Construction Law/Defects Liability

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QUESTION: We are using the Fidic Yellow Book 1999 with amendment. Clause 11.1 of our contract - Completion of Outstanding Works and Remedying Defects, the 2nd last paragraphs stated

" 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 is two (2) years after the date of which such repair or replacement was completed."

We have a warranty period of 2 years from hand over. Does it means that after a year into the warranty period, if we replaced a part or repaired some equipment, we have to extend the warranty for another 2 years from the date of replacement/repair?

ANSWER: According to my understanding, your contract says that if a part of the works is repaired or replaced within the Defect Notification Period, the DNP for that portion of the works will be extended with 2 years starting with the date of the repair/replacement. This way, you will have 2 years DNP for the main works (except those that were repaired/replaced as above) stating with the Taking Over of the Works and 2 years DNP for the repaired/replaced works, starting with the date of the repair/replacement. You should not extend the DNP for whole works, but only for the remedied/replaced ones.
Therefore, you will have not one, but more than one date on which the DNPs end for your Contract. This will have consequences on the clause 11.9 [Performance Certificate] which says: "Performance of the Contractor's obligations shall not be considered to have been completed until the Engineer has issued the Performance Certificate to the Contractor, stating the date on which the Contractor completed his obligations under the Contract. The Engineer shall issue the Performance Certificate within 28 days after the latest of the expiry dates of the Defects Notification Periods, or as soon thereafter as the Contractor has supplied all the Contractor's Documents and completed and tested all the Works, including remedying any defects. A copy of the Performance Certificate shall be issued to the Employer. Only the Performance Certificate shall be deemed to constitute acceptance of the Works."
Hope this helps.
Best regards,
Alina

---------- FOLLOW-UP ----------

QUESTION: Thank you Alina. I have further question on the extended DNP.

Q1: What happen when the part was replaced or repaired again after the initial 2 years DNP and before the expiry of the extended 2 years DNP, do we need to continue with a further extension of 2 years DNP? If so, there will be no end to the DNP?

Q2: During the extended DNP period, do we have to station people in the site to replace or repair the work or we just have send the part to the employer?

Best regards

Answer
The Contract does not say that only for one replacement the DNP is to be extended. Though, the Contract says that the DNP shall not be extended with more that 2 years, in total ("However, a Defects Notification Period shall not be extended by more than two years" - see the last sentence of the first paragraph of the Sub-clause 11.3 [Extension of Defects Notification Period}. Therefore, the DNP should be extended as many times an the case is, but the total extension of a DNP should not exceed 2 years.
The obligations of the Contractor are the same during the DNP as within the period of time before the taking over of the works as regards the repairing or replacing the defective works.
The Sub-clause 11.1 says:
"...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 a Taking-Over Certificate, within such reasonable time as is instructed by the Engineer, and
(b) execute all work required to remedy defects 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 or Section (as the case may be)."
This is why the sub-clause 11.7 [Right to Access] foresees that the Contractor shall have right to access to the Works, to fulfill all his obligations under the Contract, "except as may be inconsistent with the Employer's reasonable security restrictions", says 11.7.
Therefore, the Contractor is to go in Site and remedy of replace the defective works.
Hope it helps.
Best regards,
Alina

Construction Law

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Alina Valentina Oprea

Expertise

I can answer to questions regarding FIDIC 1999 contracts, including practical use of these conditions of contract, as well as to questions regarding dispute boards, both from theoretical and practical point of view. I cannot answer to questions related to other kind of contracts or to procurement process, except to some (limited) extent.

Experience

Implementation of works contracts (FIDIC 1999) financed by different financial institutions, including European Union; claims and disputes; dispute boards See more on www.alinaoprea.com

Organizations
Dispute Resolution Board Foundation

Publications
see http://alinaoprea.com/publications/ ; DRBF Forum Newsletter; Drumuri si Poduri; Revista Constructiilor; SIDiR Newsletter

Education/Credentials
Graduated the University of Civil Engineering Bucharest, Faculty of Railways, Roads and Bridges (1985-1990); Trained under Mr. Gwyn Owen’s pupilage program for arbitrators/adjudicators under FIDIC mentoring program (2006 – 2007)

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