Although Clause 17 is titled ‘Risk and Responsibility’ it also sets out other provisions relating to indemnities, limitation of liability and, unusually, the specific topic of intellectual and industrial property rights. The clause provides that the Contractor assumes responsibility and bears the risk for the care of the works during execution and for remedying any defects during the Defects Notification Period. Risk transfers to the Employer on issue of the Taking–Over Certificate to the extent of works defined as being completed. Generally, in construction contracts ‘risk’ is understood to mean an event or circumstance which causes delay, loss or damage to the Works. A risk can be said to be Employer caused, Contractor caused or neutral. The purpose of risk allocation is to determine which party bears the risk for such events. The Contractor may be required to remediate the damage at his own cost or the Employer may be required to pay for the damaged works. It has been stated that the “FIDIC standard forms are generally recognised as being well balanced because both parties bear parts of the risks arising from the project.”
Clause 6 deals with Staff and Labour. These provisions need to be read with the applicable laws where the works are being carried out or the relevant employment law if different. Sub-Clause 6.1 commits the Contractor (unless otherwise specified) to pay for his staff and their housing feeding and transport. Sub-Clause 6.2 requires the Contractor not to pay lower wages or give lower conditions than those generally applicable locally. Sub-Clause 6.3 forbids the Contractor from attempting to recruit from the Employer’s Personnel. Sub-Clause 6.4 requires the Contractor to abide by labour laws and to require his staff to obey the law generally. Sub-Clause 6.5 forbids work on locally recognised rest days or outside the working hours set out in the Appendix to Tender, unless stated in the Contract or agreed to by the Engineer or essential for the protection of life or property or for safety reasons. Sub-Clause 6.6 requires the Contractor to provide and maintain all necessary accommodation for its personnel and for the Employer’s personnel to the extent stated in the Specification. It is forbidden from permitting its own Personnel from living within the structures forming part of the Permanent Works. Sub-Clause 6.7 requires the Contractor to maintain the health and safety of its personnel and maintain proper medical facilities for its own personnel and for any Employer Personnel accommodated. It is required to appoint an accident prevention officer. It is required to notify the Employer of any accidents and maintain records. Sub-Clause 6.8 requires the Contractor to provide all necessary superintendence by a sufficient number of properly qualified people with adequate knowledge of the defined language of communications. Sub-Clause 6.9 requires the Contractor to ensure that its personnel are properly qualified, skilled and experienced. The Employer may require the Contractor to remove any person employed on the Site or the Works who commits misconduct, is incompetent or negligent, fails to perform in accordance with any provision of the Contract or persists in any conduct prejudicial to health, safety or the environment. If a person is removed the Contractor will have to replace him. Sub-Clause 6.10 requires the Contractor to submit to the Engineer details showing personnel and equipment on Site. This is required each month and must be in a form approved by the Engineer. Sub-Clause 6.11 requires the Contractor to take reasonable precautions to prevent disorderly conduct by Contractor’s Personnel and to preserve the peace and protection or nearby persons and property.
Much has already been written concerning the new FIDIC forms of contract published in December 2017. They are approximately 50 % longer and sought to set out the various procedure in much greater detail with the object of both encouraging good practice and reducing the scope for disputes. Numerous minor amendments have also been made. The purpose of this article is to look in more detail at the provisions dealing with Variations, these being amongst the most frequently scrutinised in practice.
Clause 14 deals with all aspects of payment. It also deals with the Statement at Completion, the Final Payment Certificate, Discharge and Cessation of the Employer’s Liability. The Clause provides that this is a re-measurement contract and that the quantities stated in the Bill of Quantities are estimated. There is provision for an advance payment to be made to the Contract. Applications for Interim Payment Certificates are made monthly and these must be supported by documents and a report on progress. Unless the amount assessed is less than the minimum amount set out in the Appendix to Tender, the Engineer has 28 days to issue an Interim Payment Certificate, which states the amount the Engineer fairly determines to be due. The Employer thereafter has an obligation to pay the amount certified, in the currencies named in the Appendix to Tender. In the event that payment is not received the Contractor can claim financing charges compounded monthly. Fifty per cent of the retention monies are paid when the Taking-Over Certificate is issued. Where there are Sections then a proportion is paid. The balance of retention is paid on the expiry of the latest Defects Notification Period or, where there are Sections, a proportion at the expiry of the Defects Notification Period for that Section. Within 84 days of receiving the Taking-Over Certificate the Contractor submits a Statement at Completion. This must include an estimate of all sums which the Contractor considers due. Within 56 days of receiving a Performance Certificate, the Contractor submits a Final Statement. The Contractor must also submit with the Final Statement a written discharge which confirms that the total of the Final Statement represents full and final settlement of all moneys due. The Engineer then issues to the Employer a Final Payment Certificate. The Contract states that the Employer shall have no liability to the Contractor except to the extent that the Contractor has included an amount expressly for that matter in the Final Statement and also the Statement at Completion.
Clause 13 - Variations and Adjustments by George Rosenberg.
Clause 19 deals with two distinct events: (1) Force Majeure; and (2) release from performance under the law. Force Majeure is often narrowly defined under the laws of many countries; however, within the FIDIC 1999 forms of contract it has a much broader meaning. The terminology used by FIDIC has therefore sometimes been criticized as being misleading.
Click through to read Corbett & Co.'s helpful commentary on FIDIC 1999 book Clause 15
Clause 4 sets out various obligations which fall on the Contractor under the Contract and which cannot easily be classified elsewhere. The obligations under Clause 4 are of a wide range covering 24 different topics. Sub-Clause 4.1 sets out the Contractor’s general obligation to carry out his duties in accordance with the contract. Clause 4 of the FIDIC Red Book 1999 amalgamates various Contractor obligations under one provision. However this Clause 4 is not exclusive as there are also other Contractor obligations scattered throughout the Contract. Other significant general obligations which could equally have been included in Clause 4 (and which should be read in conjunction with this Clause 4) are as follows: • Sub-Clause 1.3 [Communications] • Sub-Clause 1.7 [Assignment] • Sub-Clause 1.8 [Care and Supply of Documents] • Sub-Clause 1.9 [Delayed Drawings or Instructions] • Sub-Clause 1.10 [Employer’s Use of Contractor’s Documents] • Sub-Clause 1.12 [Confidential Details] • Sub-Clause 1.13 [Compliance with Laws] • Clause 6 [Staff and Labour] • Clause 7 [Plant, Materials and Workmanship] • Sub-Clause 8.2 [Time for Completion] • Sub-Clause 8.3 [Programme]
Is not uncommon to find that an employer attempts to pass almost all risk in a contract to the contractor. However, such an approach may have unforeseen consequences when events later make completion of the works impossible. Here Andrew Tweeddale considers how and when a contractor might be released from further performance.
Read the full article here.