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Construction Law/Variation to Contract Agreement

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Question
Dear Madam,

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,
I agree with the Engineer - once the "Accepted Contract Amount" was amended by agreement of the Parties, this is the new one to be considered during the Contract implementation, UNLESS there is a Letter of Acceptance that was not amended accordingly, since at the Definitions, at 1.1.4.1, it is said that <<“Accepted Contract Amount” means the amount accepted in the Letter of  Acceptance for the execution and completion of the Works and the remedying of any defects.>>
Therefore, if there is a Letter of Acceptance with an Accepted Contract Amount in it, and this letter was not amended together with the Contract Agreement, the Accepted Contract Amount remains, actually, the same, as if not being amended through the amended Contract Agreement.
Hope it helps to clarify your issue.
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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