Construction Law/Delays Caused By Authority
According to FIDIC Red Book 1999, Sub Clause 8.5, if some delay occurs due to delays caused by authority, the Contractor gets EOT without any cost and profit, is it right explanation of Sub Clause 8.5? If so,can you clarify about the cost and profit mentioned in the same Sub Clause 8.5.
for eg. Contractor imports some equipment from other country and he can not import the same in time because of unable to provide the substantiation in the custom department and he pays demurrage cost for the same. Now I want to be clear on: Shall the Employer pay for the demurrage cost which the contractor has paid to the Custom Department?
Thank you for this question.
Reference to sub-clause 8.5 of the standard FIDIC Red Book 1999 shows that any delay or disruption by an Authority which was unforeseeable and where the contractor had diligently followed the necessary procedures will be grounds for an extension of time under sub-clause 8.4(b). Those two clauses of themselves do not speak of whether the extension of time is with or without cost and profit. Unless expressly excluded elsewhere in the contract, the contractor will be compensation for either 'Cost' or 'cost'; the former excludes profit but the latter can include profit.
In the situation you have outlined the delay caused the contractor to incur demurrage costs. If those (indirect) costs can be considered as being consequential upon the delay (which will be assessed by the legal standards of the relevant jurisdiction) the contractor will be entitled to compensation. Under English law the principle adopted in assessing whether consequential costs are compensable is how remote those costs are from the event.
I hope that this assists you.
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