Commentary on fidic iv clauses

INTRODUCTION..........................................................................................................................................3
GENERAL INDEX IN ALPHABETICAL ORDER.................................................................................24
CLAUSE 1 : DEFINITION AND INTERPRETATION
........................................................................................................................................................................33
CLAUSE 2 : OBLIGATIONS OF THE ENGINEER...............................................................................44
CLAUSE 3 : ASSIGNMENT.......................................................................................................................52
CLAUSE 4 : SUB-CONTRACTING..........................................................................................................53
CLAUSE 5 : LANGUAGE OF THE CONTRACT...................................................................................56
CLAUSE 6 : DRAWINGS TO THE CONTRACTOR.............................................................................60
CLAUSE 7 : DRAWINGS AND INSTRUCTIONS..................................................................................63
CLAUSE 8 : GENERAL OBLIGATIONS OF THE CONTRACTOR..................................................66
CLAUSE 9 : FORMAL CONTRACT AGREEMENT.............................................................................70
CLAUSE 10 : PERFORMANCE SECURITY..........................................................................................72
CLAUSE 11 : INFORMATION REGARDING CONTRACT................................................................75
CLAUSE 12 : TENDER AND RATES.......................................................................................................78
CLAUSE 13 : INSTRUCTIONS FROM THE ENGINEER....................................................................82
CLAUSE 14 : WORK PROGRAMME......................................................................................................86
CLAUSE 15 : CONTRACTOR’S SUPERINTENDENCE......................................................................89
CLAUSE 16 : CONTRACTOR’S EMPLOYEES.....................................................................................91
CLAUSE 17 : SETTING OUT....................................................................................................................92
CLAUSE 18 : BOREHOLES AND EXPLORATORY EXCAVATION................................................94
CLAUSE 19 : EMPLOYER’S RESPONSIBILITIES..............................................................................95
CLAUSE 20 : CONTRACTOR’S RESPONSIBILITIES.........................................................................96
CLAUSE 21 : INSURANCE OF WORKS...............................................................................................100
CLAUSE 22 : INDEMNITY......................................................................................................................106
CLAUSE 23. : INSURANCE LIABILITIES...........................................................................................107
CLAUSE 24 : ACCIDENT OR INJURY.................................................................................................108
CLAUSE 25 : TERMS OF INSURANCE................................................................................................110
CLAUSE 26 : LEGISLATIONS AND REGULATIONS.......................................................................111
CLAUSE 27 : FOSSILS.............................................................................................................................113
CLAUSE 28 : PATENT RIGHTS.............................................................................................................114
CLAUSE 29 : INTERFERENCE AT WORK SITE...............................................................................115
CLAUSE 30 : DAMAGE AT WORK SITE.............................................................................................115
CLAUSE 31 : OPPORTUNITIES FOR OTHER CONTRACTORS...................................................117
CLAUSE 32 : KEEP SITE CLEAR OF OBSTRUCTIONS..................................................................119
CLAUSE 33 : CLEARANCE OF SITE ON COMPLETION................................................................120
CLAUSE 34 : ENGAGEMENT OF STAFF AND LABOUR................................................................120
CLAUSE 35 : RETURNS OF LABOUR AND EQUIPMENT..............................................................121
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CLAUSE 36 : FACILITIES FOR TESTING..........................................................................................121
CLAUSE 37 : INSPECTION AND TESTING........................................................................................124
CLAUSE 38 : INSPECTION OF PART OF WORKS...........................................................................127
CLAUSE 39 : REMOVAL / REPLACEMENT OF MATERIAL / PLANT........................................129
CLAUSE 40 : SUSPENSION OF WORKS..............................................................................................130
CLAUSE 41 : COMMENCEMENT OF WORKS..................................................................................134
CLAUSE 42 : HANDING OVER POSSESSION....................................................................................135
CLAUSE 43 : COMPLETION OF WORK ON TIME..........................................................................139
CLAUSE 44 : EXTENSION OF TIME....................................................................................................140
CLAUSE 45 : WORKING HOURS..........................................................................................................149
CLAUSE 46 : RATE OF PROGRESS.....................................................................................................150
CLAUSE 47 : LIQUIDATED DAMAGES..............................................................................................153
CLAUSE 48 : TAKING OVER / SUBSTANTIAL COMPLETION.....................................................157
CLAUSE 49 : DEFECTS LIABILITY PERIOD....................................................................................161
CLAUSE 50 : SEARCH FOR CAUSE OF DEFECT.............................................................................165
CLAUSE 51 : VARIATION / ADDITIONS / OMISSIONS...................................................................166
CLAUSE 52 : VALUE OF VARIATIONS .............................................................................................173
CLAUSE 53 : NOTICE FOR CLAIM......................................................................................................178
CLAUSE 54 : CONTRACTOR’S EQUIPMENT...................................................................................182
CLAUSE 55 : BILL OF QUANTITIES...................................................................................................185
CLAUSE 56 : MEASUREMENT OF WORKS.......................................................................................187
CLAUSE 57 : NET MEASUREMENT OF WORKS.............................................................................188
CLAUSE 58 : PROVISIONAL SUM.......................................................................................................189
CLAUSE 59 : NOMINATED SUB-CONTRACTOR.............................................................................191
CLAUSE 60 : CERTIFICATES & PAYMENTS OF THE CONTRACTOR......................................197
CLAUSE 61: DEFECTS LIABILITY CERTIFICATE.........................................................................216
CLAUSE 62 DEFECTS LIABILITY CERTIFICATE...........................................................................218
CLAUSE 63 : TERMINATION................................................................................................................220
CLAUSE 64 : REMEDIES........................................................................................................................232
CLAUSE 65 : SPECIAL RISKS...............................................................................................................233
CLAUSE 66 : RELEASE FROM PERFORMANCE.............................................................................238
CLAUSE 67 : SETTLEMENT OF DISPUTES.......................................................................................240
CLAUSE 68 : NOTICES............................................................................................................................250
CLAUSE 69 : DEFAULTS OF EMPLOYER..........................................................................................252
CLAUSE 70: CHANGES OF COSTS AND LEGISLATION...............................................................260
CLAUSE 71: COMPENSATION TO CONTRACTOR.........................................................................262
CLAUSE 72: CURRENCY AND EXCHANGE RATES........................................................................263
MISCELLANEOUS AMENDMENTS.....................................................................................................264
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Introduction
PREFACE
This book is intended for anybody having dealings with FIDIC's "Red Book", the
4th Edition of the "Conditions of Contract for Works of Civil Engineering
Construction" published in 1987. Employers, engineers, contractors and their
respective advisors should all find something in this work to help them to
understand and make best use of these conditions of contract.
For those not familiar with the contract, the commentary to each clause starts
with a "plain English" paraphrase to enable the reader to understand the gist of
the clause as quickly as possible. Except where the meaning of the clause is
entirely obvious, each sub-clause is given a separate paragraph.
The volume also includes a set of some 94 "suggested forms" which may be
found useful by engineers, employers and contractors. These do not attempt to
anticipate particular situations but rather to use the wording of the clause to
produce a form of notice which would, it is hoped, leave no room for doubt or
debate as to whether a notice had been given, under which clause it had been
given or whether the notice was in a form which complies with the terms of the
contract. At the very least, the forms section will provide to the parties a
reference against which to check that the notice that they are giving has been
given and copied to the correct parties. There can be few types of disputes which
are as fruitless and frustrating as disputes over whether the correct form of notice
has been given in particular circumstances. Whilst there are often good reasons
for requiring notice to be given, it is rare that justice is done when an arbitrator is
forced by the contract to rule out a claim on the grounds that no or no adequate
notice has been given. In short, it is in everybody's interest that notices are given
properly. If parties wished to do so, they could agree at the outset that notices
which conform to those set out in this volume would not be open to challenges as
to form although they could of course be open to challenge in respect of their
timing, their appropriateness or indeed the manner in which the blanks have
been filled.
Although the masculine pronouns "he" and "him" have been used from time to
time as a shorthand for the Employer, the Contractor or the Engineer, this is for
convenience and is not based on any assumption that the parties involved with
civil engineering contracts are necessarily male. The author is well aware that the
contrary is increasingly true. The usage is also consistent with the language of
the conditions.
Readers may find it strange that references will be found in this work to both the
ICE's 5th and 6th Edition. The ICE 5th Edition is referred to because the
draftsman of FIDIC's 4th Edition was plainly heavily influenced by ICE's 5th
Edition and the points of departure are interesting in themselves as well as being
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useful to those readers familiar with the ICE Conditions. References to ICE 6th
Edition are included because of the history of the FIDIC form following in the
footsteps of ICE's drafting: it is therefore interesting to see which of the
innovations introduced by FIDIC in their 4th Edition have been adopted by the
ICE in their 6th. Knowledge of the ICE conditions is by no means necessary for
the user of this work, however.
As a user of commentaries of this sort, I am well aware that all too often the
particular practical problem, which a reader experiences is not, covered by the
commentary. As a writer, it is impossible to imagine all problems that might occur
even if time and the patience of the publisher would permit all problems to be
addressed. I should add that even in cases where the problem experienced by a
reader appears to have been addressed and an answer suggested, the reader
should take great care and should avoid any assumption that their particular
circumstances were being addressed. Discussion and submission in the absence
of particular facts is necessarily limited and the reader is urged to give careful
consideration and if necessary to take independent advice in relation to their
particular circumstances.
As this work is intended not only for lawyers but for the full dramatis personae of
a civil engineering project, it was decided that footnotes would be avoided and
references to legal cases given a firmly subordinate role. Given the range of legal
systems in which the FIDIC conditions are used, very often with the local law as
the law of the contract, an over-dependence on Commonwealth case-law would
not necessarily be helpful. Recent decisions and decisions from jurisdictions
other than England have been given priority.
It should be confessed at this early stage that the references to be found in Part
II, the Conditions of Particular Application, to dredging and reclamation have not
been the subject of any comment. Part II is however set out in full at the end of
this work.
Finally, the author wishes to thank FIDIC for permitting the reproduction of the
Red Book for the purposes of this work.
ECC - LONDON
1: INTRODUCTION
Origins of FIDIC 4th Edition
FIDIC is the Federation International Des Ingenieurs-Conseils and is an
association of national associations of Consulting Engineers. They have been in
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existence since 1913 and have their headquarters and secretariat in Lausanne in
Switzerland.
FIDIC have produced standard forms of contract for civil engineering projects
since 1957. The 2nd Edition was published in 1969 and the 3rd in 1977. As the
obvious comparison is between these conditions and those produced by the
Institute of Civil Engineers in the UK, known throughout this work as "ICE", it may
be helpful to record that the ICE 1st Edition was published in 1945 and the 4th
Edition in 1955. The 5th Edition was published in 1973 and it was upon this
Edition that the FIDIC 3rd Edition was closely modeled. FIDIC took the initiative
with their 4th Edition and it may be thought that ICE 6th Edition published in
January 1991 shows that FIDIC has repaid some part of its debt to the ICE. In
particular, FIDIC's ideas in relation to an express obligation upon the Engineer to
be impartial, the deemed obligation upon the Employer to disclose all information
concerning the ground conditions on site and the introduction of conciliation into
the disputes procedure after the Engineer's decision and before arbitration, may
well have influenced ICE's 6th Edition. To avoid confusion with FIDIC editions,
the ICE conditions are referred to in the commentary as ICE 5th and ICE 6th.
Nature of the Conditions
For those who are unfamiliar with FIDIC's Standard Form, it may assist if the
basic characteristics are set out:
- It is a form very much in the traditional English mode with Bills of
Quantities and a named Engineer whose functions include making certification
and other determinations independently of the Employer and indeed impartially
as between the parties.
- It is a re-measurement contract with the quantities in the bill treated as
approximate and the Contract Price having little relevance save as a means by
which the competing tenders might be judged.
- The Employer may nominate subcontractors and has the power to make
direct payment in the event that the Contractor fails to do so. The Employer is not
made liable, as in some English forms, for delays by the nominated
subcontractors.
- Risk is divided in line with the philosophy that the Employer is best placed
to take on those risks which experienced contractors could not reasonably be
expected to foresee, which are outside the control of the parties and which are
not readily capable of being covered by insurance. Unpredictable ground
conditions are at the risk of the Employer.
The earlier editions of the FIDIC Conditions have been extensively used and the
4th Edition is rooted firmly in the tried and tested formula. The changes are
generally sensible and conservative and the 4th Edition will no doubt do equally
well.
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The changes made from the 3rd Edition are referred to at the beginning of the
commentary under each clause. The principal changes are as follows:-
- Clause 2.6 (Engineer to Act impartially): an express obligation upon the
Engineer to act impartially as between the parties.
- The Engineer is required to consult with the parties under some 25
clauses prior to granting extensions of time, fixing rates or making an award of
costs. This consultation obligation is discussed further below.
- Design by the Contractor or one of his subcontractors is catered for in
clause 7.2 (Permanent works designed by Contractor), clause 8.1 (Contractor's
general responsibility) and clause 59.3 (Design requirements to be expressly
stated).
- Clause 44.1 (Extension of time for completion) now provides for an
extension for delays and prevention by the Employer.
- The amount of variation required to trigger an adjustment has been
increased from 10% in clause 52.3 (Variations exceeding 15%).
- A procedure for claims has been set out in new clause 53 (Procedure for
claims).
- Clause 60 (Payment) has now been drafted in full whereas the 3rd Edition
left the matter entirely in the hands of the parties to deal with in Part II.
- Under clause 67 (Settlement of disputes) an "amicable settlement"
procedure has been interposed between the Engineer's decision and arbitration.
- If the Employer fails to pay on time, the Contractor is now given the option
of suspending work or reducing the rate of work as an alternative to
determination: clause 69.4 (Contractor's entitlement to suspend work).
In addition, there are numerous other material amendments and some changes
of vocabulary. Only 4 out of 185 sub-clauses escaped change altogether.
Amendment of FIDIC's 4th Edition
It is the author's experience and impression, quite unsupported by statistics, that
the FIDIC Conditions are used in an amended form, perhaps in a majority of
cases. Certainly, many of the major Employers in the Middle East adopt and
refine their own standard sets of amendments. These amendments are generally
aimed at adjusting the balance of risk in favour of the Employer rather than to
remedy any ambiguities, anomalies or discrepancies in the drafting. Clauses,
which it is suggested require attention in order to remove ambiguities, anomalies
and discrepancies and thereby to reduce the scope for conflict, are as set out
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below. For the detailed criticism, the reader is referred to the commentary under
the particular clause referred to.
- Clause 2.1 (Engineer's duties and authority), inability to replace Engineer.
- Clause 2.5 (Instructions in writing), anomaly as to date of instruction.
- Clause 2.6 (Engineer to act impartially), breadth of item (d).
- Clause 7.1 (Supplementary drawings and instructions), clause 13.1 (Work
to be in accordance with Contract) and clause 51.1 (Variations): clarify
Engineer's power to instruct.
- Clause 37.4 (Rejection), clause 39.1 (Removal of improper work,
materials or plant) and clause 63.1 (Default of Contractor) item (c): remove
inconsistencies.
- Clause 42.1 (Possession of site and access there to): clarify reference to
the clause 14 programme.
- Clause 44.1 (Extension of time for completion): clarify item (b).
- Clause 46.1 (Rate of progress) and clause 63.1 (Default of Contractor)
item (b) (ii): resolve discrepancy
- Clause 49.2 (Completion of outstanding work and remedying defects):
clarify Engineer's apparent discretion to instruct remedial works.
- Clause 51.2 (Instructions for variations): resolve finally that an increase or
decrease in quantities amounts to "varied work".
- Clause 52.3 (Variations exceeding 15%): put beyond doubt the calculation
of the 15%.
- Resolve relationship between clause 53.1 (Notice of Claim) and other
clauses with notice requirements.
- Clause 59.1 (Definition of "nominated subcontractor"): this definition
appears to be excessively wide.
- Clause 60.3 (Payment of retention money): clarify position after Taking-
Over Certificate.
- Sub-clauses 60.5 to 60.8: establish consistent policy in relation to breach
of contract.
- Sub-clauses 60.7 and 60.9 and clause 62.2 (Unfulfilled obligations): clarify
relationship between these clauses.
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- Clause 63.1 (Default of Contractor): resolve doubt as to timing of the
Engineer's certificate and the Employer's notice and termination.
- Clause 65.3 (Damage to Works by Special Risks): clarify the Contractor's
apparent right to complete the works.
- Clause 67.1 (Engineer's decision): resolve relationship with clause 63.1
(Default of Contractor) and clause 69.1 (Default of Employer).
This list represents the headline items but other amendments are suggested in
the text and either party to the contract may wish to make further amendments in
their own interest. There is a further species of amendment, which might be of
benefit to both the parties such as amending clause 44 (Extension of time) and
clause 46 (Rate of progress) to enable the Employer to order acceleration in lieu
of extension of time or in circumstances where the Contractor's entitlement to
extension of time is a matter of dispute.
Generally, great care is needed when amending any standard form of contract.
These FIDIC conditions are generally well balanced and, as with any contract,
there are a great number of links and relationships between different clauses, not
all of which are express or otherwise obvious. With any amendment, therefore,
there is the danger of upsetting the balance or of creating unintended
consequential changes to related provisions. It is in the interests of all parties that
changes should be kept to a minimum.
2: THE ROLE OF THE ENGINEER
Clause 2.1 is entitled "Engineer's duties and authority" but it is necessary to look
right through the conditions to understand the full scope of his role. In the
absence of clause 2.6 (Engineer to act impartially) it would be apparent that the
Engineer has a number of different roles which may be enumerated as follows:-
1. Designer: clauses 6, 7 and 51
2. Quality Controller: clauses 7.2, 36-39, 49 and 50
3. Value and Certifier: especially under clauses 48, 52, 60 and 62
4. Adjudicator: clause 67.
From the above it is reasonably clear that the Engineer is intended to act both as
agent for the Employer in the process of obtaining for the Employer the project
required and as an independent person for the administration of the contract and
for the settlement of disputes.
Clause 2.6 (Engineer to act impartially) creates doubt over this dichotomy. The
clause requires the Engineer when acting in an independent role to be impartial.
This raises the difficult question as to when the Engineer is engaged in which
role. The draftsman has sought to address the question by the use of the general
Page 8 of 264

concept "wherever...the Engineer is required to exercise his discretion...” There is
no other reference in the contract to the Engineer's discretion. There follows a list
of actions, which the Engineer takes in his independent capacity. These actions
would not, it is submitted, always be undertaken in an independent capacity: for
example, consenting to subcontractors under clause 4.1 or approving the
Contractor's design under clause 7.2 would normally be considered to be
functions undertaken as the Employer's agent.
As suggested under clause 2.6, the presumed intention of the draftsman has,
very arguably, not been achieved. It is difficult to find a function of the Engineer
that does not involve discretion or does not "affect the rights and obligations" of
the parties. The notice to commence under clause 41.1 (Commencement of
Works) is to be given by the Engineer. Normally there would be little doubt that
the notice would be given when the Employer wished within the prescribed
period and is thus a clear example of an "agent" function. However, there is
discretion as to when to give the notice within the period and the parties' rights
are affected. Accordingly, it is certainly arguable that clause 2.6 applies unless it
is made clear, "under the Contract" that the Engineer is not "required to exercise
his discretion". In order to avoid such an argument, a solution similar to that
adopted by ICE 6th may be required.
Under ICE 6th the Engineer is required by clause 2(8) to act impartially in relation
to all matters other than those "requiring the specific approval of the Employer"
under the equivalent clause to 2.1 (Engineer's duty and authority) whereby any
actions requiring the Employer's approval are to be set out in Part II. It will
therefore be necessary for the parties under ICE 6th to list all those functions of
the Engineer which are to be undertaken as the Employer's agent and in the
Employer's interest.
Exactly the same provision is not recommended: it would be unwieldy if the
Engineer were obliged to obtain approval for every agent action. It would be
better to list in Part II to clause 2.6 those functions in respect of which the
Engineer is not to act impartially.
Table 1 sets out the functions of the Engineer and should assist the parties to
decide which decisions are to be taken as agent and listed in Part II. The table
advances a view on whether any given function should be considered for the
agency list or whether it is intended by the draftsman to be an independent
function. The column indicating where consultation is called for demonstrates
that consultation forms part of the Engineer's independent function although not
all the normal independent functions involve consultation.
ENGINEER'S ROLE - AGENT OR INDEPENDENT?
Clause No. Description Agent Independent Consultation
2.2,.4 Appointment of Ö
Representative, assistants
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4.1 Consent to subcontractors Ö
5.2 Resolving discrepancies Ö?
6.1 Consent to disclosure Ö
6.4 Determination of time and cost Ö Ö
7.1 Drawings and instructions Ö
7.2 Approval of Contractor's Ö
Drawings
12.2 Determination of time Ö Ö
And cost
Instructions Ö
13.1 Satisfaction Ö?
Instructions Ö?
14.1 Consent to programme Ö
14.2,.3 Request for revised Ö
Programme or cash flow
Estimate
15.1 Approval of Ö
Superintendence,
Retention on site Ö
16.2 Objection/consent to Ö
Employees
17.1 Request to rectify setting- Ö
Out error
Determination of Ö
Additional cost-Clause 52
18.1 Instructing boreholes Ö
19.1 Requiring security Ö
20.3 Requiring rectification Ö
Determination of costs - Ö
Clause 52
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27.1 Instructions re fossils Ö
Determination of time Ö Ö
And cost
30.3 Determination of cost Ö Ö
Payable by Contractor to
Employer
31.1 Requirements on other Ö
Contractors
31.2 Request for facilities Ö
Determination of Ö
Additional cost - Clause 52
35.1 Requiring labor return Ö
36.1 Instructions and tests on Ö
Materials
36.5 Determination Ö Ö
37.2 Inspection and testing Ö
37.4 Determination that Ö
Materials defective
Request for repeat test Ö
Determination of Ö Ö
Employer's costs
37.5 Delegation Ö
38.1 Examination/approval of Ö
Work to be covered up
38.2 Instructing work to be Ö
Opened up
Determining additional Ö Ö
Cost
39.1 Instructing removal of Ö?
Work etc, in his opinion,
Non-compliant
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39.2 Determining Employer's Ö Ö
Costs
40.1 Instruction to suspend Ö
Opinion on necessity to Ö
Protect and secure work
And cost
40.3 Permission to resume work Ö
41.1 Notice to commence Ö
And cost
44.1,2,3 Determination of Ö Ö
Extension of time
45.1 Consent to extended Ö?
Working hours
46.1 Expedition notice/opinion Ö?
That work too slow
Consent to extend Ö?
Working
Determination of Ö Ö
Employer's costs
48.1,.2 Instruction re outstanding Ö?
Work
Issue of Taking-Over Ö
Certificate
Satisfaction Ö?
48.3 Issue of Taking-Over Ö
Certificate
Instructing remedial work Ö?
49.3 Opinion re cause of defect Ö
Determination of cost - Ö
Clause 52
49.4 Opinion re liability for Ö
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Defect
Determination of cost Ö Ö
50.1 Instruction to search Ö
51.1 Opinion as to necessity or Ö?
Appropriateness of
Variation
Instruction of variation Ö
52.1 Valuation of variations - Ö?
at rates and prices
Valuation of variations - Ö?
Based on rates and prices
Opinion as to applicability Ö
Agreement of rates or Ö? Ö
Prices
Fixing appropriate rates Ö
And prices
Determination of Ö
Provisional valuation
52.2 Opinion on Ö
"Inappropriate or
Inapplicable"
Agreement of suitable Ö? Ö
Rates or prices
Fixing appropriate rates Ö
And prices
Determination of Ö
Provisional valuation Ö
Notice of intention to Ö?
Vary rate or prices
52.3 Determination of Ö Ö
Adjustment
52.4 Opinion/instruction re Ö?
day work
Approval of quotations Ö?
Signature/agreement of Ö?
Day work schedule
Satisfaction that value
Reasonable Ö?
53.2 Inspection of records Ö?
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53.3 Requirement re intervals, Ö?
Copies
53.4 Assessment of claim Ö
53.5 Satisfaction and Ö Ö
Determination
54.1 Consent to removal of Ö?
Equipment
56.1 Measurement Ö?
57.2 Approval of breakdown Ö?
58.1,.2 Instructing provisional Ö
Sums
Determination of value - Ö
Clause 52
59.1 Nomination, selection, Ö
Approval of NSC
59.4 Instructions Ö
Determination of Ö
Entitlement - Clause 52
59.5 Demanding proof of Ö
Payment
Satisfaction/proof/ Ö?
Certificates
Deduction from certificate Ö?
60.1 Prescribing form of statement Ö
60.2 Interim certificate Ö
60.3 Determination of Ö
Proportion
Certification/withholding Ö
Of retention/
60.4 Correction of certificate Ö
60.5 Approval of form of Ö
Statement
Certification Ö
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60.6 Agreement of Final Ö?
Statement
60.8 Final Certificate Ö
62.1 Defects Liability Ö?
Certificate
63.1 Certificate of default Ö
63.2 Certificate of value Ö
63.3 Certificates of Employer's Ö
Costs and balance
64.1 Opinion on need for and Ö?
Nature of urgent work
65.3 Requirement for repairs Ö
Determination of cost - Ö
Clause 52
65.8 Determination of payment Ö Ö
67.1 Decision Ö
And cost
Consultation by the Engineer
A new feature of the 4th Edition is the obligation upon the Engineer to consult
with the Employer and Contractor on some 25 occasions within the contract prior
to making decisions as to time and money. The consequence, FIDIC indicated at
the time of the launch of the Conditions, was to make the Employer "more
visible". FIDIC indicated that the consultation obligation reflected existing
practice. It may be that some employers will welcome a procedure, which
requires the Engineer to keep them more fully informed, and some contractors
will be glad of any entitlement to discuss their views with the Engineer. This
innovation raises three questions: -
(a) What does "due consultation" mean?
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(b) How does this obligation relate to the Engineer's obligations under clause
2.6 (Engineer to act impartially)?
(c) What is the result if the Engineer fails to comply with this obligation?
Each of these issues is now addressed in turn:-
(a) The phrase "after due consultation with the Employer and the Contractor"
recurs throughout the contract. No assistance is given, however as to the form
that this consultation should take. In particular, the question is raised as to what
is meant by "due". To "consult" is, according to the Concise Oxford Dictionary, to
"take counsel... seek information or advice from ... take into consideration”. The
concise Oxford Dictionary defines "due" in the present context as "rightful,
proper, and adequate". It must be probable that it also means in accordance with
any relevant law. This raises the possibility that in those countries in which the
law imposes certain bureaucratic procedures, which must be followed prior to the
authorization of additional payment, for example, it is quite possible to envisage
the Engineer being drawn into a round of discussions with a number of relevant
ministries as part of his consultation with a government employer. This, it must
be suspected, would be far removed from the intention of the draftsman, which
was presumably to introduce an express element of openness and natural justice
into the Engineer's decision-making. It was not intended to introduce a
procedure, which could cause long delays to important determinations under the
contract. Accordingly, the parties may wish either to delete the term "due" or to
set out in the contract a simple procedure allowing each party a meeting with the
Engineer to put his case.
As determination is to take place after the consultation, the question arises
as to whether one party is able to delay or prevent the determination be refusing
to take part in the consultation process. Plainly, it would be absurd if a party
could sabotage the contract in this way. In this context, the word "due" is helpful,
conveying the idea of giving the parties a fair opportunity for consultation so that
if one party did not co-operate, the Engineer would be free to make his
determination even though consultation had not taken place. A failure to
participate in the consultation procedure by either party, bearing in mind that in
some clauses such as clause 46.1 (Rate of progress) the consultation concerns
a deduction from the Contractor and is thus not always a procedure leading to
some benefit for the Contractor, would probably amount to a breach of contract.
If, as submitted, the Engineer is entitled to proceed to make his determination
regardless of such refusal, it is unlikely that loss will arise other than from any
delay caused by such refusal.
Alternative wording to address these potential difficulties would be: "after
having given to the Employer and Contractor a reasonable opportunity for
consultation in accordance with the procedure set out in Part II".
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(b) Consultation is intended to be an outward and visible sign of the
Engineer's impartiality. Plainly it is no guarantee. As shown by Table 1 above,
consultation is firmly associated with those functions of the Engineer, which he
undertakes as an independent person rather than as agent for the Employer. At
the end of the day, impartiality depends upon the ability of the Engineer to
exclude from that part of his mind, which is making a determination under the
contract all considerations other than those, required achieving a fair decision in
accordance with the spirit of the contract.
(c) If the Engineer purported to issue a determination without having
consulted with the parties, the question arises as to the validity of that
determination. This is an important question given the uncertainty surrounding
the precise meaning of "due consultation". A party wishing to disregard a
certificate or determination could seek to argue that the consultation undertaken
by the Engineer was inadequate or otherwise not in accordance with the
contract. The answer, it is submitted, lies in clause 67. In the event of a dispute,
the Engineer is obliged to make a decision reopening the disputed determination
without the need for any consultation. Furthermore, the Contractor is obliged to
proceed with the works while a decision is pending. The current question must
therefore be considered against the philosophy of the contract proceeding
regardless of dispute. It is submitted that the pragmatic answer, at least, is that
such determinations would be valid and binding but that the Employer would be
in breach of contract for failing to procure that his Engineer conducted himself as
required by the contract. Therefore, if the Employer sought to withhold or delay
payment on the strength of a lack of consultation, the Contractor could claim as
damages any losses that flowed from the non-payment. This approach is
supported by the difficulty of interpreting the requirement as a condition
precedent to the determination.
If the consultation was intended to precede a deduction by the Employer
from monies due to the Contractor, for example, under clause 64.1 (Urgent
remedial work), the result, it is submitted, is the same. To the extent that the
Contractor can show any loss flowing from the lack of consultation, that loss
would be recoverable as damages from the Employer.
3: COMMENCEMENT AND THE FINAL STAGES
Tables 2 and 3 illustrate the activities and time periods at the beginning and end
of the project. Table 2 demonstrates the significance of the letter of acceptance
as a trigger for time periods under five clauses. The discrepancy between the
Contractor's responsibility for the works under clause 20.1 (Care of Works) and
his obligation to insure those works under clause 21.2 (Scope of cover) is also
demonstrated.
Table 3 illustrates the complexity of the provisions governing the end of the
project and also the need to distinguish between the date of issue of the Taking-
Page 17 of 264

Over Certificate which governs various matters and the date stated within the
Certificate from which date the Defects Liability Period runs.
4: EXTENSION OF TIME, ADDITIONAL PAYMENT AND NOTICE
DELAYING EVENTS - TIME, COST
AND NOTICE PROVISIONS
Clause Event E.g. Cost Notice "Delay"
6.4 Late drawing Ö Ö in advance Ö
12.2 Adverse physical Ö Ö "forthwith" X
Obstructions or
Conditions
17 Incorrect setting X Ö - X
Out data
20.3 Damage to Works X Ö - X
Due to Employer's
Risks
27 Fossils - discovery Ö Ö "immediately" Ö
31.2 Facilities for other X Ö - X
Contractors
36.5 Test not provided for Ö Ö - X
38.2 Uncovering - no X Ö - X
Fault found
40.2 Suspension Ö Ö - X
42.2 Failure to give Ö Ö - Ö
possession
44.1 Extension of time Ö X 28 days Ö
for completion
49.3 Cost of remedying n/a Ö - n/a
defects - no fault
of Contractor
50.1 Search - no fault X Ö - X
of Contractor
Page 18 of 264

51 &52 Variations cl. 44 Ö 14 days X
extra
or add.
work
58 Provisional sums X Ö - X
65.3 Damage to Works X Ö - X
by special risks
69.4 Contractor's Ö Ö in advance Ö
entitlement to
suspend works
70.2 Change to law X Ö - X
OTHER EVENTS GIVING RISE TO CLAIM FOR 'ADDITIONAL PAYMENT'
CLAUSE TITLE EVENT NOTICE
4.2 Assignment of X
subcontractor 's obligations
6.1 Custody and supply of extra drawings X
drawings and documents
9.1 Contract Agreement execution X
22.3 Indemnity by Employer claim against X
Contractor
30.3 Transport of materials and indemnity for X
Plant road damage
65.8 Payment if Contract X
terminated
70.1 Increase or decrease in costs X
Tables 4 and 5 are intended to assist in providing answers to the following
questions:-
(i) Is there a discernable policy in the conditions as to which clauses
expressly require extension of time to be determined by the Engineer?
Page 19 of 264

(ii) Where there is no express right to extension of time, is the Contractor
entitled to an extension under clause 44.1 (Extension of time for completion)?
(iii) What does clause 44.1 item (b) "any cause of delay referred to in these
Conditions" refer to?
(iv) How does clause 53.1 (Notice of claims) relate to notice provisions
contained in the clauses themselves?
(v) How does the Contractor recover his prolongation costs and other loss
and expense resulting from delays to the progress of the works which were not
his responsibility?
Each of the above questions is now taken in turn:-
(i) Is there a discernable policy in the conditions as to which clauses
expressly require extension of time to be determined by the Engineer?
If there is a policy, it is very difficult to ascertain. There are occasions of
consistency: for example, there is no express right to an extension of time at
either clause 20.3 (Loss or damage due to Employer's risks) or under clause 65.3
(Damage to Works by special risks). However, it is very difficult to see why an
extension of time should be available under clause 36.5 (Tests not provided for),
where the Engineer has required an extra test to be performed which has shown
the Contractor's materials to comply with the contract, whereas no such
extension is available under clause 38.2 (Uncovering and making openings),
when the Engineer has ordered work to be reopened but no fault has been
found. One hypothesis could be that the draftsman has not given an express
right of extension of time where clause 44.1 obviously applies: the provision of
incorrect data under clause 17.1 (Setting out) could be an "impediment or
prevention by the Employer" under clause 44.1 (d); the repair work under clauses
20.3 (Loss or damage due to Employer's risks) and 65.3 (Damage to Works by
special risks) would be "extra or additional work" within 44.1 item (a). This
hypothesis obviously does not explain the discrepancy between clause 36.5 and
clause 38.2; and a late drawing under clause 6.4 (Delays and cost of delay of
drawings) is as obviously an impediment by the Employer as incorrect data under
clause 17.1 (Setting out). If the conclusion to question (ii) below is correct and all
these causes of delay should give rise to extensions of time, one is forced to the
conclusion that there was no policy guiding the draftsman as to whether to put an
express extension of time entitlement into any given clause.
(ii) Where there is no express right to extension of time, is the Contractor
entitled to an extension under clause 44.1 (Extension of time for completion)?
If there were no provision giving the Contractor an entitlement to an extension of
time where the Engineer had supplied incorrect data under clause 17.1 (Setting
out) or where the Engineer has ordered perfectly satisfactory work to be opened
up, then, under English law at least, time would be set "at large" meaning that the
Page 20 of 264

extension of time machinery of the contract would be treated as having broken
down. This is because English courts would not permit the Employer to benefit by
way of liquidated damages as a result of his own acts which have caused delay
to the Contractor. Indeed, there cannot be many legal systems in the world which
would permit an Employer to enrich himself in this way.
There is, however, no objection to a contract stipulating that particular risks,
whether within or beyond the control of the Employer, should be upon the
Contractor. This is the effect of clause 20.1 (Care of Works), subject to the
exceptions set out in clause 20.4 (Employer's risks) and 65.2 (Special risks).
Alternatively, the conditions may cause the losses flowing from an event to lie
where they fall. This is the case with exceptionally bad weather which is included
in clause 44.1 (Extension of time for completion) at item (c) but which is
expressly excluded from any financial recovery under clause 12.2 (Adverse
physical obstructions or conditions) and clause 40.1 (Suspension of work). There
are therefore three principal categories of allocation of risk:-
(a) Entirely on the Employer: Contractor receives extension of time and costs;
(b) Loss lies where it falls: Contractor receives extension of time but no costs;
and
(c) Entirely on the Contractor: no provision for extension of time or costs;
liquidated damages deducted.
On the basis of table 4, there is room for an argument for a fourth category,
where the Contractor receives costs but no time. In fact, for most of the events
dealt with in the clauses which give cost but not time, an extension would in fact
be available under one or other of the headings of clause 44.1. There may be
argument however in relation to clause 31.2 (Facilities for other contractors) and
in relation to clause 58 (Provisional sums). See the commentary under those
clauses for discussion of those arguments.
(iii) What does clause 44.1 item (b) "any cause of delay referred to in these
Conditions" refer to.
A restricted interpretation would limit these words either to those clauses in which
the word "delay" features or to those clauses which provide for extension of time
by reference to clause 44. Table 4 demonstrates that some four clauses other
than clause 44 use the word "delay" and a total of seven clauses provide for
extensions of time.
A more liberal interpretation would treat the item as referring to any delaying
event which is dealt with in the contract. As pointed out in the commentary under
clause 44.1 item (b), this would cover defaults of the Contractor as well as those
not his responsibility. This does not necessarily rule out such an interpretation as
the Contractor's defaults would be filtered out by the phrase "being such as fairly
to entitle the Contractor to an extension".
Page 21 of 264

As there is no scope for an intermediate interpretation of the phrase, it is
necessary to consider which of the two interpretations is correct. For the narrow
interpretation, it might be argued that it was intended as a cross-reference to
those clauses which refer to the clause 44 in the same manner as clause 52.1
(Valuation of variations) refers to matters "which are required to be determined in
accordance with clause 52". If there had been no such item within clause 44.1,
the Contractor might have been obliged both to demonstrate entitlement under,
for example, clause 12.2 which allows him "any extension of time to which the
Contractor is entitled under clause 44" and additionally to fit the delaying event
within one of the other grounds under clause 44.1.
An argument in favour of the broader interpretation would not dispute the
foregoing but would add that the need to cater for clauses such as clause 17.1
and other clauses shown by Table 4 not to provide expressly for extensions of
time means that 44.1(b) was intended to sweep up these causes of delay as well.
Otherwise, it is necessary to force them, perhaps artificially, into one of the other
grounds if an argument for time at large is to be avoided. For example, unless
there was express provision in the conditions, remedial works due to incorrect
data from the Engineer is plainly something for which the Contractor should
receive an extension of time as the Employer could not be entitled to liquidated
damages in respect of a delay caused by his Engineer, under English law at
least. Therefore, time would be set at large in the absence of a right to extension
of time. As neither delay nor clause 44 are referred to in clause 17.1, the
proponent of the narrow interpretation of item (b) would be obliged to bring such
delay within one of the other grounds. Item (a) "Extra or additional work" seems
inappropriate for work that was merely executed incorrectly and there is the
objection to item (d) "any delay... by the Employer" that servants or agents are
not included. This leaves the unsatisfactory "special circumstances" and the
objection that something catered for expressly by the contract such as incorrect
data supplied by the Engineer does not qualify as "special". It would therefore be
argued that a broad interpretation was intended.
It is submitted that as a matter of pragmatism, the broad interpretation must be
adopted to prevent strained interpretations of the other grounds for extension of
time and to prevent technical and unmeritorious claims that time has been set at
large.
(iv) How does clause 53.1 (Notice of claims) relate to notice provisions
contained in the clauses themselves?
Table 4 sets out the notice requirements that are contained in the various
clauses. Thus in clause 12.2 (Adverse physical obstructions and conditions)
notice is required forthwith and under clause 27.1 (Fossils) the Contractor is to
give immediate notice. Clause 53.1 requires notice within 28 days to be given to
both Engineer and Employer if additional payment is to be claimed. It opens with
the words "notwithstanding any other provision of the Contract...". As mentioned
in the commentary under clause 53.1, this clause should probably be taken as an
Page 22 of 264

additional requirement but not a substitute for notice provisions given in a clause.
Thus, a failure to give notice forthwith under clause 12.2 to the Engineer and
Employer will not be repaired by giving notice within 28 days under clause 53.1.
Notice under clause 12.2 would however satisfy the requirements of clause 53.1.
Clause 27.1 (Fossils) only requires notice to be given to the Engineer so that
further notice under clause 53.1 copied to the Employer would be required.
Clause 53.1 is also relevant to the contents of the clause as a notice merely
indicating the presence of an obstruction or an article of interest would not
necessarily satisfy the requirement of notice that the Contractor "intends to claim
any additional payment".
Where notice of intention to claim extra payment for varied work is required
within 14 days under clause 52.2 (Power of Engineer to fix rates), a notice under
clause 53.1 within 28 days would not suffice.
The importance of complying with clause 53.1 is considerably reduced by the
ability of the Engineer or arbitrator to deal with the claim in the absence of notice
under clause 53.4 (Failure to comply).
(v) How does the Contractor recover his prolongation costs and other loss
and expense resulting from delays to the progress of the works which were not
his responsibility?
Unlike some standard forms of building contract, there is no single clause which
addresses the issue of the Contractor's loss and expense. The right to recover
additional sums is scattered through the contract as illustrated by Tables 4 and 5.
Clause 44.1 (Extension of time completion) is not linked to any clause giving a
right to payment unlike the relationship between clause 51 (Variations) and
clause 52 (Valuation of variations). As can be seen from Table 4, all the clauses
(other than clause 44) giving an entitlement to extension of time also give a right
to payment of additional costs. It has been submitted that in most of the cases
where the Engineer is obliged to determine additional costs for the Contractor,
extension of time is in fact available. (The matters listed in Table 5 would not
normally be delaying events.)
As to the events set out in clause 44.1:-
(a) "the amount or nature of extra or additional work". If the extra or additional
work has been ordered as a variation, then the Contractor may be able to
recover any resulting prolongation costs if he is able to demonstrate under clause
52 (Valuation of variations), either that there is no applicable rate or that the rate
has been rendered inappropriate by reason of the nature or amount of the extra
or additional work. It is arguable, however, as commented under clause 51.2 that
"extra" in clause 44.1 (a) includes "automatic" changes in quantities which result
from any inaccuracy in the bills of quantities. To obtain additional costs the
Contractor must either demonstrate under clause 52.3 (Variations exceeding
15%) that the "Effective Contract Price" has changed by 15%; or else must argue
that such changes in quantities fall within the definition of "varied work" within
Page 23 of 264

clause 52.2 (Power of Engineer to fix rates) with the result that the Engineer may
adjust the rates to take into account any additional costs incurred. For more on
this see under clause 51.2.
(b) "any cause of delay referred to in these conditions". As discussed above,
this effectively refers to events of delay for which provision is made so that the
Contractor will recover his prolongation costs under the individual clauses. Thus
for example, under clause 40.2 (Engineer's determination following suspension)
the Contractor is granted an extension of time and "the amount...of the cost
incurred by the Contractor by reason of such suspension".
(c) "exceptionally adverse climatic conditions". There is no provision for
payment of prolongation costs in the event of extremely bad weather. These
conditions, in common with most standard forms, cause the risk to be shared
between the parties so that the Employer recovers no liquidated damages and
the Contractor recovers no prolongation costs.
(d) "any delay, impediment or prevention by the Employer". There is no
express provision in the contract for reimbursement of prolongation costs flowing
from the Employer's default. Various failures by the Engineer are catered for in
clauses such as clause 6.4 (Delays and cost of delay of drawings) and 17.1
(Setting out). However as is mentioned in the commentary under clause 44.1 (d),
it is arguable that the Engineer's defaults are not covered by the current grounds.
To the extent that delays etc by the Employer are not covered by an express
term, the Contractor is left to recover his prolongation costs as damages for
breach of contract. The action of the Employer which invokes this ground for
extension need not be a breach. The ordering of a substantial variation which
delayed the works would be an example of a delay by the Employer if not also an
impediment and a prevention. The Contractor's prolongation costs in this event
are plainly covered by the variation clause.
(e) "other special circumstances". Generally, it is submitted, this ground will
not refer to matters dealt with in the contract so that recovery of prolongation
costs will depend upon the Contractor's ability to demonstrate breach of contract
by the Employer.
GENERAL INDEX IN ALPHABETICAL ORDER
Index Clause
Access to site 42.1
Access to works, Engineer 37.1
Access, Contractor to Satisfy Himself 11.1
Accident or Injury to Workmen - Insurance Against 24.2
Accident or Injury to Workmen - Liability for 24.1
Address, Change of 68.3
Adequacy of Insurance 25.2
Page 24 of 264

Adjustment of Contract Price if Variations Exceed 15% of Tender Sum 52.3
Agreement 9.1
Alterations, Additions and Omissions 51 & 52
Ambiguities in Contract Documents 5.2
Amicable Settlement of Disputes 67.2
Appointment of Assistants to Engineer 2.4
Approval by the Engineer 7.3
Approval of Materials not Implied 54.8
Approval Only by Defects Liability Certificate 61.1
Arbitration 67.3
Assignment of Contract 3.1
Avoidance of Damage to Roads 30.1
Bills of Quantities - Estimated Only 55.1
Boreholes and Exploratory Excavation 18.1
Breakdown of Lump Sum Items 57.2
Care of Works 20.1
Cash Flow Estimate to be Submitted 14.3
Certificate, Final Payment 60.8
Certificates and Payment, Monthly Statements 60.1
Certificates, Correction of 60.4
Certificate, Taking over 48.1
Certification of Completion of Works 48.1
Certification of Completion of Sections or Parts 48.2
Cessation of Employers Liability 60.9
Change of Address, Notice of 68.3
Claims, Contemporary Records 53.2
Claims, Notice of 53.1
Claims, Payment of 53.5
Claims, Substantiation of 53.3
Claims Under Performance Security 10.3
Clearance of Site on Completion 33.1
Commencement of Works 41.1
Completion of Works, Time for 43.1
Completion of Works, Time for, Extension of 44.1
Completion, Statement at 60.5
Compliance with Insurance Policy Conditions 25.4
Compliance with Statutes and Regulations 26.1
Contemporary Records for Claims 53.2
Contract Agreement 9.1
Contractor not Relieved of Duties or Responsibilities 14.4
Contractor's Employees 16.1
Contractor's Employees, Engineer at Liberty to Object 16.2
Contractor's Entitlement to Suspend Work for Employer's Default 69.4
Contractor's Equipment, Conditions of Hire 54.5
Contractor's Equipment, Employer not Liable for Damage 54.2
Contractor's Equipment, Insurance of 21.1
Page 25 of 264

Contractor's Equipment, Reference in Subcontracts 54.7
Contractor's Equipment, Temporary Works & Materials Exclusive Use for the
Works 54.1
Contractor's Equipment, Transport of 30.2
Contractor's Failure to Carry Out Instructions 49.4
Contractor's Failure to Insure, Remedy 25.3
Contractor's General Responsibilities 8.1
Contractor's Superintendence 15.1
Contractor to Keep Site Clear 32.1
Contractor to Search 50.1
Correction of Certificates 60.4
Cost of Remedying Defects 49.3
Cost of Samples 36.2
Cost of Tests 36.3
Cost of Tests not Provided for 36.4
Covering up Work, Examination Before 38.1
Cross Liabilities 23.3
Currencies of Payment for Provisional Sums 72.3
Currencies, Rates of Exchange 72.1
Currency Restrictions 71.1
Custody and Supply of Drawings and Documents 6.1
Customs Clearance 54.3
Damage to Persons and Property 22.1
Damage to Roads, Avoidance of 30.1
Damage to Works, Special Risks 65.3
Damages, Liquidated 47.1
Dates for Inspection and Testing 37.3
Daywork 52.4
Decrease or Increase of Costs 70.1
Default of Contractor in Compliance with Instructions on Improper Work 39.2
Default of Contractor, Remedies for 63.1
Default of Employer 69.1
Defective Materials and Work 39.1
Defects, Contractor to Search for, if Required 50.1
Defects, Cost of Remedying 49.3
Defects Liability Certificate 62.1
Defects Liability Period 49.1
Defects, Remedying of 49.2
Definitions 1.1
Delay, Liquidated Damages for 47.1
Delays and Cost of Delay of Drawings 6.4
Design by Nominated Subcontractors 59.3
Discharge 60.7
Discrepancies in Documents 5.2
Dismissal of Contractor's Employees 16.2
Disorderly Conduct etc 34.1
Disputes, Engineer's Decision 67.1
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Disruption of Progress 6.3
Documents Mutually Explanatory 5.2
Drawings 6 & 7
Drawings and Documents - Custody and Supply of 6.1
Drawings and Instructions - Supplementary 7.1
Drawings, Copy to be Kept on Site 6.2
Drawings, Delays and Cost of Delay of Drawings 6.4
Drawings, Failure by Contractor to Submit 6.5
Employer not Liable for Damage to Contractor's Equipment etc 54.2
Employer's Liability, Cessation of 60.9
Employer's Responsibilities 19.2
Employer's Risks 20.4
Engagement of Staff and Labour 34.1
Engineer's Authority to Delegate 2.3
Engineer's Determination Where Tests not Provided for 36.5
Engineer's Duties and Authority 2.1
Engineer to Act Impartially 2.6
Environment - Protection of 19.1
Errors in Setting Out 17.1
Evidence and Terms of Insurance 25.1
Examination of Work before Covering Up 8.1
Exceptions 22.2
Exchange, Rates of 72.1
Exclusions 21.4
Extension of Time, due to Employer's Failure to give Possession of Site 42.2
Extension of Time for Completion 44.1
Extension of Time for Completion, Contractor's Claim 44.2
Extension of Time for Completion, Engineer's Determination 44.3
Extraordinary Traffic 30.
Facilities for Other Contractors 31.2
Facilities - Rights of Way and 42.3
Failure by Contractor to Submit Drawings 6.5
Failure to Comply with Claims Procedure 53.4
Failure to Comply with Engineer's Decision 67.4
Failure to Give Possession of Site 42.2
Faulty Work, Removal of 39.1
Fees and Notices 26.1
Fencing, Watching, Lighting etc 19.1
Final Payment Certificate 60.8
Final Statement 60.6
Foreign Currencies, Payment in 72.
Fossils 27.1
Foundations, Examination of 38.1
General Responsibilities of Contractor 8.1
Giving of Notices - Payment of Fees 26.1
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Headings and Marginal Notes 1.2
Improper Work and Materials, Removal of 39.1
Increase or Decrease of Costs 70.1
Indemnity by Contractor 22.1 and
24.1
Indemnity by Employer 22.3
Independent Inspection 37.5
Injury to Persons - Damage to Property 22.1
Injury to Workmen 24.1
Inspection and Testing 37.2
Inspection and Testing, Dates for 37.3
Inspection of Foundations, etc 38.1
Inspection of Operations 37.1
Inspection of Site by Contractor 11.1
Instructions for Variations 51.2
Instructions in Writing 2.5
Instructions, Supplementary 7.1
Insurance, Adequacy of 25.2
Insurance, Evidence and Terms of 25.1
Insurance, Minimum Amount of 23.2
Insurance of Works and Contractor's Equipment 21.1
Insurance, Remedy on Failure to Insure 25.3
Insurance, Responsibility for Amounts not Recovered 21.3
Insurance, Scope of Cover 21.2
Insurance, Third Party 23.1
Insurance, Workmen 24.2
Interference with Traffic and Adjoining Properties 29.1
Interim Determination of Extension 44.3
Interpretations 1.3
Labour, Engagement of 34.1
Language/s and Law 5.1
Law to which Contract Subject 5.1
Legislation, Subsequent 70.2
Lighting, Fencing, Watching, etc. 19.1
Liquidated Damages for Delay 47.1
Liquidated Damages, Reduction of 47.2
Loss or Damage due to Employer's Risks 20.3
Loss or Damage - Responsibility to Rectify 20.2
Lump Sum Items - Breakdown of 57.2
Materials and Plant, Transport of 30.3
Materials - Approval of, etc, not Implied 54.8
Materials, Improper - Removal of 39.1
Materials, Quality of 36.1
Materials, Supply of 8.1
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Measurement by Engineer 56.1
Measurement, Methods of 57.1
Measurement, Quantities Estimated Only 55.1
Methods of Construction 8.2
Minimum Amount of Insurance 23.2
Monthly Payments 60.2
Nominated Subcontractors, Certification of Payments to 59.5
Nominated Subcontractors, Definition 59.1
Nominated Subcontractors, Design by 59.3
Nominated Subcontractors, Objection to Nomination 59.2
Nominated Subcontractors, Payment to 59.4
Not Foreseeable Physical Obstructions or Conditions 12.2
Notice of Claims 53.1
Notices and Fees, Payment of 26.1
Notices, Consents and Approvals 1.5
Notice to Contractor 68.1
Notice to Employer and Engineer 68.2
Objections to Contractor's Employees 16.2
Obstructions or Conditions - Not Foreseeable Physical 12.2
Omissions, Alterations, and Additions 59.
Openings, Uncovering and Making 38.2
Operations, Inspection of 37.1
Order of Work, Contractor to Furnish Programme 14.1
Other Contractors, Opportunities for 31.1
Patent Rights 28.1
Payment if Contract Terminated for Contractor's Default 63.3
Payment if Contract Terminated for Employer's Default 69.3
Payment of Claims 53.5
Payment, Time for 60.10
Performance Security 10.1
Performance Security - Claims Under 10.3
Performance Security - Period of Validity 10.2
Period of Defects Liability 49.1
Permanent Works Designed by Contractor 7.2
Physical Obstructions or Conditions - Not Foreseeable 12.2
Physical Obstructions or Conditions - Engineers Determination 12.3
Plant and Materials, Transport of 30.3
Plant, Conditions of Hire 54.5
Plant, Customs Clearance 54.3
Plant, Employer not Liable for damage to 54.2
Plant, etc - Exclusive Use for Works 54.1
Plant, Quality of 36.1
Plant, Re-export of 54.4
Plant, Removal of 39.1
Policy of Insurance - Compliance with Conditions 25.4
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Possession of Site 42.1
Possession of Site, Failure to Give 42.2
Power of Engineer to Fix Rates 52.2
Priority of Contract Documents 5.2
Programme to be Submitted 14.1
Progress - Disruption of 6.3
Progress - Rate of 46.1
Protection of Environment 19.1
Provision to Indemnify Contractor 22.3
Provision to Indemnify Employer 22.2
Provisional Sums, Currencies of Payment 72.3
Provisional Sums, Definition 58.1
Provisional Sums, Production of Vouchers 58.3
Provisional Sums, Use of 58.2
Quality of Materials and Workmanship 36.1
Quantities 55.1
Rate of Progress 46.1
Rates of Exchange 72.1
Rates, Power of Engineer to Fix 52.2
Rectification of Loss or Damage 20.2
Reduction of Liquidated Damages 47.2
Re-export of Plant 54.4
Regulations, Statutes, etc, Compliance with 26.1
Rejection 37.4
Release from Performance 66.1
Remedies for Default of Contractor 63.1
Remedying of Defects 49.2
Remedying of Defects, Cost of 49.3
Remedy on Contractor's Failure to Insure 25.3
Removal of Contractor's Employees 16.2
Removal of Contractor's Equipment 69.2
Removal of Improper Work, Materials or Plant 39.1
Removal of Plant, etc 65.7
Responsibility to Rectify Loss or Damage 20.2
Responsibility Unaffected by Approval 7.3
Restriction on Working Hours 45.1
Resumption of Work 69.5
Retention Money, Payment of 60.3
Returns of Labour and Contractor's Equipment 35.1
Revised Programme 14.2
Rights of Way and Facilities 42.3
Risks, Employer's 20.4
Risks, Special 65.
Roads, etc - Damage by Extraordinary Traffic 30.1
Roads, Interference with Access to 29.1
Royalties 28.2
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Safety, Security and Protection of the Environment 19.1
Samples, Cost of 36.2
Security, Safety and Protection of the Environment 19.1
Setting-Out 17.1
Singular and Plural 1.4
Site, Clearance on Completion 33.1
Site, Contractor to Keep Clear 32.1
Site, Inspection of by Contractor 11.1
Site Operations and Methods of Construction 8.2
Site, Possession of 42.1
Special Risks 65.
Staff, Engagement of 34.1
Statement at Completion 60.5
Statement, Final 60.6
Statutes, Regulations, etc, - Compliance with 26.1
Subcontracting 4.1
Subcontractors, Nominated 59.
Subcontractors, Responsibility of the Contractor for Acts and Default of 4.1
Subsequent Legislation 70.2
Substantial Completion of Sections or Parts 48.3
Sufficiency of Tender 12.1
Supply of Plant, Materials and Labour 8.1
Surfaces Requiring Reinstatement 48.4
Suspension, Engineer's Determination 40.2
Suspension lasting more than 84 days 40.3
Suspension of Work 40.1
Taking Over Certificate 48.1
Taking Over of Sections or Parts 48.2
Tender Documents 11.1
Tender, Sufficiency of 12.1
Termination of Contract by Employer 63.1
Termination of Contract by Employer, Assignment of Benefit 63.4
Terms of Insurance 25.1
Tests, Cost of 36.3
Tests not Provided for - Cost of 36.4
Third Party Insurance 23.1
Time for Completion 43.1
Time for Completion, Extension of 44.1
Time for Payment 60.10
Traffic, Extraordinary 30.1
Traffic, Interference with 29.1
Traffic, Waterborne 30.4
Transport of Contractor's Equipment and Temporary Works 30.2
Transport of Materials and Plant 30.3
Uncovering Work and Making Openings 38.2
Page 31 of 264

Unfulfilled Obligations 62.2
Urgent Remedial Work 64.1
Valuation at Date of Termination by the Employer 63.2
Variations 51.1
Variations, Daywork Basis 52.4
Variations, Exceeding 15% 52.3
Variations, Instructions for 51.2
Variations, Power of the Engineer to Fix Rates 52.2
Vouchers, Production of 58.3
War, Outbreak of 20.4
Watching and Lighting etc 19.1
Waterborne Traffic 30.4
Work, Examination of Before Covering Up 38.1
Work, Improper, Removal of 39.1
Working Hours, Restriction of 45.1
Workmanship, Quality of 36.1
Workmen, Accident or Injury to 24.1
Works, Care of 20.1
Works, Completion of ( Defects Liability Certificate) 62.1
Works, Commencement of 41.1
Works, Insurance of 21.1
Works, Remedying of Defects 49.2
Works, Time for Completion of 43.1
Works to be Measured 56.1
Work, Suspension of 40.1
Work to be in Accordance with the Contract 13.1
Page 32 of 264

CLAUSE 1 : Definition and Interpretation
This clause sets out the meanings of almost all the terms in the contract which
are given capital letters. The definitions of "Defects Liability Period" and
"nominated Subcontractor" are to be found in clause 49.1 and clause 59.1
respectively. In addition, four terms which have not been given capital letters are
also defined.
The headings and marginal notes are to be ignored when interpreting the
Contract.
The references to individuals include firms, corporations and other legal
organizations.
Singular words and plural words may be interchangeable where the context so
requires.
Notices, consents, approvals, certificates and determinations must be given in
writing and, with the exception of notices, must not be unreasonably withheld or
delayed.
The following definitions are new to the 4th Edition: Subcontractor, Bill of
Quantities, Tender, Letter of Acceptance, Contract Agreement, Appendix to
Tender, Commencement Date, Time for Completion, Tests on Completion,
Retention Money, Plant, Section, day, foreign currency and writing. What in the
3rd Edition was referred to (but not defined as) "Certificate of Completion", is now
defined as the Taking-Over Certificate. "Constructional Plant" has now become
Contractor's Equipment. The only definition that has not been repeated in the 4th
Edition is "Approved". This definition has essentially been overtaken by clause
1.5 (Notices, Consents etc) which requires approvals to be in writing. It should be
noted that all the definitions are subject to the opening words "except where the
context otherwise requires".
Sub-clauses 1.2 and 1.4 are taken from the 3rd Edition; sub-clauses 1.3 and 1.5
are new.
1.1
(a)(i) "Employer" and "Contractor" - If the Contract Agreement has
(a)(ii) Been entered into, "Employer" and "Contractor" are already defined in that
Agreement and thus in these conditions. Naturally, the parties must ensure that
the entries in Part II and the Agreement are identical.
The Contractor's ability to assign is restricted by clause 3.1 (Assignment of
contract) whereby no part of the contract may be assigned without the prior
consent of the Employer. Under that clause, the consent "shall be at the sole
Page 33 of 264

discretion of the Employer". Thus, the Employer has the right to refuse an
assignment on any grounds. The Contractor's consent to an assignment is
however subject to clause 1.5 (Notices, consents etc) whereby "any such
consent ... shall not be unreasonably withheld or delayed". Thus, the Employer's
ability to assign is greater than that of a Contractor. It is submitted that bona fide
concern over the financial standing of the Employer's proposed assignee would
be reasonable grounds for refusing consent. It is undoubtedly right that having
carefully selected a Contractor to execute the works, the Employer should have a
right of veto over any proposed assignment.
An attempted assignment without the requisite consent would, in English law at
least, be ineffective. Again under English law, an assignment by an Employer
with consent would not relieve that Employer of a primary obligation to pay the
Contractor. The Engineer's contract of engagement would also normally need to
be assigned or novated to the new Employer.
(a)(iii) "Subcontractor" - Under clause 4.1 (Subcontracting), it should be noted
that the Contractor is not required to obtain consent for the provision of labour.
Thus, a labour-only subcontractor does not fall within the definition.
(a)(iv) "Engineer" - By clause 1.3 (Interpretation), the Engineer may be a firm, a
corporation or other organisation having legal capacity. The Engineer must be
named in Part II. It is a new feature of the 4th Edition that there is no ability in the
Employer to replace the Engineer. In the 3rd Edition and ICE 5th and 6th, there
is defined the "Engineer appointed from time to time by the Employer". The
present definition will not be a problem if the Engineer is named as a firm;
however, the Engineer will often be a named individual. According to the Guide
issued by FIDIC on the 4th Edition, the reason for this change from the 3rd
Edition is that the identity of the Engineer (and his reputation) has been a factor
in the calculation of the Contractor's tender. This, it is submitted, is a mistake.
Whilst it is certainly true that a Contractor might well price work differently if the
Engineer is a respected independent professional on the one hand rather than a
government department's Chief Engineer on the other, the functioning of the
contract is so dependent upon the existence of an Engineer there must be a
substantial risk of the project falling apart if its survival is dependent upon the
parties' ability to agree a replacement Engineer in the event that the named
Engineer died or otherwise ceased to act. If the parties were in dispute at the
time, the prospects for agreement must be limited.
In theory, a dispute over the replacement Engineer would be one capable of
resolution under the arbitration clause. However, in the absence of an Engineer,
it is difficult to see how the disputes procedure can commence. It may be
possible to draw a distinction between situations where the Engineer has died
and other circumstances where he is simply failing or refusing to act. In the latter
circumstances, the Engineer is still in existence and the disputes procedure can
advance by default. If he is dead, there does not seem to be any way forward
without agreement between the parties. The Employer is obliged to try to replace
him and obtain the Contractor's agreement, it is submitted. For a case on the
Page 34 of 264

more traditional position, see Croudace v Lambeth (1986) 33 BLR 20, where the
Court of Appeal held the Employer liable in damages for failing to replace the
certifier after the retirement of the named person.
A similar distinction may be made with regard to the powers delegated to the
Engineer's Representative under clause 2.3 (Engineer's authority to delegate). If
the Engineer is alive, it is arguable that the Engineer's Representative's powers
are unimpaired. However, the Contractor's ability to question any communication
of the Engineer's Representative by reference to the Engineer under clause
2.3(b) could effectively bring the Engineer's Representative's powers to an end.
If the Engineer died or otherwise ceased to act and the parties are unable to
agree to a replacement, the effects, it is submitted, would be as follows:-
(1) The Employer would not be in breach of his obligation to ensure that the
Engineer exercises his functions provided that he has taken reasonable steps to
propose an alternative Engineer and has not been unreasonable in refusing any
nominee of the Contractor. Compare clause 69.1 (Default of Employer) item (b)
"interfering with or obstructing ...any such certificate".
(2) Nor would the Employer be in breach for failing to pay the Contractor in
the absence of interim certificates. The obligation would probably be to pay when
the works were complete.
(3) Clause 66.1 (Release from Performance) is not appropriate as any
impossibility is not "outside the control of both parties". Thus, it may be arguable
that the fundamental obligations of the parties remain intact:-
(i) the Contractor's obligation under clause 8.1 (Contractor's general
responsibilities) to execute and complete the works survives; and
(ii) the obligation of the Employer to pay for those works as expressed in
Article 4 of the Contract Agreement or as stated in the Letter of Acceptance or by
implication will also survive. The Employer may, however, have no obligation to
make any payment until the works are complete.
(4) In the event of any delay which is not the responsibility of the Contractor,
time would be at large because of the absence of the Engineer to grant
extensions of time. If all the delay was the Contractor's responsibility, it may be
arguable that clause 47 (Liquidated damages for delay) would continue to
operate as it is not dependent upon the existence of the Engineer, who is not
mentioned in the clause. However, substantial completion is certified by the
Engineer. The Contractor could be liable for breach of an obligation to complete
within a reasonable time, once time was set at large.
Thus it is just conceivable that a project could limp onwards without an Engineer.
Plainly, it is most unsatisfactory and an Employer might be well advised, having
exhausted attempts to agree a new Engineer simply to appoint one and
Page 35 of 264

thereafter argue, when the Contractor accepts interim payment as certified by the
Engineer, that the Contractor has effectively consented to the new Engineer.
For a discussion on when the Engineer's role comes to an end and he is functus
officio, see under clause 2.1 (Engineer's duties and authority). See also the
comments under clause 67.1 (Engineer's decision).
(a)(v) "Engineer's Representative" - The Engineer's Representative is referred to
in only three other clauses: clause 2 (Engineer and Engineer's Representative)
which deals with the delegation of powers by the Engineer to his Representative;
clause 13.1 (Work to be in accordance with contract) whereby the Contractor is
obliged to take instructions from the Engineer's Representative and clause 15.1
(Contractor's superintendence) on the same subject. In view of the delegation
provision, express mention of the Engineer's Representative is unnecessary.
(b)(i) "Contract" - There is no significance in the order of contract documents
given here. See clause 5.2 (Priority of contract documents). The reference in
earlier editions to a "Schedule of Rates and Prices, if any" has not been repeated
in this edition. It should be noted that the term "Contract" includes the Drawings
and it is therefore arguable that the term includes future drawings. In order to
make sense of expressions such as "increase or decrease the quantity of any
work included in the Contract" in clause 51.1 (Variations), it is necessary to apply
the exception in the opening words of the current sub-clause: "except where the
context otherwise requires".
(b)(ii) "Specification" - As the specification includes any variations and as the
specification is part of the contract, the contract is itself variable. Thus, strictly
speaking, the expression "increase or decrease the quantity of any work included
in the Contract" in clause 51.1 (Variations) is somewhat circular. Equally, the
definition of Works is defined by reference to the contract and thus incorporates
variability. It must be doubted that this point is ultimately of great significance.
(b)(iii) "Drawings" - The term is very widely defined. The inclusion of samples,
patents and models is perhaps surprising and produces curious results if taken
literally. For example, under clause 6.1 (Custody and supply of drawings and
documents), the Contractor is to provide for copies. This is one of the occasions
when the opening words of this sub-clause, "except where the context otherwise
requires", will be most relevant. It is also important to appreciate that this
definition is not limited to drawings etc in existence at the time time the Contract
is entered into but refers to all future drawings.
(b)(iv) "Bill of Quantities" - Surprisingly, the only other reference to the prices in
the Bill of Quantities is in clause 12.1 (Sufficiency of Tender): there is no express
indication at all that the prices are to be used for valuation other than in relation
to variations. See in particular clause 55 (Quantities) and clause 56 (Works to be
measured). The 4th Edition no longer contains a reference to the Schedule of
Rates.
Page 36 of 264

(b)(v) "Tender" - It is important to note that the Tender is a document "as
accepted by the Letter of Acceptance". Thus, it is not necessarily the tender as
submitted by the Contractor but the result of any negotiation prior to the placing
of the order. Any programme included in the tender will become part of the
contract as the tender is a contract document: for diccussion of this see under
clause 14.1 (Programme to be submitted).
(b)(vi) "Letter of Acceptance" - There is no specified form for the Letter of
Acceptance and careful attention must be paid to its contents, particularly in view
of the priority given to the Letter of Acceptance by clause 5.2 (Priority of contract
documents). It is second only to the Contract Agreement which is an optional
document. It is important to ensure that the Letter of Acceptance matches the
tender or, if there have been subsequent negotiations, an amended version of
that tender. Otherwise, the Letter of Acceptance would be no more than a
counter-offer which would require a further acceptance from the Contractor
before a contract was formed. As "the Tender" is a contract document, conflict
would result if the tender was not amended. It is also important to ensure that, if
a Contract Agreement is used, the Letter of Acceptance and Contract Agreement
also match. There are no terms in the contract which govern the Letter of
Acceptance but it is used extensively as a trigger for periods of time by which
certain activities have to be performed. These are as follows:-
Clause 10.1 (Performance security) - 28 days
Clause 14.1 (Programme to be submitted) - period prescribed in Part II
Clause 14.3 (Cashflow estimate to be submitted) - period prescibed in Part II
Clause 41.1 (Commencement of Works) - period stated in the Appendix to
Tender
Clause 57.2 (Breakdown of lump sum item) - 28 days
The importance of the Letter of Acceptance as a starting point in the conditions of
contract reinforces the importance of ensuring that the Letter of Acceptance is an
acceptance and not a counter-offer. It would make a nonsense of the various
time periods if they were running before a contract had been entered into.
(b)(vii) "Contract Agreement" - A form of Agreement is provided and referred to at
clause 9.1 (Contract Agreement). Both the definition of Contract at clause 1.1(b)
(i) and clause 5.2 (Priority of contract documents) allow for further documents to
be incorporated as contract documents. The Contract Agreement should be
amended to record such further documents.
(b)(viii) "Appendix to Tender" - As commented under the definition of
Tender above, there may be negotiations which alter the contents of the Tender
and the Appendix to Tender before the contract is entered into. This definition
therefore refers to the Appendix as amended.
(c)(i) "Commencement Date" - This definition determines the date upon which
time begins to run on the project. The notice to commence is not in a specified
form. See generally the commentary to clause 41 (Commencement of Works).
Page 37 of 264

(c)(ii) "Time for Completion" - This is the contractual completion date as set out
in the contract subject to any extensions under clause 44. Substantial completion
must be achieved under clause 48.1 (Taking-over certificate) by this date, failing
which liquidated damages will be payable under clause 47.1 (Liquidated
damages for delay).
(d)(i) "Tests on Completion" - These tests will often include commissioning and
are referred to in clause 48 (Taking-Over) as being a prerequisite to substantial
completion and the issue of a Taking-over certificate for the whole or any part of
the works for which such a test is prescribed.
(d)(ii) "Taking-Over Certificate" - No form is prescribed for this certificate: clause
48.1 (Taking-Over Certificate) only specifies that it should state the date on
which, in the Engineer's opinion, the works were substantially completed.
(e)(i) "Contract Price" - It is important to appreciate that the Contract Price is a
fixed sum as stated in the Letter of Acceptance and the term does not include
any adjustments to the contract price for variations etc. For more on this point,
see the commentary under clause 69.4 (Contractor's entitlement to suspend
work).
(e)(ii) "Retention Money" - For commentary on the uncertainty of the retention
provisions, see under clause 60.3 (Payment of Retention money).
(f)(i) "Works" - This term is given an adjusted meaning under clause 49.1
(Defects Liability Period). The definition of Temporary Works is not without
difficulty as set out under (f)(iii) below. As there are dangers in including
Temporary Works in the definition of Works, the draftsman has taken the
precaution of putting flexibility ahead of certainty with the words "or either of them
as appropriate". This reinforces the opening words of the sub-clause "except
where the context otherwise requires".
(f)(ii) "Permanent Works" - This definition now includes express reference to
Plant, a recognition of the growing amount of machinery etc. included in civil
engineering projects.
(f)(iii) "Temporary Works" - This definition is circular with the definition of
Contractor's Equipment. As noted in the commentary to clause 41
(Commencement of Works), this is unfortunate as the failure to commence the
Works is a ground for determination under clause 63.1 (Default of Contractor).
See clause 31.2 (Facilities for other contractors) for the obligation to make the
temporary works available to other contractors and clause 32.1 (Contractor to
keep site clear) and 33.1 (Clearance of site on completion) for the obligation to
remove temporary work. It should be borne in mind that temporary works are not
always removed, for example temporary linings to tunnels or temporary roads.
By clause 54 (Contractor's Equipment, Temporary Works and materials) there is
Page 38 of 264

an obligation upon the Contractor to provide temporary works exclusively for the
project.
(f)(iv) "Plant" - This is a new definition not found in the 3rd Edition or ICE 5th or
6th. It might be confusing as plant is normally regarded as meaning Contractor's
machinery. Instead, this means the plant to be installed as part of the permanent
works. The Contractor's machinery is now defined as Contractor's Equipment.
(f)(v) "Contractor's Equipment" - In the 3rd Edition and ICE 5th, the Contractor's
machinery is called "Constructional Plant". The current definition is circular with
the definition of Temporary Works. As noted in the commentary to clause 41
(Commencement of Works), this is unfortunate as the failure to commence the
Works is a ground for determination under clause 63.1 (Default of Contractor).
ICE 6th has adopted the term Contractor's Equipment.
(f)(vi) "Section" - The Works may be broken down into Sections and parts. The
difference is that a Section is specifically identified in the contract whereas a part,
which is not defined, seems to be any other sub-division including a sub-division
of a Section. See this distinction in operation in clause 47.2 (Reduction of
liquidated damages), clause 48.2 (Taking over of sections or parts) and clause
48.3 (Substantial completion of parts).
(f)(vii) "Site" - This definition is a variant upon the form used in the 3rd Edition
and ICE 5th. This definition falls into two parts:-
(a) Places provided by the Employer where the Works are to be executed;
and
(b) Other places which are specifically designated in the contract as forming
part of the site.
Compare 3rd Edition and ICE 5th which break down as follows:-
(a) places on, under in or through which works are to be executed; and
(b) places provided by the Employer or specifically designated in the contract
as forming part of the site.
The essential difference is that (a) is qualified by the words "provided by the
Employer" in this Edition but (b) contains those words in the 3rd Edition and ICE
5th. One significance of this is that the Employer cannot be in breach of clause
42.1 (Possession of site and access thereto) by failing to give possession of the
site if the site is itself defined as places provided by the Employer. As the Site
will normally be defined in the contract, this should not normally give rise to
problems. Nor, it is submitted, should the omission of the words "on, under, in or
through" create difficulties. If the failure to give possession is the failure of the
Employer to organise the removal, for example, of an underground pipe or cable
conduit, even though the possession of the surface has been given to the
Page 39 of 264

Contractor, the Contractor's claim under clause 42.2 (Failure to give possession)
should not be hampered by the absence of these words. See also the
commentary under clause 42.1 (Possession of Site and access thereto). See the
comments under clause 42.1 for further discussion of the term "Site". ICE 6th has
added the "other places...designated" formula to the ICE 5th definition.
(g)(i) "cost" - This definition for the first time expressly excludes profit. Thus,
the only occasion on which the Contractor is allowed his profit by the contract is
under clause 69.3 (Payment on termination) where, upon the default of the
Employer, he is entitled to claim "the amount of any loss or damage". This
definition has been adopted with minor amendments by ICE 6th. However ICE
6th expressly permits profit on three occasions in the contract in relation to any
additional temporary or permanent works.
(g)(ii) "day" - This edition has adopted a policy of giving periods of time in
multiples of seven days whereas the 3rd Edition used units of 30 days for longer
periods. Compare, for example, clause 67 (Settlement of disputes) in the two
editions.
(g)(iii) "foreign currency" - It is important to note that foreign currency does not
mean a currency other than the currency in which the Contract Price is
expressed but any other currency than the local currency. Thus, the Contract
Price could itself be expressed in a foreign currency. Part II provides various
amendments to clause 60 and clause 72.2 in relation to currencies.
(g)(iv) "writing" - This definition is of particular relevance to clause 1.5 (Notices,
consents etc) which must be in writing.
CLAUSE 1.1 (Definitions)
The following definitions are new to the 1992 re-print:-
(e)(iii) "Interim Payment Certificate" means any certificate of payment issued by
the Engineer other than the Final Payment Certificate.
(iv) "Final Payment Certificate" means the certificate of payment issued by the
Engineer pursuant to Sub-Clause 60.8.
Whilst it is no doubt a good idea to have defined terms for interim and final
certificates, the definition of Interim Payment Certificate raises the question as to
which clauses other than clause 60.2 (Monthly payments) will give rise to interim
payment certificates. The definition could and, it is submitted, should simply
have referred to certificates issued under sub-clause 60.2.
Other certificates to be issued by the Engineer include the Taking-Over
Certificate under clause 48 for the whole or part of the works, a certificate of the
Contractor's default under clause 63.1 (Default of Contractor) and the Defects
Liability Certificate under clause 62.1. These all lead to payments being made
Page 40 of 264

but are not the certificates for payment themselves. Under clause 59.5
(Certification of payments to nominated Subcontractors), the Engineer certifies
payment to nominated subcontractors where the Contractor fails to supply proof
that previous sums certified in relation to nominated subcontractors' work have
been passed on. Such certificates fall within the definition of Interim Payment
Certificates. The certificate under 63.2 (Valuation at date of termination) is a
certificate of value only and not a certificate for payment. In contrast, the
certificate under sub-clause 63.3 (Payment after termination) is a certificate of
payment and falls within the definition of Interim Payment Certificate despite
being final in nature. Curiously, a certificate under Sub-Clause 63.3 could show
a balance in favour of the Employer. However, such a certificate is deemed to be
a debt and is not strictly therefore a certificate for payment.
Within clause 60 (Certificates and payment) there are certificates under sub-
clause 60.3 (Payment of retention money), sub-clause 60.5 (Statement at
completion) and under sub-clause 60.6 (Final statement) where part only of the
Contractor's draft final statement is not in dispute.
Clause 60.3(a) has always raised the question whether the release of the first
half of the Retention Money following the issue of the taking-over certificate
should be the subject of a special payment certificate or included in the next
monthly interim certificate. Practice varies but more often than not, the first
moiety of retention is released in the next interim certificate. The fact that the
certification falls within the definition of Interim Payment Certificate, does not
resolve the issue.
In one respect, Contractors are ill-served by this amendment. Where the
practice would otherwise have been to issue a special certificate for the release
of retention, the Contractor was able to argue that he was entitled to immediate
payment by the Employer. Now, such a certificate is an Interim Payment
Certificate and the Employer is given 28 days under Clause 60.10 (Time for
payment).
The entry in the Appendix for the "minimum amount of interim payment
certificates" applies only to clause 60.2 and does not therefore restrict small
payments under other payment clauses despite the application of the definition.
As is plain from the list of the amendments contained in the 1992 re-print, and
the extracts set out later in this supplement, the definition has not been used
wherever it is applicable. The term is now used in sub-clauses 60.2, 60.4
(Correction of certificates) and 60.10 (Time for payment).
Perhaps surprisingly, the result is that three interim payment certificates could be
issued in the same month under clauses 60.2, 60.3 (Payment of Retention
Money) and 59.5 (Certification of payments to nominated Subcontractors).
Under clause 69.1 (Default of Employer), interference with the issuing of certain
certificates is a ground for the Contractor to terminate his employment. The
Page 41 of 264

relevant certificates are those for which time-limits for payment are given under
clause 60.10 (Time for payment). The effect of the definition of Interim Payment
Certificate and the application of that definition to a number of certificates other
than monthly certificates under clause 60.2 (Monthly payments) has been the
extention of the scope of the interference ground for termination. For example,
interference with a certificate under clause 59.5 (Certification of payment to
nominated Subcontractors) would not have been a ground for determination
hitherto. Whilst interference with any form of certification is plainly contrary to the
spirit of the contract, it is unlikely that the draftsman intended to enlarge the
ground for termination to such an extent.
1.2: This rule of interpretation will on occasion be signficant. For example,
clause 12.2 is entitled "Adverse physical obstructions or conditions" but the word
"adverse" does not feature in the clause. Similarly, the titles of clause 63
(Default of Contractor) and clause 69 (Default of Employer) both include the word
"default" which is not found in either clause. This may be just as well given the
fact that "default" is used as an alternative to breach of contract in clause 40.1
(Suspension of work), clause 44.1 (Extension of time for completion) and clause
51.1 (Variations). It is always questionable whether any tribunal is capable of
entirely ignoring such clear evidence of the intentions of the draftsman.
1.3: Clause 1.1(a)(iv) defines the Engineer as "the person appointed...". This
sub-clause is a reminder in relation to the Engineer that the Employer may name
a firm of Engineers as distinct from an individual. In view of the lack of any
provision for the replacement of an Engineer who dies or retires, this course may
be adopted more often.
1.4: This is a standard clause and was contained in the 3rd Edition and ICE
5th.
1.5: This clause is new and puts beyond doubt what may have been implicit
from clause 68 (Notices) that notices, consents etc must be in writing. Writing is
also required by the following clauses:-
clause 2.3 Engineer's delegation to Engineer's Representative
clause 2.5 Engineer's instructions
clause 6.1 Engineer's requests for further drawings
clause 6.2 Authorisation of persons to inspect drawings
clause 14.1 Contractor's general description of methods etc
clause 17.1 Setting out
clause 31.2 Engineer's request for facilities for other Contractors.
Page 42 of 264

clause 48.1 Undertaking to finish outstanding work
clause 54.5 Requests regarding hire of Contractor's Equipment
clause 56.1 Request for Contractor to attend
clause 59.5 Contractor's statement of cause for withholding payment from
nominated Subcontractor and notification by Contractor to nominated
Subcontractor.
clause 60.7 Contractor's discharge.
clause 63.1 Warning to Contractor.
clause 67.1 Reference of dispute to Engineer.
There are additional references to written instructions but clause 2.5 (Instructions
in writing) makes this plain.
A comparison of this clause with clause 2.6 (Engineer to act impartially), clause
67.1 (Engineer's decision), clause 67.3 (Arbitration) and clause 68 (Notices)
reveals an inconsistency in the use of terms such as notices, consents etc.
Table 6 indicates the clauses in which the various terms appear.
"Any such consent, approval, certificate or determination shall not unreasonably
be withheld or delayed." Notices are excluded from this list. Notices are given
under some 37 clauses by the Employer, the Engineer and the Contractor. Most
commonly, it is the Engineer notifying the Contractor of a determination of costs
and/or extension of time. A determination is covered by this clause and thus may
not unreasonably be withheld or delayed. Neither the notices nor the
determinations are directly covered by clause 2.6 (Engineer to act impartially) but
they are plainly actions affecting the rights of the parties and are thus covered by
clause 2.6(d). Notices by the Contractor or the Employer are normally given in
their own best interest, and if no time frame is specified, none is normally
necessary. As this part of the clause refers as much to the Employer and the
Contractor as to the Engineer, it is significant in relation to clauses such as
clause 10.1 (Performance security) as the right of the Employer to withhold his
approval is subject to the test of reasonableness.
Under clause 3.1 (Assignment of contract), the Employer is given an absolute
discretion to withhold his consent "notwithstanding the provisions of sub-clause
1.5".
Page 43 of 264

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Commentary on fidic iv clauses