F ID IC Y E L L O W B OOK

The book analyses every aspect of the ease or otherwise of implementing the
FIDIC Yellow Book Conditions of Contract. On a clause-by-clause basis, it
highlights important structural features and suggests alternative text to avoid
problems with the contract. Written in a user-friendly manner by an expert user
of the FIDIC Suite of Contracts, who is a Member of the FIDIC President’s List
of Adjudicators, this book will be a vital reference point for contractors, lawyers,
engineers, arbitrators and all others concerned with the FIDIC contracts.

Ben Beaumont is a active arbitrator, adjudicator and mediator as well as being

a practicing Member of the Bar. He is a chartered surveyor, FRICS, FCIArb and
a Chartered Arbitrator, as which he has more than 30 years of experience. He
was a member of the original Marriott committee which was drawn together to
draw up the draft Arbitration Law which is now the Arbitration Act 1996. He
has adjudicated and arbitrated disputes arising from the FIDIC Suite of Contract
Conditions. He is Founding Chair of the Forum for International Conciliation and
Arbitration, www.ficacic.com.
 CONTEMPORARY COMMERCIAL LAW

Causation in Insurance Contract Law Online Arbitration

Meixian Song Faye Fangfei Wang

Insurance Law in China Double Insurance and Contribution

Edited by Johanna Hjalmarsson Nisha Mohamed
and Dingjing Huang
The Law and Autonomous Vehicles
Maritime Law in China: Matthew Channon, Lucy McCormick
Emerging Issues and Future Developments and Kyriaki Noussia
Edited by Johanna Hjalmarsson
and Jenny Jingbo Zhang FIDIC Yellow Book
A Commentary
Illegality in Marine Insurance Law Ben Beaumont
Feng Wang

Insurance Law Implications of Delay in

Maritime Transport
Ayşegül Buğra

For more information about this series, please visit:

www.routledge.com/Contemporary-Commercial-Law/book-series/CCL
FI DI C YE L L OW B O O K

A C O M M E N TA RY

B EN B EAUMONT
First published 2019
by Informa Law from Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN

and by Informa Law from Routledge

52 Vanderbilt Avenue, New York, NY 10017

Informa Law from Routledge is an imprint of the Taylor & Francis Group, an informa business

© 2019 Ben Beaumont

The right of Ben Beaumont to be identified as author of this work has been asserted by him in
accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form
or by any electronic, mechanical, or other means, now known or hereafter invented, including
photocopying and recording, or in any information storage or retrieval system, without permission
in writing from the publishers.

Whilst every effort has been made to ensure that the information contained in this book is correct,
neither the author nor Informa Law can accept any responsibility for any errors or omissions or any
consequences arising therefrom.

Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are
used only for identification and explanation without intent to infringe.

British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data

A catalog record for this book has been requested

ISBN: 978-1-138-05231-4 (pbk)

ISBN: 978-1-315-16786-2 (ebk)

Typeset in Times New Roman

by Apex CoVantage, LLC
 TA B L E O F C O N TE NT S

Acknowledgementsxv
Glossaryxvii

CHAPTER 1 CLAUSE 1 GENERAL PROVISIONS  1

CHAPTER 2 CLAUSE 2 THE EMPLOYER 51

CHAPTER 3 CLAUSE 3 THE ENGINEER 61

CHAPTER 4 CLAUSE 4 THE CONTRACTOR 79

CHAPTER 5 CLAUSE 5 DESIGN 125

CHAPTER 6 CLAUSE 6 STAFF AND LABOUR 143

CHAPTER 7 CLAUSE 7 PLANT, MATERIALS AND

WORKMANSHIP155

CHAPTER 8 CLAUSE 8 COMMENCEMENT, DELAYS AND

SUSPENSION167

CHAPTER 9 CLAUSE 9 TESTS ON COMPLETION 183

CHAPTER 10 CLAUSE 10 EMPLOYER’S TAKING OVER 193

CHAPTER 11 CLAUSE 11 DEFECTS AFTER TAKING OVER 203

CHAPTER 12 CLAUSE 12 TESTS AFTER COMPLETION 219

CHAPTER 13 CLAUSE 13 VARIATIONS AND ADJUSTMENTS 227

CHAPTER 14 CLAUSE 14 CONTRACT PRICE AND PAYMENT 247

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 ta b l e o f c o n t e n t s

CHAPTER 15 CLAUSE 15 TERMINATION BY EMPLOYER 281

CHAPTER 16 CLAUSE 16 SUSPENSION AND TERMINATION

BY CONTRACTOR 293

CHAPTER 17 CLAUSE 17 CARE OF THE WORKS

AND INDEMNITIES 309

CHAPTER 18 CLAUSE 18 EXCEPTIONAL EVENTS 319

CHAPTER 19 CLAUSE 19 INSURANCE 327

CHAPTER 20 CLAUSE 20 EMPLOYER’S AND CONTRACTOR’S

CLAIMS339

CHAPTER 21 CLAUSE 21 DISPUTES AND ARBITRATION 353

Index 373

vi
 D E TA I L E D C O N TE NT S

Acknowledgementsxv
Glossaryxvii

CHAPTER 1 CLAUSE 1 GENERAL PROVISIONS 1

1.1 Definitions 1
Reasonable22
1.2 Interpretation 27
1.3 Notices and other Communications 30
1.4 Law and Language 32
1.5 Priority of Documents 33
1.6 Contract Agreement 34
1.7 Assignment 35
1.8 Care and Supply of Documents 35
1.9 Errors in the Employer’s Requirements 37
1.10 Employer’s use of Contractor’s Documents 39
1.11 Contractor’s use of Employer’s Documents 42
1.12 Confidentiality 42
1.13 Compliance with Laws 44
1.14 Joint and Several Liability 47
1.15 Limitation of Liability 48
1.16 Contract Termination 49

CHAPTER 2 CLAUSE 2 THE EMPLOYER 51

2.1 Right of Access to the Site 51
2.2 Assistance 54
2.3 Employer’s Personnel and Other Contractors 55
2.4 Employer’s Financial Arrangements 57
2.5 Site Data and Items of Reference 58
2.6 Employer-Supplied Materials and Employer’s Equipment 59

CHAPTER 3 CLAUSE 3 THE ENGINEER 61

3.1 The Engineer 61
3.2 Engineer’s Duties and Authority 62
3.3 The Engineer’s Representative 65

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 d e ta i l e d c o n t e n t s

3.4 Delegation by the Engineer 66

3.5 Engineer’s Instructions 67
3.6 Replacement of the Engineer 69
3.7 Agreement or Determination 70
3.7.1 Consultation to reach agreement 70
3.7.2 Engineer’s Determination 72
3.7.3 Time limits 73
3.7.4 Effect of the agreement or determination 74
3.7.5 Dissatisfaction with Engineer’s determination 76
3.8 Meetings 77

CHAPTER 4 CLAUSE 4 THE CONTRACTOR 79

4.1 Contractor’s General Obligations 79
4.2 Performance Security 80
4.2.1 Contractor’s Obligations81
4.2.2 Claims under the Performance Security 82
4.3 Contractor’s Representative 85
4.4 Subcontractors 88
4.5 Nominated Subcontractors 89
4.5.1 Objection to Nomination 90
4.5.2 Payment to Nominated Subcontractors 91
4.5.3 Evidence of Payments 91
4.6 Co-operation 92
4.7 Setting Out 94
4.7.1 Accuracy 95
4.7.2 Errors 95
4.7.3 Agreement or determination of rectification
measures, delay and/or Cost 96
4.8 Health and Safety Obligations 98
4.9 Quality Management and Compliance Verification Systems 101
4.9.1 Quality Management System 101
4.9.2 Compliance Verification System 104
4.9.3 General provision 105
4.10 Use of Site Data 105
4.11 Sufficiency of the Accepted Contract Amount 107
4.12 Unforeseeable Physical Conditions 107
4.12.1 Contractor’s Notice 108
4.12.2 Engineer’s inspection and investigation 109
4.12.3 Engineer’s instructions 110
4.12.2 Engineer’s Inspection and Investigation 110
4.12.4 Delay and/or Cost 110
4.12.5 Agreement or determination of Delay and/or Cost 111
4.13 Rights of Way and Facilities 112
4.14 Avoidance of Interference 112

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 d e ta i l e d c o n t e n t s

4.15 Access Route 113

4.16 Transport of Goods 114
4.17 Contractor’s Equipment 115
4.18 Protection of the Environment 116
4.19 Temporary Utilities 117
4.20 Progress Reports 118
4.21 Security of the Site 120
4.22 Contractor’s Operations On Site 121
4.23 Archaeological and Geological Findings 122

CHAPTER 5 CLAUSE 5 DESIGN 125

5.1 General Design Obligations 125
5.2 Contractor’s Documents 127
5.2.1 Preparation by Contractor 128
5.2.2 Review by Engineer 128
5.2.3 Construction 133
5.3 Contractor’s Undertaking 134
5.4 Technical Standards and Regulations 135
5.5 Training 137
5.6 As-Built Records 138
5.7 Operation and Maintenance Manuals 140
5.8 Design Error 142

CHAPTER 6 CLAUSE 6 STAFF AND LABOUR 143

6.1 Engagement of Staff and Labour 143
6.2 Rates of Wages and Conditions of Labour 143
6.3 Recruitment of Persons 144
6.4 Labour Laws 144
6.5 Working Hours 145
6.6 Facilities for Staff and Labour 146
6.7 Health and Safety of Personnel 146
6.8 Contractor’s Superintendence 148
6.9 Contractor’s Personnel 149
6.10 Contractor’s Records 151
6.11 Disorderly Conduct 152
6.12 Key Personnel 152

CHAPTER 7 CLAUSE 7 PLANT, MATERIALS AND

WORKMANSHIP155
7.1 Manner of Execution 155
7.2 Samples 156
7.3 Inspection 157
7.4 Testing by the Contractor 158
7.5 Defects and Rejection 161

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 d e ta i l e d c o n t e n t s

7.6 Remedial Work 163

7.7 Ownership of Plant and Materials 164
7.8 Royalties 165

CHAPTER 8 CLAUSE 8 COMMENCEMENT, DELAYS AND

SUSPENSION167
8.1 Commencement of Works 167
8.2 Time for Completion 167
8.3 Programme 168
8.4 Advance Warning 173
8.5 Extension of Time for Completion 173
8.6 Delays Caused by Authorities 175
8.7 Rate of Progress 176
8.8 Delay Damages 177
8.9 Employer’s Suspension 178
8.10 Consequences of Employer’s Suspension 179
8.11 Payment for Plant and Materials after Employer’s Suspension 180
8.12 Prolonged Suspension 181
8.13 Resumption of Work 182

CHAPTER 9 CLAUSE 9 TESTS ON COMPLETION 183

9.1 Contractor’s Obligations 183
9.2 Delayed Tests 187
9.3 Retesting 189
9.4 Failure to Pass Tests on Completion 190

CHAPTER 10 CLAUSE 10 EMPLOYER’S TAKING OVER 193

10.1 Taking over the Works and Section 193
10.2 Taking Over Parts 196
10.3 Interference with Tests on Completion 199
10.4 Surfaces Requiring Reinstatement 201

CHAPTER 11 CLAUSE 11 DEFECTS AFTER TAKING

OVER203
11.1 Completion of Outstanding Work and Remedying Defects 203
11.2 Cost of Remedying Defects 204
11.3 Extension of Defects Notification Period 205
11.4 Failure to Remedy Defects 206
11.5 Remedying of Defective Work Off Site 210
11.6 Further Tests after Remedying Defects 211
11.7 Right of Access after Taking Over 212
11.8 Contractor to Search 214
11.9 Performance Certificate 215
11.10 Unfulfilled Obligations 217
11.11 Clearance of Site 217

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 d e ta i l e d c o n t e n t s

CHAPTER 12 CLAUSE 12 TESTS AFTER COMPLETION 219

12.1 Procedure for Tests after Completion 219
12.2 Delayed Tests 221
12.3 Retesting 222
12.4 Failure to Pass Tests after Completion 223

CHAPTER 13 CLAUSE 13 VARIATIONS AND ADJUSTMENTS 227

13.1 Right to Vary 227
13.2 Value Engineering 229
13.3 Variation Procedure 231
13.3.1 Variation by Instruction 232
13.3.2 Variation by Request for Proposal 235
13.4 Provisional Sums 237
13.5 Daywork 239
13.6 Adjustments for Changes in Laws 242
13.7 Adjustments for Changes in Cost 244

CHAPTER 14 CLAUSE 14 CONTRACT PRICE AND PAYMENT 247

14.1 The Contract Price 247
14.2 Advance Payment 249
14.2.1 Advance Payment Guarantee 249
14.2.2 Advance Payment Certificate 251
14.2.3 Repayment of Advance Payment 252
14.3 Application for Interim Payment 253
14.4 Schedule of Payments 255
14.5 Plant and Materials intended for the Works 257
14.6 Issue of IPC 261
14.6.1 The IPC 261
14.6.2 Withholding (amounts in) an IPC 262
14.6.3 Correction or modification 264
14.7 Payment 265
14.8 Delayed Payment 267
14.9 Release of Retention Money 268
14.10 Statement at Completion 270
14.11 Final Statement 271
14.11.1 Draft Final Statement 272
14.11.2 Agreed Final Statement 273
14.12 Discharge 274
14.13 Issue of FPC 275
14.14 Cessation of Employer’s Liability 276
14.15 Currencies of Payment 278

CHAPTER 15 CLAUSE 15 TERMINATION BY EMPLOYER 281

15.1 Notice to Correct 281
15.2 Termination for Contractor’s Default 282

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 d e ta i l e d c o n t e n t s

15.2.1 Notice 282

15.2.2 Termination 285
15.2.3 After termination 286
15.2.4 Completion of the Works 287
15.3 Valuation after Termination for Contractor’s Default 287
15.4 Payment after Termination for Contractor’s Default 288
15.5 Termination for Employer’s Convenience 290
15.6 Valuation after Termination for Employer’s Convenience 291
15.7 Payment after Termination for Employer’s Convenience 292

CHAPTER 16 CLAUSE 16 SUSPENSION AND TERMINATION

BY CONTRACTOR 293
16.1 Suspension by Contractor 293
16.2 Termination by Contractor 296
16.2.1 Notice 296
16.2.2 Termination 304
16.3 Contractor’s Obligations after Termination 305
16.4 Payment after Termination by Contractor 306

CHAPTER 17 CLAUSE 17 CARE OF THE WORKS

AND INDEMNITIES 309
17.1 Responsibility for Care of the Works 309
17.2 Liability for Care of the Works 310
17.3 Intellectual and Industrial Property Rights 310
17.4 Indemnities by Contractor 314
17.5 Indemnities by Employer 316
17.6 Shared Indemnities 317

CHAPTER 18 CLAUSE 18 EXCEPTIONAL EVENTS 319

18.1 Exceptional Events 319
18.2 Notice of an Exceptional Event 320
18.3 Duty to Minimise Delay 322
18.4 Consequences of an Exceptional Event 322
18.5 Optional Termination 323
18.6 Release from Performance under the Law 325

CHAPTER 19 CLAUSE 19 INSURANCE 327

19.1 General Requirements 327
19.2 Insurance to be Provided by the Contractor 329
19.2.1 The Works 329
19.2.2 Goods 332
19.2.3 Liability for breach of professional duty 333
19.2.4 Injury to persons and damage to property 334
19.2.5 Injury to employees 336
19.2.6 Other insurances required by Laws and by local practice 337

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 d e ta i l e d c o n t e n t s

CHAPTER 20 CLAUSE 20 EMPLOYER’S AND CONTRACTOR’S

CLAIMS339
20.1 Claims 339
20.2 Claims For Payment and/or EOT 341
20.2.1 Notice of Claim 341
20.2.2 Engineer’s initial response 342
20.2.3 Contemporary records 343
20.2.4 Fully detailed claim 344
20.2.5 Agreement or determination of the claim 346
20.2.6 Claims of continuing effect 349
20.2.7 General requirements 350

CHAPTER 21 CLAUSE 21 DISPUTES AND ARBITRATION 353

21.1 Constitution of the DAAB 353
21.2 Failure to Appoint DAAB Member(s) 357
21.3 Avoidance of Disputes 359
21.4.1 Reference of a Dispute to the DAAB 360
21.4.2 The Parties’ obligations after the reference 361
21.4.3 The DAAB’s decision 361
21.4.4 Dissatisfaction with DAAB’s decision 363
21.5 Amicable Settlement 365
21.6 Arbitration 366
21.7 Failure to Comply with DAAB’s Decision 368
21.8 No DAAB In Place 370

Index 373

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 A C K N O WL E D G E ME NT S

I acknowledge with great pleasure the support given to me by FIDIC in this

enterprise, particularly Enrico Vink. I am also grateful to my publishing team
Amy Jones and Caroline Church for patiently guiding me through the writing
process. Finally, my heartfelt thanks go to Engineer Matthias Neuenschwan-
der who has reviewed the text and spent days placing my script back upon the
straight and narrow path.

xv
 G L O S S A RY

There is contained in the FIDIC Contracts Guide a glossary of

Contract terminology. It is somewhat surprising that this excel-
lent glossary is not in all cases substituted for the definitions
contained in these Conditions of Contract. In any event it is
important to list this glossary at this juncture in this book.
This glossary lists words and phrases which are used in the
fields of building, insolvency, Engineering and associated activ-
ities. The descriptions are not intended to amplify or replace
the definitions in a FIDIC Contract, but are intended to indicate
the overall principle involved. Initial letters are used to indicate
words included elsewhere in the glossary.

Accepted Contract Amount. The amount which is offered

by the Tenderer, and which is accepted by the Employer
in the Letter of Acceptance, for providing Works in
accordance with the Contract.
Addendum to Tender Documents. A document issued to
each Tenderer during the Tender Period, amending the
Tender Documents which were previously issued to each
Tenderer.
Adjudication. A procedure under which a dispute is referred
to an Adjudicator, which may include presentation of
evidence, and which concludes with the Adjudicator’s
decision in accordance with the Contract. Generally, the
decision will be binding, unless and until it is revised in an
amicable settlement, arbitration or litigation.
Adjudicator. A person to whom a dispute between the
Parties is referred for Adjudication.

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 g l o s s a ry

Advance Payment. A payment (if specified in the Contract)

which an Employer makes to a Contractor soon after
the Effective Date, in order to finance the Contractor’s
mobilisation and other early expenditures.
Alternative Dispute Resolution. Resolution/settlement of
a dispute using an alternative procedure to that which may
be typically envisaged, as an alternative to arbitration or
litigation.
Amicable Settlement. Resolution/settlement of the dispute
by direct negotiation or by any other method which both
Parties consider they can pursue amicably.
Appendix to Tender. The pages which are appended to the
Letter of Tender, which defines various matters referred to
in the Conditions of Contract.
Arbitration. A procedure under which a dispute has referred
to one or 3 arbitrator(s), which includes a presentation
of evidence, and which concludes with a binding award
in accordance with the Contract. The procedure may be
prescribed by law and/or by published rules of arbitration,
and may be administered by an arbitral institution.
Arbitrator. A person to whom a dispute between the Parties
is referred for arbitration.
Base Date. The date which is a specified period (usually 28
days) prior to the latest date for submission of the Tender
to the Employer.
Bid and bidder. The Tender and the Tenderer: see below.
Bid-build. The procurement procedure under which the
Employer provides most (or all) of the design details. The
Contractor provides the Permanent Works in accordance
with the Employer’s design, and carries out the design of
the Temporary Works and (possibly) particular parts of the
Permanent Works as defined in the Contract.
Bill of Quantities. Under a Remeasurement Contract, the
document which is issued by the Employer, and which is
completed by the Tenderer and submitted with the Tender,
as included in the Contract. This document contains, for
each of the items of work, the physical quantity, unit

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 g l o s s a ry

rate and amount (or price) for the work. Each amount is
a product of the quantity and the rate (in money per unit
quantities).
Build-Operate-Train-Transfer (BOTT). The procurement
procedure under which the concessionaire designs and
provides completely equipped Works ready for operation,
and then operates and maintains the Works during the
Concession Period. The Works are then taken over by the
project owner, whose operators will have previously been
trained by the Concessionaire.
Build-Operate-Transfer (BOT). The procurement
procedure under which the concessionaire designs and
provides completely equipped Works ready for operation,
and then operates and maintains the Works during the
concession period. The Works are then taken over by the
project owner.
Build-own-operate-transfer (BOOT). The procurement
procedure under which the Concessionaire designs and
provides completely equipped Works ready for operation,
and then owns, operates and maintains the Works during
the Concession Period. The Works then revert to the
project owner.
Client. The Party for whom the Consultant carries out the
Services under a Consultancy Agreement.
Commencement Date. The calendar date, of which the
Contractor is given Notice, and which is the first day of the
Time for Completion.
Concessionaire. Under BOT and similar procedures,
the Party whose Tender has been accepted, and who is
responsible for providing the Works and for operation and
maintenance during the concession period; and the
Concession period. Under the BOT and similar procedures,
the period during which the concessionaire operates and
maintains the Works, and receives the monies which are
typically intended cover the capital costs of providing the
Works and also the costs of operation and maintenance.
These monies may be based on the outcome of operation

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 g l o s s a ry

(for example, power generated or water treated), or other

charges in respect of the use of, or end-product produced
by, the facilities.
Conciliation. A procedure under which a dispute is
referred to a conciliator, which may include presentation
of evidence, and which may conclude with a binding
agreement between the Parties. If there is no such
agreement, the procedure is of no effect. The conciliator
may then be required issue non-binding recommendations,
which may take account of aspects other than those arising
from the Contract.
Conciliator. The person to whom a dispute between the
Parties is referred for conciliation.
Conditions of Contract. The document which specifies
the fundamental stipulations of the Contract, the Parties’
overall obligations under the Contract, and the allocation
and consequences of risks.
Consortium. The joint venture comprising 2 or more
Parties, each of which takes responsibility for a specific
part of the obligations undertaken by the joint-venture.
Consultancy agreement. The services agreement under
which the consultant carries out the services for the client,
who may (for example) be the Employer or a design -build
Contractor.
Consultant. A consulting Engineer or other professional,
may be a person, an Engineering firm or a consortium (or
other joint-venture) of such firms, and who carries out the
services for a client under a consultancy agreement.
Contractor Contract Documents. The Documents which
together constitute the legally enforcing all the agreement
between the Parties, and which are usually named (and
include) Conditions of Contract, Tender and Letter of
Acceptance and/or Contract agreement. A Bid-build
Contract will also include Employer’s Requirements,
Drawings, Bill of Quantities and (possibly) other
Schedules. A design and build Contract will also include
Employer’s Requirements and proposal.

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 g l o s s a ry

Contract Agreement. The formal agreement between the

Parties, which confirms or establishes the Contract.
Contract Price. The amount, which is due and payable
to the Contractor for providing the Works. Under
a re-measurement Contract, The Contract Price is
determined from the actual physical quantities of the
completed work.
Contractor. The Party whose Tender has been accepted by
the Employer, and who is responsible for providing the
work; and the legal successors entitled to such Party.
Contractor’s Documents. The calculations, computer
programs and other software, Drawings, manuals, models
and other Documents of a similar nature which the
Contractor is required to provide, as specified in the Contract.
Contractor’s Equipment. The machinery, apparatus and
other things (other than temporary Works and Employer’s
Equipment, if any) which the Contractor requires in order
to provide the Works. Contractor’s equipment does not
include anything, which is intended to form or forms part
of the Permanent Works.
Contractor’s Personnel. People whom the Contractor
utilises on-Site, including: the Contractor’s staff, labour
and other Employers; the staff, labour and other Employees
of each Subcontractor; and any other people appointed by
the Contractor to assist in the execution of the Works.
Contractor’s proposal. Under a design-build Contract,
the proposal submitted with the Tender, is included in
the Contract, which includes preliminary and/or outline
design(s) of the Works.
Cost. The expenditure properly incurred (or to be incurred)
by the Contractor, whether on or off the Site, including
overhead and similar charges, but excluding Profit.
Country. The country in which the Works are to be provided
and to which Plant and Materials are to be delivered.
Defects Notification Period. Period specified in the Contract
for notifying defects, calculated from the date on which the
Works (or, possibly, a Section) are completed and taken over.

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 g l o s s a ry

Design Build. The procurement procedure under which the

Contractor designs and provides the Works.
Design Build Finance Operate (DBFO). The procurement
procedure under which the concessionaire obtains finance,
designs and provides completely equipped Works ready
for operation, and then operates and maintains the Works
during the concession period, receiving payment in respect
of the outcome of the operation (for example, power
generated or water treated). The Works are then taken over
by the project owner.
Dispute Adjudication Board (DAB). A panel of one or 3
persons, to whom a dispute between the Parties is initially
referred for adjudication, which concludes with the board’s
decision in accordance with the Contract. Generally, the
decision will be binding, unless and until it is revised in an
amicable settlement, arbitration or litigation.
Dispute Review Board (DRB). A panel, usually of 3
persons to whom a dispute between the Parties is usually
referred under a procedure which may include presentation
of evidence and which generally concludes with the
boards’ non-binding recommendation for settlement of
the dispute. The recommendation may become binding if
neither Party gives the required Notice.
The Drawings. Under a Bid-Build Contract, the Drawings
of the Works included in the Tender dossier, and any
additional and modified Drawings issued by (or on behalf
of) the Employer under the Contract.
Effective date. The calendar date on which the Contract
comes into full force and effect.
Employer. The Party who receives and accepts the Tender,
who is responsible for providing the Site and paying the
Contractor, and for whom the Works are provided by the
Contractor; and the legal successors entitled to such a
Party.
Employer’s Equipment. The machinery and apparatus (if
any) which the Employer is required to make available for
the use of the Contractor, as specified in the Contract.

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 g l o s s a ry

Employer’s Personnel. People whom the Employer utilises

on-Site (other than Contractor’s Personnel), may include:
the Employer’s staff, Labour and other Employees; and
the staff, labour and other Employees of the Engineer or
Employer’s Representative.
Employer’s Requirements. Under a bid-build Contract,
the technical document issued by the Employer to the
Tenderer, as included in the Contract and any additions
and modifications to such Employer’s Requirements in
accordance with the Contract. Whereas the Employer’s
Requirements usually specifies all the technical
Requirements for the Works.
Employer’s Requirements. Under a design-build Contract,
the document issued by the Employer to the Tenderer, as
included in the Contract, and any additions and modifications
to such Requirements in accordance with the Contract. This
document may specify the required skill, standard, design
criteria and other Requirements for the Works.
Engineer. A Consulting Engineer or other professional,
whom the Contract requires the Employer to appoint,
and who may be the person, an Engineering firm or a
consortium (or other joint-venture) of such firms.
Engineer, Procure and Construct (EPC) Contract. The
procurement procedure under which the Contractor or
supplier designs and provides Works which are fully
complete and ready for operation by the Employer. An
EPC Contract may also require the Contractor to provide
finance for the capital costs of providing the Works, and/
or consumables for a specified period of operation and
maintenance.
FICA. An UNCITRAL Observer NGO with special interests
in dispute avoidance www.ficacic.com
Final statement. The statement submitted by the Contractor
in order to receive final payment, as agreed.
Force majeure. An Exceptional Event or circumstance
which satisfies the criteria for force majeure stated in the
Contract.

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Foreign Currency. The Currency, specified in the Contract

as a Currency in which the Contractor is due to be paid,
other than the local Currency.
Goods. Contractor’s equipment, Materials, Plant and
temporary Works, or any part of them as appropriate.
ICC. The International Chamber of Commerce, which is
based at 38 Cours Albert 1er, 75008, Paris, France. See
www.iccwbo.org.
Instructions to Tenderers. The document which is issued
to the Tenderer with the Tender dossier, which contains
details applicable the Tender period (for sample, the
arrangements for visiting the Site and for receipt and
opening of Tenders), and which should therefore not
become part of the Contract.
Joint venture. 2 or more Parties who, together, undertake a
venture for profit.
Letter of Acceptance. The Employer’s letter to the Tenderer,
formally accepting the offer contained in the Tender.
Letter of invitation. The Employer’s letter to the Tenderer,
or the published advertisement(s), containing the invitation
to prepare and submit a Tender.
Letter of Tender. The Tenderer’s letter to the Employer,
formally offering to provide the Works.
Local Currency. The Currency of the country in which the
Works are to be provided and to which Plant and Materials
are to be delivered.
Lump Sum Contract. The form of Contract under which
the Tenderer offers lump sum prices for providing the
Works, thereby taking the risk that the physical quantities
of the Works may differ from those which he had
calculated in order to finalise his Tender sum.
Materials. Things of all kinds (other than Plant) which the
Contractor is required to supply and incorporate into the
Permanent Works, as specified in the Contract.
Mediation. A procedure under which a dispute is referred
to mediator, which may include presentation of evidence,
and which may conclude with a binding agreement

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between the Parties. If there is no such binding agreement,

the procedure is of no effect. The mediator may then be
required to issue non-binding recommendations, which
may take account of aspects other than those arising from
the Contract.
Nominated Subcontractor. A Subcontractor whom the
Contractor is required (by the Employer or by the terms
of the Contract) to appoint, but for whom the Contractor
retains responsibility; and the legal successors entitled to
such Subcontractor.
Open Tendering. The procurement procedure under which
any person may obtain a Tender dossier and submit a
Tender for the Works, without prequalification. However,
post-qualification may be required.
Party. One of the 2 Parties to enter into a Contract with
the other, and who are typically the Employer and the
Contractor.
Payment certificate. A certificate which is issued under the
Contract, and which states the amount which the certifier
considers that the Contractor is then due to be paid.
Performance Certificate. The certificate which is issued
under the Contract when the specified certifier considers
that the Contractor has performed all obligations under the
Contract.
Performance Security. The security for proper performance
(usually, bond or bank guarantee), which the Contractor
is required to provide, as specified in the Contract. The
Performance Security provides protection for the Employer
in case of major default by the Contractor.
Permanent Works. The Works which the Contractor is
required to provide and hand over to the Employer, as
specified in the Contract.
Plant. The machinery and apparatus which the Contractor
is required to provide and hand over to the Employer, as
specified in the Contract.
Post-qualification. The part of an open Tendering
procedure, which is carried out after receipt of Tenders,

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 g l o s s a ry

and during which the Employer assesses Tenderer’s ability

the form of Contract.
Privately financed infrastructure project. The project
for which the concessionaire obtains finance, designs
and provides completely equipped Works ready for
operation, then operates and maintains the Works during
the concession period, receiving payment in respect of
the outcome of operation (for example, power generated
or water treated). The Works are then taken over by the
project owner.
Privatisation. The process of converting a public utility into
private ownership.
Programme. Codified instructions used by a computer; or
the USA spelling for a programme.
Programme. A document which is typically prepared and
issued by the Contractor, and which shows the proposed
timing of each stage of the provision of the Works.
Proposal. For a consultancy agreement: the consultants offer
to carry out the services. For a design and build Contract:
the Tenderer’s proposal to provide the Works, which
becomes the Contractor’s proposal.
Provisional sum. A sum specifically described in the
Contract as a Provisional Sum, for the execution of
any part of the Works all the supply of Plant, Materials
or services. Being provisional, the payment due to the
Contractor will depend on the work which he is required to
carry out, if any.
Re-measurement Contract. The form of Contract under
which the Tenderer prices a Bill of Quantities, and under
which the payment due to the Contractor is based on the
actual physical quantities of the completed Works.
Representative. The person representing the relevant Party
defined in the Contract.
Repair Operate Transfer (ROT). The procurement
procedure under which the concessionaire repairs and
refurbishes an existing facility ready for operation, the then
operates and maintains the facility during the concession

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period. The facility is then handed back to the project

owner.
Retention money. The accumulated monies (if specified
in the Contract) which are deducted and retained by
the Employer from the payments otherwise due to the
Contractor, which are only paid after completion.
Schedules. The document which is issued by the Employer,
and which is completed by the Tenderer and submitted
with the Tender, as included in the Contract. This
document contains data and information which the
Employer wishes the Tenderer to specify and which the
Parties wish would become parts of the Contract.
Section. A part of the Works, which is specifically defined
in the Contract is a Section, and which may be required
to be completed by the Contractor and taken over by the
Employer before other parts of the Works.
Services. The services which a consultant is required to
provide, as stated in its consultancy agreement.
Site. The places provided by the Employer, whether Works
are to be executed and to which Plant and Materials are to
be delivered.
Statement. Statement submitted by the Contractor as part of
an application for payment.
Subcontractor. The Party whom the Contractor appoints
to provide a part of the Works, for whom the Contractor
retains responsibility under the Contract, and the legal
successors entitled to such Party.
Taking-Over Certificate. A Certificate which is issued
under the Contract, when the specified certifier considers
that the whole (or part) of the Works has been completed
and is ready for the Employer to take over.
Temporary Works. All temporary Works of every kind
(other than Contractor’s equipment) required for the
execution and completion of the Works and the remedying
any defects.
Tender. The set of Documents which the Tenderer has
completed and submitted to the Employer.

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 g l o s s a ry

Tender Documents. The set of Documents which: the

Employer issues to the Tenderer (and which is sometimes
referred to as the Tender dossier), or the Tenderer submits
to the Employer.
Tender dossier. The set of Documents which the Employer
issues to a Tenderer for him to prepare and submit a
Tender.
Tender Agent. The person identified by the Employer who
receives the Tender dossier and subsequently submits the
Tender for acceptance by the Employer.
Tender period. The period which commences when each
Tenderer can obtain a Tender dossier and which expires
on the latest day for the submission of the Tender for
acceptance by the Employer.
Tender sum. The sum offered by the Tenderer for providing
the Works in accordance with the Contract.
Tender validity. The calendar date stated in the Tender up
to which it is open for acceptance by the Employer; or the
period which expires on such date, calculated from the
latest date for submission of the Tender.
Terms of reference. That document which is typically
prepared by the client and sent to a prospective consultant,
and which describes the proposed scope of the services.
Tests after Completion. Tests which are required to be
carried out after the Works (or, possibly, a Section)
are complete and taken over by the Employer, all in
accordance with the Contract.
Tests on Completion. Tests which the Contractor is required
to carry out before the Works (or, possibly, Section) are
taken over by the Employer, all in accordance with the
Contract.
Time for Completion. The period specified in the Contract
as that within which the Contractor is required to complete
the Works (or, possibly, a Section), calculated from the
commencement date.
Turnkey. The procurement procedure under which the
Contractor or supplier designs and revised Works, which

xxviii
 g l o s s a ry

are ready for operation by the Employer (at the “turn of

the key”), and which may incorporate all the necessary
fixtures, fittings and equipment.
UNCITRAL. United Nations Commission on International
trade Law. See www.uncitral.org
Value Engineering. A procedure under which an
Engineering design is reviewed with the intention of
improving the value to the Employer of the completed
Works.
Variation. An alteration or modification to such Works as a
Contractor is required to provide under the Contract. Under
a bid-build Contract, a variation may be ordered by a
change to the Employer’s Requirements or drawing. Under
a design-build Contract, the variation may be ordered, or
maybe approved after being proposed by the Contractor’s
designers.
Works. The Permanent Works and the temporary Works,
which the Contract requires the Contractor to provide.
World Bank. The International bank for Reconstruction
and development and the International Development
Association, which are based at 1818H Street NW,
Washington DC 20433, USA. See www.worldbank.org

xxix
 CHAPTER 1

Clause 1 General Provisions

1.1 Definitions

1.1 In the Contract following words and expressions shall have

the meaning stated, except where the context requires otherwise.

This is a fundamentally unhelpful comment as an introduction to the general

Conditions. The opportunity to identify a context, which requires a different
interpretation from that set out in the general definitions is impossible to define.

1.1.1 “Accepted Contract Amount” means the amount

accepted in the Letter of Acceptance for the execution of the
Works in accordance with the Contract.

This definition is accurate providing that there were no Conditions imposed in the
Letter of Acceptance, which could or would vary the Accepted Contract Amount
should those Conditions take effect.

1.1.2 “Advance Payment Certificate” means a Payment Certif-

icate issued by the Engineer for advance payment under Sub-
Clause 14.2.2 [Advance Payment Certificate].

There are various steps, which must be complied with before the certificate can be
issued and these are set out in Sub-Clause 14.2.2 [Advance Payment Certificate].

1.1.3 “Advance Payment Guarantee” means the guarantee

under Sub-Clause 14.2.1 [Advance Payment Guarantee].

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 clause 1 general provisions

This guarantee is intrinsically linked to the procedure enabling the Contractor to

receive payment under the Advance Payment Certificate structure.

1.1.4 “Base Date” means the date 28 days before the latest date
for the submission of the Tender.

It is important to note that it is implied that the Base Date can vary should the
Employer decide to extend either once or more than once the date for the sub-
mission of the Tender. The precise Determination of the Base Date can be critical
when taking into account regulations or legislation which come into force just
after the Base Date and which have therefore to be taken into account under the
Contractor’s obligations ensure that the Design and Execution of the Works and/
or Plant are fully compliant with all the Laws and regulations of the Country. On
occasions compliance with new legislation will engender variations which will
incur a cost to the Employer.

1.1.5 “Claim” means a request or assertion by one Party to the

other Party for an entitlement or relief under any Clause of these
Conditions or otherwise in connection with, or arising out of,
the Contract or the execution of the Works.

The use of the phrase an entitlement suggests a reward different from money. The
definition of Claim might be better phrased as follows:
“‘Claim’ means a request by one Party to the other Party for a monetary payment
and/or for an extension of time, where appropriate, or other relief of whatever nature
under any Clause of these Conditions or otherwise in connection with, or arising out
of, the Contract or the execution and operation of the Works and/or Plant.”

The amended definition allows for an explicit Claim to arise from the operation
of the Works or Plant and further specifically identifies that an area of Claim may
arise out of the operation of the Plant. That issue is not clear from the original
definition.

1.1.6 “Commencement Date” means the date as stated in the

Engineer’s Notice issued under Sub-Clause 8.1 [Commence-
ment of Works].

There may be occasions where a Letter of Acceptance has not been provided but
the Engineer has issued a Notice under Sub-Clause 8.1. In that event the Con-
tractor may safely proceed to commence operation under his obligations under
the Contract.

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 clause 1 general provisions

1.1.7 “Compliance Verification System” means the compli-

ance verification system to be prepared and implemented by the
Contractor for the Works in accordance with Sub-Clause 4.9.2
[Compliance Verification System].

This requirement is now usual for all contracts.

1.1.8 “Conditions of Contract” or “these Conditions” means

these General Conditions as amended by the Particular
Conditions.

This is a very unhelpful definition. What is intended is as follows:

“Conditions of Contract or these Conditions mean the general Conditions of Con-
tract and such particular Conditions as may form part of the Contract. These par-
ticular Conditions may add to or vary the general Conditions.”

1.1.9 “Contract” means the Contract Agreement, the Letter of

Acceptance, the Letter of Tender, any addenda referred to in the
Contract Agreement, these Conditions, the Employer’s Require-
ments, the Schedules, the Contractor’s Proposal, the JV Undertak-
ing (if applicable) and the further documents (if any), which are
listed in the Contract Agreement or in the Letter of Acceptance.

This definition is too restrictive. The definition should be phrased as follows:

“‘Contract’ means any combination being: the Contract agreement, the Letter of
Acceptance, a Letter of Tender, any additional Documents referred to in the Contract
agreement, these Conditions, the Employer’s Requirements, the Schedules, the Con-
tractor’s proposal, the Particular Conditions, any JV Undertaking (if applicable)
and any further Documents (if any) which are listed in the Contract Agreement and/
or in the Letter of Acceptance.”

This definition is more loosely drafted than that provided in the definition stated
above and gives both Parties greater flexibility. It is very important that Documents
can be read in the alternative in order to provide an effective binding legal context.

1.1.10 “Contract Agreement” means the agreement entered

into by both Parties in accordance with Sub-Clause 1.6 [Con-
tract Agreement].

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 clause 1 general provisions

As Sub-Clause 1.6 anticipates it is not essential for the Parties to enter into a
Contract agreement. The key document is the Letter of Acceptance.

1.1.11 “Contract Data” means the pages, entitled contract data,

which constitute Part A of the Particular Conditions.

There is no reason for the information which constitutes Contract Data should
be placed in a document entitled to Contract Data. Further “Contract Data” does
not mean the pages, it refers to the information provided by the Employer to the
Contractor and upon which the Contractor may well base the Contract amount.
Therefore, the importance placed upon carefully produced and detailed Contract
Data cannot be underestimated.
A better definition would be:
“Contract Data means that the relevant information provided by the Employer and
where appropriate the Contractor in written form whether entitled Contract Data or
not upon which the Contractor relies when determining the bid offer.”

1.1.12 “Contract Price” means the price defined in Sub-Clause

14.1 [The Contract Price].

This is self-explanatory.

1.1.13 “Contractor” means the person(s) named as contractor

in the Letter of Tender accepted by the Employer and the legal
successors in title of such person(s).

This is self-explanatory.

1.1.14 “Contractor’s Documents” means the documents pre-

pared by the Contractor as described in Sub-Clause 5.2 [Contrac-
tor’s Documents], including calculations, digital files, computer
programs and other software, drawings, manuals, models, spec-
ifications and other documents of a technical nature.

Sub-Clause 5.2 does in fact not provide any detail of a definition of Contractor’s
Documents. The only question here is raised over the use of the word “supply”.
The word “supplying” implies a giving by someone to someone, i.e. the Employer
or where appropriate the Engineer. Questions are raised as to the situation at the
moment of the supply of the documents (during Tender or during realisation of

4
 clause 1 general provisions

the Works), and what happens to these documents when approved or following
a non-objection notice: are they still documents upon which the Contactor relies
(only), or are may they become binding for the Employer also?
In fact, the items listed under this definition while fundamental to the con-
struction of the Permanent Works are not necessarily going to form part of the
Permanent Works. An alternative phrase might be more appropriate “prepared by
the Contractor for his use under the Contract.”
This definition should be loosened in order to allow for most possibilities as
follows:
“‘Contractor’s Documents’ means the Documents to be supplied by the Contractor
as described in Sub-Clause 5.2 Contractor’s Documents, and which may include:
calculations, digital files, Computer programs and other software, drawings, pro-
visional and final operational manuals, models, specifications and all other Docu-
ments whether of a technical nature or otherwise upon which the Contractor relies
in order to fulfil his obligations under the Contract.”

1.1.15 “Contractor’s Equipment” means all apparatus, equip-

ment, machinery, construction plant, vehicles and other items
required by the Contractor for the execution of the Works. Con-
tractor’s Equipment excludes Temporary Works, Plant, Materi-
als and any other things intended to form or forming part of the
Permanent Works.

This definition has excluded any reference to remedying of the defects. Previ-
ously Contractor’s equipment was envisaged being used during the defects noti-
fication period. It is not clear why this period has been impliedly excluded.

1.1.16 “Contractor’s Personnel” means the Contractor’s Rep-

resentative and all personnel whom the Contractor utilises on
Site or other places where the Works are being carried out,
including the staff, labour and other employees of the Contrac-
tor and of each Subcontractor; and any other personnel assisting
the Contractor in the execution of the Works.

The Reference to any other Personnel assisting the Contractor in the execution
of the Works shall include any independent personnel who assist the Contractor
before, during and/or after the execution of the Works.

1.1.17 “Contractor’s Proposal” means the part of the Ten-

der stated or implied as being the Contractor’s proposal for

5
 clause 1 general provisions

execution of the Works, as included in the Contract. Such docu-

ments may include the Contractor’s preliminary design.

This definition where stating a reference to an Implied Proposal which takes account
of the fact that on occasions Documents which should be entitled or headed in a
certain manner are not so headed or do not yet include the key information which
enable them to form part of the Contract and/or the Contractor’s Documents.

1.1.18 “Contractor’s Representative” means the natural per-

son named by the Contractor in the Contract or appointed by
the Contractor under Sub-Clause 4.3 [Contractor’s Representa-
tive], who acts on behalf of the Contractor.

This Definition is not quite clear. A redraft would be:

“‘Contractor’s Representative’ means the natural person named by the Contractor
in the Contract or appointed by the Contractor under Sub-Clause 4.3 Contractor’s
Representative, as the Contractor’s Representative and who acts on behalf of the
Contractor with respect to all matters relevant to the progress of the Works.”

1.1.19 “Cost” means all expenditure reasonably incurred (or

to be incurred) by the Contractor in performing the Contract,
whether on or off the Site, including taxes, overheads and simi-
lar charges, but does not include profit. Where the Contractor is
entitled under a Sub-Clause of these Conditions to payment of
Cost, it shall be added to the Contract Price.

A more effective definition is as follows:

“‘Cost’ means or expenditure reasonably incurred and including any charge for
Daywork (or to be incurred) by the Contractor performing his obligations under
the Contract, whether on or off the Site, including material and labour cost, taxes,
overheads and similar charges but does not include profit. Where the Contractor is
entitled under a Sub-Clause of these Conditions to payment of Cost, it shall be added
to the Contract Price.”

1.1.20 “Cost Plus Profit” means Cost plus the applicable per-
centage for profit stated in the Contract Data (if not stated, five

6
 clause 1 general provisions

percent (5%)). Such percentage shall only be added to Cost,

and Cost Plus Profit shall only be added to the Contract Price,
where the Contractor is entitled under a Sub-Clause of these
Conditions to payment of Cost Plus Profit.

This is an unwieldy definition.

First sentence is clear. Thus a revised definition would be:
“‘Cost Plus Profit’ means costs plus the applicable percentage profit stated in the
Contract Data (if not stated, then the percentage will be five percentum (5%)). Such
percentage shall only be added to cost where the Contractor is entitled under a Sub-
Clause of these Conditions to payment of Cost Plus Profit.
The calculation being Cost Plus Profit shall thereafter be added to the Contract
Price.”

1.1.21 “Country” means the country in which the Site (or most
of it) is located, where the Permanent Works are to be executed.

This is not accurate. What is intended is that country where the Works and/or
Plant are located is to be identified. Therefore a better definition is:

“Country means the country where the Permanent Works and/or Plant is located.”

1.1.22 “DAAB” or “Dispute Avoidance/Adjudication Board”

means the sole member or three members (as the case may be)
so named in the Contract, or appointed under Sub-Clause 21.1
[Constitution of the DAAB] or Sub-Clause 21.2 [Failure to
Appoint DAAB Member(s)].
1.1.23 “DAAB Agreement” means the agreement signed or
deemed to have been signed by both Parties and the sole member
or each of the three members (as the case may be) of the DAAB in
accordance with Sub-Clause 21.1 [Constitution of the DAAB] or
Sub-Clause 21.2 [Failure to Appoint DAAB Member(s)], incor-
porating by reference the General Conditions of Dispute Avoid-
ance/Adjudication Agreement contained in the Appendix to these
General Conditions with such amendments as are agreed.

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 clause 1 general provisions

This definition could be simplified.

“DAAB agreement means the agreement entered into by both Parties on the one hand
and the sole member or each of the three members (as the case may be) of the DAAB
in accordance with Sub-Clause 21.1[Constitution of the DAAB]. The agreement may
incorporate the terms of the dispute avoidance/ adjudication board (DAAB) rules
published by FIDIC (or any subsequent published amendment or modification of
these rules being in force at the Base Date) together with such amendments to the
agreement as are agreed on the one hand by both Parties and on the other by mem-
bers of the DAAB.”

1.1.24 “Date of Completion” means the date stated in the Taking-

Over Certificate issued by the Engineer; or, if the last para-
graph of Sub-Clause 10.1 [Taking Over the Works and Sections]
applies, the date on which the Works or Section are deemed
to have been completed in accordance with the Contract; or,
if Sub-Clause 10.2 [Taking Over Parts] or Sub-Clause 10.3.
[Interference with Tests on Completion] applies, the date on
which the Works or Section or Part are deemed to have been
taken over by the Employer.
1.1.25 Day means a calendar day
1.1.26 “Daywork Schedule” means the document entitled day-
work schedule (if any) included in the Contract, showing the
amounts and manner of payments to be made to the Contrac-
tor for labour, materials and equipment used for daywork under
Sub-Clause 13.5 [Daywork].

A more all-encompassing definition might be:

“Daywork schedule means the document included in the Contract or agreed between
the Parties showing the rates applicable to each item of labour, Materials and equip-
ment used by the Contractor for daywork under Sub-Clause 13.5 [Daywork]. Where
an item of labour, Materials or equipment is absent from the schedule then the Engi-
neer shall determine a fair rate for the item”

1.1.27 “Defects Notification Period” or “DNP” means the

period for notifying defects and/or damage in the Works or a
Section or a Part (as the case may be) under Sub-Clause 11.1
[Completion of Outstanding Work and Remedying Defects],
as stated in the Contract Data (if not stated, one year), and as

8
 clause 1 general provisions

may be extended under Sub-Clause 11.3 [Extension of Defects

Notification Period]. This period is calculated from the Date of
Completion of the Works or Section or Part.

The last sentence of this definition needs to be re-written.

“This period is calculated from the date on which the Works or Section is taken
over or deemed to be taken over under Sub-Clause 10.1 [Taking Over the Works
and Sections] or a Part is taken over or deemed to be taken over under Sub-Clause
10.2[Taking over Parts.]”

The deeming provision applies whether the taking over is of the Works, Sections
or Parts. Therefore the definition should reflect that fact.

1.1.28 “Delay Damages” means the damages for which the

Contractor shall be liable under Sub-Clause 8.8 [Delay Dam-
ages] for failure to comply with Sub-Clause 8.2 [Time for
Completion].

This definition is self-explanatory.

1.1.29 “Dispute” means any situation where:

(a) one Party makes a claim against the other Party (which
may be a Claim, as defined in these Conditions, or a
matter to be determined by the Engineer under these
Conditions, or otherwise);
(b) the other Party (or the Engineer under Sub-Clause 3.7.2
[Engineer’s Determination]) rejects the claim in whole
or in part; and
(c) the first Party does not acquiesce (by giving a NOD under
Sub-Clause 3.7.5 [Dissatisfaction with Engineer’s deter-
mination] or otherwise), provided however that a failure
by the other Party (or the Engineer) to oppose or respond
to the claim, in whole or in part, may constitute a rejection
if, in the circumstances, the DAAB or the arbitrator(s), as
the case may be, deem it reasonable for it to do so.

This is an extraordinarily complex and unusual definition.

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 clause 1 general provisions

In the first leg of the definition the explanatory Clause is placed after the word
Party instead of after the word “Claim”. Secondly, most participants involved in
these Conditions of Contract know what a Claim is. It is a request by Party A for
something from Party B. If there is a concession from Party B that the request is
justified there is no dispute. However, if the request is rejected wholly or in part
then there is a dispute as to the element rejected.
What this definition has done is to create a scenario where by Party B may, by
silence, indicate its rejection of the Claim. Without citing every instance there are
time limits, which apply within these Conditions of Contract as a result of which
deeming provision come into force if the responding Party is silent. The situation
described in this definition reverses that concept. As a result, a Contractor, and
it will usually be the Contractor, will be in the position of complete uncertainty
as to whether or not a Claim has been rejected. This is a most extraordinary
proposition.
Therefore, not only is this definition over complex but it has turned the Claim
process into a situation where an Employer, or Engineer, may by silence, which
is reasonable, reject the Claim. How can silence be reasonable?
The tried and tested formula for describing a dispute should be substituted for
this extraordinary conglomeration of words. Also, the addition of a claim that is
not a Claim to the concept is strange and should be avoided. Therefore:
“Dispute means:
Where one Party makes a Claim against the other Party;
as a result the other Party rejects the Claim wholly or in part in a timely matter as
set out in these Conditions of Contract, where appropriate; and
the Claiming Party does not accept the rejection as bringing an end to the matter.”

1.1.30 “Employer” means the person named as the Employer in

the Contract Data and the legal successors in title to this person.

This definition should be widened to include:

“the person named as the Employer in the Contract Data or/and on the Letter of
Acceptance or whichever other document rates the highest in the priority list of
documents and the legal successors in title to this person.”

It may well be that person, Natural or otherwise, named in the Contract Data is
not the Party who is the Employer and therefore it is appropriate to look to the
person identified on the Letter of Acceptance or whichever other document rates
the highest in the priority list of documents as deciding the matter as to who is
the Employer.

1.1.31 “Employer’s Equipment” means the apparatus, equip-

ment, machinery, construction plant and/or vehicles (if any) to

10
 clause 1 general provisions

be made available by the Employer for the use of the Contrac-

tor under Sub-Clause 2.6 [Employer-Supplied Materials and
Employer’s Equipment]; but does not include Plant which has
not been taken over under Clause 10 [Employer’s Taking Over].

It is not clear how the exclusion at the end of the definition assists the defini-
tion. Employer’s Equipment appears to refer to all items loaned or leased by the
Employer to the Contractor solely and simply for the purpose of executing the
Works. By its own definition it could not include Plant, which has been taken over
by the Employer and forms part of the Permanent Works. But it certainly could
include Plant, which belongs to the Employer and is either apparatus machinery
or vehicles. There is a difference between construction plant and Plant, which is
a defined term. Plant made available to the Contractor by the Employer is closer
to Material made available by the Employer to the Contractor than Equipment, as
it will form part of the Works. The definition is not very elegant but it is correct.

1.1.32 “Employer’s Personnel” means the Engineer, the Engi-

neer’s Representative (if appointed), the assistants described in
Sub-Clause 3.4 [Delegation by the Engineer] and all other staff,
labour and other employees of the Engineer and of the Employer
engaged in fulfilling the Employer’s obligations under the Con-
tract; and any other personnel identified as Employer’s Personnel,
by a Notice from the Employer or the Engineer to the Contractor.

A slight comment to this definition would be to remove the comma after Employ-
er’s Personnel in the last line. The Notice requirement identified does not need to
be separated from the various Personnel identified as Employer’s Personnel but
needs to be linked to it without separation by a comma.

1.1.33 “Employer’s Requirements” means the document enti-

tled Employer’s Requirements, as included in the Contract, and
any additions and modifications to such document in accord-
ance with the Contract. Such document describes the purpose(s)
for which the Works are intended, and specifies Key Person-
nel (if any), the scope, and/or design and/or other performance,
technical and evaluation criteria, for the Works.

Again, this definition is too restrictive.

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 clause 1 general provisions

The key definition should be as follows:

“Employer’s Requirements mean the document or Documents which describes the
purposes and scope for which the Works are intended and the product (if any) intended
to be produced and, where appropriate, specifies the design and, where appropriate,
other performance, technical and evaluation criteria applicable to the Works.”

While there is no need for the document to be entitled or headed Employer’s Require-
ments, it would be preferable that the Employer’s Requirements (be wrapped up in
a document called “Employer’s Requirements”: this facilitates the Contractor’s task
and obliges the Employer to be a little orderly in his Tender docs. A special para-
graph about this should go into the Guidance on Preparation of Tender Documents.
What is vital is that there is a document, which describes exactly what the Employer
requires and how the Employer envisages that product being created.

1.1.34 Employer-Supplied Materials” means the materials (if

any) to be supplied by the Employer to the Contractor under
Sub-Clause 2.6 [Employer-Supplied Materials and Employer’s
Equipment].

This definition is linked to 1.1.31 [Employer’s Equipment]. That definition

encompasses the equipment whereas this definition encompasses the Materials.

1.1.35 “Engineer” means the person named in the Contract

Data appointed by the Employer to act as the Engineer for the
purposes of the Contract, or any replacement appointed under
Sub-Clause 3.6 [Replacement of the Engineer].

Again, this Clause is self-explanatory save that the definition does not allow for
the Employer to appoint the Engineer after the Contract Data has been compiled.
It would be preferable to state:
“Engineer means the person named in the Contract Data and appointed by the
Employer to act as the Engineer for the purposes of the Contract or any replacement
appointed on the Sub-Clause 3.6 [Replacement of the Engineer].”

The comma after the word “Contract” in the second line has been removed in the
amended definition as the replacement option is meant to be read together with
the first part of the definition.

1.1.36 “Engineer’s Representative” means the natural person

who may be appointed by the Engineer under Sub-Clause 3.3
[Engineer’s Representative].

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 clause 1 general provisions

The provisions for appointment are set out in Sub-Clause 3.3.

1.1.37 “Exceptional Event” means an event or circumstance as

defined in Sub-Clause 18.1 [Exceptional Events].

It is difficult to determine what the addition of the words “or circumstance”

adds to the definition. “Event” according to the Merriam-Webster web dic-
tionary is “something that happens” (occurrence), while “circumstance would
be “a condition, fact, or event accompanying, conditioning, or determining
another : an essential or inevitable concomitant the weather is a circumstance
to be taken into consideration”. If circumstance is complementary to event,
then the meaning would include condition and fact. The authors may have
meant “condition”: the contract regards the conditions (physical and other)
under which the Works are realised. Maybe “condition” would be a better
word.

1.1.38 “Extension of Time” or “EOT” means an extension of

the Time for Completion under Sub-Clause 8.5 [Extension of
Time for Completion].

This is the first time that the concept of an extension of time has been formally
identified in the definition section of these Conditions.

1.1.39 “FIDIC” means the Fédération Internationale des

Ingénieurs-Conseils, the International Federation of Consulting
Engineers.
1.1.40 “Final Payment Certificate” or “FPC” means the pay-
ment certificate issued by the Engineer under Sub-Clause 14.13
[Issue of FPC].

This definition merely refers to the detail of the Sub-Clause, which addresses
procedure by which the Engineer is put in the position to issue the Final Payment
Certificate.

1.1.41 “Final Statement” means the Statement defined in Sub-

Clause 14.11.2 [Agreed Final Statement].

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 clause 1 general provisions

It is seriously considered that there should be a separate definition for Agreed

Final Statement. However, Sub-Clause 14.11.2 appears to spend the major-
ity of the text examining the situation where an agreed final statement will
not be forthcoming. In general, it would be preferable to include all defini-
tions in this section, so as to avoid the necessity of definitions elsewhere. It
seems strange that a definition in the definition section refers to a definition
elsewhere.

1.1.42 “Foreign Currency” means a currency in which part (or

all) of the Contract Price is payable, but not the Local Currency.

It is not clear why there is a need for a reference to the Currency being foreign.
It would be sufficient to refer to the Currency as being that in which part or all of
The Contract Price is payable but excluding the local Currency. Further it would
be better to refer to Currency as the Currencies, as opposed to any Currency, in
which part or all of the Contract Price is payable. It is a common occurrence for
the Agreed Contract Amount or and the Contract Price to be composed of a bas-
ket of Currencies. The definition as currently drafted raises issues as it refers to a
singular Currency instead of all possible Currencies.
It is not a clear definition. A better definition would be:
“Foreign Currency means any Currency other than the local Currency in which part
(or) of the Contract price is payable.”

1.1.43 “General Conditions” means this document entitled

“Conditions of Contract for Plant and Design-Build for Elec-
trical & Mechanical Plant, and for Building and Engineering
Works, designed by the Contractor”, as published by FIDIC.

It is not absolutely clear why the definition at 1.1.8 Conditions of Contract for these
Conditions is so very separate as to only represent General Conditions as described
in the previous definition which are amended by the particular Conditions.

1.1.44 “Goods” means Contractor’s Equipment, Materials,

Plant and Temporary Works, or any of them as appropriate.

Contractor’s Equipment is defined earlier in the general Conditions of Contract. It

is suggested that to avoid all doubt this definition should be amended as follows:
“Contractor’s Goods means Contractor’s Equipment, Materials, Plant and such
Temporary Works as are necessary for the execution of the Works or any of them as
are appropriate.”

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 clause 1 general provisions

1.1.45 “Interim Payment Certificate” or “IPC” means a Pay-

ment Certificate issued by the Engineer for an interim payment
under Sub-Clause 14.6 [Issue of IPC].

This definition is self-explanatory and the comment made under 1.1.42 applies.

1.1.46 “Joint Venture” or “JV” means a joint venture, associ-

ation, consortium or other unincorporated grouping of two or
more persons, whether in the form of a partnership or otherwise.

Here are general Conditions of Contract that are attempting to impose a generic
term of art being joint-venture, upon a variety of authorised and legal corporate
combinations which may not in fact be a joint-venture.

1.1.47 “JV Undertaking” means the letter provided to the

Employer as part of the Tender setting out the legal undertaking
between the two or more persons constituting the Contractor as a
JV. This letter shall be signed by all the persons who are members
of the JV, shall be addressed to the Employer and shall include:

(a) each such member’s undertaking to be jointly and sev-

erally liable to the Employer for the performance of the
Contractor’s obligations under the Contract;
(b) identification and authorisation of the leader of the JV;
and
(c) identification of the separate scope or part of the Works
(if any) to be carried out by each member of the JV.

These definitions do not require that the JV, were it to exist, to disclose to the
Employer the terms of the JV. Person is not defined in these general Conditions
of Contract. It is clear that these Conditions anticipate that a person may be a
natural person or a body corporate. It would be more appropriate in this definition
to amend the second sentence as follows:
“This letter shall be signed by all the Representatives of the members of the JV and
shall be addressed to the Employer...”

It is also a harsh reality in these construction businesses that in a joint-venture the

Contract imposes joint and several liabilities upon all the joint-venture partners
however minimal is the contribution of the particular partner.

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 clause 1 general provisions

The requirement for each member to be jointly and severally liable for this
to be carefully considered by any Contractor forming part of the joint-venture.
The reason is simple. Not all joint-venture partners are equal partners. And the
junior partners need to ensure that they are effectively and properly protected by
insurance and other contractual arrangements against wilful or other acts by the
predominant member or members of the joint-venture.
The next requirement is that the Undertaking must identify the leader and
rather baldly addresses authorisation of the leader of the JV.
The leader’s role may be practical or purely administrative. Some model
Contracts for joint-ventures anticipate that the leader shall be no more than
a mouthpiece and shall have virtually no power while other model Con-
tracts give the leader powers to bind other members of the consortium or
joint-venture.
It would be better for the Employer to state his requirements regarding
authority of the leader in his Tender Documents.
Finally, this definition requires that the Undertaking identifies the separate
scope of work or part of the work to be carried out by each member of the
Joint-Venture. That is a rational requirement and is a very important document
for future negotiation. As this identification of the different areas of operation
of the Joint-Venture Parties is key to a smooth running and effective Contract
management system.

1.1.48 “Key Personnel” means the positions (if any) of the

Contractor’s Personnel, other than the Contractor’s Representa-
tive, that are specified in the Employer’s Requirements.
1.1.49 “Laws” means all national (or state or provincial) legis-
lation, statutes, acts, decrees, rules, ordinances, orders, treaties,
international law and other laws, and regulations and by-laws of
any legally constituted public authority.

The only issue with this definition is its excessive search for different words
meaning laws. It might be preferable to define laws as:
“Laws means national, state or provincial legislation or regulation of whatever
nature published by a legally constituted public authority.”

1.1.50 “Letter of Acceptance” means the letter of formal accept-

ance, signed by the Employer, of the Letter of Tender, including
any annexed memoranda comprising agreements between and
signed by both Parties. If there is no such Letter of Acceptance,

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 clause 1 general provisions

the expression “Letter of Acceptance” means the Contract Agree-

ment and the date of issuing or receiving the Letter of Acceptance
means the date of signing the Contract Agreement.

It is very important to give flexibility to the meaning of Letter of Acceptance. Fre-

quently a Contract will be commenced on the basis of the sending of an email. There
may not be anything more formal than a responding email of acceptance. The defini-
tion of Contract agreement defines such an agreement as the agreement entered into
by both Parties in accordance with Sub-Clause 1.6 [Contract Agreement]. Minimal
legal Requirements are necessary in order to constitute such an agreement.
The last sentence of the definition is unclear. A simpler definition would be:

“If there is no such Letter of Acceptance, the expression Letter of Acceptance

means the document constituting the Contract Agreement and the date of issuing
the Letter of Acceptance means the date when the Employer signed the Contract
Agreement.”

1.1.51 “Letter of Tender” means the letter of tender, signed by

the Contractor, stating the Contractor’s offer to the Employer
for the execution of the Works.

The use of the word “offer” is unhelpful. The offer consists of a series of doc-
uments, not only the financial terms. Maybe “proposal” would be better? Oth-
erwise the different documents forming the proposal (financial, technical etc)
should be specified. Also, there is no mention in this definition of a need for the
document to be headed or entitled letter of Tender.

1.1.52 “Local Currency” means the currency of the Country.

This definition is self-explanatory.

1.1.53 “Materials” means things of all kinds (other than Plant),

whether on the Site or otherwise allocated to the Contract and
intended to form or forming part of the Permanent Works,
including the supply-only materials (if any) to be supplied by
the Contractor under the Contract.

There is no mention here of Materials which form part of the temporary or under-
ground Works. Thus in underground Works where the temporary ground support

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 clause 1 general provisions

may not be part of the Permanent Works (because the Design does not consider
it in the final stage), but cannot be compared to scaffolding or formwork because
they will remain anyway. Materials should be redefined as follows:
“Materials means things of all kinds (other than Plant), whether for use on the
Site or otherwise allocated to the Contract and intended to form or forming part
of the Permanent Works, but excluding such Materials as are incorporated in the
temporary Works, but including supply only Materials (if any) to be supplied by the
Contractor under the Contract.”

1.1.54 “month” is a calendar month (according to the Grego-

rian calendar).

This definition as written is incorrect. The key element is the reference to the
Gregorian calendar therefore that should not be placed in brackets. In any event
this is a rather western way of seeing things, anyway. What about contracts in
Islamic countries, or other places with a different calendar?

1.1.55 “No-objection” means that the Engineer has no objection

to the Contractor’s Documents, or other documents submitted
by the Contractor under these Conditions, and such Contractor’s
Documents or other documents may be used for the Works.

This definition is self-explanatory.

1.1.56 “Notice” means a written communication identified as a

Notice and issued in accordance with Sub-Clause 1.3 [Notices
and Other Communications].

This is one of the few occasions where it is essential for a document to be headed
or entitled “Notice”. It is difficult to understand why the definition refers to the
written communication as being identified as a Notice. Elsewhere in the defini-
tions Documents are “entitled” which, in fact, means “headed”. It is suggested
that the same phrase be used in this definition.

1.1.57 “Notice of Dissatisfaction” or “NOD” means the

Notice one Party may give to the other Party if it is dissatis-
fied, either with an Engineer’s determination under Sub-Clause

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 clause 1 general provisions

3.7 [Agreement or Determination] or with a DAAB’s decision

under Sub-Clause 21.4 [Obtaining DAAB’s Decision].

This definition is clear.

1.1.58 “Part” means a part of the Works or part of a Section (as

the case may be), which is used by the Employer and deemed to
have been taken over under Sub-Clause 10.2 [Taking Over Parts].

This definition is nonsensical. The separation of the Works or Section into parts
will have taken place at the outset of the execution of the Works. The description
is incorrect. A better definition would be:
“Part means a part of the Works or of a Section (as the case may be) which for con-
venience of the Engineer or Employer is separately identified for the purposes of the
execution of the Works or for early Taking Over by the Employer.”

1.1.59 “Particular Conditions” means the document enti-

tled particular conditions of contract included in the Contract,
which consists of Part A – Contract Data and Part B – Special
Provisions.

This definition needs to re-focus on the document. Therefore a more accurate

definition is:

“Particular Conditions means the document headed or entitled Particular Condi-

tions of Contract which consists of part A Contract Data and part B Special Provi-
sions and is included in the Contract.”

1.1.60 “Party” means the Employer or the Contractor, as the context

requires. “Parties” means both the Employer and the Contractor.

This definition is self-explanatory

1.1.61 “Payment Certificate” means a payment certificate issued

by the Engineer under Clause 14 [Contract Price and Payment].

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 clause 1 general provisions

This definition is self-explanatory and note comment to 1.1.42.

1.1.62 “Performance Certificate” means the certificate issued

by the Engineer (or deemed to be issued) under Sub-Clause 11.9
[Performance Certificate].

This definition is self-explanatory.

1.1.63 “Performance Damages” means the damages to be paid

by the Contractor to the Employer, for the failure to achieve the
guaranteed performance of the Plant and/or the Works or any
part of the Works (as the case may be), as set out in the Schedule
of Performance Guarantees.

The absent element is the requirement for the Employer and/or the Engineer to
serve a Notice upon the Contractor that the Contractor is in breach of the require-
ments of the Guaranteed Performances.

1.1.64 “Performance Security” means the security under Sub-

Clause 4.2 [Performance Security].

This definition is somewhat bald.

There is not any definition of performance security in Sub-Clause 4.2. It is
clearly intended to be a document issued by bank or insurance company or other
authorised body in a format approved by the Employer to ensure that the Con-
tractor has an independent financial warranty that the Contractor will complete
the Contract. It is similar to a bond. As the definition implies there is no reason
why an Employer cannot request a Contractor to take on more than one perfor-
mance security although interestingly the terms of Sub-Clause 4.2 do not appear
to allow that request to be made.
A more complete definition would be:
“Performance Security means a document issued by bank or insurance company
or other authorised body in a format approved by the Employer to ensure that the
Contractor has an independent financial warranty that the Contractor will complete
the Contract, as required by reason of the authority given to the Employer to require
the giving of such security under Sub-Clause 4.2 [Performance Security].”

1.1.65 “Permanent Works” means the works of a permanent nature

which are to be executed by the Contractor under the Contract.

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 clause 1 general provisions

This definition is self-explanatory.

1.1.66 “Plant” means the apparatus, equipment, machinery and

vehicles (including any components) whether on the Site or oth-
erwise allocated to the Contract and intended to form or form-
ing part of the Permanent Works.

This definition is for a Permanent Works encompassed within the definition of

Plant or in the alternative where Plant forms a part of the Permanent Works.

1.1.67 “Programme” means a detailed time programme pre-

pared and submitted by the Contractor to which the Engineer
has given (or is deemed to have given) a Notice of No Objection
under Sub-Clause 8.3 [Programme].

In this definition there is no need for the descriptors being “detailed time” pro-
gramme. There is only one programme and that is set out in Sub-Clause 8.3
program. It is only necessary to say:
“Programme means the programme prepared and submitted by the Contractor to
which the Engineer has given (or is deemed to have given) a Notice of No Objection
under Sub-Clause 8.3 [Programme]”

1.1.68 “Provisional Sum” means a sum (if any) which is spec-

ified in the Contract by the Employer 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 13.4 [Provisional
Sums].

The definition should at least say that it is a sum to remunerate the execution of
any part etc.

1.1.69 “QM System” means the Contractor’s quality manage-

ment system (as may be updated and/or revised from time to
time) in accordance with Sub-Clause 4.9.1 [Quality Manage-
ment System].

Providing the Contractors understand the concept there is no further explanation

needed.

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 clause 1 general provisions

Reasonable
It is suggested that within “other definitions” at 1.1.6 the bullet is bitten and a
definition of “reasonable” is provided. There are, as the drafters are aware, words
which have a vague interpretation. There are references to the words “immedi-
ately, prompt and promptly, as soon as practicable, as soon as reasonable” and
so on. It appears that the only way to remove doubt and avoid confusion is to
add a period of days so as to provide a clear sanction each time these phrases
are used. Thus, where there are situations where there is not any sanction then
that should be made clear. In the event that a deeming provision or any further
implied option to extend time is permitted and encouraged then those particular
situations should be made clear.

1.1.70 “Retention Money” means the accumulated retention

moneys, which the Employer retains under Sub-Clause 14.3
[Application for Interim Payment] and pays under Sub-Clause
14.9 [Release of Retention Money].

This definition is incorrect.

“Retention Money is the percentage of the sums certified on Interim Payment Certif-
icates and held back from payment until the completion of the execution of the Works
and the conclusion of the Defects Notification Period.”

There is little point in creating a Contract specific specification defining retention

monies in a unique manner.

1.1.71 “Review” means examination and consideration by

the Engineer of a Contractor’s submission in order to assess
whether (and to what extent) it complies with the Contract and/
or with the Contractor’s obligations under or in connection with
the Contract.

This definition does not describe the full process.

“Review means examination, consideration and, as the case may be, approval, or
rejection in whole or in part by the Engineer of a Contractor’s submission in order
to assess whether and to what extent it complies with the Contract and/or with the
Contractor’s obligations under or in connection with the Contract.”

The process of review is very important within these Conditions of Contract and
it is essential that those reading the definitions easily understand the role and
position of the Engineer.

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 clause 1 general provisions

1.1.72 “Schedules” means the document(s) entitled schedules

prepared by the Employer and completed by the Contractor, as
attached to the Letter of Tender and included in the Contract.
Such document(s) may include data, lists and schedules of pay-
ments and/or rates and prices, and guarantees.

The key point is to recognise that these lists, however they may be composed, do not
need to be entitled Schedules providing on Face of the document it is obvious what it
is. There is an obsession throughout these definitions to have Documents entitled or
headed. The only document which requires to be immediately identified is a Notice.

1.1.73 “Schedule of Payments” means the document(s) enti-

tled schedule of payments (if any) in the Schedules showing the
amounts and manner of payments to be made to the Contractor.

This definition is important as includes references to payments.

1.1.74 “Schedule of Performance Guarantees” means the

document(s) entitled schedule of performance guarantees (if
any) in the Schedules showing the guarantees required by the
Employer for performance of the Works and/or the Plant or any
part of the Works (as the case may be), and stating the appli-
cable Performance Damages payable in the event of failure to
attain any of the guaranteed performance(s).

However, it is vital that there is a procedure or formula for the Employer to trig-
ger in the event of a Failure in the performance of either the Works, any part of
the Works or indeed the Plant.

1.1.75 “Schedule of Rates and Prices” means the document(s)

entitled schedule of rates and prices (if any) in the Schedules.

As mentioned before there is no need for the document to be headed or entitled

Schedule of Rates and Prices providing it is obvious from the contents of the
document what it contains. A more appropriate definition may be:
“Schedule of Rates and Prices means the Documents containing a schedule of Rates
and Prices whether identified in the Contract Data or otherwise.”

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 clause 1 general provisions

1.1.76 “Section” means a part of the Works specified in the

Contract Data as a Section (if any).

This confusingly refers to a part. A more appropriate definition might be:

“Section means a portion of the Works specified or otherwise identified in the Con-
tract Data or elsewhere as a section (if any).”

1.1.77 “Site” means the places where the Permanent Works are
to be executed and to which Plant and Materials are to be deliv-
ered, and any other places specified in the Contract as forming
part of the Site.

Usually in these Conditions opportunities allowed for either plural or singular.

This should occur here. Further the reference to the Contract should be widened
to include Employer’s Requirements and the Contract Data. Thus, a new defini-
tion would be:
“Site means the place(s) where the Permanent Works are to be executed and to
which Plant and Materials are to be delivered and any other places specified in the
Contract, as forming part of the Site.”

1.1.78 “Special Provisions” means the document (if any), enti-

tled special provisions, which constitutes Part B of the Particu-
lar Conditions.

This definition is self-explanatory.

1.1.79 “Statement” means a statement submitted by the Contrac-

tor as part of an application for a Payment Certificate under Sub-
Clause 14.3 [Application for Interim Payment], Sub-Clause 14.10
[Statement at Completion] or Sub-Clause 14.11 [Final Statement].

This definition would be assisted by stating that the Statement means a financial
document submitted by the Contractor in support of any application made for
payment under this Contract.

1.1.80 “Subcontractor” means any person named in the

Contract as a subcontractor, or any person appointed by the

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 clause 1 general provisions

Contractor as a subcontractor or designer, for a part of the

Works; and the legal successors in title to each of these persons.

The Grammatical punctuation here is inappropriate. The definition should read:

“Subcontractor means any person named in the Contract as a Subcontractor or any
person appointed by the Contractor as a Subcontractor, supplier or designer for a
part of the Works and the legal successors in title to each of these persons.”

This sentence is meant to be read as a single instruction. Breaking the sentence

with commas and semicolons detracts from the meaning, which is intended.

1.1.81 “Taking-Over Certificate” means a certificate issued

(or deemed to be issued) by the Engineer in accordance with
Clause 10 [Employer’s Taking Over].

This definition is self-explanatory.

1.1.82 “Temporary Works” means all temporary works of

every kind (other than Contractor’s Equipment) required on
Site for the execution of the Works.

It is difficult to understand how the addition of the phrase in (other than Contrac-
tor’s equipment) assists the definition. Temporary Works are temporary Works.

1.1.83 “Tender” means the Letter of Tender, the Contractor’s

Proposal, the JV Undertaking (if applicable), and all other doc-
uments, which the Contractor submitted with the Letter of Ten-
der, as included in the Contract.

The definition is too wide and too lacking in conditionality. A more practical
definition would be as follows:
“Tender means the letter of Tender, whether entitled or headed Tender or not, the
Contractor’s proposal, the JV Undertaking (if any is required) and any other Doc-
uments which the Contractor submitted with the letter of Tender as required in the
Instructions to Tenderers.”

The key place to find the Schedule of Documents required to be submitted should
be in the Employer’s Requirements. The identification of any other place is con-
fusing. There is no need to confuse the issue by requiring a Joint Venture Under-
taking where there may not be any Joint-Venture.

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 clause 1 general provisions

1.1.84 “Tests after Completion” means the tests (if any) which
are specified in the Employer’s Requirements and which are
carried out under Clause 12 [Tests after Completion] after the
Works or a Section (as the case may be) are taken over under
Clause 10 [Employer’s Taking Over].

This definition ignores the inclusion in these Conditions of Contract of a part of

the Works. Therefore the definition should be re-written as follows:
“Tests after Completion means the tests (if any) which are specified in the Employer’s
Requirements and which are carried out under Clause 12 [Tests after Completion] after
the Works, a Section or a Part (as the case may be) are taken over by the Employer.”

1.1.85 “Tests on Completion” means the tests which are spec-

ified in the Contract or agreed by both Parties or instructed as
a Variation, and which are carried out under Clause 9 [Tests on
Completion] before the Works or a Section (as the case may be)
are taken over under Clause 10 [Employer’s Taking Over].

The same concerns with this definition arose with the previous definitions. A con-
sistent redraft would be:
“Tests on Completion means the tests which are specified in the Employer’s Require-
ments or agreed by both Parties or instructed as a variation, and which are carried
out under Clause 9 [Tests on Completion] before the Works, a Section or a Part as
the case may be) are taken over by the Employer.”

1.1.86 “Time for Completion” means the time for completing

the Works or a Section (as the case may be) under Sub-Clause
8.2 [Time for Completion], as stated in the Contract Data as may
be extended under Sub-Clause 8.5 [Extension of Time for Com-
pletion], calculated from the Commencement Date.

Yet again a “part” of the Works is ignored. And a reference to the Employer’s
Requirements would be more relevant. Therefore a revised definition would be:
“Time for Completion means the time for Completing the Works, a Section or a
part (as the case may be) under Sub-Clause 8.2 [Time for Completion], as stated in
the Employer’s Requirements or Contract Data (or as may be extended under Sub-
Clause 8.5 [Extension of Time for Completion]), calculated from the Commence-
ment Date.”

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 clause 1 general provisions

1.1.87 “Unforeseeable” means not reasonably foreseeable by

an experienced contractor by the Base Date.

The addition of the last few words is not helpful. There is a problem with the
lapse of time between the Base Date and the Date for Submission of the Tender:
in certain cases it is impossible for the Contractor to include information in his
tender that appears after base date (a striking example would be some Tsunami
on the day before the Date of Submission). This must be clarified, and the Date
for Submission is not appropriate.
Therefore the definition should be:
“Unforeseeable means not reasonably foreseeable by an experienced Contractor.”

1.1.88 “Variation” means any change to the Employer’s

Requirements or to the Works, which is instructed as a variation
under Clause 13 [Variations and Adjustments].

This definition is self-explanatory.

1.1.89 “Works” mean the Permanent Works and the Temporary

Works, or either of them as appropriate.

This definition is self-explanatory.

1.1.90 “year” means 365 days.

1.2 Interpretation

In the Contract, except where the context requires otherwise:

(a) words indicating one gender include all genders; and

“he”, “his” and “himself” shall be read as “he/she”, “his/
her” and “himself/herself” respectively;
(b) words indicating the singular also include the plural and
words indicating the plural also include the singular;

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 clause 1 general provisions

(c) provisions including the word “agree”, “agreed” or

“agreement” require the agreement to be recorded in
writing;
(d) “written” or “in writing” means hand-written, type-writ-
ten, printed or electronically made, and resulting in a
permanent record;
(e) “may” means that the Party or person referred to has the
choice of whether to act or not in the matter referred to;

This last is a new interpretation Clause and is useful because it removes any
doubt as to whether the word “May” is discretionary or mandatory. Most com-
mon sense interpretations indicate the word made to be discretionary but some
authoritative institutions consider context decides the meaning in spite of a clear
indication to the contrary. This is very much to be welcomed in this interpretation
description.

(f) “shall” means that the Party or person referred to has

an obligation under the Contract to perform the duty
referred to;

The comments made above apply equally to this new interpretation.

(g) “consent” means that the Employer, the Contractor or

the Engineer (as the case may be) agrees to, or gives
permission for, the requested matter;

There is a question as to whether the reference to “agrees to” is entirely appro-

priate. A definition in the sense of “Where consent is issued or explicit agree-
ment notified” would be more helpful. There is a request and the response to the
request is either in the negative or the positive.

(h) “including”, “include” and “includes” shall be inter-

preted as not being limited to, or qualified by, the stated
items that follow;

The phraseology here is inappropriate. A better direction would be as follows:

“the words including, include and includes mean ‘not limited to’ or ‘not qualified by’
the stated items that follow, as the case may be.”

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(i) “words” indicating persons or parties shall be inter-

preted as referring to natural and legal persons (includ-
ing corporations and other legal entities); and

This interpretation is not helpful as at least two or three definitions refer to the
fact of a person being a natural person. Why is it necessary to define the person
as a natural person if the interpretation definition of person here is quite explicit?
Therefore, the definition is redundant.

(j) “execute the Works” or “execution of the Works” means

the design, construction and completion of the Works
and the remedying of any defects.

This definition is self-explanatory.

In any list in these Conditions, where the second-last item of

the list is followed by “and” or “or” or “and/or” then all of the
list items going before this item shall also be read as if they are
followed by “and” or “or” or “and/or” (as the case may be).
The marginal words and other headings shall not be taken into
consideration in the interpretation of these Conditions.

Where the condition is included in the first line, which says “except where the
context requires otherwise”. This condition means that all the elements within
this Sub-Clause are subject to this condition. This cannot be right. Take as an
example the direction that all provisions that include the word “agree” etc., are
required to be recorded in writing, which means that the sentence in question
should be put at the beginning of Sub-Clause 1.2.
This condition described above appears to require the users of these Condi-
tions of Contractor consider every paragraph within every Sub-Clause in order
to decide whether Sub-Clause 1.2 applies “or whether the context requires
otherwise”.
As to the second direction stated in this Sub-Clause that the headings etc.,
shall not be taken into consideration in the interpretation of these Conditions this
direction should be re-phrased.
A proposal is:
“The headings set out in these Conditions of Contract are merely headings for the
provision of guidance and are not taken to have any critical impact upon the con-
tents of the Sub-Clause.”

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1.3 Notices and other Communications

Wherever these Conditions provide for the giving of a Notice

(including a Notice of Dissatisfaction) or the issuing, providing,
sending, submitting or transmitting of another type of commu-
nication (including acceptance, acknowledgement, advising,
agreement, approval, certificate, Claim, consent, decision, deter-
mination, discharge, instruction, No-objection, record(s) of meet-
ing, permission, proposal, record, reply, report, request, Review,
Statement, statement, submission or any other similar type of
communication), the Notice or other communication shall be in
writing and:

This accumulation of nouns and Gerunds is intended to be all encompassing

but does not simplify the advice to the Parties. What is required are two simple
directions.
“Wherever these Conditions provide for the giving of Notice that Notice shall be in
writing.
Wherever these Conditions provide for the existence of a communication of what-
ever nature that communication shall be in writing.”

(a) shall be:

  (i) a paper-original signed by the Contractor’s Repre-
sentative, the Engineer, or the authorised represent-
ative of the Employer (as the case may be); or
(ii) an electronic original generated from any of the sys-
tems of electronic transmission stated in the Con-
tract Data (if not stated, system(s) acceptable to the
Engineer), where the electronic original is transmit-
ted by the electronic address uniquely assigned to
each of such authorised representatives,
or both, as stated in these Conditions; and

This appears to be slightly complex.

In the event that the Parties are not using paper originals then an electronic
communication and which is uniquely assigned to each of such authorised Rep-
resentatives is helpful. Further, there is no requirement here for the Contractor
to submit to the Engineer it’s proposals for an effective electronic communica-
tion system. This is essential in view of the bracketed reference to the system(s)
acceptable to the Engineer.

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 clause 1 general provisions

(b) if it is a Notice, it shall be identified as a Notice. If it

is another form of communication, it shall be identified
as such and include reference to the provision(s) of the
Contract under which it is issued where appropriate;
(c) delivered by hand (against receipt), or sent by mail or
courier (against receipt), or transmitted using any of the
systems of electronic transmission under sub-paragraph
(a)(ii) above; and

There is no clear grammatical assistance from the bracketed phrase against

receipt with delivery by hand. If it is the intent of the revised Conditions of Con-
tract to have a receipt whenever there is a delivery of a communication by hand
then it should be stated explicitly and not encompassed within a bracket.

(d) delivered, sent or transmitted to the address for the recipi-

ent’s communications as stated in the Contract Data. How-
ever, if the recipient gives a Notice of another address,
all Notices and other communications shall be delivered
accordingly after the sender receives such Notice.
Where these Conditions state that a Notice or NOD or other
communication is to be delivered, given, issued, provided,
sent, submitted or transmitted, it shall have effect when it is
received (or deemed to have been received) at the recipient’s
current address under sub-paragraph (d) above. An electron-
ically transmitted Notice or other communication is deemed
to have been received on the day after transmission, provided
no non-delivery notification was received by the sender.

This instruction does not mandate that the electronic transmission system shall
have within it software to record receipt and opening of communication. That
software is available and regularly used and should be part of the requirement as
to delivery set out in sub-paragraph (d).

All Notices, and all other types of communication as referred to

above, shall not be unreasonably withheld or delayed.

There are no sanctions applied to situations where a Party has unreasonably with-
held or delayed such communication.

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 clause 1 general provisions

When a Notice or NOD or certificate is issued by a Party or the

Engineer, the paper and/or electronic original shall be sent to
the intended recipient and a copy shall be sent to the Engineer
or the other Party, as the case may be. All other communications
shall be copied to the Parties and/or the Engineer as stated under
these Conditions or elsewhere in the Contract.

This last direction is self-explanatory.

1.4 Law and Language

The Contract shall be governed by the law of the country (or

other jurisdiction) stated in the Contract Data (if not stated, the
law of the Country), excluding any conflict of law rules.
The ruling language of the Contract shall be that stated in the
Contract Data (if not stated, the language of these Conditions).
If there are versions of any part of the Contract, which are writ-
ten in more than one language, the version which is in the ruling
language shall prevail.

There could be situations where there is more than one original version of the
Contract each written in a different language. Concerns as to interpretation may
well arise when operating in a country such as the People’s Republic of China
where it is highly likely that the Employer will require and original Contract to
be written in mandarin side-by-side with are equally binding original Contract
written in English. Translations from English into Mandarin and vice a versa are
notoriously complex, thus great care must be exercised when operating in such
a situation.
Further uncertainty as to which would be the ruling language should be elimi-
nated in the Contract Data in any such situation.

The language for communications shall be that stated in the

Contract Data. If no language is stated there, the language for
communications shall be the ruling language of the Contract.

The same comments apply.

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 clause 1 general provisions

1.5 Priority of Documents

The documents forming the Contract are to be taken as mutu-

ally explanatory of one another. If there is any conflict, ambi-
guity or discrepancy, the priority of the documents shall be in
accordance with the following sequence:

(a) the Contract Agreement;

(b) the Letter of Acceptance;
(c) he Letter of Tender,
(d) the Particular Conditions Part A – Contract Data;
(e) the Particular Conditions Part B – Special Provisions;
(f) these General Conditions;
(g) the Employer’s Requirements;
(h) the Schedules;
(i) the Contractor’s Proposal;
(j) the JV Undertaking (if the Contractor is a JV); and
(k) any other documents forming part of the Contract.

There are two changes to the priority schedule in the original Yellow Book.
They referred to the Particular Conditions part A and part B. However, there is
a slight contradiction in separating the two for the purposes as a priority. Defi-
nition 1.1.61 refers to the Particular Conditions meaning the document entitled
Particular Conditions of Contract. While it is understood that singular means
plural and plural means singular and in places in the Conditions such as 1.1.61
it should be made quite clear that the document referred to means Document or
Documents.
The second change is in addition to the priority list being the joint-venture
Undertaking.
This should be redrafted as the intent of this addition is in the alternative not as
a unifying description. That’s the reference should be to:
“The JV Undertaking, if any (if the Contractor constitutes an unincorporated JV) and
(k) any other Documents forming part of the Contract.”

The addition of the alternative option at the end of the sentence makes it quite
clear what is required.

If a Party finds an ambiguity or discrepancy in the documents, that

Party shall promptly give a Notice to the Engineer, describing the

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 clause 1 general provisions

ambiguity or discrepancy. After receiving such Notice, or if the

Engineer finds an ambiguity or discrepancy in the documents,
the Engineer shall issue the necessary clarification or instruction.

The original direction as to ambiguity was sparse in the extreme. The expanded
direction is helpful as it sets out the procedure to be followed. The only comment
as to the structure of the direction is that the Engineer might wish to issue a var-
iation, instruction or advice especially where there is a discrepancy. That option
is not available to the Engineer. In the last sentence there is a comment “if an
ambiguity or discrepancy is found in the Documents, the Engineer shall issue
any necessary clarification or instruction”. This instruction does not fall under
the heading of priority. It is sufficiently important to deserve its own Condition.
Further it should make clear that:
“where a Party considers that there is an ambiguity or discrepancy of any nature
within the Documents then the Party should serve a Notice on the Engineer seeking
clarification or instruction which shall be provided by the Engineer within 28 days of
receipt. If such a verification or instruction is not provided within the 28 day period
then the ambiguity or discrepancy shall be deemed to be found in favour of the Party
seeking clarification or instruction.”

1.6 Contract Agreement

The Parties shall sign a Contract Agreement within 35 days after

the Contractor receives the Letter of Acceptance, unless they agree
otherwise. The Contract Agreement shall be based on the form
annexed to the Particular Conditions. The costs of stamp duties
and similar charges (if any) imposed by law in connection with
entry into the Contract Agreement shall be borne by the Employer.

The revised version of Clause 1.6 refers to the Parties signing a Contract agree-
ment. However, in the last sentence there is a reference to an entry into the Con-
tract Agreement. Therefore, it is suggested that there should be an amendment by
removing the words “with entry” and replacing it
“in connection with any signing of the Contract Agreement...”

In the second line of the definition there is a phrase “unless they agree other-
wise”. It appears that this alternative agreement refers only to the period of days.
In fact, it would be quite possible for the Parties to agree not to enter into a Con-
tract Agreement or merely to come to this agreement by implication. An alterna-
tive phraseology might be:
“unless they agree to vary the entire or any part of the procedure in any way and
confirm that variation in writing”.

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 clause 1 general provisions

If the Contractor comprises a JV, the authorised representative

of each member of the JV shall sign the Contract Agreement.

Definition 1.1.47 describes the Joint-Venture. Definition 1.1.48 describes in detail

a JV Undertaking. It will be usual for the leader of the JV to be authorised to sign
the Contract on behalf of the other members of the joint-venture. However, this
direction contained in the Contract agreement prevents that situation from occurring.

1.7 Assignment

Neither Party shall assign the whole or any part of the Contract
or any benefit or interest in or under the Contract. However,
either Party:

(a) may assign the whole or any part of the Contract with
the prior agreement of the other Party, at the sole discre-
tion of such other Party; and
(b) may, as security in favour of a bank or financial insti-
tution, assign the Party’s right to any moneys due, or to
become due, under the Contract without the prior agree-
ment of the other Party

This definition has the usual prohibition against assignment. The prohibition is
mandatory and absolute. The definition should be amended by a “unless” provi-
sion. Thus
“unless the Parties have complied with the permissive Clause set out below”.

This addition gives a sensible interpretation to the otherwise total prohibition.

1.8 Care and Supply of Documents

Each of the Contractor’s Documents shall be in the custody

and care of the Contractor, unless and until submitted to the
Engineer. The Contractor shall supply to the Engineer one
paper-original, one electronic copy (in the form as specified in
the Employer’s Requirements or, if not stated, a form acceptable
to the Engineer) and additional paper copies (if any) as stated in
the Contract Data of each of the Contractor’s Documents.

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 clause 1 general provisions

This direction changes the procedure. Previously the Contractor’s Documents

were retained by the Contractor until the takeover by the Employer. Now these
Documents will not remain in the custody and care of the Contractor as soon
as they are issued to the Engineer. Since many of the constituent parts of the
Contractor’s Documents will require review followed by consent or Notice of
Objection then the entire procedure has changed and it is suggested appropriately
so. Where custody and control lies after the Documents have been issued to the
Engineer is not clear.
This procedure has not been thought through. What is intended is that the
Documents will be in the custody and care of the Contractor until the execu-
tion of the Works has been completed and the Employer has taken over the
Works.
There should be a separate instruction directing the Contractor to supply/issue
a Document, which will eventually form part of the Contractor’s Documents to
the Engineer as they come into existence, then Engineer will then review the
Documents. That separate provision would then ensure that the Documents
remained with the Contractor until completion of the Works. What happens with
the reviewed document (who’s document is it)? It would be best if everybody
kept custody and care of the documents produced by themselves until the end of
the Contract

The Contractor shall keep at all times, on the Site, a copy of:

(a) the Contract;

(b) the records under Sub-Clause 6.10 [Contractor’s Records]
and Sub-Clause 20.2.3 [Contemporary records];
(c) the publications (if any) named in the Employer’s
Requirements;
(d) the Contractor’s Documents; and
(e) Variations, Notices and other communications given
under the Contract.
The Employer’s Personnel shall have right of access to all these
documents during all normal working hours, or as otherwise
agreed with the Contractor.

This set of directions as to the location of Documents is the same as that contained
in the original Yellow Book save that the right of access given to the Employer’s
Personnel has now been restricted to “all normal working hours” as opposed to
“at all reasonable times”.

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 clause 1 general provisions

This is sensible. There is also flexibility given to the Parties to agree times
outside normal working hours.

If a Party (or the Engineer) becomes aware of an error or defect

(whether of a technical nature or otherwise) in a document
which was prepared by (or on behalf of) the Contractor for use
in the execution of the Works, the Party (or the Engineer) shall
promptly give a Notice of such error or defect to the other Party
(or to the Parties). The Contractor shall then promptly rectify
the error or defect at the Contractor’s risk and cost.

There are practical changes to this direction from the original Yellow Book. The
Engineer can now take the initiative. The error or defect can be technical or oth-
erwise which is very practical.
However, the last sentence is new. That sentence directs that the Contractor
shall rectify the error or defect at its own cost. This is reasonable as the errors
or defects were found in a document prepared by or on behalf of the Contractor.
The third paragraph addresses the key matter of communication of the nature
of an error or defect to the other Party. However, little urgency is given to this
instruction; the word used is that the communication must be prompt. There is
mention that Notice should be given, however no formality is given with respect
to the Notice. No format nor acknowledgement is required! Advice to both Par-
ties is that they should assume formality however laxly the direction is given.

1.9 Errors in the Employer’s Requirements

If the Contractor finds an error, fault or defect in the Employer’s

Requirements as a result of scrutinising them under Sub-Clause
5.1 [General Design Obligations], the Contractor shall give a
Notice to the Engineer within the period stated in the Contract
Data (if not stated, 42 days) calculated from the Commence-
ment Date.

This revised direction is a period of 42 days within which to give a Notice to the
Engineer. That was missing from the original direction. It now appears that for
reasons which are not clear the revised direction has separated the period into two
within which the Notice to be given. The first period is the period is the period
stated in the Contract Data calculated from the commencement date and the sec-
ond period as shall be seen in a moment is any time thereafter.

37