Construction Law/Royalties


Conditions of contract used MDB 2010.
Sub-clause defines Site.
Sub-clause 7.8 states that Unless otherwise stated in the Specification, the Contractor shall pay all royalties, rents and other payments for (a) natural Materials obtained from outside the Site.

Nothing is stated in the specification regarding Royalties on natural materials obtained from site.  
The Employer is Ministry X. Now Ministry Y says that all natural materials belong to state and any user is required to pay Royalty to them (Ministry Y) as per the law of the country. Their claim is based on sub-clause 1.13 (Compliance with Laws). They have asked the Employer (Ministry X) to deduct certain amount form the invoice of the contractor and send it to them even  for payment of Royalties on  materials obtained from site as well.  Contractor's stand is that he is not required to pay Royalties on materials obtained from Site (Sub-clause 7.8). I would appreciate your guidance.

Further, whether the governing law specified in the contract prevails over the contract conditions or it comes into force only  when something is not clearly stated in the contract. There could be many laws in a country and if the provisions in those laws are not addressed by modifying the contract conditions in PCC, is the contractor supposed to know about all these laws while preparing and submitting his bid. Thanks in advance for your guidance.

Dear Kafle
I am taking the opportunity to answer your question.
Sub clause stated that"unless otherwise stated in Specification, the contractor shall pay all royalties,rents and other payments for:
a) natural materials obtained from outside the site.
Contractor's stands is correct that there is nothing specified in the contract Specifications then the royalties are liable to pay only for those natural materials obtained outside of the site.

On other part sub clause 1.13 stated that"(b) the Contractor shall give all notices, pay all taxes, duties and fees, and obtain all permits, licences and approvals, as required by the Laws in relation to the execution and completion of the Works and the remedying of any defects; and the Contractor shall indemnify and hold the Employer harmless against and from the consequences of any failure to do so, unless the
Contractor is impeded to accomplish these actions and shows evidence of its diligence."

From above it is clear that governing law prevails the all conditions of the contract. Here is the matter of governing law of the country has to be follow by the contractor as per the conditions of the country and it should be applicable in the contract. Yes contractor has to know about the applicable law of the country before bidding the contract.

This will help to you.
with best regards


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Sanjay Khandelwal


I can answer related to the various construction contracts forms related with disputes and claims.Expertise in to evalute the extension of time,cost and profit claims.I can answer regarding the contract management in civil works.


I have the experience of construction industry, as a consultants,executor of construction activities of infrastructure development like road and buildings. I have the experience of various software related to design of highways and quantity evaluation.

I am life member of Indian Road Congress,INDIA I am presently employed with M/s Lion Engineering Consultants,INDIA

My educational qualifications are as below: I am engineering graduate from MITS, INDIA,1987 I have completed my Post graduation from NIT,INDIA,2011

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