S.B _Kolkata (Service) 11 February 2012

Delivery extension

Dear All

Please be informed that we are presently engaged to execute a turnkey project work at SAIL, bokaro. The project is getting inormous delay due to other contractor or SAIL's supervision. Consequently we are still unable to obtain the clear front to start our job. So as to continue the contract we need to have a delivery Extension which was expired on 1st Feb, 2012. Accordingly we applied for that now got a incredible reply fom the clients as mentioned below:

May kindly submit undertaking as follows with regards to obtain the delivery period.

“We agree to SAIL, BSL’s reservation of right to levy liquidated damage at a later date and such levy of liquidated damage by BSL will not be disputed by us.”

Under this circumstances we are quite puzzled to hear this from the purchaser.

My Specific question is as follows:

1. What does it mean?

2. How will it affect at later stage?

3. What is cost implication?

4. Is there any hide intension to be imposed on us at later stage?

5. If we will not provide the above undertaking, then what shall going to be happened except delay in getting delivery extension?

Please give your valued reply at the earliest.

Thanks & Regards

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2 Replies

Ajay Kumar (Administration) 20 February 2012

From above it appears that you have not been able to start your project and delay is fully attributable to SAIL or other contractors. Assuming this, what u should ask SAIL is not for Delivery Period Extension for Refixation of Delivery Period.

Now assuming that you too are responsible for dealy, then

1. It means that SAIL will have the legitimate right to impose liquidated damages on you.

2.It will have financial implications nothing else.

3.Rate at which Liquidated Damages will be imposed must be mentioned in your Contract. If it is not mentioned SAIL can not impose it. But it must be there. Its a standard term.

4. No there appears to be no hidden intensions. SAIL is following standard practise.

5.If u do not provide above undertaking, SAIL may refuse to extend the delivery period and cancel your contract. In that case, SAIL may forfeit the Security Deposit you have submitted to them, if any. Further, it can also black list/debar your firm from future contract. Further, if you have agreed to Risk Purchase Agreement Cluse with SAIL then SAIL can exercise that right too.

Professionally, I advise you to provide that undertaking and get the actual Delivery Period Extended to the Date by which you will be able to fully execute the contract.

Rgards

(Guest)

Dear S.B.,

Delay due to other contractor or SAIL's supervision, itself, indicates the ill motives of the authorities of SAIL to ultimately put a blame of delay in delivery on your part and to levy damages on you or to extract some bribe from you, if the hurdle on account of delay of other contractor and SAIL's supervisors had not been reported from time to time and asked to remove the hurdles.

Before asking for reply to your queries 2 to 5, you may need to check your contract agreement where you can get the clauses of liquidated damages also. If you like, for further guidance, you may also like to send the scanned copy of agreement and the contract award letter throgh email at: dcgroup1962@gmail.com.