Aksum University

Aksum Institute of Technology (AiT)

Faculty of Civil Engineering and Construction Management

Department of Construction Technology and Management

CONSTRUCTION LAW

5 – International Construction Contract

June 2024
Aksum – Ethiopia
 Construction Law
5 – International Construction Contract

INTERNATIONAL CONSTRUCTION CONTRACT

Contents

1. Introduction
2. Obligations of the Contractor
3. Contractor’s Remedial Rights
4. Obligations of the Employer
5. Employer’s Remedial Rights
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1. INTRODUCTION

This part of the Course deals about international construction contract based on the FIDIC international Conditions of
Contract. The specific FIDIC conditions of contract to be referred shall be that of the MDB Harmonized Edition, 2006.
The delivery method adopted by the said conditions of contract is that of design, bid and build (DBB). This condition of
contract has been approved by all major international financial and development institutions.

Structure of the MDB Harmonized Edition

The said condition of contract is divided in to 20 major clauses and 177 sub-clauses; The major clauses are the
following:

 Clause 1: General Provisions

 Clause 2: The Employer
 Clause 3: The Engineer
 Clause 4: The Contractor
 Clause 5: Nominated Subcontractors
 Clause 6: Staff and Labour
 Clause 7: Plant, Materials and Workmanship
 Clause 8: Commencement, Delays and Suspension
 Clause 9: Tests on Completion
 Clause 10: Employer’s Taking Over
 Clause 11: Defects Liability
 Clause 12: Measurement and Evaluation
 Clause 13: Variations and Adjustments
 Clause 14: Contract Price and Payment
 Clause 15: Termination by Employer
 Clause 16: Suspension and Termination by Contractor
 Clause 17: Risk and Responsibility
 Clause 18: Insurance
 Clause 19: Force Majeure
 Clause 20: Claims, Disputes and Arbitration

The said condition of contract has been supported by two appendices. The appendices are related to Dispute Board.
These are:

 General Conditions of Dispute Board Agreement; and

 Procedural Rules; i.e. in relation to the Dispute Board;

Contractual Terminologies

 A given legislation defines certain terms in terms of the contextual application of that same term in that given
legislation.
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 The purpose of that definition is to delimit the scope of application of that relevant term and the
interpretation of same.

 Undefined terms may carry their normal meaning.

 On the same principle, the MDB Conditions of Contract have defined, under its Article 1.1: Definitions, certain
contractual terms, which have key and critical meaning within the framework of same.

 Such contractual terms have been divided in to the following 6 parts:

▪ The Contract;
▪ Parties and Persons;
▪ Dates, Tests, Periods and Completion;
▪ Money and Payments;
▪ Works and Goods;
▪ Other Definitions; like Contractor’s Documents, Country, Employer’s Equipment, Force Majeure,
Laws, Performance Security, Site, Unforeseeable and Variation;

 Such contractual terms contain documentary, party related, time, financial, work and other dimensions.

 The presentations under this part of the Course have been classified in to the following sections:

▪ The Obligation of the Contractor;

▪ Contractor’s Remedial Rights;
▪ The Obligation of the Employer;
▪ Employer’s Remedial Rights;
▪ Tabular Presentation of the full Rights and Obligations of the Contractor and the Employer including
their respective Remedial Rights, and the Role of the Engineer;
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A. Obligations of the Contractor

The obligations of the contractor, under the MDB Conditions of Contract, may be generalized as follows.

 Completion obligation;
 Quality performance obligation;
 Timely performance obligation;
 Obligation to provide securities, indemnity and insurance;
 Obligation to supply information and notice;
 Administrative obligation;
 Obligation up on or after completion;

Let examine each of the contractor’s obligations, in turn.

Completion Obligation

i. Basic Obligation

1. Clause 4.1 During Performance Period

• Completion of the whole of the Works in accordance with the Contract up to Take Over
(Clause 10) of the Works;

2. Clause 11.1 During Defects Liability Period

a. Executing outstanding works; and

b. Remedying of defects and damages in the works;

ii. Extent of Completion Obligation

1. Clause 15.1 to execute variations orders;

2. Clause 17.4 rectification of losses or damages to the works arising out of the Employer’s Risks;
3. Clause 7.6 executing remedial or urgent works;
4. Clause 9.1 cum Clause 8.2(a) carrying out of works to achieve tests on completion for the
purpose of Taking Over (Clause 8.29b));

iii. Excuses from Completion Obligation

 Clause 19.7 due to legal or physical impossibility; see also Article 1678(b) (lawful and possible) cum Article
1715(1) (–possibility to be performed) of the Civil Code
 Clause 17.3 in case of the occurrence of the Employer’s Risks;
 Clause 8.8 in case of suspension of the Works by the Employer;
 Clause 16.1 in case of legitimate suspension of the Works by the Contractor;
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 Clause 16.2 in case of termination of the Contract by the Contractor due to the default of the Employer;
Clause 15.5 in case of termination of the Contract by the Employer for its convenience; see also the concept
of employer’s termination of contract for its convenience under Article 3180 of the Civil Code;
 Clause 8.11 in case of termination of the Contract for the whole of the Works due to prolonged suspension
caused by the Employer;
 Clause 19.6 in case of optional termination of the Contract by the Contractor or by the Employer due to
prevention of performance by force majeure; see the legal concept and scope of force majeure under Article
1792-Article 1794 of the Civil Code;

Quality Performance Obligation

 Clause 4.1 and Clause 7.1 using materials, plant and workmanship as provided in the Contract specifically in
the Technical Specifications;

 Attributes of quality to be embedded in the Works in terms of;

▪ Clause 7.1(a) in case of Plant;

▪ Clause 7.1(c) in case of Materials;
▪ Clause 7.1(b)cum Clause 6.1 in case of Workmanship;

 No excuse for defective performance/execution of the Contract/ Works;

Timely Performance Obligation

 Scope of the Obligation

▪ Timely and effective mobilization by the is required;

▪ Please, also consider the prior performance obligation of the employer (like providing site and
access there to, effecting mobilization advance, if agreed, effecting notice to proceed, if required
under the contract, …) for the Contractor to duly mobilize and commence works;
▪ Commencement Clause 8.1 (Commencement of the Works);
▪ Progress: Clause 8.1 cum Clause 8.6 (Rate of Progress); please, also consider the obligation of the
Engineer to issue working drawings, certifying payments, approving variations…;
▪ Completion: Clause 8.2 (Time for Completion); please, also consider effects of delay & disruption by
the employer, third parties and/or the Engineer & other grounds;
▪ Passing of Tests on Completion: Clause 9 (Tests on Completion); please, also consider the possible
contractual obligation of the employer in doing some of the required tests on completion by itself
and/or providing some input to the contractor to undertake the tests on completion;

Excuses from Timely Completion Obligation

 Clause 8.4 due to Extension of Time for Completion;

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 Clause 8. 5 due to Delays caused by authorities;

 Clause 8.8 cum Clause 8. 9 due to Suspension of Work and its consequences;

 Clause 8.11 due to prolonged suspension; (NB: If the performance of Work resumed after such prolonged
suspension.)

 Clause 16. 1(h) due to suspension & deceleration of the Works by the Contractor due to payment problems;

 Other specified grounds entitling the Contractor to extension of time for completion:

▪ Clause 1.9(a) due to delay in issuing drawings or instructions by the Engineer;

▪ Clause 2.1(a) due to initial delay caused by the Employer in providing possession of Site;
▪ Clause 4.7(a) due to setting out;
▪ Clause 4.12(a) due to unforeseeable physical conditions;
▪ Clause 4.24(a) delay encountered by the Contractor due to the discovery and reporting of Fossils;
▪ Clause 7.4(a) due to testing as instructed by the Engineer or for which the Employer is responsible
under the Contract;
▪ Clause 10.3(a) due to interference with the Tests on Completion by the Employer;
▪ Clause 13.7(a) due to adjustment for changes in legislation;
▪ Clause 17.4(a) due to consequences of Employer’s Risks;

 Clause 8.6 (Rate of Progress) due to the Engineer’s instruction to accelerate the progress of the Works, for
which the Contractor is not responsible under the Contract;

 Clause 8.7: The Contractor’s liability to pay Delay Damages occurs in case of the alternative contractual
grounds:

▪ Not completing the Works within the agreed or reasonable time; or

▪ Not completing the Works within the extended time, if any, for completion;

Obligation to provide Securities, Indemnities and Insurance

 Securities

▪ Clause 4.2 in relation to Performance Security;

▪ Clause 14.2 in relation to Advance Payment Guarantee;
▪ Clause 14.9 in relation to Retention Money Guarantee;

 Indemnity

▪ Clause 1.13 in relation to compliance with laws;

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▪ Clause 4.14 in relation to avoidance of interference with the convenience of the public or the access to
and use and occupation of all roads and footpaths …;
▪ Clause 4.16 in relation to transport of goods;
▪ Clause 17.1 in relation to bodily injury, sickness, diseases or death, of any person whatsoever arising out
of or in the course of or by reason of the Contractor’s design (if any), the execution and completion of
the Works and remedying of any defects therein;
▪ Clause 17.5 in relation to intellectual and industrial property rights against and from any other claim
which arises out of or in relation to the manufacture, use, sale or import of any Goods, or any design for
which the Contractor is responsible;

 Insurance

▪ Clause 18.1 in relation to general requirements (choice of the insurer, terms of insurance, making the
insurance in the joint name, providing the policy, providing evidence for the payment of premium, use of
the insurance money for the purpose of the Contract, …) in providing specific insurance arrangement;
▪ Clause 18.2 in relation to insurance of Works and Contractor’s Equipment;
▪ Clause 18.3 in relation to insurance against injury to persons and damage to property;
▪ Clause 18.4 in relation to insurance for Contractor’s Personnel;

Obligation to supply Information and Notice

 Information

 Clause 4.1(a) & (b) design information, in case where the Contractor is required under the Contract to
design part of the permanent Works;
 Clause 4.24 geological or archeological finds (Fossils);
 Clause 5.4 submitting evidence in relation to payments made to the nominated sub-contractors, as the
Engineer requests;
 Clause 6.10 details of Labour and Equipment;
 Clause 8.3 programme and revised programme;
 Clause 12.1 particulars as requested by the Engineer information pertaining to measurement of Works;
 Clause 13.5 in relation to provisional sums submission of quotations, receipts, vouchers and accounts or
receipts for substantiation of the use of the said sums;
 Clause 13.6 on use of Day Work items, on daily basis;
 Clause 14.3 submitting monthly statements to the Engineer for payment purposes;
 Clause 20.1 contemporary records as per the request of the Engineer;
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 Notices

 Clause 1.9 giving notices in relation to delayed drawings or instructions by the Engineer;
 Clause 1.13 giving of all notices…in relation to the execution and completion of the Works and remedying
any defects therein;
 Clause 2.1 giving notice to the Employer in case of failure of the Employer in providing possession of Site;
 Clause 4.2 in case of submission of the Performance Security copy to the Employer;
 Clause 4.12 in case of encountering unforeseeable physical conditions: to the Employer;
 Clause 4.16 notice to be given to the Engineer in relation to transport of Goods and Plant to be delivered
to the Site;
 Clause 7.3 giving notice to the Engineer in case of any work is ready and before it is covered up, put out
of sight, or packaged for storage or transport or inspection;
 Clause 8.4 giving notice to the Engineer in case of request for extension of time (EOT) for completion;
 Clause 8.9 giving notice to the Engineer in case of suspension of work instructed by the Engineer;
 Clause 8.11 giving notice to the Engineer in case of prolonged suspension of the Works;
 Clause 10.1 giving notice to the Engineer in case of requesting the Taking Over of the Works and Sections,
if any;
 Clause 13.1 giving notice to the Engineer the reasons (with supporting particulars) not to execute the
variation order or instruction;
 Clause 17.4 giving notice to the Engineer in case of the effects or consequences of the Employer’s Risks;
 Clause 18.1 giving notice to the Engineer in case of submission of insurance policies to the Employer;
 Clause 20.1 giving notice to the Engineer describing the event or circumstance giving rise to the claim;
 Clause 20.4 giving notice of dissatisfaction with the decision of the adjudicator to the Employer;
 Clause 20.4 giving notice of intention to commence arbitration;

Administrative Obligation

 Clause 1.6 entering into a Contract Agreement;

 Clause 1.7(a) securing prior consent for assignment from the Employer;
 Clause 3.5 duty to consult with the Engineer;
 Clause 4.4(b) securing prior consent from the Engineer for Sub-contracting;
 Clause 4.6 providing appropriate opportunities for the Employer’s Personnel and any other contractors
employed by the Employer and for personnel of public authorities;
 Clause 6.1-making arrangement for the engagement of staff and labour;
 Clause 6.1 Affording opportunity of access to the Site to the Engineer, other personnel and for the public
authorities;
 Clause 7.8 payment of royalties;
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 Clause 20.5 attempting amicable settlement;

Obligation upon or after Completion

 Clause 11.1 remedying defects and completion of outstanding works, if any;

 Clause 11.11 clearance of Site upon completion;
 Clause 14.10 submission of Statement at Completion to the Engineer;
 Clause 14.11 submission of draft Final Statement to the Engineer;
 Clause 14.11 submission of further information relative to the finalization of the draft Final Statement;
 Clause 14.12 submitting written discharge to the Employer confirming that the total of the Final Statement
represents full and final settlement of all monies due to the Contractor;
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B. Contractor’s Remedial Rights

The remedial rights are the liability of the other party (ex. the employer), which result due to breaching it’s (i.e. the
employer’s) contractual and/or legal obligation. The remedial rights of the Contractor may be categorized, as
contractual and legal remedies:

 Contractual Remedies;
▪ Financial remedies; Cost; Profit; Financing charges; and Indemnity;
▪ Extension of time;
▪ Other remedies; Deceleration of progress of the Works; Suspension; and Termination;
 Legal Remedies;
▪ Specific Performance;
▪ Cancellation of Contract;
▪ General damages;
▪ Other remedies, if any;
▪ see Article 1771 et seq. of the Civil Code;

Contractual Remedies

a) Financial Remedies

Cost

▪ Clause 1.9(b) due to delayed issuance of drawings and instructions to the Contractor caused by the
Engineer;
▪ Clause 2.1(b) due to delay caused in providing access to the Site caused by the Employer (Initial Delay);
▪ Clause 4.7 due to delay suffered by the Contractor in case of error in setting out;
▪ Clause 4.12(b) due to delay caused by unforeseeable physical conditions;
▪ Clause 4.24(b) due to delay caused in case of discovery & reporting of fossils;
▪ Clause 7.4(b) due to delay suffered by the Contractor caused by the Employer in case of testing;
▪ Clause 8.9(b) due to delay caused by the effect of suspension as ordered by the Engineer;
▪ Clause 10.3(b) due to delay caused by the interference of the Employer with Tests on Completion;
▪ Clause 11.6 due to incurring of costs by the Contractor with respect to repetition of Tests;
▪ Clause 13.7 cum 14.3(b) due to incurring of cots in relation to adjustment for changes in legislation;
▪ Clause 13.8 due to incurring of costs in relation to adjustment of changes in cost;
▪ Clause 14.3(a) cum Clause 13.2 entitlement to additional cost in case of cost reduction in relation to Value
Engineering;
▪ Clause 15.4 (c) getting the balance, if any, in relation to termination of the Contract due to the default of
the Contractor and the completion of the project by the Employer or third part;
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▪ Clause 16.1 (b) due to suspension of works by the Contractor, as caused by the problem of payment and
thereby incurred cost;
▪ Clause 16.1(b) due to reduction of the progress of the works by the Contractor as caused by the problem
of payment & thereby incurred cost;
▪ Clause 16.4 (c) due to termination of Contract by the Contractor due to the default of the Employer and
recovering costs incurred thereby;
▪ Clause 17.4(b) costs incurred due to consequences of the Employer’s Risks;
▪ Clause 19.7 (b) entitlement to some payment in case of release from performance of the Contract
(Frustration);
▪ Clause 20.1 cum Clause 14.3(f) payment of additional payment due to claims of the Contractor;

Profit, Where applicable;

▪ Clause 1.9(b) in case of delayed issuance of drawings and instruction by the Engineer;
▪ Clause 2.1(b) in case of delay in providing access to the Site;
▪ Clause 4.7(b) in case of error in Setting out;
▪ Clause 7.4(b) in case of delay suffered by the Contractor caused by the Employer in relation to Testing;
▪ Clause 10.3(b) in case of interference with Tests on Completion by the Employer;
▪ Clause 16.1(b) in case of suspension and reduction of the progress of the work by the Contractor caused
by payment problem;
▪ Clause 17.4(b) cum Clause 17.3(f) &(g) in case of Employer’s Risks;

Financing Charges

▪ Clause 14.8 in case of delayed payment by the Employer;

Indemnity

▪ Indemnity includes claims, damages, losses, and expenses including legal fees and expenses;
▪ Clause 4.2 in case of calling the Performance Security by the Employer to the extent to which the
Employer was not entitled to make the claim;
▪ Clause 17.1 general obligation in relation to indemnifying the Contractor by the Employer;
▪ Clause 17.5 indemnifying the Contractor in relation to intellectual and industrial property rights;

b) Extension of Time

▪ Clause 8.4(a) due to Variation;

▪ Clause 8.4(b) see below in conjunction with other relevant Sub-clauses;
▪ Clause 8.4(c) due to exceptionally adverse climatic conditions;
▪ Clause 8.4(d) due to unforeseeable shortages in the availability of personnel, or Goods caused by
epidemic or governmental action;
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▪ Clause 8.4(e) due to any delay, impediment or prevention caused by or attributable to the Employer, the
Employer’s personnel (including the Engineer see Clause 1.1.2.6) or the Employer’s other contractors;
▪ Clause 8.4(b)cum Clause 1.9(a) due to delay in issuing drawing and instructions by the Engineer to the
Contractor;
▪ Clause 8.4(b) cum Clause 2.1(a) due to delay in providing access to the Site by the Employer;
▪ Clause 8.4(b) Clause 4.7(a) due to delay caused due to error in Setting out;
▪ Clause 8.4(b) cum Clause 4.12(a) delay due to unforeseeable physical conditions;
▪ Clause 8.4(b)cum Clause 4.24(a) delay caused due to discovery and reporting of Fossils;
▪ Clause 8.4(b)cum Clause 7.4(a) delay caused by the Employer in relation to Testing;
▪ Clause 8.4(b)cum Clause 8.8 delay caused by suspension as ordered by the Engineer;
▪ Clause 8.4(b)cum Clause 8.11 delay caused due to prolonged suspension provided the Contractor opted
for resuming the performance of the Works after such prolonged suspension;
▪ Clause 8.4(b)cum Clause 16.1(h) delay caused to the Contractor due to suspension or reduction in the
progress of the Works by the Contractor due to delay in payment;

Others Contractual Remedies

Deceleration (reduction) of the progress of the Works;

▪ Clause 16.1 due to delay in payment;

Suspension of the performance of the Works;

▪ Clause 16.1 due to delay in payment;

Termination of the Contract;

▪ Clause 8.11 cum Clause 16.2 (f) due to prolonged suspension of the Works by the Employer;
▪ Clause 16.2 (a) through (j) due to the default of the Employer;
▪ Clause 16.2(h) due to delay in payment & other payment related grounds;

Legal remedies

a) Specific Performance; see Article 1771(1) cum Article 1776 ff of the Civil Code;
b) Cancellation of Contract; see Article 1771(1) cum Article 1784 ff of the Civil Code;
c) General Damages; see Article 1771(2) cum Article 1790 ff of the Civil Code;
d) Other legal Remedies, if any;
e) See also in general Article 1771 et seq. of the Civil Code;
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C. Obligations of the Employer

 The obligations of the employer may be summarized, as follows. These are:

▪ Payment obligation;
▪ Risk sharing obligation;
▪ Acceptance obligation; and
▪ Other obligations;

 Payment Obligation

Payment obligation encompasses:

 the payment of the contract price; and

 other payment obligations;

a) Payment of the Contract Price

 Clause 14.2cum Clause 14.7(a) in relation to Advance Payment;

 Clause 14.7(b) in relation to Interim Payment;
 Clause 14.13cum Clause 14.7(c) in relation to Final Payment;
 Clause 14.9 in relation to the first half of the Retention Money;
 Clause 14.9 in relation to the second half of the Retention Money;

b) Other Payment Obligations

 This obligation is related to claims or otherwise;

 Clause 1.9(b) payment of cost and profit due to delay in issuing drawings and instructions by the
Engineer;
 Clause 2.1(b) payment of cost and profit due to delay caused in providing access to the Site;
 Clause 4.7 payment of cost and profit due to error in Setting out;
 Clause 4.12(b) payment of cost due to delay caused by unforeseeable physical conditions;
 Clause 4.24(b) payment of cost in case of discovery of Fossils & reporting of same;
 Clause 7.4(b) payment of cost in case of Testing for which the Employer is responsible;
 Clause 8.9(b) payment of cost in case of suspension of Works;
 Clause 10.3(b) payment of cost and profit in case of interference with Tests on Completion;
 Clause 11.6 payment of cost in case of further tests for which the Employer is responsible;
 Clause 13.7 cum 14.3(b) payment of cost in case of Adjustment for Changes in Legislation;
 Clause 13.8 payment of cost in case of Adjustment for Changes in Cost;
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 Clause 14.3(a) cum Clause 13.2 payment of additional payment to the Contractor derived from
savings due to the effects of Value Engineering;
 Clause 14.8 payment of financing charges in case of delay in payment;
 Clause 15.4(c) entitlement to a balance of costs, if any, in case of termination of the Contract by the
Employer due to the default of the Contractor, after completion of the Works by the Employer or
another contractor;
 Clause 16.1(b) payment of cost and profit in case of suspension and reduction of the progress of the
Works by the Contractor;
 Clause 16.4 payment of any loss or damage sustained by the Contractor due to termination of the
Contract by the Contractor due to the default of the Employer;
 Clause 17.4(b)cum Clause 17.3(f) & (g) payment of cost and profit in case of Employer’s risks;
 Clause 19.7 payment of costs in relation to Plant, Materials, other costs and liabilities, cost of
removal of the Temporary Works, cost of the repatriation of Contractor’s Personnel;
 Clause 20.1 cum Clause 14.3 payment of claims;

 Risk Sharing Obligation

 The risk sharing obligation of is related to the obligation of the employer under the contract.
 This governed under Clause 17.3 (Employer’s Risks);

 Acceptance Obligation

 Clause 10 relative to actual Taking Over;

 Clause 10 relative to presumptive or constructive Taking Over; in case of interference with the tests
in completion by the Employer;
 Effect: commencement of defects liability period; release of half of the retention money; submission
of retention bond, if agreed;

 Other Obligations

a) Giving Possession of the Site and Access thereto

 Clause 2.1 providing access to the Site to the Contractor;

 Clause 4.10 providing Site Data to the Contractor;
 Clause 4.13 providing rights of way and facilities to the Contractor;

b) Appointing an Engineer

 Clause 3.1 appointing an Engineer;

c) Supplying Instructions as to the Carrying out of the Works (i.e. instructions, information,
consents, approvals, notices …)
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 Clause 1.7 in relation to prior consent of the Employer for assignment;

 Clause 1.13 in relation to obtaining the planning, zoning, building permits or similar permissions and
providing same information to the Contractor
 Clause 2.2 in relation to permits, licenses or approvals;
 Clause 2.4 in relation to submission of evidence or information on the Employer’s financial
arrangement;
 Clause 2.5 in relation to notice of claim by the Employer;
 Clause 4.2 in relation to approval of the form and institution for the Performance Security;
 Clause 4.10 in relation to providing information on sub-surface, hydrological and environmental
aspects;
 Clause 15.2 in relation to notice of termination;
 Clause 18.1 in relation to approval of the insurance institution and form of the insurance policy;
 Clause 20.4 in relation to notice of dissatisfaction with decision of the Adjudicator;

d) Not Interfering with the Progress of the Works

 Clause 1.13cum Clause 8.4(a) in relation to failure to secure the required planning, zoning and other
permits;
 Clause 4.6 cum Clause 8.4(a) in relation not to cause delay to the Contractor due to the Employer,
Employer’s Personnel and Employer’s other contractors;
 Clause 1.9 cum Clause 8.4(a) in relation to issuing instruction or drawing by the Engineer;
 Clause 13.3 cum Clause 8.4(a) in relation to making variations or other substantive change to the
quantity of Works;
 Clause 2.1 cum Clause 8.4(a) in relation to failure to give possession of Site and access thereto;

e) Nomination of Specialist Sub-contractors and Suppliers

 Clause 5 cum Clause 13.5

f) Permitting the Contractor to Carryout the Whole of the Works

 Clause 12.4 ordering omission of the Works not for the purpose of awarding the omitted part to be
completed by other contractors or itself;
 Clause 13.1(d) in relation to omission of works unless it is to be carried out by others;
 Clause 4.1 in relation to the Contractor’s general obligation to execute and complete the whole of the
Works and not to interfere therewith by the Employer;

g) Supplying Materials and Carrying out Works, if these form Part of the Works

 Clause 4.6 in relation to employing other contractors to carry out works not forming part of the
Contract with the Contractor;
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 Clause 4.20 in relation to supplying Employer’s Equipment and Free-Issue –Materials to the
Contractor, indeed against payment;

h) Indemnity Obligation

 Clause 4.2 in relation to Performance security resulting from a claim under the Performance
Security to the extent to which the Employer was not entitled to make the claim there under;
 Clause 17.1 in relation to indemnity relative to bodily injury, sickness, diseases or death, for which
the Employer is responsible under the Contract;
 Clause 17.5 in relation to intellectual and industrial property rights (infringement of rights);

i) Insurance Obligation

 Clause 17.3 in relation to Employer’s Risks (if the test of insurability has passed and capable of
insuring);
 Clause 18.1 in relation to general requirements for insurance, the Employer as "insuring party"
under the Contract;
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D. Employer’s Remedial Rights

The remedial rights are the liability of the other party (ex. the contractor), which result due to breaching of it’s (i.e. the
contractor’s) contractual and/or legal obligation. The remedial rights of the Employer may thus be categorized, as
contractual and legal remedies.

 Contractual remedies;

▪ Financial remedies; Delay Damages; Indemnities; and Deduction of Contract Price;

▪ Extension of Time; In case of Defects Notification Period;
▪ Other contractual remedies; Suspension; and Termination;

 Legal remedies;

▪ Specific performance;
▪ Cancellation of contract;
▪ General damages;
▪ Other legal remedies, if any;

Contractual Remedies

a) Financial Remedy

Delay Damages

 Clause 8.7 in relation to delay by the Contractor in completing the Works within the time for completion or as
extended;
 This is equivalent to liquidated damages;

Indemnities

 Clause 1.13 in relation to the Contractor’s failure to comply with laws;

 Clause 4.14 in relation to the Contractor’s responsibility for the acts or defaults of any sub-contractor, his
agents or employees;
 Clause 4.16(c) in relation to the transport of Goods;
 Clause 17.1 in relation to bodily injury, sickness, diseases, or death of any person …;
 Clause 17.5 in relation to claims pertaining to intellectual and industrial property rights;

Deduction from the Contract Price

 Clause 4.9 in relation to testing;

 Clause 4.19 in relation to the cost of electricity, water & gas;
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 Clause 4.20 in relation to Employer’s Equipment & Free-issue-Materials;

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 Clause 15.4(c) in relation to payments (of the balance, if any) after termination of the Contract by the
Employer due to default of the Contractor;
 Clause 11.4(c) in relation to failure to remedying defects by the Contractor;

b) Time Extension

 Clause 11.3 in relation to Defects Notification Period;

c) Other Contractual Remedies

Suspension

 Clause 8.8 in relation to suspension of the Performance of the Works;

Termination

 Clause 11.4(c) in relation to Tests on Completion;

 Clause 15.2 in relation to defaults of the Contractor;
 Clause 15.2(f) in relation to corruptive practices of the Contractor;
 Clause 15.6 in relation to corruptive practices of the Contractor;

Legal Remedies

a) Specific performance; see Article 1776 ff of the Civil Code;

b) Cancellation of contract; see Article 1784 ff of the Civil Code;
c) General Damages; see Article 1790 ff of the Civil Code;
d) Other legal Remedies, if any;
e) See also in general Article 1771 et seq. of the Civil Code;
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Reference Materials

1. The Civil Code of Ethiopia;

2. The Conditions of Contract for Building and Engineering Works Designed by the Employer: Multilateral
Development Bank (MDB) Harmonized Edition, March, 2006; FIDIC New Red Book

3. Various Other International Conditions of Contract;

4. International Construction Contracts and the Resolution of Disputes, ICC-FIDIC Conference Paris, 2006,
Michael Martimer-Hawkins

5. Engineering Contracts and Specification, Robert W. Abbet, 4th Edition, 1963;

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