Novation contacts. 1

[Roadbridge]

Several months’ back a small local contractor, who had taken over a contract through novation, approached me. He asked me would I be willing to run the contract as his site agent on a water supply contract, after careful consideration and study of the BoQ and specification of the original contractors tender I declined the position and advised the contractor not to sign the final novation contract, but to seek the contract under his own original tender rates.
This he did not do and went ahead and signed it. Last week I heard that he pulled his crew off the contract claiming that the local authority had not been fully forth coming in disclosing the extent of the amount of work that had to be made good such as testing of water mains and the relay off such.
The contractor further claimed that some of the major rates with in the bill were some uneconomical that the original contractor should not have been awarded the contract in the first place.
Has this contractor any redress in now breaking the contract and declaring it null and void or is his bound to honour it and lose his shirt in doing so?

 

[Roadbridge]

I’m sorry that should be Novation Contract.

 

[IRstuff]

Time to see a lawyer

TTFN

 

[Roadbridge]

I would also like to ask the members have they ever worked on a Novation contract before and if so what kind of experience had they. What kind of difficulties did they encounter during the project and did their companies manage to a profit on the project.

 

[p11100]

What is a Nonvation contract anyway?

P11100

 

[MintJulep]

Could the full scope of necessary work have been identified through proper due diligence before the contract was signed?

 

[IRstuff]

Novation is like taking over someone else's house payments.

Anyway, as you might suspect, novations, as with buying a house can go either way. Our production contracts have been cash cows, but our development contracts have been sinkholes. This is typical, though, since development contracts are almost always bid aggressively and optimistically.

TTFN

 

[keano1]

P11100

Hope this answers your question.

Novation is a contractual device whereby, with a client's express approval, a new contractor steps into the shoes of an insolvent contractor. In effect, the new contractor purchases the interests in the project and, for a consideration, assumes all the rights, benefits and liabilities of the contract. The completion of the project by novation arrangement enables the client to continue the project without any additional costs. However, this is possible only where the novation agreement clearly makes the new contractor liable for the following:

General making good of defects (patent and latent, if applicable) in the works.

Carrying out all emergency work

Rectification of any damage (deterioration or act of vandalism) resulting from the determination.

Responsibility for the time lost between the determination and recommencement of production.

Arrangement for the assignment of nominated sub-subcontractors / suppliers contracts from the insolvent contractor to the new contractor.