How well do you know your common construction contracts?
Construction contracts have always been a major part of the industry, and many of those contracts are now so common that they are included in almost any project. Even if you have been in the business for years, it’s worth taking a fresh look at these vital documents to stay up-to-date for your next project.
What is the basis for the most common construction contracts in the UAE?
The International Federation of Consulting Engineers (FIDIC) produces several types of contracts that are used throughout the world. In the UAE, these are the top three most common FIDIC construction contracts:
The Conditions of Contract for Construction (Red Book)
This FIDIC contract is mainly used when the employer is responsible for the majority of a project’s design.
The Conditions of Contract for Design and Build (Yellow Book)
As opposed to the Red Book, the Yellow Book is used when the contractor takes on design responsibility.
The Conditions of Contract for EPC/Turnkey Projects (Silver Book)
As the title suggests, this FIDIC contract is for turnkey projects, which require the contractor to take on a significant amount of risk as well as design responsibility
What do these FIDIC contracts have in common?
Overall, FIDIC contracts are divided into two parts, which helps with ease of use and creating a final agreement. Part I contains general terms and conditions that will be included in almost every contract. Part II is more project-specific and contains clauses that can vary according to the situation, such as choice law, contract language, and the appointed engineer and employer’s representative. Each of these contracts also favours a multi-tiered approach to dispute resolution with provisions for the adjudication of conflicts by an engineer or dispute board, an amicable settlement period, and, finally, arbitration.
What are some other important points about common construction contracts?
Most UAE-based FIDIC contracts use the 1999 edition. Generally, the architect’s or engineer’s office with draw up the contract and include any changes or modifications, which may be slight variations or greater deviations from the standard forms. There are also some mandatory provisions that must be included in every construction contract. Specifically, these provisions refer to the responsibility the contractor has for any loss caused by its actions or structural problems (which also applies to the project’s architect). No party can waive these protections as they are required by law.
Though each project is unique, common construction contracts ensure a consistent legal foundation in a complex and dynamic industry. Staying up-to-date with these agreements gives your business the competitive edge that comes from being organised and prepared for the contracting process.