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Construction Law/Extension of Defects Notification Period

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Question
We are using modified FIDIC Yellow Book 1999. The Article 11.1 has been modified and now read as

11.    Defects Liability
11.1   Completion of Outstanding Works and Remedying Defects
In order that the Works and Contractor's Documents shall be in the condition required by this Contract and the Implementation Agreement (fair wear and tear excepted) by the expiry date of the relevant Defects Notification Period or as soon as practicable thereafter, the Contractor shall:

(a)   complete any work which is outstanding on the date stated in the Taking-Over Certificate (in the form of the "snag list" referred to under Sub-Article 4.2 (e)), within such reasonable time and priority as is instructed by the Engineer; and
(b)   execute all works required to remedy defects (including but not limited to structural defect), non-conformities or damage, as may be notified by (or on behalf of) the Employer on or before the expiry date of the Defects Notification Period for the Works.

Any portion of the Works which are repaired or replaced during the Defects Notification Period as provided above shall be warranted by the Contractor until the expiration of the Defects Notification Period with respect thereto and the date that is two (2) years after the date on which such repair or replacement was completed.

If a defect appears or damage occurs, the Contractor shall be notified accordingly, by (or on behalf of) the Employer. The Contractor shall maintain qualified and adequate staff and take the adequate measures to ensure the prompt completion of the Outstanding Works and the remedy of any defects.

There is no change in Article 11.3

11.3   Extension of Defects Notification Period
The Employer shall be entitled subject to Sub-Article 2.5 [Employer's Claims] to an extension of the Defects Notification Period for the Works if and to the extent that the Works or a major item of the Terminal (as the case may be, and after taking over) cannot be used for the purposes for which they are intended by reason of a defect or damage. However, a Defects Notification Period shall not be extended by more than two years.

The second last paragraphs of article 11.1 read

Any portion of the Works which are repaired or replaced during the Defects Notification Period as provided above shall be warranted by the Contractor until the expiration of the Defects Notification Period with respect thereto and the date that is two (2) years after the date on which such repair or replacement was completed.

and the last paragraph was added by the following sentence:

The Contractor shall maintain qualified and adequate staff and take the adequate measures to ensure the prompt completion of the Outstanding Works and the remedy of any defects.

I find that the added wordings in Article 11.1 and Article 11.3 contradictory, please advise whether the added wordings in article 11.1 are valid or not.

If we are to warrant any portion of Works which are repaired or replaced during the Defects Notification Period for an additional 2 years, does it mean that even a screw that has been replaced need us to warrant 2 years from the date we replaced it. I cannot find any definition to the word "warrant" as well.

Article 11.3 is the Article dealing with Extension of Defects Notification Period, by adding the extra wordings to Article 11.1 to extend the Defects Notification Period is this right?

Article 11.3 refer only to major item that affect the Works need
Extension of Defects Notification Period and not any portion of the Works as stated in the additional wording of Article 11.1. I wish to challenge the validity of the additional wordings in Article 11.1, please advise.

Answer
Hello Wong,


Welcome back, glad to hear again from you. Thank you for your new question and apologise for my late answer. There is something wrong, as I do not receive the notification emails, until All Experts send me one, saying I am late ...

Apologise once again for that, though it is not me.

To answer your queries:

Indeed, 11.3 enables the Employer to have the whole DNP extended, for ALL WORKS, in case they are deprived from usage of Works, or a major part of the Works, for a certain period.

Sub-Clause 11.1, as modified, only refers to extending the warranty, for "Any portion of the Works which are repaired or replaced during the Defects Notification Period", but not for ALL WORKS.

It is a nuance, 11.1, partially overlaps over 11.3, but that is where the difference is. If you want, it is a sort of DNP extension, but ONLY, for the portion of the Works that is repaired.

Indeed, it is regretful that you have accepted such condition, as it can extend indefinitely.

It is also against the basic principle of the DNP, i.e. to have the Works guaranteed for a specific period. As a repaired portion of the Works has been already under guarantee, until the defect has occurred and has been repaired, they should have remained with 11.3.

But as modified, 11.1, enables the 2 years period to re-commence for a specific portion of the Works.

It's a bit tricky, hope they will not need to call you back to repair any portion of the Works, as you may find yourself in a spiral of extensions of warranties.

I'd suggest you talk to a qualified Contract Manager/ Lawyer, I think there are ways around it, but for making up a case and get out of that, one needs to look at all details and put a case together.

Hope that helps!

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Florin NICULESCU

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Questions related to Civil Engineering Contracts, using FIDIC or other Conditions of Contract, concerning Procurement procedures and documents (pre-qualification, tendering and contracting) and Services/ Works Contracts implementation matters including Determinations, Payments, Time Extensions, VOs, Claims/Disputes. Additionally, questions related to dealing with International Financing Institutions. Can also answer questions in Romanian. Can not answer improperly formulated questions.

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Member of Romanian Professional Association of Roads and Bridges; Listed on President's List of Adjudicators of Romanian Association of Consulting Engineers www.aric.org Former member of the Disputes Resolution Board Foundation (DRBF) of United States – nominee on DRBF President’s Disputes Board Members List www.drb.org and of DRBF Chapter for Eastern Europe http://dabdrb.googlepages.com Former member of Polish Association of Consulting Engineers (SIDiR) – nominee on SIDiR President’s Disputes Board Members National List http://www.sidir.pl/sidir/index.php?action=czlonkowie&a2=r Member of “AllExperts.com” volunteers pool http://www.allexperts.com/user.cgi?m=4&expID=85358&catID=914 Member of the "Constructions Disputes Resolution Services” International Panel of Construction ADR Specialists" of United States www.constructiondisputes-cdrs.com

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