FIDIC Yellow Book: A Commentary

Ben Beaumont

• Publisher: Informa Law from Routledge
• Year: 2019
• ISBN:
  9781351684255
• Edition: 1
• Topic: Business
• Subtopic: Consulting
• Index: Business

The book analyses every aspect of the ease or otherwise of implementing the FIDIC Yellow Book Conditions of Contract. On a clause-by-clause basis, it highlights important structural features and suggests alternative text to avoid problems with the contract. Written in a user-friendly manner by an expert user of the FIDIC Suite of Contracts, who is a Member of the FIDIC President's List of Adjudicators, this book will be a vital reference point for contractors, lawyers, engineers, arbitrators and all others concerned with the FIDIC contracts.

Chapter 1

Clause 1 General Provisions

1.1 Definitions

1.1 In the Contract following words and expressions shall have the meaning stated, except where the context requires otherwise.

This is a fundamentally unhelpful comment as an introduction to the general Conditions. The opportunity to identify a context, which requires a different interpretation from that set out in the general definitions is impossible to define.

1.1.1 “Accepted Contract Amount” means the amount accepted in the Letter of Acceptance for the execution of the Works in accordance with the Contract.

This definition is accurate providing that there were no Conditions imposed in the Letter of Acceptance, which could or would vary the Accepted Contract Amount should those Conditions take effect.

1.1.2 “Advance Payment Certificate” means a Payment Certificate issued by the Engineer for advance payment under Sub-Clause 14.2.2 [Advance Payment Certificate].

There are various steps, which must be complied with before the certificate can be issued and these are set out in Sub-Clause 14.2.2 [Advance Payment Certificate].

1.1.3 “Advance Payment Guarantee” means the guarantee under Sub-Clause 14.2.1 [Advance Payment Guarantee].

This guarantee is intrinsically linked to the procedure enabling the Contractor to receive payment under the Advance Payment Certificate structure.

1.1.4 “Base Date” means the date 28 days before the latest date for the submission of the Tender.

It is important to note that it is implied that the Base Date can vary should the Employer decide to extend either once or more than once the date for the submission of the Tender. The precise Determination of the Base Date can be critical when taking into account regulations or legislation which come into force just after the Base Date and which have therefore to be taken into account under the Contractor’s obligations ensure that the Design and Execution of the Works and/or Plant are fully compliant with all the Laws and regulations of the Country. On occasions compliance with new legislation will engender variations which will incur a cost to the Employer.

1.1.5 “Claim” means a request or assertion by one Party to the other Party for an entitlement or relief under any Clause of these Conditions or otherwise in connection with, or arising out of, the Contract or the execution of the Works.

The use of the phrase an entitlement suggests a reward different from money. The definition of Claim might be better phrased as follows:

“‘Claim’ means a request by one Party to the other Party for a monetary payment and/or for an extension of time, where appropriate, or other relief of whatever nature under any Clause of these Conditions or otherwise in connection with, or arising out of, the Contract or the execution and operation of the Works and/or Plant.”

The amended definition allows for an explicit Claim to arise from the operation of the Works or Plant and further specifically identifies that an area of Claim may arise out of the operation of the Plant. That issue is not clear from the original definition.

1.1.6 “Commencement Date” means the date as stated in the Engineer’s Notice issued under Sub-Clause 8.1 [Commencement of Works].

There may be occasions where a Letter of Acceptance has not been provided but the Engineer has issued a Notice under Sub-Clause 8.1. In that event the Contractor may safely proceed to commence operation under his obligations under the Contract.

1.1.7 “Compliance Verification System” means the compliance verification system to be prepared and implemented by the Contractor for the Works in accordance with Sub-Clause 4.9.2 [Compliance Verification System].

This requirement is now usual for all contracts.

1.1.8 “Conditions of Contract” or “these Conditions” means these General Conditions as amended by the Particular Conditions.

This is a very unhelpful definition. What is intended is as follows:

“Conditions of Contract or these Conditions mean the general Conditions of Contract and such particular Conditions as may form part of the Contract. These particular Conditions may add to or vary the general Conditions.”

1.1.9 “Contract” means the Contract Agreement, the Letter of Acceptance, the Letter of Tender, any addenda referred to in the Contract Agreement, these Conditions, the Employer’s Requirements, the Schedules, the Contractor’s Proposal, the JV Undertaking (if applicable) and the further documents (if any), which are listed in the Contract Agreement or in the Letter of Acceptance.

This definition is too restrictive. The definition should be phrased as follows:

“‘Contract’ means any combination being: the Contract agreement, the Letter of Acceptance, a Letter of Tender, any additional Documents referred to in the Contract agreement, these Conditions, the Employer’s Requirements, the Schedules, the Contractor’s proposal, the Particular Conditions, any JV Undertaking (if applicable) and any further Documents (if any) which are listed in the Contract Agreement and/or in the Letter of Acceptance.”

This definition is more loosely drafted than that provided in the definition stated above and gives both Parties greater flexibility. It is very important that Documents can be read in the alternative in order to provide an effective binding legal context.

1.1.10 “Contract Agreement” means the agreement entered into by both Parties in accordance with Sub-Clause 1.6 [Contract Agreement].

As Sub-Clause 1.6 anticipates it is not essential for the Parties to enter into a Contract agreement. The key document is the Letter of Acceptance.

1.1.11 “Contract Data” means the pages, entitled contract data, which constitute Part A of the Particular Conditions.

There is no reason for the information which constitutes Contract Data should be placed in a document entitled to Contract Data. Further “Contract Data” does not mean the pages, it refers to the information provided by the Employer to the Contractor and upon which the Contractor may well base the Contract amount. Therefore, the importance placed upon carefully produced and detailed Contract Data cannot be underestimated.

A better definition would be:

“Contract Data means that the relevant information provided by the Employer and where appropriate the Contractor in written form whether entitled Contract Data or not upon which the Contractor relies when determining the bid offer.”

1.1.12 “Contract Price” means the price defined in Sub-Clause 14.1 [The Contract Price].

This is self-explanatory.

1.1.13 “Contractor” means the person(s) named as contractor in the Letter of Tender accepted by the Employer and the legal successors in title of such person(s).

This is self-explanatory.

1.1.14 “Contractor’s Documents” means the documents prepared by the Contractor as described in Sub-Clause 5.2 [Contractor’s Documents], including calculations, digital files, computer programs and other software, drawings, manuals, models, specifications and other documents of a technical nature.

Sub-Clause 5.2 does in fact not provide any detail of a definition of Contractor’s Documents. The only question here is raised over the use of the word “supply”. The word “supplying” implies a giving by someone to someone, i.e. the Employer or where appropriate the Engineer. Questions are raised as to the situation at the moment of the supply of the documents (during Tender or during realisation of the Works), and what happens to these documents when approved or following a non-objection notice: are they still documents upon which the Contactor relies (only), or are may they become binding for the Employer also?

In fact, the items listed under this definition while fundamental to the construction of the Permanent Works are not necessarily going to form part of the Permanent Works. An alternative phrase might be more appropriate “prepared by the Contractor for his use under the Contract.”

This definition should be loosened in order to allow for most possibilities as follows:

“‘Contractor’s Documents’ means the Documents to be supplied by the Contractor as described in Sub-Clause 5.2 Contractor’s Documents, and which may include: calculations, digital files, Computer programs and other software, drawings, provisional and final operational manuals, models, specifications and all other Documents whether of a technical nature or otherwise upon which the Contractor relies in order to fulfil his obligations under the Contract.”

1.1.15 “Contractor’s Equipment” means all apparatus, equipment, machinery, construction plant, vehicles and other items required by the Contractor for the execution of the Works. Contractor’s Equipment excludes Temporary Works, Plant, Materials and any other things intended to form or forming part of the Permanent Works.

This definition has excluded any reference to remedying of the defects. Previously Contractor’s equipment was envisaged being used during the defects notification period. It is not clear why this period has been impliedly excluded.

1.1.16 “Contractor’s Personnel” means the Contractor’s Representative and all personnel whom the Contractor utilises on Site or other places where the Works are being carried out, including the staff, labour and other employees of the Contractor and of each Subcontractor; and any other personnel assisting the Contractor in the execution of the Works.

The Reference to any other Personnel assisting the Contractor in the execution of the Works shall include any independent personnel who assist the Contractor before, during and/or after the execution of the Works.

1.1.17 “Contractor’s Proposal” means the part of the Tender stated or implied as being the Contractor’s proposal for execution of the Works, as included in the Contract. Such documents may include the Contractor’s preliminary design.

This definition where stating a reference to an Implied Proposal which takes account of the fact that on occasions Documents which should be entitled or headed in a certain manner are not so headed or do not yet include the key information which enable them to form part of the Contract and/or the Contractor’s Documents.

1.1.18 “Contractor’s Representative” means the natural person named by the Contractor in the Contract or appointed by the Contractor under Sub-Clause 4.3 [Contractor’s Representative], who acts on behalf of the Contractor.

This Definition is not quite clear. A redraft woul...