“TRANSPORTE DE COMBUSTIBLE POR AUTOTANQUES MODALIDAD TRANSFERENCIA TERRESTRE DESDE EL TERMINAL EL BEATERIO HASTA LA ESTACIÓN DE SERVICIO

This clause defines the Defects Liability Period as an agreed period, usually sixor twelve months running from the date or dates of the Taking-Over Certificate(s).T h e C o n t r a c t o r i s o b l i g e d t o c o m p l e t e a n y

o u t s t a n d i n g w o r k a n d r e m e d y a n y defects during or shortly after this period.U n l e s s a n y r e m e d i a l w o r k u n d e r t a k e n b y t h e C o n t r a c t o r w a s d u e t o a c a u s e which was not the Contractor's responsibility, he receives no extra payment for works executed during this pe riod. If the Contractor remedies defects not of his making, he is paid as if the work was a variation.If the Contractor fails to carry out the remedial works within a reasonable time, t h e E m p l o y e r c a n t a k e o n a l t e r n a t i v e c o n t r a c t o r s t o e x e c u t e t h e w o r k s a n d charge the Contractor the cost of remedying the Contractor's defects.In the 4th Edition, the "Period of Maintenance"

has become the Defects Liability Period. This change in name appears to have occurred to avoid any suggestionthat the Contractor is obliged to carry out

maintenance as distinct from remedialworks after substantial completion. Clause 49 has retained the structure and thebroad principles of the 3rd Edition but the vocabulary has changed extensively. T h e r e f e r e n c e t o d e s i g n i n i t e m ( b ) o f s u b - c l a u s e 4 9 . 3 i s t h e m o s t

m a t e r i a l addition.4 9 . 1 T h e r e i s a s c h o o l o f t h o u g h t t h a t i f y o u h a v e a c l a u s e s u c h a s c l a u s e 1 . 1 entitled "Definitions", then all definitions should be contained there. That view isr e i n f o r c e d b y t h e f a c t t h a t t h e D e f e c t s L i a b i l i t y P e r i o d i s r e f e r r e d t o i n s o m e thirteen clauses throughout the contract."...the expression "the Works" shall be construed

accordingly". It is far from clear what effect these words are intended to have or indeed have. The definition of

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Works at clause 1.1(f)(i) includes the Permanent Works. It is also qualified by

thep h r a s e i n t h e o p e n i n g s e n t e n c e o f c l a u s e 1 . 1 " e x c e p t w h e r e t h e c o n t e x t o t h e r w i s e r e q u i r e s " . T h e d r a f t s m a n i s n o d o u b t a d d r e s s i n g h e r e t h e c o n f l i c t arising at first sight from the definition of the Defects Liability Period as starting on "the date of completion of the

Works".T h e D e f e c t s L i a b i l i t y P e r i o d m o s t f r e q u e n t l y s e e n i n t h e A p p e n d i x t o c i v i l engineering contracts is one year.4 9 . 2 T h e r e i s n o p r o v i s i o n f o r t h e o u t s t a n d i n g w o r k s t o b e l i s t e d o r

o t h e r w i s e identified. In practice, however, this may not cause particular difficulty. Thestatement of intent in relation to the state of the works at the end of the

DefectsL i a b i l i t y P e r i o d i s o f l i t t l e a p p a r e n t r e l e v a n c e t o t h e o b l i g a t i o n t o c o m p l e t e o u t s t a n d i n g w o r k a s s o o n a s p r a c t i c a b l e a f t e r t h e d a t e i n t h e T a k i n g - O v e r Certificate consistent with the undertaking given under clause 48.1 (Taking-Over Certificate).S u b - c l a u s e ( b ) c o n t a i n s n o t i m e l i m i t u p o n t h e C o n t r a c t o r f o r e x e c u t i n g

t h e remedial works save by implication from the statement of

intent. Nevertheless, f a i l u r e t o c a r r y o u t w o r k s i n s t r u c t e d w i t h i n a r e a s o n a b l e t i m e h a s t h e c o n s e q u e n c e t h a t t h e E m p l o y e r m a y e m p l o y o t h e r s u n d e r s u b - c l a u s e 4 9 . 4 below.It is a question of construction whether t he terms "amendment,

reconstruction" a r e g o v e r n e d b y t h e w o r d s " o t h e r f a u l t s " o r w h e t h e r a m e n d m e n t s o r r e c o n s t r u c t i o n s w h i c h d o n o t d e r i v e f r o m d e f e c t i v e d e s i g n , m a t e r i a l s o r wokmanship and amount to variations may be instructed by the Engineer duringt h e D e f e c t s L i a b i l i t y P e r i o d . T h e r i g h t t o o r d e r v a r i a t i o n s u n d e r c l a u s e 5 1 . 1 (Variations) is not expressly limited in time and therefore the Contractor mayhave no rig ht to object to variations being ordered during the Defects Liability Period. The obligation upon the Contractor to carry out

variations may only endupon the granting of the Def ects Liability Certif icate

under clause 62.1. Thismig ht come as a considerable surprise to a Contractor who demobilises in the u s u a l w a y a f t e r t h e T a k i n g -

O v e r C e r t i f i c a t e h a s b e e n i s s u e d . F o r f u r t h e r d i s c u s s i o n o n w h e t h e r t h e E n g i n e e r m a y i s s u e v a r i a t i o n i n s t r u c t i o n s a f t e r substantial completion, see the commentary under clause 13.1 (W ork to be inaccordance with the contract).It is obviously in the Employer's interests to have a right to take advantage of thep r e s e n c e a n d k n o w l e d g e o f t h e C o n t r a c t o r t o r e m e d y f a u l t s a r i s i n g t h r o u g h d e s i g n , t h e E m p l o y e r ' s o w n d i r e c t w o r k s o r o t h e r c a u s e s w h i c h a r e n o t t h e responsibility of the Contractor. Perhaps surprising ly, the Eng ineer is g iven a d i s c r e t i o n a s t o w h e t h e r o r n o t t o o r d e r r e m e d i a l s w h i c h s e e m s t o e x t e n d t o defects which are

the Contractor's responsibility. As instructions are not expresslyref erred to in clause 2.6 (Eng ineer to act impartially), the Eng ineer will of ten bereq uired to fol low the wishes of the Employer. (See however the commentary u n d e r c l a u s e 2 . 6 a n d t h e a r g u m e n t t h a t a l l o f t h e E n g i n e e r ' s f u n c t i o n s a r e covered by the impartiality obligation.) This raises issues of mitigation: is the

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Employer entitled to employ another contractor to execute the

remedials? If so, has he any right to recover damages from the Contractor? It is submitted that theEngineer's discretion is limited to whether the remedials are necessary and the means of carrying out the work. As the work is part of the contract, the Contractor has the right to do it. Compare the right to omit work, now expressly limited by clause 51.1 (Variations) item (b). If remedial work was given to another contractor and the Employer sought to recover the cost from the Contractor as damages for breach, the Contractor's response would be that the Employer was also in breachw i t h t h e r e s u l t t h a t t h e E m p l o y e r m a y r e c o v e r n o m o r e t h a n t h e c o s t t o t h e Contractor would have been if he had executed the work. It is arguable that theEmployer should

recover none of the costs incurred in breach of contract but as the Contractor was himself in breach by executing work defectively, this positioni s m o r e d i f f i c u l t t o s u s t a i n . I f t h e C o n t r a c t o r i s a b l e t o

d e m o n s t r a t e t h a t t h e r e m e d i a l w o r k w o u l d h a v e c o s t h i m

n o t h i n g a s s u b c o n t r a c t o r s w o u l d h a v e executed it as part of their remedial obligations, it is submitted that the Employer is in greater difficulty.S e e c l a u s e 2 0 . 3 ( L o s s o r d a m a g e d u e t o E m p l o y e r ' s r i s k s ) w h e r e a s i m i l a r discretion i s g iven and clause 65.3 (Damag e to W orks by Special Risk s)

wheret h e C o n t r a c t o r a p p e a r s t o h a v e b e e n g i v e n t h e r i g h t t o r e c t i f y , p e r h a p s inadvertantly. See also the commentary under those clauses. This clause shoulda l s o b e r e a d w i t h c l a u s e 6 4 . 1 ( U r g e n t r e m e d i a l w o r k ) . 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 commentary under clause 2.1 (Eng ineer's duties and authority) and clause 13.1 (Work to be in accordance with the contract).4 9 . 3 T h e r e f e r e n c e t o i m p l i e d o b l i g a t i o n i s o n e o f t h e a r e a s i n t h e c o n t r a c t i n which the parties are exposed to the vag aries of the law of the contract, usually the law of the country in which the works are being executed. The opportunity of the overhaul of the conditions leading to t he publication of the 4th Edition was unfortunately not used to make express some of the commonly accepted impliedterms of the contract in order to reduce the necessity to research and apply locallaws.If the Contractor is instructed to carry out remedial work which he believes to bed u e t o a c a u s e f o r w h i c h h e i s n o t r e s p o n s i b l e , i t i s s u b m i t t e d t h a t h e h a s n o obligation to say so other than in accordance with clause 53.1 (Notice of claims),that is within 28 days of the event, here the instruction. The notice requirement inclause 52.2 (Power of Engineer to fix rates) relates to "work instructed to be doneby the Eng ineer pursuant to Clause 51". W hilst

remedial work additional to thatdue to the Contractor's faulty work , desig n etc. may fall within clause 51.1, th ei n s t r u c t i o n i s p u r s u a n t t o s u b - c l a u s e 4 9 . 2 a n d n o t c l a u s e 5 1 . T h i s m a y b e something that Employers would wish to change as a very different attitude maybe taken to the repair of defects if they are not to be at the cost of the Contractor but rather the subject of a claim. There will be defects the cause of which cannotb e e s t a b l i s h e d u n t i l o p e n e d u p , s u c h a s t h o s e a d d r e s s e d u n d e r c l a u s e 5 0 . 1 (Contractor to search): the Employer will have to make an informed guess in thecase of non-essential remedials as to whether he will have to pay for the work. In

practice, defects are most likely to be due to workmanship or materials problems.It is comparatively rare that a problem is obviously and exclusively due to faultydesign: as a consequence, many disputes derive from the grey area betweendesign and workmanship.I f t h e C o n t r a c t o r i s i n s t r u c t e d t o d o w o r k t h a t d o e s n o t f a l l w i t h i n s u b - c l a u s e 49.2(b), such as dealing with "fair wear and tear", he is unable to recover under this sub-clause. Clarification should be sought as to the basis for the instruction.I n v i e w o f t h e d o u b t o v e r t h e a b i l i t y o f t h e E n g i n e e r t o o r d e r v a r i a t i o n s

a f t e r substantial completion, the Contractor should seek to ensure that the

Engineer isauthorised by the Employer to require the work: thus, under English law at least,t h e C o n t r a c t o r w o u l d b e e n t i t l e d t o b e p a i d f o r t h e w o r k . T o b e c e r t a i n , t h e Contractor should obtain written agreements from the Employer in relation to work of this sort falling outside the contract.For a comment comparing the treatment of this clause with the other "loser pays"clauses, clause 36.4 (Cost of tests not provided for), clause 38.2 (Uncovering and making openings) and clause 50.1 (Contractor to search), see under clause36.5 (Engineer's determination where tests not provided for).4 9 . 4 T h i s

c l a u s e r e l a t e s t o t h e f a i l u r e o f t h e C o n t r a c t o r t o c a r r y o u t " s u c h i n s t r u c t i o n " . T h i s c a n o n l y r e f e r t o s u b - c l a u s e 4 9 . 2 ( b ) a s t h a t i s t h e o n l y reference to an instruction. Clause 48.1 (Taking -Over Certificate) imposes thedeem ed

obligation to complete outstanding work "with due expedition" and sub-clause 49.2(a) requires the work to be done "as soon as practicable".T h e i n s e r t i o n o f " w i t h i n a r e a s o n a b l e t i m e " i s n e w t o t h e 4 t h

E d i t i o n . W h e n c o n s t r u i n g w h a t i s a r e a s o n a b l e t i m e , o n e s h o u l d a r g u a b l y c o n s i d e r t h e statement of intent at the outset of sub -clause 49.2. Thus it could be said

thata n y t i m e w i t h i n t h e D e f e c t s L i a b i l i t y P e r i o d w o u l d b e r e a s o n a b l e e v e n f o r repairing faults instructed at the beginning of the period. It is submitted that the j u d g e m e n t o f w h a t i s r e a s o n a b l e m u s t a l s o t a k e i n t o a c c o u n t t h e E m p l o y e r ' s need for a fully complete project as soon as possible and the Contractor's abilityto execute the remedial work.In view of the fact that an alternative contractor will a lmost invariably cost theEmployer more than having works executed by the Contractor, it is strange thatthe Employer's entitlement to reimbursement under this sub -clause is limited

toc i r c u m s t a n c e s w h e r e t h e d e f e c t i s f o u n d t o b e t h e r e s p o n s i b i l i t y o f t h e C o n t r a c t o r . A s t h e E m p l o y e r i s e n t i t l e d b y s u b - c l a u s e 4 9 . 2 ( b ) t o r e q u i r e

t h e C o n t r a c t o r t o e x e c u t e r e m e d i a l w o r k s w h i c h a r e n o t t h e C o n t r a c t o r ' s responsibilty, the Employer would wish to be

reimbursed the additional costs

of e m p l o y i n g a n a l t e r n a t i v e c o n t r a c t o r t o e x e c u t e s u c h w o r k s .

T h e q u e s t i o n i s therefore whether it is intended that this sub-clause provides all of the Employer'sr e m e d i e s o r w h e t h e r t h e E m p l o y e r i s f r e e t o p u r s u e t h e e x t r a c o s t b y w a y o f damages for breach of sub-clause 49.2(b). Although this sub-clause sets out toprescribe the consequences of the Contractor's failure, it is submitted that theEmployer may pursue damages. This is because the draftsman used very clear

words when in clause 47.1 (Liquidation damages for delay) he wished to indicatethat the provision was intended to be exhaustive. There are no equivalent wordshere but the matter is certainly not beyond argument.Part II provides an optional sub-clause 49.5 for projects which incorporate a highproportion of machinery . If

machinery is replaced, the Defects Liability Period s t a r t s r u n n i n g a g a i n . T h e p e r i o d w i l l c e a s e t o r u n d u r i n g a n y p e r i o d t h a t t h e works are out of action due to a defect. The provisions are subject to a two year maximum for the Defects Liability Period.