Construction Law/Clarification request
QUESTION: Dear Alina
I am new to fidic form of contracts and therefore seek your advice on the following issues.Please be informed that asked questions are very basic and may be irritating for a person of your caliber, but your response will clarify the ambiguities that I have in my mind
1-What is the difference between Contract & Contract Agreement according to Red Book 1999 Edition?
2-What makes a contract a fidic contract i.e. how a contract can be identified as fidic based contract?
3-What are the mandatory clauses without which a contract can not be treated as fidic based?
4-Can a sub-contract or assignment of contract be fidic based?
5-Do we need to learn by heart all the clauses and sub-clauses of any form of fidic contract, for a better understanding of FIDIC?
6-What is the best way to understand the reference system of clause and sub-clause
ANSWER: Hi, Muhammad,
Let's see your questions...
1. The Contract Agreement is the form to be filled in and signed by the Parties and you can find an example of it in the Annexes of the FIDIC Books, either FIDIC 1999 Red Book, or Yellow Book or other form of FIDIC Contracts. It contains things like the name of the Parties, the name of the Contract, the Accepted Contract Amount, the Time of Completion, the signatures of the Parties and it is usually 2-3 pages long.
The Contract is formed by many documents - see the Sub-clause 1.5 of the General Conditions of Contract, which says:
"The documents forming the Contract are to be taken as mutually explanatory of one another. For the purposes of interpretation, the priority of the documents shall be in accordance with the following sequence:
(a) the Contract Agreement (if any),
(b) the Letter of Acceptance,
(c) the Letter of Tender,
(d) the Particular Conditions,
(e) these General Conditions,
(f) the Specification,
(g) the Drawings, and
(h) the Schedules and any other documents forming part of the Contract"
2. If a contract contains the General Conditions of Contract as published by FIDIC and Particular Conditions that do not change the balance of the Parties' responsibilities and risks, it is a FIDIC contract.
3. The FIDIC contract clauses are very carefully written and are the result of over 50 years of experience and studies worldwide of contract conditions drafters and are not redundant, but contain the necessary provisions for a contract to be usable all over the world and balanced. Any of these clauses missing or having changed its meaning through Particular Conditions like changing the basic responsibilities of the Parties, the contract would not be a FIDIC contract anymore.
4. It can. More than that, there are FIDIC Subcontract Conditions of Contract published by FIDIC, available in the FIDIC bookshop http://fidic.org/books/construction-1999-red-book-subcontract-1st-ed-2011
5. The 1999 suite of FIDIC Books - Yellow, Red, Silver and the later ones - FIDIC MDB, FIDIC Gold Book are drafted so that they are in very high proportion similar, with 20 clauses each, so that you can learn one of these Books and understand the principles, then, knowing - mainly from accredited FIDIC training sessions - the differences between the different Books, you end knowing all the FIDIC Books. This will ensure you a basic knowledge of the FIDIC Books. When you work with a specific FIDIC Book from all these, of course you should learn it carefully and each time when you write about a certain clause or want to apply it, read it again first, then use it.
6. The clauses have many Sub-clauses, but all the Sub-clauses within a Clause deal with a subject/theme. The subject/theme is the title itself of that Clause. There are only 20 Clauses (15 clauses in FIDIC Green Book, which is kind of Red simplified Book), easy to remember, and everything related to the title-subject you find in the Sub-clauses of that Clause.
Hope this helps.
---------- FOLLOW-UP ----------
QUESTION: Dear Alina
First of all I am highly thankful to you for such a detailed response and really appreciates your professionalism, further i would request some more clarification on below points.
1-Although most of the obligations are expressly mentioned even then there are lot of clauses which still need interpretation. What is the interpretation authority regarding fidic clauses in case of any dispute between stakeholders? i.e. Is there any guide from fidic for interpretation or construction law of that region prevails?
As I understand that for most of the disputes there must be standardized interpretation
You can find guides on FIDIC Conditions of Contracts on http://fidic.org/bookshop/advanced-search?keys=guide&field_book_category_tid=All
The most used is "FIDIC Contracts Guide to the Construction, Plant and Design-Build and EPC/Turnkey Contracts (1st Edition, 2000)" - see http://fidic.org/books/fidic-contracts-1999-editions-guide-1st-ed-2000