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Overview and Short Comparison between FIDICs Red Book & New Red Book November 2010.

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Presentation on theme: "Overview and Short Comparison between FIDICs Red Book & New Red Book November 2010."— Presentation transcript:

1 Overview and Short Comparison between FIDICs Red Book & New Red Book November 2010

2 This presentation will cover : I- History and development II- Main differences

3 History and development The first and principal form contract for use in international construction was published in August It was entitled the Conditions of Contract (International) for works of Civil Engineering Construction and became commonly known by the color of its cover, the Red Book. FIDIC organizes conference, seminars and training courses and is best known for its range of Standard form of contracts. FIDIC, the International Federation of Consulting Engineers (the acronym stands for the French version of the Federations name), was founded by three francophone countries: Belgium, France and Switzerland and is now with membership from over 60 countries.

4 Was published in July 1969; it included no changes in the text but added a section containing Conditions of Particular to Dredging and Reclamation Work as Part III. Second Edition Was published in March 1977, incorporating some significant changes. which referred to some selected aspects of the various clauses of the Third Edition. Third Edition Was published, after March 1977, it referrers to some selected aspects of the various clauses of the Third Edition. Notes on Documents for Civil Engineering Contracts History and development The Red book was designed for construction contracts in which the contractor built to the employers design and supervised by an engineer.

5 The Fourth Edition was published in September 1987 No amendments were issued until the Fourth Edition was published in September 1987, when major revisions were made which extended even to the title of the document. The world international was deleted inviting parties from all over the world to use the Red Book not only in international contracts but also in domestic contracts. Part II of the Red Book which is referred to as the Conditions of Particular Application was expended and produced in a separate booklet. I n 1988, the fourth edition was reprinted with a number of editorial amendments. These amendments were of a very minor nature and did not affect the meaning of the relevant clauses but simply clarified their intention (they are reproduced in Appendix A at the end of this book). Later in 1992, further amendments were introduced in a reprint of the Fourth Edition of the Red Book. The list is reproduced in Appendix B at the end of this book).Some of these amendments added or changed the meaning of relevant clauses. History and development

6 In November 1996, FIDIC published a document entitledSupplement to Fourth Edition Conditions of Contract for Works of Civil Engineering Construction- Reprinted 1992 with Further Amendments. It is intended to provide the user with alternative arrangements in three controversial areas of the Red Book, thus giving him a choice in the method to be used for: settlement of disputes; payment; and preventing delay in certification for the purpose of payments. History and development

7 FIDIC established a task force to update the red (and the yellow book) in the light of developments in the international construction industry. The key considerations included: The role of the Engineer and, in particular, the requirement to act impartially in the circumstances of being employed and paid by the Employer; The desirability for standardization within the FIDIC forms; The simplification of the FIDIC forms in light of the fact that the FIDIC conditions were issued in English but in very many instances were being utilized by those whose language background was other than in English; and That the new books would be suitable for use in both common law and civil law jurisdictions. This led to the publication in 1999 of the New Red Book. The title of the new 1999 First Edition construction book is Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer. History and development

8 Most recently in 2005, the Red Book (MDB edition) was published (also known as the pink book). This edition simplifies the use of the FIDI contract For the Multilateral Development Banks. The following MDBs have all participated in the preparation of the Red Book: African development bank Asian development Bank Black Sea Trade and Development Bank Caribbean Development Bank European Bank for Reconstruction and Development Inter-American Development Bank International Bank for Reconstruction and Development Islamic Bank for development Bank Nordic Development Bank. History and development

9 Main differences An overall review of the New Red book indicated that the contractual impartiality of the Engineer has been diminished compared to the position in the Red Book. For a more detailed analysis, the tables below highlight the main differences between the Red Book and the New Red Book.

10 1) Relationship between the Employer and the Engineer Red BookNew Red Book (1999) 2.1- (a) The Engineer shall carry out the duties specified in the Contract (…) 3.1- (…)Whenever carrying out duties or exercising authority, specified in or implied by the Contract, the Engineer shall be deemed to act for the Employer (…) => The New Red Book introduces an express statement regarding the relationship between the Employer and the Engineer Main differences

11 2) Engineer a- Definition Red BookNew Red Book (1999) 1.1 (a) (iv) Engineer means the person appointed by the Employer to act as Engineer for the purposes of the Contract and named as such in Part II of these Conditions Engineer means the person appointed by the Employer to act as the Engineer for the purposes of the Contact and named Appendix to Tender, or other person appointed from time to time by the Employer and notified to the Contractor under Sub-Clause 3.4 [Replacement of the Engineer] => The definition in the New Book is larger and includes … or other person appointed from time to time by the Employer and notified to the Contractor… Main differences

12 2) Engineer b-Duties Red BookNew Red Book (1999) Clause 2.1 Clause 3.1 => There are no significant differences between the two books. However the New Red Book has a more elaborated text in relation to the duties of the Engineer. Main differences

13 2) Engineer c- His representative Red BookNew Red Book (1999) 1.1 (a) (v) Engineers Representative means a person appointed from time to time by the Engineer under Sub-Clause The Engineers Representative shall be appointed by and be responsible to the Engineer and shall carry out such duties and exercise such authority as may be delegated to him by the Engineer under Sub-Clause 2.3. NA There is no equivalent in the New Red Book. Main differences

14 Red BookNew Red Book (1999) Clause 2.3Clause 3.2 => In the New Red Book, unless agreed by both parties, the Engineer shall not delegate the authority to determine matters in accordance with Sub- Clause 3.5 (Determinations). Any approval, consent, instruction, notices … in accordance with the delegation, shall have the same effect as though it had been an act of the Engineer. 2) Engineer d- Delegation Main differences

15 2) Engineer e- Appointment of assistance Red BookNew Red Book (1999) 2.4 The Engineer or the Engineers Representative may appoint any number of persons to assist the Engineers Representative in the carrying out of his duties under Sub-Clause 2.2. He shall notify to the Contractor the names, duties and scope of authority of such persons. Such assistants shall have no authority to issue any instructions to the Contractor save in so far as such instructions may be necessary to enable them to carry out their duties and to secure their acceptance of materials, Plant or workmanship as being in accordance with the Contract, and any instructions given by any of them for those purposes shall be deemed to have been given by the Engineers Representative. NA => The term assistants has a different meaning in the New Red Book. It relates to where the Engineer delegates authority. Main differences

16 2) Engineer f- Extension of time Red BookNew Red Book (1999) 44.1 In the event of: (a) the amount or nature of extra or additional work, (b) any cause of delay referred to in these Conditions, (c) exceptionally adverse climatic conditions, (d) any delay, impediment or prevention by the Employer, or (e) other special circumstances which may occur, other than through a default of or breach of contract by the Contractor or for which he is responsible, being such as fairly to entitle the Contractor to an extension of the Time for Completion of the Works, or any Section or part thereof, the Engineer shall, after due consultation with the Employer and the Contractor, determine the amount of such extension and shall notify the Contractor accordingly, with a copy to the Employer. 8.4 (e) The Contractor shall be entitled subject to Clause 20.1 [Contractors Claims] to an extension of the Time for Completion if and to the extent that completion for the purposes of Sub-Clause 10.1 [taking over of the Works and Sections] is or will be delayed by any of the following clauses: (…) (e)Any delay, impediment or prevention caused by or attributable to the employer, the Employers Personnel, or the Employers other contractors on the Site (….) => The Employer personnel (as referred to in the New Red Book means the Engineer and the assistants so, the New Red Book entitles the Contractor to claim for an extension of time for any delay or prevention by the Engineer or his assistants. Main differences

17 2) Engineer g- Suspension of time Red BookNew Red Book (1999) NA 16.1 If the Engineers fails to certify in accordance with Sub-Clause 14.6 [Issue of Interim Payment Certificates] or the Employer fails to comply with Sub-Clause 2.4 [Employers Financial Arrangements] or Sub-Clause 14.7 [Payment], the Contractor may, after giving not less than 21 days notice to the Employer, suspend work (for reduce the rate of work) unless and until the Contractor has received the Payment Certificate, reasonable evidence or payment, as the case may be and as described in the notice (…) => There were no equivalent right of suspension in the Red Book. Main differences

18 2) Engineer h- Replacement Red BookNew Red Book (1999) NA 3.4 If the Employer intends to replace the Engineer, the Employer shall, not less than 42 days before the intended date of replacement, give notice to the Contractor of the name, address and relevant experience of the intended replacement Engineer. The Employer shall not replace the Engineer with a person against whom the Contractor raises reasonable objection by notice to the Employer, with supporting particulars => There were no equivalent mechanism in the Red Book. Main differences

19 3) Contractor a- Obligations Red BookNew Red Book (1999) C lause 8.1 The Contractor shall execute and complete the Works and remedy any defects and he shall provide all superintendence, labour, materials, Plant, Contactors Equipment and all other things. The Contractor shall give prompt notice to the Engineer of any error, omission, fault or other defect in the design of or Specification for their Works. C lause 4.1 The Contractor shall design, execute and complete the Works and shall remedy any defects in the Works. The Contractor shall provide the Plant and Contractors Document specified in the Contract and all Contractors Personnel. The Contractor shall be responsible for the adequacy, stability and safety of all Site operations and of all methods of construction. The Contractor shall, whenever required by the Engineers submit details of the arrangements and methods which the Contractor proposes to adopt for the execution of the Works. The Contractor shall also submit to the Engineer the Contractors Documents. =>The New Red Book has a more elaborated text concerning the Obligations of the Contractor. Main differences

20 3) Contractor b- Termination Red BookNew Red Book (1999) NA 16.2 The Contractor shall be entitled to terminate the Contract if (…) (b)The Engineer fails, within 56 days after receiving a Statement and supporting documents, to issue the relevant Payment Certificate (….) => In the Red Book, the Contractor has no equivalent right of termination. Main differences

21 3) Contractor c- Default by Contractor Red BookNew Red Book (1999) 63.1 (text too long) (the Employer can only terminate, in certain circumstances, where the Engineer has certified that, in his opinion, the Contractor has failed to do something) NA =>In the New Red book and for the advantage of the Contractor this provision is deleted. Main differences

22 This presentation contains a random selection of information. This presentation and its content should not be taken, and are not intended to be taken, as a legal advice by any recipient or reader. Al-Jad does not provide any warranties or guarantees in relation to any information or material provided in this presentation. Should you wish to receive formal legal advice, please contact one of our team leaders.

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