Content of the pre-2017 FIDIC forms

Standard clauses

From a practical point of view, the key to reading and understanding the FIDIC form is to understand its structure.

The FIDIC form of building or works contract (as opposed to services or subcontract) generally has 20 clauses in the general conditions and, to a greater or lesser degree (depending on the procurement route), they follow the format as set out below.

Clause 1 – General provisions
Clause 2 – The employer
Clause 3 – The engineer or employer's representative
Clause 4 – The contractor
Clause 5 – Designer
Clause 6 – Staff and labour
Clause 7 – Plant, materials and workmanship
Clause 8 – Commencement, delays and suspension
Clause 9 – Tests on completion
Clause 10 –Taking over
Clause 11 – Defects liability
Clause 12 – Tests after completion
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.

One of the main exceptions is in the Red Book, where clause 5 deals with nominated subcontractors and clause 12 deals with measurement.

In the Gold Book, there is a slightly different order, with the insurance clause moved to clause 19, while clause 17 has been renamed 'Risk allocation' and the force majeure clause has been dropped and replaced with a new clause 18 headed 'exceptional risks'.

Standard amendments

The FIDIC forms also contain guidance for the preparation of particular conditions which include notes on the preparation of tender documents, and also highlight some of the key points which, if missed, could lead to difficulties during the project. The particular conditions set out, on a contract by contract basis, additional clauses and amendments to the general conditions set out above. Suggested particular conditions in the FIDIC guidance to the Red Book include:

  • Clause 1.2 – in certain situations the contractor is entitled to additional cost and 'reasonable profit'. As the level of 'reasonable profit' is not defined the parties may prefer to specify the percentage of profit the contractor is entitled to.
  • Clause 1.14 – joint and several liability. Major contracts are usually conducted by a joint venture. If so, detailed requirements should be set out. These may include, parent company guarantees from each member of the joint venture and the appointment of a leader providing a single point of contact for the employer.
  • Clause 3.1 – any requirements whereby the engineer needs the employer's approval to take certain action should be spelt out.
  • Clause 4.8 – safety procedures. Where the contractor is sharing the site, everyone's obligations as to safety should be spelt out.
  • Clause 8.2 – if the works are to be taken over in stages, these stages must be carefully defined as sections.
  • Clause 11.10 – defects liability. Different laws have different periods of liability. Therefore this clause may mean different things in different jurisdictions. This is a typical example of the care that is needed when working in different jurisdictions with parties who may all themselves come from different jurisdictions. It is essential that everyone takes advice from those working in the relevant jurisdiction so that all obligations are properly understood. Clauses 8.7 (liquidated or delay damages) and 19 (force majeure) are further good examples of this.

Following the Singaporean decision in CRW Joint Operation v PT Perusahaan Gas Negara (Persero) TBK [2011] SGCA 33, FIDIC published guidance and a suggested amendment to clause 20 (for contracts other than the Gold Book which already expressly deals with this) in the event that the parties choose arbitration as the final method of dispute resolution. This is to prevent arguments about the enforceability of DAB decisions which are final but not yet binding.

Template forms

The FIDIC forms also contain standard:

  • examples of the different types of bonds and guarantee that the parties may be required to enter into (although parties frequently use bespoke forms of security documents);
  • wording for the letter of tender (including a template appendix to tender);
  • contract agreement; and
  • dispute adjudication agreements.