FIDIC Red Book

A Commentary

Ben Beaumont

• Publisher: Informa Law from Routledge
• Year: 2019
• eBook ISBN: 9781351686129
• Edition: 1
• Topic: Law
• Subtopic: Commercial Law
• Index: Law

Written by a member of the FIDIC President's List of Adjudicators, this detailed and critical commentary on the FIDIC Red Book provides authoritative guidance and recommendations for best practice. Focusing on each Clause of the Condition of Contract, this book identifies pitfalls and logistics issues associated with its enforcement and ancillary processes, to give readers an advantage when operating with the FIDIC Red Book. Intended to promote the best use and growth of FIDIC, this guide will be essential for all users of the FIDIC Red Book, be they contractors, lawyers, engineers, students training to join these industries or any professional involved in the resolution of disputes involving the FIDIC Red Book.

Chapter 1

General Provisions

1.1 Definitions

In the Contract the 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 to 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 “Bill of Quantities” means the document Bill of Quantities (if any) included in the Schedules.

The definitions allow for the situation where there is no Bill of Quantities.

1.1.6 “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.

1.1.7 “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.

1.1.8 “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.

1.1.9 “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.

1.1.10 “Contract” means the Contract Agreement, the Letter of Acceptance, the Letter of Tender, any addenda referred to in the Contract Agreement, these Conditions, the Specification, 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 Specification, 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.

1.1.11 “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.

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

There is no reason that the information which constitutes Contract Data should be placed in a document entitled 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 overestimated.

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.

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

This is self-explanatory.

1.1.14 “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.

1.1.15 “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 not in fact provide any detailed 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 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, dryings 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.

1.1.16 “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.

1.1.17 “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.

1.1.18 “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 re-draft would be:

“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, as the Contractor’s Representative and who acts on behalf of the Contractor with respect to all matters relevant to the progress of the Works.

1.1.19 “Cost” means all expenditure reasonably incurred (or to be incurred) by the Contractor in performing the Contract, whether on or off the Site, including taxes, overheads and similar charges, but does not include Profit....

Table of contents

• Cover
• Half Title
• Series
• Title
• Copyright
• Contents
• Brief Contents
• Acknowledgements
• Glossary
• Chapter 1 General Provisions
• Chapter 2 The Employer
• Chapter 3 The Engineer
• Chapter 4 The Contractor
• Chapter 5 Subcontracting
• Chapter 6 Staff and Labour
• Chapter 7 Plant, Materials and Workmanship
• Chapter 8 Commencement, Delays and Suspension
• Chapter 9 Tests on Completion
• Chapter 10 Employer’s Taking Over
• Chapter 11 Defects after Taking Over
• Chapter 12 Measurement and Valuation
• Chapter 13 Variations and Adjustments
• Chapter 14 Contract Price and Payment
• Chapter 15 Termination by Employer
• Chapter 16 Suspension and Termination by Contractor
• Chapter 17 Care of the Works and Indemnities
• Chapter 18 Exceptional Events
• Chapter 19 Insurance
• Chapter 20 Employer’s and Contractor’s Claims
• Chapter 21 Disputes and Arbitration
• Index