Notices under FIDIC Silver Book 2017 Edition Part 3

This is the third in a multi-part series on notices under the 2017 Edition of FIDIC Silver Book. This post covers notices in Clauses 1 (General Provisions), 2 (The Employer), and 3 (The Employer’s Administration).

Events Where Notices are Applicable

Clause 1 (General Provisions)

Sub-Clause 1.5 (Priority of Documents): If a party finds an ambiguity or discrepancy in the contract documents, that party shall promptly submit a notice to the other party and the Employer shall issue the necessary clarification or instruction.

Sub-Clause 1.8 (Care and Supply of Documents): If a party becomes aware of an error or defect in a document that was prepared by the Contractor, then the party shall promptly submit a notice of such error or defect to the other party. The Contractor shall then promptly rectify the error or defect at the Contractor’s risk and cost.

Clause 2 (The Employer)

Sub-Clause 2.4 (Employer’s Financial Arrangement): If the Employer intends to make any change to his financial arrangement, then he shall submit a notice immediately to the Contractor with supporting details. The Contractor, for any reason, may request reasonable evidence of the financial arrangement. Then, within 28 days of receiving that request, the Employer shall provide reasonable evidence that financial arrangements have been made and that the Employer is in a position to pay the remaining contract price.

Clause 3 (The Employer’s Administration)

Sub-Clause 3.1 (Employer’s Representative): The Employer or Employer’s Representative shall give notice to the parties. Here, there are two possible circumstances. In the case of a legal entity, any replacement of a legal entity appointed and authorized to act on its behalf, and revocation of the above-mentioned authority, there should be a notice given to that party.

Similarly, if it is a person the Employer wishes to replace. If the Employer wishes to replace any person appointed as the Engineer’s Representative, notice should be submitted including their name, address, duties and authority, as well as the date of appointment. That notice shall be not less than 14 days before the intended date of replacement.

The Employer shall not replace the Employer’s Representative with a person or entity against whom the Contractor has raised reasonable objection by a notice under this Sub-Clause.

Sub-Clause 3.2 (Other Employer’s Personnel): The Employer or Employer’s Representative may assign, delegate, or revoke duties to assistants by giving notice to the Contractor of the name, assigned duties, and delegated authority of the assistants. Their delegation or revocation of assignments shall not take effect until this notice has been received by the Contractor.

Sub-Clause 3.3 (Delegated Persons) If the Contractor needs to question any instruction, communication, or notice given by a delegated person, then the Contractor may, by submitting a notice, refer the matter to the Employer. If the Employer does not respond within seven days of receiving the notice, reversing or varying the delegated person’s instruction or notice, he shall be deemed to have confirmed such instructions or notices.

Sub-Clause 3.4 (Instructions): If an instruction:

constitutes a variation still, does not state it is a variation
does not comply with applicable laws or
will reduce the safety, or
is technically impossible,

then, before commencing any work related to the instruction, the Contractor shall submit a notice with reasons to the Employer. If the Employer does not respond within seven days of receiving this notice by giving a notice confirming, reversing, or varying the instruction, the Employer shall be deemed to have revoked the instruction.

Sub-Clause 3.5 (Agreement or Determination): There are three potential scenarios under this sub-clause. In scenario one, agreement is reached within 42 days, any error found in the Employer’s Representative’s notice of agreement and corrected. The Employer’s Representative starts performing his duties under Sub-Clause 3.5. Within the 42 days, the parties reach an agreement and the Employer’s Representative issues a Notice of Agreement under Sub-Clause 3.5.1. If there are any errors, then within 14 days, a notice is given of the error by a party under Sub-Clause 3.5.4 and the Employer’s Representative issues a Notice of Corrected Agreement under Sub-Clause 3.7.4 within seven days.

Scenario number two is the case that the party’s early advice that agreement cannot be reached and so the Employer’s Representative’s determination is necessary. There is no error in the Employer’s Representative’s determination. In this case, the Employer’s Representative starts performing his duties under Sub-Clause 3.5. After 42 days, it is understood that the parties are not reaching any agreement under Sub-Clause 3.5.1(b). In this case, within another 42 days, the Employer’s Representative issues a Notice of Determination under Sub-Clause 3.5.2 and there is no Notice of Error within 14 days. In this case, the Contractor has an option to go for a Notice of Dissatisfaction under Sub-Clause 3.5.5 within 28 days of the determination.

Finally, the third scenario is that no agreement is reached within 42 days, the Employer’s Representative determines within 42 days, but an error is found in the Employer’s Representative’s determination and corrected. The Employer’s Representative starts performing his duties under Sub-Clause 3.5 and, after 42 days, there is no agreement. So, the Employer’s Representative moves again for determination within another 42 days under Sub-Clause 3.5.2. That determination has some error, and a Notice of Error is submitted by a party under Sub-Clause 3.5.4. Within another seven days, the Employer’s Representative issues a Notice of Corrected Determination under Sub-Clause 3.5.4. If there is any more dissatisfaction by the Contractor, he has another 28 days to issue a Notice of Dissatisfaction under Sub-Clause 3.5.5.

This guest post was written by Mansoor Ali, FICCP and Jishma Joy. It is the third post in a multi-part series and was originally published as LinkedIn videos, viewable here and here.

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