FIDIC Force Majeure Clauses and Contract Disruption

Force majeure events in the contract come usually under common law (NOTE: this would heavily depend on jurisdiction which parties chose for the Contract to be enforced) and exist to protect the parties, otherwise, the contract would come to an end. The contractor might be able to extend the time under specific clauses from the contract, but this doesn’t end the same between the parties. Under FIDIC/SF98, the force majeure clause is defined that; ‘’An event of circumstances that make the party’s performance illegal, and that is beyond the party’s reasonable control’’

FIDIC/M&E87, also defines force majeure as an event or circumstance that is beyond the party’s control. 

It is clear from the force majeure formulation that:

- Is beyond anything of parties can control

- If such event or circumstance do develop, then neither party could overcome or govern in a way that becomes attributable to the party. 

The FIDIC suite of contracts also generally stipulate, that either party can terminate the contract if the progress is interrupted as a result of force majeure, for a continuous period of 84 days. 

Although, the force majeure is very likely to cause delays, which are beyond the contractor’s resolution activities. Such provision does not make any cost distribution, which supposably is allocated where they fall. In some cases, if the latter lasts for 120, the contract can be terminated by either party. 

In some forms of contracts, the risk is shared between the employer and contractor, however other FIDIC forms stipulate that the employer bear the force majeure risk. In other standard contracts, when the contractors are guilty for the delay to completion day, then the same bear the time allocated risk. 

Whilst, most standard firms of contracts provide compensation for time delay, FIDIC seeks to lessen the number of claims towards the contractor by furnishing a hierarchy of documents clauses, which automatically resolve ambiguity and vague terms. The hierarchy of documents usually include. 

- Tender documents and forms 

- Letter of acceptance 

- Any correspondence between parties, that demonstrate the form part of the contract.

- Drawings and specifications as part of the project

- Parts and materials quantities and bills with invoices 

Contract inconsistency is usually resolved by variations or document priority.

- Agreement between parties, even is not or has been partly executed

- Tender classification documents, including the letter of acceptance and schedule. 

- Tender form

- Contract and conditions 

- Works’ requirements and proposals

- Pricing documents and other contract forms 

Besides, any temporary suspension might be treated as contract variation, hence reimbursable. Exclusion is only made in GC/Works’ suite of UK government contracts, where is no clause or provision made for the time extension.

Veselin Shivachev 

Vedera Consulting
+44 (0) 2381941164


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