What Can a Client Recover under MF/1?

As my introductory blog on MF/1 sets out, there are some significant limits under MF/1 on the rights of the purchaser (client or employer) to recover losses. What can you do about it? This blog considers the purchaser’s remedies.

Remedies

As the purchaser, you – either yourself or through the engineer – have the following remedies:

  • Time: You can ask the contractor to accelerate works which are proceeding too slowly (14.6); and deduct agreed damages for delays to completion (34.1) or terminate the contract for prolonged delay (34.2).
  • Quality/Defects: If the works do not meet the contract, you can ask the contractor to rectify defects before taking-over (26.1) or for 12 months afterwards (36.3); the 12-month defect period starts afresh for any repairs or replacements (36.3) or is suspended if the works are not operational (36.4), subject to a maximum period of 24 months (36.3) or 3 years for latent defects (36.10). If the contractor does not rectify defects, you can do so and recover the cost from the contractor (36.5)
  • Quality/Testing: You can inspect and tests works before delivery (23.1), before taking-over (28.2) and after taking-over (35.2). If the works do not meet the tests in the contract, you can ask for tests to be repeated (28.4 and 36.7); you can deduct agreed damages for poor performance (35.8(a)), accept badly performing works but reduce the contract price (35.8(b)), or you can reject works (23.5, 28.5 and 35.8(c))
  • Cost: When you issue certificates of payment you can state the amount due and any deductions (39.6), and you can reject claims for additional money which are not made in time (41.3).
  • Termination: You can end the contractor’s future obligations under the contract for assignment without consent, rejected works, insolvency, abandonment or unwarranted suspension, failure to proceed with due diligence after warnings, infringement of IP rights (49.1).

Constraints on Remedies

As with all contracts, any remedy is subject to following the specific contract procedure. There are two key constraints under MF/1 which you need to be aware of:

  1. The exclusive remedies clause (44.4) which means that you can only rely on these remedies set out in MF/1 – you cannot bring any other claims for negligence, breach of statutory duties and even for breach of contract.
  2. Conclusivity of certificates (39.7) – unless challenged within 3 months or where there has been fraud or dishonesty, your certificates of payment are conclusive evidence that the works meet the contract, the value of those works, and the contractor has performed its obligations relating to those works.

What Should You Do?

If you are a purchaser under MF/1, familiarise yourself with the remedies under MF/1 as part of your overall risk management. It pays to know what you can and cannot do if the project does not run according to your plan.

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