March 22, 2023
Construction Contract Issue – Pay-If-Paid and Pay-When-Paid Clauses
In this post, we shall discuss ‘pay-if-paid’ and ‘pay-when-paid’ clauses in construction contracts: their meaning, differences and implications. Delays in payments are endemic in the construction industry all over the world. A European Commission report on payment behaviour in business-to-business transactions, published in 2018, mentions that construction industry is most affected by delays with 65% of stakeholders having experienced delayed payments. Extensive research all over the world has shown that delayed payments in the construction industry have four major outcomes: cash flow problems, increase in disputes, insolvency and bankruptcy, and/or delays and cost overruns in projects. One reason for delayed payments in the construction industry that particularly affects Subcontractors, is the ‘pay-if-paid’ and ‘pay-when-paid’ clauses included or implied in construction contracts. These broadly imply that the main Contractor will be liable to pay the Subcontractor if and when he is…
March 6, 2023
FIDIC Green Book – a brief overview Part 3
This is the third in a three-part series on the FIDIC Green Book. In this instalment, we will consider the various changes from the First Edition. New Inclusions: Provisions that have been added to the Second Edition, released in 2021, include: professional liability insurance, assignment, intellectual property, confidentiality, limits on liability, site data, Employer’s financial arrangements, inspection and testing, commissioning and taking over taking over part of the works responsibility for subcontracting claims and variation have now been separated, Defects and defects notification period, and indemnities. Some key features have also been added to the 2021 Edition. The form now contains a suitably long and helpful explanation of the salient features of the contract and how it works. There are also a number of typical sequence-of-events flow diagrams for processes such as: variations, claim management, and disputes. The form now contemplates having particular conditions.…
February 28, 2023
FIDIC Green Book – a brief overview Part 2
This is the second in a three-part series on the FIDIC Green Book. This instalment will focus on the Clauses. Clause 1 Sub-Clause 1.1 focuses on definitions for terms used in the contract. The definitions in these conditions are not all the same as those to be found in other FIDIC contracts. This is a result of the need for simplicity in the conditions of this sort. Significantly different definitions include commencement date, site variation, and works. Under the heading Contract there are definitions for: Contract Specifications Drawings Under Persons: Employer Contractor Party Under Dates, Times, and Periods: Commencement Date Day Completion Date Under Monies and Payments: Cost Also covered in other definitions are Contractor’s Equipment, Country, Employer’s liability, force majeure, materials, plant, site, variation and works. Other Sub-Clauses in Clause 1 Sub-Clause 1.2 (Interpretation) Sub-Clause 1.3 (Priority of Documents) Sub-Clause 1.4 (Law) Sub-Clause 1.5…
February 21, 2023
FIDIC Green Book – a brief overview
Over the next few blog posts, we will look at the FIDIC Green Book. The first edition was released in 1999 and the latest version is the 2021 Edition. In this blog mini-series, we will go through them and the changes introduced. Overview The Green Book is a short form of contract and is recommended for engineering and building works of a smaller scale. A maximum of USD$500,000 and a six-month construction period was initially considered as a reasonable limit on the capital value and duration. However, the World Bank has suggested its use for contract values up to USD$10 million. Depending on the type of works, the Green Book may be suitable for contracts of considerably greater value. Also, it is considered more likely to be suitable for fairly simple or repetitive work or work of a short duration without the need for specialist subcontracts. The main intention is to produce a flexible document of 15 clauses containing essential commercial provisions with a variety of administrative…
January 10, 2023
FIDIC Green, Blue-Green, Gold, and Emerald Books – a brief overview
This is the third in a three-part series on the FIDIC Suite of Contracts. This post will summarise the Green, Gold, Blue-Green, and Emerald FIDIC contracts and outline the benefits of each. The series began by laying out the history and evolution of FIDIC contracts. The previous post in this series covered the Red, Yellow, and Silver Books. Because the Pink and Orange Books are no longer relevant, they will not be discussed in this series. The Green Book This is the short form of contract, first published in 1999 and updated in 2021. The Green Book contains the contract agreement, general conditions, rules for education, and notes for guidance. The short form of contract is recommended for Engineering and Building work of relatively small capital value. Depending on the type of works, the Green Book may be suitable for contracts of considerably greater value. The Green Book is considered most suitable for fairly simple or repetitive work or works of short duration without the need for…