Construction Contract PPT.ppt

Contracting Practices
in
Ethiopia

1. Background
• The Law of Administrative Contract is an
important concept in relation to Public
Procurement especially with respect to
Public Works since 1960.
• The MoWUD Conditions of Contract are
important local conditions of contract.
The current one is valid since 1994. Such
conditions of contract is highly resembles
that of FIDIC’s conditions of contract. It

1. Background
• The PPA Conditions of Contract are
recent one. They have been issued in
January 2006. They are applicable to
all possible sorts of public
procurement.

2. Administrative Contract
 An administrative contract is a special
type of contract, recognized under the
Civil Code. It is separately regulated
under Article 3131-Article 3306.
 It is a contract to be signed between a
public (government) authority & a
private party. See Article 3132 for the

 Not all contracts to be signed between
the public authority & the private
contracting party may be categorized
under the administrative contract.
 The administrative authority & the
private contracting party to the
administrative contract are not at equal
footing.
 There are the following sub-types of

These are:
• Public Services; (Article 3207-Article
3243)
• Public Works; (Article 3244-Article 3296)
(both Construction & Industrial
Contract)
• Supplies; (Article 3297-Article 3206)

 The very feature of an Administrative
Contract is that the balance of the said
contract is tilted towards the public
authority. This imbalance of the
contract is legally justified on the basis
of public interest.

There are certain principles which show
this imbalance. They are all recognized
under the civil law legal system.
These principles are the following.
–Theories des sujetions imprevues;
–Theories de l’ imprevision; and
–Fait du Prince;

2. AdministrativeContract
A. Theories des sujetions imprevues
• Literally, it means the theory of unforeseen
(physical) constraints.
• The theory permits compensation of a
contractor who encounters exceptional physical
constraints which is not due to any act of the
administration (public authority) & was not
foreseen at the time of the contract.
• Under FIDIC Red Book 4th Edition
–Clause 12.2 Adverse Physical

B. Theorie de l’imprevision
• Literally, it means the theory of want of (non-
physical) foresight.
• The theory compensates the Contractor in the
event of unforeseeable financial, economic &
political circumstances.
• Under FIDIC
–Clause 20.4 Employer’s Risks
–Clause 65 Special Risks
–Clause 70.1 Increase or Decrease of

• Under MoWUD
–Clause 20.2 Excepted Risks
–Clause 65.2 Special Risks
–Clause 70.1 Increase or Decrease of Cost
• Under the Civil Code
–Article 3185 Unforeseen Events
• Under PPA
–Clause 10 Employer’s & Contractor’s Risks
–Clause 11 Employer’s Risks

C. Fait du Prince;
• It means act of state or government.
• The theory provides an opportunity for the
Contractor to obtain full reimbursement
where the administration has somehow
intervened by changing the law or acting in a
way that alters the economic balance of the

2.Administrative Contract
• Such measures are known, under the Civil
Code, as General Measures (see Article
3190 & Article 3191) & Particular Measures
(see Article 3192 & Article 3193). The issue
of compensation is not automatic in all
cases.
• Under FIDIC

2.Administrative Contract
• Under MoWUD
– Clause 51.1 Variations
– Clause 70.7 Subsequent Legislation
• Under the Civil Code (Acts of Government)
– Article 3190 General Measures 1. Affecting Substance of
Contract;
– Article 3191 2. Making the Performance of the Contract
More Onerous;
– Article 3192 Particular Measures 1.Taken by Contracting
Authorities;
– Article 3193 2. Taken by Another (public) Authority;

3. The MoWUD Standard Conditions of
Contract
 Officially, known as “Standard
Conditions of Contract for
Construction of Civil Work Projects”.
 It has been in practice since
December, 1994.
 It contains 75 clauses including Form

3. MoWUD
 It structure & content resembles that of
FIDIC Standard Conditions of Contract for
Civil Engineering Works.
 The Project Delivery System adopted is
that of Design-Bid-Build.
 The type of contract is based on BOQ i.e. it
is an ad measurement contract type (see

3. MoWUD
The general framework of the said conditions of
contract includes the following items:
 Definitions & interpretation,
 Engineer & Engineer’s representative,
Assignment & subletting (of the construction
contract),
Contract documents,
 General obligations (of the contractor),
 Provision of labour, materials & workmanship,

3. MoWUD
Commencement time & delays,
Maintenance & defects,
Alterations, additions & omissions,
Plant, temporary works & materials,
 measurement,
 provisional sums,

3. MoWUD
 nominated subcontractors,
 certificate & payment,
 remedies & power (in case of the default of
the contractor), special risks (of the
employer),
 frustration (of the contract),
 settlement of disputes (by arbitration),
notices, default of the employer, changes in
costs & legislation, and other matters (like
the issue of warranty in respect of defects
of construction, taxation, explosives,
 contract confidential, and publicity).

4. The PPA Standard Conditions of Contract
– The PPA, under its legal mandate provided
under The Public Procurement
Proclamation, it has prepared & issued
certain standard tender & contract
documents for the purpose of public
procurement.
– The conditions of contract are applicable to
the procurements of the federal
government.

4. PPA
– These are Standard Conditions of Contract
for the procurement of:-
• Consultancy Services;
• Non-consultancy Services;
• Works;
• Goods;
• Including Simple Request for Quotations
& Local Purchase Order;

4. PPA
Procurement of Works
– The Standard Conditions of Contract for the
purpose of the procurement of Works have
been prepared for International Competitive
Bidding (ICB) & National Competitive Bidding
(NCB), separately.
– User’s Guide has been also prepared,
separately, both for the ICB & the NCB.
– The Conditions of Contract have been also
prepared both in Amharic & English language.

4. PPA
– The conditions of contract are based on Design-
Bid-Build project delivery system.
– The type of contract could be based on BOQ, in
which case it becomes measurement based.
– Or based on Activities Schedule, in which case it
becomes lump sum.
– The role of the engineer is envisaged.
– The documentation is divided in to the following
three parts, namely,
• Bidding Procedure;
• Schedule of Requirements; and

4. PPA
Bidding Procedure & Documentation
– Under this part, the following are included, namely,
• Section 1 Instruction To Tenderers(ITB);
– General;
– Bidding Documents;
– Preparation of Bids;
– Submission of Bids;
– Bid Opening & Evaluation;
– Award of Contract;
• Section 2 Bid Data Sheet (BDS)

4. PPA
• Section 3 Evaluation & Qualification Criteria (EQC)
– Average Annual Volume of Construction Work;
– Experience as Prime Contractor;
– Acquisition of essential Equipment( by way of
ownership, hire or lease);
– Personnel;
– Liquid Assets and/or Credit Facilities;
– The issue of Joint Venture;

4. PPA
• Section 4 Bidding Forms
– Bid Submission Form;
– Priced Schedules (BOQ OR Schedule of
Activities);
– Bid Security;
– Qualification Information;
• Section 5 Eligible Countries
– Schedule of Requirements & Documentation
• Section 6 Schedule of Requirements
– Scope of Works;
– Technical Specification;
– Drawings;

4. PPA
– Contract & Contract Documentation
– Under this part, the following are included.
• Section 7 General Conditions of Contract (GCC)
• The GCC is composed of 62 Clauses.
• It contains the following parts.
– General; (Clause 1-Clause 26)
– Time Control; (Clause 27-Clause 32)
– Quality Control; (Clause 33-Clause 36)
– Cost Control; (Clause 37-Clause 54)
– Finishing the Contract; (Clause 55-Clause 62)

4. PPA
General
• This section includes the following items:
definitions, interpretations, language & law,
engineer’s decision, delegation, communications,
sub-contracting, other contractors, personnel,
employer’s & contractor’s risks, insurance, site
investigation reports, queries about the special
conditions of contract, contractor to construct the
works, the works to be completed by the intended
completion date, approval by the engineer, safety,
discoveries, possession of site, access to site,

4. PPA
• Time Control
• This section includes the following items: program,
extension of the intended completion date, acceleration,
delays ordered by the engineer, management meetings,
and early warning.
• Quality Control
• This section includes the following items: identifying
defects, tests, correction of defects, uncorrected defects.
• Cost Control
• This section includes the following items: BOQ or activity
schedule, change in the BOQ or activity schedule,
variations, payment for variations, cash flow forecasts,
payment certificates, payments, compensation events,
tax, currencies, price adjustment, retention, liquidated

4. PPA
• Finishing the Contract
• This section includes the following items: completion,
taking over, final account, operating & maintenance
manuals, termination, payment upon termination,
property, and release from performance.
• Section 8 Special Conditions of Contract (SCC)
• Section 9 Contract Forms
– Agreement;
– Performance Bank Guarantee;
– Performance Bond;
– Advance Payment Guarantee;

4. PPA
Other Procurements & Related Documentation
– By the other documentation we mean the
documentation that have been prepared for the
procurement of:-
• Consultancy Services;
• Non-Consultancy Services;
• Goods;
– The documentation has been prepared both for ICB
& NCB.
– The documents have been prepared both in Amharic
& English language.
– They do all have the following structure.
– They are divided in to the following major parts,
namely,

4. PPA
– Bidding Procedure & Documentation
– Under this part, the following are included.
• Section 1 ITB;
• Section 2 BDS;
• Section 3 Evaluation Criteria;
• Section 4 Bidding Forms;
For Consultancy Services
– For Technical Proposal;
– For Financial Proposal;
For Non-Consultancy Services
– Bid Submission Sheet;
– Bid Security;
– Price Schedule; and
– Qualification Form

4. PPA
• For Procurement of Goods
– Bid Submission Sheet;
– Price Schedule for Goods & Related Services
– Bid Security; and
– Manufacturer’s Authorization;
 Section 5 Eligible Countries;
– Schedule of Requirements & Documentation
• Section 6
• For Consultancy & Non-Consultancy Services
– Terms of Reference
• For Procurements of Goods
– Statement of Requirements
» List of Goods & Related Services;
» Delivery & Completion Schedule;
» Technical Specifications & Compliance Sheet; and
» Drawings;

International Construction Contract

Table of Contents
• International Standard Conditions of Contract
• Tender & Contract Documents
• The FIDIC
• Obligations of the Contractor
• Contractor’s Remedial Rights
• Obligations of the Employer
• Employer’s Remedial Rights

InternationalStandardConditionsof Contract
• There are different standard conditions of contract developed by certain
institutions or recommended by international financing or development
institutions;
Standard Conditions of Contract developed by FIDIC:
• Conditions of Contract for Civil Engineering Works ( Red Book);
• Conditions of Contract for Electrical & Mechanical Works ( Yellow Book);
• Conditions of Sub-Contract for Works of Civil Engineering Construction;
• Conditions of Contract for Design-Build & Turnkey ( Orange Book);
• Conditions of Contract for Consultancy Services ( White Book);

• Standard Conditions of Contract developed by other
international institutions:
• By European Union ( through the European
Development Fund (EDF);
– General Regulations for Works, Supply & Service
Contracts financed by the EDF;
– General Conditions for Works Contracts financed by EDF;
– General Conditions for Supply Contracts financed by EDF;
– General Conditions for Service Contracts financed by EDF;

• By the African Development Bank/Fund ( it applies for the
procurement of Works, Goods & Services);
• By the World Bank. These are Standard Bidding Documents
for the procurement works of civil engineering construction.
• By UNICTRAL to be used for the procurement of Goods,
Construction & Services Contract. It is rather a model, on
which basis any country to develop a suitable LAW.
• By other institutions;

The FIDIC
The FIDIC
– FIDIC is an international federation of national association of
independent consulting engineers.
– Its full name is Federation International Des Ingenieurs-Conseils ;
– It was founded in 1913 by five national associations of
independent consulting engineers within Europe;
– The objectives of forming the federation were to promote in
common the professional interests of the member associations
and to disseminate information of interest to members of its
component national associations;

– It has begun to prepare & disseminate standard
conditions of contract since 1957 for international use.
– The following editions are relevant with respect to
international construction contract ( Red Book)
• First Edition August, 1957;
• Second Edition July, 1969;
• Third Edition March, 1977;
• Fourth Edition September, 1987;
The FIDIC

• Fourth Edition (a supplement) Summer 1992 ;
(NB: Amendments with regard to some of the Provisions of
the Conditions of Contract)
• Fourth Edition ( further amendment) November, 1996
(NB: in relation to Dispute Adjudication Board,
• Payment on Lump Sum Basis & Late
• Certification.)
• The FIDIC Conditions of Contract is based on the concepts of
the Common Law Legal System.

– Recently (1999 & 2006) FIDIC has published the
following conditions of contract.
– These are:-
• Conditions of Contract for Construction for Building and
Engineering Works Designed by the Employer: The
Construction Contract (New Red Book);
• Conditions of Contract for Plant and Design-Build for Electrical
and Mechanical Plant, and for Building and Engineering Works,
Designed by the Contractor: The Plant and Design/Build
Contract (New Yellow Book);

• Conditions of Contract for Turnkey Projects: The
Turnkey Contract: (Silver Book);
• Short form of Contract: The Short Form (Green
Book);
• Conditions of Contract for Construction: For Building
and Engineering Works Designed by the Employer:
Multilateral Development Bank(MDB) Harmonized
Edition, March, 2006, FIDIC;

Harmonized Edition
– In this course the focus will be on FIDIC’s MDB
Harmonized Edition.
– The referred sub-clauses are from the MDB
Harmonized edition.

Obligation of the Contractor
The obligations of the contractor, under the said conditions of contract, may
be generalized as follows.
• Completion obligation;
• Quality performance obligation;
• Timely performance obligation;
• Obligation to provide securities, indemnity & insurance;
• Obligation to supply information & notice;
• Administrative obligation;
• Obligation up on or after completion;
• Let examine each of the contractor’s obligations, in turn.

Completion Obligation
Basic Obligation
– Clause 4.1 During Performance Period
• Completion of the whole of the Works in accordance with
the Contract up to Take Over (Clause 10) of the Works
– Clause 11.1 During Defects Liability Period
» Executing outstanding works; and
» Remedying of defects & damages in the
works;

Extent of Completion Obligation
– Clause 15.1 to execute variations orders;
– Clause 17. 4 rectification of losses or damages to
the works arising out of the Employer’s Risks;
– Clause 7.6 executing remedial or urgent works;
– Clause 9.1 cum Clause 8.2(a) carrying out of works
to achieve tests on completion for the purpose of
Taking Over (Clause 8.29b));

Excuses from Completion Obligation
• Clause 19. 7 due to legal or physical impossibility;
• Clause 17. 3 in case of the occurrence of the Employer’s
Risks;
• Clause 8.8 in case of suspension of the Works by the
Employer;
• Clause 16.1 in case of legitimate suspension of the Works
by the Contractor;
• Clause 16.2 in case of termination of the Contract by the
Contractor due to the default of the Employer;

Excuses form Completion Obligation…
• Clause 15.5 in case of termination of the Contract by
the Employer for its convenience;
• Clause 8.11 in case of termination of the Contract for
the whole of the Works due to prolonged suspension
caused by the Employer;
• Clause 19.6 in case of optional termination of the
Contract by the Contractor or by the Employer due to
prevention of performance by force majeure;

Quality Performance Obligation
• Clause 4.1 & Clause 7.1 using materials, plant & workmanship
as provided in the Contract specifically in the Technical
Specifications;
• Attributes of quality to be embedded in the Works in terms of;
– Clause 7.1(a) in case of Plant;
– Clause 7.1(c) in case of Materials;
– Clause 7.1(b)cum Clause 6.1 in case of Workmanship;
• No excuse for defective performance/execution of the
Contract/ Works;

Timely Performance Obligation
• Scope of the Obligation
– Commencement Clause 8.1 (Commencement of
the Works);
– Progress: Clause 8.1 cum Clause 8.6 (Rate of
Progress)
– Completion: Clause 8.2 (Time for Completion);
– Passing of Tests on Completion: Clause 9 (Tests
on Completion)

Excuses from Timely Completion Obligation
• Clause 8.4 due to Extension of Time for Completion;
• Clause 8. 5 due to Delays caused by authorities;
• Clause 8.8 cum Clause 8. 9 due to Suspension of
Work & its consequences;
• Clause 8.11 due to prolonged suspension; (NB: If
the performance of Work resumed after such
prolonged suspension.)

Excuses from Timely …
• Clause 16. 1(h) due to suspension & deceleration of the
Works by the Contractor due to payment problems;
• Other specified grounds entitling the Contractor to
extension of time for completion:
– Clause 1.9(a) due to delay in issuing drawings or instructions
by the Engineer;
– Clause 2.1(a) due to initial delay caused by the Employer in
providing possession of Site;

Excuses form Timely…
– Clause 4.7(a) due to setting out;
– Clause 4.12(a) due to unforeseeable physical
conditions;
– Clause 4.24(a) delay encountered by the Contractor
due to the discovery & reporting of Fossils;
– Clause 7.4(a) due to testing as instructed by the
Engineer or for which the Employer is responsible
under the Contract;

Excuses from timely…
– Clause 10.3(a) due to interference with the Tests on
Completion by the Employer;
– Clause 13.7(a) due to adjustment for changes in
legislation;
– Clause 17.4(a) due to consequences of Employer’s Risks;
• Clause 8.6 (Rate of Progress) due to the Engineer’s
instruction to accelerate the progress of the Works, for
which the Contractor is not responsible under the Contract;

Liability for delay..
• Clause 8.7: The Contractor’s liability to pay
Delay Damages occurs in case of the
alternative contractual grounds:
– Not completing the Works within the agreed or
reasonable time; or
– Not completing the Works within the extended
time for completion;

Obligation to provide Securities, Indemnities &
Insurance
Securities
– Clause 4.2 in relation to Performance Security;
– Clause 14.2 in relation to Advance Payment
Guarantee;
– Clause 14.9 in relation to Retention Money
Guarantee;

• Indemnity
• Clause 1.13 in relation to compliance with
laws;
• Clause 4.14 in relation to avoidance of
interference the convenience of the public or
the access to & use & occupation of all roads &
footpaths…;
• Clause 4.16 in relation to transport of goods;

Indemnity…
• Clause 17.1 in relation to bodily injury, sickness, diseases or
death, of any person whatsoever arising out of or in the
course of or by reason of the Contractor’s design (if any), the
execution & completion of the Works & remedying of any
defects therein;
• Clause 17.5 in relation to intellectual & industrial property
rights against & from any other claim which arises out of or
in relation to the manufacture, use, sale or import of any
Goods, or any design for which the Contractor is responsible;

Insurance
• Clause 18.1 in relation to general requirements (choice of the
insurer, terms of insurance, making the insurance in the joint
name, providing the policy, providing evidence for the payment of
premium, use of the insurance money for the purpose of the
Contract,…)in providing specific insurance arrangement;
• Clause 18.2 in relation to insurance of Works & Contractor’s
Equipment;
• Clause 18.3 in relation to insurance against injury to persons &
damage to property;
• Clause 18.4 in relation to insurance for Contractor’s Personnel;

Obligation to supply Information & Notice
Information
• Clause 4.1(a) & (b) design information, in case
where the Contractor is required under the Contract
to design part of the permanent Works;
• Clause 4.24 geological or archeological
finds(Fossils);
• Clause 5.4 submitting evidence in relation to
payments made to the nominated sub-contractors,
as the Engineer requests;

Information…
• Clause 6.10 details of Labour & Equipment;
• Clause 8.3 programme & revised programme;
• Clause 12.1 particulars as requested by the Engineer
in formation pertaining to measurement of Works;
• Clause 13.5 in relation to provisional sums
submission of quotations, receipts , vouchers &
accounts or receipts for substantiation of the use of
the said sums;

Information…
• Clause 13.6 on use of Day Work items, on
daily basis;
• Clause 14.3 submitting monthly statements
to the Engineer for payment purposes;
• Clause 20.1 contemporary records as per the
request of the Engineer;

Notices
• Clause 1.9 giving of notices in relation to delayed
drawings or instructions by the Engineer;
• Clause 1.13 giving of all notices…in relation to the
execution & completion of the Works & remedying any
defects therein;
• Clause 2.1 giving notice to the Employer in case of
failure of the Employer in providing possession of Site;
• Clause 4.2 in case of submission of the Performance
Security copy to the Employer;

Notice…
• Clause 4.12 in case of encountering unforeseeable physical
conditions: to the Employer;
• Clause 4.16 notice to be given to the Engineer in relation to
transport of Goods & Plant to be delivered to the Site;
• Clause 7.3 giving notice to the Engineer in case of any work
is ready & before it is covered up, put out of sight, or
packaged for storage or transport or inspection;
• Clause 8.4 giving notice to the Engineer in case of request for
extension of time(EOT) for completion;

Notice…
• Clause 8.9 giving notice to the Engineer in case of suspension
of work instructed by the Engineer;
• Clause 8.11 giving notice to the Engineer in case of
prolonged suspension of the Works;
requesting the Taking Over of the Works & Sections, if any;
• Clause 13.1 giving notice to the Engineer the reasons(with
supporting particulars) not to execute the variation order or
instruction;

Notice
• Clause 17.4 giving notice to the Engineer in case of the
effects or consequences of the Employer’s Risks;
submission of insurance policies to the Employer;
• Clause 20.1 giving notice to the Engineer describing the
event or circumstance giving rise to the claim;
• Clause 20.4 giving notice of dissatisfaction with the decision
of the adjudicator to the Employer;
• Clause 20.4 giving notice of intention to commence
arbitration;

Administrative Obligation
• Clause 1.6 entering into a Contract
Agreement;
• Clause 1.7(a) securing prior consent for
assignment from the Employer;
• Clause 3.5 duty to consult with the Engineer;
• Clause 4.4(b) securing prior consent from the
Engineer for Sub-contracting;

Administrative Obligation…
• Clause 4.6 providing appropriate
opportunities for the Employer’s Personnel
and any other contractors employed by the
Employer & for personnel of public
authorities;
• Clause 6.1-making arrangement for the
engagement of staff & labour;

Administrative Obligations…
• Clause 6.1 Affording opportunity of access to
the Site to the Engineer, other personnel &
for the public authorities;
• Clause 7.8 payment of royalties;
• Clause 20.5 attempting amicable settlement;

Obligation upon or after Completion
• Clause 11.1 remedying defects & completion of
outstanding works, if any;
• Clause 11.11 clearance of Site upon completion;
• Clause 14.10 submission of Statement at
Completion to the Engineer;
• Clause 14.11 submission of draft Final Statement to
the Engineer;

Obligation Upon or after…
• Clause 14.11 submission of further information
relative to the finalization of the draft Final
Statement;
• Clause 14.12 submitting written discharge to the
Employer confirming that the total of the Final
Statement represents full & final settlement of
all monies due to the Contractor;

Contractor’s Remedial Rights
The remedial rights of the Contractor may be categorized, as follows.
• Contractual Remedies;
• Financial remedies;
• Cost;
• Profit;
• Financing charges;
• Indemnity;
– Extension of time;
– Other contractual remedies;
• Deceleration of progress of the Works;
• Suspension;
• Termination;

Contractor’s Remedial Rights…
• Legal Remedies;
• Specific Performance;
• Cancellation of Contract;
• General damages;
• Other remedies, if any;

Contractual Remedies
• Financial
– Cost
• Clause 1.9(b) due to delayed issuance of drawings &
instructions to the Contractor caused by the Engineer;
• Clause 2.1(b) due to delay caused in providing access to
the Site caused by the Employer (Initial Delay);
• Clause 4.7 due to delay suffered by the Contractor in
case of error in setting out;

Contractual remedies…
• Clause 4.12(b) due to delay caused by unforeseeable
physical conditions;
• Clause 4.24(b) due to delay caused in case of discovery
& reporting of fossils;
• Clause 7.4(b) due to delay suffered by the Contractor
caused by the Employer in case of testing;
• Clause 8.9(b) due to delay caused by the effect of
suspension as ordered by the Engineer;

• Clause 10.3(b) due to delay caused by the interference of the
Employer with Tests on Completion;
• Clause 11.6 due to incurring of costs by the Contractor with
respect to repetition of Tests;
• Clause 13.7 cum 14.3(b) due to incurring of cots in relation
to adjustment for changes in legislation;
• Clause 13.8 due to incurring of costs in relation to
adjustment of changes in cost;

• Clause 14.3(a) cum Clause 13.2 entitlement to
additional cost in case of cost reduction in relation to
Value Engineering;
• Clause 15.4( c ) getting the balance, if any, in relation to
termination of the Contract due to the default of the
Contractor & the completion of the project by the
Employer or third part;
• Clause 16.1 (b) due to suspension of works by the
Contractor, as caused by the problem of payment &
thereby incurred cost;

• Clause 16.1(b) due to reduction of the progress
of the works by the Contractor as caused by the
problem of payment & thereby incurred cost;
• Clause 16.4 (c) due to termination of Contract by
the Contractor due to the default of the
Employer & recovering costs incurred thereby;

• Clause 17.4(b) costs incurred due to consequences
of the Employer’s Risks;
• Clause 19.7 (b) entitlement to some payment in
case of release from performance of the Contract
(Frustration);
• Clause 20.1 cum Clause 14.3(f) payment of
additional payment due to claims of the Contractor;

– Profit, where applicable
• Clause 1.9(b) in case of delayed issuance of drawings
& instruction by the Engineer;
• Clause 2.1(b) in case of delay in providing access to
the Site;
• Clause 4.7(b) in case of error in Setting out;
• Clause 7.4(b) in case of delay suffered by the
Contractor caused by the Employer in relation to
Testing;

Contractual remedies…Profit..
• Clause 10.3(b) in case of interference with Tests on
Completion by the Employer;
• Clause 16.1(b) in case of suspension & reduction of
the progress of the work by the Contractor caused by
payment problem;
• Clause 17.4(b) cum Clause 17.3(f) &(g) in case of
Employer’s Risks;

Contractor’s Remedial Rights…
– Financing Charges
• Clause 14.8 in case of delayed payment by
the Employer;

– Contractual remedies…
– Indemnity
• Indemnity includes claims, damages, losses, & expenses
including legal fees & expenses;
• Clause 4. 2 in case of calling the Performance Security by the
Employer to the extent to which the Employer was not
entitled to make the claim;
• Clause 17.1 general obligation in relation to indemnifying
the Contractor by the Employer;
• Clause 17.5 indemnifying the Contractor in relation to
intellectual & industrial property rights;

• Extension of Time
– Clause 8.4(a) due to Variation;
– Clause 8.4(b) see below in conjunction with
other relevant Sub-clauses;
– Clause 8.4 (c) due to exceptionally adverse
climatic conditions;
– Clause 8.4 (d) due to unforeseeable shortages
in the availability of personnel, or Goods
caused by epidemic or governmental action;

Extension of Time…
– Clause 8.4(e) due to any delay, impediment or prevention
caused by or attributable to the Employer, the Employer’s
personnel (including the Engineer see Clause 1.1.2.6) or
the Employer’s other contractors;
– Clause 8.4(b)cum Clause 1.9(a) due to delay in issuing
drawing & instructions by the Engineer to the Contractor;
– Clause 8.4(b) cum Clause 2.1(a) due to delay in providing
access to the Site by the Employer;

– Clause 8.4(b) Clause 4.7(a) due to delay caused due to
error in Setting out;
– Clause 8.4(b) cum Clause 4.12(a) delay due to
unforeseeable physical conditions;
– Clause 8.4(b)cum Clause 4.24(a) delay caused due to
discovery & reporting of Fossils;
– Clause 8.4(b)cum Clause 7.4(a) delay caused by the
Employer in relation to Testing;

– Clause 8.4(b)cum Clause 8.8 delay caused by suspension
as ordered by the Engineer;
– Clause 8.4(b)cum Clause 8.11 delay caused due to
prolonged suspension provided the Contractor opted for
resuming the performance of the Works after such
prolonged suspension;
– Clause 8.4(b)cum Clause 16.1(h) delay caused to the
Contractor due to suspension or reduction in the progress
of the Works by the Contractor due to delay in payment;

Others Contractual Remedies
– Deceleration (reduction) of the progress of the Works;
• Clause 16.1 due to delay in payment;
– Suspension of the performance of the Works;
• Clause 16.1 due to delay in payment;
– Termination of the Contract;
• Clause 8.11 cum Clause 16.2 (f) due to prolonged suspension of
the Works by the Employer;
• Clause 16.2 (a) through (j) due to the default of the Employer;
• Clause 16.2(h) due to delay in payment & other payment
related grounds;

Legal remedies
• Specific Performance;
• Cancellation of Contract;
• General Damages
• Other legal Remedies, if any

Obligations of the Employer
Obligations of the Employer
The obligations of the employer may be
summarized, as follows.
• Payment obligation; (Contract price & other
payment)
• Acceptance obligation
• Other obligations;

Payment Obligation
• Payment of the Contract Price
– Clause 14.2cum Clause 14.7(a) in relation to Advance Payment;
– Clause 14.7(b) in relation to Interim Payment;
– Clause 14.13cum Clause 14.7(c ) in relation to Final Payment;
– Clause 14.9 in relation to the first half of the Retention Money;
– Clause 14.9 in relation to the second half of the Retention
Money;

Other Payment Obligations
• This obligation is related to claims or otherwise;
• Clause 1.9(b) payment of cost & profit due to
delay in issuing drawings & instructions by the
Engineer;
• Clause 2.1(b) payment of cost & profit due to
delay caused in providing access to the Site;
• Clause 4.7 payment of cost & profit due to error in
Setting out;

Other Payment Obligations…
• Clause 4.12(b) payment of cost due to delay caused
by unforeseeable physical conditions;
• Clause 4.24(b) payment of cost in case of discovery
& reporting of Fossils;
• Clause 7.4(b) payment of cost in case of Testing for
which the Employer is responsible;
• Clause 8.9(b) payment of cost in case of suspension
of Works;

• Clause 10.3(b) payment of cost & profit in case of
interference with Tests on Completion;
• Clause 11.6 payment of cost in case of further tests for which
the Employer is responsible;
• Clause 13.7 cum 14.3(b) payment of cost in case of
Adjustment for Changes in Legislation;
• Clause 13.8 payment of cost in case of Adjustment for
Changes in Cost;

• Clause 14.3(a) cum Clause 13.2 payment of additional
payment to the Contractor derived from savings due to the
effects of Value Engineering;
• Clause 14.8 payment of financing charges in case of delay in
payment;
• Clause 15.4( c ) entitlement to a balance of costs, if any, in
case of termination of the Contract by the Employer due to
the default of the Contractor, after completion of the Works
by the Employer or another contractor;

• Clause 16.1(b) payment of cost & profit in case of
suspension & reduction of the progress of the Works by
the Contractor;
• Clause 16.4 payment of any loss or damage sustained by
the Contractor due to termination of the Contract by the
Contractor due to the default of the Employer;
• Clause 17.4(b)cum Clause 17.3(f) & (g) payment of cost
& profit in case of Employer’s risks;

• Clause 19.7 payment of costs in relation to
Plant, Materials, other costs & liabilities, cost
of removal of the Temporary Works, cost of
the repatriation of Contractor’s Personnel;
• Clause 20.1 cum Clause 14.3 payment of
claims;

Acceptance Obligation
• Clause 10 relative to actual Taking Over;
• Clause 10 relative to presumptive or
constructive Taking Over;

Other Obligations
• Giving Possession of the Site & Access
thereto
– Clause 2.1 providing access to the Site to the
Contractor;
– Clause 4.10 providing Site Data to the Contractor;
– Clause 4.13 providing rights of way & facilities to
the Contractor;

Other Obligations…
Appointing an Engineer
• Clause 3.1 appointing an Engineer;

• Supplying Instructions as to the Carrying out of the Works
(i.e. instructions, information, consents, approvals,
notices…)
• Clause 1.7 in relation to prior consent of the Employer for
assignment;
• Clause 1.13 in relation to obtaining the planning, zoning,
building permits or similar permissions & providing same
information to the Contractor
• Clause 2.2 in relation to permits, licenses or approvals;

• Clause 2.4 in relation to submission of evidence or
information on the Employer’s financial arrangement;
• Clause 2.5 in relation to notice of claim by the
Employer;
• Clause 4.2 in relation to approval of the form &
institution for the Performance Security;
• Clause 4.10 in relation to providing information on sub-
surface, hydrological & environmental aspects;

• Clause 15.2 in relation to notice of termination;
• Clause 18.1 in relation to approval of the
insurance institution & form of the insurance
policy;
• Clause 20.4 in relation to notice of
dissatisfaction with decision of the Adjudicator;

Not Interfering with the Progress of the Works
• Clause 1.13cum Clause 8.4(a) in relation to failure
to secure the required planning, zoning & other
permits;
• Clause 4.6 cum Clause 8.4(a) in relation not to
cause delay to the Contractor due to the
Employer, Employer’s Personnel & Employer’s
other contractors;

Non-interference…
• Clause 13.3 cum Clause 8.4(a) in relation to
making variations or other substantive
change to the quantity of Works;
• Clause 2.1 cum Clause 8.4(a) in relation to
failure to give possession of Site & access
thereto;

Nomination of Specialist Sub-contractors &
Suppliers
• Clause 5 cum Clause 13.5

Supplying Materials & Carrying out Works, if these
form Part of the Works
• Clause 4.6 in relation to employing other
contractors to carry out works not forming part of
the Contract with the Contractor;
• Clause 4.20 in relation to supplying Employer’s
Equipment & Free-Issue –Materials to the
Contractor, indeed against payment;

Indemnity Obligation
• Clause 4.2 in relation to Performance security resulting
from a claim under the Performance Security to the extent
to which the Employer was not entitled to make the claim
there under;
• Clause 17.1 in relation to indemnity relative to bodily
injury, sickness, diseases or death, for which the Employer
is responsible under the Contract;
• Clause 17.5 in relation to intellectual & industrial property
rights(infringement of rights);

Insurance Obligation
• Clause 17.3 in relation to Employer’s Risks
(if the test of insurability has passed &
capable of insuring);
• Clause 18.1 in relation to general
requirements for insurance, the Employer
as “insuring party” under the Contract;

Employer’s Remedial Rights
• The remedial rights of the Employer may be categorized, as contractual
& legal.
• These are:-
– Contractual remedies;
• Financial remedies;
– Delay Damages;
– Indemnities;
– Deduction of Contract Price;
• Extension of Time;
• In case of Defects Notification period;
• Other contractual remedies;
• Suspension;
• Termination;

Legal remedies;
• Specific performance;
• Cancellation of contract;
• General damages;
• Other legal remedies, if any;

Contractual Remedies
• Financial
– Delay Damages
• Clause 8.7 in relation to delay by the Contractor in
completing the Works within the time for completion
or as extended;
• This is equivalent to liquidated damages;

– Indemnities
• Clause 1.13 in relation to the Contractor’s failure to comply
with laws;
• Clause 4.14 in relation to the Contractor’s responsibility for
the acts or defaults of any sub-contractor, his agents or
employees;
• Clause 4.16(c) in relation to the transport of Goods;
• Clause 17.1 in relation to bodily injury, sickness, diseases, or
death of any person …;
• Clause 17.5 in relation to claims pertaining to intellectual &
industrial property rights;

Deduction from the Contract Price
• Clause 4.9 in relation to testing;
• Clause 4.19 in relation to the cost of electricity, water & gas;
• Clause 4.20 in relation to Employer’s Equipment & Free-issue-
Materials;
• Clause 15.4(c ) in relation to payments (of the balance, if any)
after termination of the Contract by the Employer due to default
of the Contractor;
• Clause 11.4(c ) in relation to failure to remedying defects by the
Contractor;

Time Extension
• Clause 11.3 in relation to Defects
Notification Period;

Other Contractual Remedies
• Suspension
– Clause 8.8 in relation to suspension of the Performance of
the Works;
• Termination
• Clause 11.4(c ) in relation to Tests on Completion;
• Clause 15.2 in relation to defaults of the Contractor;
• Clause 15.2(f) in relation to corruptive practices of the
Contractor;
• Clause 15.6 in relation to corruptive practices of the
Contractor;

Legal Remedies
• Specific performance;
• Cancellation of contract;
• General Damages;
• Other legal Remedies, if any

Legal Liability of the Contractor
– After the works have been completed and
finally accepted by the employer, there may
be no contractual liability towards the
contractor.
– There will be a legal liability, however.

Legal Liability of the Contractor…
– This is the warranty obligation of the contractor.
– This legal warranty period lasts for ten years.
– The ten year time is calculated from the date of the
final acceptance of the works.
– This is called Decennial Liability of the contractor.
The designation is related to the time scale of the
warranty period i.e. ten years.

– See also
• Article 3039 (Warranty due by the
Contractor) of the Civil Code (under Contracts
of Work & Labour related to Immovable);
• Article 3282 (Warranty in respect of defects
of construction) of the Civil Code ( under the
Law of Administrative Contract);

Construction Contract PPT.ppt

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