April 25, 2023
Legal and Contractual Interpretation of Construction Contract Time Bar Clauses Part 3
This is the third in a three-part series. In the previous posts, the time bar clauses of FIDIC and Indian construction contracts were compared, the differences between FIDIC and Indian contracts were examined, as well as how Common Law has evolved to favour the implementation of these clauses. In this post, we shall examine the treatment of time bar clauses in India. Contractual Time barring of claims is a relatively recent inclusion in Indian contracts. CPWD has no such clause and NHAI EPC contracts has these time bar provisions for EOT, change in law, Force Majeure, and Termination due to Authority’s default. Some state agencies have copied these clauses in a distorted fashion to be all-encompassing for all claims, including variations with a reduced time frame. Leading Indian Cases Chandigarh Constr Co. v State of Punjab - SCI ruled that such condition precedent cannot be considered as a statutory bar for the claim. Though the clause indicates that if such a claim is not made, it…
April 15, 2023
Legal and Contractual Interpretation of Construction Contract Time Bar Clauses Part 2
This is the second in a three-part series. In the previous post, the time bar clauses of FIDIC and Indian construction contracts were compared. Making timely notice and/or submission of a detailed claim as per the time limit given in the contract as a condition precedent to entitlement to claim. This post will consider the fine-line differences between the time bar clause of FIDIC Sub-Clause 20.1 (Contractor’s Claim) (1999 Edition) and Sub-Clause 20.2 (Notice of Claim) (2017 Edition) and Indian contracts. Additionally, we shall examine the validity of time bar clauses under Common law keeping in view the Prevention Principle and good faith clauses. FIDIC vs. Indian Construction Contracts FIDIC Sub-Clause 20.2 (Notice of Claim) (2017) lays down time bars for notices and a detailed claim pertaining to EOT and/or additional costs (and loss of profit in some cases) for all types of excusable and/or compensable delays and/or disruption, but not for variations. Claims for variations…
April 5, 2023
Legal and Contractual Interpretation of Construction Contract Time Bar Clauses
Over the next few posts, we shall examine how the legal and contractual interpretation of certain construction contract clauses in India is a bit different as compared to the UK and other common law countries; despite India being a Common Law jurisdiction and following the UK in most legal judgments. Issue 1- Time Barring of Claims According to the 1999 Edition of the FIDIC Red Book Sub-Clause 20.1 (Contractor’s Claims): “If the Contractor fails to give notice of a claim within such period of 28 days, the Time for Completion shall not be extended, the Contractor shall not be entitled to additional payment, and the Employer shall be discharged from all liability in connection with the claim.” Sub-Clause 20.2 (Appointment of the Dispute Adjudication Board) of the 2017 edition of the FIDIC Red Book lays a further time bar on the claim: “….If within this time limit (84 days) the claiming Party fails to submit the statement under sub-paragraph (b) above (detailed claim), the Notice of…
September 20, 2022
Advice on Mark-Ups
Change management is crucial to projects proceeding smoothly. It depends on communication, recognition of entitlements as to principles, and evaluation of price adjustment. This article will examine mark-up agreements and their role in change management. Some costs, while undoubtedly arising, are hard to estimate. It could be Head Office overheads, change management costs, margins and profit, or savings share. These are often resolved by making contractual agreements through so-called mark-up clauses. Such clauses make change evaluation easier. The usual method is to relate the mark-up rate with the direct value of change. But this can be complicated. What kind of costs should be included? What should be done with de-scopes or time-extending changes? Examples of Marked-up Costs Typical categories included in mark-up clauses include profits, head office overheads, site overheads, change management costs, contingencies for risk, and share of savings. Some contracts may add fixed…
February 20, 2022
What’s the Difference Between a Claim Submitted to an Engineer and One Submitted to Arbitration?
I was recently asked if there are differences between claims submitted to the Engineer and those submitted for arbitration. My response was, “Yes, there frequently is, but there shouldn’t be.” Here is a very frequent scenario related to claims that explains why that is. The Contractor considers that he has a justifiable claim for either a significant amount of money or an extension of time which will negate delay damages. He delegates the claim preparation without determining whether the person has adequate qualifications or experience to prepare a claim to a suitable standard. The person given the responsibility does his/her best, but lacking the necessary experience and skills, the claim is not prepared to a good standard. The Engineer rejects the claim because: he can’t understand it it does not contain adequate information it is not substantiated, or it just does not prove that the claim is justifiable. Even an impartial Engineer would be correct to do so and a defensive…