Understanding the Generality of Variation Clauses and the Variety of Broad Interpretation that Exists under FIDIC Based Contract Modalities in Gulf

By Dr. Chandana Jayalath

Majority of construction contracts in the Gulf region maintain the principle features of the FIDIC forms of contract, yet there are many subtle changes from the FIDIC forms of contract. These changes will eventually imbalance the even risk allocation between the parties. Many contracts drafted in one sided language biased towards the clients are a result of cut and paste exercise, for instance, sometimes; there is no provision for price escalation and variations exceeding 10 or 15 per cent. The message to contractors entering into contracts on the basis of these forms is to review them very carefully without being fooled into thinking they are simply the FIDIC versions. [Read more…]

Comments (1) |

Contractor’s Entitlement under Fidic Contact 4th Edition

Contractor’s Claim for increased cost of material due to unforeseen conditions resulting major revisions can be admissible under clauses 12.2, 6.3, 40.1, 51.1 and 6.4 (FIDIC 4th Edition)

[Read more…]

Leave a Comment |

The Green Building Dilemma

By Saeed Alabbar

In the early decades of the 20th century, construction was extremely sustainable due to the lack of availability of centralised electricity and water supply, and the use of only local building materials. However, as the UAE entered the 21st century, globalisation bought with it many ideas and design concepts from the West. [Read more…]

Leave a Comment |

Key issues of UAE construction law

By MARTIN PRESTON
The UAE Civil Code governs construction (and other) contracts entered into in the UAE. As such, unlike in a common law system where, subject to certain statutory exceptions, the parties are free to agree to the content of their contract, the UAE Civil Code imports a number of requirements into construction contracts. These are mainly to be found between Articles 872 and 896. Some of the main provisions affecting construction contracts are: Decennial liability: Article 880 of the Civil Code imposes a 10-year liability on contractors and consultants in relation to structural defects. This liability can neither be contracted out (of Article 882) nor does it appear that specific decennial liability insurance is available to cover off this risk as is the case in certain other jurisdictions with decennial liability (for example, France). However, the scope of decennial liability is limited to serious structural defects likely to result in the collapse of the building or structure rather than all defects to the works. Liquidated damages/penalties: Either party to a contract may challenge the liquidated damages contained within a contract if the actual loss suffered is more or less than the liquidated damages (Article 390). This differs from the position under most common law jurisdictions where the enforceability of liquidated damages is determined by whether the damages were a genuine pre-estimate of loss at the date the contract was entered into. As is the case in most common law jurisdictions, however, it is rare that the courts will open up the liquidated damages agreed by the parties in their contract.

[Read more…]

Comments (2) |

Pay When Paid: What does it mean?

1. The Readers of this journal must be very familiar with the phase “pay when paid”. From time to time, it has been raised by main contractors as a defence for not paying its sub-contractors. A classic “pay when paid” clause is found in clause 11(b) of the Standard Form of Sub-Contract for use when the sub-contractor is nominated under the Standard Form of Building Contract drawn up by The Hong Kong Institute of Architects, The Royal Institution of Chartered Surveyors (Hong Kong Branch) and The Society of Builders, Hong Kong (commonly known as the “Green Form”). [Read more…]

Comments (1) |

Recovery of Unabsorbed Head Office Overheads in a Contract Prolongation

By Dr. Chandana Jayalath

A contractor’s overheads are normally covered by the income of the business as a whole and, where the completion of one contract is delayed, the contractor may claim to have suffered a loss arising from the diminution of the income from the contract and hence, the turnover of the business; but the general running costs of his business continue to be expended. Were it not for the delay, the contractor’s workforce would have had the opportunity of being employed on another contract, with the result that it would have contributed towards the overhead costs during the overrun period. Also, if he can show that the staff, who would otherwise have been gainfully employed, had to devote time to dealing with the disruption or delay, he may have a claim for that too. [Read more…]

Leave a Comment |

Claims for Loss of Profit on Omitted Works

By Dr. Chandana Jayalath

Whenever variations are ordered that omit work, and particularly if such omissions are substantial in nature, contractors often argue that they should be entitled to claim the loss of profit that they would have earned on such works. [Read more…]

Comments (1) |

Termination Claims in Nutshell

By Dr. Chandana Jayalath

Termination occurs when the employer instructs a contractor to permanently stop the performance of work and leave the site. Construction contracts specify each party’s rights, obligations, and remedies for termination. Termination on construction projects often results in claims and disputes; therefore, the decision to proceed with this option should not be taken lightly. [Read more…]

Leave a Comment |

Time impact analysis – how dare it is!

By Dr. Chandana Jayalath

Delays are inherent in construction. If they can not be avoided, then they ought to be either mitigated or absorbed within the contract. A Contractor may be delayed by the effects of a change in the work or an event that was simply beyond his control, then the entity responsible for overseeing the contract, that is Employer, may be obligated to adjust the contract. All depends on the circumstances where the contract forbids or provides for. [Read more…]

Leave a Comment |

International Joint Ventures

At long last, specialists have agreed upon two model contracts for international joint ventures. Legal experts from a Geneva law firm who provided the initial drafts describe their features. For several decades, companies’ legal departments secretly developed their own tailor-made joint venture contracts. They couldn’t do otherwise: no international model existed and no one dared to propose one in view of the diversity of legal cultures and practices.
A joint venture is a classic type of strategic alliance between two or more companies. It can be long or short term,  It seemed that no model could suit all these needs and reconcile lawyers from diverse backgrounds. Yet the demand for international models was pressing. [Read more…]

Comments (1) |