we obtained approval for our pods in terms of MIRs, Installation IRs and Finishing IRs by the Engineer and no comment related to any bad workmanship was received and you have no right whatsoever to apply such deduction for any reason.
- Letter of Credit amendment and discrepancy.
The Letter of Credit (appendix 5) expiry date was 15 June xxx but due to the delay in certification and short certification as detailed in points (A) & (B) above, the L/C was required to be amended.
As per our Subcontract Agreement, Clause 16, Payment, L/C Terms, All charges related to Applicant’s bank shall be borne by Contractor.
However, the Main Contractor has disregarded the Terms of our Subcontract and amended the L/C by incorporating a condition to recover the amendment charges from M/s xxx (Contractor Name) (appendix 6) which is not acceptable.
Conclusion
The continuous default of the Main Contractor and deviation from his contractual obligations and commitments is no longer tolerable as it is incurring costs and causing loss of profit and financial damages to M/s xxx (Contractor Name).
Accordingly, you are urged to revisit your certification by clearing the balance amount in full and ommiting your unjust deduction to allow us to submit the Tax Invoice.
Also, you are required to adhere by the Terms of our Subcontract and revise the L/C clause on immediate basis.
M/s xxx (Contractor Name) will not be liable for any consequences caused by your default on your contractual liabilities and we reserve our rights under the Terms of our Subcontract Agreement to claim for all the damages and loss your default has caused to M/s xxx (Contractor Name) in addition to an Extension of Time (EOT) equivalent to the same number of days by which the advance payment, L/C establishment, certification and progress payments are delayed.
Yours faithfully,
On behalf of M/s xxx (Contractor Name) LLC
xxx
Projects Manager