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- Herausgeber: John Wiley & Sons
- Kategorie: Wissenschaft und neue Technologien
- Sprache: Englisch
Enables readers to easily understand the contract to enable better compliance and efficiency Guide to the FIDIC Conditions of Contract for Construction: The Red Book 2017 helps the reader overcome some of the difficulties encountered on a typical international construction project using the FIDIC Construction Contract 2nd Edition (the 2017 Red Book), by summarizing the activities and duties of those involved, and crystallizing the requirements of the contract. To aid in reader comprehension, the text explains clauses in the sequence they appear in the contract, but also in the order they happen in real time on site. It further provides practical guidance in a concise manner, and in straightforward, jargon-free language. It is a highly practical resource for use during the project, rather than a legal review of the contractual requirements, ensuring readers are fully conversant with the revised requirements and procedures mandated by the 2017 edition of the contract. Guide to the FIDIC Conditions of Contract for Construction: The Red Book 2017 includes: * A review of the duties and responsibilities of the three parties, the Employer, the Engineer and the Contractor, engaged on a FIDIC-based Contract * A review of the flow of documentation and instructions which is to be provided by one party to another party throughout the contract period * Practical guidelines are provided for the avoidance of disputes and delays in order that contracts are completed as planned Guide to the FIDIC Conditions of Contract for Construction: The Red Book 2017 is a practical and highly useful resource for engineers, consultants, project managers, and others who are engaged in the site management of international projects using the FIDIC Construction Contract, along with those involved in contractual administration on behalf of the client.
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Table of Contents
Cover
Title Page
Copyright
Dedication
Preface
FIDIC Conditions of Contract for Construction: First Edition 1999
FIDIC Conditions of Contract for Construction: Second Edition 2017
Acknowledgements
1 Clause 1 General Provisions
1.1 Definitions
1.2 Interpretation
1.3 Notices and Other Communications
1.4 Law and Language
1.5 Priority of Documents
1.6 Contract Agreement
1.7 Assignment
1.8 Care and Supply of Documents
1.9 Delayed Drawings or Instructions
1.10 Employer's Use of Contractor's Documents
1.11 Contractor's Use of Employer's Documents
1.12 Confidentiality
1.13 Compliance with Laws
1.14 Joint and Several Liability
1.15 Limitation of Liability
1.16 Contract Termination
2 Clause 2 The Employer
2.1 Right of Access to the Site
2.2 Assistance
2.3 Employer's Personnel and Other Contractors
2.4 Employer's Financial Arrangements
2.5 Site Data and Items of Reference
2.6 Employer‐Supplied Materials and Employer's Equipment
3 Clause 3 The Engineer
3.1 The Engineer
3.2 Engineer's Duties and Authority
3.3 The Engineer's Representative
3.4 Delegation by the Engineer
3.5 Engineer's Instructions
3.6 Replacement of the Engineer
3.7 Agreement or Determination
3.8 Meetings
4 Clause 4 The Contractor
4.1 Contractor's General Obligations
4.2 Performance Security
4.3 Contractor's Representative
4.4 Contractor's Documents
4.5 Training
4.6 Co‐operation
4.7 Setting Out
4.8 Health and Safety Obligations
4.9 Quality Management and Compliance Verification
4.10 Use of Site Data
4.11 Sufficiency of the Accepted Contract Amount
4.12 Unforeseeable Physical Conditions
4.13 Rights of Way and Facilities
4.14 Avoidance of Interference
4.15 Access Route
4.16 Transport of Goods
4.17 Contractor's Equipment
4.18 Protection of the Environment
4.19 Temporary Utilities
4.20 Progress Reports
4.21 Security of the Site
4.22 Contractor's Operations on Site
4.23 Archaeological and Geological Findings
5 Clause 5 Subcontracting
5.1 Subcontractors
5.2 Nominated Subcontractors
6 Clause 6 Staff and Labour
6.1 Engagement of Staff and Labour
6.2 Rates of Wages and Conditions of Labour
6.3 Recruitment of Persons
6.4 Labour Laws
6.5 Working Hours
6.6 Facilities for Staff and Labour
6.7 Health and Safety for Personnel
6.8 Contractor's Superintendence
6.9 Contractor's Personnel
6.10 Contractor's Records
6.11 Disorderly Conduct
6.12 Key Personnel
7 Clause 7 Plant, Materials, and Workmanship
7.1 Manner of Execution
7.2 Samples
7.3 Inspections (by the Employer's Personnel)
7.4 Testing by the Contractor (on Site)
7.5 Defects and Rejection
7.6 Remedial Work
7.7 Ownership of Plant and Materials
7.8 Royalties
8 Clause 8 Commencement, Delays, and Suspension
8.1 Commencement of Works
8.2 Time for Completion
8.3 Programme
8.4 Advance Warning
8.5 Extension of Time
8.6 Delays Caused by Authorities
8.7 Rate of Progress
8.8 Delay Damages
8.9 Employer's Suspension
8.10 Consequences of Employer's Suspension
8.11 Payment for Plant and Materials after Employer's Suspension
8.12 Prolonged Suspension
8.13 Resumption of Work
9 Clause 9 Test on Completion
9.1 Contractor's Obligations
9.2 Delayed Tests
9.3 Re‐testing
9.4 Failure to Pass Tests on Completion
10 Clause 10 Employer's Taking Over
10.1 Taking Over of the Works and Sections
10.2 Taking Over of Parts of the Works
10.3 Interference with Tests on Completion
10.4 Surfaces Requiring Reinstatement
11 Clause 11 Defects after Taking Over
11.1 Completion of Outstanding Work and Remedying Defects
11.2 Cost of Remedying Defects
11.3 Extension of Defects Notification Period
11.4 Failure to Remedy Defects
11.5 Remedying of Defective Work off Site
11.6 Further Tests after Remedying Defects
11.7 Right of Access after Taking‐Over
11.8 Contractor to Search
11.9 Performance Certificate
11.10 Unfulfilled Obligations
11.11 Clearance of Site
12 Clause 12 Measurement and Valuation
12.1 Works To Be Measured
12.2 Method of Measurement
12.3 Valuation of the Works
12.4 Omissions
13 Clause 13 Variations and Adjustments
13.1 Right to Vary
13.2 Value Engineering
13.3 Variation Procedure
13.4 Provisional Sums
13.5 Daywork
13.6 Adjustments for Changes in Laws
13.7 Adjustment for Changes in Cost
14 Clause 14 Price and Payment
14.1 The Contract Price
14.2 Advance Payment
14.3 Application for Interim Payment Certificates
14.4 Schedule of Payments
14.5 Plant and Materials intended for the Works
14.6 Issue of IPC
14.7 Payment
14.8 Delayed Payment
14.9 Release of Retention Money
14.10 Statement on Completion
14.11 Final Statement
14.12 Discharge
14.13 Issue of Final Payment Certificate (FPC)
14.14 Cessation of Employer's Liability
14.15 Currencies of Payment
15 Clause 15 Termination by the Employer
15.1 Notice to Correct
15.2 Termination for Contractor's Default
15.3 Valuation after Termination for Contractor's Default
15.4 Payment after Termination for Contractor's Default
15.5 Termination for Employer's Convenience
15.6 Valuation after Termination for Employer's Convenience
15.7 Payment after Termination for Employer's Convenience
16 Clause 16 Suspension and Termination by the Contractor
16.1 Suspension by the Contractor
16.2 Termination by Contractor
16.3 Contractor's Obligations After Termination
16.4 Payment after Termination by the Contractor
17 Clause 17 Care of the Works and Indemnities
17.1 Responsibility for Care of Works
17.2 Liability for Care of the Works
17.3 Intellectual and Industrial Property Rights
17.4 Indemnities by Contractor
17.5 Indemnities by Employer
17.6 Shared Indemnities
18 Clause 18 Exceptional Events
18.1 Exceptional Events
18.2 Notice of an Exceptional Event
18.3 Duty to Minimise Delay
18.4 Consequences of an Exceptional Event
18.5 Optional Termination
18.6 Release from Performance Under the Law
19 Clause 19 Insurance
19.1 General Requirements
19.2 Insurance to be provided by the Contractor
20 Clause 20 Employer's and Contractor's Claims
20.1 Claims
20.2 Claims for Payment and EOT
21 Clause 21 Disputes and Arbitration
21.1 Constitution of the DAAB
21.2 Failure to Appoint DAAB Members
21.3 Avoidance of Disputes
21.4 Obtaining DAAB's Decision
21.5 Amicable Settlement
21.6 Arbitration
21.7 Failure to Comply with DAAB's Decision
21.8 No DAAB in Place
Appendix A. Guidance for the Preparation of Particular Conditions
Contract Data
Special Provisions
Appendix B. Employer's Claims
Employer's Claims under a CONS Contract
Appendix C. Contractor's Claims
Appendix D. Notices and Site Organisation
Appendix E. Daywork and Contemporary Record Sheets
Appendix F. Contractor's Costs
Appendix G. Joint Ventures
Model Form of a Pre‐Bid Joint Venture Agreement
Index of Clauses and Sub‐Clauses
Index of Sub‐Clauses
End User License Agreement
Guide
Cover
Table of Contents
Title Page
Copyright
Dedication
Preface
Acknowledgements
Begin Reading
Appendix A. Guidance for the Preparation of Particular Conditions
Appendix B. Employer's Claims
Appendix C. Contractor's Claims
Appendix D. Notices and Site Organisation
Appendix E. Daywork and Contemporary Record Sheets
Appendix F. Contractor's Costs
Appendix G. Joint Ventures
Model Form of a Pre‐Bid Joint Venture Agreement
Index of Clauses and Sub‐Clauses
Index of Sub‐Clauses
End User License Agreement
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Guide to the FIDIC Conditions of Contract for Construction
The Red Book 2017
Michael D. Robinson
This edition first published 2023© 2023 John Wiley & Sons Ltd
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Library of Congress Cataloging‐in‐Publication data is applied for
Hardback ISBN: 9781119856627
Cover Design by WileyCover Image: © Samran wonglakorn/Shutterstock
This book is dedicated to my wife Monika who has unfailingly provided me with practical assistance and encouragement in the preparation of this book.
I would like to convey my heartfelt thanks to my sons Paul, Simon, and Tristan in whom I have great pride and to my granddaughters Zena, Scarlet, Lente, and Heather who give me hope of a bright future.
Preface
The Conditions of Contract prepared by FIDIC are well established as the standard form of choice for use in the international construction industry.
Traditionally, in the standard FIDIC forms, the Engineer was given an authoritative role, enabling him to make informed judgements concerning the conduct and execution of projects with a large measure of independence from the Employer. From time to time, FIDIC updated these forms culminating in the 4th Edition 1987 (last reprinted 1992).
However, over the past 30–40 years, Employers became increasingly more involved in the day‐by‐day administration of projects, thereby restricting the powers of the Engineer to act independently of the parties.
In the same period, there was a significant increase in the availability of international funding, particularly for infrastructure projects. As a consequence, more and more companies undertook construction projects outside their national borders. However, many contractors were not always familiar with operating requirements of an FIDIC‐based contract. Equally, Employers, well used to their national systems of contracting practices and law, faced with having to deal with contracts based on unfamiliar forms.
A key feature of the dispute resolution procedure contained in the FIDIC 4th Edition 1987, Sub‐Clause 67.1 (Engineer's Decision) was the power and authority of the Engineer to make independent judgements. As the independence of the Engineer diminished following the increasing direct involvement of the Employer, the value of Engineer’s decision was increasingly challenged by the contractors; as a result, more and more disputes were referred to arbitration.
Few in the construction industry regard arbitration as a satisfactory means of resolving disputes. Arbitration is a lengthy and expensive process that may or may not lead to awards. With a more flexible, realistic approach, the disputes could be negotiated more quickly and at a lower cost. A contractor also suffers because he is unable to foresee the outcome of the arbitration, and his cash flow is uncertain and damaged as a consequence of lengthy arbitration. Regrettably, there are instances of Employers preferring to refer some disputes to arbitration to avoid having to make decisions that they are unwilling to make themselves because of political or economic reasons.
Against this background, FIDIC undertook a major review of their standard forms.
FIDIC Conditions of Contract for Construction: First Edition 1999
Following extensive consultations with other parties engaged in the field of international construction, FIDIC issued, in 1999, a suite of four different contract forms:
CONS – Conditions of Contract for Construction (hereinafter referred to as ‘The Red Book First Edition 1999’), which FIDIC recommends for use in building and engineering works designed by the Employer or his representative, the Engineer.
P & DB – Conditions of Contract for Plant and Design‐Build (‘The Yellow Book’), which FIDIC recommends for the provision of electrical and/or mechanical plant and for the design and execution of building or engineering works to be designed by the Contractor in accordance with the Employer’s requirements.
EPCT – Conditions of Contract for EPC/Turnkey Projects (‘The Silver Book’), which FIDIC recommends for the provision of a process or power plant on a turnkey project.
‘Short Form of Contract’ (‘The Green Book’) – A fourth contract form that intended for use in contracts involving small or repetitive work was also issued.
Subsequently, FIDIC has published other Conditions of Contract for specialist types of activity. The full listing of all other available contract forms is available on the FIDIC website, and these are not considered further in this book. Further, no consideration is given in this book to the second editions of the Yellow Book or Silver Book, which were also issued in 2017.
FIDIC Conditions of Contract for Construction: Second Edition 2017
In the 18 years that have elapsed since the publication of the First Edition 1999, inevitably, the substantial experience gained has shown that a further revision of this contract form was required.
In the Notes to this Second Edition 2017, FIDIC states that
‘… the edition provides:
greater detail and clarity on the requirements for notices and other communications;
provisions to address Employers’ and Contractors’ claims treated equally and separated from disputes;
mechanisms for dispute avoidance and
detailed provisions for quality management, and verification of Contractor’s contractual compliance’.
The principle features of this second edition include the following:
There is a greater emphasis on dispute avoidance.
There is a binding requirement for the Engineer to give an Engineer's Decision in respect of both Employer's and Contractor's claims within the prescribed time limits before referrals to the DAAB.
Clause 20 of the First Edition is now divided into two separate clauses. Clause 20 is now titled ‘Employer's and Contractor's Claims’, whilst new Clause 21 is titled ‘Disputes and Arbitration’, wherein the designation of
DAB
(
Dispute Adjudication Board
) has been amended to
DAAB
(
Dispute Avoidance/Adjudication Board
). This separation emphasises that Clause 20 concerns ‘claims’, which, not resolved after due procedure, become ‘disputes’ to be dealt within the procedures given in new Clause 21.
There are changed time limits for various events, e.g. submittal of claims and submittal of notices generally.
Programming requirements are more specific and will require more detailed and closer monitoring and reporting.
There is a broader definition of the word ‘Notice’, a consequence of which is the increase of workload for project management.
This Second Edition is a much bulkier document than its predecessor, having almost double the number of pages. The number of supplementary documents (including the ‘Guidance for Preparations of Particular Conditions’) has also increased.
Acknowledgements
The author is grateful to the Fédération Internationale des Ingénieurs Conseil (FIDIC) for permission to quote extracts from the Conditions of Contract for Construction, ‘The Red Book’ Second Edition 2017. Quoted extracts from this publication are given in italics.
Throughout this book, ‘The FIDIC Conditions of Contract for Construction’ (‘The Red Book’), First Edition 1999, is referred to as the ‘First Edition’
and
‘The FIDIC Conditions of Contract for Construction’ (‘The Red Book’), Second Edition 2017, is referred to as the ‘Second Edition’.
In this book, the Employer, the Engineer, the Contractor, and subcontractors are referred to in the masculine gender for simplicity and uniformity. The author wishes to emphasise that the book is intended to address ALL GENDERS on an equal basis as their male colleagues.
1Clause 1 General Provisions
1.1 Definitions
Of the 58 definitions included in the First Edition, 34 have been included unchanged in the Second Edition and a further 18 included with minor changes only. Just one item, Sub‐Paragraph 1.1.6.4 (Force Majeure), included in the First Edition, has been deleted from its original position and is now included in Clause 18 of the Second Edition under the revised heading ‘Exceptional Events’.
There are 37 new or revised definitions included in the Second Edition and are listed below:
1.1.10 The Contract
The definition has been broadened to include two additional documents:
‘The Contractor's proposal’, which itself is not a defined term. It is assumed to be a general statement of how the Contractor intends to proceed with the execution of the Works. Conventionally, this is provided as part of the Contractor's tender.
‘The JV Undertaking, if any’. A grouping of Contractors intending to tender as a Joint Venture will enter into a Pre‐Bid Joint Venture Agreement to ensure that each member is committed to the Joint Venture. If the Employer requires a pre‐bid qualification process, then the Pre‐Bid Joint Venture Agreement can be used to support the JV qualification, otherwise it shall be included in the Joint Venture tender offer. The full JV Agreement will be finalised immediately after award should the tender be successful. An example of a Joint Venture Agreement is provided in Appendix G.
1.1.12 Contract Data
In the First Edition, ‘Contract Data’ was referred to as ‘Appendix to Tender’. In the Second Edition the number of items included under this heading has been significantly increased (these are discussed later in Appendix A, ‘Guidance for the Preparation of Particular Conditions’).
1.1.13 Contract Price
This definition is minimal. A full definition is included in Sub‐Clause 14.1 (The Contract Price).
1.1.15 Contractor's Documents
This definition has been enlarged seemingly to ensure every potential item has been included. Considering that the sub‐clause ends ‘and other documents of a technical nature’, an extensive listing is hardly required.
1.1.20 Cost Plus Profit
This definition has been significantly improved from that given in the First Edition and provides clarity on an issue that has led to disputes in the past.
The percentage for profit shall be as stated in the Contract Data.
The percentage for profit shall be 5% if not otherwise stated in the Contract Data.
The Contractor should note that there have been instances where the Employer has failed to add any percentage for profit in the Contract Data. At a later date, the Employer could claim that because no percentage was given, the Contractor was not entitled to any payment under this item.
1.1.22 DAAB
‘Dispute Avoidance/Adjudication Board’ () replaces the “Dispute Adjudication Board” described in the First Edition, as it more accurately defines the purpose of the Board as stated elsewhere in Clause 21 of the Second Edition.
1.1.23 DAAB Agreement
An updating of the DAB wording used in the First Edition.
1.1.24 Date of Completion
This is a new sub‐paragraph not used in the First Edition and is self‐explanatory.
1.1.26 Daywork Schedule (If Included)
This is a new definition not used in the First Edition but arguably should have been included. For further comment refer to commentary on Sub‐Clause 13.5 (Daywork).
If a Daywork Schedule is not included in the Contract, it would be appropriate to query this omission in the Tender period.
1.1.27 Defects Notification Period (DNP)
The wording has been slightly modified but has the same intent as that stated in the First Edition.
1.1.28 Delay Damages
In the First Edition, the Delay Damages were specified in the (then) Sub‐Clauses 8.2 and 8.7 and valued as stated in the Appendix to Tender. In the Second Edition, the relative clause numbers are Clauses 8.2 and 8.8 and any Delay Damages are to be valued as stated in the Contract Data (which is the retitled ‘Appendix to Tender’ – see Sub‐Paragraph 1.1.12 above).
1.1.29 Disputes
This is a new definition not included in the First Edition. It is a very important topic and is to be referenced to Clause 21.
1.1.37 Exceptional Events
Clause 19 of the First Edition (headed ‘Force Majeure’) defined Force Majeure as an ‘exceptional event or circumstance’. In this edition, the wording ‘Force Majeure’ has been retitled as ‘Exceptional Events’ with only very minor changes to the contents of the clause. The clause number is changed from Clause 19 to Clause 18.
1.1.38 Extension of Time (EOT)
This is a new definition. Sub‐Clause 8.4 of the First Edition has been replaced by Sub‐Clause 8.5 in the Second Edition. Refer to Sub‐Clause 8.5 for further discussion. Note that the abbreviation EOT is now regularised.
1.1.40 Final Payment Certificate (FPC)
The wording is unchanged from the wording in the First Edition. Note that the abbreviation FPC is now regularised.
1.1.43 General Conditions
This is a new definition added presumably for the sake of completeness.
1.1.45 Interim Payment Certificate (or IPC)
Text is slightly modified with same intent as in the First Edition. Note that the abbreviation IPC is now regularised.
1.1.46 Joint Venture
This is a new definition. The First Edition did not contain this definition even though it is a frequently used term to describe a well‐recognised Contractor's business structure. Note that the abbreviation JV is now regularised. It is observed that this Second Edition does not make reference to other Contractor's business structures such as a ‘Consortium’.
1.1.48 Key Personnel
This is a new definition added presumably for completeness. Note that it specifically refers to the Contractor's personnel excepting only the Contractor's Representative.
1.1.49 Laws
This is a new definition added to reflect the changed heading of Sub‐Clause 13.6 (Adjustment for Changes in Laws).
1.1.54 Month
This is a new definition. ‘Month’ is a word used occasionally in the Conditions of Contract.
1.1.55 No objection
This is a new definition and is a wording occasionally used in the Conditions of Contract.
1.1.56 Notice
This is a new definition. When read in conjunction with Sub‐Clause 1.3 (Notices and Communications), this definition will have an important impact on the day‐to‐day management of the project. More than 100 instances where a Notice is required to be issued are identified in Appendix D of this book.
1.1.57 Notice of Dissatisfaction (or NOD)
This is a new definition and refers to the Notice one Party may give to the other Party if he is dissatisfied with either an Engineer's determination (Sub‐Clause 3.7) or with a DAAB decision (Sub‐Clause 21.4).
1.1.59 Particular Conditions
This is a new definition. No definition of ‘Particular Conditions’ was included in the First Edition, although the wording ‘The Particular Conditions’ was included in Sub‐Clause 1.5 of the General Conditions. The same wording is included in the Second Edition, Sub‐Clauses 1.5(a) and (b). This definition is solely a tidying up exercise.
1.1.62 Performance Certificate
This issue of the Performance Certificate is conditional on the Contractor having completed all his obligations, i.e. at the end of the expiry date of the last Defects Notification Period.
1.1.65 Plant
The wording of this definition has been slightly enlarged in the Second Edition. The definition refers to ‘apparatus, equipment, machinery etc.’, intended to form part or forming part of the permanent works.
1.1.66 Programme
This is a new definition. Although Sub‐Clause 8.3 of the First Edition described the Contractor’s general obligations in respect of programming, no specific definition of the word “Programme” was provided. A much‐enlarged Sub‐Clause 8.3 (Programme) is included in this Second Edition.
1.1.68 QM System
This is a new definition. The First Edition Sub‐Clause 4.9, headed ‘Quality Assurance’, contained only a brief description of the Contractor's obligations. In this Second Edition, Sub‐Clause 4.9, headed ‘Quality Management and Compliance Verification Systems’, contains a much more detailed description of the required QM system.
1.1.70 Review
This is a new definition. The word ‘review’ was variously used in the First Edition. However, a clear definition was not provided.
1.1.71 Schedules
The wording of this definition has been slightly amended.
1.1.75 Special Provisions
This is a new definition. The Second Edition has a number of annexures, including a document entitled ‘Guidance for the Preparation of Particular Conditions’. Pages 13–52 of that document are subtitled ‘Notes on the Preparation of Special Provisions’, which is intended to provide guidance to the Employer and his advisors when preparing the Particular Conditions of Contract Part B for inclusion in the Contract Documents. There is no direct involvement of the Contractor in this matter.
1.1.77 Statement
This sub‐clause has been expanded to make it clear that in addition to Statements for Applications for Interim Payments, the Contractor shall also provide Statements at Completion (Sub‐Clause 14.10) and Statement at Final Completion (Sub‐Clause 14.11).
1.1.78 Subcontractor
The term ‘Subcontractor’ is extended to include any designer appointed by the Contractor.
Note: Nominated Subcontractors are defined in Sub‐Clause 5.2.1.
1.1.81 Tender
The definition contained in the First Edition has been extended to include:
The Contractor's proposal
The JV Undertaking (if applicable)
1.1.82 Tests After Completion
The definition has been rewritten with the same intent as in the First Edition.
1.1.85 Unforeseeable
The wording in the First Edition ‘…. by the date for submission of the Tender’ is amended to ‘… by the Base Date’. Base Date is defined in Sub‐Paragraph 1.1.4.
1.2 Interpretation
This sub‐clause contains legal statements confirming (except where the context requires otherwise):
words indicating one gender – includes all genders
words indicating the singular also include the plural and vice versa
“Agreements” have to be recorded in writing
where something is stated to be
written
or
in writing
, this shall result in a
permanentrecord
Two additional sub‐clauses have been added in the Second Edition:
‘may’
means that the Party or person has a choice of whether to act or not
‘shall’
indicates an obligation to perform.
1.3 Notices and Other Communications
In the First Edition, this Sub‐Clause was headed ‘Communications’. In this Second Edition, the sub‐clause has been significantly expanded and its application requires a much greater degree of formality between the Parties.
The opening paragraph contains an extensive listing of all potential types of communication and content which could arise during the course of executing a contract. Most items in the listing relate to routine matters arising during the performance of the contract and will be familiar to those directly engaged in its execution.
However, this Second Edition now introduces two related new items which require special attention, namely ‘Notice’ (refer Sub‐Paragraph 1.1.56) and ‘Notice of Dissatisfaction’ (refer Sub‐Paragraph 1.1.57).
A Notice is a written communication identified as a Notice which is sent by one Party to another.
Examples of Notices are:
Clause 8.1
The Engineer shall give a Notice to the Contractor stating the Commencement Date.
Clause 3.7.2
The Engineer shall give a “Notice of the Engineer’s Determination” to both Parties of his determination of any claim.
Various Clauses
All claims submitted by the Contractor shall require a heading “Notice of Claim”.
The general requirements of this sub‐clause are:
a Notice or communication must be in writing and a paper original signed by the Contractor's Representative (or authorised representative)
an electronic original to be transmitted to/from the electronic addressees of the authorised representatives or
delivered by hand against receipt,
delivered, sent or transmitted to the address for the recipient’s communications as stated in the Contract Data.
The management of ‘Notices and Other Communications’ is a burden on site staff and will require careful handling, especially if time related issues are involved. This subject is discussed further in Appendix D of this book.
1.4 Law and Language
The law governing the Contract shall be that of the country where the Contract is to be executed.
The wording of the First Edition has been upgraded. Both the ruling language and the language for communications are intended to be stated in the Contract Data. If not stated, then the language of these Conditions of Contract shall be the ruling language and the language for communications shall be the ruling language.
Should the stated governing law be not that of the country where the contract is executed, it may happen that the local courts may claim jurisdiction regardless of the wording of the Contract. Legal advice should be sought if such a situation arises.
1.5 Priority of Documents
Engineer or Contractor to give Notice of any discrepancy which may lead to Notice of Claim by Contractor.
The listing provided in the First Edition has been extended in the Second Edition as follows:
the Contract Agreement}
the Letter of Acceptance}unchanged in the Second Edition
the Letter of Tender}
The Particular Conditions item (d) of the First Edition has been amended. The First Edition Sub‐Paragraph 1.1.1.9 describes a document titled ‘Appendix to Tender’, which is a listing of additional information pertinent to the Tender (and to be included in the signed Contract), and which are to be provided by the Employer.
In this Second Edition, this document is now re‐titled ‘Particular Conditions Part A – Contract Data’.
The previous format of the Particular Conditions in the First Edition is retained and re‐titled ‘Particular Conditions Part B – Special Provisions’.
the General Conditions}
the Specifications}Re‐numbered but otherwise unchanged
the Drawings}
The Schedules}
the JV Undertaking (if the Contractor is a JV) – New item (refer to Appendix G of this book)
any other documents forming part of the contract – unchanged
‘If a Party finds an ambiguity or discrepancy on the documents, that Party shall promptly give a Notice to the Engineer, describing the ambiguity or discrepancy’.
1.6 Contract Agreement
This Second Edition follows the same procedures given in the First Edition. The Employer is required to provide the Contractor with a Letter of Acceptance, which the Contractor should acknowledge in writing with the date of receipt duly noted. From the date of receipt of the Letter of Acceptance by the Contractor, a binding contract exists between the Parties. Within 35 days (was 28 days in the First Edition) after receipt of the Letter of Acceptance by the Contractor, the Parties shall sign a Contract Agreement based on the standard form annexed to the Particular Conditions of Contract.
It is preferable that the full contract documentation, including the Contract Agreement and those documents described in Sub‐Clause 1.5, are all brought together in one comprehensive bound document. The various annexures need only be initialled by the signatories.
The signatories of both the Employer and the Contractor will have to be legally authorised to do so by their respective Board of Directors (or equal).
1.7 Assignment
The wording of the First Edition is unaltered.
‘Neither Party is permitted to assign or transfer the whole or any part of the Contract or any benefit or interest in or under the Contract without the agreement of the other Party’.
Either Party may, as security, assign its right to any money due under the Contract to a bank or financial institution. Contractors generally will finance their activities with loans from their bankers. A typical condition of the provision of such loans is that the Contractor's income is to be channelled through these banks, thus providing a high degree of financial stability.
Government bodies may be reorganised and retitled from time to time, but this would not lead to reassignment.
However, if the Employer is not a government body, then events such as taking over by others, re‐organisation, change of ownership etc. may occur. The Contractor is advised to obtain a legal review should these circumstances arise.
1.8 Care and Supply of Documents
Parties and Engineer are required to give Notice of errors or defects which may give rise to Notice of claim by Contractor.
In both the previous and Second Editions, the Specification and Drawings are to be in the custody of the Employer.
The Employer is required to provide the Contractor with two copies of the Contract and each subsequent drawing at no cost to the Contractor. Further copies may be provided if requested by the Contractor and at the Contractor’s expense.
The Contractor is to retain the custody of the Contractor’s Documents, unless and until taken over by the Employer.
In the Second Edition, the requirements of the First Edition have been partly amended. The Contractor is now required to provide the Employer with one paper original of each of the Contractor's Documents, together with
‘one electronic copy (in the form stated in the Specifications or, if not so stated, in a form acceptable to the Engineer) and additional paper copies (if any) as stated in the Contract Data for each of the Contractor’s Documents’.
One wonders if it would not be more efficient and less costly if both Parties were to exchange copies of drawings by electronic means, allowing each Party to decide the number of copies required at their own convenience.
1.9 Delayed Drawings or Instructions
The wording of this sub‐clause in the Second Edition is broadly similar to the provisions stated in the First Edition.
Concerning the supply of drawings there are two possible scenarios:
The Employer will have appointed an Engineer responsible for both the design and supervision of the construction of the Works.
The Employer must ensure that:
Drawings of sufficient quality and quantity are available for inclusion in the tender document package.
Updated drawings are progressively issued for use as “drawings for construction”. The first package of drawings will be required as soon as possible following the Contractor’s receipt of the Letter of Acceptance.
Thereafter the Engineer and the Contractor should agree a schedule for the continuing supply of drawings which will reflect the Contractor’s Programme of Works (which for this purpose can be assumed to approximate to the Programme of Works included in the Contractor’s Tender offer). As a general indicator the Contractor will require drawings for construction at least two months prior to commencement of each segment of the Works in order that key materials (re‐bar, embedments, etc.) can be ordered and delivered to Site. Due allowance should be made, where applicable, for shipping times and customs clearance. Drawing revisions are a common feature of any significant project and a late supply may delay Contractor activities. However, with good communication systems this possibility can be minimised. If the Contractor is delayed, he is entitled to give a Notice of Claim (all subject to Sub‐Clause 20.2) to be given within 28 days.
The Employer may (for a number of reasons) decide to employ a design specialist to prepare the design of the Works and the Tender Documents (which implies that the Employer is satisfied with the design).
Thereafter, the Employer may engage the services of another engineer to supervise the construction stage of the project (the FIDIC Engineer of these Conditions of Contract). Any decision to separate the design of the Works from the supervision of construction frequently arises of separate financing packages for the two stages. However, occasionally, this separation can have unintended consequences.
The Author has experience of a modest road rehabilitation project in Eastern Europe which was designed by an external consultant using funding from an initial external financing package. After a further five years, the Employer was able to access a second financial package for the physical reconstruction of the road. A supervising engineer (the “Engineer”) was duly appointed.
Soon after commencement of the work, the Engineer discovered that in the intervening five years the road had significantly deteriorated further, requiring significant changes to the design and the execution of additional quantities of work. The Employer had not taken this possibility into consideration when awarding the construction contract. The available funding package was inadequate to cover the resulting additional costs.
Further, the modified Red Book FIDIC 1999 contract document contained additional wording which inter alia stated that the Engineer could not order additional work without first obtaining the permission of the Employer. Due to a lack of funding the Employer was unable to provide the requested permission. The administration of the contract fell into disarray. After a prolonged delay, additional funding was eventually obtained to finish the contract which was delivered well over budget and very late.
Note:
Concerning restrictions on the Engineer’s authority to order additional work, students of these FIDIC Contract Forms are invited to read the FIDIC publication ‘THE FIDIC GOLDEN PRINCIPLES – First Edition 2019’ which is available on the FIDIC website.
