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FIDIC

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17 views4 pages

FIDIC

Uploaded by

mohdmuddabir08
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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FIDIC (Fédération Internationale des Ingénieurs-Conseils) is an international

organization that publishes standard contract forms used in construction


projects. FIDIC contracts provide specific provisions related to termination of
contracts, particularly in the FIDIC Red Book (for building and engineering
works designed by the employer), FIDIC Yellow Book (for plant and design-
build contracts), and FIDIC Silver Book (for EPC/turnkey projects). Below
are the key provisions related to contract termination under FIDIC contracts:

1. Termination by Employer (Client)

Under the FIDIC standard contracts, the employer has the right to terminate
the contract in several circumstances, typically under Clause 15.

a. Termination for Contractor’s Default (Clause 15.2)

The employer may terminate the contract if the contractor:

 Fails to comply with a notice to correct a breach of contract (such as


delays or poor performance).

 Abandons the work or shows clear signs of not intending to continue


the work.

 Fails to proceed with due diligence or without reasonable excuse.

 Becomes bankrupt or insolvent.

 Assigns the contract without the employer’s consent.

 Fails to meet performance standards or technical specifications.

Notice Requirements: The employer must issue a formal notice specifying


the breach and allowing the contractor time to correct it (usually 14 days). If
the breach is not remedied, the employer can terminate the contract.

b. Termination for Convenience (Clause 15.5)

FIDIC allows the employer to terminate the contract at any time for
convenience, meaning without cause. The employer is required to:

 Give notice to the contractor.

 Pay the contractor for the work done up to the point of termination,
including demobilization costs, materials on-site, and other expenses
as per the contract.

This is often used if the employer decides not to continue with the project for
reasons outside the contractor's control.
2. Termination by Contractor

The contractor also has the right to terminate the contract in certain
situations, under Clause 16.

a. Termination for Employer’s Default (Clause 16.2)

The contractor may terminate the contract if the employer:

 Fails to make payments due under the contract within the specified
time period.

 Fails to issue a taking-over certificate when the works are


completed and ready for handover.

 Fails to provide evidence of financial arrangements necessary for the


contract.

 Suspends the works for a prolonged period without cause (typically


over 84 days) or orders repeated suspensions.

 Becomes bankrupt or insolvent.

Notice Requirements: The contractor must provide a notice to the


employer stating the grounds for termination and allow the employer an
opportunity to remedy the issue (usually 28 days). If the employer does not
address the breach, the contractor may terminate the contract.

b. Termination for Prolonged Suspension (Clause 16.2)

If the employer suspends the work for more than 84 days for reasons not
related to the contractor’s performance, the contractor may terminate the
contract.

c. Termination for Force Majeure (Clause 19.6)

Both the employer and contractor may terminate the contract if the work is
stopped for more than 84 days due to force majeure events, such as
natural disasters, war, or other events beyond the control of both parties.

3. Termination for Force Majeure (Clause 19)

Under Clause 19 (Force Majeure), either party may terminate the contract
if:

 An event of force majeure (such as war, natural disaster, or extreme


events) prevents performance of substantial obligations for a
prolonged period (usually more than 84 days).
 In this case, the contract may be terminated by either party, and both
parties are generally released from future obligations, with the
contractor entitled to payment for work done up to the termination
date and any reasonable costs incurred as a result of the termination.

4. Termination Procedure (Clause 15.3, 16.3)

FIDIC contracts outline a clear procedure for termination, which includes:

 Notice of Intention to Terminate: The party wishing to terminate


must serve notice in writing, clearly stating the reason for termination.

 Rectification Period: The party in breach is given a certain number


of days (usually 14 or 28, depending on the contract) to correct the
breach.

 Termination Notice: If the breach is not remedied, the contract can


be formally terminated by issuing another notice.

5. Consequences of Termination (Clause 15.4, 16.4)

After termination, FIDIC contracts lay out specific procedures for both parties,
such as:

 Payment Obligations: The employer must pay the contractor for


work done up to the termination date, including any necessary
demobilization and equipment removal costs.

 Site Handover: The contractor must vacate the site and remove
equipment, while the employer may take over the work and materials
on-site.

6. Suspension as a Precursor to Termination

Under Clause 8.8, the contractor can suspend work in cases like non-
payment, which often precedes contract termination if the issue remains
unresolved.

Summary of Key FIDIC Termination Clauses:

 Clause 15: Termination by Employer (for default, for convenience).

 Clause 16: Termination by Contractor (for employer default, for


prolonged suspension).

 Clause 19: Termination for Force Majeure.

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