This EPC Forum 2013 will address the challenges faced by owners and EPC contractors from scope of work to delivery of project without compromising other aspects such as handling construction risk and cost management throughout the years. Take a step further to hear it from other key speakers around the globe and exploring new working opportunities around the world. …
By Dr. Chandana Jayalath
The term construction contract involves not only contractors and employers but also consultants from different disciplines, sub contractors, investors, insurers, bankers, and so on. The international nature lies in both the facts that the parties come from different countries and so is the source of supply of works, goods and services. The forms of contract also differ upon for whom the work is being carried out. …
By Dr. Chandana Jayalath
The whole idea of interpretation is to dig out the intention of the parties had in their minds at the time they entered into the contract. There are rules of interpretation that have been based on common sense connected with the ordinary life. It is the philosophy of language that provides material for interpretation. In contract law, it is now well-established that the context is important in interpreting documents, which is often referred to by the label ‘matrix of facts’, ‘surrounding circumstances’, or ‘factual background’. Courts must place itself in thought in the same position as the parties to the contract were placed, in fact, when they made it. Accordingly, those involved in contract interpretation should not try to make a bargain for the parties, but instead seek to understand what the parties meant by reference to the words which they chose. …
By Dr. Chandana Jayalath
Suspension usually occurs on a construction project when an employer requires a contractor to temporarily stop work on all or a portion of the project. Contractually, the contractor shall suspend the progress on the engineer’s written notice if it is only provided for in the contract, due to contractor’s default, due to climatic conditions, on safety reasons, necessary for proper execution of work or in excepted risks. A mandatory requirement is cast on the contractor to give a written notice of his intension to claim for any additional cost or time within a specified period from the date of receiving the engineer’s order to suspend the work. This clause specifically permits the engineer to authorize extension of time or payment of extra cost, whose decision is final and binding. …
By Dr. Chandana Jayalath
The topicality of claims has been accentuated by the fact that contractors keep chasing extras, and clients keep pursuing cost savings, particularly in lump sum contracts where the majority has been locked into. The trend is that claims specialists are reported mobilize on such contracts even before construction commences, to locate loopholes in the documentation and look for lapses in the process of contract administration that will altogether facilitate ‘juicy’ claims. This situation has jerked the entire Gulf region into awareness on the importance of good contract administration and the supreme importance of documentation. …
By Dr. Chandana Jayalath
Any standard form of contract is a generic product applicable under ‘typical’ circumstances subject to amendments in the Particular Application section in order to cater locally specific project requirements where necessary. Importantly, the Contractors therefore recognize the differences and know how to act upon those amendments in the contract. All in all, everyone ‘knows the deal’ if presented with a standard form. The other significant advantage is that the wording of many standard forms has been subject to interpretation over the years by courts. But at least with standard forms both employers and contractors know roughly where they are standing. There are always those who wish to go down the bespoke route but even in bespoke contracts there are vast chunks of texts copied straightway from standard forms. Even though on most occasions what the standard form gives with one hand the amendments take back with the other. …
Amendment, Deletion or Silence – Which One is Better?Read More »
By Dr. Chandana Jayalath
It is common practice that time extension claim comes before the claim on prolongation costs. Once an extension of time has been granted, the evaluation of the additional prolongation costs is often related to the period between the contract completion date and the extended completion date. Prolongation cost is also calculated on time related preliminaries. The author contends that this line of thinking is illogical. …
By Dr. Chandana Jayalath
Majority of construction contracts in the Gulf region maintain the principle features of the FIDIC forms of contract, yet there are many subtle changes from the FIDIC forms of contract. These changes will eventually imbalance the even risk allocation between the parties. Many contracts drafted in one sided language biased towards the clients are a result of cut and paste exercise, for instance, sometimes; there is no provision for price escalation and variations exceeding 10 or 15 per cent. The message to contractors entering into contracts on the basis of these forms is to review them very carefully without being fooled into thinking they are simply the FIDIC versions. …
Contractor’s Claim for increased cost of material due to unforeseen conditions resulting major revisions can be admissible under clauses 12.2, 6.3, 40.1, 51.1 and 6.4 (FIDIC 4th Edition)
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Contractor’s Entitlement under Fidic Contact 4th EditionRead More »
By Saeed Alabbar
In the early decades of the 20th century, construction was extremely sustainable due to the lack of availability of centralised electricity and water supply, and the use of only local building materials. However, as the UAE entered the 21st century, globalisation bought with it many ideas and design concepts from the West. …
By MARTIN PRESTON
The UAE Civil Code governs construction (and other) contracts entered into in the UAE. As such, unlike in a common law system where, subject to certain statutory exceptions, the parties are free to agree to the content of their contract, the UAE Civil Code imports a number of requirements into construction contracts. These are mainly to be found between Articles 872 and 896. Some of the main provisions affecting construction contracts are:• Decennial liability: Article 880 of the Civil Code imposes a 10-year liability on contractors and consultants in relation to structural defects. This liability can neither be contracted out (of Article 882) nor does it appear that specific decennial liability insurance is available to cover off this risk as is the case in certain other jurisdictions with decennial liability (for example, France). However, the scope of decennial liability is limited to serious structural defects likely to result in the collapse of the building or structure rather than all defects to the works.• Liquidated damages/penalties: Either party to a contract may challenge the liquidated damages contained within a contract if the actual loss suffered is more or less than the liquidated damages (Article 390). This differs from the position under most common law jurisdictions where the enforceability of liquidated damages is determined by whether the damages were a genuine pre-estimate of loss at the date the contract was entered into. As is the case in most common law jurisdictions, however, it is rare that the courts will open up the liquidated damages agreed by the parties in their contract.
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1. The Readers of this journal must be very familiar with the phase “pay when paid”. From time to time, it has been raised by main contractors as a defence for not paying its sub-contractors. A classic “pay when paid” clause is found in clause 11(b) of the Standard Form of Sub-Contract for use when the sub-contractor is nominated under the Standard Form of Building Contract drawn up by The Hong Kong Institute of Architects, The Royal Institution of Chartered Surveyors (Hong Kong Branch) and The Society of Builders, Hong Kong (commonly known as the “Green Form”). …
