Our Ref: xxx
Date:
To
xxx Contracting LLC
P. O. Box xxx
Dubai, U.A.E.
Attention : Mr. xxx, Group Procurement Manager
Project : : xxx Tower, Dubai – U.A.E.
Subject : Notice of delay in establishing the Letter of Credit
Reference : a) M/s xxx (Contractor Name) letter xxx dated 21 January xxx
Dear Sir,
We are in receipt of your letter reference xxx dated 30 January xxx with regards to your delay in establishing the Letter of Credit and we would like to note the following:
First, we totally object to your statement and solitary decision to issue cheques on their due dates stating that this is stipulated under Clause 16 of the Sub-contract Agreement.
We remind you once again that as per our Sub-Contract Agreement, Clause 16, payment, the payment for the certified amount shall be processed from date of submission of monthly payment application, (b) 75% value of BOQ amount based on progress of works at site through Letter of Credit (100 days credit).
Our Sub-contract does not state under any of its clauses especially Clause 16 that the settlement of payment can be altered by postdated cheque (PDC). Therefore you statement and decision is incorrect and not contractual.
Second, please be informed that during the discussion of the Letter of Credit Terms and following the delay in establishing the Letter of Credit by the Main Contractor, ASCC account team has proposed to issue cheques covering the payment of pods delivered prior to issuance of L/C and M/s xxx (Contractor Name) has accepted to receive Current Dated Cheques (CDC) not postdated payment. (See appendix A)
Accordingly the cheque for the works done in the months of October xxx till January xxx must be issued from the date of the monthly payment application.
We have currently received the payment due against the certified work for the month of October xxx and we also accepted on good faith the postdated cheque received against the certified work for the month of November xxx.
However, accepting the above, does not infer in an acceptance to changing the payment terms neither stated in the Sub-contract under Clause 16, nor the agreement with your finance team to cover the due payment with a CDC. Therefore, the payment against the certified work for December xxx amounting to AED xxx (Appendix B) and the payment that will be certified for the work done in January xxx against IPA No. 04 (Appendix C) must be settled by a current dated cheque only.
In conclusion, your delay in issuance of the Letter of Credit and settling due payments is factual and we urge you to release the CDC of December on immediate basis and establish the L/C within before 25February xxx so the monthly payment of the month of February will be covered under the L/C.
M/s xxx (Contractor Name) will not be liable for any delay caused by your default on your contractual liabilities, as such delays are on account on ASCC acts. In addition we reserve our rights under the Terms of our Sub-Contract Agreement for an Extension of Time (EOT) equivalent to the same number of days by which the advance payment and progress payments are delayed.
This is for your information & necessary action.
Yours faithfully,
On behalf of xxx LLC
xxx
project Manager
