Provides a clear and comprehensive guide to the 2017 FIDIC contracts - written by a member of the FIDIC Updates Task Group
FIDIC contracts are the most widely used engineering standard form contracts internationally but until 2017 the three main forms (the Red, Yellow and Silver Books) had not been amended or updated for nearly two decades, since the first editions were published in 1999. Written by a specialist lawyer who was member of the FIDIC Updates Task Group responsible for writing the new contracts, this book examines in detail the many substantial changes they have introduced. After providing an overview the contracts are examined clause by clause with the aim of showing how each compares and contrasts with the others and how the second editions compare and contrast with the first.
The first chapter describes how the Red, Yellow and Silver Books evolved from earlier contract forms and the distinctive characteristics of each, before providing an overview of the updates, including new potential risks for both Employer and Contractor, and then examining, in the second chapter, key general provisions such as the new rules on notices and limitation of liability. Chapter 3 examines the enhanced role of the Engineer in the Red and Yellow Books/Employer’s Representative’s function in the Silver including the new procedure for determinations as well as the Employer’s obligations and contract administration. The Contractor’s obligations are considered in chapter 4 while chapter 5 examines his responsibility for design in the Yellow and Silver Books. Chapters 6 to 14 deal respectively with plant, materials and workmanship and staff and labour; time-related provisions in the three contracts including extensions of time, and the Employer’s right to suspend the works; testing on and after completion and the Employer’s taking over of the works; defects after taking over, acceptance of the works and unfulfilled obligations; measurement (in the Red Book), the Contract Price and payment; the new variations regime and adjustments to the Price; termination and suspension; care of the works and indemnities and Exceptional Events (previously, Force Majeure). An important feature of the new contracts is their increased emphasis on clarity in the claims process and on dispute avoidance. These topics are examined in the final two chapters, 15 and 16, which deal respectively with the new claims and dispute resolution provisions of the 2017 forms.
- FIDIC contracts are the most widely used standard forms of contract for international engineering and construction projects
- Provides a clear and comprehensive guide to the 2017 FIDIC Red, Yellow and Silver Books
- Written by a senior specialist lawyer and member of the FIDIC 2017 Updates Task Group responsible for writing the new contracts
- Accessible to those with little or no familiarity with FIDIC contracts
The 2017 FIDIC Contracts is an important guide for anyone engaged in international projects, including employers, contractors, engineers, lawyers, suppliers and project financiers/sponsors.
Table of Contents
Foreword xiii
Preface xv
About the Author xvii
1 Overview of the 2017 Contracts 1
1.1 Introduction 1
1.2 The Rainbow Suite: The Main Features of the 1999 Red, Yellow and Silver Books 2
1.2.1 The 1999 Red Book 2
1.2.2 The 1999 Yellow Book 4
1.2.3 The 1999 Silver Book 5
1.3 Contractor Risk in the Silver Book: Two Examples 7
1.3.1 Unforeseeable Difficulties 7
1.3.2 Errors in Employer’s Requirements 7
1.4 New Potential Risks for Contractor and Employer in the 2017 Books 8
1.4.1 Contractor Risks 8
1.4.2 Employer Risks 10
1.5 FIDIC’s Guidance for the Preparation of Particular Conditions 13
1.5.1 The Contract Data 13
1.5.2 The Special Provisions 13
1.5.3 Golden Principles 14
1.5.4 Tender Documents 14
1.5.5 Drafting Options 14
1.5.6 Building Information Modelling 15
1.6 Forms 15
2 Key General Provisions 17
2.1 Definitions 17
2.2 Notices and Other Communications 17
2.3 Law and Language 18
2.3.1 Governing Law 18
2.3.2 Language of the Contract/Communications 19
2.4 Priority of Documents 19
2.5 Errors in the Employer’s Requirements/Delayed Drawings and Instructions 20
2.5.1 Errors in Employer’s Requirements: Yellow Book Clause 1.9 20
2.5.2 Delayed Drawings and Instructions 21
2.6 Use of Documents 21
2.7 Compliance with Laws 22
2.8 Limitation of Liability 23
2.8.1 Indirect or Consequential Loss or Damage 23
2.8.2 Cap on Contractor’s Total Liability 25
2.9 Contract Termination: Clause 1.16 Red and Yellow Books/1.15 Silver Book 26
3 The Employer, the Engineer and Contract Administration 27
3.1 The Employer 27
3.1.1 Right of Access to Site 27
3.1.2 Assistance 28
3.1.3 Employer’s Personnel and Other Contractors 28
3.1.4 Employer’s Financial Arrangements 28
3.1.5 Site Data and Items of Reference 29
3.1.6 Employer-supplied Materials and Employer’s Equipment 29
3.2 The Engineer/Employer’s Administration 29
3.2.1 Contract Administration in the Three Books: Engineer’s/Employer’s Representative’s Role and Authority 30
3.2.2 Instructions 32
3.2.3 Instructions: The 2017 Provisions 33
3.2.4 Where the Instruction Does Not State that it is a Variation 33
3.2.5 Clause 3.5/3.4 Sub-paragraph (a) 34
3.2.6 Clause 3.5/3.4 Sub-paragraph (b) 35
3.3 Agreement or Determination 35
3.3.1 Consultation 35
3.3.2 Engineer’s Determination 36
3.3.3 Time Limits 36
3.3.4 Effect of Agreement or Determination 37
3.3.5 Dissatisfaction with Engineer’s Determination 38
3.4 Meetings 39
4 The Contractor and Fitness for Purpose 41
4.1 Contractor’s General Obligations 41
4.1.1 Yellow and Silver Books 41
4.1.2 Red Book 41
4.1.3 ‘Fitness for Purpose’ 42
4.1.4 Other General Obligations 45
4.2 Contractor to Provide Performance Security 45
4.3 Contractor’s Representative 47
4.4 Subcontractors 47
4.5 Nominated Subcontractors 48
4.6 Contractor’s Documents: The 2017 Red Book 49
4.7 Cooperation 50
4.8 Quality Management and Compliance Verification Systems 50
4.8.1 Quality Management System 51
4.8.2 Compliance Verification 51
4.9 Use of Site Data 52
4.10 Unforeseeable Difficulties/Physical Conditions 53
4.10.1 Unforeseeable Physical Conditions: Procedure 54
4.11 Other Contractor’s Obligations 55
5 Design 57
5.1 Contractor’s General Design Obligations 57
5.1.1 Silver Book: Errors in Employer’s Requirements 57
5.1.2 Silver Book: Designs by Employer 58
5.1.3 Silver Book: Design Personnel 58
5.1.4 Yellow Book: Errors in Employer’s Requirements 59
5.1.5 Yellow Book: Designs by Employer 61
5.1.6 Yellow Book: Design Personnel 61
5.2 Contractor’s Documents: 2017 Yellow and Silver Books 62
5.3 Other Design-related Provisions 63
6 Plant, Materials and Workmanship/Staff and Labour 65
6.1 Staff and Labour 65
6.2 Plant, Materials and Workmanship 65
6.2.1 Execution, Samples and Inspection 67
6.2.2 Testing by the Contractor 67
6.2.3 Defects and Rejection 68
6.2.4 Remedial Work 69
6.2.5 Ownership of Plant and Materials/Royalties 69
7 Commencement, Delays and Extensions of Time, and Employer’s Suspension of the Works 71
7.1 Commencement 71
7.2 Time for Completion 72
7.3 The Programme 72
7.3.1 Contents of the Initial and any Revised Programme 73
7.3.2 Other Provisions: Clause 8.3 76
7.4 Advance Warning 76
7.5 Extensions of Time 77
7.5.1 Yellow and Red Books 77
7.5.2 Silver Book 78
7.5.3 Completion 79
7.6 The Specified Causes of Delay to Completion 80
7.6.1 Variations 80
7.6.2 A Cause of Delay Giving an Entitlement to an Extension Under Another Clause 82
7.6.3 Exceptionally Adverse Climatic Conditions: Red and Yellow Books 82
7.6.4 Unforeseeable Shortages 82
7.6.5 Delays, Impediments or Preventions Caused by or Attributable to the Employer 83
7.7 Concurrent Causes 83
7.8 Delay Damages 85
7.8.1 Clause 8.8: First Paragraph 85
7.8.2 Clause 8.8: Second and Third Paragraphs 89
7.8.3 Other Delay-related Provisions 89
7.9 Employer’s Suspension of theWorks 90
7.9.1 Right to Instruct Suspension 90
7.9.2 Effects of Suspension 90
7.9.3 Payment for Plant and Materials After Suspension: Clause 8.11 90
7.9.4 Prolonged Suspension: Clause 8.12 91
7.9.5 Instruction to ResumeWork: Clause 8.13 91
8 Testing on and After Completion and Employer’s Taking Over 93
8.1 Testing on Completion 94
8.1.1 Contractor’s Obligations 94
8.1.2 Delayed Tests 95
8.1.3 Retesting 95
8.1.4 Failure to Pass Tests on Completion 95
8.2 Employer’s Taking Over 97
8.2.1 The 1999 Contracts 97
8.2.2 The 2017 Yellow Book 97
8.2.3 The 2017 Red and Silver Books 98
8.2.4 Procedure Under Clause 10.1 99
8.2.5 Wording of the Deeming Provision 100
8.2.6 Taking Over of Parts: Clause 10.2 101
8.2.7 Other Clause 10 Provisions 101
8.3 Tests After Completion 102
8.3.1 The Yellow Book 102
8.3.2 The Silver Book 104
9 Defects After Taking Over, Acceptance of the Works and Unfulfilled Obligations 107
9.1 Contractor’s Basic Obligation 107
9.2 Who is Responsible for the Cost? 108
9.3 Extending the DNP 108
9.4 Other Obligations 109
9.5 Performance Certificate 110
9.6 Unfulfilled Obligations 110
10 Measurement, the Price and Payment 113
10.1 Measurement and Valuation: Clause 12 of the 2017 Red Book 113
10.1.1 Measurement Procedures 113
10.1.2 Method of Measurement 114
10.1.3 Valuation 114
10.1.4 Omissions 115
10.2 The Contract Price 115
10.2.1 Yellow Book 115
10.2.2 Red Book 116
10.2.3 Silver Book 116
10.3 Advance Payment 117
10.4 Plant and Materials Intended for the Works 117
10.5 The Payment Process 118
10.5.1 Interim Payments 119
10.5.2 Statement at Completion 122
10.5.3 Final Statement 123
10.5.4 Discharge 124
10.5.5 Issue of Final Payment Certificate/Final Payment 124
10.5.6 Payment 126
10.5.7 Delayed Payment 127
10.6 Cessation of Employer’s Liability 127
11 Variations and Adjustments to the Contract Price 129
11.1 Variations 129
11.1.1 Meaning of ‘Variation’ 129
11.1.2 The Right to Vary: Omitting Works to Be Carried out by Others 130
11.1.3 Contractor’s Objections to a Variation 131
11.1.4 Engineer/Employer’s Response 133
11.2 Value Engineering 134
11.2.1 The 1999 Editions 134
11.2.2 The 2017 Books 134
11.3 Variation Procedure 135
11.3.1 Variation by Instruction: Clause 13.3.1 135
11.3.2 Variation by Request for Proposal: Clause 13.3.2 138
11.3.3 New Applications of the Variation Procedure 139
11.4 Other Adjustments to the Contract Price 140
11.4.1 Adjustments for Changes in Laws 140
11.4.2 Adjustments for Changes in Cost 141
12 Termination and Suspension 143
12.1 Employer Termination: For Contractor Default 144
12.1.1 The Grounds of Termination: Clause 15.2, 1999 Editions 145
12.1.2 The Termination Procedure Under Clause 15.2, 1999 Editions 147
12.1.3 Valuation and Payment After a Clause 15.2 Termination 147
12.1.4 The Grounds of Termination: Clause 15.2.1, 2017 Editions 149
12.1.5 Termination: Clause 15.2.2, 2017 Editions 151
12.1.6 Termination Procedure Under Clauses 15.2.3 and 15.2.4, 2017 Editions 151
12.1.7 Valuation and Payment After a Clause 15.2 Termination 151
12.2 Employer’s Termination: For Convenience 152
12.2.1 Clause 15.5, 2017 Editions 153
12.2.2 Clauses 15.6 and 15.17, 2017 Editions 154
12.3 Contractor’s Right to Suspend 154
12.4 Contractor’s Termination 155
12.4.1 The Grounds of Termination: Clause 16.2, 1999 Editions 156
12.4.2 Termination Under Clause 16.2, 1999 Editions 158
12.4.3 Effects of Termination and Payment 158
12.4.4 The Grounds of Termination Under Clause 16.2.1, 2017 Editions 159
12.4.5 Termination Under Clause 16.2, 2017 Editions 160
12.4.6 Contractor’s Obligations After Termination 161
12.4.7 Payment After Contractor’s Termination 161
13 Care of the Works, Indemnities and Insurance 163
13.1 Care of the Works 163
13.1.1 Clause 17.1: Responsibility for Care of the Works 163
13.1.2 Clause 17.2: Liability for Care of the Works 164
13.1.3 The Clause 17.2 Events 165
13.1.4 Consequences of a Clause 17.2 Event 167
13.1.5 Combined Causes 168
13.2 Indemnities 168
13.2.1 Indemnities by Contractor: 2017 Yellow and Silver Books 168
13.2.2 Indemnities by Contractor: 2017 Red Book 170
13.2.3 Indemnities by Employer 170
13.2.4 Shared Indemnities 171
13.3 Intellectual and Industrial Property Rights 171
13.4 Insurance 172
13.4.1 The 2017 Books 172
13.4.2 The Works: Clause 19.2.1 172
13.4.3 Goods: Clause 19.2.2 173
13.4.4 Liability for Breach of Professional Duty: Clause 19.2.3 173
13.4.5 Injury to Persons and Damage to Property: Clause 19.2.4 173
13.4.6 Injury to Employees: Clause 19.2.5 174
13.4.7 Other Insurances Required by the Applicable Law and by Local Practice: Clause 19.2.6 174
14 Exceptional Events 175
14.1 Examples of Exceptional Events 175
14.2 Notice Requirements 176
14.3 Duty to Minimise Delay 176
14.4 Consequences of an Exceptional Event 177
14.5 Optional Termination 178
14.6 Release from Performance Under the Applicable Law 178
15 Employers’ and Contractors’ Claims 181
15.1 The Categories of Claim: Clause 20.1 181
15.2 Claims for Money and/or Time 182
15.2.1 The Notice of Claim: Clause 20.2.1 183
15.2.2 The Clause 20.2.1 Time Bar 183
15.2.3 Initial Response to the Claim: Clause 20.2.2 184
15.2.4 Contemporaneous Records: Clause 20.2.3 185
15.2.5 The Fully Detailed Claim: Clause 20.2.4 185
15.2.6 The Clause 20.2.4 Time Bar 186
15.2.7 Agreement or Determination of the Claim: Clause 20.2.5 187
15.2.8 Comparison with 1999 Forms 188
15.2.9 Agreeing or Determining Time Bar Issues 189
15.2.10 Other Time Bars Affecting the Claim 190
15.2.11 The Time Bars: Summary 190
15.2.12 Further Details 191
15.2.13 Claims of Continuing Effect: Clause 20.2.6 192
15.3 General Requirements: Clause 20.2.7 192
16 Dispute Resolution 195
16.1 TheThree-tier Process in the 1999 Contracts 196
16.2 The 2017 Contracts 196
16.2.1 Disputes 197
16.2.2 Procedure for Obtaining the DAAB’s Decision 197
16.2.3 Referring the Dispute: Clause 21.4.1 198
16.2.4 Parties’ Obligations After Dispute Referred: Clause 21.4.2 198
16.2.5 The DAAB’s Decision: Clause 21.4.3 198
16.2.6 Dissatisfaction with the DAAB’s Decision: Clause 21.4.4 199
16.3 Appointment of the DAAB 201
16.3.1 Sole Member or Three 202
16.3.2 The DAAB Agreement and DAAB Procedural Rules 203
16.4 Failure to Appoint DAAB Members 204
16.5 Avoidance of Disputes 204
16.6 Amicable Settlement 205
16.7 Arbitration 206
16.7.1 Party Commencing Arbitration 206
16.7.2 Time for Commencing an Arbitration 207
16.7.3 Choice of Arbitration 207
16.7.4 ICC Arbitration 208
16.7.5 The Tribunal’s Powers 209
16.7.6 Payment of Sums Awarded 210
16.7.7 Costs 210
16.8 Failure to Comply with the DAAB’s Decision 210
Index 213
