The 2017 FIDIC Contracts

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