FIDIC Red Book (2017) PDF

Conditions of Contract for Construction This document is restricted for distribution within the Lexis Nexis platform - NOT FOR CONTRACT...

Conditions of Contract for Construction This document is restricted for distribution within the Lexis Nexis platform - NOT FOR CONTRACT USE AND NOT PRINTABLE - ORIGINAL FOR SALE AT www.fidic.org GENERAL CONDITIONS GUIDANCE FOR THE PREPARATION OF PARTICULAR CONDITIONS AND ANNEXES: FORMS OF SECURITIES FORMS OF LETTER OF TENDER, LETTER OF ACCEPTANCE, CONTRACT AGREEMENT AND DISPUTE ADJUDICATION/AVOIDANCE AGREEMENT ISBN 978-2-88432-084-9 SECOND EDITION 2017  GENERAL CONDITIONS GUIDANCE FOR THE PREPARATION OF PARTICULAR CONDITIONS AND ANNEXES: FORMS OF SECURITIES FIDIC® Conditions of Contract for FORMS OF LETTER OF CONSTRUCTION TENDER, LETTER OF ACCEPTANCE, CONTRACT AGREEMENT AND DISPUTE ADJUDICATION/ FOR BUILDING AND ENGINEERING AVOIDANCE AGREEMENT WORKS DESIGNED BY THE EMPLOYER This document is restricted for distribution within the Lexis Nexis platform - NOT FOR CONTRACT USE AND NOT PRINTABLE - ORIGINAL FOR SALE AT www.fidic.org Second Edition 2017 ISBN 978-2-88432-084-9 FEDERATION INTERNATIONALE DES INGENIEURS-CONSEILS INTERNATIONAL FEDERATION OF CONSULTING ENGINEERS INTERNATIONALE VEREINIGUNG BERATENDER INGENIEURE FEDERACION INTERNACIONAL DE INGENIEROS CONSULTORES  COPYRIGHT Copyright © 2017 FIDIC, World Trade Center II, 29 route de Prés-Bois, Geneva Airport, CH- 1215 Geneva, Switzerland. All rights reserved. FIDIC is the only Copyright owner of FIDIC publications, which are protected by the Berne Convention for the Protection of Literary and Artistic Works, international conventions such as TRIPS and the WIPO copyright treaty and national intellectual property laws. No part of a FIDIC publication can be reproduced, translated, adapted, stored in a retrieval system or communicated, in any form or by any means, mechanical, electronic, magnetic, photocopying, recording or otherwise, without prior permission in writing from FIDIC. The version in English is considered by FIDIC as the official and authentic text for the purposes of translation. TERMS AND CONDITIONS The widespread dissemination, acceptance and use of FIDIC publications and their translations are important means for accomplishing FIDIC’s mission and are therefore actively promoted by FIDIC. The sale of FIDIC publications and their translations is an important source of revenue for FIDIC and its Member Associations. It creates resources for providing a wide range of services meeting the business needs of member firms. All steps, starting with the initial This document is restricted for distribution within the Lexis Nexis platform - NOT FOR CONTRACT USE AND NOT PRINTABLE - ORIGINAL FOR SALE AT www.fidic.org drafting of publications, often require considerable effort and expense. FIDIC regularly updates and reissues publications so that users can profit from the state-of-the-art. By supplying publications, FIDIC does not grant any intellectual property rights. The purchase or supply of a FIDIC publication, including forms for completion by a purchaser or authorised user, does not confer author’s rights under any circumstances. Users rely on the contents of FIDIC publications, especially FIDIC contracts and agreements, for important business transactions. The use of authentic publications is therefore essential for safeguarding their interests. FIDIC discourages modification of its publications, and only in exceptional circumstances will it authorise modification, reproduction or incorporation elsewhere. Permission to quote from, incorporate, reproduce or copy all or part of a FIDIC publication should be addressed to the FIDIC Secretariat, which will decide upon appropriate terms. A license to prepare a modified or adapted publication will be agreed to under certain conditions. Specifically the modified or adapted publication must be for internal purposes, and not be published or distributed commercially. In the case of FIDIC contracts and agreements, FIDIC aims to provide balanced and equitable conditions of contract by ensuring the integrity of its publications. A purchaser or authorised user of a FIDIC contract or agreement is thus granted the right to: - make a single copy of the purchased document, for personal and private use; - incorporate in other documents (or electronic files) either the original printed document (or electronic file) or pages printed from an electronic file supplied by FIDIC for this purpose; - draw up and distribute internally and/or among partners clearly identified Particular Conditions or their equivalent using text provided in the FIDIC publication specifically for this purpose; - reproduce, complete and distribute internally and/or among partners any forms, in both printed and electronic formats, provided for completion by the purchaser or user. DISCLAIMER While FIDIC aims to ensure that its publications represent the best in business practice, the Federation accepts or assumes no liability or responsibility for any events or the consequences thereof that derive from the use of its publications. FIDIC publications are provided “as is”, without warranty of any kind, either express or implied, including, without limitation, warranties of merchantability, fitness for a particular purpose and non-infringement. FIDIC publications are not exhaustive and are only intended to provide general guidance. They should not be relied upon in a specific situation or issue. Expert legal advice should be obtained whenever appropriate, and particularly before entering into or terminating a contract. © FIDIC 2017  CONTENTS Acknowledgements Notes General Conditions Content...................................................................................................... i Clauses 1 to 21.......................................................................................... 1 Appendix: General Conditions of Dispute Avoidance/Adjudication Agreement............................................................................................. 107 This document is restricted for distribution within the Lexis Nexis platform - NOT FOR CONTRACT USE AND NOT PRINTABLE - ORIGINAL FOR SALE AT www.fidic.org Annex: DAAB Procedural Rules..............................................................117 Index of Sub-Clauses.............................................................................124 Guidance for the Preparation of Particular Conditions Contents.................................................................................................... 1 Introductory Guidance Notes......................................................................2 Particular Conditions Part A – Contract Data...............................................3 Particular Conditions Part B – Special Provisions........................................8 Notes on the Preparation of Tender Documents............................10 Notes on the Preparation of Special Provisions.............................13 Clauses.......................................................................................14 Advisory Notes to Users of FIDIC Contracts Where the Project is to Include Building Information Modelling Systems.......................................53 Annexes: Forms of Securities..................................................................................56 Forms of Letter of Tender, Letter of Acceptance, Contract Agreement and Dispute Adjudication/Avoidance Agreement Letter of Tender.......................................................................................... i Letter of Acceptance..................................................................................ii Contract Agreementiii Dispute Avoidance/Adjudication Agreementiv © FIDIC 2017 This document is restricted for distribution within the Lexis Nexis platform - NOT FOR CONTRACT USE AND NOT PRINTABLE - ORIGINAL FOR SALE AT www.fidic.org  ACKNOWLEDGEMENTS Fédération Internationale des Ingénieurs-Conseils (FIDIC) extends special thanks to the following persons who prepared, assisted and contributed in the preparation of the Second Edition of FIDIC’s three standard forms of contract (Conditions of Contract for Construction, Conditions of Contract for Plant and Design-Build, and Conditions of Contract for EPC/Turnkey Projects): FIDIC Contracts Committee’s Updates Special Group: Zoltán Záhonyi, Z&Partners Consulting Engineers, Hungary; Siobhan Fahey, Consulting Engineer, Ireland (Principal Drafter); Christoph Theune, GKW Consult GmbH, Germany; and William Howard, CDM Smith, USA (Executive Committee liaison). Initial Update Task Group: Svend Poulsen, Atkins/COWI, Denmark (Group Leader); Aisha Nadar, Advokatfirman Runeland AB, Sweden (task group principal drafter); Robin Schonfeld, SMEC, This document is restricted for distribution within the Lexis Nexis platform - NOT FOR CONTRACT USE AND NOT PRINTABLE - ORIGINAL FOR SALE AT www.fidic.org Australia (task group principal drafter); Darko Plamenac, Consulting Engineer, Serbia; Jan Ziepke, Consulting Engineer, Germany; and Zoltán Záhonyi, Z&Partners Consulting Engineers, Hungary (Contracts Committee liaison). Second Stage Update Task Group: Simon Worley, EIA Ltd., UK (Group Leader); John Greenhalgh, Greenhalgh Associates, UK; Leo Grutters, C2S Global, Germany; Aisha Nadar, Advokatfirman Runeland AB, Sweden; William Godwin, Matrix Seminars, UK; Siobhan Fahey, Consulting Engineer, Ireland (Contracts Committee liaison); and Shelley Adams, EIA Ltd., UK (secretary to the task group). The preparation was carried out under the general direction of the FIDIC Contracts Committee: Philip Jenkinson, Atkins, UK (past Chairman); Zoltán Záhonyi, Z&Partners Consulting Engineers, Hungary (Chairman); Vincent Leloup, Exequatur, France; Kaj Möller, SWECO, Sweden; Siobhan Fahey, Consulting Engineer, Ireland; Mike Roberts, Mott MacDonald, UK; Des Barry, Consulting Engineer, Ireland; Christoph Theune, GKW Consult GmbH, Germany; Enrico Vink, FIDIC Managing Director; and Christophe Sisto, FIDIC Design & Edition Manager. together with liaisons to the FIDIC Contracts Committee: Geoff French, Scott Wilson, UK (past EC liaison); Kaj Möller, SWECO, Sweden (past EC liaison); José Amorim Faria, SOPSEC, Portugal (past EFCA liaison); William Howard, CDM Smith, USA (EC primary liaison); Aisha Nadar, Advokatfirman Runeland AB, Sweden (EC secondary liaison; and Pawel Zejer, AECOM, Poland (EFCA liaison). Advisory Notes to Users of FIDIC Contracts Where the Project is Using Building Information Modelling Systems were provided by: Anthony Barry, Aurecon, Australia (FIDIC Executive Committee), Andrew Read, Pedersen Read Consulting, New Zealand (chairman FIDIC Business Practice Committee) and Stephen Jenkins, Aurecon, New Zealand (chairman FIDIC Risk, Liability and Quality Committee). © FIDIC 2017  Special Advisers to the Contracts Committee provided invaluable and continued support in the various drafting and revision stages: Christopher Seppälä, White & Case LLP, France (legal adviser, assisted by Dimitar Kondev, White & Case LLP, France); Nael G Bunni, Ireland (risk and insurance adviser); Axel-V. Jaeger, Germany; Michael Mortimer Hawkins, UK/Sweden; and Christopher Wade, UK. Drafts were reviewed by many persons and organisations, including those listed below. Their comments were duly studied by the FIDIC Contracts Committee’s Updates Special Group and Update Task Groups and, where considered appropriate, have influenced the wording of the clauses. Mahmoud Abu Hussein, Dolphin Energy, United Arab Emirates; Ihab Abu-Zahra, CRC Hassan Dorra, Egypt; Mushtaq Ahmad Smore, Engineer, Pakistan; Richard Appuhn, Engineer, Italy; Ulrik Bang Olsen, Bang Olsen & Partners Law Firm P/S, Denmark; Hartmut Bruehl, Engineer, Germany; Donald Charrett, MTECC, Australia; Edward Corbett, Corbett & Co International Construction Lawyers Ltd, UK; Cremona Cotovelea, SCPA Tecuci-Paltineanu, Romania; Mark Etheridge, UWP Consulting This document is restricted for distribution within the Lexis Nexis platform - NOT FOR CONTRACT USE AND NOT PRINTABLE - ORIGINAL FOR SALE AT www.fidic.org Pty (Ltd), UK; European International Contractors, Berlin, Germany; Ciaran Fahy, Engineer, Ireland; Stephane Giraud, Egis, France; Karen Gough, 39 Essex Chambers, UK; Sarwono Hardjomuljadi, Special Adviser to the Minister of Public Works, Indonesia; Sebastian Hoek, Kanzlei Dr.Hök Stieglmeier & Kollegen Berlin, Germany; Tomohide Ichiguchi, JICA, Japan; Reza Ikani, Tehran Berkeley Group of Companies, Iran; Levent Irmak, MC2 Modern, Turkey; Gordon Jaynes, Lawyer, UK; Nabeel Khokhar, Driver Group, UK; Humphrey Lloyd, Queen Mary University London, UK; Liu Luobing, Shanghai SICC Planning & Architectural Design, Republic of China; Husni Madi, Shura Construction Management, Jordan; Malith Mendis, ACES, Sri Lanka; Benjamin Mellors, Holman Fenwick Willan LLP, UK; Christopher Miers, Probyn Miers, UK; Henry Musonda, Kiran & Musonda Associates, Zambia; Kjeld B Nielsen, Sweco, Denmark; Patrizia Palmitessa-Savric, Ginder Palmitessa Pty Ltd, Botswana; James Perry, PS Consulting, France; Mikko Pulkkinen, Presentio Oy, Finland; John Ritchie, Consultant, Canada; Munther Sakhet, Allied Planning & Engineering Co, Jordan; Michael Sergeant, HFW, UK; Christian Siemer, Fichtner Consulting Engineers, Germany; Evgeny Smirnov, EBRD, UK; Jakob B. Sorensen, M Holst, Advokater, Denmark; Benjamin Valloire, Syntec Ingénierie, France; Kitty Villani, Council of Europe Development Bank, France; Ahmed Faty Waly, WALY Arbitration, Egypt. Acknowledgement of all reviewers above does not mean that such persons or organisations approve the wording of all clauses. FIDIC very much appreciates the time and effort devoted by all the above persons. The ultimate decision on the form and content of the document rests with FIDIC. © FIDIC 2017  NOTES This Second Edition of the Conditions of Contract for Construction has been published by the Fédération Internationale des Ingénieurs-Conseils (FIDIC) as an update of the FIDIC 1999 Conditions of Contract for Construction (Red Book), First Edition. Along with the FIDIC 1999 Yellow Book (the Conditions of Contract for Plant and Design-Build) and the FIDIC 1999 Silver Book (the Conditions of Contract for EPC/ Turnkey Projects), the FIDIC 1999 Red Book has been in widespread use for nearly two decades. In particular, it has been recognised for, among other things, its principles of balanced risk sharing between the Employer and the Contractor in projects where the Contractor constructs the works in accordance with a design provided by the Employer. However, the works may include some elements of Contractor-designed civil, mechanical, electrical and/or construction works. This Second Edition of the FIDIC Red Book continues FIDIC’s fundamental principles of balanced risk sharing while seeking to build on the substantial experience This document is restricted for distribution within the Lexis Nexis platform - NOT FOR CONTRACT USE AND NOT PRINTABLE - ORIGINAL FOR SALE AT www.fidic.org gained from its use over the past 18 years. For example, this edition provides: 1) greater detail and clarity on the requirements for notices and other communications; 2) provisions to address Employers’ and Contractors’ claims treated equally and separated from disputes; 3) mechanisms for dispute avoidance and 4) detailed provisions for quality management, and verification of Contractor’s contractual compliance. These Conditions of Contract for Construction include conditions, which are likely to apply to the majority of such contracts. Essential items of information which are particular to each individual contract are to be included in the Particular Conditions Part A – Contract Data. In addition, it is recognised that many Employers, especially governmental agencies, may require special conditions of contract, or particular procedures, which differ from those included in the General Conditions. These should be included in Part B – Special Provisions. It should be noted, that the General Conditions and the Particular Conditions (Part A – Contract Data and Part B – Special Provisions) are all part of the Conditions of Contract. To assist Employers in preparing tender documents and in drafting Particular Conditions of Contract for specific contracts, this publication includes Notes on the Preparation of Tender Documents and Notes on the Preparation of Special Provisions, which provide important advice to drafters of contract documents, in particular the Specifications and Special Provisions. In drafting Special Provisions, if clauses in the General Conditions are to be replaced or supplemented and before incorporating any example wording, Employers are urged to seek legal and engineering advice in an effort to avoid ambiguity and to ensure completeness and consistency with the other provisions of the contract. © FIDIC 2017  This publication begins with a series of comprehensive flow charts which typically show, in visual form, the sequences of activities which characterise the FIDIC Construction form of contract. The charts are illustrative, however, and must not be taken into consideration in the interpretation of the Conditions of Contract. This publication also includes a number of sample forms to help both Parties to develop a common understanding of what is required by third parties such as providers of securities and guarantees. Drafters of contract documents are reminded that the General Conditions of all FIDIC contracts are protected by copyright and trademark and may not be changed without specific written consent, usually in the form of a licence to amend, from FIDIC. If drafters wish to amend the provisions found in the General Conditions, the place for doing this is in the Particular Conditions Part B – Special Provisions, as mentioned above, and not by making changes in the General Conditions as published. FIDIC considers the official and authentic texts to be the versions in the English language. This document is restricted for distribution within the Lexis Nexis platform - NOT FOR CONTRACT USE AND NOT PRINTABLE - ORIGINAL FOR SALE AT www.fidic.org © FIDIC 2017  Typical Sequence of Principal Events During Contracts for Construction 1. The Time for Completion is to be stated (in the Contract Data) as a number of days, to which is added any extensions of time under Sub-Clause 8.5. 2. In order to indicate the sequence of events, the above diagram is based upon the example of the Contractor failing to comply with Sub-Clause 8.2. 3. The Defects Notification Period is to be stated (in the Contract Data) as a number of days, to which is added any extensions under Sub-Clause 11.3. 4. Depending on the type of Works, Tests after Completion may also be required. Issue of the Submission Tenderof Contractor’s the Documents 8.1 Tender 1.1.2411.9 Issue of receipt ofCommencement the Letter of Date Acceptance Date ofPerformance CompletionCertificate This document is restricted for distribution within the Lexis Nexis platform - NOT FOR CONTRACT USE AND NOT PRINTABLE - ORIGINAL FOR SALE AT www.fidic.org Base Date Defects Notification Period3 8.2 Time for Completion1 28d ≤28d ≤21d 11 Notifying of Defects Delay attributable to the Contractor2 Tender period 4.2.1 Delivery of the Performance Security 9. Tests on CompletionRemedying 4 of Defects 4.2.3 Return of the Performance Security (subject to Sub-Clause 11 © FIDIC 2017  Typical Sequence of Payment Events Envisaged in Clause 14 14.3, 14.6.1 Engineer 14.6 Engineer 14.7 Employer makes receives Contractor’s issues Interim the payment to the Statement and Payment Certificate Contractor Supporting documents Each of the ≤56d monthly (or otherwise) interim payments ≤28d The final Engineer verifies the payment statement, Contractor submits information ≤28d ≤56d This document is restricted for distribution within the Lexis Nexis platform - NOT FOR CONTRACT USE AND NOT PRINTABLE - ORIGINAL FOR SALE AT www.fidic.org 14.11.1 Contractor submits draft final 14.11.2 Contractor submits 14.13 Engineer issues 14.7 Employer Statement to the Engineer Final Statement and the Final Payment makes payment 14.12 discharge Certificate Typical Sequence of Dispute Events Envisaged in Clause 21 Contractor receives21.1 Parties appoint the DAAB 21.4.1 A Party refers the Dispute to the DAAB 21.4.4 A Party may issue21.6 A Party may initiate ar the Letter of Acceptance a “Notice of Dissatisfaction” Parties present submissions to the DAAB 21.5 Amicable settlement ≤28d* ≤84d ≤28d >28d DAAB gives its decision Arbitrator/s appointed * If not stated otherwise in the Contract Data (Sub-Clause 21.1) © FIDIC 2017  Typical Sequence of Events in Agreement or Determination under Sub-Clause 3.7 Scenario 11 Engineer starts performing duties Sub-Clause 3.7 Parties’ agreement Sub-Clause Notice 3.7.1 of error by a Party/Engineer Sub-Clause 3.7.4 Engineer’s Notice of agreement Engineer’s Sub-Clause Notice3.7.1 of corrected agreement Sub-Clau Consultations ≤42d ≤14d ≤7d Sub-Clause 3.7.3 (a), (b) or (c) Scenario 22 Engineer starts Parties advise the Engineer’s Notice Notice of performing duties Engineer: no agreement of determination Dissatisfaction Sub-Clause 3.7 Sub-Clause 3.7.1(b) Sub-Clause 3.7.2 Sub-Clause This document is restricted for distribution within the Lexis Nexis platform - NOT FOR CONTRACT USE AND NOT PRINTABLE - ORIGINAL FOR SALE AT www.fidic.org 3.7.5 No Notice of error Consultations Period for making Engineer’s determintaion ≤42d ≤42d ≤14d ≤28d Sub-Clause 3.7.3 (a), (b) or (c) Scenario 33 Engineer starts performing duties Sub-Clause No agreement 3.7 between the Parties Sub-Clause Engineer’s 3.7.1(a)NoticeEngineer’s Notice of determinationof corre Sub-Clause 3.7.2determination Sub-Clause 3.7.4 Notice of error by a Party/Engineer Notice of Dissatisfaction Sub-Clause 3.7.4Sub-Cl Consultations Period for making Engineer’s determintaion ≤42d ≤42d ≤14d≤7d ≤28d Sub-Clause 3.7.3 (a), (b) or (c) 1. Agreement is reached within 42 days, error found in the Engineer’s Notice of agreement and corrected. 2. The Parties’ early advice that agreement cannot be reached and so Engineer’s determination is necessary, no error in Engineer’s determination. 3. No agreement within 42 days, Engineer determines within 42 days, error found in the Engineer’s determination and corrected. © FIDIC 2017  This document is restricted for distribution within the Lexis Nexis platform - NOT FOR CONTRACT USE AND NOT PRINTABLE - ORIGINAL FOR SALE AT www.fidic.org © FIDIC 2017  GENERAL CONDITIONS GUIDANCE FOR THE PREPARATION OF PARTICULAR CONDITIONS AND ANNEXES: FORMS OF SECURITIES FIDIC® Conditions of Contract for FORMS OF LETTER OF CONSTRUCTION TENDER, LETTER OF ACCEPTANCE, CONTRACT AGREEMENT AND DISPUTE ADJUDICATION/ FOR BUILDING AND ENGINEERING AVOIDANCE AGREEMENT WORKS DESIGNED BY THE EMPLOYER This document is restricted for distribution within the Lexis Nexis platform - NOT FOR CONTRACT USE AND NOT PRINTABLE - ORIGINAL FOR SALE AT www.fidic.org General Conditions FEDERATION INTERNATIONALE DES INGENIEURS-CONSEILS INTERNATIONAL FEDERATION OF CONSULTING ENGINEERS INTERNATIONALE VEREINIGUNG BERATENDER INGENIEURE FEDERACION INTERNACIONAL DE INGENIEROS CONSULTORES This document is restricted for distribution within the Lexis Nexis platform - NOT FOR CONTRACT USE AND NOT PRINTABLE - ORIGINAL FOR SALE AT www.fidic.org  CONDITIONS GENERAL GUIDANCE General Conditions CONTENTS FORMS 1 GENERAL PROVISIONS.............................................................................1 1.1 Definitions 1.2 Interpretation 1.3 Notices and Other Communications 1.4 Law and Language This document is restricted for distribution within the Lexis Nexis platform - NOT FOR CONTRACT USE AND NOT PRINTABLE - ORIGINAL FOR SALE AT www.fidic.org 1.5 Priority of Documents 1.6 Contract Agreement 1.7 Assignment 1.8 Care and Supply of Documents 1.9 Delayed Drawings or Instructions 1.10 Employer’s Use of Contractor’s Documents 1.11 Contractor’s Use of Employer’s Documents 1.12 Confidentiality 1.13 Compliance with Laws 1.14 Joint and Several Liability 1.15 Limitation of Liability 1.16 Contract Termination 2 THE EMPLOYER.......................................................................................14 2.1 Right of Access to the Site 2.2 Assistance 2.3 Employer’s Personnel and Other Contractors 2.4 Employer’s Financial Arrangements 2.5 Site Data and Items of Reference 2.6 Employer-Supplied Materials and Employer’s Equipment 3 THE ENGINEER........................................................................................ 16 3.1 The Engineer 3.2 Engineer’s Duties and Authority 3.3 The Engineer’s Representative 3.4 Delegation by the Engineer General Conditions © FIDIC 2017 i  3.5 Engineer’s Instructions CONDITIONS 3.6 Replacement of the Engineer GENERAL 3.7 Agreement or Determination 3.8 Meetings 4 THE CONTRACTOR..................................................................................22 GUIDANCE 4.1 Contractor’s General Obligations 4.2 Performance Security 4.3 Contractor’s Representative 4.4 Contractor’s Documents 4.5 Training 4.6 Co-operation FORMS 4.7 Setting Out 4.8 Health and Safety Obligations