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:
    • Under Persons:
    • Under Dates, Times, and Periods:
        Commencement Date
        Completion Date
    • Under Monies and Payments:

    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 (Communication)
    Sub-Clause 1.6 (Statutory Obligation)

    Clause Two [Employer]

    Sub-Clause 2.1 (Provision of Site) states unless the parties have agreed otherwise, the site must be handed over by the Employer to the Contractor on the commencement date which is 14 days after the contract has come into effect.
    Other Sub-Clauses in Clause 2:
    Sub-Clause 2.2 (Permits and Licenses)
    Sub-Clause 2.3 (Employer’s Instructions)
    Sub-Clause 2.4 (Approvals)

    Sub-Clauses in Clause 3 [Employer’s Representative]

    Sub-Clause 3.1 (Authorized Person) who will be named in the Appendix. The Contractor will thus know who in an Employer’s organisation is authorized to speak and act for the Employer at any given time.
    Sub-Clause 3.2 (Employer’s Representative) allows Employers who require professional assistance to have their consultant, if required, with clearly established delegated powers. Once appointed, the Employer’s Representative acts for and in the interest of the Employer. There is no dual role or duty to be impartial.

    Sub-Clauses in Clause 4 [The Contractor]

    Sub-Clause 4.1 (General Obligations)
    Sub-Clause 4.2 (Contractor’s Representative)
    Sub-Clause 4.3 (Subcontracting)
    Sub-Clause 4.4 (Performance Security). There is no suggested form of performance bond/security bond or bank guarantee in this contract. The amount should be set out in the Appendix.

    Sub-Clauses in Clause 5 [Design by Contractor]

    Sub-Clause 5.1 (Contractor’s Design) and Sub-Clause 5.2 (Design Responsibility) detail the design requirements and obligations of both the Employer and Contractor.

    As with all design-build contracts, it is essential that the Employer’s requirements are set out clearly and precisely. The Contractor will have an absolute obligation to ensure that the parts of the works designed by him are fit for their purposes, provided that the intended purposes are defined in the contract.

    The Employer must therefore make clear in the parts of the specification that impose design obligations the intended purposes of the part of the works to be designed by the Contractor under this clause.

    Clause 6 [Employer’s Liability]

    Sub-Clause 6.1 (Employer’s Liability) gathers together in one place the grounds for Extension of Time under Sub-Clause 7.3 (Extension of Time) and the grounds for claims under Sub-Clause 10.4 (Right to Claim). There is no time or claim for bad weather.

    Clause 7 [Time for Completion]

    Sub-Clause 7.1 (Execution of Works)
    Sub-Clause 7.2 (Programme) The appendix should stipulate any particular requirement as to the format and level of detail of programme to be submitted.
    Sub-Clause 7.3 (Extension of Time). This sub-clause is connected to Sub-Clause 10.3 (Early Warning). An Extension of Time should not be granted to the extent that any failure by the Contractor to give an early warning notice under Sub-Clause 10.3 contributed to the delay.
    Sub-Clause 7.4 (Late Completion)

    Clause 8 [Taking Over]

    Once the works are ready to be used for their intended purpose, notice should be given. There is no provision for taking over of only parts of the work.

    If any tests are required to be completed prior to taking over, these should be specified in the specification.

    The Sub-Clauses in Clause 8 are:
    Sub-Clause 8.1 (Completion)
    Sub-Clause 8.2 (Taking Over Notice)

    Clause 9 [Remedying Defects]

    There is no defined defects liability period, but normally it is twelve months from the date of taking over.

    The Sub-Clauses in Clause 9 are:
    Sub-Clause 9.1 (Remedying Defects)
    Sub-Clause 9.2 (Uncovering and Testing)

    Clause 10 [Variation and Claims]

    Variation is defined to include any change to the specification or drawings included in the contract, requires the Contractor to notify the Employer of events promptly and to detail any claim within 28 days. If the effects of the event are increased or if the availability of the Employer to verify any claim is affected by the failure to notify, then the Employer is protected.

    These are detailed in the various Sub-Clauses including:
    Sub-Clause 10.1 (Right to Vary)
    Sub-Clause 10.2 (Valuation of Variation)
    Sub-Clause 10.3 (Early Warning)
    Sub-Clause 10.4 (Right to Claim)
    Sub-Clause 10.5 (Variation and Claim Procedures)

    Clause 11 [Contract Price and Payment]

    The sum in the offer is to be calculated and presented through either lump sum price or lump sum price with a schedule of rates or lump sum price with BOQ or Reimbursement with BOQ or Cost reimbursement. No provision is made for advanced payments.

    The Sub-Clauses in Clause 11 are:
    Sub-Clause 11.1 (Valuation of the Works)
    Sub-Clause 11.2 (Monthly Statements)
    Sub-Clause 11.3 (Interim Payments)
    Sub-Clause 11.4 (Payments of First Half of Retention)
    Sub-Clause 11.5 (Payment of Second Half of Retention)
    Sub-Clause 11.6 (Final Payment)
    Sub-Clause 11.7 (Currency)
    Sub-Clause 11.8 (Delayed Payments)

    Clause 12 [Default]

    The Sub-Clauses in Clause 12 are:
    Sub-Clause 12.1 (Default by Contractor)
    Sub-Clause 12.2 (Default by Employer)
    Sub-Clause 12.3 (Insolvency)
    Sub-Clause 12.4 (Payment upon Termination)

    Clause 13 [Risk and Responsibility]

    The Sub-Clauses in Clause 13 are:
    Sub-Clause 13.1 (Contractor’s Care of the Works)
    Sub-Clause 13.2 (Force Majeure)

    Clause 14 [Insurance]

    The Sub-Clauses in Clause 14 are:
    Sub-Clause 14.1 (Extent of Cover)
    Sub-Clause 14.2 (Arrangements)
    Sub-Clause 14.3 (Failure to Insure)

    Clause 15 [Resolution of Disputes]

    Arbitration may not be commenced unless the dispute has first been the subject of an adjudication.

    The Sub-Clauses in Clause 15 are:
    Sub-Clause 15.1 (Adjudication)
    Sub-Clause 15.2 (Notice of Dissatisfaction)
    Sub-Clause 15.3 (Arbitration)

    The next instalment will cover changes in the new edition of the Green Book.

    This guest post was written by Mansoor Ali, FICCP. This post was originally published as three LinkedIn videos, available here, here and here.

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