T h e C o n t r a c t o r i s f u l l y r e s p o n s i b l e f o r t h e c a r e o f t h e w o r k s , f r o m t h e commencement date until the works or any section or part is taken over by the
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Employer. The Contractor will also take responsibility for any outstanding workswhich he undertakes to finish during the Defects Liability Period.The
Contractor is to rectify at his own cost any damage to the works before theyare taken over unless caused by one of the Employer's risks. He will also rectifyany damage done by him during the Defects Liability Period including damage done during a search.If the damage is due to one of the Employer's risks, the Engineer will decide whatrectification should take place and will determine the
Contractor's costs. If thedamage was only partly due to an Employer's risk, the Contractor will be paid a proportion only.The list of Employer's risks is set out.Although reorganised, re -worded and clarified, this clause is not fundamentallychanged in principle from the 3rd Edition but note the significant changes to sub-clause 20.4, particularly items (g) and (h).This clause contains an allocation of risk between Contractor and Employer
andc l a u s e 2 1 ( I n s u r a n c e o f W o r k s a n d C o n t r a c t o r ' s E q u i p m e n t ) c o n t a i n s t h e obligation to insure those risks. Similarly clause 22 (Damage to persons andproperty) deals with the risk and clause 23 (Third party insurance) covers the obligation to insure.C l a u s e s 2 0 t o 2 5 a n d c l a u s e 6 5 ( S p e c i a l r i s k s ) i m p o s e r i s k a n d i n s u r a n c e liabilities in layers as follows:-( a ) r e s p o n s i b i l i t y i s
a l l o c a t e d t o t h e C o n t r a c t o r b y c l a u s e s 2 0 , 2 2 a n d 2 4 , s u b j e c t t o e x c e p t i o n s i n s u b -
c l a u s e 2 0 . 4 ( E m p l o y e r ' s r i s k s ) a n d c l a u s e 6 5 (Special risks);( b ) l i a b i l i t y t o i n s u r e i s i m p o s e d b y c l a u s e s 2 1 , 2 3 a n d 2 4 ; ( c ) i f f u l l r e c o v e r y i s n o t a c h i e v e d f r o m i n s u r e r s , l i a b i l i t y r e v e r t s t o ( a ) a b o v e pursuant to clause 21.3 (Responsibility for amounts not recovered); and( d ) i f e i t h e r p a r t y i s i n b r e a c h
o f i t s i n s u r a n c e o b l i g a t i o n s u n d e r t h e c o n t r a c t o r i t s
o b l i g a t i o n s u n d e r t h e c o n t r a c t s o f i n s u r a n c e , t h e y b e c o m e l i a b l e f o r a n y consequential loss pursuant to clause 25.3 (Remedy on Contractor's failure to insure) and clause 25.4 (Compliance with policy
conditions).2 0 . 1 G r e a t e r c l a r i t y w o u l d b e a c h i e v e d i n s u b - c l a u s e ( b ) i f t h e r e f e r e n c e w a s t o outstanding "work" rather than
"W orks". This would conform with the usage in clause 48 (Taking-over certificate) and clause 49 (Defects liability). There shouldbe no outstanding W orks as the entirety of the W orks would have been takenover by the Employer. The use of the term "W orks" is a change from the 3rd Page 96 of 264
Edition where "work" was used. It is presumed that the draftsman had in mindthe final phrase of sub-clause 49.1 whereby "the Works" are obliquely
redefined.I t s h o u l d b e n o t e d t h a t i t i s t h e i s s u e o f t h e T a k i n g - o v e r c e r t i f i c a t e t h a t i s significant for insurance purposes and not any date stated in it. The Contractor must maintain his pol icies regardless of any agreement on site that substantial completion has been achieved.There will be an overlap of responsibility when the Contractor is returning to parto f t h e W o r k s t a k e n o v e r b y t h e E m p l o y e r i n o r d e r t o c o m p l e t e s o m e p e r h a p s minor element of outstanding works. It is submitted that the formula used in sub-c l a u s e 2 0 . 2 r e n d e r i n g t h e C o n t r a c t o r l i a b l e " f o r a n y l o s s o r d a m a g e t o W o r k s occasioned by him in the course of any
operations ... under clauses 49 and 50" would be more
satisfactory.C o n t r a c t o r s s h o u l d b e a r i n m i n d t h a t t h e d u t y t o c a r e f o r t h e w o r k s i n c l u d e s Plant. This may mean a duty to insure
machinery that is to be obtained by
theE m p l o y e r , p e r h a p s f r o m i t s o w n f a c t o r i e s , t h a t m a y b e t r a n s p o r t e d b y t h e Employer, and that may be subject to testing off-site by technicians employed bythe Employer.
Altogether, the Contractor's responsibility may extend far beyondmatters within his control, a factor to be taken into account in arranging insurancefor the project.2 0 . 2 / 2 0 . 3 I f t h e W o r k s a r e d a m a g e d b y , f o r e x a m p l e , a n e x p l o s i o n o f materials stored by the Contractor, then the Contractor is obliged to rectify andrebuild the works. If however, the explosion was due to war or insurrection or one of the other Employer's risks, the Employer through the Engineer is given thechoice as to whether to rebuild or not. Thus, the Employer's use of the insurancemoney and the Contractor's right to execute the works depends on whether anevent falls within clause 20.4 (Employer's risks) or not."...from any cause whatsoe ver...". The breadth of this phrase has the curious r e s u l t t h a t i f t h e d a m a g e i s d o n e b y t h e E m p l o y e r o t h e r t h a n b y h i s u s e o r o ccupation or if it is done by the Engineer other than by his design of the works, the Contractor is liable for the cost of any rectification work instructed. The sameapplies for damage by "other contractors" of the
Employer. This allocation of
riski s n o t t o o o b j e c t i o n a b l e i n t h e c o n t e x t o f i n s u r a n c e b u t , a s c l a u s e 2 1 . 3 (Responsibility for amounts not
recovered) makes clear, the Contra ctor would bear these losses if for any reason the insurance did not cover them.A n i n n o v a t i o n i n t h e 4 t h E d i t i o n i s t h e w a y i n w h i c h c l a u s e 2 0 . 3 d e a l s
w i t h c i r c u m s t a n c e s w h e r e t h e l o s s o r d a m a g e d e r i v e s f r o m a c o m b i n a t i o n o f Employer's risks and other
risks.T h e u n d e r l y i n g o b l i g a t i o n o f t h e C o n t r a c t o r i s t o c o m p l e t e t h e w o r k s . T h i s obligation is subject to any applicable law of frustration or force majeure as wellas to a number of clauses such as clause 13 (Work to be in accordance with thecontract) and clause 66.1 (Payment in event of release from performance). If the
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works are damaged by the Contractor or by a cause for which he is responsible,the Contractor's obligation to complete is unaffected. If the event of damage for which the Employer is responsible, the Contractor's obligation and, indeed, rightt o
c o m p l e t e t h e w o r k s i s q u a l i f i e d b y t h e r i g h t o f t h e E n g i n e e r t o d i c t a t e t h e e x t e n t o f t h e r e c t i f i c a t i o n r e q u i r e d . T h e r e m e d i a l w o r k s w o u l d e f f e c t i v e l y b e treated as a variation entitling the Contractor to the valuation of his work under c l a u s e 5 2 . T h e d e l a y c o n s e q u e n t u p o n t h e d a m a g e w o u l d q u a l i f y e i t h e r a s "delay, impediment or prevention by the Employer" under clause 44.1 (Extensiono f t i m e f o r c o m p l e t i o n ) , a s ( a ) a d d i t i o n a l w o r k o r ( e ) s p e c i a l
c i r c u m s t a n c e s . Conversely, it follows from the "full responsibility" taken by the Contractor for thecare of the works other than in relation to Employer's risks, that no extension of t i m e w i l l b e g r a n t e d f o r l o s s o r d a m a g e t o t h e W o r k s f r o m r i s k s o t h e r t h a n E m p l o y e r ' s r i s k s . T h u s t h e C o n t r a c t o r w i l l b e w e l l a d v i s e d t o e n s u r e t h a t t h e r e l e v a n t i n s u r a n c e c o v e r i n c l u d e s h i s l i a b i l i t y f o r l i q u i d a t e d d a m a g e s , i f s u c h cover is available.Clause 53.1 (Notice of claims) applies to claims under this sub-clause so that theC o n t r a c t o r h a s 2 8 d a y s o f t h e e v e n t t o n o t i f y t h e E n g i n e e r o f a n i n t e n t i o n t o claim. The notice requirement of clause 52.2 (Power of Engineer to fix rates) does not, it is submitted, apply for the reasons set out under that sub-
clause." . . . d u r i n g t h e p e r i o d f o r w h i c h t h e C o n t r a c t o r i s r e s p o n s i b l e f o r t h e c a r e thereof...". The Contractor's obligation to rectify loss and damage is limited to theperiod prior to the issue of the Taking -Over Certificate. It would obviously be u n s a t i s f a c t o r y i f t h e C o n t r a c t o r w a s o b l i g e d t o r e - m o b i l i s e i n o r d e r t o r e p a i r d a m a g e c a u s e d b y t h e E m p l o y e r ' s r i s k s . H o w e v e r , " t h e p e r i o d " i s l e s s
t h a n p r e c i s e d u e t o c l a u s e 2 0 . 1 ( b ) w h i c h p l a c e s r e s p o n s i b i l i t y f o r c a r e o n t h e Contractor during the Defects Liability Period for the work which he is completingor remedying. T he effect of clause 20.2 seems to be that if the loss or damag e h a p p e n s t o a p a r t o f t h e w o r k s f o r w h i c h t h e C o n t r a c t o r h a s a c o n t i n u i n g responsibility, then he is obliged to rectify it but not otherwise. In this context, itshould b e borne in mind that if a def ect emerg es in any part of the work s, the C o n t r a c t o r w o u l d b e o b l i g e d t o r e - m o b i l i s e a l l n e c e s s a r y e q u i p m e n t a n d manpower to search for the cause of the defect under clause 50.1 (Contractor
tos e a r c h ) a n d c l a u s e 4 9 . 2 ( C o m p l e t i o n o f o u t s t a n d i n g w o r k a n d r e m e d y i n g defects). This re-mobilisation obligation is so even if the costs are not ultimatelyp a y a b l e b y t h e C o n t r a c t o r b e c a u s e , f o r e x a m p l e , t h e d e f e c t i s f o u n d t o b e a design problem.F o r d i s c u s s i o n o f t h e
E n g i n e e r ' s p o w e r t o w a i v e s t r i c t c o m p l i a n c e
w i t h t h e s p e c i f i c a t i o n , s e e t h e c o m m e n t a r y u n d e r c l a u s e 2 . 1 ( E n g i n e e r ' s d u t i e s a n d authority) and clause 13.1 (Work to be in accordance with the contract).2 0 . 4 T h i s c l a u s e s h o u l d b e r e a d i n c o n j u n c t i o n w i t h c l a u s e 6 5 ( S p e c i a l r i s k s ) , which are defined as Employer's risks (a), (c), (d) and (e) as well as (b) providedt h a t t h e r e b e l l i o n e t c r e l a t e s t o t h e c o u n t r y i n
w h i c h t h e W o r k s a r e t o b e e x e c u t e d . C l a u s e 6 5 m a k e s i t c l e a r t h a t t h e C o n t r a c t o r i s n o t l i a b l e f o r t h e conseq uences of special risk s upon the W orks or other property nor for injury or
loss of life. However, there is a conflict between sub-clause 20.3 and clause 65.3(Damage to W orks by special risks). Under 20.3, the Contractor is obliged torectify the damage caused by t he Employer's risks at the Employer's expenseonly if required by the Engineer to do so. Similarly, clause 49.2 (Completion of outstanding work and remedying defects) requires the Contractor to carry outsuch remedial works as the Engineer instructs. Clause 65.3 on the other hand, expressly entitles the Contractor to payment for rectifying the damage "so far asmay be required by the Engineer or as may be necessary for the completion of t h e W o r k s "
( u n d e r l i n i n g a d d e d ) . T h u s , d e s p i t e t h e f a c t t h a t f o u r o f t h e f i v e special risks may well be uninsured, the Employer is obliged to pay for such of the Contractor's repair works as are necessary for
the completion of the W orks.An exception to this is if the risk concerned is the outbreak of war which wouldentitle the Empl oyer to determine the contract under clause 65.6 (Outbreak of war). Alternatively, either party could seek to rely upon clause 66.1 (Release fromperformance) in the event that they thought the contract to be frustrated; or the Employer could give an "economic dislocation" notice under clause 69.1 (Defaultof Employer) bringing about the termination of the contract by the Contractor.It is submitted that the conflict should be resolved in favour of the Contractor's right and obligation to complete the works and that the Engineer's role is confinedto instructing the Contractor which portions of the damaged work he requires to be rectified in order to achieve the completion of the works to his satisfaction. Inthe 3rd
Edition, the equivalent words to those in 20.3 we re "if and to the extentr e q u i r e d b y t h e E n g i n e e r a n d s u b j e c t a l w a y s t o t h e p r o v i s i o n s o f c l a u s e 6 5 hereof ...". Such conflict only arises where the works have been damaged in such a way or to such extent that completion would be impossible without repair.If the damage is to a peripheral part of the works, it is right that the Employer andEngineer should have the option to omit the work."(e) riot...". Insurance for riot is not readily available but the Contractor is obligedby clause 21 (Insurance of Works) and possibly clause 23 (Third party insurance)to cover this risk."(f)...due to the use or occupation by the Employer...". As the risk passes to the Employer on the issue of a Taking-Over Certificate, which the Engineer is obligedby clause 48.2 (Taking over of Sections or parts) to issue upon the occupation or use by the Employer, this clause only covers limited circumstances. Howe ver, clause 48 is far from straightforward and needs careful reading."(g) loss or damage to the extent that it is due to the design...". In the 3rd Edition,loss or damage had to be "solely" due to design so that if it could be shown that,for example, poor workmanship contributed to any extent to the loss or damage,the risk would remain upon the Contractor. As amended, the clause will rel ievet h e C o n t r a c t o r o f r e s p o n s i b i l i t y t o t h e
e x t e n t t h a t t h e E n g i n e e r ' s d e s i g n w a s causative."(h) any operation of the forces of nature...". W hereas the 3rd Edition required t h e f o r c e s o f n a t u r e t o b e s u c h t h a t " a n e x p e r i e n c e d C o n t r a c t o r c o u l d n o t Page 99 of 264
f o r e s e e . . . o r i n s u r e a g a i n s t " , t h i s e d i t i o n r e f e r s t o f o r c e s " a g a i n s t w h i c h a n e x p e r i e n c e d C o n t r a c t o r c o u l d n o t r e a s o n a b l y h a v e b e e n e x p e c t e d t o t a k e precautions". Foreseeability has been shown by clause12.2 (Adverse physicalobstructions or conditions ) to be a source of much dispute; and insurability is adifficult test
as cover is sometimes available but only at an exorbitant price.
Thepresent wording may represent an improvement. For example, the Contractor'sinformation concerning a particular site could show that flooding occurs from timeto time for two reasons: firstly, because of a local river breaching its banks at aparticular point and,
secondly, due to occasional flash floods following torrentialrain in the region. It may be that an experienced C ontractor would build up
andreinforce the bank of the river but that nothing could realistically be done to avoidthe damage that a flash flood would cause. The Employer takes the risk of the latter. Inevitably, there will be many borderline cases and it is submitted that thep r e s e n t t e s t w i l l h a v e m u c h i n c o m m o n w i t h t h e
f o r e s e e a b i l i t y t e s t o f t h e 3 r d Edition.I n c i v i l l a w c o u n t r i e s , w h e r e a d m i n i s t r a t i v e l a w b a s e d o n t h e F r e n c h m o d e l applies, this clause reflects the Theorie de l'imprevision whereby if exception aland
unforeseen events render the Contractor's obligation excessively
onerousthreatening him with exorbitant loss, then the Contractor's excessive losses mayb e r e d u c e d t o r e a s o n a b l e l i m i t s b y w a y o f c o m p e n s a t i o n b y t h e E m p l o y e r . I n certain countries, notab ly Egypt, this doctrine has been extended to private lawcontracts as well. This clause is in fact more generous than the
administrative l a w d o c t r i n e a s i t p r o v i d e s f o r t h e C o n t r a c t o r t o b e c o m p l e t e l y r e l i e v e d o f r e s p o n s i b i l i t y , w h e r e a s t h e T h e o r i e o n l y p r o v i d e s f o r t h e r e d u c t i o n o f t h e C o n t r a c t o r ' s l o s s e s . F o r a b r i e f o v e r v i e w o f a d m i n i s t r a t i v e l a w b a s e d o n t h e French model, see clause 5.1 (Languages and law).