What you should consider before paying for Site Material?

Presented by Mazuan Lin

Definition

Building Contract Dictionary by Chappell, Marshall, Powell-Smith and Cavender

Brief Description of Relevant Contract Clauses Material delivered shall not be removed from site Contractor shall be responsible for loss or damage to materials and goods When material paid it shall become a property of the client/government Warranty of title of goods and materials Value of Materials and Good (Default)

Contract Clauses PAM 1998 14.1 14.2 & 14.4 14.2 & 14.3 100% PAM 2006 14.1 14.3 20.0 14.2 46.4 PWD 203A KLCC 2012

14.4 100%

90%

Client Discretion

Contract Clauses

a)

Delivered to the Site;

Intended for incorporation into the permanent works; Reasonably, properly and not prematurely brought to the Site; Adequately protected against weather and other casualties. In practice, i add up some more...

b)

c)

d)

e)

The materials has been approved by relevant consultant (if any);

Attached with Payment Voucher, Receipt, Purchase Order (PO) and Delivery Order (DO); Verified by the resident architect/engineer or clerk of work.

f)

g)

Criteria for Payment

Clause 14.2 & 14.3 (PAM1998) Clause 14.2 (PAM 2006) Clause 20.0 (PWD 203A)
All the above clause stated that when the materials paid under Materials on Site, it shall be a property of the Employer/Government. Question: Does those clauses bound the third party?? i.e Supplier Reference made to a Legal Maxim NEMODAT NON QUAD HABET A MAN CANNOT GIVE WHAT HE HAS NOT

Who is the Owner???

DAWBER WILLIAMSON V HUMBERSIDE COUNTY COUNCIL Plaintif supplied slates to the site. The Main Contractor then claimed it as an Unfixed Material. PP has evaluated and included the Slate into IPC which subsequently being paid. Later on, the Main Contractor was declared bankrupt and unable to made payment to the Plaintif. Plaintif came to site and claimed for the material but was not allowed by the client. Court has then decided that the Plaintif have his rights for the slates as no payment received by him from the Main Contractor.

Court Cases

LIM CHUI LAI V ZENO Zeno is a supplier for concrete culvert to a contractor named Ahmad. Later on Ahmads contract was terminated by MPPJ. Zeno contacted MPPJ saying that the payment has yet to be made by Ahmad. As such, the materials are still owned by Zeno. When Zeno went to site, it was found that Ahmad had sold the materials to Lim. Court has decided that Ahmad has no right to sell the material to anyone. Ahmad is only a BAILEE under the law as long as the payment has yet to be made to Zeno. In that case, Zeno still hold the rights against the materials.

Court Cases

Contractor needs to supply the material at site or adjacent to the site. The contractor also need to be responsible on the suitableness of the material including damage and loss as well. TEST VALLEY BOROUGH COUNCIL V GREATER LONDON COUNCIL The court has decided that the contractor will provide good and proper materials. The material will be FIT FOR THE PURPOSE so far as that has been made known to the contractor.

Court Cases

In Young and Martin Ltd - v - MacManus Child Ltd (1969), the Contractor supplied defective roof tiles to the Employer under a house building contract. The brand and manufacturer for the tiles had been specified, but the Contractor had been allowed to make his own contractual arrangements for supply of the tiles from a sub-contractor. The House of Lords held that in the absence of any reliance there was no room for the implication of a term as to reasonable fitness for purpose. However, the absence of reliance did not displace the implication of the term for satisfactory quality.

Court Cases

Contractor is required not to supply the material prematurely from site activity. What is the meaning of prematurely?
Refer case of STANLEY HUGH LEACH Court decided that the actual activity duration to become a basis and not according to contractors work program. This is crucial as to avoid any damage risk, early payment and shall be in accordance with SALES OF GOODS ACT.

Court Cases

What if we were asked to pay Material OFF Site????

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Check whether there is provision in CoC for Materials off Site. Materials must be in BONDED store / fully insured Materials must be properly placed in store - away from other materials/equipment Materials must be properly identified for that particular project/client The supplier/contractor/subcon must show prove that the ownership have been transferred to them from the manufacturers or whoever they bought those materials from. Consider asking for a parent company guarantee or a performance bond in return for payment.

Before you pay Materials off Site

What is wrong with this MOS?

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Pay for MOS without looking at it. They just simply take the rates from BQ as a basis. Using Current Market Price instead of Market Price during tender. Payment made for premature items. Temporary works included. Never ask for Transfer of Ownership Proof.

Dosa-dosa Seorang QS

Thank You!
With knowledge, certify Material On Site without fear...... Treat contractor as partner to complete.... Not an enemy to compete.