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 8 contains all the fundamental provisions relating to the start of the Works, the Time for Completion, delays and the entitlement of the Contractor to an extension of time and of the Employer to delay damages, and finally the circumstances in which a suspension of the Works can occur and the implications for the Parties.
Clause 17 - Care of the Works and Indemnities by
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]
Sub-Clause 13.1 deals with the right of the Engineer to vary the Contract. This right can be exercised at any time up to the issue of the Taking-Over Certificate. Sub-Clause 13.2 deals with value engineering and permits the Contractor to propose a change which will benefit the Employer. The proposal is prepared at the cost of the Contractor, who designs the change. Sub-Clause 13.3 deals with the procedure prior to the Engineer instructing a variation. The Engineer may request a proposal from the Contractor. However, while the Contractor is preparing the proposal it must proceed with the works. Sub-Clause 13.4 deals with payment in applicable currencies. Sub-Clause 13.5 deals with Provisional Sums and ought to be read with Sub-Clause 126.96.36.199 which defines Provisional Sum as follows:- “a sum (if any) which is specified in the Contract as a provisional sum, for the execution of any part of the Works or for the supply of Plant, Materials or services under Sub-Clause 13.5 [Provisional Sums].” The Provisional Sum can only be used where there is an Engineer’s instruction and the Contractor receives payment for only the work done to which the Provisional Sum relates. Sub-Clause 13.6 deals with daywork. This is where work of a minor or incidental nature is to be carried out. The work is then valued in accordance with the Daywork Schedule in the Contract or if there is no Daywork Schedule then the alternative method of payment as prescribed in the Contract. Sub-Clause 13.7 deals with the Cost arising from changes in the Laws of the Country which affect the Contractor in performance of his obligations under the Contract. Where the Contractor suffers delay or additional Cost then it must give notice under Sub-Clause 20.1 of the Contract. Sub-Clause 13.8 deals with adjustments for changes in cost. This Sub-Clause only applies where the “table of adjustment data” included in the Appendix to Tender has been completed. If the Sub-Clause does apply then the amounts payable to the Contractor for rises and fall in the cost of the Works are adjusted by a formula.
Clause 11 requires that the Works shall be in the condition required by the Contract at the end of the Defects Notification Period. Where the Contractor carries out work in the Defects Notification Period, it is not entitled to receive payment if the work was a result of a defect in the design for which the Contractor was responsible. Similarly, if the Plant, Materials or workmanship are not in accordance with the Contract or there is a failure by the Contractor to comply with any other obligation then it is required to remedy the problem without payment. The Employer may obtain an extension of the Defects Notification Period if the Works, a Section or a major piece of Plant cannot be used during the Defects Notification Period. The Contractor is required to remedy any defect during the Defect Notification Period and, if it does not, the Employer may claim against the Contractor. Rights are given to the Contractor to undertake this work subject to the Employer’s reasonable security restrictions. Once the Defects Notification Period has expired the Engineer is required within 28 days, subject to receipt of the Contractor’s Documents and the completion of any tests, to issue a Performance Certificate. It is the Performance Certificate that is deemed to constitute acceptance of the Works. Sub-Clause 11.10 provides that after the Performance Certificate has been issued, each Party will remain liable for the fulfilment of any obligation which remains unperformed at the time. The extent and meaning of this clause is open to debate.