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Construction Law/Interpretation Instruction to Tenderers Clause


Hello Mr. Dowse,

I would like to copy a few sub-clauses from the ITT in respect of a D&B Contract we are currently undertaking. It is a fixed "Guaranteed Maximum Price" contract based on the New FIDIC Yellow Book (1st Ed. 1999). The contract is being undertaken in East Africa.

16.1 The rates and prices shall be quoted by the Tenderer entirely in Tanzania Shillings. Foreign currency requirements shall be indicated in the Tender Data Sheet as a percentage of the Tender price (excluding provisional sums).

16.2 The rates of exchange to be used by the Tenderer in arriving at the local currency equivalent and the percentages mentioned in ITT sub-Clause 16.1 above shall be the selling rates for similar transactions established by the authority specified in the Tender Data Sheet prevailing on the date 28 days prior to the latest deadline for submission of Tenders. These exchange rates shall apply for all payments so that no exchange risk will be borne by the Tenderer. If the Tenderer uses other rates of exchange, the provisions of ITT sub-Clause 30.1 shall apply. In any case, payments will be computed using the rates quoted in the Tender.

We have understood these Sub-clauses to mean that the Contractor shall not take any risk in respect of currency fluctuation. Since the signing of the Contract the currency devalued by approximately 20% and the Employer is now saying that this is not their risk. there are numerous other associated items but I would appreciate a initial view of the allocation of the currency exchange risk.



Dear Brian,

Thank you for this question.

On the basis of the sub-clauses provided, for any element of the Contract price that is to be paid in a foreign currency are intended to be at a fixed exchange rate. There is a line of argument that the Employer can maintain that exchange; however, in view of the high fall in the currency it may be possible to argue an entitlement on another basis.

In order to advise on this it would be necessary to enter into dialogue with you to determine facts not disclosed by your question and review the possible options. Please contact me by e-mail ( initially.

I hope that this assists you.

Kind regards,
John Dowse

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John Dowse


Legal; contract interpretation; quantum; delay analysis. Practitioner in arbitration, adjudication and mediation.


Thirty-three (33) years experience in building and construction, at all levels both within contracting and consulting organisations. Practising arbitrator, adjudicator, and mediator. Faculty approved trainer for the Chartered Institute of Arbitrators. Lecturer on construction contract forms and dispute resolution practices.

Chartered Institution of Civil Engineering Surveyors Chartered Institute of Arbitrators Institute of Directors Society of Construction Arbitrators

Various UK and International construction and legal publications.

LLB (Hons), Pg Dip (Legal Practice), MCInstCES MCIArb MIOD Barrister

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