FIDIC launches new Red, Yellow and Silver Books
03 January 2018
In December 2017, FIDIC launched new editions of the following contracts to replace the 1999 editions:
- FIDIC Red Book (Conditions of Contract for Construction) 2017
- FIDIC Yellow Book (Conditions of Contract for Plant & Design Build) 2017
- FIDIC Silver Book (Conditions of Contract for EPC/Turnkey Projects) 2017
The FIDIC contracts are often used in international projects but we are also seeing them being used on some domestic projects. These new contracts contain significant amendments and new provisions. The key changes are intended to support both contract and project management while reducing disputes. However, FIDIC says that it has maintained the principles of risk sharing in the 1999 editions. This article gives a brief overview of some of the new provisions and changes.
The key changes include:
- Changes to terminology and structure - the contracts are longer, the definitions are in alphabetical order and there are more subheadings.
- Reciprocity - the number of rights and obligations that are reciprocal as between Employer and Contractor have been increased. For example, the process for Employer and Contractor claims are now the same and set out in clause 20.
- Design - the design provisions have been modified including importantly in relation to fitness for purpose. For example, the fitness for purpose obligation is now reinforced by an indemnity in clause 17.4 but it is not unlimited.
- Employer’s financial arrangements - the Employer must detail its financial arrangements in the Contract Data and if it intends to make a material change it must give notice to the Contractor.
- Concurrent delay - a new provision has been introduced relating to concurrent delay.
- Advance warning - a new advance warning provision has been introduced which is intended to promote communication and collaboration.
- New Limitation period - there is a new limitation period for Plant stating that the Contractor is not liable for any defects/damage occurring more than 2 years after the Defects Notification Period.
- Termination - there have been many changes to the termination provisions. For example, the Employer’s right to terminate for convenience now requires it to pay the Contractor in respect of loss of profit and other losses. The Contractor also has the right to walk away if he does not receive a Notice of the Commencement Date within 84 days of the Letter of Acceptance.
- Insurance - the insurance provisions have been rewritten and they now include a new requirement for insurance to cover the Contractor against fitness for purpose obligations.
- Claims - there are new and detailed provisions dealing with the process for dealing with claims by the Contractor and the Employer in clause 20.
- Disputes - the dispute resolution provisions in clause 21 have been amended. The dispute board is now called DAAB (Dispute Avoidance and Adjudication Board) and a standing DAAB now applies to the Red, Yellow and Silver Books. The provisions also include time bars and deeming provisions to control the claims procedure.
- Engineer/Employer’s Representative - there are additional requirements relating to the role of the Engineer/Employer’s Representative. The main change concerns the provisions for determination, which are significantly more prescriptive and include new deadlines and requirements to be complied with.
In summary, the amendments have introduced new procedures, new deadlines and new consequences all of which need careful review by users to ensure that the correct procedures and resources are in place.
Clarkslegal, specialist Construction lawyers in London, Reading and throughout the Thames Valley.
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