Fidic Form of Subcontract
This new form, which is to be used in conjunction with the contractual conditions for plant construction and design (1999) (the “1999 Yellow Book”), closes the subcontracting gap that existed in FIDIC design-build projects. Based on the subcontracting terms for construction (known as the “red book subcontract”) published in 2011, FIDIC has taken a similar approach to transferring rights and responsibilities to subcontractors under the main contract – with the difference that this version is intended to be used when the subcontractor has design and construction obligations. Similarly, there is no evidence of widespread use of the Yellow Book subcontract in Asia. Again, this has more to do with the fact that this form was only recently introduced with its suitability for the Asian market: in fact, due to Belt and Road Initiative (BRI) projects and other China-led international investment projects, we can expect increased use of FIDIC standard forms in general, including the new subcontract. In the event of termination of the main contract, the contractor may terminate the subcontract immediately. If such termination results from a breach by the subcontractor of the subcontractor, the contractor is entitled to recover all costs and losses incurred by it as a result of the termination of the main contract, as well as all other losses suffered by the contractor as a result of the termination of the main contract or other subcontracts. These liabilities fall under the subcontractor`s overall liability ceiling, but are excluded from the exclusion of indirect losses. If a subcontract package has a significantly lower value than the main order, this can pose an unacceptable risk to a subcontractor. From the point of view of the main contractor, the overall flow of liabilities effectively meets the main objective of transferring risks in the contract chain. Nevertheless, there are still some risks that cannot be passed on, such as.
B, the subcontractor`s right to time and money when subcontracting work is disrupted by the “non-cooperation” of other subcontractors (sub-clause 6.1), exposing the main contractors to claims. This new subcontract is a further step on the path to FIDIC standardization and, as such, a welcome addition as it has been specifically designed to comply with the Red and Pink Books. Of course, in order to fully understand the risks and responsibilities, as with any subcontract, it is up to all parties to read the subcontract with the respective main contract. The subcontract is the first set of standard conditions for subcontracts that can be used with the current Red Book (employer-designed construction and engineering work). It is likely to become the international standard procurement contract for construction and engineering projects in the coming years. Subcontracting across Africa is extensive and very often carried out due to the conditions and requirements of the local market. It is usually carried out on the basis of consecutive agreements and on the basis of loose letters of appointment or flexible conditions that do not address the complexity of the relationship between the contractor and the subcontractor and very often require a more detailed approach than the main contract. However, these obligations of the Contractor are subject to clause 6.1, which obliges the Subcontractor to cooperate with other subcontractors. Clause 6.1 also states that if the subcontractor is in default or is hindered by another subcontractor, it must inform the contractor.
Under these conditions, the subcontractor may be entitled to an extension of the deadline and payment of the costs incurred. The need for FIDIC to outsource the Red Book arose for a variety of reasons, including perhaps because FIDIC had not produced one since 1994, and which was designed for use with the former 4th edition of the Red Book. But this new project is also particularly important for multilateral development banks, which have required subcontracts issued in their forms to be in an “internationally recognized form.” The new subcontract, which is currently available in test edition, is called FIDIC Subcontracting Conditions for Construction. “In areas of the world where provisions relating to remuneration at the time of payment are not permitted by law, the guidelines for taking notes on certain conditions on the back of the new subcontract include examples of clauses for subcontracts. In addition, there are exemplary provisions in the guidelines on the back of the new subcontract where the determination of an engineer and/or a dab decision and/or an arbitral award under the main contract is binding with respect to a subcontractor`s claim under the subcontract. At the FIDIC User Conference in London in December 2019, the latest edition of FIDIC`s standard form contract series was presented – the Equipment and Design-Build Subcontracting Conditions – also known as the “Yellow Book Subcontracting Agreement”. The FIDIC suite generally enjoys a good reputation in hardware stores in the Middle East. However, the contractual approach generally taken by large builders is to make various employer-friendly adjustments to the main terms of the construction contract. Subcontracts are therefore usually leased using tailor-made subcontracting forms, usually incriminating, with independent terms.
This may indeed be the subcontractor`s preference, as he may hate to accept a “consecutive” transfer of conditions and risks under a contract that he did not participate in negotiating and which can be very different in its overall scope from his own. The new Yellow Book Subcontracting Conditions are now available at a price of €40. Click here to order the suborder from the FIDIC library. With the trend in some jurisdictions towards greater collaboration and integration in construction projects, it is now more necessary than ever to pay more attention to contracts used at all levels of the supply chain and not just at the prime contractor level. The introduction of another FIDIC-type subcontract after the first edition of the Red Book subcontract in 2011 is therefore a welcome addition to the sequel. At the end of last year, the International Federation of Consulting Engineers1 (“FIDIC”) published the first edition of the Subcontracting Conditions for The Plant and Design-Build (the “Yellow Book Subcontract”). The Yellow Book Subcontract is the first standard form to be used with fidic`s 1999 general terms and conditions for installation and design-build (the “1999 Yellow Book”). The general clauses of the Yellow Book subcontract are similar to those of the subcontracting terms for the construction of the first edition of FIDIC 2011, known as the “Red Book Subcontract”. FIDIC enjoys a good reputation in the African market. The suite is widely used in a variety of projects, including energy and infrastructure projects in common law, civil code and Sharia.
The FIDIC First Edition 1999 is still widely used and so it makes sense to have a Red and now Yellow First Edition 1999 subcontract There have been a number of developments at FIDIC over the past 12 months. These include the introduction of a new subcontract to be used with the Red Book – the FIDIC Construction Contract, 1st edition 1999 – and also some changes to the Pink Book, the version of the Red Book used by multilateral development banks. The Yellow Book subcontract is a welcome addition to the FIDIC family. While it may be strange that 2 years after the publication of the second edition of the FIDIC Yellow Book, FIDIC decided to publish a subcontract for use with its first edition, it nevertheless reinforces the reality that the 1999 editions of the fiDIC forms are and will remain widely available for the foreseeable future. As always, FIDIC paid particular attention to the dispute settlement provisions of the subcontract. The subcontract contains its own dispute resolution procedures. The deadlines for the declaration and processing of claims are shorter in the subcontract than in the main contract, which undoubtedly allows the transfer of the subcontractor`s claims. The subcontractor must carefully note that it is only entitled to additional delays or costs if it meets the requirements of the main contract notice. In addition, the subcontract contains a suspension period that stipulates that, after notification of a claim, the parties must postpone each ATM procedure by 112 days (and the ATM is here an ad hoc procedure as opposed to the ATM usually preferred in the Red Book) under the subcontract in order to give the contractor time to resolve the dispute under the main contract. Thus, this period of suspension “quantifies” the simple obligation of “best efforts” contained in other standard forms that require the contractor to pursue subcontractors` claims under the main contract. The Contractor retains responsibility for the coordination and project management of the Main Contract Work, including the coordination of all other subcontract work packages.
While the Subcontractor is required to cooperate with other subcontractors employed by the Contractor, the Contractor is responsible for ensuring that other Subcontractors do the same. .
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