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Construction Law/Contractor's Proposal

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QUESTION: Type of contract is EPC/Turnkey (1999). Turnkey Contractor's Proposal included for 8-passenger lift. After acceptance of proposal and award of contract by the Employer, the Employer's Representative has informed the Contractor that the 8-passenger lift is not appropriate based on passenger flow calculations and have asked the Contractor to provide a 13-passenger lift instead. Could this be considered as a Variation under Clause 13? What if, the ER is right and that the calculations actually proof that the 8-passenger lift is under-capacity? Could the ER reject the work, if the Contractor goes ahead to provide an 8-passenger lift in accordance with the accepted specification?

ANSWER: Dear Yaw,

This situation is covered by clause 13.  It all depends on the exact wording in the Employer's Requirements.  The Employer, through his representative if that is the Contract Procedure, must issue an instruction to vary the Employer's Requirements, which are now 13 passenger lift rather than a 8 passenger lift.  The procedure for agreeing any variation in costs will be covered by Clause 13.  It is unlikely that the ER could reject the work, contractually, if it is compliant with the Employer's Requirements.


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

QUESTION: Thank you for your reply. I ought to have clarified that the project is a residential block of apartments. The Employer's Requirement did not indicate the type and capacity of the lift. However, the Turnkey Contractor's proposal and the subsequent contract specification for that Block of Apartments included for an 8-passenger lift. The ER now thinks an 8-passenger lift does not have the capacity to service the occupants effectively, based on his passenger traffic calculations. The question is, can the ER insist that the Contractor changes the lift from 8-passenger to 13-passenger on the basis that the contractor's calculations supporting the selection of 8-passenger lift is flawed and not in accord with established design criteria; without agreeing a Variation Order  with increased costs?

ANSWER: Dear Yaw,

There is a contract which specifies a 8 passenger lift.  The ER wishes to change that to a 13 passenger lift, so he must instruct and pay for any changes.  If he did not specify a lift in the instructions to tenderer and accepted the Contractor's proposal, then that is unfortunate.  The calculations should have been checked prior to contract signature. I see no basis for enforcing a change without payment.  The Contractor may wish to check the ER's calculations to see if he supports the need for a change. Then the discussion is only about the money and not confused by arguments over the need.  You may wish to research the legal principle of contra preforentum, which, simply put, says that, in case of doubt, the law will decide against the author of the document, in this case the Employer.

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

QUESTION: Thank you. Regarding the principle of contra preforentum, the specification document which states that the Contractor shall provide an 8-passenger lift was prepared by the Contractor as part of his Contractor's Proposal submission. This document was then accepted by the Employer and became part of the signed contract for the project. Does the fact that the specification document was prepared by the Contractor negate the requirement for a VO with costs, to change from 8-passenger to 13-passenger?

Answer
Dear Yaw,

The Employer wrote the Employer's Requirements, which omitted the need for a lift.  The bidder saw the need for a lift and proposed one.  The Employer accepted the need for a lift and accepted the proposal.  The Employer should have checked the adequacy of the proposal before accepting it and signing the Contract.  The Employer is responsible for the Employer's Requirements and thus contra preforentum acts against him in this situation.  The fact that the specification document was prepared by the Contractor does not negate the requirement for a VO with costs if there is a change from the signed contract.  The situation would be the same if the Employer's advisors had written the document.  

The more important question is does the Contractor agree with the ER regarding the sizing of the lift?  

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Peter M. Elliott

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First response to queries regarding extensions of time, variations orders, site instructions and payment using FIDIC and other forms of Conditions of Contract, based on English Law, and derivatives only. Anyone who needs advice about EoT should download and study the SCL Delay & Disruption Protocol www.eotprotocol.com before submitting a question.

Experience

Value . . .
It's unwise to pay too much, but it's unwise to pay too little. When you pay too much you lose a little money, that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing you bought it to do.
The common law of business balance prohibits paying a little and getting a lot. It can't be done. If you deal with the lowest bidder, it's well to add something for the risk you run.
And if you do that, you will have enough to pay for something better.
. . . John Ruskin (1819 - 1900)
"We are too poor to buy something cheap"
.Romanian Proverb 2002
A lean compromise is better than a fat lawsuit. George Herbert (English poet 1593-1633)
I said it in Hebrew, I said it in Dutch,
I said it in German and Greek:
But I wholly forgot (and it vexes me much)
That English is what you speak!" Hunting of the Snark - Lewis Caroll
Match your presentation to the reader!
The joy of food lasts but an hour, of sleep but a day, of a woman, but a month, but the joy of a building lasts a lifetime. Syrian proverb.
Comments and observations leading to improvements in the translation of FIDIC Red & Yellow books into Romanian prior to approval by FIDIC (reference 'Preface to the Romanian edition')

Organizations
Institution of Civil Engineers, Association of Chartered and Certified Accountants, Society of Construction Law, Dispute Resolution Board Foundation

Education/Credentials
B Sc(Hons) in Civil Engineering

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