NICMARAssignment On DIFFERENCES BETWEEN INDIAN CONDITIONS OF CONTRACT AND FIDIC CONDITIONS OF CONTRACT MCM 314: CONTRACT LAWS AND CLAIMS Submitted By: Apoorva Ajmera Roll No. G03103 N ATI O N A L I N S T I T U T E O F C O N S T R U C T I O N MAN AGEMENT AND RESEAR CH unless otherwise provided in the contract. The contract Agreement. Bill of quantities and 9.5. Specifications 7.NO. Any other document forming part of the contract. Conditions of Contract including Special Conditions of Contract 6. Each of these clauses of different Indian contract. . If the contract requires the contractor to obtain security for his proper performance of the contract. Performance Security Performance Security The Performance Security (including additional security for unbalanced bids) shall be provided to the Employer no later than date specified in the Letter of Acceptance and shall be issued in an amount and form and by a bank or surety acceptable to the Employer. Contract Data 5. Part I of these Conditions.GOA CAMPUS Assignment:Study a contract executed under the Indian Contact Act and a Contract executed under FIDIC condition of Contract and prepares a report giving a measure Difference between the two contract conditions Following are the measure differences between Indian and FIDIC conditions of contract:S. Part II of these Conditions. 6. and denominated in Indian Rupee. these are explained below: 1. Any other documents listed in the Contract Data as forming part of the Contract As per FIDIC Red Book “Clause no. 2. the priority in the contract. Agreement 2. notice to proceed with the works 3. 3. the priority of the documents forming the contract shall be as follows: 1.2” the condition is as follows : The Several Documents forming the Contract are to be taken as mutually explanatory of one another. Indian Condition of Contract FIDIC Condition of Contract 1. Contractor’s Bid 4. Drawings 8. 2. but in case of ambiguities or discrepancies the same shall be explained and adjusted by the Engineer who shall thereupon issues to the Contractor Instructions thereon and in such event. in the sum stated in the appendix to tender. The Letter of Acceptance. he shall obtain and provide to the Employer such security within 28 days after the receipt of the letter of acceptance. 5. Letter of acceptance. The Tender 4. Priority of contract Document Priority of contract Document The various Indian contract Condition have similar or slightly varying conditions regarding the priority of document. The Employer or the Contractor is made bankrupt or goes into liquidation other than for a reconstruction or amalgamation. the contractor shall notify the Engineer of so doing. 2. 2. The institution providing such security shall be subject to the approval of the Employer. . Otherwise provided for in the Contract. 4. The Contractor shall on the instruction of the Engineer suspend the progress of the Works or any part thereof for such time and in such manner as the Engineer may consider necessary and still during such suspension properly protect an secure the Works or such part thereof so far as is necessary in the opinion of the Engineer. When providing such security to the Employer. The Performance Security shall be valid until a date 28 days from the date of expiry of Defects Liability Period and the additional security for unbalanced bids shall be valid until a date 28 days from the date of issue of the certificate of completion. Suspension Suspension The Employer or the Contractor may terminate the Contract if the other party causes a fundamental breach of the Contract. A payment certified by the Engineer is not paid by the Employer to the Contractor within 56 days of the date of the Engineer’s certificate. 5. The Engineer gives Notice that failure to correct a particular Defect is a fundamental breach of Contract and the Contractor fails to correct it within a reasonable period of time Such security shall be in the form annexed to these conditions or in such other form as may be agreed between the Employer and the contractor.3. The contractor stops work for 28 days when no stoppage work is shown on the current Programme and the stoppage has not been authorized by the Engineer. Necessary by reason of some default of or breach of contract by the Contractor. Fundamental breaches of Contract include. Unless such suspension is: 1. but shall not be limited to the following: 1. The Engineer instructs the Contractor to delay the progress of the Works and the instruction is not withdrawn within 28 days. 3. or which he is responsible. 4. The contractor has delayed the completion of works by the number of days for which the maximum amount of liquidated damages can be paid as defined in the Contract data. any delay. the amount or nature of extra or occurs or a Variation is issued which makes additional work. 6. The Contractor does not maintain a security which is required. If the Contractor. 7. exceptionally adverse climatic conditions. If the Contract is terminated the Contractor shall stop work immediately.determined by the Engineer. When either party to the Contract gives notice of a breach of contract to the Engineer for a cause other than those listed under Sub-Clause 59. it impossible for Completion to be achieved 2. in the judgment of the Employer has engaged in corrupt or fraudulent practices in competing for or in executing the Contract. the Engineer shall decide whether the breach is fundamental or not. make the Site safe and secure and leave the Site as soon as reasonably possible. Contractor taking steps to accelerate the 4. other special circumstances which may occur.2 above. the 3. and 8. other than through a The Engineer shall decide whether and by Default of or breach of contract . the Employer may terminate the Contract for convenience. impediment or remaining work and which would cause the prevention by the Employer. Notwithstanding the above. 5. Extension of time Extension of time The Engineer shall extend the Intended In the event of: Completion Date if a Compensation Event 1. or Contractor to incur additional cost. any cause of delay referred to in by the Intended Completion Date without these Conditions. duly considering. If the Employer fails to give his acceptance. entitlement of the contractor to compensation events where such events are caused by any additional The Engineer shall make any variation of the form. The Employer shall in not more than 21 days communicate to the Engineer the acceptance or otherwise of the Engineer’s decision. increase or decrease the quantity of any work included in the Contract . and overhead costs.1 5. be necessary and for that purpose. Variation Variation If the final quantity of the work done differs from the quantity in the Bill of Quantities for the particular item by more than 25 percent provided the changes exceeds 1% of initial Contract Price. the Engineer shall not grant the extension and the contractor may refer the matter to the Dispute Review Expert under Clause 24. justification for rate adjustment as furnished by the contractor. economics resulting from increase in quantities by way of reduced plant. or any Section or part thereof. after due consultation with the warning of a delay or has failed to Employer and the Contractor determine cooperate in dealing with a delay by this the amount of such extension and shall failure shall not be considered in assessing notify the Contractor accordingly with a the new Intended Completion Date. quality or quantity of the Works or any part thereof that may in his opinion. 3. for Completion of the Works. the Engineer shall adjust the rate to allow for the change. equipment. 1. or if for any other reason it shall in his opinion be appropriate he shall have the authority to instruct the Contractor to do and the Contractor shall do any of the following: 1. copy to the Employer. Contractor asking the Engineer for a decision upon the effect of a Compensation being such as fairly to entitle the Event or Variation and submitting full Contractor to an extension of the Time supporting information. 2. the Engineer If the Contractor has failed to give early shall.by the Contractor or for which he how much to extend the Intended Completion Date within 35 days of the is responsible. The Engineer shall within 14 days of receiving full justification from the Contractor for extension of Intended Completion Date refer to the Employer his decision. or 6. Omit any such work (but not if the omitted work is to be carried out by the Employer or by another contractor). the Contractor shall provide the Engineer with a detailed cost breakdown of any rate in the Bill of Quantities. if any. Engineer. 2. the quantity of work above the failing which after due consultation by . Valuation of Variation All variations referred to in Clause 51 and any additions to the Contract Price which are required to be determined in accordance with Clause 52 (for the purposes of this Clause referred to as “varied work”) shall be valued at the rates and prices set out in the Contract if. or 5. but the effect. The Engineer shall not adjust rates from changes in quantities if thereby the Initial Contract Price is excepted by more than 15 percent. which shall be given within seven days of the request or within any longer period stated by the Engineer and before the Variation is ordered. change the levels lines. change the character or quality or kind of any such work 4. Provided that where the issue of an instruction to vary the Works is necessitated by some default of or breach of contract by the Contractor or for which he is responsible any additional cost attributable to such default shall be borne by the Contractor. execute additional work of any kind necessary for the completion of the Works. Valuation of Variation The Contractor shall provide the Engineer with a quotation (with breakdown of unit rates) for carrying out the Variation when requested to do so by the Engineer. position and dimensions of any part of the Works.work. of all such variations shall be valued in accordance with Clause 52. The Engineer shall asses the quotation. No such variation shall in any way vitiate or invalidate the Construct. 3. All Variations shall be included in updated Programmes produced by the Contractor. in the opinion of the Engineer the same shall be applicable. in the opinion of the valuation so far as may be reasonable. 6. If the Contract does not domain any rates or price applicable If the work in the Variation corresponds to the varied work-the rates and prices in with an item description in the Bill of the Contract shall be used as the basis for Quantities and if. except with the Prior approval of the Employer. If requested by the Engineer. Change any specified sequence or timing of construction of any part of the Works. to claim any additional payment pursuant to any Clause of these Condition. If the Engineer decides that urgency of varying the work would prevent a quotation being given and considered without delaying the work. If the Employer makes a late payment. he shall give notice of his intention to the Engineer with a copy to the Employer within 28 days after the event giving rise to the claim has first arisen. Interest shall be calculated from the date by which the payment should have been up to the date when the late payment is made at 12% per annum. The Employer shall pay the Contractor the amounts certified by the Engineer within 28 days of the date of each certificate. retention. In the event of disagreement the Engineer shall fix such rates or prices as are in his opinion. other recoveries in terms of the contract and taxes at source. Until such time as rates or prices agreed or fixed. appropriate and shall notify the Contractor accordingly with a copy to the employer. no quotation shall be given and the Variation shall be treated as a Compensation Event.Limit stated in Sub Clause 38. Suitable or prices shall be agreed upon between the Engineer and the Contractor. the Engineer may order the accordance with Clause 60. or otherwise. 7. Claims Claims Payments shall be adjusted for deductions for advance payments. The Engineer with the Employer and the Contractor. the Contractor shall be paid interest on the late payment in the next payment. . Variation and make a change to the Contract Price which shall be based on Engineer’s own forecast of the effects of the Variation on the Contractor’s costs. Not with standing any other provision of the Contract if the Contractor intend.1 or the timing of its execution do not cause the cost per unit of quantity to change. the Engineer shall determine provisional rates or prices to enable on-account payments to be If the Contractor’s quotation is included in certificates issued in unreasonable. or if the nature or timing of the work in the Variation does not correspond with items in the Bill of Quantities. The Contractor shall not be entitled to additional payment for costs which could have been avoided by giving early warning. as applicable under the law. If the cost per unit of quantity changes. the quotation by the Contractor shall be in the form of new rates for the relevant items of work. the rate in the Bill of Quantities shall be used to calculate the value of the Variation. Injury or loss of life. including any dispute as to any opinion. whether by way of or indemnity or otherwise for or in respect of: Employer’s Risks 1.8. the risks of the said special risks. the Contract or the execution of the Works. The cost shall divided equally between the instruction. 2. destruction of or damage to the The Employer is responsible for the Works save to work condemned excepted risks which are under the provisions of Clause 39 (a) in so far as they directly affect the prior to the occurrence of any of execution of the Works in India. Settlement of Disputes Settlement of Disputes The Dispute Review Expert (Board)* shall If a dispute of any kind whatsoever arises give a decision in writing within 28 days of between the Employer and the Contractor receipt of a notification of a dispute. and contamination from any nuclear fuel or nuclear waste or radioactive toxic explosive. or (b) a cause due solely to the design of the Works. Destruction of or damage to war. civil war. 9. invasion. other termination of the Contract. in connection with or arising out of. determination. other than the Contractor’s design. The Dispute Review Expert (Board)* shall be paid daily at the rate specified in the whether during the execution of the Contract Data together with reimbursable Works or after their completion and expenses of the types specified in the whether before or after repudiation or Contract Data. or or military or usurped power. . act of foreign properly. and whatsoever in consequence of any of the the Contractor carries the risks which this special risks referred to in Clause 65 Contract states are Contractor’s risks. riot 3. hostilities. insurrection or third parties. commotion or disorder (unless restricted to the Contractor’s employees). Contractor’s Risks All risks of loss of damage to physical property and of personal injury and death which arise during and in consequence of the performance of the Contract other than the excepted risks are the responsibility of the Contractor. rebellion. Employment and the Contractor. Special Risk Special Risk The Employer carries the risks which this The Contractor shall be under no liability Contract states are Employer’s risks. revolution. whether of the Employer enemies. the Dispute Review Expert’s decision will be final and binding. Whatever decision is reached by the Dispute Review Expert. Descriptions of schedule of bill of materials. 3. General condition of contract. 2. accordance with the arbitration procedure stated in the Special Conditions of Contract. If neither party refers the dispute to arbitration within the next 28 days. Technical specifications. Either party may give notice to the other to refer a decision of the Dispute Review Expert to an Arbitrator within 28 days of the Dispute Review Expert’s written decision. Approved general arrangement drawing. continue to proceed with the Works with all due diligence and the Contractor and the Employer-shall give effect forthwith to every such decision of the Engineer unless and until the same shall be revised. . Unless the Contract has already been repudiated or terminated the Contractor shall in every case. Such reference shall state that it is made pursuant to this Clause. the Contractor shall seek clarification from the engineer and shall carry out the work in accordance with clarification furnished by the engineer. with a copy to the other party. 5. as hereinafter provided in an amicable settlement or an arbitral award. Several Documents forming the contract are to be taken as complementary to one another.24” the condition is as follows: In case of any Discrepancy in the drawings or between the drawings. the matter In first place be referred in writing to the Engineer. Special condition of contract. no later than the eighty-fourth day after the day on which he received such reference the Engineer shall give notice of his decision to the Employer and the Contractor.Certificate or valuation of the Engineer. and /or schedule or items/quantities. Such decision shall state that The arbitration shall be conducted in it is made pursuant to this Clause. 4. technical specifications. Priority of Contract Documents: As per NTPC Conditions of Contract “Clause no. The following order of preference shall be observed: 1. Comparison of Indian Contract with FIDIC condition of contract National Thermal Power Corporation 1. The priority of document given by the NTPC has bill of materials as top most priority and conditions of contract being given the least priority FIDIC has put more emphasis on contract agreement whereas NTPC has stressed upon the technical matter deciding element incase of ambiguity. 2. 3. Comparison and Comment: 1. NTPC condition requires to submit the security deposit of 2. 2. Comparison and comment Comparing the clause with FIDIC clause no. Technical details are susceptible to variation hence giving priority to these documents might create further complication to both contractor as well as NTPC. Performance Security : As per NTPC condition of contract “clause no. As per NTPC condition security deposit will be returned after the issuance of Final acceptance certificate by owner and no claim certificate by contractor while FIDIC says performance guarantee to be returned with in 14 days after the issue of defect liability certificate. 5.Any error in description. 45.5% of the initial contract price in the form of a draft of any scheduled bank within 10 days of acceptance of tender. quantity or rate in bill of materials or any omissions thereof shall not initiate the contract or release the contractor from execution of whole or any part of the works comprised therein according to drawings and specifications or from any of the obligations under the contract. 4. Suspension : As per NTPC conditions of contract “Clause no.1” the condition is as follows: .5% of initial contract price within 10 days of letter of acceptance where as FIDIC suggest Submission of performance security within 28 days of letter of acceptance.2 one can observe that both the documents state that incase of discrepancies the contractor is required to seek clarification from the engineer and proceed as per the instructions furnished by the engineer. several documents forming part of the contract has been taken as mutually explanatory. It will be released on expiry of maintenance guarantee period and satisfactory completion of rectification of defects and on issuance of “Final Acceptance Certificate” by the Owner and submission of “No claim Certificate” by the contractor.11” the condition is as follows The contractor shall submit an initial security deposit of 2. 3” the condition is as follows: The contractor shall not carry out any work extra to or make any omission or additions to or omission from the works or any deviation from any of the provisions of the agreement. Also as per FIDIC conditions.The owner may suspend the work in whole or part at any time by giving the contractor notice n writing to such effect stating the nature. Force Majeure. including all the possible variations that the contractor is required to follow on instruction of engineer. Extension of Time: As per NTPC conditions of contract “Clause no. engineer determines the extension of time after due consultation with contractor and employer. Comparison & Comment NTPC condition suggest that the contractor is liable to carry out any conditions or alterations or omissions from the work in the kind of quality or material to be used for work on instructions of engineer whereas FIDIC condition has given detailed version. Extension of time shall be as per decision of the Owner. 3. 15. stipulation. . or contract drawing without the previous consent in writing from the engineer. 2. Variation: As per NTPC conditions of contract “Clause no. 4. during the performance of the agreement to make any condition to. specification. 3.1” the condition is as follows: The owner/engineer shall have the right.4” the condition is as follows: 1. Incase of FIDIC conditions then an event under the extension of time is clearly spelt out avoiding any scope of ambiguity later on. As per NTPC conditions of contract “Clause no. 15. Major challenges or substantial addition to the work ordered by the Owner adversely affecting the completion time. Comparison & Comment: NTPC conditions suggest the extension of time to be decided by the owner for the conditions such as Force Majeure. 5. Comparison & comment: Both conditions requires engineer’s/owner to provide instruction in writing to the contractor before suspending the work and the contractor is required to resume the work immediately after the notice for resumption by the engineer/Owner. Delay in handing over the site etc. Substantial change in the work and delay related to handing over the site. alterations in and omission from the works or any alterations in the kind or quality of the materials to be used there in and shall give notice thereof in writing to the contractor. the effective date and duration of such suspension. the rate for such items of work shall be fixed as per the following procedure.FIDIC condition also specifies that if the increase or decrease is due to inadequate quantities of bill then it will not be considered as variations. 1. 15. if the rates are not available then it will be fixed based on contractor rates or else the engineer shall fix the rates with due consultation with the employer and the contractor . While NTPC conditions also bring out that if there is a requirement of increase or decrease in work and which is not specifically mentioned but is required to complete in any of the documents hall be carried out by the contractor at no extra cost 6. the agency shall be got approved from the owner on recommendation of engineer and decision of the owner regarding appointment of the agency and the rates shall be final and binding. 3. 2. then the rates for such extra items shall be derived from contract rates of similar/closest items of work. as may be approved by the engineer with the concurrence of the owner regarding labour and material content. In case of disagreement the engineer shall fix the rates. Valuation of Variation: As per NTPC conditions of contract “Clause no.01 i) then the rate shall be established based on the market rates and taking into 20% over cost of labour and materials to cover supervision. Where the nature of extra work is such that it has to e got executed through a specialized agency. Where the extra works are of similar character under similar conditions as to any of item of work appearing in the contract agreement. Comparison & Comment: FIDIC condition states that the variations will be valued on the rates in the bill of quantities if it is with in 15% in case it exceeds 15% the rates shall be decided by the engineer with due consultation with employer and contractor.3” the condition is as follows: Should it be found necessary to execute any item of work which is not included in the schedule of items and as such no contract rate is available. if rates in bill of quantities are applicable it will be considered for varied work. shall be adopted for this purpose. overheads and profits. Where the nature of items is such that the rate for same cannot be derived as per article 12. The norms followed by CPWD or MES. .