Articles from the Silver Shemmings Ash Team on contractual matters, recent case law changes and items of interest in the construction and property world
November 29, 2019 | Silver Shemmings
The FIDIC Red, Yellow & Silver Books
The Federation Internationale des Ingenieurs Conseils (FIDIC) (International Federation of Consulting Engineers) published the first editions of the Red Book, Yellow Book and Silver Book in 1999.
There were prior versions of the Red and Yellow Books, which were published in 1957 (which was when the Red Book was first published), 1963 (which was when the Yellow Book was first published), 1977 and 1987. However, in 1999, FIDIC rewrote the Red and Yellow Books and published the Silver Book for the first time.
The Red Book (which is entitled “Conditions of Contract for Construction For Building and Engineering Works Designed by the Employer”) is used for construction projects where the employer is responsible for the design of the Works.
The Yellow Book is entitled “Conditions of Contract for Plant and Design-Build For Electrical and Mechanical Works And For Building and Engineering Works Designed by the Contractor”. It is frequently used where a project is procured as several work packages, where each of those work packages is designed and built by the relevant contractor; however, the employer is responsible for integrating those work packages for the delivery of the whole project. An example of where it might be used is a wind farm project, where there might be separate foundations, turbines and balance of plant work packages.
The Silver Book (which is entitled “Conditions of Contract for EPC / Turnkey Projects) is an EPC (“engineer, procure and construct”) / “turnkey” form of construction contract. It is used where a single contractor is responsible for delivery of the whole project; such that, upon completion of the project, all the employer has to do is turn the key, to begin operating the installation (for example, it might be used for a process plant project).
In 2017, FIDIC published the second editions of the red, yellow and silver books.
The Deeming Provisions In The FIDIC 1999 Red, Yellow & Silver Books
The FIDIC 1999 red, yellow and silver books contained several deeming provisions that were intended to give a party certain rights or to prevent a party bringing certain claims or raising certain defences to a claim. For example, the Contractor is deemed to have satisfied himself as to the correctness and sufficiency of the agreed contract price under clause 4.11.
Another type of deeming provision which was found in FIDIC 1999 was a provision which deemed something to have happened where a party had failed to take an action it was obliged to take within a prescribed period of time. These included:
Such deeming provisions are intended to assist administration of the contract, where timely action is required so as not to stall the attainment of important milestones for the completion of the Works.
It is this type of deeming provision which is now more ubiquitous in the 2017 editions of the FIDIC red, yellow and silver books.
The Additional Deeming Provisions In The FIDIC 2017 Red, Yellow & Silver Books
A significant change which has been made in the second editions of the red, yellow and silver books is the expanded use of deeming provisions. The deeming provisions which have been added include the following:
if the Engineer / Employer had failed to respond within 7 days to a quotation for a Provisional Sum submitted by the Contractor, having been requested by the Engineer / Employer, the Contractor being entitled to accept such quotation (clause 13.4).
The NEC 3 EEC & NEC 4 EEC Deeming Provisions
Deeming provisions feature prominently in NEC 3 EEC and NEC4 EEC standard forms. This is unsurprising given the emphasis in those forms on proactive project management and the resolution of issues as and when they occur.
The NEC 3 EEC / NEC 4 EEC standard forms contain the following deeming provisions:
It is apparent from the above, that the deeming provisions which have been added in the FIDIC 2017 Red, Yellow and Silver books far outweigh the use of such provisions in the NEC 3 EEC and NEC 4 EEC forms, despite the latter’s focus on proactive project management contracts.
Moreover, unlike the NEC 3 EEC and NEC 4 EEC forms, the FIDIC 2017 forms do not contain the safeguard of requiring the Contractor to submit a further notice following a failure by the Employer / Engineer to respond when required, before something is deemed to have happened. The absence of a further notice requirement increases the risk that, due to an inadvertent administrative error, the Employer / Engineer may fail to take an action when required, but with significant consequences.
Employers should therefore be extremely vigilant when administering contracts based on any of the FIDIC 2017 Red, Yellow and Silver books.
Author Chidi Egbochue is a Partner with Silver Shemmings Ash and has over 12 years’ experience of providing primarily non-contentious advice on major construction projects across several sectors, including rail, airport and other infrastructure, energy, oil and gas, and office, residential and mixed use developments, both domestically and internationally. He gained much of this experience at a large worldwide law firm and a magic circle law firm. Prior to which, he worked as a disputes lawyer at a niche construction law practice for 4 years.
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