Construction Law/Prise adjustment


Dear Mr. Elliot,
Our Contract is FIDIC 1999 not MDB. Contract value is USD and in the contract no any single word about local currency (AZN-Azerbaijani Manat) I mean it is not fixed when we sign the contract.
After devaluation the Engineer claims difference formulated through devoluation. For example: 6 month ago 1 USD was 1.05 today 1 USD is 1.6. When USD was 1.05 we get 1000000 USD in accordance to IPC which was equal 1050000 AZN then we getadditional 1000000 USD which was equal to 1600000 AZN. But we recieve our payment in USD not in AZN The Engineer calculates that we have pay back 550000 AZN due to devoluation. (1600000-1050000=550000) The Engineer claims difference coming exchange rate. Is he right or not?
Thanks in advance and best regards,

Dear Anwar,

If the individual items in the BoQ are priced in USD, then the work should be valued in USD, and you should get paid in USD, with no adjustment for devaluation.  The Employer has taken the risk of currency fluctuations.  His loan is probably in USD, if it is from one of the International Funding Institutions, so he has no loss from any exchange rate fluctuations.  If the individual items are priced in AZN, then the work should be valued in AZN with a conversion to USD.  

In general, I would say that the Engineer's statement is somewhat unusual.  

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Peter M. Elliott


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 before submitting a question.


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')

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

B Sc(Hons) in Civil Engineering

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