CEng5202

1. Contract, specification and

Quantity
CEng5202
Surveying
Credit Hours-3

1. Basic civil Engineering Contracts

2. Specification
3. Procurement and contract management
4.Construction project cost estimation
5.Taking off Quantities

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 Bridge Construction

1. BASIC CIVIL ENGINEERING CONTRACT

1.1.Law of Contract
Definition of Law

“ a set of general statements aimed at regulating

choices in possible human behavior

That is defined or recognized, publicized and

sanctioned or rewarded by the State. “

 The sphere of regulation of Law extend to the

relationship between the State and its
subjects/citizens, and between the Subjects;

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 Nature of the Law
The nature of Law may be summed up as follows.
Law is Obligatory
An obligation implied the existence of a superior will which
commands and of an inferior will which obeys;
Law is Established by Public Authority
It is in this consideration Law at its source that one is able to
distinguish true law (enacted by legally constituted legislative body)
from certain rules established by private authority ( ex.
Companies );
Law is Sanctioned by Public Force
It is in this way that Law is distinguished from moral rules
which also dominate human society. Sanctions may be Preventive
or repressive (in criminal cases) or compensatory (in civil cases)
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 Function of the Law
 Law is a System of Social Control
It controls the relationship between the State and its Subjects (b y
means of Public Law) and the relationship between the Subjects
themselves (by means of Private Law)
Law is a Method of Dispute Settlement
This is done through the Court System.
The Law serves as a means of Social
Engineering
The Law here serves as a change catalyst i.e. as a means of
introducing and sustaining social transformation.

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 CEng5202

Sources of Law in Ethiopia

Introduction to Legal Systems

The two major legal systems of the world are:-

The Civil Law Legal System

The Common Law Legal System.

 The Ethiopian law is a civil law i.e. based on Codes.

The main sources of the Ethiopian law are: Custom or
Legislation(Constitution, Proclamations, and
Regulations and directives)

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 Classification of Laws

National Laws are generally classified in to

1.N. Public Law 2. N.Private Law

• Constitutional Law  Civil Code
• Administrative Law Law of Property
• Law of Finance Law of
• Law of Taxation Obligations;
• Budget Law Law of Agency
• Law of  Commercial Code
Procurement  Maritime Code
• Environmental Law
• Criminal Law
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 Bridge Construction
Scope of Application of Law
The scope of application of Law is
determined:-
Territory:
At federal, regional, local or municipal
level;
Subject matter:
For example, Construction, Finance, Tax,
Environment);
Persons:
The general public or specific segment of
the society
Natural Persons and/or Legal Persons;
Time:
Effective Date of the Law;
other time scales prescribed in the Law, if
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 The issue of Person in Law

Persons are endowed with rights, obligations

and privileges.
Legally, there are two types of Persons.
 Natural or Physical Persons
 Juridical or Legal Persons
Natural Persons are human beings.
Juridical Persons are legal Persons created by
Law.
The State;
The Ministries; The Construction Company
The Bureaus;
The Corporations; The Consultancy Firm;
The Associations;
Others ;
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 Bridge Construction
Legal Sanctions
The source of obligation & liability is either law or
contract.

The violation of the law or the breach of contract

results remedies for the injured & liability against the
one who violates the law or breaches the contract.
This is called legal sanction.
Penal sanctions;
Administrative measures;
Civil remedies;

Civil sanctions may arise out of contractual or

extra-contractual or legal relationships & focus
on proprietary or financial compensation.
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 Reading assignment

o Making of Laws
o Repealing of Laws
o Interpretation of Laws
o Hierarchy of Laws

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 1.2 Law of Contract
Background

Generally, a contract is an agreement or willful

promise enforceable at law.
However, not all agreements or promises are
contracts. Some may lack enforceability at law.

According to the Civil Code of Ethiopia,

Art.1675-Article 2026.
A contract is an agreement whereby two or more
persons as between themselves create, vary or
extinguish obligations of a proprietary nature.
A construction contract is a product of an
agreement between the employer & the
contractor & it is enforceable at law. 12
 1.2 Law of Contract
“Enforceable at law” means that
if the agreement reached between the
employer & the contractor
breached( deviations occur from the promises)
by one of the parties, the aggrieved party, may
bring a legal action against the other to
demand the enforcement of its rights with the
support of law.
In this part, we will try to
 legally define the very concept of Contract,
 the legal elements or ingredients to be fulfilled
to constitute contract,
the formation & variation of contract &
extinction of obligation,
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the express & implied terms of contract
 Types of Contract
Contracts may be classified based on certain
criterion
For example, in terms of:-

Reciprocity of rights & obligations;

Time parameter for the performance of the
assumed respective obligations;
Form requirement;
The presence of freedom of negotiation or
not;
Obligation of result or diligence; and
Other criterion;

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 The following are some of the types of
contract.
These are:
 Contracts on onerous vs gratuitous title;
(reciprocity);
Commutative vs. aleatory contracts; (time)
Consensual vs. solemn contracts; (form)
contracts of consultation vs. contracts of
adhesion; (freedom of negotiation);
Diligence v. Result

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 Elements of Contract
According to Article 1678 of the Civil Code:
No valid contract shall exist unless
The parties are capable of contracting and give
their consent sustainable at law.
The object of the contract is sufficiently defined
and is possible and lawful.
The contract is made in the form prescribed by
law.
The following are the fundamental elements
of contract.
 Capacity of the contracting parties;
Consent of the contracting parties;
Object of the contract; and
Form of contract, if any
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2.Consent
Please, see Article 1678 (a) and Article 1679-
Article 1710 of the Civil Code)

Consent is a declared will of the individual to

enter in to contract.
It is the willingness of the parties to enter in to
a legally binding relation.

Consent of the intended contracting parties

decomposes in to :-
 Offer; and
 Acceptance;

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Offer
is defined as a proposal expressing the declared
willingness of the offerer to enter in to an
agreement, if the offer is accepted.

Offer is a legal process which is a declaration of

willingness or intent to be bound by specific
terms set out.
Offer may be made:-
 Orally;
 In writing;
 By sign;
 By conduct;
 By specially stipulated manner for
acceptance;
In case of (public) construction contract, offer
shall be made in writing. 18
 Characteristics of Offer

The following are characteristics of a valid

offer.
The offer should be:-
 Certain;
 Communicated;
 Unconditional;
 Distinguished from invitation to treat
Bidders are making offers, for ex. in terms of
• submitting filled & signed Form of Tender;
• priced BOQ;
• alternative proposals, if allowed;

The employer is within his right to accept or

reject such offers, however;
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Termination of Offer
The following could be the way by which the
offer could be terminated.
These are:-
By Death; -of either party before acceptance;
By Counter offer; -of the offeree;
Revocation; -by the offeror, within the time
limit;
Withdrawal; -by the offeror; within the time
limit;
By lapse of Time; -on part of the offeree,
By failure to accept in the stipulated manner;-
By silence of the offeree; -
By Liquidation;
By Insolvency;-

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Acceptance
Acceptance is a declaration of will to enter in to
a legally binding contract.

By acceptance, a contract shall be completed,

where the offeree accepts the offer without any
reservation.
Forms of Acceptance
 Orally;
 In writing;
 By sign;
 By conduct;
 As specially stipulated by the offeror;
In the construction contract, especially for public
works, acceptance in writing is the most
common & legally imperative practice.(The
Letter of Acceptance) 21
Characteristics of Acceptance
Acceptance could be conditional or
unconditional.

Conditional acceptance rejects the original offer

made by the bidder (offeror) & creates a counter
offer or new offer by the project owner.

Unconditional or unreserved acceptance of an

offer by the project owner creates a Contract
Agreement between the bidder & the project
owner subject to other subsequent actions, ex.
negotiation.

In case of Public Projects, approval of the

Contract by higher authorities may be required.
In that case, legally, the Contract is not yet 22
Defects in Consent

Consent given in the process of offer &

acceptance should be free from defects in
consent or vices of consent, for the contract to
be sustainable & enforceable at law.

Defects in consent or vices of consent are the

following.
These are:-
 Mistake; see Art. 1697-Art. 1703 of the Civil
Code;
 Fraud; see Art. 1704-Art. 1705 of the Civil
Code;
 Duress; see Art. 1706-Art. 1709 of the Civil
Code;
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3.Object of Contract
Please, see Article 1711 – Article 1718 of the
Civil Code);

The object of contract is the very obligations

of the contracting parties.
ex, in the construction contract,
the obligations of the employer and the
contractor.

The possible objects, i.e. the obligations of

the contracting parties, of contract are:-
obligation to do (perform);
obligation not to do; or
obligation to deliver;
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The obligations of the contracting parties could
be divided in to two broad terms:

Promises; and
Considerations;

The object of contract (i.e. both promises &

considerations) shall be:-

Sufficiently defined;
Possible;
Lawful;
Not immoral;

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The object of a construction contract shall be
sufficiently defined.

In the construction contract the whole purpose

of all parts of the contract documents such as:-
the BOQ,
the Drawing,
the Technical Specification, notably, &
 the Conditions of Contract (both General and
Special Conditions of Contract), and
other documents

is to sufficiently define the object of the

construction contract, i.e. the very respective
obligations of the contractor & the employer.

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The contractual obligation of the contractor (i.e.
Promises) shall be determined from the contract
documents in terms of:
What to do: i.e. to construct:-
water supply dam & systems;
 irrigation dam; or
Hydropower dam; or other hydraulic structures;
road; or
building; or other type of structures;
Defined In terms of its:-
scope;
quality;
cost;
time;
safety; and
Other aspects of its promises.
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The Payment, obligation to do(Considerations)
and other contractual rewarding obligations of
the employer shall also be sufficiently defined in
terms of:
Payment obligation
extent of contract price;
types of payment;
timing for payment;
conditions of payment;
other related issues;

other obligations in terms of other benefits,

exchanges, & rewards;

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The object of contract, even though sufficiently
defined, it has to be possible or capable of
performing.
 Impossibility of performance of ones obligation
may relate to physical or legal impossibility.
(Impossibility of performance must not be
confused with difficulty of performance)

The object of contract shall be lawful.

Contract agreements can not serve to achieve
illegal objectives.
 There shall not be any contract agreement on
legally prohibited matters.

Contracts shall not also go contrary to accepted

moral values (as to the principle of right or
wrong) of the society.) 29
4.Form (Form may mean types of contract.)
Form may also mean the making of the contract
orally or in writing.
Should the contract is to be made in certain
prescribed form, it means that contract should
be made in writing.
In this case, form is related with the validity &
proof of the contract itself.

By form, under these circumstances, we mean

the making of the contract in writing,
if the law imperatively prescribes so or if the
parties voluntarily wish to do so.

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Contracts with public (government) body shall
be made, legally, in writing. (See Article 1724 of
the Civil Code).
If the contract shall be made in writing, there
are two possibilities:
 Preparing fully tailor-made conditions of
contract to the project at hand; or
 Using standard conditions of contract
suitable for the project at hand;

The first type of contract is called contract of

consultation, whereas the second one is called
contract of adhesion.
In public works, the use of standard conditions
of contract is common.
Standard conditions of contract could be
international or national in origin. 31
 There must be a special contract document
prepared for that purpose; (ex. Form of
Agreement, which summarizes the whole
Agreement & sets out the whole contract
document)
 On that document (including on the whole
pages of all the Contract Documents) the
parties to the contract agreement shall put
their signature;
 In case of body corporate, their corporate
seal has to be affixed on all parts or pages of
the contract documents;
 The contract agreement shall be attested, at
least, by two witnesses.

Then, the contract said to be, legally, formed or

created 32


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 Effects of Contract
Effects of contract may have two dimensions;

 The time when the contract is considered

bound by the contracting parties; and
(relates to the effectiveness of the contract)
 The fulfillment or performance of the set of
promises prescribed in the contract
( related to the performance of obligations of
the contracting parties under the contract. )

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 Effectiveness of the Contract
(Time Dimension)
expressed in the following three ways:
a). Contract is effective and thus is binding on
the contracting parties from the moment of
the conclusion of the contract
b). Contract can be considered effective after
some days are passed from the conclusion of
the contract;
c). Contract can be considered effective after
the performance of some actions by the
contracting parties;
. Making advance payment a condition
precedent for the effectiveness of the
contract. . Securing approval of the contract
by higher authorities; Other pre-conditions;
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 Performance of the Contract
(Discharge Dimension)
The following discussions are focused on the
real performance of the contract as agreed.

Effects of contract may bring:-

Contractual effects; and /or
Legal effects;

Major Areas of Effects of Contract concerned

with the following four issues.
Interpretation of Contract;
Performance of Contract;
Variation of Contract;
Non-performance of Contract;
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 1. Interpretation of Contract
Def:- the process of determining the true
meaning of a written document.
Interpretation is a judicial process, affected
in accordance with a number of rules &
presumptions.
Conditions of contract, based on the
principles of interpretation of contract, are
interpreted, depending on the
circumstances:
Interpretation may be classified in to:-
 Formal interpretation;
By the court
By the arbitral tribunal;
 Informal interpretation
By the Conditions of Contract itself
By the contracting parties themselves 37
 2. Performance of Contract
Def. the carrying out or discharge of the
obligation under taken by the contracting
parties.
That is, respectively, from the perspective
for example, of the Contractor & of the
Employer, under the construction contract i.e.

promise dimension; and Consideration

dimension

The effect of contract is fulfilled by performance

of the very contractual obligations of the
contracting parties. It means that :
the Contractor has executed the works within
the time for completion, within the cost agreed,
as per the quality specified…;and 38
 3. Variation of Contract
Variation of Contract could be done:-
 By the Court, judicial variation(as an
exception);
 By the contracting parties, contractual
variation, (as a rule)
The contracting parties, in principle, are free to
create & vary their contractual agreement.

Variation of contract & its effect are regulated

under the Conditions of Contract.
Variation of contract, under the construction
contract, may result from:-
 Requirement change by the employer,
 Design change by the engineer;
 Proposal by the contractor;
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4. Non-performance of Contract
Def. The failure of the contracting party or
parties to carry out the obligations they have
undertaken under the contract.
The effects of contract are sanctioned by
applying the provisions of the law or the
agreement of the parties.
Non-performance involves the following legal
concepts.
 Notice requirement;
Notice necessary (Article 1772-Article 1774)
Notice unnecessary (Article 1775)
Specific performance; (1776- 1783 Article)
Actual performance
Substitutionary performance

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 Cancellation of contract;
Cancellation by court (Article 1784-Article
1785);
Cancellation by the contracting party (Article
1786-Article 17890);
Damages
Liability for damages;
Quantum of damages:
Damages may be requested due to
Non-performance of the contract; and
Invalidation of the contract.
No payment of damages in case of force
majeure.

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Extinction of Obligations
The obligations of the contracting parties may
come to an end on the following grounds
 By performance of the contract
 By invalidation of the contract
 By cancellation of the contract
 By termination of the contract
 By merger
 By limitation of action
 others

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Proof of Contract
Proof of contract is important in case of
construction claims & disputes.

Proof or evidence is important to prove the

existence or non existence of a given fact,
which is disputed or denied.
The form of proof in relation to Construction
Contract could be:
 Documentary evidence;
 Factual witness;
 Expert opinion;
 Project site visit;
 Others, if any;

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The records may appear in diverse forms:

Correspondences or Exchange of Letters;

Notices;
Reports;
Minutes of Meeting;
Site Diary;
Site Instructions;
Payment Certificates or related documents;
Executed Standard Forms;
Others, if any;

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Thank you for listening

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