You are here:

Construction Law/Contract Agreement (Ammendment)

Advertisement


Question
Dear Sir,

In one of our Contract which is based on FIDIC MDB 2010 Conditions of Contract, a Variation(amendment) to the Contract Agreement was signed between the Parties  during the currency of the Contract wherein simply the Accepted Contract Amount was amended(reduced) without stating any reasons or repercussions of the this Variation. We, being the Engineer, have used this revised Accepted Contract Amount in order to deduct Advance Payment from Contractor’s Payment Invoices. But the Contractor did not agree with the Engineer’s stance by stating that Accepted Contract Amount means the amount accepted in the letter of Acceptance as per Contract. But the Engineer’s is of the view that Variation (amendment) of Contract Agreement has priority over all Contract Documents, therefore this revised Accepted Contract Amount will prevail as per amendment.

Please advise in this regard.

Regards,

Umer Shabbir

Answer
Dear Umer Shabbir,

Thank you for this question.

There is only one definition 0f the Accepted Contract Amount; it is defined at sub-clause 1.1.4.1 of the FIDIC MDB 2010 contract by reference to the Letter of Acceptance. As such the Contractor's position is correct.

If the repayment mechanism for the Advance Payment was linked to the Accepted Contract Amount (as is the case with the standard FIDIC term) then the Contractor can expect that the adjustment follows that mechanism EVEN IF the Contract Price is reduced below the Accepted Contract Amount by Variation.

A further worrying aspect of your narrative is the comment that the Contract Price was reduced "without stating any reason". That is a recipe for disaster!


I hope that this assists you.

Kind regards,
John Dowse

Follow me on Twitter: @CernoOrg
For my regular industry newsletter e-mail to info@cerno.org, stating SUBSCRIBE in the subject line

Training and consulting services are available, bespoke to companies and individuals.
John Dowse can be contacted by e-mail to info@cerno.org (When e-mailing, please include “AllExperts” in the subject line.)

Construction Law

All Answers


Answers by Expert:


Ask Experts

Volunteer


John Dowse

Expertise

Legal; contract interpretation; quantum; delay analysis. Practitioner in arbitration, adjudication and mediation.

Experience

Thirty-three (33) years experience in building and construction, at all levels both within contracting and consulting organisations. Practising arbitrator, adjudicator, and mediator. Faculty approved trainer for the Chartered Institute of Arbitrators. Lecturer on construction contract forms and dispute resolution practices.

Organizations
Chartered Institution of Civil Engineering Surveyors Chartered Institute of Arbitrators Institute of Directors Society of Construction Arbitrators

Publications
Various UK and International construction and legal publications.

Education/Credentials
LLB (Hons), Pg Dip (Legal Practice), MCInstCES MCIArb MIOD Barrister

©2016 About.com. All rights reserved.