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
Dear Sir,
We have received the payment certificate no. 09 on 18 August xxx (appendix 1) for the works done up to June xxx and it is still holding a short certification for an amount of AED xxx which is not acceptable, unjustifiable, has no basis and is a complete disregard to your obligations and commitments.
We remind you again that M/s xxx (Contractor Name) scope of 261 pods is fully completed and must be fully certified and we raise our serious concerns on the continuous disregard to our requests raised in several letters referenced above and multiple verbal and written communications to obtain the full certification.
We notify you that you are in a massive default for delaying our certifications, short certifying our payments, imposing unfair deductions and also incurring losses and extra costs on M/s xxx (Contractor Name) due to LC discrepancies and the bank charges arising from the amendments of advance payment bond which was supposed to be recovered months ago if you certified our payments as it should be.
A‐ 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.
But, till date the full certification is not yet received à Delay in certification is currently 105 days.
B- Short certification:
We refer to letters ref (g) & (h) in which we notified you previously on the short certifications following the receipt of payments certificates PC#7 & PC#8.
Disappointingly, once again you decided to ignore our letters and Emails and issued PC#9 with a short certification amounting AED xxxx from the work done value in a total 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.”
C- 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 again 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.
We reserve our rights to take any action we deem necessary against you if you don’t remove such unfair deductions from the next certification.
D-Letter of Credit amendment & discrepancy and request to reimburse L/C charges:
The Letter of Credit (appendix 3) 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, you 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 4) which is not acceptable.
We refer to our letter (j) in which we notified you on the amount incurred due to your default and attached all the supporting documents and requested you to reimburse the amount of AED xxx.
Disappointingly, the Main Contractor decided to ignore our request and didn’t reimburse the amount in PC#9 adding another damage to M/s xxx (Contractor Name).
E- Charges due to amendment of Advance Guarantee:
As notified in paragraph [A] above, the full certification and recovery of advance payment amount was supposed to be in 09 May xxx.
Due to your defaults by delaying certifications and short certifying our payments till date, the advance payment has not yet recovered, forcing an extension to the advance payment guarantee and incurring charges on M/s xxx (Contractor Name).
All these incurred charges will be claimed and back charged to the Main Contractor.
On the other hand, you are urged to issue an NOC on your company letter head duly stamped and signed by Authorized signatories to allow us to reduce the amount of Advance Guarantee to the remaining value of AED xxx instead of the current value of AED xxx.
The request was already issued to you in our letter ref (k) on 15 August xxx.
Conclusion
In the end, the financial damage you have caused and still causing M/s xxx (Contractor Name) in delaying our certification, in short certifications on our progress payments, is leaving us with no other option but to submit the TAX Invoice (appendix 5) along with LC documents for acceptance for onward submission to bank based on the arbitrary amount you have noted on your PC #9 for the month of June xxx.
However, 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) that are beyond any acceptable norms.
Accordingly, you are urged to issue PC#10 on immediate basis by clearing the balance amount in full and omitting your unjust deduction and reimbursing the L/C charges.
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.
It must be clear that submitting this invoice does not infer in any acceptance by M/s xxx (Contractor Name) on the amount certified or on the arbitrary deduction included therein, nor should it be considered as an acceptance on the part of M/s xxx (Contractor Name) on the change in payment terms that ASC is implementing in the LC in direct breach of our Subcontract Agreement.
Yours faithfully,
On behalf of M/s xxx (Contractor Name) LLC
xxx
Projects Manager