perfections, proceed more rapidly with said work, or otherwise comply with the provisions of this contract.

(b) ANNULMENT. In such case the Company may give the Contractor ten (10) days' written notice, and at the end of that time, if the Contractor continues to neglect the work, the Company may provide labor and materials and deduct the cost from any money due the Contractor under this agreement; and may terminate the employment of the Contractor under this agreement and take possession of the premises and of all materials, tools and appliances thereon, and employ such forces as may be necessary to finish the work. such case the Contractor shall receive no further payment until the work shall be finished, when, if the unpaid balance that would be due under this contract exceeds the cost to the Company of finishing the work, such excess shall be paid to the Contractor; but if such cost exceeds such unpaid balance, the Contractor shall pay the difference to the Company.

In

(c) COMPANY MAY DO PART OF WORK. Upon failure of the Contractor to comply with any notice given in accordance with the provisions hereof, the Company shall have the alternative right, instead of assuming charge of the entire work, to place additional forces, tools, equipment, and materials on parts of the work for the purpose of carrying on such parts of the work, and the cost incurred by the Company in carrying on such parts of the work shall be payable by the Contractor, and such work shall be deemed to be carried on by the Company on account of the Contractor, and the Contractor shall be allowed therefor the contract price. The Company may retain the amount of the cost of such work, with per cent. added, from any such sum

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or sums due or to become due the Contractor under this agreement.

In case of annulment for neglect, the burden of proof will be upon the Company to establish the neglect.

In 33 (b) it may be wise to make the reading in the third and fourth lines as follows:

A. provide labor, materials, tools and appliances, by contract or otherwise, and deduct, etc.

as is done in several forms as to carrying on the work by Contract or otherwise. The desired action is probably included in the clause "employ such forces as may be necessary to complete the work," but a more specific statement has some value.

The following form includes many features common to a number in use and in somewhat different phraseology from that given above:

B. If the work to be done under this contract shall be abandoned by the Contractor, or if this contract or any part thereof shall be assigned or the work sub-let by him without the previous written consent of the City, or if at any time any official of the City or employee thereof shall become directly or indirectly interested in this contract or in furnishing the supplies or performing the work thereunder, or in any portion of the profit thereof; or if at any time the City shall be of the opinion that the performance of the contract is unnecessarily or unreasonably delayed, or that the Contractor is wilfully violating any of the provisions of this contract; or if

the work be not fully completed within the time named in this contract; then, and in any such case, the City may notify the Contractor in writing to discontinue all work or any part thereof, and thereupon the Contractor shall discontinue the work or such part thereof as may be designated, and the City may thereupon according to law enter upon and take possession of the work or part thereof, complete, or cause the same to be completed, and charge the entire expense of so completing the work or part thereof to the Contractor; and for such completion, the City for itself or for its Contractors may take possession of and use or cause to be used any materials, machinery or tools of every description provided by the Contractor for the purposes of this work, and may procure or cause to be procured other materials, machinery or tools for the completion of the work, and charge the cost and expense thereof to the Contractor.

All expenses, including those of re-letting, incurred and charged under these clauses or by virtue of this contract, shall be deducted and paid by the City out of any moneys then due or to become due the Contractor under and by virtue of this contract or any part thereof. In case such expense shall exceed the amount which would have been payable under the contract if the same had been completed by the Contractor, the Contractor or his sureties shall pay the amount of excess to the city; but should such expense be less than the amount payable under this contract had the same been completed by the Contractor, he shall receive the difference, after deducting the amount retained as hereinafter specified, but shall not be entitled to damages for not being allowed to complete the work himself.

It is not feasible to include the various readings, which are mostly long. Some special features and wordings may, however, be of interest and value; for example:

C. Thereupon the said Board shall have the power to, and may at the cost of said Contractor, either complete the said work by contract or itself do the work provided for hereunder by employing such men and teams, and by purchasing or otherwise obtaining such materials, supplies, machinery, implements, tools, and plant as the said Chief Engineer shall deem necessary . . . and may use . . . such materials . . . as may be the property of said Contractor, and may make the necessary repairs and replacements thereto, etc.

...

D. When any particular part of the work is being carried on by the Board, by contract or otherwise, under the provision of this article of the contract, the Contractor shall continue the remainder of the work in conformity with the terms of this contract, and in such manner as in no wise to hinder or interfere with the persons or workmen employed, as above provided, by the Board, etc.

Another form gives the right:

E. To use such implements, tools and materials of every description as may be found upon the site of said work, and to procure other tools and materials for the completion of the same.

Other forms provide for taking over the work:

F. If the Contractor shall become insolvent or bankrupt, or if his property or affairs shall be put in the hands of a receiver or receivers.

G. If the Contractor shall lose control of said work for any cause whatsoever except by act of God or the public enemy, or if the Contractor shall refuse or neglect to follow the instructions of the Engineer.

H. If in the opinion of the Chief Engineer the Contractor is guilty of carelessness or incompetency in the execution of the work.

Another phrase in common use is:

I. Or is not executing the work in good faith.

A sewer Contract form provides that the Board:

J. May take possession of . . . materials, animals, machinery, implements, centers, forms and tools of every description.

Another provision is that in case of taking away work:

K. The Board shall not be held to obtain the lowest figure for the work of completing the contract.

It should be remembered that the provision requiring this in the original letting is for the benefit of the taxpayer and not of the Contractor. Another uses the words:

L. Employ such persons and obtain such appliances and tools, etc.

One Contract form provides that:

M. The Board shall have a lien upon all the materials, supplies, machinery, implements and tools of the Contractor.

This provision may be important in case of financial inability of the Contractor and possible attachment of his property. From this standpoint it would be wise to add:

N. Such lien to attach at the time of notice by the Chief Engineer to the Contractor to improve his execution of the contract.

This additional provision would not hinder at all the Contractor's performance, but would prevent any action by him to place his plant beyond the control of the City or railroad after notification.

With relation to the clause providing for the payment by the Contractor for the work done by the railroad or City under this section, the following readings are of interest:

O. Such expense to be paid by the Contractor shall not exceed the amount of the security for the performance of this contract.

P. Such excess shall not exceed the amount owed by the Board, under this contract, at the time the Contractor is notified to discontinue said work, or any

part thereof, plus the amount of the bond executed by the Contractor for the performance of the contract.

Such provisions are omitted in many forms.

In one form in use, however, provision is made even for selling all the plant of the Contractor to cover any excess of cost.

The phrase "neglecting to remedy imperfections" in the Uniform Contract Form is unusual, but rather desirable. The opportunity given the Contractor to mend his ways after notice is also desirable and in the line of fair play.

The clause relating to any City employee becoming directly or indirectly interested in the Contract seems desirable in City Contracts; it is inapplicable for railroads. Specifying "the power and duty" of the Chief Engineer to notify, is a definite and wise provision. An alternative provision is as follows:

Q. Or if at any time the Chief Engineer shall be of the opinion and shall so certify in writing to the Board, that the conditions ...... are not fulfilled etc. the Board may notify the Contractor.

Here the Board notifies, rather than the Chief Engineer.

34. (a) ANNULMENT WITHOUT FAULT OF CONTRACTOR. The Company shall have the right at any time, for reasons which appear good to it, to annul this contract upon giving thirty days' notice in writing to the Contractor, in which event the Contractor shall be entitled to the full amount of the estimate for the work done by him under the terms and conditions of this contract up to the time of such annulment, including the retained percentage. The Contractor shall be reimbursed by the Company for such expenditures as in the judgment of the Chief Engineer are not otherwise compensated for, and as are required in preparing for and moving to and from the work; the intent being that an equitable settlement shall be made with the Contractor.

(b) NOTICE - HOW SERVED. Any notice to be given by the Company to the Contractor under this contract shall be deemed to be served if the same be delivered to the man in charge of any office used by the Contractor, or to his foreman or agent at or near the work, or deposited in the postoffice, postpaid, addressed to the Contractor at his last known place of business.

(c) REMOVAL OF EQUIPMENT. In case of annulment of this contract before completion from any cause whatever, the Contractor, if notified to do so by the Company, shall promptly remove any part or all of his equipment and supplies from the property of the Company, failing which the Company shall have the right to remove such equipment and supplies at the expense of the Contractor.

The provision allowing the Company to annul the Contract without fault or default on the part of the Contractor is unusual except in railroad Contracts, where it has not been unusual to have a change of policy in relation to construction.

Whether this clause is fair to the Contractor is doubtful. There is an apparent intent to treat him fairly. Some Contractors, not without reason, think that anticipated profits should be included. The Contractor may have had, at the time he bid, opportunity for another profitable Contract, which he turned down. Anticipated profits, however, are difficult to estimate, and if allowed and paid, the Contractor may promptly secure another equally favorable Contract and so double his profits.

In case of annulment without fault of the Contractor, there may be some doubt whether, after the transaction is closed, the decision of the Chief Engineer ought to be made final as to the allowance to be made to the Contractor. Any question as to maintaining control of the work is now eliminated. It is possible that arbitration may be appropriate in this case if agreement is not reached. Engineers who incline to look favorably on arbitration may find it desirable here, even if undesirable in general. The expense and other unsatisfactory features of arbitration will lead other Engineers to reject arbitration even here. Most Companies and their Chief Engineers would probably insist on restricting any award so that anticipated profits should not be allowed. Cases of annulment are probably rare except in railroad work where the Contractor has knowledge, at the time of making his bid, of the possibility or probability of such action, so that the risk in its occurrence, as a practical matter, would usually be slight.

The difficulty of determining the reimbursement proper in any case is due in considerable part to a faulty system of bidding. In many Contracts there is a large expense for establishment, temporary structures, depreciation on plant, and other overhead charges. The direct unit cost of the various items in the Proposal can be closely computed in advance. Upon each of the items, however, must be saddled a part of these overhead charges. The Contractor, probably wisely, often puts a larger proportion on those items on which monthly payments will be made earliest or upon those which are likely to be increased in amount. A system of bidding is desirable which will allow a direct bid on establishment, etc.; this will tend to cure the difficulties due to annulments, and the somewhat similar troubles due to increase or decrease of quantities from those forming the basis of the Proposal. It will also give better control over unbalanced bids.

Section 34 (b) seems not appropriate as a part of a section on annulment. It is general in character, applying to all notices to the Contractor. It seems questionable whether notice "to the man in charge of any office used by the Contractor "is notice to a man of sufficient responsibility, in the important case of the annulment of a Contract, and the same is true of "his foreman." Either the notice should be mailed to the Contractor's