Introduction
PREFACE This book is intended for anybody having dealings with FIDIC's "Red Book",
the4 t h E d i t i o n o f t h e " C o n d i t i o n s o f C o n t r a c t f o r W o r k s o f C i v i l E n g i n e e r i n g Construction" published in 1987. Employers, engineers, contractors and
their r e s p e c t i v e a d v i s o r s s h o u l d a l l f i n d s o m e t h i n g i n t h i s w o r k t o h e l p t h e m t o understand and make best use of these
conditions of contract. For those not familiar with the contract, the
commentary to each clause starts with a "plain English" paraphrase to enable the reader to understand the gist of the clause as quickly as possible. Except where the meaning of the clause is entirely obvious, each sub-clause is given a separate paragraph. T h e v o l u m e a l s o
i n c l u d e s a s e t o f s o m e 9 4 " s u g g e s t e d f o r m s " w h i c h m a y
b e found useful by engineers, employers and contractors. These do not attempt to a n t i c i p a t e p a r t i c u l a r s i t u a t i o n s b u t r a t h e r t o u s e t h e w o r d i n g o f t h e c l a u s e t o produce a form of notice which would, it is hoped, leave no room for doubt or debate as to whether a notice ha d been given, under which clause it had been given or whether the notice was in a form which complies with the terms of the c o n t r a c t . A t t h e v e r y l e a s t , t h e f o r m s s e c t i o n w i l l p r o v i d e t o t h e p a r t i e s a reference against which to check that the notice that they are giving has beengiven and copied to the correct parties. There can be few types of disputes whichare as fruitless and frustrating as disputes over whether the correct form of noticehas been given in particular circumstances. Whilst there are often good reasonsfor requiring notice to be given, it is rare that justice is done when an arbitrator isforced by the contract to rule out a claim on the grounds that no or no adequate notice has been given. In short, it is in
everybody's interest that notices are given properly. If parties wished to do so, they could agree at the outset that notices which conform to those set out in this volume would not be open to challenges asto form although they could of course be open to challenge in respect of their t i m i n g , t h e i r a p p r o p r i a t e n e s s o r i n d e e d t h e m a n n e r i n w h i c h t h e b l a n k s h a v e been filled. Although the masculine pronouns "he" and "him" have been used from time totime as a shorthand for the Employer,
the Contractor or the Engineer, this is for convenience and is not based on any assumption that the parties involved with civil engineering contracts are necessarily male. The author is well aware that the contrary is increasingly true. The usage is also consistent with the language of the conditions. Readers may find it strange that references will be found in this work to both
theI C E ' s 5 t h a n d 6 t h E d i t i o n . T h e I C E 5 t h E d i t i o n i s r e f e r r e d t o b e c a u s e t h e d r a f t s m a n o f F I D I C ' s 4 t h E d i t i o n w a s p l a i n l y h e a v i l y i n f l u e n c e d b y I C E ' s 5 t h Edition and the points of departure are interesting in themselves as well as being
useful to those readers familiar with the ICE Conditions. References to ICE 6thE d i t i o n a r e i n c l u d e d b e c a u s e o f t h e h i s t o r y o f t h e
F I D I C f o r m f o l l o w i n g i n
t h e f o o t s t e p s o f I C E ' s d r a f t i n g : i t i s t h e r e f o r e i n t e r e s t i n g t o s e e w h i c h o f t h e innovations introduced by FIDIC in their 4th Edition have been adopted by theICE in their 6th. Knowledge of the ICE conditions is by no means necessary for the user of this work,
however.A s a u s e r o f c o m m e n t a r i e s o f t h i s s o r t , I a m w e l l a w a r e t h a t a l l t o o o f t e n t h e particular practical problem, which a reader experiences is not, covered by the commentary. As a writer, it is impossible to imagine all problems that might occur even if time and the patience of the publisher would perm it all problems to be addressed. I should add that even in cases where the problem experienced by areader appears to have been addressed and an answer suggested, the reader s h o u l d t a k e g r e a t c a r e a n d s h o u l d a v o i d a n y a s s u m p t i o n t h a t t h e i r
p a r t i c u l a r circumstances were being addressed. Discussion and submission in the absenceof particular facts is necessarily limited and the reader is urged to give careful c o n s i d e r a t i o n a n d i f n e c e s s a r y t o t a k e i n d e p e n d e n t a d v i c e i n r e l a t i o n t o t h e i r particular circumstances.As this work is intended not only for lawyers but for the full dramatis personae of a civil engineering project, it was decided that footnotes would be
avoided andreferences to legal cases given a firmly subordinate role. Given the range of legalsystems in which the FIDIC conditions are used, very often with the local law asthe law of the contract, an over-dependence
on Commonwealth case-law wouldn o t n e c e s s a r i l y b e h e l p f u l . R e c e n t d e c i s i o n s a n d d e c i s i o n s f r o m j u r i s d i c t i o n s other than England have been given priority.It should be confessed at this early stage that the references to be found in PartII, the Conditions of Particular Application, to dredging and reclamation have notbeen the subject of any comment. Part II is however set out in full at the end of this work.Finally, the author
wishes to thank FIDIC for permitting the reproduction of the Red Book for the purposes of this work.ECC - LONDON1: INTRODUCTIONOrigins of FIDIC 4th
EditionF I D I C i s t h e F e d e r a t i o n I n t e r n a t i o n a l D e s I n g e n i e u r s - C o n s e i l s a n d i s a n association of national associations of Consulting Engineers. They have been in
existence since 1913 and have their headquarters and secretariat in Lausanne inSwitzerland.FIDIC have produced standard forms of contract for civil engineering projectssince 1957. The 2nd Edition was published in 1969 and the 3rd in 1977. As the o b v i o u s c o m p a r i s o n i s b e t w e e n t h e s e c o n d i t i o n s a n d t h o s e p r o d u c e d b y t h e Institute of Civil
Engineers in the UK, known throughout this work as "ICE", it maybe helpful to record that the ICE 1st Edition was published in 1945 and the
4thE d i t i o n i n 1 9 5 5 . T h e 5 t h E d i t i o n w a s p u b l i s h e d i n 1 9 7 3 a n d i t w a s u p o n t h i s Edition that the FIDIC 3rd Edition was closely
modeled. FIDIC took the initiativew i t h t h e i r 4 t h E d i t i o n a n d i t m a y b e t h o u g h t t h a t I C E 6 t h E d i t i o n p u b l i s h e d i n January 1991 shows that FIDIC has repaid some part of its debt to the ICE. In particular, FIDIC's ideas in relation to an express obligation upon the Engineer tobe impartial, the deemed obligation upon the Employer to disclose all
informationconcerning the ground conditions on site and the introduction of conciliation intothe disputes procedure after the Engineer's decision and before arbitration, maywell have influenced ICE's 6th Edition. To avoid
confusion with FIDI C editions,the ICE conditions are referred to in the commentary as ICE 5th and ICE 6th.Nature of the ConditionsFor those who are unfamiliar with FIDIC's Standard Form, it may assist if the basic characteristics are set out:- I t i s a f o r m v e r y m u c h i n t h e t r a d i t i o n a l E n g l i s h m o d e w i t h B i l l s o f Quantities and a named Engineer whose functions include making certificationand other determinations independently of the Employer and indeed impartiallyas between the parties. I t i s a r e
-m e a s u r e -m e n t c o n t r a c t w i t h t h e q u a n t i t i e s i n t h e b i l l t r e a t e d a s approximate and the Contract Price having little relevance save as a means by which the competing tenders might be judged.- T h e E m p l o y e r m a y n o m i n a t e
s u b c o n t r a c t o r s a n d h a s t h e p o w e r t o m a k e direct payment in the event that the Contractor fails to do so. The Employer is
notm a d e l i a b l e , a s i n s o m e E n g l i s h f o r m s , f o r d e l a y s b y t h e n o m i n a t e d subcontractors.- R i s k i s d i v i d e d i n l i n e w i t h t h e p h i l o s o p h y t h a t t h e E m p l o y e r i s b e s t p l a c e d to take on those risks which experienced contractor s could not reasonably beexpected to foresee, which are outside the control of the parties and which
aren o t r e a d i l y c a p a b l e o f b e i n g c o v e r e d b y i n s u r a n c e . U n p r e d i c t a b l e g r o u n d conditions are at the risk of the Employer.The earlier editions of the FIDIC Conditions have been extensively used and the4 t h
E d i t i o n i s r o o t e d f i r m l y i n t h e t r i e d a n d t e s t e d f o r m u l a . T h e c h a n g e s a r e generally sensible and conservative and the 4th Edition will no doubt do equallywell.
The changes made from the 3rd Editi on are referred to at the
beginning of thecommentary under each clause. The principal changes are as follows:-- C l a u s e 2 . 6 ( E n g i n e e r t o A c t
i m p a r t i a l l y ) : a n e x p r e s s o b l i g a t i o n u p o n t h e Engineer to act impartially as between the
parties.-T h e E n g i n e e r i s r e q u i r e d t o c o n s u l t
w i t h t h e p a r t i e s u n d e r s o m e 2 5 clauses prior to granting extensions of time, fixing rates or making an award of costs. This consultation obligation is discussed further below.- D e s i g n b y
t h e C o n t r a c t o r o r o n e o f h i s
s u b c o n t r a c t o r s i s c a t e r e d f o r i n clause 7.2 (Permanent works designed by Contractor), clause
8.1 (Contractor'sgeneral responsibility) and clause 59.3 (Design requirements to be
expresslystated).-C l a u s e 4 4 . 1 ( E x t e n s i o n o f t i m e f o r c o m p l e t i o n ) n o w p r o v i d e s f o r a n extension for delays and prevention by the
Employer.-T h e a m o u n t o f v a r i a t i o n r e q u i r e d t o t r i g g e r a n a d j u s t m e n t h a s b e e n increased from 10% in clause 52.3 (Variations exceeding 15%).- A p r o c e d u r e f o r
c l a i m s h a s b e e n s e t o u t i n n e w c l a u s e 5 3 ( P r o c e d u r e f o r claims).- C l a u s e 6 0 ( P a y m e n t ) h a s n o w b e e n d r a f t e d i n f u l l w h e r e a s t h e 3 r d
E d i t i o n left the matter entirely in the hands of the parties to deal with in Part
II.-U n d e r c l a u s e 6 7 ( S e t t l e m e n t o f d i s p u t e s ) a n " a m i c a b l e s e t t l e m e n t " procedure has been interposed between the Engineer's decision and arbitration.- I f t h e
E m p l o y e r f a i l s t o p a y o n t i m e , t h e C o n t r a c t o r i s n o w g i v e n t h e
o p t i o n o f s u s p e n d i n g w o r k o r r e d u c i n g t h e r a t e o f w o r k a s a n a l t e r n a t i v e t o determination: clause 69.4 (Contractor's entitlement to suspend work).In addition, there ar e numerous other material amendments and some changes of vocabulary. Only 4 out of 185 sub-clauses escaped change altogether.Amendment of FIDIC's 4th EditionIt is the author's experience and impression, quite unsupported by statistics,
thatt h e F I D I C C o n d i t i o n s a r e u s e d i n a n a m e n d e d f o r m ,
p e r h a p s i n a m a j o r i t y o f c a s e s . C e r t a i n l y , m a n y o f t h e m a j o r E m p l o y e r s i n t h e M i d d l e E a s t a d o p t a n d refine their own standard sets of amendments. These amendments are generallyaimed at adjusting the balance of risk in favour of the Employer rather than toremedy any ambiguities, anomalies or discrepancies in the drafting. Clauses, which it is suggested require attention in order to remove ambiguities, anomaliesand discrepancies and thereby to reduce the scope for conflict, are as set out
below. For the detailed criticism, the reader is referred to the commentary under the particular clause referred to.- C l a u s e 2 . 1 ( E n g i n e e r ' s d u t i e s a n d a u t h o r i t y ) , i n a b i l i t y t o r e p l a c e E n g i n e e r . -C l a u s e 2 . 5 ( I n s t r u c t i o n s i n w r i t i n g ) , a n o m a l y a s t o d a t e o f i n s t r u c t i o n . - C l a u s e 2 . 6 ( E n g i n e e r t o a c t i m p a r t i a l l y ) , b r e a d t h o f i t e m ( d ) . -C l a u s e 7 . 1 ( S u p p l e m e n t a r y d r a w i n g s a n d i n s t r u c t i o n s ) , c l a u s e 1 3 . 1 ( W o r k to be in accordance with Contract) and clause 51.1 (Variations): clarify Engineer'spower to instruct.-C l a u s e 3 7 . 4 ( R e j e c t i o n ) , c l a u s e 3 9 . 1 ( R e m o v a l o f i m p r o p e r w o r k , m a t e r i a l s o r p l a n t ) a n d c l a u s e 6 3 . 1 ( D e f a u l t o f C o n t r a c t o r ) i t e m ( c ) : r e m o v e inconsistencies.- C l a u s e 4 2 . 1 ( P o s s e s s i o n o f s i t e a n d a c c e s s t h e r e t o ) : c l a r i f y r e f e r e n c e t o the clause 14 programme.- C l a u s e 4 4 . 1 ( E x t e n s i o n o f t i m e f o r c o m p l e t i o n ) : c l a r i f y i t e m ( b ) . - C l a u s e 4 6 . 1 ( R a t e o f p r o g r e s s ) a n d c l a u s e 6 3 . 1 ( D e f a u l t o f
C o n t r a c t o r ) item (b) (ii): resolve discrepancy- C l a u s e 4 9 . 2 ( C o m p l e t i o n o f o u t s t a n d i n g w o r k a n d
r e m e d y i n g d e f e c t s ) : clarify Engineer's apparent discretion to instruct remedial works.- C l a u s e 5 1 . 2 ( I n s t r u c t i o n s f o r v a r i a t i o n s ) : r e s o l v e f i n a l l y t h a t a n i n c r e a s e o r decrease in quantities amounts to "varied work".- C l a u s e 5 2 . 3
( V a r i a t i o n s e x c e e d i n g 1 5 % ) : p u t b e y o n d d o u b t t h e c a l c u l a t i o n of the
15%.-R e s o l v e r e l a t i o n s h i p b e t w e e n
c l a u s e 5 3 . 1 ( N o t i c e o f C l a i m ) a n d o t h e r clau ses with notice
requirements.-C l a u s e 5 9 . 1 ( D e f i n i t i o n o f " n o m i n a t e d s u b c o n t r a c t o r " ) : t h i s d e f i n i t i o n appears to be excessively wide.- C l a u s e 6 0 . 3 ( P a y m e n t o f r e t e n t i o n m o n e y ) : c l a r i f y p o s i t i o n a f t e r T a k i n g - Over Certificate.- S u b - c l a u s e s 6 0 . 5 t o 6 0 . 8 : e s t a b l i s h c o n s i s t e n t p o l i c y i n r e l a t i o n t o b r e a c h of contract. S u b -c l a u s e s 6 0 . 7 a n d 6 0 . 9 a n d -c l a u s e 6 2 . 2 ( U n f u l f i l l e d o b l i g a t i o n s ) : c l a r i f y relationship between these clauses.
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- C l a u s e 6 3 . 1 ( D e f a u l t o f C o n t r a c t o r ) : r e s o l v e
d o u b t a s t o t i m i n g o f t h e Engineer's certificate and the Employer's notice and termination.- C l a u s e 6 5 . 3 ( D a m a g e t o W o r k s b y S p e c i a l R i s k s ) : c l a r i f y t h e
C o n t r a c t o r ' s apparent right to complete the works.- C l a u s e 6 7 . 1 ( E n g i n e e r ' s d e c i s i o n ) : r e s o l v e
r e l a t i o n s h i p w i t h c l a u s e 6 3 . 1 (Default of Contractor) and clause 69.1 (Default of Employer).This list represents the headline items but other amendments are suggested in the text and either party to the contract may wish to make further amendments intheir own interest. There is a further species of amendment, which might be of benefit to both the parties such as amending clause 44 (Extension of time) and clause 46 (Rate of progress) to enable the Employer to order acceleration in lieuof
extension of time or in circumstances where the Contractor's
entitlement toextension of time is a matter of dispute.Generally, great care is needed when amending any standard form of contract.These FIDIC conditions are generally well balanced and, as with any contract, there are a great number of links and relationships between different clauses, notall of which are express or otherwise obvious. W ith any amendment,
therefore,t h e r e i s t h e d a n g e r o f u p s e t t i n g t h e b a l a n c e o r o f c r e a t i n g u n i n t e n d e d consequential changes to related provisions. It is in the interests of all parties thatchanges should be kept to a minimum.2: THE ROLE OF THE ENGINEERClause 2.1 is entitled "Engineer's duties and authority" but it is necessary to lookr i g h t t h r o u g h t h e
c o n d i t i o n s t o u n d e r s t a n d t h e f u l l s c o p e o f h i s r o l e . I n t h e absence of clause 2.6 (Engineer to act impartially) it would be apparent that theEngineer has a number of different roles which may be enumerated as follows:-1 . D e s i g n e r : c l a u s e s
6 , 7 a n d 5 1 2 . Q u a l i t y C o n t r o l l e r : c l a u s e s 7 . 2 , 3 6 - 3 9 , 4 9 a n d 5 0 3 . V a l u e a n d C e r t i f i e r :
e s p e c i a l l y u n d e r c l a u s e s 4 8 , 5 2 , 6 0
a n d 6 2 4 . A d j u d i c a t o r : c l a u s e 6 7 . From the above it is reasonably clear that the Engineer is intended to act both asagent for the Employer in the process of obtaining for the Employer the
projectrequired and as an independent person for the administration of the contract andfor the settlement of disputes.Clause 2.6 (Engineer to act impartially) creates doubt over this dichotomy. The clause requires the Engineer when acting in an independent role to be impartial.This raises the difficult question as to when the Engineer is engaged in which role. The draftsman has sought to address the question by the use of the general
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concept "wherever...the Engineer is required to exercise his discretion...” There isno other reference in the contract to the Engineer's discretion. There follows a listof actions, which the Engineer takes in his independent capacity. These actionswould not, it is submitted, always be undertaken in an independent capacity:
for e x a m p l e , c o n s e n t i n g t o s u b c o n t r a c t o r s u n d e r c l a u s e 4 . 1 o r a p p r o v i n g t h e C o n t r a c t o r ' s d e s i g n u n d e r c l a u s e 7 . 2 w o u l d n o r m a l l y b e c o n s i d e r e d t o b e functions undertaken as the Employer's agent.As suggested under clause 2.6, the presumed intention of the draftsman has,very arguably, not been achieved. It is difficult to find a function of the Engineer that does not involve
discretion or does not "affect the rights and obligations" of t h e p a r t i e s . T h e n o t i c e t o c o m m e n c e u n d e r c l a u s e 4 1 . 1
( C o m m e n c e m e n t o f W orks) is to be given by the Engineer. Normally there would be little doubt that t h e n o t i c e w o u l d b e g i v e n w h e n t h e E m p l o y e r w i s h e d w i t h i n t h e p r e s c r i b e d p e r i o d a n d i s t h u s a c l e a r e x a m p l e o f a n " a g e n t " f u n c t i o n . H o w e v e r , t h e r e
i s discretion as to when to give the notice within the period and the parties' rightsare affected. Accordingly, it is certainly arguable that clause 2.6 applies unless itis made clear, "under the Contract" that the Engineer is not "required to exerciseh i s d i s c r e t i o n " . I n o r d e r t o a v o i d s u c h a n a r g u m e n t , a s o l u t i o n s i m i l a r t o t h a t adopted by ICE 6th may be
required.Under ICE 6th the Engineer is required by clause 2(8) to act impartially in relationto all matters other than those "req uiring the specific approval of the Employer"under the equivalent clause to 2.1 (Engineer's duty and authority) whereby anya c t i o n s r e q u i r i n g t h e E m p l o y e r ' s a p p r o v a l a r e t o b e s e t o u t i n P a r t I I . I t w i l l therefore
be necessary for the parties under ICE 6th to list all those functions of t h e E n g i n e e r w h i c h a r e t o b e u n d e r t a k e n a s t h e E m p l o y e r ' s a g e n t a n d i n t h e Employer's interest.E x a c t l y t h e s a m e p r o v i s i o n i s n o t r e c o m m e n d e d : i t w o u l d b e u n w i e l d y i f t h e E n g i n e e r w e r e o b l i g e d t o o b t a i n a p p r o v a l f o r e v e r y a g e n t a c t i o n . I t w o u l d b e b e t t e r t o l i s t i n P a r t I I t o c l a u s e 2 . 6 t h o s e f u n c t i o n s i n r e s p e c t o f w h i c h t h e Engineer is not to act impartially.Table 1 sets out the functions of the Engineer and should assist the parties todecide which decisions are to be taken as age nt and listed in Part II. The tablea d v a n c e s a v i e w o n w h e t h e r a n y g i v e n f u n c t i o n s h o u l d b e c o n s i d e r e d f o r t h e a g e n c y l i s t o r w h e t h e r i t i s i n t e n d e d b y t h e d r a f t s m a n t o b e a n i n d e p e n d e n t function. The column indicating where consultation is called for demonst ratesthat consultation
forms part of the Engineer's independent function although not all the normal independent functions involve consultation. ENGINEER'S ROLE - AGENT OR
INDEPENDENT?C l a u s e N o . D e s c r i p t i o n A g e n t I n d e p e n d e n t C o n s u l t a t i o n 2 . 2 , . 4 A p p o i n t m e n t o f Ö Representative, assistants
A s t h e r e i s n o s c o p e f o r a n i n t e r m e d i a t e i n t e r p r e t a t i o n o f t h e p h r a s e , i t i s necessary to consider which of the two interpretations is
correct. For the narrowinterpretation, it m ight be argued that it w as intended as a cross -ref erence tothose clauses which ref er to the clause 44 in the sam e m anner as clause 52.1 (Valuation of variations) refers to matters "which are required to be determined inaccordance with clause 52". If there had been no such item wit hin clause 44.1,the Contractor m ight have been obliged both to dem onstrate entitlem ent under,f or exam ple, clause 12.2 which allows him "any extension of tim e to whic h theContractor is entitled under clause 44" and additionally to f it the delaying event within one of the other grounds under clause
44.1.A n a r g u m e n t i n f a v o u r o f t h e b r o a d e r i n t e r p r e t a t i o n w o u l d n o t d i s p u t e t h e f oregoing but would add that the need to cater f or clauses such as clause 17.1and other clauses shown by Table 4 not to provide expressly f or extensions of time means that 44.1(b) was intended to sweep up these causes of delay as well.Otherwise, it is necessary to force them, perhaps artificially, into one of the other grounds if an argum ent for tim e at large is to be avoided. For exam ple, unlessthere was express provision in the conditions, rem edial works due to incorrect d a t a f r o m t h e E n g i n e e r i s p l a i n l y s o m e t h i n g f o r w h i c h t h e C o n t r a c t o r s h o u l d rec eive an extension of tim e as the Em ployer could not be entitled to
liquidatedd a m a g e s i n r e s p e c t o f a d e l a y c a u s e d b y h i s E n g i n e e r , u n d e r E n g l i s h l a w a t least. Therefore, time would be set at large in the absence of a right to extensiono f t i m e . A s n e i t h e r d e l a y n o r c l a u s e 4 4 a r e r e f e r r e d t o i n c l a u s e 1 7 . 1 , t h e proponent of the narrow interpretation of item (b) would be obliged to bring suchdelay within one of the other grounds. Item (a) "Extra or additional work" seem s i n a p p r o p r i a t e f o r w o r k t h a t w a s m e r e l y e x e c u t e d i n c o r r e c t l y a n d t h e r e i s t h e objection to item (d) "any delay... by the Em ployer" that se rvants or agents are n o t
i n c l u d e d . T h i s l e a v e s t h e u n s a t i s f a c t o r y " s p e c i a l c i r c u m s t a n c e s " a n d t h e objection that som ething catered f or expressly by the contract such as incorrect data supplied by the Engineer does not qualify as "special". It would therefore beargued that a broad interpretation was intended.It is subm itted that as a m atter of pragm atism , the broad interpretation m ust beadopted
to prevent strained interpretations of the other grounds f or extension of time and to prevent technical and unmeritorious claims that time has been set atlarge.( i v ) H o w d o e s c l a u s e 5 3 . 1 ( N o t i c e o f c l a i m s ) r e l a t e t o n o t i c e p r o v i s i o n s contained in the clauses
themselves?T a b l e 4 s e t s o u t t h e n o t i c e r e q u i r e m e n t s t h a t a r e c o n t a i n e d i n t h e v a r i o u s c l a u s e s . T h u s i n c l a u s e 1 2 . 2
( A d v e r s e p h y s i c a l o b s t r u c t i o n s a n d c o n d i t i o n s ) notice is required f orthwith and under clause 27.1 (Fossils) the Contractor is to give immediate notice. Clause 53.1 requires notice within 28 days to be given toboth Engineer and Employer if additional payment is to be claimed. It opens withthe words "notwithstanding any other provision of the Contract...". As mentionedin the commentary under clause 53.1, this clause should probably be taken as an
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additional requirement but not a substitute for notice provisions given in a
clause.Thus, a failure to give notice forthwith under clause 12.2 to the Engineer and Employer will not be repaired by giving notice within 28 days under clause 53.1.Notice under clause 12.2 would however satisfy the requirements of clause 53.1.Clause 27.1 (Fossils) only requires notice to be given to the Engineer so thatf u r t h e r n o t i c e u n d e r c l a u s e 5 3 . 1 c o p i e d t o t h e E m p l o y e r w o u l d b e r e q u i r e d . C l a u s e 5 3 . 1 i s a l s o r e l e v a n t t o t h e c o n t e n t s o f t h e c l a u s e a s a n o t i c e m e r e l y i n d i c a t i n g t h e
p r e s e n c e o f a n o b s t r u c t i o n o r a n a r t i c l e o f i n t e r e s t w o u l d n o t necessarily satisfy the requirement of notice that the Contractor "intends to claimany additional payment".W h e r e n o t i c e o f i n t e n t i o n t o c l a i m e x t r a p a y m e n t f o r v a r i e d w o r k i s r e q u i r e d within 14 days under clause 52.2 (Power of Engineer to fix rates), a notice under clause 53.1 within 28 days would not suffice.The importance of complying with clause 53.1 is considerably reduced by the ability of the Engineer or arbitrator to deal with the claim in the absence of noticeunder clause 53.4 (Failure to comply).( v ) H o w d o e s t h e C o n t r a c t o r r e c o v e r h i s p r o l o n g a t i o n c o s t s a n d o t h e r l o s s and expense resulting from delays to the progress of the works which were not his responsibility?Unlike some standard forms of building contract, there is no single clause whichaddresses the issue of the
Contractor's loss and expense. The right to recover additional sums is scattered through the contract as illustrated by Tables 4 and 5.Clause 44.1 (Extension of time complet ion) is not linked to any clause giving
ar i g h t t o p a y m e n t u n l i k e t h e r e l a t i o n s h i p b e t w e e n c l a u s e 5 1 ( V a r i a t i o n s ) a n d clause 52 (Valuation of variations). As can be seen from Table 4, all the clauses(other than clause 44) giving an entitlement to extension of time also give a rightto payment of additional costs. It has been submitted that in most of the caseswhere the Engineer is obliged to determine additional costs for the Contractor,extension of time is in fact available. (The matters listed in Table 5 wou ld notnormally be delaying events.)As to the events set out in clause 44.1:-( a ) " t h e a m o u n t o r n a t u r e o f e x t r a o r a d d i t i o n a l w o r k " . I f t h e e x t r a o r a d d i t i o n a l w o r k h a s b e e n
o r d e r e d a s a v a r i a t i o n , t h e n t h e C o n t r a c t o r m a y b e a b l e t o recover any resulting prolongation costs if he is able to demonstrate under
clause52 (Valuation of variations), either that there is no applicable rate or that the ratehas been rendered inappropriate by reason of the nature or amount of the extraor additional work. It is arguable, however, as commented under clause 51.2 that"extra" in clause 44.1 (a) includes "automatic" changes in quantities which resultf r o m a n y i n a c c u r a c y i n t h e b i l l s o f q u a n t i t i e s . T o o b t a i n a d d i t i o n a l c o s t s t h e Contractor must either demonstrate under
clause 52.3 (Variations exceeding15%) that the "Effective Contract Price" has changed by 15%; or else must arguethat such changes in quantities fall within the definition of "varied work" within
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clause 52.2 (Power of Engineer to fix rates) with the result that the Engineer mayadjust the rates to take into account any additional costs incurred. For more on this see under clause 51.2.( b ) " a n y c a u s e o f d e l a y
r e f e r r e d t o i n t h e s e c o n d i t i o n s " . A s d i s c u s s e d a b o v e , this effectively refers to events of delay fo r which provision is made so that theContractor will recover his prolongation costs under the individual clauses. Thusfor example, under clause 40.2 (Engineer's determination following
suspension)t h e C o n t r a c t o r i s g r a n t e d a n e x t e n s i o n o f t i m e a n d " t h e a m o u n t . . . o f t h e c o s t incurred by the Contractor by reason of such suspension".( c ) " e x c e p t i o n a l l y a d v e r s e c l i m a t i c c o n d i t i o n s " . T h e r e i s n o p r o v i s i o n f o r p a y m e n t o f p r o l o n g a t i o n c o s t s i n t h e e v e n t o f e x t r e m e l y b a d w e a t h e r . T h e s e conditions, in common with most sta ndard forms, cause the risk to be sharedbetween the parties so that the Employer recovers no liquidated damages and the Contractor recovers no prolongation
costs.( d ) " a n y d e l a y , i m p e d i m e n t o r p r e v e n t i o n b y t h e E m p l o y e r " .
T h e r e i s n o express provision in the contract for reimbursement of
prolongation costs flowingfrom the Employer's default. Various failures by the Engineer are catered for in c l a u s e s s u c h a s c l a u s e 6 . 4 ( D e l a y s a n d c o s t o f d e l a y o f d r a w i n g s ) a n d 1 7 . 1 (Setting out). However as is mentioned in the commentary under clause 44.1 (d),it is arguable that the Engineer's defaults are not covered by the current grounds.To the extent that delays etc by the Employer are not covered by an express t e r m , t h e C o n t r a c t o r i s l e f t t o r e c o v e r h i s p r o l o n g a t i o n c o s t s a s d a m a g e s f o r b r e a c h o f c o n t r a c t . T h e a c t i o n o f t h e E m p l o y e r w h i c h i n v o k e s t h i s
g r o u n d f o r e xtension need not be a breach. The ordering of a
substantial variation which delayed the works would be an example of a delay by the Employer if not also animpediment and a prevention. The Contractor's prolongation costs in this event are plainly covered by the variation
clause.( e ) " o t h e r s p e c i a l c i r c u m s t a n c e s " . G e n e r a l l y , i t i s s u b m i t t e d , t h i s g r o u n d w i l l not refer to matters dealt with in the contract so that recovery of prolongation costs will depend upon the
Contractor's ability to demonstrate breach of contractby the Employer.
CLAUSE 1 : Definition and Interpretation
This clause sets out the meanings of almost all the terms in the contract whicha r e g i v e n
c a p i t a l l e t t e r s . T h e d e f i n i t i o n s o f " D e f e c t s L i a b i l i t y P e r i o d " a n d " n o m i n a t e d
S u b c o n t r a c t o r " a r e t o b e f o u n d i n c l a u s e 4 9 . 1 a n d c l a u s e 5 9 . 1 respectively. In addition, four terms which have not been given capital letters arealso
defined.T h e h e a d i n g s a n d m a r g i n a l n o t e s a r e t o b e i g n o r e d w h e n i n t e r p r e t i n g t h e Contract.T h e r e f e r e n c e s t o i n d i v i d u a l s i n c l u d e f i r m s , c o r p o r a t i o n s a n d o t h e r l e g a l organiza tions.Singular words and plural words may be interchangeable where the context sorequires.Notices, consents, approvals, certificates and determinations must be given in writing and, with the exception of notices, must not be unreasonably withheld
or delayed.T h e f o l l o w i n g d e f i n i t i o n s a r e n e w t o t h e 4 t h E d i t i o n : S u b c o n t r a c t o r , B i l l o f Q u a n t i t i e s , T e n d e r , L e t t e r o f A c c e p t a n c e , C o n t r a c t A g r e e m e n t , A p p e n d i x t o T e n d e r , C o m m e n c e m e n t D a t e , T i m e f o r C o m p l e t i o n , T e s t s o n C o m p l e t i o n , Rete ntion Money, Plant, Section, day, foreign currency and writing. What in the3rd Edition was referred to (but not defined as) "Certificate of Completion", is nowdefined as the Taking-Over Certificate. "Constructional Plant" has now
becomeContractor's Equipment. The only definition that has not been repeated in the 4thEdition is "Approved". This definition has essentially been
overtaken by clause1.5 (Notices, Consents etc) which requires approvals to be in writing. It should benoted that all the definitions are subject to the opening words "except where thecontext otherwise requires".Sub-clauses 1.2 and 1.4 are taken from the 3rd Edition; sub-clauses 1.3 and 1.5are new.1.1(a)(i)"Employer" and "Contractor" - If the Contract Agreement has(a)(ii)Been entered into, "Employer" and "Contractor" are already defined in that Agreement and thus in these conditions. Naturally, the parties must ensure thatthe entries in Part II and the Agreement are identical.T h e C o n t r a c t o r ' s a b i l i t y t o
a s s i g n i s r e s t r i c t e d b y c l a u s e 3 . 1 ( A s s i g n m e n t o f c o n t r a c t ) w h e r e b y n o p a r t o f t h e c o n t r a c t m a y b e a s s i g n e d w i t h o u t t h e p r i o r consent of the Employer. Under that clause, the consent "shall be at the sole
d i s c r e t i o n o f t h e E m p l o y e r " . T h u s , t h e E m p l o y e r h a s t h e r i g h t t o r e f u s e a n a s s i g n m e n t o n a n y g r o u n d s . T h e C o n t r a c t o r ' s c o n s e n t t o a n a s s i g n m e n t
i s h o w e v e r s u b j e c t t o c l a u s e 1 . 5 ( N o t i c e s , c o n s e n t s e t c ) w h e r e b y " a n y s u c h consent ... shall not be unreasonably withheld
or delayed". Thus, the Employer'sability to assign is greater than that of a Contractor. It is submitted that bona fideconcern over the financial standing of the
Em ployer's proposed assignee wouldbe reasonable grounds f or ref using consent. It is undoubtedly right that having carefully selected a Contractor to execute the works, the Employer should have aright of veto over any proposed
assignment.An attempted assignm ent without the requisite co nsent would, in English law atleast, be ineff ective. Again under English law,
an assignm ent by an Em ployer with consent would not relieve that Em ployer of a prim ary obligation to pay the Contractor. The Engineer's
contract of engagement would also normally need tobe assigned or novated to the new Employer.(a)(iii)"Subcontractor" - Under clause 4.1 (Subcontracting), it should be notedthat the Contractor is not required to obtain consent f or the provision of labour. Thus, a labour-only subcontractor does not fall within the definition.(a)(iv)"Engineer" - By clause 1.3 (Interpretation), the Engineer m ay be a f irm , acorporation or other organisation having legal
capacity. The Engineer m ust be named in Part II. It is a new feature of the 4th Edition that there is no ability in theEmployer to replace the Engineer. In the 3rd Edition and ICE 5th and 6th, therei s d e f i n e d t h e " E n g i n e e r a p p o i n t e d f r o m
t i m e t o t i m e b y t h e E m p l o y e r " . T h e p r e s e n t d e f i n i t i o n w i l l n o t b e a p r o b l e m i f t h e E n g i n e e r i s n a m e d a s a f i r m ; however, the Engineer will often be a named individual. According to the Guidei s s u e d b y F I D I C o n t h e 4 t h E d i t i o n , t h e r e a s o n f o r t h i s c h a n g e f r o m t h e 3 r d Edition is that the identity of the Engineer (and his reputation) has been a f actor in the calculation of the Contr actor's tender. This, it is subm itted, is a
m istake.W hilst it is certainly true that a Contractor m ight well price work diff erently if the Engineer is a respected independent professional on the one hand rather than ag o v e r n m e n t d e p a r t m e n t ' s C h i e f E n g i n e e r o n t h e o t h e r , t h e f u n c t i o n i n g o f t h e c o n t r a c t i s s o d e p e n d e n t u p o n t h e
e x i s t e n c e o f a n E n g i n e e r t h e r e m u s t b e a substantial risk of the project falling apart if its survival is dependent upon the p a r t i e s ' a b i l i t y t o a g r e e a r e p l a c e m e n t E n g i n e e r i n t h e e v e n t t h a t t h e
n a m e d Engineer died or other wise ceased to act. If the parties were in dispute at the time, the prospects for agreement must be limited.I n t h e o r y , a d i s p u t e o v e r t h e r e p l a c e m e n t E n g i n e e r w o u l d b e o n e c a p a b l e o f resolution under the arbitration clause. However, in the absence of an Engineer,i t i s d i f f i c u l t t o s e e h o w t h e d i s p u t e s p r o c e d u r e c a n c o m m e n c e . I t m a y b e possible to draw a distinction bet ween situations where the Engineer has died and other circumstances where he is simply failing or refusing to act. In the latter circumstances, the Engineer is still in existence and the disputes procedure canadvanc e by def ault. If he is dead, there does not seem to be any way f orwar d without agreement between the parties. The Employer is obliged to try to replacehim and obtain the Contractor's agreem ent, it is subm itted. For a case on the
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more traditional position, see Croudace v Lambeth (1986) 33 BLR 20, where theCourt of Appeal held the Employer liable in damages for failing to replace the certifier after the retirement of the named person.A similar
distinction may be made with regard to the powers delegated to theEngineer's Representative under clause 2.3 (Engineer's authority
to delegate). If the Engineer is alive, it is arguable that the Enginee r's Representative's powers are unimpaired. However, the Contractor's ability to question any communicationo f t h e E n g i n e e r ' s R e p r e s e n t a t i v e b y
r e f e r e n c e t o t h e E n g i n e e r u n d e r c l a u s e 2.3(b) could effectively bring the Engineer's Representative's powers to an end.I f t h e E n g i n e e r d i e d o r
o t h e r w i s e c e a s e d t o a c t a n d t h e p a r t i e s a r e u n a b l e t o agree to a replacement, the effects, it is submitted, would be as follows:-( 1 ) T h e
E m p l o y e r w o u l d n o t b e i n b r e a c h o f h i s o b l i g a t i o n t o e n s u r e t h a t t h e Engineer exercises his functions provided that he has taken reasonable steps topropose an alternative Engineer and has not been unreasonable in refusing anynominee of the Contractor. Compare clause 69.1 (Default of Employer) item (b) "interfering with or obstructing ...any such certificate".( 2 ) N o r w o u l d t h e E m p l o y e r b e i n
b r e a c h f o r f a i l i n g t o p a y t h e C o n t r a c t o r i n the absence of interim certificates. The obligation would probably be to pay whenthe works were complete.( 3 ) C l a u s e 6 6 . 1 ( R e l e a s e f r o m
P e r f o r m a n c e ) i s n o t a p p r o p r i a t e a s a n y impossibility is not "outside the control of both parties". Thus, it may be arguablethat the
fundamental obligations of the parties remain
intact:-( i ) t h e C o n t r a c t o r ' s o b l i g a t i o n u n d e r c l a u s e 8 . 1 ( C o n t r a c t o r ' s g e n e r a l responsibilities) to execute and complete the works survives; and( i i ) t h e o b l i g a t i o n o f
t h e E m p l o y e r t o p a y f o r t h o s e w o r k s a s
e x p r e s s e d i n Article 4 of the Contract Agreement or as stated in the Letter of Acceptance or byimplication will also survive. The Employer
may, however, have no obligation tomake any payment until the works are complete.( 4 ) I n t h e e v e n t o f a n y d e l a y w h i c h i s n o t t h e r e s p o n s i b i l i t y o f t h e
C o n t r a c t o r , t i m e w o u l d b e a t l a r g e b e c a u s e o f t h e a b s e n c e o f t h e E n g i n e e r t o g r a n t e xtensions of time. If all the delay was the Contractor's responsibility, it
may bea r g u a b l e t h a t c l a u s e 4 7 ( L i q u i d a t e d d a m a g e s f o r d e l a y ) w o u l d c o n t i n u e t o operate as it is not dependent upon the existence of the Engineer, who is not m e n t i o n e d i n t h e c l a u s e . H o w e v e r ,
s u b s t a n t i a l c o m p l e t i o n i s c e r t i f i e d b y t h e Engineer. The Contractor could be liable for breach of an obligation to completewithin a reasonable time, once time was set at large.Thus it is just conceivable that a project could limp onwards without an Engineer.Plainly, it is most unsatisfactory and an Employer might be well advised,
havinge x h a u s t e d a t t e m p t s t o a g r e e a n e w E n g i n e e r s i m p l y t o a p p o i n t o n e a n d
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thereafter argue, when the Contractor accepts interim payment as certified by
theEngineer, that the Contractor has effectively consented to the new Engineer.For a discussion on when the Engineer's role comes to an end and he is functuso f f i c i o , s e e u n d e r c l a u s e 2 . 1 ( E n g i n e e r ' s d u t i e s a n d a u t h o r i t y ) . S e e a l s o t h e comments under clause 67.1 (Engineer's decision).(a)(v)"Engineer's Representative" - The Engineer's Representative is referred toin only three other clauses: clause 2 (Engineer and Engineer's
Representative)which deals with the delegation of powers by the Engineer to his Representative;clause 13.1 (W ork to be in accordance with contra ct) whereby the Contractor isobliged to take instructions from
the Engineer's Representative and clause 15.1(Contractor's
superintendence) on the same subject. In view of the delegation provision, express mention of the Engineer's Representative
is unnecessary.( b ) ( i ) " C o n t r a c t " - T h e r e i s n o s i g n i f i c a n c e i n t h e o r d e r o f c o n t r a c t d o c u m e n t s given here. See clause 5.2 (Priority of contract documents). The reference in earlier editions to a "Schedule of Rates and Prices, if any" has not been repeatedin this edition. It should be
noted that the term "Contract" includes the Drawingsand it is therefore arguable that the term includes future drawings. In order tomake sense of expressions such as "increase or decrease the quantity of any work included in the Contract" in clause 51.1 (Variations), it is necessary to applythe exception in the opening words of the current sub-clause: "except where thecontext otherwise requires".( b ) ( i i ) " S p e c i f i c a t i o n " - A s t h e s p e c i f i c a t i o n
i n c l u d e s a n y v a r i a t i o n s a n d a s t h e specification is pa rt of the contract, the contract is itself variable. Thus, strictlyspeaking, the expression "increase or decrease the quantity of any work includedin the Contract" in clause 51.1 (Variations) is somewhat circular. Equally, thedefinition of Works is defined by reference to the contract and thus
incorporatesvariability. It must be doubted that this point is ultimately of great significance.( b ) ( i i i ) " D r a w i n g s " - T h e t e r m i s v e r y w i d e l y d e f i n e d . T h e i n c l u s i o n o f s a m p l e s , patents and models is perhaps surprising and produces curious results if takenliterally. For example, under clause 6.1 (Custody and supply of drawings and documents), the Contractor is to provide for copies. This is one of the occasionswhen the opening words of this sub-clause, "except where the context
otherwiser e q u i r e s " , w i l l b e m o s t r e l e v a n t . I t i s a l s o i m p o r t a n t t o a p p r e c i a t e t h a t t h i s definition is not limited to drawings etc in existence at the time time the Contractis entered into but refers to all future
drawings.(b)(iv)"Bill of Quantities" - Surprisingly, the only other reference to the prices in the Bill of Quantities is in clause 12.1 (Sufficiency of Tender): there is no expressindication at all that the prices are to be used for valuation other than in relationto variations. See in particular clause 55 (Quantities) and clause 56 (Works to bemeasured). The 4th Edition no longer contains a reference to the Schedule of Rates.
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( b ) ( v ) " T e n d e r " - I t i s i m p o r t a n t t o
Letter of Acceptance". Thus, it is not necessarily the tender assubmitted by the Contractor but the result of any negotiation prior to the placingo f t h e o r d e r . A n y p r o g r a m m e i n c l u d e d i n t h e t e n d e r w i l l b e c o m e p a r t o f t h e contract as the tender is a contract document: f or
diccussion of this see under clause 14.1 (Programme to be submitted).( b ) ( v i ) " L e t t e r o f A c c e p t a n c e "
T h e r e i s n o s p e c i f i e d f o r m f o r t h e L e t t e r o f Acceptance and careful attention must be paid to its contents, particularly in viewof the priority given to the Letter of Acceptance by clause 5.2 (Priority of contractdocuments). It is second only to the Contract Agreement which is an optionaldocument. It is important to ensure that the Letter of Acceptance matches thetender or, if there have been subsequent n egotiations, an amended version of t h a t t e n d e r . O t h e r w i s e , t h e L e t t e r o f A c c e p t a n c e w o u l d b e n o m o r e t h a n a c o u n t e r
-o f f e r w h i c h w -o u l d r e q u i r e a f u r t h e r a c c e p t a n c e f r -o m t h e C -o n t r a c t o r before a contract was formed. As "the Tender" is a contract
document, conf lictwould result if the tender was not amended. It is also important to ensure that, if a Contract Agreement is used, the Letter of Acceptance and
Contract Agreementa l s o m a t c h . T h e r e a r e n o t e r m s i n t h e
c o n t r a c t w h i c h g o v e r n t h e L e t t e r o f Acceptance but it is used extensively as a trigger for periods of time by which certain activities have to be performed. These are as follows:-Clause 10.1 (Performance security) - 28
daysClause 14.1 (Programme to be submitted) - period prescribed in Part IIClause 14.3 (Cashflow estimate to be submitted) - period prescibed in Part IIC l a u s e 4 1 . 1 ( C o m m e n c e m e n t o f W o r k s ) - p e r i o d s t a t e d i n t h e A p p e n d i x
t o Tender Clause 57.2 (Breakdown of lump sum item) - 28 daysThe importance of the Letter of Acceptance as a starting point in the conditions of contract reinforces the importance of ensuring that the Letter of Acceptance is anacceptance and not a counter-offer. It would make a nonsense of the various time periods if they were running before a contract had been entered into.(b)(vii)"Contract Agreement" A form of Agreement is provided and referred to atc l a u s e 9 . 1 ( C o n t r a c t A g r e e m e n t ) . B o t h t h e d e f i n i t i o n o f C o n t r a c t a t
c l a u s e 1 . 1 ( b ) ( i ) a n d c l a u s e 5 . 2 ( P r i o r i t y o f c o n t r a c t d o c u m e n t s ) a l l o w f o r f u r t h e r documents to be incorporated as
contract documents. The Contract Agreementshould be amended to record such further
documents.( b ) ( v i i i ) " A p p e n d i x t o T e n d e r " A s c o m m e n t e d u n d e r t h e d e f i n i t i o n o f Tender above, there may be negotiations which alter the contents of the
Tender and the Appendix t o Tender before the contract is entered into. This definitiontherefore refers to the Appendix as
amended.( c ) ( i ) " C o m m e n c e m e n t D a t e " - T h i s d e f i n i t i o n d e t e r m i n e s t h e d a t e u p o n w h i c h time begins to run on the project. The notice to commence is not in a specifi edform. See generally the commentary to clause 41 (Commencement of Works).
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(c)(ii)"Time for Completion" - This is the contractual completion date as set outin the contract subject to any extensions under clause 44. Substantial
completionmust be achieved under clause 48.1 (Taking-over certificate) by this date, failingw h i c h l i q u i d a t e d d a m a g e s w i l l b e p a y a b l e u n d e r c l a u s e 4 7 . 1 ( L i q u i d a t e d damages for delay).(d)(i)"Tests on Completion" - These tests will often include commissioning andare refe rred to in
clause 48 (Taking-Over) as being a prerequisite to substantial completion and the issue of a Taking-over certificate for the whole or any part of the works for which such a test is prescribed.(d)(ii)"Taking-Over Certificate" - No form is prescribed for this certificate: clause 4 8 . 1 ( T a k i n g - O v e r C e r t i f i c a t e ) o n l y s p e c i f i e s t h a t i t s h o u l d s t a t e t h e d a t e o n which, in the Engineer's opinion, the works were substantially completed.( e ) ( i ) " C o n t r a c t P r i c e " - I t i s i m p o r t a n t t o a p p r e c i a t e t h a t t h e C o n t r a c t P r i c e i s a fixed sum as stated in the Letter of Acceptance and the term does not includeany adjustments to the contract price for variations etc. For more on this point,s e e t h e c o m m e n t a r y u n d e r c l a u s e 6 9 . 4 ( C o n t r a c t o r ' s e n t i t l e m e n t t o s u s p e n d work).( e ) ( i i ) " R e t e n t i o n M o n e y " - F o r
c o m m e n t a r y o n t h e u n c e r t a i n t y o f t h e r e t e n t i o n provisions, see under clause 60.3 (Payment of Retention money).( f ) ( i ) " W o r k s " - T h i s
t e r m i s g i v e n a n
a d j u s t e d m e a n i n g u n d e r c l a u s e 4 9 . 1 ( D e f e c t s L i a b i l i t y P e r i o d ) . T h e d e f i n i t i o n o f T e m p o r a r y W o r k s i s n o t w i t h o u t d i f f i c u l t y a s s e t o u t u n d e r ( f ) ( i i i ) b e l o w . A s t h e r e a r e d a n g e r s i n i n c l u d i n g T e m p o r a r y W o r k s i n t h e d e f i n i t i o n o f W o r k s , t h e d r a f t s m a n h a s t a k e n t h e precaution of putting flexibility ahead of certainty with the words "or either of themas appropriate". This reinforces the opening words of the sub -clause "except where the context otherwise requires".( f ) ( i i ) " P e r m a n e n t W o r k s " - T h i s d e f i n i t i o n n o w i n c l u d e s e x p r e s s r e f e r e n c e t o P l a n t , a r e c o g n i t i o n o f t h e g r o w i n g a m o u n t o f m a c h i n e r y e t c . i n c l u d e d i n c i v i l engineering projects.( f ) ( i i i ) " T e m p o r a r y W o r k s " T h i s d e f i n i t i o n i s c i r c u l a r w i t h t h e d e f i n i t i o n o f C o n t r a c t o r ' s E q u i p m e n t . A s n o t e d i n t h e c o m m e n t a r y t o c l a u s e 4 1 (Commencement of W orks), this is unfortunate as the failure to commence theW orks is a ground for determination under clause 63.1 (Default of Contractor).See clause 31.2 (Facilities for other contractors) for the obligation to make thetemporary works
available to other contractors and clause 32.1 (Contractor tokeep site clear) and 33.1 (Clearance of site on completion) for the obligation toremove temporary work. It should be borne in mind that temporary works are notalways removed, for example temporary linings to tunnels or temporary roads.By clause 54 (Contractor's Equipment, Temporary Works and materials) there is
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an obligation upon the Contractor to provide temporary works exclusively for theproject.(f)(iv)"Plant" - This is a new definition not found in the 3rd Edition or ICE 5th or 6th. It might be confusing as plant is normally regarded as meaning Contractor'smachinery. Instead, this means the plant to be installed as part of the permanentworks. The Contractor's machinery is now defined as
Contractor's Equipment.(f)(v)"Contractor's Equipment" - In the 3rd Edition and ICE 5th, the Contractor'smachinery is called "Constructional Plant". The current definition is circular withthe definition of Temporary W orks. As noted in the commentary to clause 41(Commencement of W orks), this is unfortunate as the failure to commenc e theW orks is a ground for determination under clause 63.1 (Default of Contractor). ICE 6th has adopted the term Contractor's Equipment.(f)(vi)"Section" - The W orks may be broken down into Sections and parts. Thedifference is that a Section
is specifically identified in the contract whereas a part,which is not defined, seems to be any other sub-division including a sub-divisiono f a S e c t i o n . S e e t h i s d i s t i n c t i o n i n o p e r a t i o n i n c l a u s e 4 7 . 2 ( R e d u c t i o n o f liquidated damages), clause 48.2 (Taking over of section s or parts) and clause 48.3 (Substantial completion of parts).( f ) ( v i i ) " S i t e " - T h i s d e f i n i t i o n i s
a v a r i a n t u p o n t h e f o r m u s e d i n t h e 3 r d E d i t i o n and ICE 5th. This definition falls into two parts:-( a ) P l a c e s p r o v i d e d b y t h e
E m p l o y e r w h e r e t h e W o r k s a r e t o b e
e x e c u t e d ; and( b ) O t h e r p l a c e s w h i c h a r e s p e c i f i c a l l y
d e s i g n a t e d i n t h e c o n t r a c t a s f o r m i n g part of the site.Compare 3rd Edition and ICE 5th which break down as follows:-( a ) p l a c e s o n , u n d e r i n o r t h r o u g h w h i c h w o r k s a r e t o b e e x e c u t e d ;
a n d ( b ) p l a c e s p r o v i d e d b y t h e E m p l o y e r o r s p e c i f i c a l l y d e s i g n a t e d i n t h e c o n t r a c t as forming part of the site.The essential difference is that (a) is qualified by the words "provided by the Employer" in this Edition but (b) contains those words in the 3rd Edition and ICE5th. One significance of this is that the Employer cannot be in breach of
clause42.1 (Possession of site and access thereto) by failing to give possession of thesite if the site is itself defined as places provided by the
Employer. As the Site w i l l n o r m a l l y b e d e f i n e d i n t h e c o n t r a c t , t h i s s h o u l d n o t n o r m a l l y g i v e r i s e t o problems. Nor, it is submitted, should the omission of the words "on, under, in or through" create difficulties. If the failure to give possession is the failure of the Employer to organise the removal, for example, of an underground pipe or cablec o n d u i t , e v e n
t h o u g h t h e p o s s e s s i o n o f t h e s u r f a c e h a s b e e n g i v e n t o t h e
Contractor, the Contractor's claim under clause 42.2 (Failure to give
possession)s h o u l d n o t b e h a m p e r e d b y t h e a b s e n c e o f t h e s e w o r d s . S e e a l s o t h e commentary under clause 42.1 (Possession of Site and access thereto). See thecomments under clause 42.1 for further
discussion of the term "Site". ICE 6th hasadded the "other places...designated" formula to the ICE 5th definition.(g)(i)"cost" - This definition for the
first time expressly excludes profit. Thus, theo n l y o c c a s i o n o n w h i c h t h e C o n t r a c t o r i s a l l o w e d h i s p r o f i t b y t h e c o n t r a c t i s u n d e r c l a u s e 6 9 . 3 ( P a y m e n t o n t e r m i n a t i o n ) w h e r e , u p o n t h e d e f a u l t o f t h e E m p l o y e r , h e i s e n t i t l e d t o c l a i m " t h e a m o u n t o f a n y l o s s o r d a m a g e " . T h i s definition has been adopted with minor amendments by ICE 6th. However ICE6th expressly permits profit on three occasions in the contract in relation to any additional temporary or permanent
works.( g ) ( i i ) " d a y " - T h i s e d i t i o n h a s a d o p t e d a p o l i c y o f g i v i n g p e r i o d s o f t i m e i n multiples of seven days whereas the 3rd Edition used units of 30 days for longer periods. Compare, for example, clause 67 (Settlement of disputes) in the two editions.(g)(iii)"foreign currency" - It is important to note that foreign currency does
notm e a n a c u r r e n c y o t h e r t h a n t h e c u r r e n c y i n w h i c h t h e C o n t r a c t P r i c e i s expressed but any other currency than the local currency. Thus, the ContractPrice could itself be expressed in a foreign currency. Part II provides various amendments to clause 60 and clause 72.2 in relation to currencies.(g)(iv)"writing" - This definition is of particular relevance to clause 1.5 (Notices, consents etc) which must be in
writing.CLAUSE 1.1 (Definitions)The following definitions are new to the 1992 re-print:-(e)(iii)"Interim Payment Certificate" means any certificate of
payment issued bythe Engineer other than the Final Payment Certificate.(iv)"Final Payment Certificate" means the certificate of payment issued by theEngineer
pursuant to Sub-Clause 60.8.W h i l s t i t i s n o d o u b t a g o o d i d e a t o h a v e d e f i n e d t e r m s f o r i n t e r i m a n d f i n a l certificates, the definition of Interim Payment Certificate raises the question as towhich clauses other than clause 60.2 (Monthly payments) will give rise to interimpayment certificates. The definition could and, it is submitted, should simply have referred to certificates issued under sub-clause
60.2.O t h e r c e r t i f i c a t e s t o b e i s s u e d b y t h e E n g i n e e r i n c l u d e t h e T a k i n g - O v e r Certificate under clause 48 for the whole or part of the works, a certificate of theContractor's default under clause 63.1 (Default of Contractor) and the DefectsLiability Certificate under clause 62.1. These all lead to payments being made
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b u t a r e n o t t h e c e r t i f i c a t e s f o r p a y m e n t
t h e m s e l v e s . U n d e r c l a u s e 5 9 . 5 (Certification of payments to nominated Subcontractors), the Engineer certifies payment to nominated subcontractors where the Contractor fails to supply proof that previous sums certified in relation to nominated subcontractors' work havebeen passed on. Such certificates fall within the definition of Interim
PaymentCertificates. The certificate under 63.2 (Valuation at date of termination) is ac e r t i f i c a t e o f v a l u e o n l y a n d n o t a c e r t i f i c a t e f o r p a y m e n t . I n c o n t r a s t , t h e certificate under sub -clause 63.3
(Payment after termination) is a certificate of p a y m e n t a n d f a l l s w i t h i n t h e d e f i n i t i o n o f I n t e r i m P a y m e n t C e r t i f i c a t e d e s p i t e being final in nature. Curiously, a certificate under Sub-Clause 63.3 could showa balance in favour of the Employer. However, such a certificate is deemed to bea debt and is not strictly therefore a certificate for payment.W ithin clause 60 (Certificates and
payment) there are certificates under
subc l a u s e 6 0 . 3 ( P a y m e n t o f r e t e n t i o n m o n e y ) , s u b
-c l a u s e 6 0 . 5 ( S t a t e m e n t a t -completion) and under sub --clause 60.6 (Final statement) where part only of the Contractor's draft final statement is not in dispute.Clause 60.3(a) has always raised the question whether the release of the firsth a l f o f t h e R e t e n t i o n M o n e y f o l l o w i n g t h e i s s u e o f t h e t a k i n g - o v e r c e r t i f i c a t e s h o u l d b e t h e s u b j e c t o f a s p e c i a l p a y m e n t c e r t i f i c a t e o r i n c l u d e d i n t h e n e x t m o n t h l y
i n t e r i m c e r t i f i c a t e . P r a c t i c e v a r i e s b u t m o r e o f t e n t h a n n o t , t h e f i r s t moiety of retention is relea sed in the next interim certificate. The fact that thecertification falls within the definition of Interim Payment Certificate, does not resolve the
issue.I n o n e r e s p e c t , C o n t r a c t o r s a r e i l l
-s e r v e d b y t h i -s a m e n d m e n t . W h e r e t h e practice would otherwi-se have been to issue a special certificate for the releaseof retention, the Contractor was able to argue that he was entitled to immediate p a y m e n t b y t h e E m p l o y e r . N o w , s u c h a c e r t i f i c a t e i s a n I n t e r i m P a y m e n t C e r t i f i c a t e a n d t h e E m p l o y e r i s g i v e n 2 8 d a y s u n d e r C l a u s e 6 0 . 1 0 ( T i m e f o r payment).T h e e n t r y i n t h e A p p e n d i x f o r t h e " m i n i m u m a m o u n t o f i n t e r i m p a y m e n t c e r t i f i c a t e s " a p p l i e s o n l y t o c l a u s e 6 0 . 2 a n d d o e s n o t t h e r e f o r e r e s t r i c t s m a l l payments under other payment clauses despite the application of the definition.As is plain from the list of the amendments contained in the 1992 re -print, andthe extracts set out later in this supplement, the definition has not been used w h e r e v e r i t i s a p p l i c a b l e . T h e t e r m i s n o w u s e d i n s u b - c l a u s e s 6 0 . 2 ,
6 0 . 4 (Correction of certificates) and 60.10 (Time for payment).Perhaps surprisingly, the result is that three interim payment certificates could bei s s u e d i n t h e s a m e m o n t h u n d e r c l a u s e s 6 0 . 2 , 6 0 . 3 ( P a y m e n t o f R e t e n t i o n Money) and 59.5 (Certification of payments to nominated Subcontractors).Under clause 69.1 (Default of Employer), interference with the issuing of certainc e r t i f i c a t e s
i s a g r o u n d f o r t h e C o n t r a c t o r t o t e r m i n a t e h i s e m p l o y m e n t . T h e Page 41 of 264
relevant certificates are those for which time-limits for payment are
given under clause 60.10 (Time for payment). The effect of the definition of Interim PaymentCertificate and the application of that definition to a number of certificates other than monthly certificates under clause 60.2 (Monthly payments) has been theextention of the scope of the interference ground for termination. For example,i n t e r f e r e n c e w i t h a c e r t i f i c a t e u n d e r c l a u s e 5 9 . 5 ( C e r t i f i c a t i o n o f p a y m e n t t o n o m i n a t e d
S u b c o n t r a c t o r s ) w o u l d n o t h a v e b e e n a g r o u n d f o r
d e t e r m i n a t i o n hitherto. Whilst interference with any form of certification is plainly contrary to thes p i r i t o f t h e c o n t r a c t , i t i s u n l i k e l y t h a t t h e d r a f t s m a n i n t e n d e d t o e n l a r g e t h e ground for termination to such an extent.1 . 2 : T h i s r u l e o f i n t e r p r e t a t i o n w i l l o n o c c a s i o n b e s i g n f i c a n t . F o r e x a m p l e , clause 12.2 is entitled "Adverse physical obstructions or conditions" but the word"adverse" does not feature in the clause. Similarly, the titles of clause 63 (Defaulto f C o n t r a c t o r ) a n d c l a u s e 6 9 ( D e f a u l t o f E m p l o y e r ) b o t h i n c l u d e t h e w o r d "default" which is not found in either clause. This may be just as well given thefact that "default" is used as an
alternative to breach of contract in clause 40.1 (Suspension of work), clause 44.1 (Extension of time for completion) and clause51.1 (Variations). It is always questionable whether any tribunal is capable of entirely ignoring such clear evidence of the intentions of the draftsman.1 . 3 : C l a u s e 1 . 1 ( a ) ( i v ) d e f i n e s t h e E n g i n e e r a s " t h e p e r s o n a p p o i n t e d . . . " . T h i s sub-clause is a reminder in relation to the Engineer that the Employer may namea f i r m o f E n g i n e e r s a s d i s t i n c t f r o m a n i n d i v i d u a l . I n v i e w o f t h e l a c k o f a n y provision for the replacement of an Engineer who dies or retires, this course maybe adopted more often.1 . 4 : T h i s i s a s t a n d a r d c l a u s e a n d w a s c o n t a i n e d i n t h e 3 r d E d i t i o n a n d I C E 5th.1 . 5 : T h i s c l a u s e i s n e w a n d p u t s b e y o n d d o u b t w h a t m a y h a v e b e e n
i m p l i c i t from clause 68 (Notices) that notices, consents etc must be in writing. Writing isalso required by the following
clauses:-clause 2.3 Engineer's delegation to Engineer's Representativeclauses:-clause 2.5 Engineer's i nstructionsclause 6.1 Engineer's requests for further drawingsclause 6.2 Authorisatio n of persons to inspect drawingsclause 14.1 Contractor's general description of meth ods etcclause 17.1 Setting outclause 31.2 Engineer's request for facilities for other Contractors.
clause 48.1 Undertaking to finish outstanding workclause 54.5 Requests regardin g hire of Contractor's Equipmentclause 56.1 Request for Contractor to attendc l a u s e 5 9 . 5 C o n t r a c t o r ' s s t a t e m e n t o f c a u s e f o r w i t h h o l d i n g p a y m e n t f r o m n o m i n a t e d S u b c o n t r a c t o r a n d n o t i f i c a t i o n b y C o n t r a c t o r t o n o m i n a t e d Subcontractor.clause 60.7 Contractor' s discharge.clause 63.1 Warning to Contractor.clause 67.1 Reference of dispute t o Engineer.There are additional references to written instructions but clause 2.5 (Instructionsin writing) makes this plain.A comparison of this clause
with clause 2.6 (Engineer to act impartially), clause 6 7 . 1 ( E n g i n e e r ' s d e c i s i o n ) , c l a u s e 6 7 . 3 ( A r b i t r a t i o n ) a n d c l a u s e 6 8
( N o t i c e s ) r e v e a l s a n i n c o n s i s t e n c y i n t h e u s e o f t e r m s s u c h a s n o t i c e s , c o n s e n t s e t c . Table 6 indicates the clauses in which the various terms appear."Any such consent, approval, certificate or
determination shall not unreasonablybe withheld or delayed." Notices are excluded from this list. Notices are givenunder some 37 clauses by
the Employer, the Engineer and the Contractor. Mostcommonly, it is the Engineer notifying the Contractor of a determination of costsand/or extension of
time. A determination is covered by this clause and thus
mayn o t u n r e a s o n a b l y b e w i t h h e l d o r d e l a y e d . N e i t h e r t h e n o t i c e s n o r t h e determinations are directly covered by clause 2.6 (Engineer to act impartially) butthey are plainly actions affecting the rights of the parties and are thus covered byclause 2.6(d). Notices by the Contractor or the Employer are normally given in t h e i r o w n b e s t i n t e r e s t , a n d i f n o t i m e f r a m e i s s p e c i f i e d , n o n e i s
n o r m a l l y necessary. As this part of the clause refers as much to the Employer and theC o n t r a c t o r a s t o t h e E n g i n e e r , i t i s s i g n i f i c a n t i n r e l a t i o n t o c l a u s e s s u c h a s clause 10.1 (Performance security) as the right of the Employer to withhold his approval is subject to the test of reasonableness.Under clause 3.1 (Assignment of contract), the
Employer is given an absoluted iscretion to withhold his consent "notwithstanding the provisions of sub -clause1.5".
