Transcript Slajd 1

Contracts – important issues
Piotr Mazur
Paulina Wawryca
Paweł Bilski
The construction contract is a legally binding agreement
between two parties on the details and cost of a
construction project and it is a key element in the
implementation process of the construction project.
VOB - German Construction Contract Procedures
FIDIC - International Federation of Consulting Engineers
Defining the parties
Employer
- Contractor
-
In FIDIC:
- Engineer - Any contacts between the parties of the contract should take
place only through the Engineer, which is not a part to the contract.
Engineer is appointed to ensure compliance with procedures and
should act impartially, regardless of employment status, in accordance
with the CONTRACT concluded between the parties. An engineer is a
person employed to work in conditions of the contract and must be
interpreted only as it is written. The basis of the contract is
cooperation and collective action of the Employer, the Contractor and
the Engineer.
Finances
The Employer shall submit reasonable evidence that financial arrangements
have been made and are being maintained which will enable the Employer
to pay the Contract Price punctually.
If the Contractor does not receive payment the Contractor shall be
entitled to receive financing charges compounded monthly on the amount
unpaid during the period of delay.
Unless otherwise stated in the Particular Conditions, these financing
charges shall be calculated at the annual rate of three percentage points
above the discount rate of the central bank in the country of the currency
of payment, or if not available, the interbank offered rate, and shall be paid
in such currency
Finances
Currency
The Contract Price shall be paid in the currency or currencies named in the project.
If more than one currency is so named, payments shall be made as follows:
a) if the Accepted Contract Amount was expressed in Local Currency only:
other payments to the Employer by the Contractor shall be made in the currency in
which the sum was expended by the Employer, or in such currency as may be
agreed by both Parties;
b) if any amount payable by the Contractor to the Employer in a particular currency
exceeds the sum payable by the Employer to the Contractor in that currency, the
Employer may recover the balance of this amount from the sums otherwise payable
to the Contractor in other currencies
c) if no rates of exchange are stated in project, they shall be those prevailing on the
Base Date and determined by the central bank of the Country.
Claims and disputes
Claims - If the Contractor considers himself to be entitled to any extension
of the Time for Completion and/or any additional payment, the Contractor
shall give notice to the Engineer, describing the event or circumstance giving
rise to the claim. The notice shall be given as soon as practicable, and not later
than 28 days after the Contractor became aware, or should have become
aware, of the event or circumstance.
Within the period of 42 days, the Engineer shall proceed to agree or
determine the extension (if any) of the Time and/or the additional payment
(if any) to which the Contractor is entitled under the Contract.
Dispute - shall be referred to a Dispute Board for decision.
Each “Dispute Board Agreement” is an agreement between:
a)
b)
c)
the “Employer”
the “Contractor”
the “Member” who is defined in the Dispute Board
Agreement as being:
-
the sole member of the "DB"
-
one of the three persons who are chosen by each party,
each party nominates one member for the approval of
the other party. The first two members should
recommend and the parties shall agree upon the third
member, who shall act as a chairman.
Any dispute between the Parties of which the DB’s decision
(if any) has not become final, shall be finally settled by arbitration.
Arbitration shall be conducted as follows:
a)
if the contract is with foreign contractors:
international arbitration which was specified in a contract;
if the arbitration rules are not specified in the Contract Data, with
proceedings administered by the International Chamber of
Commerce (ICC) and conducted under the ICC Rules of
Arbitration;
b)
if the Contract is with domestic contractors, arbitration with
proceedings conducted in accordance with the laws of the
Employer’s country.
The place of arbitration shall be the neutral location specified in the
Contract Data; and the arbitration shall be conducted in the language
also specified in a project.
Termination of a project
Termination by an employer:
The Employer shall be entitled to terminate the Contract if the Contractor:
- Abandons the work
- Is delayed with the work
- Subcontracts the whole of the works or assigns the contract without the
required agreement
- Becomes bankrupt or insolvent, goes into liquidation
In any of these events or circumstances, the Employer may, upon giving 14 days’
notice to the Contractor, terminate the Contract and expel the Contractor
from the Site. However, in the case of bankruptcy for example, may by notice
terminate the Contract immediately.
Termination of a project
Termination by a contractor.
The Contractor shall be entitled to terminate the Contract if:
- the Contractor does not receive the payment
- the Employer substantially fails to perform his obligations under the Contract
in such manner as to materially and adversely affect the economic balance of
the Contract and/or the ability of the Contractor to perform the Contract,
- the Employer becomes bankrupt or insolvent, goes into liquidation,
In any of these events or circumstances, the Contractor may, upon giving 14
days’ notice to the Employer, terminate the Contract. However, in the case of
bankruptcy, insolvent or liquidation, the Contractor may by notice terminate
the Contract immediately.
Employer’s risks
- War, hostilities, invasion, act of foreign enemies,
- rebellion, terrorism, sabotage by persons other than the Contractor’s
Personnel, revolution, insurrection, military or usurped power, or civil war,
within the Country, strikes
- riot, commotion or disorder within the Country by persons other than
the Contractor’s
If the Contractor suffers delay and/or incurs Cost from rectifying this loss
or damage, the Contractor shall give a further notice to the Engineer and
shall be entitled to:
a) an extension of time for any such delay, if completion is or will be delayed
b) payment of any such Cost, which shall be included in the Contract Price
Thanks for listening!
Piotr Mazur
Paulina Wawryca
Paweł Bilski