So some of the topics, some of the items which are there in the checklist like case, no, I have

not picked here because it's not applicable to our area of business here because we are
operating in a civil law country. So case law is not applicable. So they will not expect you to
demonstrate your knowledge on case law because that is study check, this is always.Applied uh
within the context of your practice, if we if we are not practicing peso, they cannot ask case load
uh.So therefore I have refined this to suit with the the area of practice of a quantity surveyor who
is practicing in in the Middle East region.So we will be discussing about all these topics from
principles of contract law, legislation, forms of contract up until defect rectification period or then
defect notification period. For DLP same thing but just the terminology is different from.Contract
to contract so basically the intention today is to you know give you explain the areas and you
know perimeters of these subject subjects for you to do for the studies and get ready for the
interview .

If you if you are a quantity surveyor, unless you hope you only work from pre contract stages,
then you must have come across all these subjects in your practice and you know,
maybe.Yeah, it may, I mean some, some areas you may have you know, come across to a
lesser degree like example for termination. So if you have not experienced termination in any of
your projects, then you may not have practical knowledge and termination, but you are still
expected to have that theoretical knowledge and to explain.Questions around termination of
contracts.Uh, other thing is now, uh, we, uh.Did they want us to know about the conduct law?
So for that reason I will be drawing some examples from civil law of United Arab Emirates. So
the law applicable for contracts in way if law number 5/19/85.It within that civil court, there are
about 1528 articles and those articles relate to all the contracts which are made in UAE, not
specifically for construction contracts.Within that civil court which we call Mukwala, uh, there is a
section, uh, there is uh, there are few articles from Article 872289624 articles. So these are
purely related to construction contracts.So we call, call them Mukwala and uh.Yeah. So we will
uh, be discussing those, uh, articles also as, as they relate to these topics, uh, to, uh, give you
some knowledge and understanding on how, uh, the law is applied, uh, on on to construction
contracts in way if you are joining from.The country other than UAE, but if you're working in the
Middle East country then you tend to have.Uh, similar provisions in the law governing contracts
in your country. If it is Qatar or Saudi or Oman, most likely you will find similar provisions
because law in this part of the world is influenced by Egyptian law, so they all contain more
similar provisions. Article numbers.Uh, and, uh, some specific wording could, could change, uh,
but the inherent, uh, the meaning, uh, will remain same across, uh, all the countries. That is
something I have observed. So, uh, and also, uh, remember the law is written in Arabic, uh, in
these countries. So what we are.Everything is English translation for education purpose only.
There are no official English translation to Arabic law. The reason for that is if a case goes to
court, it is always heard in Arabic so so the translation will not come.Will will not be applicable
and Arabic lawyers will argue the case so. So therefore they will refer to the Arabic original test
and give the interpretation and be the case. But we use English translations which are done by
different lawyers.For for education purpose only, just keep in mind that the translation can be
different from one version to the other version slightly because certain Arabic words they may
not have exactly similar English word in the dictionary, so they are using.You know the most
suitable word to translate that contest. But this is good enough for our education purpose to get
the meaning of those clauses and articles.i think with that introduction uh we can now move on
to the topics

1st we need to define what is a contract.I have given here a definition which uh invite in my
opinion covers all the aspects in a contract. There are many definitions. If you look at Internet
search Internet or textbooks you will find many different definitions for a contract.All are correct,
but they, uh, had, you know.They can, they can be slightly different and uh, you know, some,
some definitions may be written in spells, you know, constraints, certain area of business. Uh,
now this is a definition which is very common and could be applied for any contract made in.But
they could come back and contact for or whether it is insurance contract or some other.Uh,
matter commercial. So what is a contract? Contract is a legally binding agreement. So it's an
agreement meeting of minds. Yeah. And also it is legally binding. If it is not legally binding, then
it's not a contract.Contract is a legally binding agreement. Uh, with specific terms there is. There
should be specific terms in a contract. Otherwise it's not a contract made between two or more
parties.

At least there should be two parties. Yes, of course you know one person cannot make a
contract by himself at.Means there should be other party, uh, so that there will be meeting of
minds and there will be specific terms has changed. OK, So between two parties, you can have
more parties in a contract, there can be multiparty agreements, that is perfectly OK, but at least
there should be two parties.In which there is a promise to do something, Yes. In a contract there
is a promise to do something in return for a valuable benefit. Unless consideration, yes.In a
contract, a party is promising to do something in return for something valuable.Which legally we
call as consideration. So let's try to understand this definition in the context of a construction
contract. So construction contract is a legally binding agreement.It's an agreement, you know
that is conductor, there is employer, so at least two parties are there or there is contracted the
subcontractor. So at least there is two parties and it is between two commercial entities. So it is
legally binding.With specific terms, so there are specific terms in the construction contract, time
for completion, the contract price, payment terms, uh, warranties, the performance, uh,
requirement.

All these are clearly specified in the contract. So there are specific terms.Made between two or
more parties in which there is a promise to do something. He has seen a contract, the
contractor construction contract. The contractor is promising to build that facility for the
employer, whether it is a building or a bridge.Brought Dan. Whatever that construction needs,
the contractor is promising that he will build that facility in return for a valuable benefit known as
consideration. So what the contractor get gets in return is the contract price.So in return, ya, so
the contract is promising to build that facility in return, uh, for the contract price is going to get
paid by the employ.Similarly, the employer is also promising to do something what he is
promising to do. He is promising to make a payment to the contractor in return for the facility
that the contractor is going to build for him.Right. So, uh, this promise, uh, flows from both
parties.UH Conduct is making a promise to the employer to build that facility. Employees
making a promise to the contractor to make a payment.And the contractor is getting a valuable
benefit which is conduct price and the employees is getting a valuable benefit which is the
facility that the contract is building. So remember that the the promise.Uh, plus from both parties
and the consideration plus from both parties. So that is how the contract is made and that is
how the contract is defined. Then, uh, when it comes to contracts regarding form of
contract.Can you make contracts orally or or do you have to always make contracts in writing?
What do you think?So the answer to this is.

There is no mandatory requirement that the contract must be made in writing. There is nothing
like that in many of the laws.You can make contracts orally or in writing.The effect on day-to-day
basis, we make contracts orally. When you go to shop and buy some goods, there is a contract
between you and the shop owner. You're not going to write a contract and sign between the
parties to do that, right? You just go to the shop and there is.You pick whatever you want to buy,
come to the cashier, make the payment and go. But there is a contract between you and the
shop owner when you if you use the transport, whether it is provided by public or private
sector.There is a contract between you and the transport provider, so you get onto the bus or
the train. If you buy a ticket, you use the transport and then there is a service provider to use the
service contract.So likewise, uh, we, we have contracts, uh, orally and they are perfectly OK.In
fact, we can even have contracts, uh, construction contracts orally, like, uh, if you want to get
some, uh, minor maintenance work done in your house, uh, let's say your, uh, there is a leak,
water leak in your toilet and you will just call the plumber plumbing company and then they will.

They will inspect the water leak and then they will verbally tell you, yes we can repair this work
but it will cost so and so and then you agree the price and and the and the company fix the
issue for you. Once it is done you make the payment right. So that is a construction contract
delivered orally.But when I say you can make contracts orally, there can be certain limitations
now in most of the countries if the contract is related to transfer of properties.You know, it's
better like a land or a building then that those contracts must be made in writing. So it is clearly
written in the law of the country what contracts must be made in writing.Certain contracts which
are exceeding maybe 10 years, you know, if it is a lease agreement more than 10 years, then
maybe the law of your country requires that contract to be made in rifle.If a contract exceeds
certain amount.Then again, the law of your country may say that those contracts which are
exceeding this amount must be made in writing. Therefore there can be exception. What I'm
explaining is the general principle.

So that is another important method that I should clarify from the outset whenever I talk about
legal principles.I only talk about the general principles because during this session I cannot
cover all the deviation because every law has an exception. That is very famous saying every
law has an exception. So you have to, you have to refer to the law and see what are the
exception. Now for example, when you say that can be.Orally on writing their exception and the
exceptions are those relating to land transactions relating to properties relating exceeding
certain value or exceeding certain duration. Those contracts may have to be made in in writing.
OK, so.So now we know that context can be done orally or in writing. So why then we bothered
to do constructs in writing if it is OK to do them orally, right? Because making a contract in
writing.You know, requests on the first drop to drop those contracts and then negotiate the term
between the parties and then sign those contracts. So why we take off all these efforts? It is
because now.If you make a contract orally and if there are no weaknesses, if if there is no
person who is witnessing that everyone, then if something happens and if the other party is not
this dishonouring his obligations is not performing as a agreed and if you want to enforce.This
contract, then it's very difficult to prove what was agreed between the parties.

OK, if you if you go to the course then the other party might appear and then he might say
something else. Then it is one persons word against the other parties were how the court will
decide. If there are no evidence then the court will have to make a determination based on what
is reasonable right?It's regarding, you know, what has been agreed with in the parties.
Therefore, in order to enforce contracts, it is important that we have the contract in writing so it
is very clear what is agreed between the parties and that can be produced to the court as
evidence. You know, this is the agreement that we signed in writing.And this is what we have
actually. So then the other party will have to challenge the validity of that concern in order to get
away from that.

The challenge in the validity of a of a contract is very difficult. So there are there are some
grounds that you can challenge.On different like for example the person who signed the contract
did not have authority to sign the contract, things like that. But that then you then at least you
know there is a contract in writing then you can to some extent.And, uh, resolve the, uh,
difficulties of, uh, enforcing the contract. So that is why, uh, uh, we do contracts in writing. In
fact, uh, when, when 2 commercial parties, when 2 businesses, when they are involved, they
always try to do contracts in writing because they need to maintain those, uh, records for the
team.And also for counting purpose. So therefore.All, all the contracts that we work with are in
writing. That is a good thing. Then what is the other?Uh, aspect that we need to discuss about
the contract is the terms in a contract. So there are basically three types of of terms, uh, in a
contract. The first two types are also can also be combined together.

Express terms are those terms which are expressly concerned. So when you are, when you
look at the contract, when you read the contract, it is already written in that contract, right? Or if
it is, if it is a oral contract, those terms are already discussed between the parties, they are
express.Uh, uh, dubs, uh, like in, in our construction contract, the contract price, the
specifications, the, all those, the conditions agreed between the parties, these are all expressed
in the contract agreement. You have certain clauses, for example, this contract will be.That one
by so and so lot of those are expressed terms. Then what are the terms in? What are the
incorporated terms?So terms can be incorporated by notice, for example, uh, now, uh, if you are
making a contract based on Pyrrhic, uh, uh, threadbook 1999, then what we do is, uh.In, in Part
1, uh, we will just describe that this contract, uh, that, uh, the, the terms and conditions of pedic,
uh, threadbook 1999.Are incorporated into this contract.

Or the general conditions of this contract shall be, you know, predict 1999 or something like
that. You will explain So what you do.By that is incorporating those terms into your contract
because you cannot simply print that Vedic 1999 all document and bind that document into your
impact. If you do that, you're violating copyrights.No so because that the that is a property of
perfidy. So we cannot reproduce that document without their approval or with without.Uh, uh,
without having an agreement with them and, you know, paying whatever the fees.Ah, but uh,
what you can do is instead of reproducing the same document and attaching that in your
contract, you can simply make a reference to that document and predict 1999 read book is
available. Anyone can go and purchase that document if they want and the contractors who are
bidding for.Project.

They know they have those conditions already with with them.And those contracts which are
incorporated are also express terms, although they are not, you know you can't find them in the
conduct of human but still you can refer to that document and that document will have express
term.Pudosa again another type of viscous term, but they are incorporated by notice.And the
other type are the implied terms.What are employed terms?But here what we mean is the terms
which are implied by the law governing the contracts. Now This is why when we make contracts,
we clearly state, you know, the contract is to be governed by which which law? So normally if it
is, if it is a contract made here.To buy, what we say is that this contract will be governed by the
laws of United Arab Emirates and the Emirati law with the federal law of UAE and the Emirati
law of Dubai. So this is how we describe that in our context.So, so if, if all the laws which are
you know, applicable to this contract from federal law will be implied into this contract and all the
laws which are applicable to construction contracts on the MRR kilo will also be applied.So that
is how you make, uh, that is how the terms can be implied. So they are not written in any of
these documents.

They are not not written in your contract. They are not written in the predict document that is
incorporated by notice, but those terms are implied. So how they can imply into your contract
is.If your contract is silent on on a on a certain aspect, then the law will imply. For example, let's
say just for an example, let's assume that this contract does not explain how to make payments
to the contractor.Then what is stated in the law governing that conduct will be applicable.Now
we've been as we move on, we will learn that there are general provisions and mandatory
provisions of law. So general provisions will be implied on your contract when the contract is
silent on that matter.If the contract is not silent, if the party is agreed expressly on on that
aspect, then the general provision will not be applicable. What is agreed between the parties will
be applicable. But then there are other types of provision.In row which are called mandatory
provisions. So the mandatory provisions cannot be deviated by the parties. For example,
decision and liability decision liabilities are mandatory provision in in law.Low applicable to these
construction contracts.

So that is clearly written. We will see that close later on. And if you write something in your
contract to say that the senior liability is not applicable to this contract.Then that that term is
invalid, so that that will be a point, and then the law related to decimal liability will be implied
upon your contract because it is a mandatory provision.So it doesn't, uh, it doesn't, uh, consider
what the parties have agreed in the contract because you cannot deviate from these mandatory
provisions. I will explain this further as we move on.OK, uh.So in a contract, there are few
elements of principles that we need to discuss, and these elements should be present for a valid
contract to exist.The contract usually they not usually always start with an offer and of course
there should be an offer.The offer can be given in writing orally, doesn't matter, but there should
be offer. So what is an offer?Offer is an expression.By your party.Alpha grilling does.To enter
into a contract.That is an offer.So, so you, uh, a party can express that expression can be, you
know, in words or it can be in writing.And that part is expressing that I am willing to enter into a
legally binding contract with you.So that is an offer. The party who is making the offer is called.
The party who is receiving the offer call Ophiri.

So the offeror gives the offer to Oferi.Right now, uh.Uh, from, from the, uh, uh, con construction,
uh, context now when, uh, a contractor, when he has collected the tender documents, reviewed
them and when he submits his price to the employer.He is making an offer.He's making an offer
to build that facility for whatever the price that he's quoting for and in full compliance with the
tender documents. So he's making making an offer.So. So in that case, the contractor.Is the
opera and the employer? Is the operis the employees receiving the offer from confirmed?But
now there are certain things that we need to distinguish when it comes to offer. One thing
is.What's the difference between invitation to treat and?And an offer, right?Let's look at.SAMA
legal provision now. Now we start looking at these articles from civil court. As I said, law number
51985, there are 1528 articles and only article 872-2896 are purely related to construction
contracts.Other articles they are generally related to other areas of business and some articles
are commonly applicable to all contracts. So this article 134 is something which is commonly
applicable.Uh, and what I have written here, invitation to create, You don't find this in the, uh,
translation. I have inserted these first from my side just to explain that this particular article
relates to a certain legal principle.In Article 13, Voices of Publication advertisement for a current
price list or any other statement connected with offers for orders directed towards the public for
individuals shall not, in the event of doubt, be treated as Gopers, but only as an invitation to
enter into contracts

.Please, if it is a publication, no advertisement publication or or a price list, which is, you know,
distributed, all these things should not be considered as open. You know, for example, you
know, we are putting advertisements on website, on paper, newspapers. If you have some, you
know, something to sell.A property or some item from your house.Yeah, or vehicle, if you want
to sell, you put an advertisement somewhere. So that advertisement is not an offer, it is only an
invitation to treat. So the if a person who sees that advertisement.And is interested to buy your
car, then he will call you, make an appointment, come and inspect the car and then if he is
happy with the price and the car then he will make an offer that he is ready to buy this car hook
and so price.So that is the time the offer is made.The doffer comes from the person who is, who
is, who is going to buy the car from you. So what we have done is just an invitation to print. You
have just published an advertisement. Yeah. So that's the difference.So again, now the, you
know, when there are construction tenders, the contractors. Now if it is an open tendering which
is common in common contracts in Sri Lanka, you might have seen, you know, there are, you
know.Notice the tender invitation notices published in newspapers, right. So those, those are
open changes. That means anyone can bid for those projects or maybe in those in the
Northeast it might say, you know, this category of contractors can be that is any contractor who
is in that.The can be for that those produce. So those are just invitation to take. They are not
offers now in in Dubai or UAE. This this countries. Normally what we do is we send the
employers.Then UH-10 by which, uh, tender invitations to, you know, selected the set of
bidders. So we, they, they, they do the prequalification. So it's selective generate basically. So
in that case also, uh, those letters which are sent to contractors or the letters which are sent by
contractor to subcon factors, uh, you know, RF, RFP or FQ.Request for quotations. These are
all just invitations to treat.

They are not purpose right.Right. And then, uh, how revocation of offer?Revocation means can
you take the offer pack?Yes, you can reward the offers or you can take them back. But there is
one condition. You have to take them back before the other party accept the offer, if the other
party accept the offer unconditionally and if that acceptance has been communicated to you
successfully.That means there is a concern so you can no longer take the offer back. If you
want to, you know, get out of it, then you have to terminate the contract. Then you will be liable
for, you know, breach of contract and, you know, whatever the damages incurred by the other
party because of your breach.You will be liable, so that will then come on the termination of
contracts and it will open up all set of litigation against you. Therefore, if you think you made a
wrong offer.You have to take it back.Before the other party accepts the offer.So again, this is
clearly a strain in the civil court, says here in Article 126. The conducting parties shall retain the
option to resign from the time offer has been made, and the offer shall be avoided if the Opera
refracts it after making it and prior to.It's been accepted by the other party.

So prior to is being accepted by the other party is very important. As soon as it is accepted by
the other party unconditionally, there is a contract and then you, you can only terminate the
contract. You cannot take the offer back. Offer is no longer in existence. It is already expired
now.And how about repetitive occurs in OK, for example, in that scenario, the person who is
coming to buy your vehicle, let's say he makes an offer to buy that vehicle for 50,000 dirhams
as an example and you don't you think that that price is too low, so you say I cannot accept
that.Then that person increased his price to 55,000 for example. So this is a repetitive, repetitive
offer. So he made, made made the first of all you did not accept. Then he made a second
number.So what happened in this situation? Again, these things are clarified in law. It says in
Article 138 or repetition of the offer prior to acceptance and also the first offer and the last made
offer shall be regarded as a valid 1.So as soon as you make another offer, the previous offer
gets cancelled automatically, so the other party can no longer accept the previous offer and the
last mail offer is the valid 1 is clearly a fair.And how about the termination of offer? You know
when when an offer will lapse?

Now, uh, the good practice is when you make an offer, you have to say, you have to clearly is,
you know, state the validity period of that offer. So This is why when the conductors, when they
are submitting tenders, they say they suffice valid for 90 days or 60 days.When you get the
quotation from subcontractors or suppliers, maybe they say this is valid for 30 days something
like that. So when you when you say that when you clearly define the validity period when you
make the offer, then that offer will will be automatically cancelled after that period. So if you say
in the quotation this is.After 30 days the other party cannot come and accept because you have
already clearly stated this is only valid for 30 days. So after 30 days you can. You can either,
you know, submit the same quotation. Now you can change your quotation.But what happens is
sometimes you may not mention what is the validity period right with with your offer. So in that
case how long you should be valid?Now again, uh, civil court, it says uh, in Article 139, if a time
is fixed for the acceptance to be given, the opera shall be bound to keep the offer in such time
expires. The time may be inferred from the circumstances of the case or from the nature of the
transaction.

So.If you do not prescribe the time, then it will come under this provision tool which says the
time may be important, the circumstances of the case and the nature of transaction. So what
happens is now if there is no time mentioned, let's say for example, it's a.Transaction relating to
property so.So I let's say I want to buy a property. So I went and I inspected the property. I gave
them an offer for one million to buy that property and the seller did not empty because seller
was expecting more and then we did not proceed thereafter.I came back and after six months
uh can the seller come and try to accept my offer because during that six months the price has
come down uh. Now let's say the real value of that property is 900,000 instead of 1,000,000,
and now this seller is trying to accept the offer that I made for 1,000,000.Can you do that? But
this is so if this happens, then if it if the matter goes to the core, then the court, the judge will,
will, will look at the circumstances and the nature of the transaction.And then if I prove to the
part that the circumstances have changed when I make your further value, value of that property
was 1,000,000. Now during this six months, the price of properties have come down by 10%
and therefore the price of the property is now only 900,000 and now.I, you know now he cannot
come and try to access my offer, then the court might agree with you because the
circumstances have changed. Therefore, that offer should not be regarded as valid anymore. So
This is why. So in order to avoid those complications, whenever we make an offer, we must
mention what is the validity period. If you mention that, then it is.Is very clear.And the other uh
aspect is the acceptance.

So when when the oppo is made, the other party has to accept the offer unconditionally for a
contract to be made, so must meet the offer. You can't attach any uh conditions with your
acceptance if you attach any conditions with your acceptance.Then it it will become a count
open.Again, we will look at the legal uh provisions. It says uh in Article 140. The acceptance
must coincide with your is must match the offer if the acceptance exceeds the subject matter of
the offer or places a restriction.Oh, where you sit? He shall be regarded as a rejection
containing a new open.It's very clear. So if you deviate from the offer in when you make the
acceptance, then it is regarded as a rejection of the original loafer.And and the acceptance now
will become a count open. Send it in this case now the uh.Othello is the person who is sending
that acceptance and the original party will become a Perry. Now the original party will have to
confirm their acceptance in in order for a contract to be made.Ah, an example from our practice
is now when the letter of acceptance are issued.Uh, we normally, uh, the time normally mention,
uh, certain conditions in that, right. It is not, you know, I mean, I have never seen a left of
acceptance, which is, uh, you know, stating us, you know, we have a unconditionally accept
your offer.And please proceed with the works. Something like that. You know always the
acceptance letter will come with certain process. So This is why at the end of the acceptance
letter there is a page for the contractor to sign and return.And and in that page you will find
wording similar to typing here by unconditionally accept the terms and conditions listed in the
letter of acceptance, so and so.And when, when, when the contractor signs that accepted
statement, that means there is a contract because contractor made an offer and the client made
a count offer in their, uh, in their letter of acceptance and and that counter offer was
unconditionally accepted by the contractor. So the contract is made.So that is how we work
around this issue and always make sure whenever you are sending an acceptance statement
with those conditions, make sure that you get the acceptor, you get a separate acceptance
statement signed by the conductor for the contract to be valid.If it doesn't happen, then, uh, this
can be challenging because it dispute, uh, happens when it goes to court, then the court might
decide there is no contract between the parties because there was no acceptance at all. But to
avoid those complications, make sure that we have the acceptance statement sign.
Uh, consideration, as I spent at the beginning, is the, uh, valuable benefit which comes from
both parties. What is required is it should be sufficient. It doesn't have to be adequate. The
meaning of that is now.As long as there is a sufficient monetary value, uh, in fact, then it is
considered as good consideration. The reason for that is that is now, uh, let's say that, uh,
example. So we agreed to 1,000,000 and I purchased that property and later.I realized that the
real value of this property is not 1,000,000, it is only 900,000. So I paid more than what he
deserves.

Can I go to court and ask the court to intervene and cancel the contract because the
consideration was not adequate?Something like that, No, because the court will not allow court
will check you know whether you have done a transaction, legally binding transaction and there
are, there is clear acceptance and there is, there is clear offer and clear acceptance and there
is.Consideration exchange between the parties and all these ingredients are fulfilled and the
court will upheld that contract and court will not allow the cancellation. Now why this this is like
this is because.If if a party is allowed to cancel the contract based on consideration being not
enough, then the court will be flooded by cases. Every time a party realized that they have
made a bad bargain, they will go to court and try to challenge the court case contract based
on.The value of consideration so in order to avoid this and also the parties they willingly they
entered into contract so forth, they they normally tend to.After all, the pay agreement between
the parties as much as possible, as long as it doesn't contradict with the law of the country, they
try to keep the agreement between the parties and usually they don't try to, you know, intervene
and change that agreement unless it is.Contradicting with any mandatory provisions of law or
public policy, things like that.Right. And, uh, even from, uh, Civil Code, we can, uh, understand
the difference between these two. In article 503 says price means that which the party have
agreed in the consideration of the sale, whether it is greater or less than the value. And the
value means the value, uh, the true value of the.Use neither more nor less. So even the law
recognize the difference between the price and the true value. The price can be different prices,
but you have agreed, but the real value of those could be different.the other aspect is

It's a legal, uh, there is a intention to create a legal relationship. And if a party wants to
challenge the validity of the contract on this ground, then he has to prove that there was no
intention to be at the legal relationship. So the burden of proof rests with the party who is trying
to challenge the contract based on intention to create legal relationship.Burden of proof is very
important in law. I mean burden of proof means the party was claiming has to prove that he has
survived.Uh, legal capacity is another aspect. Uh, not everyone or every company can enter into
a contract. For example, miners cannot enter into contract or they mentally incapacitated, uh,
people cannot intend to contract. What, what is the reason for that? Uh, it is because in
contracts, uh.We are agreeing to perform certain duties, obligations to the other party. Now
these people, minors or the mentally unstable people, they will not understand what they are
undertaking to perform under those under the contract.Now, if you do not understand your
obligations at the beginning itself, that means those contracts are bound to fail.Because you are
not, you cannot deliver those obligations if you do not understand what is meant by those
obligations, what you have to do, right.

So This is why the law prevents those people entering into contracts, because those contracts
are bound to fail. So the law will not allow those contracts to be made and even the companies
which have declared bankrupt.So, so they cannot meet their financial obligations. So in
contracts we usually have this financial obligations to comply with and then those companies
also prevented from entering into contraction only.And then the legality so you cannot anything
to contracts to do anything illegal where is very clearly stated in law in Article 127, it says a
contract must not be concluded for commitment of an illicit act. So if you enter into a
contract.Uh, for committing an illicit that that contract is, uh, not valid. It is it is quite from
beginning at the last aspect is, uh, so this is uh, some uh, uh, an element which is essentially
Pratham in civil law countries.Let's look at the article first.It says in Article 2 for the contract must
be performed in accordance with its contents and in a manner consistent with good pay.This is
2 aspects. The contract must be performed in accordance with its content. You have to perform
the contract as per the contents. You know what is agreed between the artist you have to
perform.Also in a manner Franciscan with good faith, but not only the contents, but also it
should be consistent with good faith.Uh, let's try to understand that, uh, by VFN example now,
uh, let's say there is a contract and, uh, which requires, uh, I mean, you predict 1999. Let's take,
let's take as an as an example. So Vedic 1999 request a notice to be provided.If, if, uh, if a
delay event happens, you know, like for example, let's say in this uh, situation, uh, the employer
has delayed the access to certain area of the project. The employees is still occupying that
area. Maybe there is, there is office that he is using and he has not vacated that office.To be
conducted does not have access to this, uh, area. Uh, now this is a delay, uh, event. You know,
it is a, this employer culpable delay event and it should give if it is impacting the critical part and
therefore if it is, uh, delaying the project.Then it should give uh an entitlement for EOT to the
contractor. However, the contract requires that the notices to be served within let's say 14 days
and then detail particulars to be submitted and then the final particular. So all these notices,
data particulars are subject to stringent notice require.Certificates like predict 1999 contracts
then if you do not serve the notice of the detail particular within that time period, you are
deemed to have lost your right. I mean that is that whether it's but the contract says, let's say
now this contractor.Wha wha what's ignorant? So he did not serve the notice. So he he thought
like you know automatically he will get an EOT because it is obvious that they can employ is not
giving access. But he did not complain with the contract condition.Now let's say now because of
this delay, he delayed the access for six months and therefore the contact is now completed six
months late at the contract will have penalties close. And now let's save the employees trying to
apply penalties. Let's say this hypothetically, let's say this is the only delay that happened in this
project.In all of the areas, the constructor was.He he, he, he was doing his job properly, so there
are no delays from the contractor don't need delays access delay by the employer. Now in this
situation, if you strictly apply the contract conditions, the employer can.Apply penalties because
the engineer cannot avoid extension of time due to lack of notice. It is clearly said in the contract
if there is no notice, no EOT. So the contractor COT request is rejected by the engineer due to
lack of notice and now the employee has applied penalties.Now ask now this, this is in
accordance with the contents of the compact. What employee has done is correct. He has, he
has administrative, I mean the engineer has. What engineer has done is correct. He cannot give
your team without notice and the employer can apply penalty. There is no So what is done is
correct.Now you just go, goes to a civil, uh, court here. And if the constructor can prove that this
is the only delay event and it is purely because of the employer. Now the employer has delayed
the access because of that, I have completed the work, uh, six months late and I, I have spent
more money to, uh, you know.Because of this delay period, because I have to keep maintain my
resources during that prolongation period. And now I could cause now in I mean, instead of, you
know, paying compensation to me, the employees now trying to deduct penalties for me.And if,
if this goes to court, then the court might see this as not consistent with good faith. You know it
is the employer who delayed. An employer cannot make a benefit of his own fault, so the fault is
with the employer not giving the access.And now having done done a fall, now he's trying to
benefit from his own fault by deducting penalties from the contractor. And this will surely be
rejected by the calls because it is against the good faith. So this is how good faith and fair deal
will come into seen in civil law countries if this happens in a common.RP uh, maybe the judge
will agree what the employer has done is correct because that is what the parties have agreed
and if the conductor has missed to serve the notice then it is his fault.So this is how it will be
interpreted in a common law country. But in a civil law country, because of the good faith
requirements, the the courts, courts are more linear, more they try to, you know, apply the
sense of good faith is present or not in that particular situation.So we completed the first topic,
Uh.let me see if there are any

In fact, law, just a few things to discuss, uh, further. Uh, now in contracts, uh, what we are, uh,
what we normally find is, uh, uh, there are benefits, obligations, rights and liabilities in a
contract.So let's try to understand this formula construction contract point of view. Now from
employers point of view, what is benefit? Benefit is the building or that facility is going to get
built, right? So that's the benefit.Then what are the obligations uh, uh, from employees point of
view, Employee has an obligation to provide uh access on time. If it is traditional, uh, you know,
traditional, uh, designed by the employer, then the employer has obligation to provide the
design drawings to the contractor.Uh, if there are any materials to be pressured by the
employer, then yeah, he has to provide those materials on time. So these are his obligations,
whatever status in the contact as obligations, then what is his right? An example for a right is if
the contract is in delay, then he has a right to deduct.It damages, it's a right given to him under
the contract. Then what is what are the liabilities?An example of a liability is to make the
payment. If the contract requires the employer to make a monthly payment then then he has a
liability to make monthly payments. So that is how we understand the compact. So contractors
point of views, what's the benefit?The benefit is the payment he's going to get for building that
facility.That's a benefit. Then what is his obligation?So examples are like he has to comply with
this specification requirements, he has to comply with the time for completion requirements.
These are his obligations and then what is a right?He has a right to access to the site. He has
to. He has a right to receive the drawings from the engineer. Besides Rice, then what is the
example for liability is liable for liquidated damages if he is in delay.That is a liability. So this is
how we understand the contract, uh, construction contracts from both the employers and
contractors point of view. So what you find in, in the contract is in any, any contract is there are
benefits, obligations, rights and liabilities.OK, then when it comes to construction, uh, construct
of humans, there are certain areas that needs to be covered. Uh, for example, uh, the
responsibilities of the party should be clearly defined in a contract because.In a construction
contract, in addition to the employer and the contractor, there will be other parties who might be
having responsibilities, like the engineer or certain companies may have a project manager.
Likewise, for those, the responsibilities of the parties must be clearly defined.And the contract
management procedures must be again explained how how you manage the contract, how their
payments are to be administered and the scope related matters should be clearly addressed.
Specifications drawing.Scope of work and then, uh, the time frame and the Yogi related, uh,
provision time for completion delays, how to manage the extensions, things like that. Variations
should be aggressive.If you want to change the scope of work, then how that is to be governed?
Who has the authority to issue instructions likewise?And disputes if if there are disputes
between the parties, then how doors are to be resolved, how the disputes are to be escalated
and then finally resolved should be covered and.Case of termination you know what are the
provisions applicable? How do you?Administrators at termination of contract for the but on the
rise of each party.Those are the common areas that means reactive. And then when it comes to
contents of path of construction construct customers. Now we normally put them into various
paths from volume one to four. Normally volume 1 is the conditions of contact, the contract
agreement form of tender, appendix to tender and.And the instructions to tenderers, if it is
issued for things like that to come under volume 1. Volume 2 is typically the specification,
Volume 3 normally the BOQ and the pricing schedules. Volume 4 are the drawings, but this is
not.There is no.Mandated requirement that we need to follow these volumes exactly, I mean
picnic type of them. But just want to define what are the volumes and all this has to be defined
in your contract. This is how normally it is practice. Sometimes you might get more volumes like
you know.File an Investigation will enforce off site survey documents, topography survey
documents and things like that. We may be put together under volume 5 which are just issued
for information purpose.Uh and uh.Uh, the differences between the tender and the compact
documents. So, so you put together these volumes in the tender documents and these I should
be conductor for meeting purpose. And there are certain documents that are added to the
tender documents for a contract.Uh, to fight to become a contractor human. These are like, uh,
the, the sign conducted agreement and then, uh, the, the letter of acceptance is issued then, uh,
a copy of that and then, uh, the tender agenda issued during tender period.Cool and if there are
post in that end I should that means after the tender has been submitted if there are further
information that is issued as post and add in that then those should be listed and incorporated.
PTC is part in the clarifications discussed between the parties. Any other post in the
correspondence?It's, uh, relating to the, uh, contract. Uh, so all these, uh, are added, uh,
usually these, these are added in volume 1 and uh, and then, uh, it will form the contract
document.Uh, now, uh, ya, so there are, uh, various, uh, parts in a contract document and, uh,
there can be situations where, uh, we might find discrepancies, uh, between these, uh,
parts.That is.Uh, I mean, that is not a good situation. We must try and avoid this frequencies as
much as possible. Uh, you know, but however, you know, you might find different consultants
working on different disciplines.So the drawings uh, might not be coordinated each other and
uh, and also there might be certain things which are agreed, uh, issued for, uh, during the
duration and post tender. And for various reasons you might have some discrepancies between
the documents.And and when when this happens, then there should be a way to resolve this
discrepancy, right? Otherwise the matter will will be subject to, you know, dispute and then.It will
impact the performance of the contract. So for this reason a predict type of contract, they have
something called priority of documents. So whenever there is a discrepancy then we refer to this
priority of documents in order to resolve the discrepancy.So let's look at the the most commonly
used spin equation, spinning 1987 and 1999 documents. And this is how the priority of
documents is defined. In 1987 contract agreement takes the highest priority, then lack of
acceptance, then the tender submitted by the tenderer.Part 2 Conditions of contract. Part 1
Condition of contract and any other documents.Predict 1999 almost same at the beginning
contract agreement in the top tender particular conditions there were confusion and then any
other documents they have given they have listed them in order specification drawings and
schedules. So BOQ will come under these schedules and other documents.For this
specification take precedence over drawings and BOQ drawings take precedence over BOQ.
So BOQ has the lowest priority. Therefore if it when it comes to you know determination of
scope and all specification and drawings will will determine this code.Not the BOQ.Right. So if a
dispute happens in a predict 1999 cycle fact, let's say it's it's regarding thickness of a slab in
specification itself it should be 200 MMM and in the drawings it says it is 150 MMM.So if this this
discrepancy they are in predict 1999 type of contract then it is clear based on priority of
documents. What is stated in specification is the score. So that means 200 MMM is the scope
that the contractor has to deliver.However, if what is required on site, it's uh, let's say 150, then
the engineer will issue an instruction to, uh, instruct them to change, uh, uh, the thickness of this
platform 200 to 150 and it will be a negative variation.Are we with the same discrepancy
happens in 1987 a type of contract? Then we cannot use the priority of documents to resolve
that discrepancy, right? Because it is specification and the points are listed in the same level.So
how do you resolve in this situation?So this is where there is something called a common law
principle, contract referendum rule.Contract of random rule in common law terms, uh, it is
described as an ambiguity in a document is considered in the least favorable manner to the
person who prepared the document if there is an ambiguity.It should be interpreted in the least
favorable manner to the person who prepared.The essence behind this is the person who
prepared the document. He had the opportunity not to create that discrepancy. So having
prepared a document with a discrepancy, now when it comes to interpretation, it should be
interpreted in the least favorable manner to him.So in construction contracts, who prepare the
contract documents, it is always the employer, right? The employer, not by himself, but he will
get consultants to do the contract of humans, but it is the employer.At end of the day who is
responsible for those documents. So the employer have been prepared the contract documents
and having created this discrepancy within the contract documents should not take the benefit
of it. Now this is the essence of contract referendum rule. So if dispute have if this discrepancy
happens.In predict 1987 or 4 if you apply random rule that means.The contractor's obligation is
to provide 150.So how do you interpret that in the least favorable manner to the employer is to
make the contractor to do the less honorous obligation?Do you all agree? Because if you ask
the contractor to 200 MMM, that means it is interpreted in the in a favorable manner to the
employer. No, what what is required is it should be interpreted in the least favorable manner to
the employer. So how to interpret in the least favorable manner is to make the contractor to do
the lesson of obligation, which is.UH-150 What is required on site is actually 200. Then the
engineer will have to issue an instruction to increase the thickness of the slack form 150 to 200,
therefore positive variation to the contractor.Now control referendum rule we cannot use here
right is a common law principle which is applicable common law countries. So what we can use
here we have an article.Article 266.Uh, of of civil court? Is there a doubt?Here now we are
talking about contracts. A doubt in a contract can be resolved in favor of the obligor. So obligor
is a person who also undertakes an obligation to another by contract. So that is the definition of
oblige. So here, who has the obligation to do that?Slab it is the contractor, right? He has the
obligation to do that particular slap.So even if you go to uh, civil law, uh, Article 266 is there a
doubt in a contract shall be resolved in so a doubt shall be resolved in favor of the contractor
who is, who is undertaking the slap. So how do you resolve that doubt in way of conductor is to
make make him do the less honorable.So even if you go to civil law, so the same, uh, I mean,
in, in common law, uh, contract referendum rule, it says it should be interpreted, uh, in the least
favorable manner to the employer. So it doesn't say it should be interpreted in favor of the
contractor. He says in in least favorable manner to the employer, but in civil law.He says clearly
and directly that he should be interpreted in fear of the contractor.But that's how.The legal
background against around this matter of discrepancies.

OK, uh-huh. With that, uh, legislation, uh.And about the pot structure under this in UAE and
almost in most of the other countries, even in common law countries, we have basically 3 layers
of core. Those are caught up first instance. So that is we are a case of you know as soon as
there is again now.Uh, keep in mind that I'm only describing the general principles here. There
can be exceptions, you know, for example, if it is, uh, uh, fundamental right scale, you can
straight away go to a Supreme Court, for example. I'm not talking about those, I'm talking about
normal civil.Uh, civil law, contract law applicable situation. So the first, uh, if you have a dispute
regarding your contract, the 1st place to go is the cost of business. So that is where you will,
you will submit all the.Yeah, uh, details of your case and both parties will appear and the judge
will hear both the facts and the law, uh, and then the judgment will be given. So all the points of
fact are low, like if it is relating to prolongation cost.Uh, the judgment look at the calculation of
the prongation cost as well as the liability, you know, whether the, whether the employees liable
to make that plantation cost to the contractor and, uh, and also, uh, how much the employee
should pay, uh, as in, uh, propagation cost.So judge will not be an expert to calculate that but
judge will appoint as first to advise him on the prolongation cause there will be delay analyst,
there will be claims specialist so who are registered in the call system. So the judge will
appoint.Uh, an expert and, uh, and then the expert will, uh, give his, uh, input as to the
calculation of the amount and the judge will interpret the legal principles and based on that, he
will make his determination. He decides that the employer has to pay prolongation cost. His
judgment will also instead, how much is to be.If he decides that there is no obligation for
employer to take the prolongation cost, then the question about the valuation will not come into
question.Right. So that is quarter percent stuff. Now if a party is not satisfied with the outcome
that he gets from court to 1st instant, he can register and appeal in Court of Appeal. So this
again in order to file a case in Court of Appeal, you have to do that within a certain duration
after.You after receiving the judgement from the first instant, if you if that period is expired, then
that judgment given will be final and binding. So there are these durations and procedures.Will
change from country to country, and the lawyers who are administrating these people, they're
fully aware of the requirement.So at quarter, first quarter appeal also again the judge caught up
appealed judge will look at the points of facts and no again, so he will disregard you know what
is.Uh, considered in quarter percentage, the Court of Appeal also look at it what not fully
disregard. I mean, the Court of Appeal can, uh, can again look at the facts and know, and he
can, uh, if you want, he can deviate from the judgment given by the.For example, maybe, uh, he
can still, uh, give a rolling that, uh, the employer has to pay prolongation cost. However, the
amount, uh, instead of uh, 10 million, it should be reduced to 5 million because.This touch one
on the points of path could vary.Oh, it's oh oh in uh, or maybe if the quarter passengers are
given a judgement in pay off the contractor for plantation cost, maybe part of appeal might find
based on the evidence submitted to the court, the employees not liable to make any
pronunciation cost. In that case it will be 0. So likewise the Court of Appeal judge can.He can
make a new judgement, he can give a new judgment, and that judgment can address both
points of facts and points of law.Or the liability issues?and if a party is still not satisfied with the
outcome that he gets from court of appeal he has the final opportunity to take his aid if it is in
dubai it's called

Court Structures this is the in Mauritius ,Uk , Canada and Quebec

Systems, uh, uh, in the globally there are two main types, which is common law system
and the civil law system. So we all know what is practiced here and in, in Gulf region is
the civil law system. So civil law system is it's a qualified law, whereas in common law,
the law is not written in the legal courts.Uh, law is made by judges. How they make law,
How the judges make law is by, uh, uh, by hearing cases. So when a case is heard, a
judgment is given. When that judgment is registered in the court system, that becomes
low.So we call, we call them as case law, right? So This is why in common law countries
you when it comes to arguing, you always refer to previous cases, I mean similar fact
and the judgment given in those cases.So if if there is a case which talks to court which
has same similar fact of a previous case and if the parties have values you know that
case as a reference point then the judge will have to follow the judgement given in that
previous case.He cannot unless another situation is different, another facts are different.
In this case, he cannot usually deviate from the previous judgment.So because of this
case law.The outcome, uh, of a case in a common law country is more predictable than in
civil law countries because the judges are bound to follow previous cases and when it
comes to case law, there is a hierarchy.Uh, the the Supreme Court does not have to
follow the judgments given by photography or the court of passenger.But a judgment
given by Supreme Court will be binding upon Supreme Court, the Court of Appeal and
Court of Assistance. A judgement given by Court of Appeal will be binding on Court of
Appeal, the court of circumstance, but not binding one court of important so there is a
hierarchical.That way, and when a new new judgement is given, the previous case can
get superseded and likewise it moves on. So therefore in common law countries the
lowest evolving fast.The law will only change when there is a new civil court that comes
into existence. For example, in the Gray we are still using the civil court law number
5/19/85.Uh, for, uh, governing contracts, so that, that low is now almost 40 years or so,
that means to be updated, uh, it can only be updated when they, when the new civil court
is issued.So likewise, but however, in common law countries, it keeps on updating. Uh,
therefore the common law, uh, the law is, uh, like, uh, whatever the changes that are
happening in the business environment and the, uh, with the technologies and all these
are, you know, captured very soon into the legal system because of the case.Uh, and uh,
in, in civil law countries also, uh, when, uh, lawyers, when they argue cases in court,
they, they make reference to previous judgments. So you can still make reference to
previous judgment in your submissions and all, but.Only difference is the judge is not
bound to follow previous judgments. In civil law countries, the judge can make use it as a
reference only. However, the judge will look at the civil court and give.His interpretation
to the civil, uh, the, the provisions in civil court as applicable to this case and based on
his interpretation, he will give a judgement. Therefore, in civil law countries, you, you
might get two different adjustments.For two different cases which I have in same facts
because it depends on how how the noise interpreter during that hearing and and based
on the submissions made by the parties.Uh, now although we have these two distinct,
uh, system like common law system and civil law system now, the common law
countries also now increasingly getting some of some areas of their, uh, low
codified.Like in a it's a common law country but now some areas like health and safety
related law, these are qualified. So there are different legal posts that needs to be
adopted. So therefore it is a mixed system.Not purely a common law system, but
however the the law relating to contracts is mostly common law still in those countries
as well.OK. Uh, again, uh, then on, uh, the, uh, the important provisions, uh, that you
must, uh, you know, go through, uh, uh, into construction contracts is, uh, the law
relating to operation and the law related to contracts and the low lows relating to labour
to labour.Construction is a labeling intensive industry for the laws related to contracts. I
think we are covering to some extent during this session, but we familiar with, I think our
patient there might be further revisions to this law. I haven't checked recently. So check,
check on that as well.and we spoke about these general

Now in more detail, so general provisions are those provisions in the contract, uh, now.Why we
have to mention, uh, you know, when we make a contract, we must mention what is the low
governing that contract, right? If you don't mention that, then you will end up in an argument.
Now if a dispute happens, that means.Be the for the court of the operator. Before they even
start looking at the dispute, they will have to 1st decide which law should be applied onto this
contract.Then the parties will make submission. Maybe, uh, now, especially, uh, in, in Middle
East countries, you might get parties, uh, you know, from different countries. Like for example,
let's say this development is happening in Dubai and the employer is, is an investor from, uh,
uh.Saudi Arabia, that's it, using his money in Dubai, so he's the employer. So the work is done
in Dubai, the employees from Saudi Arabia and let's see, the contractor is from UK suffering
contract. It can happen, right? There might be. So now there are three parties.That I mean there
are, the two parties involved are from Saudi Arabia and UK and the work is done in United Arab
Emirates. So there are three countries in one here now.Now if you do not mention which store is
to be applied to govern this contract, then the contractor is from UK. Maybe he wants to apply
his UK law to this country.The employer from Saudi Arabia, maybe he wants to apply the civil
law from Saudi Arabia to this case.Now the work is done in Dubai, so maybe then the judge
might decide no we since since the work is done in Dubai and the contract is made in Dubai, the
laws in Dubai should be applied. So likewise you will enter into these arguments if you do not
mention clearly what is the law governing governing.So this should be agreed from the outset
and mentioned in your contract agreement and.And the other thing why we mentioned, uh, why,
why the law should be implied on to contracts is if we, if the law doesn't imply into contracts,
then you have to write everything in your contract, right? If you try to write everything in your
contract, we, you know, the contract document would be huge. It will be, I mean.If it is, uh, if it is
to be printed, then we will have to be transported in several vehicles. So we so in order to avoid
that. So we just simply say this contract is governed by so and so low. So whatever the general
provisions in that law will be applicable to your contract.For example, regarding the formation of
the contract, you will might not write in. In the contract right of the formation is to be decided.Uh,
maybe termination, you will not capture in detail in your contract. So, so if you, whenever your
contract is silent on that aspect, the general provision can be implied on to your contract. So
that is, that is the benefit of.Stating what is a low governing government in the contracts. Even if
you do not mention, there should be some law which governs the contract. The contracts cannot
sit in isolation. There should be a low governing that contract. If you do not mention then it will
be up for the operator then just to decide which door should be up to.Coming to mandatory
provisions, as I said, certain uh, provisions, uh, in law are mandatory and can be deviated by
the parties. Let's say what they say about this in UAE civil court in Article 31, it says a
mandatory provision of law shall take precedence over contractual inter stipulation.The scale
says if it is a mandatory provision then he should take procedures over what is agreed by the
parties in the conference. Yeah, if the parties have not agreed anything in the contract regarding
that, then it doesn't matter. So mandatory provision will will be applied anyway.But if there is a
contractual agreement, then it will get so president by the Mandarin provision. So what are
those mandatory provisions for example, I mean it doesn't say here clearly this is a mandatory
provision and all. So we have to see the wording of the article and then decide whether it is
mandatory or not. Now this coming to this senior liability Article 880.He said any agreement, the
profit of which is to extend the contractor or the architect from liability or limit such liability shall
be wide. So when they say if there is an agreement between the parties to, you know, avoid this
decision, liability or limit the lead senior liability shall be wide. So that means mandatory
provision. You cannot, you cannot.Avoid the senior liability.It says in Article 218 regarding
termination of contracts, a contract shall not be binding on one of both of the contracting parties
despite its validity and effectiveness. If there is a condition that such party may cancel it without
mutual consent or order of cost. If you have any provision where the contract can be terminated
by employee default and all.Employee default or control default. That is not valid because there
is a mandatory provision in UAE law which says you can only cancel the contract by mutual
consent or order of order of a call. Only two scenarios.Other than, you know, by performance. If
the contract is concluded by performance, that means that can come to an end. Otherwise it can
only be cancelled before the before fully discharging only by two instances, by mutual consent
or by court order.Uh, regarding uh, liability for harmful at cooperation of contract, is there any
condition perfitting to provide exemption from liability for harmful acts? Shall we watch?So you
cannot write a condition in your term in your contract, you know the contract, the employer is not
liable for breach of contract or something like that.If you if you write something like that and it is
not valid.

Let me check if there are any questions.

Let's say, for example, I haven't checked this, Let's say for example, in, in general provision, it
says, uh, uh, the defect liability period is, uh, one year. Let's say if if a contract has done some
work, you know, he should be liable for the defects for a period of one year. Let's see this is
your permission if the parties have agreed in.Is contract the defect liability period is 2 years,
then what is agreed by the parties will take precedence over what is stated in general
permission. That means the difficulty period for that particular conduct will be two years. Let's
say the parties have not defined the defect liability period in the contract, then the general
provision will be applicable and the.Period will be one year.So that is just an example. I haven't
checked, uh, uh, you know, what is, uh, the related, uh, aspects of that in law, but this is just to
explain how the general provisions will be applied.

In contract it is mentioned general liabilities of the contractor. Is there any interpretation in law
for this?Uh, there is no interpretation in law like, I mean, if, uh, if the contract uh, contains
express provision relating to the general liabilities of the contractor, then those liabilities will
have to be discharged by the contractor.You don't have, I mean.Interface, I mean, we, we go to
law, uh, I mean, uh, in case of, uh.I mean if the gun contract is very clear and it is expected
written, then what is written in the contract will will have to be on earth. We we go to law only in
the case when the contract is silent. If there is no.If, if, if there, if there are no express, uh, terms
and between, between the parties, then only we report to the law, right? And, uh, and also in the
case of mandatory provisions, then also we will have to apply the law provision, but that is very
rare because these contracts are corrupted by.You know, they, you know qualified legal
professionals. So they don't normally incorporate terms which are not, which are against the
law, right. So therefore you will not for example, I haven't come across any contract which says
this senior liabilities are applicable to this contract.Because they know it is not, it will not be
upheld by the law of the country because it's a mandatory provision, right? So therefore you will
not find those terms in your contract. But yeah.

OK, regarding boilerplate terms, uh clarification is given to address various legal and
administrative aspects.Now in law, I think I'm not sure whether this is what the question is
about. Now, you know, we, we have certain.Uh, law provisions called proceed procedural law,
you know, those are just the procedures to administrate cases involved and it is not to this, uh,
adjudicate the dispute between the parties. So we have two types of local procedural law and
the substantial law. The substantial law is what we consider like.Law number 51985. This is a
substantive law, you know like it, it is. Those provisions are used to interpret the relationship
between the parties when it comes to procedural law. Procedural law are just to explain the
procedure.As to how a case is to be made either in the core system, that is what we are asking.
I think this is the definition between those two.

Can you please provide an example for contract referendum rule? I think I gave that example
about slap thickness right? I explained it in very detail. It is 200 and 1:50. So under contracted
random rule the contractor will have to do 150.Because constructive random role says it's it
should be interpreted in the least favorable manner to the person who prepared the document.
The employee is the person who prepared the document, so he should be interpreted in the
favorable matter to the employer. So the constructors obligation is only to do 150.Uh, someone
says like slides are moving, so thank you.Problem with slice please join again then it will resolve
the issue.Is a termination on employer convenience acceptable as per termination article? No.
We will discuss about termination later. There is a flight about it.

Standard Forms of Main and Sub Contract

Types of Standard Forms Of Contract

Subcontracts. So types of standard forms is you know there are various standard forms used
in.Dusty, uh, just saw a slide about it. Uh, when it comes to standard forms, there are different,
these are different entities, uh, who have published, uh, standard form. So they have spent, they
have done lots of research, engage lot of practitioners in developing these standard forms. They
have their.On strengths and weaknesses.ACT joint contract by vinyl, they have series NEC new
engineering contract. They also have a series of contracts and predict is the document that we
normally use here in Gal and Ferric they have 87 version which is still practiced here in some of
the government.You said, uh, organization, they still practice 1987 or related, uh, versions. Uh,
we spoke contracts model based on this predic 1999 is the most commonly practiced document
here and predict 2017, which was introduced very recently.But it is yet to be widely adopted by
the practitioners. I mean overtime they will migrate into predict 2017 within next, you know, 5 to
10 years.Uh, so beautiful homes of contracts are those contracts which are, you know, prepared
by each organization to use in their contract, for example, to buy municipality for transport
authority, to buy Civil Aviation, Abu Dhabi municipality and almost all the leading developers
operating in Dubai and Abu Dhabi, they have.On bespoke condition like Mark, uh, Dubai Hall is
Nakhil. So all all these developers, they have their own.It's a set of conditions, but the good
thing is all these bespoke conditions, they are model based on Pyrrhic standard conditions,
whether it is Pyrrhic 87 or Perdix 1999.So when you study Physique 1999 that means you have
covered almost all the baseball contracts which are used in in UAE and and then you can only
study the deviations between the standard form and the base for condition.To administrate
those kind of tracks because you already know about, you know predict standard version and
when you know the deviations then you know about that base work form then you can
administrate it accordingly.So be familiar with the predicate 87 and predict 1999 documents and
the differences. I will not explain in detail here. It also be familiar with the differences between
Phoenix 1999 and 2017 version which is which is a common question can come as a common
question in the APC interviews.Uh, there are new provisions added regarding advanced
warning, which is very, uh, good aspect in particular 2017 and dispute avoidance has given
more prominence concurrent delays. I was now address, although it doesn't give full uh,
procedure, but at least there is uh, some recognition given to the concurrent delays
under.Contract is also addressed. Employees claims are also subject to notices. Previously only
the contractors came for subject to notices. Now it is more neutral. Even the employer if he
wants to claim money against the contractor has to give a notice. Force Major is now replaced
with exceptional events in 2017.Contract and the relative field equation. So usually the areas
which are amended are the notice provisions and and and the notice provisions not only for the
notices but also for interim particulars and the detail particulars.Also, the operation rules are
usually amended in predicates international rules, whereas in baseball contract we will find local
regulation rules and and the institute whether it is the act Dubai operation.He doesn't love to
incentive or whether it is Abu Dhabi abstraction center likewise.Uh, so uh, and the price
fluctuates in clothes are usually, uh, deactivated in uh, baseball contracts.So study the
differences and be familiar with that question. Is the panel asked you to explain the differences
between related query question and your BS for contract? And what are the benefits of standard
forms of contract?Uh, so.If you don't use a standard form of confront, that means you have to
develop your own form of contract, right? So developing your own form of contract can be very
lengthy process and also legal fast will be very high and also there is call for mistake is also
very high because.This is standard forms of conduct. They have been in existence for over a
century, uh, more than 100 years. And they have been gone through several modifications,
provisions and, uh, and, and, and large number of, uh, experts are involved in developing these
conditions.And, uh, and all the others that were found in the previous, uh, divisions have been
addressed and rectified in the subsequent, uh, revisions. Therefore, this is standard forms have
gone through, uh, you know, the period of time and it has, uh, withstood the test of time over
this period. They have been.You know, adapted in, uh, so many projects, uh, so, and also
parties are very familiar. So, so the score for disputes is very less because they know how these
provisions are interpreted.Uh and uh, one of the most important, uh, benefit is in now in the
standard forms, uh, now in contract, but we know what we do is we are transferring the risk
between the parties. So in a standard form, we call the risk is.Transport to the party who is in
the best place to mitigate the risk.So because it is, it is prepared by neutral parties. So they they
think about a real construction project and then they decide, you know, whether it is contractor
or the employer who is in the best position to mitigate the risk.And then they assigned the risk
accordingly. For example the unforeseeable underground physical obstructions. Now at the time
of gender. Is a conductor in the best place to mitigate the risk? No, because contractor has not
even started work on site and he can unless it is shown in any of the documents issued to the
contractor.Then he will. There is no way that he can find whether there are any underground
physical obstruction. He will. He will only discover them if there is any. When he starts digging
for escaping, for digging for foundations or the basement construction, then only he will find
these obstructions, if there is any.And As for the pedic standard version, if there is some
possible fiscal obstruction which is found during construction, then if that is required to be
relocated or remote then dispose of site then the compactor will be entitled to additional time
and cost.SSS under the gun track. Sometimes in baseball contracts they try to pass this risk to
the contractor. So in that situation what happens is the risk is transferred to contractor who is
not in the best position to mitigate the effects at the time of fighting. So at the time of fighting
then the compactor will have to allow some.Contingency within his contract price because he
does not know if if this underground physical obstruction happens then he needs some money
allocated within the contract price to deal with that problem. So now during construction you
might or you might not find this underground physical obstruction. If you find underground
physical obstruction, then the contractors already allocated.Money against that which he can
utilize in order to resolve that situation. But if you do not find any underground physical
obstruction, that means the compactor can keep that in his pocket, so he is benefiting.Instead
what the standard form says is I mean as per if you if the employer adopted the standard form
that in that situation the employee will have to only pay if if the contract actually finds
underground physical obstacle.So likewise, there are many other instances where the, you
know, risk is transferred not in a favorable manner because the employer prepares these
documents, they try to pass the risk to the contractors. So eventually the employee will pay a
price.Because the contractor, when he, uh, when he gets the tender of your month, see, we look
at the conditions and identify all this risk items and then accordingly price them within his
standard price. So it is not to the benefit of the employer by transferring all the risk to the
contract. They should be kept with the person who is in the best position to mitigate the risk.A
uh, couple of, uh, aspects on uh assignment and, uh, novation.What is assignment and what is
novation?In assignment, what happens is a party is transferring his right to another party.Now,
uh, because of uh, puberty of contract.You know that they have been not, uh, there won't be
any rise. So applications imposed on other parties, uh, we who are not party to the contract, like
for example, if a party A&B are entering into a contract, there should not be any obligation or
right on party C, right?So this is purity of contract with the the Kentucky based meeting those
two parties on now in assignment what happens is.A party is transferring his life to another
party. For example, let's say.Uh, uh, uh, now in, in, uh, in contracts, when the contract is signed
between the employer and the contractor, uh, the right to receive money is with the contractor
right when, when they undertake the work.Uh, first he will get an advance payment, then once
he start completing his Cisco, uh, work, then he will be entitled to interim payments. So all these
payments are to be paid by the employer to the contractor. The contractor has the right to
receive money. The contractor can assign this right to his bank. The what the contractor
does.As soon as he gets appointed, the contractor sends a letter stating that.Uh, uh, any, any
money which is becoming, uh, due and payable, uh, to us under this contract are to be
transferred to so and so account held by our company in so and so bad.So this is the this letter
is sent and once that that letter is sent, then the employer instead of paying the money to the
contractor, the employee can pay that amount to the bank. So this is assignment. So the
contractor has the right to receive money under the contract. He's assigning that right to his
bank.To receive money, another one is collateral warranty. Now when the contractor.Uh, uh,
purchase materials from a supplier, the supplier will give a warranty to the contractor. Right
now, uh, if something goes wrong with those materials, then it is the conductor who has the right
to claim warranty.Against those materials. Now this warranty the contractor can transfer to the
employer. So that is a call of our warranty. That means the employer gets the benefit.To go after
the supplier directly bypassing the contractor. For example, maybe after sometime the contract
is not in the market, may be suffering contract then he has now gone away and you can't find
the contractor. So in this situation the employee should be able to let's say this is regarding
waterproofing and the warranty is 10 years. Normally waterproofing work they provide.Now after
five years you can't find the contractor. If what did it happen then the employer should be able to
pay in the warranty from the water propane supplier.So this is how the uh, assignment happens
in real life, uh.Just look at some predict provisions relating to assignment itself. In predict 1987
the book the contract shall constructor shall not without the prior consent of the employer
assigned the contractor any part they are of 1987 it says.Now normally for assignment you don't
need the consent of the other part. Normal.Right. Uh, because you're only assigning a right,
you're not assigning any obligate. You will still keep your obligation, you will still, you will still
discharge your obligations to the other party. Only the rise can be assigned. So normally you
don't need the consent of the other party, but construction contracts when it comes to
construction contracts in PDK 87.It says confrontation not assigned without the private consent
and the employers contractor has been prevented from assigning without the employer's
consent. In predict 1999 it says neither party shall assign the whole any part of the contract
benefit or interest in under the contract. So it is not only the contractor now in.In 99 it is more
neutral. Both parties cannot assign.However, they can assign may assign hollow any any part
with the prior agreement of the other part. If the other party agrees, you can assign at this all
description of such other party. That agreement is at this all description of the.Such as other
party, other party can say no, then there is nothing this part can do because it is at his sole
discussion.And then the second scenario is me he can assign any party can assign as security
in favour of Bank of financial institution, assign his right to any money is due or become new
under the contract. So this is the scenario I spent because contractors when they get the
contract they need some.Facilities from the bank, they want uh, to open the left of credits they
want to provide bonds, guarantees advance payment bonds performance bond. So in order to
provide this financial uh, securities, the back will also will will need some security against uh,
those.So the so the security normally the bank ask, ask is any money which is becoming new
under this contract should be transferred to our account. Then only we will give you these
facilities. So that's an agreement between the bank and the contractor. And in order to that
agreement, the contractor can issue this letter signing his side to receive receive money.To the
back. So in order to do that, you don't need the consent to the other party.Only two instances,
yeah. You can assign with the agreement of the other party, or you can assign to the bank
otherwise. Otherwise you can't assign construction contracts.Then what is Novation?
so novation is
Rights and obligations remains with the original party and innovation a party is getting fully
replaced. Let's look at an example. The famous example is the dewarping subcontractor. Now
you know in.Uh, in, in, uh, in contracts, but firstly enabling contractor can get appointed and
then the enabling contractor will have to uh, appoint uh, the work in subcontractor uh, to
undertake the dewatering score. And once the enabling was conducted as completed his work,
the dewatering contractor has to still continue his.Obligation until the building is, you know, the
structure is built to, to the extent that it can be planned be a water pressure. Therefore, the
working activity has to continue. However, the enabling conductor has completed his work. Now
he wants to leave the site and agree his final account with the employer.Now in this situation,
what they can do is they can find an innovation agreement, novation. In the case of novation,
uh, uh, we know both parties must agree. You can't do novation without the agreement because
they should sign a new agreement called innovation agreement.Now, in this, uh, uh, the original
party is the devoted subcontractor and the remaining party is, is the, uh, sorry, original party is
the enabling works contractor, new training, remaining parties, the new subcontractor.So there
is all contract between the enabling works contractor and the deworking contractor and the new
party is the main contractor who is appointed now. So what they can do is they can sign this
novation agreement. So the all transaction between the.Enabling was conducted under
devoping. Contractor will be cancelled and a new transaction. A new contract will be established
between the dewarting contractor and the main contractor.And we, uh, enabling contractor
being this contractor.And going forward, the contract will be between these two parties and
contractor and then devoting subcontractor. So in order for this to happen smoothly within the
standard document for main contract.Uh, the employer must, uh, mention the details of the
enabling works in subcontractor hired by the enabling works contractor so he can write, you
know, so and so companies appointed as the subcontractor and they are, they are raised as
follows so that the main contractor can include.And price for the dewoping.Activities within his
standard price and and if he has any objection regarding this devoting subcontractor, he can
raise the objection at attend this stage itself so this matters can be resolved. So what's the main
contract is signed? That means all details are provided in the main contract. Then the main
contractor can cannot raise any objection.Uh, and the main constructor, we have to sign the
innovation agreement at the Olympic conductor can, uh, uh, you know, finishes, uh, contract
and he can empty the final account and leave the site.Uh, Lacroix intent.So first of all, uh, what?
What is a laptop intent? Let's try to define this, uh, before we talk about the purpose.uh so

In writing because it's a letter, right that I said it's in writing and expression in writing of a part is
present willingness to enter into a contract on a future day. That is a letter of intent. It's a
expression of expression in writing of a parties.Prasant intention. It is prasant intention to enter
into a contract on a future day. That intention can change. That is why we call it present
intention. So why we issue? What is the purpose of electropintent now in construction? This is a
lengthy protocol.Now people developer when he wants to embark on a development. So first of
all he might be debating which development to do, whether it is commercial shopping mall or
whether to build, you know, villa community or whether to do some medium to, you know, high
rise residential powers, you know, depending.On the amount of money he has, there are
different ways that money can be invested and there can be different projects that can be done
right. So he will be doing his feasibility studies, initiate the spending few months that you know,
engaging with the specialist to do those studies and then once he has finally decided we might
find out development he's going to.Take this then, uh, he will have to then appoint the, uh,
design consultants to develop the design, right? Starting with the concept design and then
moving on to the schematic, uh, stage and then, uh, onto the detail design stage.And then once
that is, uh, approved, then only the documents will be produced. And, uh, once it ended up
humans are done, then they will have to plot the tender. And then, uh, so all these process now
from, uh, from the initiation of the project.The developer may have spent about easily about 12
months at least on this feasibility studies and then the design process.Uh, what when it comes
to detail design stage, now the employer might be, you know, starting to, uh, you know, prepare
their commercial brochures and then starting to market this project. Maybe you want to sell, uh,
the project to the prospective.So, yeah, so that means the employer may have doubtfully define
the project or the specification. Everything is agreed at the detailed design stage and now he in
order to get some money.Invested by the investors, now you see it started selling the property
and now he's committing a delivery date to the these investors or the buyers, right? Because
without commitment fundamental delivery date, they will not know, no one will.Uh, invest
money, uh, however, the contract is not yet appointed. Now he still has to go through this tender
process, uh, plotting tenders and 10 tendering period might take couple of months at least, uh,
answering queries and then once the window returns, uh, back then the PTC process another
one or two months, so.You might be spending time another four or five months into the tender
process now, but he still hasn't appointed the conductor. But now in principle he has short
disturb. You know who is going to get the contact, but there are still certain things.Is that do we
finally agreed, maybe they haven't agreed the contract price yet, there are value engineering
still in discussion or maybe you know there are some other aspects relating to the contract are
not finalized but in principle.Employer knows that this company is going to get the compare. So
in this situation what the employer can do is because he has already committed the date to be
bias, now he can be not afford to delay the delivery of this this project.But at the same time we
can't, he's not in a position to issue the letter of acceptance either. So what we can do is he can
simply issue a laptop intent so that the contractor can get ready and he knows now this contract
is coming in his way, so he can start contacting his suppliers, shortlisting and then getting.You
know, his people organize, uh, starting to interview people and uh, planning his resources, you
know, all these preparatory work we can start doing so that when that happens, as soon as the
contractor gets the letter of acceptance, then.He is ready to persist with the contract
immediately. Otherwise all these prepared to work will also have to be done after the electronic
acceptance is issued. So in order to get those couple of weeks, maybe save. That is the
purpose of the property intent.So the top intent if it is issued in the in the correct manner, it will
not constitute an acceptance of an offer made by the contractor. It will only communicate that
we.Uh, we have an intention to enter into a contract with you on a future day and so that you
can start preparing, uh, you know, for this confirm. So that is the only purpose.However, in real
life, what happens is sometimes laptop intent is issued and the employee, uh, employees
expecting the contractor to do some work on site, maybe after the site clear the uh, vegetation,
uh, clear the clear the area. There are some trees to be remote, you know, make the site ready,
basically do the hoarding around the site.And if there are in access source to be done, you
know all the initial work establishment site establishment work, he might want the conductor to
proceed. In that case, it is not not a letter of intent in pure sense because the employees really
requested the contractor to do some work.So if, if the, uh, employees letter, uh, is issued in
such a manner that, uh, the employees infecting the conductor to proceed with some work, that
means, uh, there is an obligation to pay the contractor does some work. And eventually if
something happens and this contract does not get, uh, awarded, uh, to this particular fan factor
for some reason.Maybe they could not be on the final five, so maybe time for completion. They
couldn't actually, which is considered as an essential term. Uh, then there is no contract made.
So in this situation, the employer might then proceed with the second lowest. Now the second
conductor is going to come to the site. He doesn't, he doesn't have to do the same work. It is
done by the original contract.Now he's ready for him to proceed. That means the does not have
to pay the second contractor money for those site establishment work. In this situation, the
employees taking a benefit, right? So having taken the benefit of the work which is done by
repulsion factor, the employee cannot deny the payment to the first contractor therefore.There is
an application to pay, uh, if the, if the employer clearly made a request for the first contractor to
undertake some work and the first contractor has done that work and that work is beneficial to
the employer, then the employer has an obligation to pay. This is called quantum medic
principle. So on the quantum merit principle.What what happens is, I mean common law
definition for this is a reasonable sum of money to be paid for the, you know, work done by the
services completed when the amount due is not stipulated in a legally binding contract
because.Uh, because it is a little, so there is no legally binding contract, but uh, under, under
the common condom merit, uh, principle, uh, there is an obligation to pay a reasonable sum of
money for the work which is completed by the other party.Ah, we can see some articles from
civil court also. First of all, in article 141 it says regarding formation of contract, that contract
may only be made upon the agreement of the two parties to the essential elements of the
obligation.And the other local conditions which the parties, uh, regard as essential. So that
means, uh, you know, for example, time for completion contract site is done. So if the parties
have not agreed to these residency, that means there is no contract.Regarding Quantum merit
article 888889 Now you can see here these are articles from mobile section section. I'll tell you
at the beginning article 872-2896. These are specific articles related to construction work.It says
if the price for the work is not specified in the contract of Fair, remuneration together with the
value of materials provided should be given. The even Civil Court Makwala Law clearly says if
the price for the work is not specified in the contract, the fair remuneration together with the
fair.If they are profit, they are profit and the cost should be uh paid. So now when when there is
a yellow eye situation, that means there is no contract price. Agree right. I mean that situation
we can.We can interpret that situation to come under this clause because if the price for the
work is not specified, the price for the work is not specified because there is no contract agreed
between the parties in that situation of Fair profit and the cost will be paid. As I said, quantum
merit principle in common law are reasonable sum of money to be paid.For service event data,
work done when the amount give is not stipulated in a legally impossible contract.Uh, we can
also use unjust enrichment principles, uh, to explain this situation. I'm just enrichment happens,
uh, when a party is enriched at the expense of other party.In a situation that the loss is as
unjust, so that is unjust in this one. If a party is enriched at the expense of other party. In
situations where the loss is loss, loss is as unjust. So in that situation what happens is if
the.Employer is allowed to take the benefit of the bus contractor and not pay him. That means
the employer is enriched at the expense of the contractor and that situation is not allowed in in
in law.It's called unjust enrichment.OK, that let's discuss about performance forms and parent
company guarantees and things like that. So performance security bond, what is the purpose?
The purpose is basically. As you know the name says it is to ensure the proper performance of
the contract by the contractor. In order that the contractor performs the contract as stipulated in
the contract, there is a guarantee obtained by.The employer and this guarantee or the bond is
given by a financial institution and it has a monetary value.But those are the specific features
applicable to a performance security. It it is given by your financial institution and it has a
monetary value. The value usually is defined in the contract itself. It is.Stated in the Sometimes
it is stated in Part 2 or sometimes it is stated in the appendix tender and the amount usually is
10% of the contract price. It's not a fixed amount. The parties are free to agree the amount of
performance one and even whether to take a performance bond or not is up.Is is at the solve
discussion of the employer. If the employee decides that he doesn't want a performance 1, he
can relax that requirement and he can he can amend the conditions in Part 2 stating that the
performance function will not be required for this contract and then there will not be an
obligation for conductor to provide performance fund because providing.Performance point is
partly it has to be taken from a recognized Bank of the financial institution and they charge for
for issuing this performance fund usually about two 3% per annum of the value of the
performance fund which is can be you know but.Uh, expensive for a bigger contract.However, it
is advisable to take a performance want to protect the employers interest because employee will
be making interim payments and if something happens at the contractor runaway from the
project then at least the security is there for the employer to recover some of his losses if not
full.Therefore, it is give and take employee will have to pay a premium, uh, in the contract price,
uh, because the contractor will be pricing his cost, uh, of the bond, the price itself. So the
employee will eventually pay that cost at the same time it gives protection to the
employer.Therefore, the amount has to be kept in a reasonable range. What is the industry
standard is 10% of the contractors. Also, the wording of the performance point is clearly given in
the contract. One feature is these performance sponsor unconditional on demand.But wording
will clearly state this requirement. What is meant by unconditional demand means as soon as a
demand is made without any condition, the back has an obligation to pay the employer. They
say the performance fund value is 10 million.Absolutely, that's the employer Make a demand. If
the employer send a letter that I want to encounter this one, please pay 10 million to my friends
over count. The bank has to immediately pay no questions asked.Unconditional on demand
yeah, even the employee can encash the bond in several installments like, you know, he
doesn't have to go and encash the bonding pool at one go If if what the employer considers the
loss suffered by him is 2 million instead of 10 million, the employee can only in cash 2,000,000
out of.10 million, right, because the employer when he is encasing the performance fund for
encatching performance fund, first of all, it's a serious action. I mean the employee will not go
and encase the performance fund for each, you know, small breach.Because if you encash a
performance one, then, uh, that will be a very bad uh, uh, record in the contractors, uh, uh,
banking history. So when, when this, uh, when the other banks get to know about this, then it
will be very difficult for that particular fun factor to obtain.At one in future because the risk
associated with that will be very less in that situation, in order to provide a bond in future for this
particular contractor, the bank may ask them to deposit the same value of the performance
bond in their bank. For example, if the value is 10 million, the one value the bank might ask you
know you have to deposit 10 million.In a fixed account and keep that with the bank until the
expiry of the bomb. So so therefore it's a serious situation. The employer will only and the other
thing is if you unlawfully invest the performance bond, then the contractor will surely dispute this
will go into our patient and litigation.To prove that the conductor has employer has unlawfully in
case the one depot when employer in case in the bond, he has to make sure that there are
there are enough evidence to prove the contractor's default and because of that there are
enough evidence to prove that the client has.But loss, all these evidence should be present and
as soon as the action is challenged in the court, the employer will have to prove all this to the
court. Therefore, the actual loss occurred by the employees 2 million. The employee will not
simply go and invest 10 million because he will not be able to prove that record. And if that
happens, the.We'll have to pay it back to the contractor with interest if the interest is allowed. So
this will go as a you know, back history to the employer if it if he does unlawful in cash one
because in future then whenever a bank is issuing.A performance one to that particular
employer. The bags will also be very careful that they will increase their charges and the
employee will eventually will have to pay higher charges in order to get a pot. All these are
commercial things you know. There is check and balance on all aspects and it has to be
managed in a proper and professional manner.Other aspect Now this instead of performance
one. Sometimes some companies they they opt for parent company guarantee. But these
parent company guarantee will not provide the same level of security as a performance bond. In
parent company guarantee, there is no monetary value and there is no.Bank of financial
institution involved. So this happens usually when, uh, a new company in the market when they
try to enter into contracts or branch of a foreign company, you know, where they, this tranche
does not have much access here locally.All these, you know, joint ventures which are not
incorporated. So in those situations the employer might ask for a parent campaign guarantee.
So here what happens is the parent company guarantee simply giving a guarantee that in case
if they are subsidiary of the branch does not perform the contract, then we will make sure.Can
form that's that's only so if if if there is something to a strong and then if the employer claims
under the parent company guarantee, then the parent company guarantee simply has to appoint
another contractor to do the work. That's all. He doesn't have to pay the employer or anything
like that.Uh, sometimes you can ask for both parent company guarantee as well as the
performance security. So it all depends on what the employer wants and how. How risk averse
is the employer?Other forms of guarantees like guarantee and advanced permanent guarantee,
we will discuss as we move on. In fact, we will discuss now advanced payments. Uh, what is the
purpose of advance payment?

The purpose of advancement is. At the beginning of a construction contract, the contractor will
start incurring cost, right? He has to establish the you know he has been cost for site
establishment, putting office officers, hoarding and all, and then he has to.Get people on board.
So he has to pay salaries and get equipment, uh, mobilize all these costs and materials. He has
to order materials may be advanced payments to suppliers to give those materials. So from day
one, the contractor will start incurring cost, however.You know the income against the contract
will only happen after few months because first the contractor has to provide provide.Uh, The,
uh, the, the performance bond and, uh, and all other, uh, initial contact deliverables, which are
quite under the contract and get them approved. And then, uh, uh, even after, uh, the, you
know, some, some contracts, they specify a minimum payment. So the.In fact, he has to wait
until he, he uh yeah, he is the minimum of the month in order to apply for payment. And even
after applying for payment, then there is time for engineer certificate we normally 28 days and
after engineer certificate then again there is time for employers pay a month, which is 28 years
or 56 days, two months.So, so by the time constructor receives the first payment, it might be
around 4 four, you know, about four or five months might have gone, maybe at least for four
months may have gone.So what happens in this situation is from the outside the contracted
incurring cost which is we call that cash outflow. And initially though there will be gas outflow
and when it starts getting gas in flow, it may be around month 4 or 5 S initially there is a
negative cash flow because the contract.We have cash out food, there is no cash in flow, so the
net is uh, total cash outflow. So initially there is negative cash flow. So when, when the
contractor bidding for this project, when you receive the tender document, when we, if we, if he
sees that there is no advance payment in this contract.But the contractor's estimation manager
does is he will prepare a indicative cash flow chart and he will find out, you know how, how
much time it will take.For the cash flow to be positive because even after the month 4, as soon
as you receive the payment, your cash flow will not be positive because there is negative cash
flow which is at the beginning. It will take some time, maybe it will take about 6-7 or eight
months for the cash flow to be positive in this project without an advance payment. So when,
when is it just?Calculation then, uh, that negative cash flow has to be, uh, uh, has to be fulfilled
by, you know, some other source, right? Maybe the contractor has to use his own, uh, spare
cash or maybe he has to, he has to borrow money.Uh, maybe take a overdraft from bank or
maybe, uh, put additional capital for perform whatever the source, the money has to come and
uh, and there is cost of money. You know, the money is not free, but there is always cost
attached to attachment, even if the contact is using.Is on cash then there is opportunity cost,
right. We could have invested that cash in somewhere else and he could have generated some
profit. So that is called opportunity cost. So the money comes with cost and then when the
estimation manager knows that there is 6-7 months of period where there is negative cash flow
then that.The the cost of money will be built into the contract as interest finance charges for the
employer will have eventually pay this finance charges along with the contract price.So in order
to avoid this situation, if the employer has already secured funding for this project, what he can
do is he can release an advanced payment at the beginning. So he can try and resolve this
negative cash flow to some extent. Not if, if not all. So when? When there is an advance
payment.Then the negative cash flow will be less, so the finance cost will be less for the
contractor. So eventually the employee will be paying less, lesser contract price.So that's a very
big a win win situation for both parties. the IT will reduce the concur twice to the employer and
also it will ease the negative cash flow situation to the contractor. So that is the purpose of
advance payment and when advanced payment is involved there are constructive provisions
relating to that how the advanced payment.Is to be released and how it is to be recovered 100%
of the advanced women should be recovered before the 100% of the completion of the works,
and sometimes you you recover the advanced payment as a percentage from the interim
payments or otherwise.The both parties they agree on tour recovery schedule. So there is a
advanced payment record schedule that we from the outset and as per that schedule the
advanced payment will be recovered from each monthly payment. When there is advanced
payment for sure it will be subject to an advanced payment guarantee because no employee will
be will.Is and and the class payment without any guarantee? As soon as the advanced payment
is paid, it is in contractors account right? So you can do whatever he wants with that money. So
in order to protect the interest it will be released against an advanced payment guarantee.It is
also similar to performance guarantee issued by your financial institution and there is a
monetary value. But there are a couple of deviations in advance payment guarantee compared
to performance security 1999 where book has given an example for advanced payment
guarantee form. I have respected this wording from that.Some uh template. It says uh, this
guarantee shall become effective upon receipt of the advanced payment by the principal.So the
the the guarantee is only effective upon receipt of the advancement, whereas performance
security as soon as it is issued it is effective.So the the I mean as as soon as the performance
security is received by the employer, the next minute he can go and make cash if you want. It is
effective from from the moment it is issued. Whereas advanced payment guarantees on the
effective when the advanced payment is received.And then it says such guaranteed amount
shall be reduced by the amounts of the advance payment repaired due the performance
security. If it is issued for 10 million, it will stay at 10 million until the competition unless both
parties agree to reduce the value of performance one, which is a supplementary agreement
otherwise.It is same value that will continue throughout the construct, whereas advanced
payment guarantee will reduce overtime because as and when the advanced payment is
recovered. Let's say you start with 10 million advance payment. After six months, the employee
has already recovered 2,000,000 out of 10 million. Now the advanced payment which is held by
the employees on the 8 million, that means the guarantee value should also be reduced.Media
because there is no point of keeping the guarantee at 10 million when the employees only
holding advance payment 8 million. The 2,000,000 is already paid back to the employer by way
of deduction through the interim payments.So this is called, uh, the reduction. So there is the
reduction of advanced payment, uh, and then the, there is a procedure applicable to this. This
will be explained in the, uh, contract of the advanced payment is to be reduced.Can the
certification of advance payment now?You before you certify the advanced payment, there are
few things that you need to check. First, the contract has to be signed. Of course, there should
be left out exceptions or the contract agreement sign between the parties. And then if advanced
payment guarantee as required under the contract should have been submitted and approved
by the employer, it should comply with the specimen form.Provided and it should be issued by
an institute with the which is acceptable to the employer.And uh.And then, uh, the contractor
has to be applied by the payment and the engineer can certify the advanced payment if these
requirements are fulfilled.OK. I think with that we will take.uh big uh 5 minutes break because
we don't have much time uh let's come back

I'm back. Am I audible?I'll discuss few questions, uh that has come through the chat.Is there any
different type, uh, types of LOI? Uh, no, uh, what matters is uh, uh, what is stated within the
letter itself, not the subject. Now you can call uh, the in the subject as uh, letter of intent.Uh, but
if you, when you read the content, if you have stated within the content that we hereby
acknowledge your receipt of so and so offer from the contractor and confirm our acceptance or
something like that, that means it's a letter of, uh, acceptance, not letter of tech.Always, uh, we
need to check what is the content and not the subject, uh, to uh, decide what that letter, uh, is
about.Can we add in overhead and profit on the merit principal? Yes, Yeah, we saw that no in
civil, uh.I I think you already got that because I explained in that article it says PR remuneration
plus the cost of material. PR remuneration means fair profit.Is to proceed both tasay no notice to
proceed means.Now.Now it's like this now, uh.Now having a contract is one thing, giving notice
to procedures another. You can sign and contract and you can wait for another couple of
months before you see the notice to proceed, right? Because maybe you have you have made
the contract but the site is not yet ready for the contract to proceed. So in that case you you sign
the.Anyway, so not but the time for completion will only start running from the notice to
proceed.So if the time for condition is, let's say uh, 365 days one year, then uh, the contractors
obligation to complete within 365 days will start from notice to comments or notice to proceed,
whichever the way it is described.If any, repairs to be done to a project in the latter part of the
DLP.And to be extended further, what is the period for performance fund? Performance fund
has to be valid until the defect liability certificate is issued. So therefore that question will not
come.Normally defect uh, it has to be valid until the insurance of the defect liability certificate in
bespoke contracts, uh, I think in Philly, uh, we check uh, the validity, uh, it is mentioned, uh.So
uh, As for Physique 1987, the performance bond has to be returned within 14 days after the
defect label certificate is issued. As for Predict 1999, uh, the performance fund is to be released
within 21 days after receiving performance certificate.The both the predict forms they relate to
the different liabilities certificate or the performance certificate what are same, but the term is
different in two versions. So therefore the the question about you know still in the defect liability
period will not impact.So it is we call Performance Honda open-ended. So there is no calendar
date mentioned in the performance security that it should be valid on up to this date only it is
open-ended. It is. It is. It should be valid until the certificate is issued.Does the bank should
queue any notice to the contractor that is the time before incurs the performance won by the
employer? Uh, now if if the notice is required under the contract, then the employee should
issue a notice to the contractor stating that we are going to encash your bond if.That is not
required under the contract. Then there is no obligation for the employee to issue an artist. The
employer as soon as you know, send the you know, send a request to the bank. The bank has
an obligation to pay. The bank cannot detect any conditions. In order to say that no, before we
pay, we have to check with the.After we have to send a notice. So nothing like that, the
employee will not accept those conditions. If there are any conditions attached to the
performance one, they all should be mentioned in the specimen. They all should be mentioned
within the guarantee itself. So if they mention you know, normally the bats try to, you know,
include these conditions.So, uh, within their guarantee. So if you are working for the employer,
then you, you have to make sure that the guarantee exactly matches with the specific one. And
if any additional wording, additional conditions inserted by the back has to be removed. So you
have to ask the bank to ask, ask the contractor to get, get the bank to amend those conditions
to.Make them fully compliant with the specimen, like for example, even if you put something like
that if you want to, if the client, if the beneficiary wants to encash this bond, the request must be
submitted to so and so branch.At during student hours, maybe some dad might try to put this,
don't accept these conditions, because what happens now after two years if the back is closed
that branch, then we have to go, right? These things can happen, right?Then, then, uh, then the
employee will be stuck with that want, uh, the players mentioned in the, uh, wand is no longer
existing. So these, these technical issues will come up. Therefore, don't accept any condition.
Uh, it should match with the exact uh, wording given in this specimen.uh no if i split

Insurances
Insurance for work, so these are works carried out by the contract on site. Those are the new
construction activities and then insurance for 3rd party liability. So this is insurance against all
the third parties, so.It everyone other than the employee and the conductor are considered a
third party. I mean even if there is a property which will also be employer which is not subject of
this contract, that property also third party. Let's say now this is an adjacent property which
belongs to the employer.But that that was over third party property because it's, it's, it's a third
party to this contract.And Workman compensation, these are uh, contractors personal who are
working, undertaking the works on site and then contractors equipment. So these also should
be insured, but these are equipment that the contract is bringing to the site in order to execute
the works.They are not, you know, the plant which will be incorporated into the permanent
works. These are just the temporary equipment that comes that is brought to the site for the
purpose of undertaking the works and then once the work is completed, they will be taken away
from the site.NPA the professional indemnity insurance is applicable, you know in the discharge
of professional obligation mostly when it when it comes to construction contest many it is for the
design.Uh, with the when the contract is involved in undertaking some design that the contractor
will be required to provide the insurance as well, in addition to the other 4 main types of
insurance Sir.So to, uh, understand the insurance, uh, let's look at this, uh.Table uh, I have
given here course references from that Vedic 1999, uh, works. Uh, the amount of that insurance
should be for the full replacement cost plus 15%. So full replacement cost assuming that there
is no price fluctuation.if they match the contract price that means if something happens you
know once the project is fully done and and this project fully collapse now then how much
money you will need to replace that again assuming there is no price

Contractor has to ensure and then that third party insurance should be valid until any works are
carried out on site. So effectively it is until we can assurance of different labeled period or in
terms of different liability period.Workman Compensation.The amount should be for the sum
sufficient to cover the liability under the law of the country, and then it should be valid until any
persons are employed at work.Yeah, the contractor's equipment again, uh, for some sufficient to
provide replacement at site if something happens and that equipment fully destroyed, that how
much money the contractor will need to replace that equipment. That money should be the sum
that is insured.And uh, again, it should be valid until no longer required. Now regarding
Workman compensation and contractor equipment, normally what happens in uh, you know, in
the industry is contractors, they maintain annual policies, uh, for their all Workman and for all
equipment. So they don't take project price insurance.They maintain their annual policy and that
is getting renewed annually. So therefore it will continue to be valid throughout as long as that
company is in in business. What they need to do is as and when they get the project awarded,
they should include that project under the same policy. So when you are receiving evidence of
insurance.On the contractor, you should ask the contractor to provide evidence that this project
is covered under the same policy. They can go to the insurance company and they can offer a
certificate to be issued, uh, stating that this project is covered. So therefore workpoint
compensation contractors equipment. Normally this validity issues will not come into uh,
question because contractor will.Keep maintaining those insurances as long as they are in
business.And their coverage is also, you know, legally they they are they have an obligation to
cover for the some sufficient to the.For some sufficient to cover the liability under the law so
they maintain that otherwise they will not get their trade license and all. So no question on that
third party insurance. Now this is.Uh, the, the employee cannot put very high amount. If it was
very high, high amount, then the premium will be very high. Eventually the employee will have to
pay. So the employee will have to decide a reasonable amount of money, uh, under the third
party and the works works is if normally we take, take it as contract price plus 15%.Or some in
some contracts it is only contract price is depending on how the contract is how for the contract
department.Uh few other uh, aspect on uh.Insurance, so PR insurance, uh, as I said, so this is
for professionals who are engaged in, uh, delivering professional services. So when
professionals are involved in delivering services, they are expected to, uh, exercise, uh, uh,
reasonable skill, uh, care and diligence in performing their.So, so they are professionals, so they
they have to meet the standard of care. So expected from like if you, if you go to a doctor for
three months, you are expecting that doctor to maintain certain standard of care, right. And you
know for his profession. Similarly architects when they design or the instructor designers.When
they do the design quantity surveys, when they advise on cost, you know we are expected to
maintain that standard of care. That means what is normally expected from a qualified
professional who is practicing that profession. So when you fail to maintain that standard of
care, diligence.In delivering your services.We are responsible for something called professional
negligence, so that means we have not carried out our services in the required standard with
you, with the care and diligence as required.So when you are responsible for negligence, uh,
when negligence happens, actually the other party who is, who is, who is the party who is
suffering because of their negligence can claim against you.Uh, so when they claim, uh, you will
be liable for damages suffered by the other party because of, uh, the negligence. And in order to
cover these damages, you can take out an insurance.That means if a claim comes to, comes
against you and, uh, and if, if that party is, uh, successful in establishing that claim to whatever
the measures, litigation and all, then if you get a judgement, uh, from the law or an operator that
you, you have to pay.Certain amount then then you can if you have the insurance then the
insurance company can can be on your behalf or when you have insurance as soon as a claim
comes you don't have to wait until this issue is resolved in the course. You can just submit the
claim to the insurance and the insurance will look look into the issue and if.The claim is covered
under the policy you have taken. Then the insurance company will pay and then uh.If if there is
a chance that the insurance company can recover that from someone else, then they will do it
so.So that's that's why we have this API insurance requirements in the industry. So what how it
is applicable to construction contracts is when contractor has a design responsibility, then the
client might request contractor to provide PA insurance to cover.Uh, any negligence in the
design?Uh, then what is the remedy for contractors failure to issue if the contractor does not,
uh, obtain the insurances required under the contract? It is very straight, straightforward. All
predict type of contracts say that the employer can take out the insurance on behalf of the
contractor and deduct a premium from the payments made to the contractor.And third party
insurances are sometimes provided by the employer because you know, if the employer has
many contractors working in in that area, maybe this is, you know, whole community
development and you have multiple contractors info contractor, villa contractor maybe.Different
contractors. So if you ask each contractor to go out and take the third party insurance Sir, then
the employee will have to pay premium to all these contractors and when they added together it
might not be economical for employer to ask each contractor to provide their own third party
insurance. So here what they can do is employ.And take out a third party insurance covering,
covering all the third parties in that particular development. And then, uh, as and when a
contractor is appointed, they can include that conductor under the same policy.But that is a that
is true. That is a more economical.Contractors operating in the same area or same development
on behalf of the employee umbrella covers again, sometimes you can even include works under
the same policies of works plus third party all put together.That under one umbrella, so that is
also possible. Like for example.Like airport construction. So the 4th constructions government,
you know, they, they have hundreds of contractors working within the airport. So they will even
the works can get issued by the employer and when the contractors are appointed, they get
included under the same policy.What is deductible? Uh, deductible is the amount which is uh,
you know, not covered by the insurance. Now almost all insurance policies, they have a
deductible. The purpose of that is to prevent.You know hundreds of small claims. Otherwise it
become a.An administrative burden to administrate all these claims if you allow each and every
small claim to be submitted under the insurance policy. Now it depends on the value of the
insurance coverage. Like if the insurance coverage is 10 million, maybe your deductible may be
about 200,000.So that when the value is more, the deductible is also more. If the insurance you
know the some insured is let's say you know half a million that that then that insurance may
have a deductible around 10,000 to 20,000. That means any claim which is valued less than
10,000 will not be will not be entertained by the insurance company.Only those claims which are
valued higher than 10,000 dirhams can only be submitted under under that policy. So that's the
meaning of deductible, the amount which is not covered by the insurance.Then how do you
administrate insurance claims if if, if an incident happens on site which is you know?Uh, which
is, which can be claimed under the insurance, uh, policy. Then the first thing you have to do is,
uh, report the incident to the insurance company, uh, because this insurance policies, they have
very, very.Tough not his requirements like if you don't notify within 24 hours then they will not
we will not entertain any claims or something like that. So you must notify the insurance
company that an event happened so and so event happened because of that.These these
damages have happened. We are still investigating, investigating the incident. However we
would like to notify the event to you. And then second thing is, if possible, try to take police
reports because police reports will be useful when it comes to.You know, evidence in the
incident to insurance company, uh, because policy is a third party who will come and inspect
and they will come from, yes, that incident happened.And then?Uh, once insurance company
get notified, then they will send, uh, bus adjuster to the site, uh, to verify the incident and then
they will ask, uh, the, uh, you know, they, they will prepare, they will, uh, they will ask the,
uh.The claiming party to prepare a incident report and submit the incident report basically will
explain in an arrive to, uh, way, you know, how this happened, like, you know, such and such
date, uh, when we were working on September area of the site, uh, such and such vehicle
belonging to so and so contractor.Entered to the site and and then, uh, one when, when the
vehicle was unloading the materials, uh so and so material got uh, loose and it went and hit so
and so column and the column which uh, was damaged because of this incident something like
that so.It has to, you know, give all the specifics of, uh, of the incident with, with all the
photographs, uh, and also, uh, the, you know, witness from, from who, who, who was there
during that incident happened with all this. You will submit this incident report and then loss
adjuster will verify the details provided.And then we'll ask you to submit a claim. So the claim will
include, uh, you know, how much money you're claiming in order to, as compensation for that
incident. And once the claim is verified, then the money will be paid, uh, to the beneficiary.On
the materials, uh, sorry, uh, interim payments before on material site, uh?so this is very

Area for all of you, I think.You must be practicing this. If you are working on post contract budget
monthly basis you you have to come.No work through this this income payments whether you
work for contractor or whether you work for the engineer or even the employer, you would you
would have come across these interim payments. So in predict types of compact it is always
monthly payments, monthly statements the contractor has to submit at the end of each
month.And that will include the work that is completed by the contractor after the valuation
period and value of the permanent works and also value of all other items like general.And the
temporary works as stated in the BOQ uh materials on site, if it is allowed in the contract in what
is the value of materials delivered to the site? Price fluctuations, Again, if it is allowed, then you
can include that also. And any other sums like claims which have food, you can include those
also in your payment application.Within your monthly statement and monthly statements are
usually prepared on cumulative basis and then whatever the amount due for that month can be
applied and then engineer upon receipt of monthly statement will go to the you know
contractors.Payment application and then, uh, I did try to agree the progress, progress achieved
on site. Uh, maybe, uh, if, if they can, you can actually the percentage during a site visit.Or
maybe, uh, percentage can be assessed based on the documentation, the inspection request
approved by the engineer as evidence from those records also. So whichever the way the
engineer and the contractor can agree how, how to access these payments and once the
engineer.His tongue is assessment that based on that assessment the engineer can issue the
incline payment certificate. Before engineer issuing the certificate. There are two conditions as
prophetic types of contracts. One, the performance bond if it is required under the contract
should have been submitted and approved by the employer. Second, if there is
minimum.Specified in the contract and the value of the interim payment has to be more than
that minimum payment. If these two conditions satisfied then the engineer can issue the
payment certificate and once it is submitted to the client then the client can make the payment
within those number of days specified in the contract. This is very simple process I explained
but in practice.Can get, go to lots of number of other steps, you know, uh, before the engineer
show the payment certificate, maybe there is a procedure that the engineer has to talk with, uh,
his, uh, draft certificate to the employer and get his, uh, approval. So these, these things the
engineer has to manage as far as consultancy agreement with the employer.Uh, also when,
when it comes back, we agree in the progress now, uh, wow. You know, some, some projects
they apply, they, they, they adapt the procedure where the progress is agreed between the
contractor and the engineer before the certificate is issued. If this is the case, it is good.
Otherwise, when the certificate.Route without any agreement with the contractor. Then the
contractor might might.Uh, dispute the certificate, then it will go to the dispute resolution
mechanism. Because uh, if, if the contract is not satisfied with uh, a certificate issued by the
engineer, then the contractor can dispute and the contractor can ask for engineers decision. So
therefore, in order to avoid those, the best practice.Seeds for engineer and the compactor to
agree the progress on site and then issue the certificate. But in predic conditions this is the
engineer has to you know assess the payment in a way that in a way to make the payment
which is even payable to the contractor.The engineer is given full authority to make make the
determination as to as to the payment payable to the conductor.So this this agreeing the
progress and all is not a mandatory requirement but but I explain this the good practice.Material
on oxide which is part of interim payments. So material on site is obvious you know those are
materials which are delivered to site usually you know all predict types of contracts they include
provisions relating to metal oxide and if these materials are like.Uh, delivered to the site and
they are approved by the engineer. There are few things that you need to check first, uh, now
when the material on site, uh, famous are applicable, then usually there is a list attached in the
appendix to tender.And you know, specifying which materials are qualified for, for material on
site payment. So first of all, you should go to that list who is doing the review and make sure
that those materials are listed in the particular list and then.Uh, there are some documents that
the, uh, contractor has to submit on material side. Uh, he has to submit the invoices, delivery
loss and the material inspection approval, uh, by the engineer.And he has to make sure
materials are stored in a proper manner before damage. Uh, Also materials are stored within the
site parameters because if it is not in within the site then it is not covered by the project
insurance.And then the quantity of the materials which are delivered to the site should not
exceed the requirement of this particular contract. So if these conditions are fulfilled, then the
engineer can access the materials.On site rally and and then include that payment within within
his certificate. Sometimes it is again defined in the condition, sometimes it is a percentage from
the invoice value or sometimes it is a percentage from the engineers determined value of the
materials.So based on that the determination will be concluded. How about certified material off
site?Uh, now material oxide is, uh, not something captured in, uh, 87 or 1999. Now these are
materials which are not delivered yet to the site. So for example, some reason maybe the
employer may want to pay metal oxide because maybe the site is very congested. There
is.Place to restore materials on site. So in this case maybe in the employer might agree to pay
material off site. But if that is the case, it must be clearly stated in the conditions in the particular
conditions you you the employer, the contractor has to agree as to the terms applicable to for
certification of metal off site.Uh, if this is applicable, then uh, there are two additional
requirements. One is insurance because these materials are stored outside means it is not
covered by the works insurance, uh, taken under the contract. Therefore there should be
separate insurance provided for these materials which are stored oxide. The other aspect is
there should be wasting certificate.Because since the materials are not delivered to the site, the
ownership of the materials is not yet transferred to the employer. So there is a risk if employer
pays for these materials without getting the ownership of those materials. Therefore, there
should be resting certificate and.And, and the particular insurance provided against those metal
oxide, uh, uh, for the engineer to certify these materials, uh, off site.Question is again another
aspect In interim valuations. First of all, why we need a retention? Oh, what is the retention?So
retention is the accumulated money which is retained from from the payments made to the
contractor right personal to the contract. Now the normally again there is a industry benchmark
which is normally 10%.Of each payment is retained as a retention and the purpose of retaining
this amount is.Uh, in, in case, if the contractor does not rectify any defects which are notified by
the engineer, then the employer can use this, uh, retention to get another contractor to
undertake those rectification works and pay that conductor. So that is the.All-purpose of keeping
a retention in order to uh, keep some money to attend to the defects which are not, uh, rectified
by the conductor even after notification by the engineer. So why, uh, somebody can ask, you
know, there is performance security already why we keep.Retention. That's an additional
security measure.OK, the purpose of that is when I when we talked about the performance but I
explained that in caching performance bond is a serious action, so it can have lots of
consequences.Bought on the contractor as well as the employer. Therefore, and other thing is
for the small small defects which are not rectified by the contractor, it is not practical for
employee to go and performance fund each time there is a defect which is not rectified.So that,
uh, now when, when the employer keep a gas retention, that means that cash is readily
available with the employer, right? He doesn't have to go and ask from, from anyone. He, he
has that money already in his account, but he can immediately, he can use that, uh, cash
because, uh, immediately available to him to get.Rectifications that so so that is why.The
tension is applied in addition to the performance security purely for defects and when retention
is applicable, as I said, there is a percentage retained from each payment and then there is a
limit. Usually it is 10% from every payment and the limit is 10%.Uh, now all these, uh, needs,
needs to be, uh, you know, agreed in a reasonable manner. Now, if the employer increased the
retention, then there will be finance charges added to the tender price and eventually the
employee will have to pay those finance charges. Therefore, it has to be kept in a reasonable
range.Usually 10%, some contracts even 5%. I have seen, uh, some leading developers, they
are only applying 5% retention.And then, uh.Uh, how the retention is to be released again, uh, it
is sustained in the type of contracts. It is normally released in two parts. The first half is released
when the POC is issued and the second-half is normally released when the uh, effect liability
period is concluded.This is OK when there are no section, but uh, if there are sections involved,
then the first half of the retention is released as and when each section is completed in a by
calculating the, you know, applicable percentage on product basis.So, uh, then what about the
second, uh, half?Now, when it comes to second-half, uh, the release of second-half on the
predic uh, 1987 happens uh, at, uh, you know, at the expiry of the last defect liability period. So
even though the first half is released as and when each section is completed, the second-half is
always released together.When the full last defect liability period is completed in predict 1999,
second-half is also progressively released as and when each period is over, because when
there are 6 cells involved, there will be different periods for each section.Keep that in mind and
uh, retention 1 is another instrument, uh, similar to, uh, you know, performance security, uh, like
it's a bad guarantee, uh, it is given by the contractor now.Instead of keeping cash attention, uh
the parties can agree for contractor to submit a retention 1 and the employee to release the full
full amount without any retention. For example, I have I have seen this practice in case of you
know.Uh, really? Radius of retention? Yeah, instead of releasing half of the retention,
sometimes the confactors get the full amount of retention release upon the assurance of the
TOC, uh, upon the, uh, upon, uh, producing a retention bond for the second-half.But if, if this uh,
is to happen, then, uh, those specific provisions must be agreed during, uh, in the contact itself.
Sometimes during the final negotiations, the PTCS, uh, the employer and the compacted into
activities things and they get incorporated into the contract if it is applicable, then, uh.Track
tickets, submit a retention one for the second-half and get his full retention release, uh, upon
TOC.OK. With that we come to the topic relating to changes and valuation of changes. For the
purpose of this CPD, I'll keep it very brief. Now when it comes to changes, we are talking about
changes to works, not changes to contract.Because contract once once it is executed, you can't
change unless both parties assign a supplementary agreement amend in the, uh, original
contract. So both parties will have to come into an agreement to change the contract,
however.Change in the scope of works in physical types of contract. The authority is given to
the engineer to instruct any changes. Why this is?You know, address this way why we need to.
You know why, Why? What are the reasons for changes in construction work?Because now, uh,
I mean angels, we, we must avoid as much as possible because the moment there is a
change.It will have, uh, constant time impact, so and also changes.Uh, you know, changes can
lead to disputes, uh, between the, uh, employer and the contractor. Therefore, uh.It is important
to minimize the changes as much as possible. But uh, still now there can be instances where
the client change their mind. Instead of certain finish, they want another finish. Maybe the
authority requirements have changed. They want some additional sprinklers here and there to
comply with the fire code. Maybe it's.Materials although which I although they are specified in
the compact, they might, may not be available in the market now. Maybe that material is out of
stock or maybe some, some something happened like you know, developments in Red Sea. So
materials are not preaching now.United Arab Emirates So, so then the engineer will have to,
you know, specify your replacement material. So for various reasons, you know, changes can
happen. Therefore there should be a a procedure to manage these changes.Now when it
comes to change management process, uh, I'll just very briefly explain a very basic process.
Change management will start from the identification of change. First we need to identify there
is a requirement for a change. That identification can happen, can can be done by the
conductor.Engineer, the employer, any of them. So as soon as the someone identifies that there
is a need for a change, then the engineer has to the. It will be notified to the engineer and then
the engineer will have to initiate the change order request.So that end order request will explain
what is the change required and what is the cost impact, What is the time impact if that change
is interrupted.And based on that, uh, when it goes to client, then client has two decision. Uh,
client has to make a decision and there is there are two ways it can go and the client can either
reject that change, which is no and that that process will stop there.Or else the client came up to
the change, which is yes. In that case, the approval will be given back to the engineer and the
engineer will then issue, uh, the instruction for change. When client making the decision, the
client will consider all the.Factors affecting that change. Some changes may be unavoidable like
if the material is not available or if it is authority requirement then the client does not have much
say, he will have to approve otherwise the project will not proceed. But when it comes to certain
things like changing finisher, the client can you know depending on the cost.I mean, but that
receives from the engineer he can be assessed whether he is really required to do this change
incurring so much of additional cost and so much of delays to the project or whether he he can
stick with the original.Beside.So so this is a very simple chart and but in actual situation the
stage management process can be so complicated.Within the plants.Sorry, I'm having a difficult
with my voice. Uh, let me.

Client organization. They have a very detailed spelled out change management process
applicable to their projects because they know changes are very costly, time consuming, so
they try to avoid the changes as much as possible.Regarding valuation of changes, so it is
again very straightforward to conduct, contains very clearly specified provisions, all predict types
of contracts. So if there is a vocal rate that can that is applicable, we we have to use that
accurate to value the changes. So I said if applicable.So there are various situations.We are,
uh, you know, either the employer or the contractor can argue that the rate is not applicable,
right?I mean, so can't go to so in just uh, keep that in mind and think about the examples. But
as long as the rate is applicable, then the POQ rate should be used to value the variations if the
BOQ rate is not applicable.Uh, then you have to try and derive a new rate using a which we
call.if that is also not possible that means
And uh, if I deliver happens, which is beyond the control of uh contractor and if there are no
mechanisms to extend the time for completion in the contract, then the time will be at
large.Because the original time for completion is stated till the conduct is no longer applicable.
Because there are delays which are beyond the control of the contractor which is impacting the
critical path of the project and therefore it delays the completion of the works. However, since
there are no no provisions related to extension of time in the.The engineer cannot determine an
extension of time. So how how we can resolve this situation is only by contractor and the
engineer.Agree towards supplementary agreement. So in that case the engineer and the
conductor will have sorry the employer, the conductor will have to agree a new competition
there. And when it when it comes to this agreement, it there can be so many.Uh, disagreements
between the parties may be contract is asking to masses tension. The employer says I cannot
give two months. I can only afford to give you one month.And that supplementary agreement
will never get concluded right because the employer is now stuck. He has already solved the
problem, I mean the the units to the buyers and he has only committed to a completion
date.Them and he will be liable for penalties to those buyers if if if the Handy Nova gets
delayed. So therefore if you leave it for employer and the contractor to agree each time there is
a delay on the new completion date that that will never happen.Those discussions will never be
concluded and the contractor will not get POD till the end of the contract. So to avoid these
situations, very type of contracts as given authority for engineer to determine extension of time
based on the provisions given in the conditions.And what are the grounds for extension of time?
So as explained in Philly conditions now if there are any extra or additional work depending on
their nature?Uh, there can be entitlement to EOT and the second category is, uh, if there are
any delays, uh, uh, referred in the conditions. Now, if you look at predict types of predict types of
contracts.In different places there is reference to the delays and extension of time. I explained
about underground physical abstractions at the beginning, right when we spoke about risk, risk
sharing in standard forms. So in that particular clause it says in the standard predict conditions if
there is underground.Physical obstruction which is impacting the program, then the conductor
will be entitled to extension of time, right?So those are likewise there are many places like if the
access is delayed then there is entitlement to your team. If drawings are delayed then there is
entitlement to your team. So in those clauses it is a threat clearly. So those are the second
category. The first one needs a SPA or additional work. Second category is delay events which
are required in the conditions.The third category are the exceptionary adverse climatic
conditions.The word exceptionally adverse is very important here. Not every climatic condition
will entirely be constructed to an extension of time, because as an experienced conductor, when
he is submitting his bid for this project, he is expected to have allowed for all the normal climatic
conditions.Now in if this is contract, if this contract is in Dubai, all contractors they know in Dubai
in December, January it is called and all contractors they know you know in, in in July,
August.The the you know, it can get very hot and there will be, you know.Midday ban and all
these, uh, should I have been already factored into this uh program And those are no reasons
for extension of time. Only the exceptionally adverse climatic conditions are considered. How do
you determine whether it is exceptionally adverse?Is by intensity volume.Uh, or some other
mean now, uh.In order to do that, what the constructor has to do is he has to take the pass,
whether it was over the last 5-10 years and if the contractor can demonstrate to the engineer
that in the last 10 years the average rainfall in Dubai has been so and so and in this particular
particular.Here, the rainfall has tripled and therefore normally on average there are only 7 days
of rain in Dubai in the last 10 years and in this particular year we had 21 days of rain. So that is
exceptionally adverse situation because.No experience contractor would have anticipated that.
They cannot focus the future right? They can only look at the past weather reports and allow for
normal weather conditions.So. So there are other ways. I mean, what I will stand is only one
weekend, one week. There are many other ways to determine whether it is exceptionally
adverse or not.And this is the third category and the fourth one is any delay or impediment of
prevention by the employer. If the employee is preventing the conductor from proceeding with
the works, of course the conductor should be entitled to an ERT. And the other last categories
are the exception of circumstances like VIP.For example, maybe USA president, president is
visiting Dubai, you know, during that visit maybe.No, no, no person will be allowed to. You
know, there will be restrictions everywhere on the work and all, so those are special
situation.Again, uh, not something that the contractor would have allowed, uh, in the in, in their
contract.So if these grounds happen, then the engineer has to determine a fair entitlement of
the conductor. So what we mean by pyaar entitled Mantis as soon as a delay happens?The
conductor cannot relax, he has to try and mitigate the impact of delay. That is an obligation built
into the contact itself. So if there is a way that the contractor can work.This sequence that works
or maybe?You know, advancing, you know, change in the sequence and and because the
conduct is not expected to what we call accelerate the work is not expected to incur additional
cost mitigation is something that you know.That he can do without incurring any additional cost,
you know by resequencing the works or by working on different work terms, you know, if it is not
really impacting his cost, these things should have been taken so the engineer when, when,
when determining the extension and also if there is any plot which is available the.But they
cannot still expect to have the same flow because plot uh, belongs to whoever who gets to
consume that first. So in this case, the plot is consumed by the employer does not mean that
the contractor is can still request for the same plot to be maintained in the revised program. So
the plot will have to be absorbed so.We'll check all these things and then determine if you're
entitlement, uh, of, of, uh, EOT.And also the, the uh, there are notice and detail particulars, uh,
involved in the extension of timeframes. The notices, uh, are very important. As soon as a delay
event happened within certain number of days, the contractor has to provide a notice.And uh,
these notices can be described in different ways. For example, uh uh, in uh with predict 87 it
says uh if the notice is not provided.The injuries not bound to make a determination it it only
says engine is not found right? It doesn't say engineers prevented. So that means there is no
obligation for engineer to determine near if the notice is not there. But if the engineer thinks that
is the correct thing to do, the engineer can still determine an EOT.Whereas uh, in uh, in some
other bespoke contracts you might find the engineers shall not determine an idiot if the notice is
not given. So in this case engineers prevented.Even if the engineer thinks it is the correct way to
do, he cannot, because the contract really says engineer shall not determine your T if the notice
is not given. But he doesn't say the operator cannot or the judge cannot fight, only the engineer
is prevented. So in that case if it goes.Uh, if the disputes is escalated, then uh, the others can
decide who is educating that dispute. Some other contract types like Phoenix 1999 and most of
the other base for contracts from, from the main developers, you might find the wording like.The
contractor is deemed to have forfeited his wife if the notice is not given or the employer shall be
discharged from all his obligations in the if the notice is not given. So this is called condition
procedure. That means if the notice is not served, the right will not be established.So for the
right to be established for the notice has to be served the condition president. So in this
situation, uh, that means contractually the conductor has lost his right. But we, uh, we discussed
at the beginning about good faith and.Yes, depending on the situation, uh, the the judge or the
operator may consider uh an entitlement for example, if it is one that it is purely because of
employers delay.Uh, and there is no other culpability and there is no concurrency between the
delays, uh, of, of contractor and the employer, then there might be chance to get, but, but if, uh,
the, the best practices, if the Northeast is conditioned president, make sure that the notice is
provided within.Those number of days otherwise the contractor will have very difficult time.Uh,
uh, to get to get his uh, EOD entitled money. The same will be applicable for detail particulars
also. They need to be submitted within certain number of days. Uh, first you have to submit the
interim particulars and then every 28 is the you just have to keep submitting it in particular until
the event.Cease to happen and then final particulars.So those information will be utilized in
order to substantiate your fame. When it comes to determination, uh, the, the requirement is the
the engineer should not, cannot wait until the final particulars to make a determination as long
as the conductor has submitted the notice and the interim particulars.The engineers and
obligation to make a determination. So engineer can determine an interim your T and then once
the final particulars are submitted they can determine the final. The requirement is the final EOT
cannot be less than the interim EOT. It has to be same as the interim EOT or more than
that.Meaning that if the engineers already avoided 30 days of extent enough time uh as a final
uh, EOT, the engineer cannot award less than 30 days, it has to be 30 days or more than
that.Every other things were relating to extension of time, climatic conditions. Now here the
entitlement is only for cost, only for time, not cost. What is the reason for that is because it is
beyond the control of both parties, right? Exceptionally across climatic conditions it is not.Within
the control of the employer, therefore only the time is given, no cost.OK. Uh, regarding types of
delays, uh, there are mainly three types of delays, uh, in construction projects, uh, one is
second employer delays and the third category is neutral delays. Neutral delays are those
climatic conditions.So, uh, uh, since there are these, uh, different types of delay event, there
can be situations where two or more delay events, you know, they, they, they, they are failed on
the program at the same time, you know?But this situation is called concurrently for solitary. Uh,
delay is a situation where there is only one delay event happens at the same time and is
impacted on the program at one time. So it is solitary. It's not combined with any other delays,
concurrent is.You know, two or more like it can be, you know conductor and employee delays or
it can be conduct an employee neutral. All three types of delays might be impacting on the
program at the same time. In that situation it is a concurrent delay.So this concurrent delay
situation, you know when, when it when the delays are concurrent, how do we determine the
entitlement of the parties? You know whether the contractor is entitled to your team and whether
the contract is entitled to cost. So this area is not addressing.87 N Phoenix 1999 in 2017 to
some extent they have tried to define the situation, but not the remedies are not completely at
this so.So in order to resolve this situation, we can refer to a document called HCL Delay and
Destruction Protocol. HCL is stand for Society of construction law. So here.Uh, uh, let's see
what the the.OK, uh, let's find uh.Uh, let's see what uh protocol says, uh about concurrent delay
situation.In paragraph 1.4.1 regarding time, the protocol says where the contractor delay uh to
come uh completion occurs concurrently with the employer delay to completion. The contractors
concurrent delay should not reduce any EOTD.Yeah, the protocol clearly says, you know.If
there is a concurrency, the contractors delay should not, uh, reduce the yoke.The contractor
should get the same EOD as if there was no concurrent. Uh, there was no contractor delay.Uh,
let's try to understand this by by way of an example. Now let's say, uh, the uh, employer has
not.He went access to an area for contractor to commence at the same time.Uh, let's say the uh
contractor has also not received these materials to start work.Now this is a concurrent delay
situation because, uh, both deliverance happens, uh, they can happen sequentially or at the
same time. Maybe, maybe the, uh, employers delay event, which is, uh, lack of access is
ongoing for long period now.And now at the same time the contractor is also having difficulties
to get the materials. So there is delay from its side. So even if the materials.Passed to the site,
the contractor cannot start because there is no access. On the other hand, even if the access is
given to the contractor, he is not ready to start because there is no materials.Right. So in in this
situation the client can also argue even if I give you the access, you don't have the materials, so
why should I give you E or P, right? So there can be arguments like this.Yeah. So, so in this
situation, what the protocol says is.The contractor should get the Yogi.Because the employer is
also culpable. Because what happens is if the if the conductor does not get the EOT, then the
conductor will be liable for penalties, right?Then there is no your tea. If there is a delay to the
competition then the contract is liable for penalties. Now the employer having not provided
access then will be able to recover penalties from the contractor. So that situation is not
reasonable.So that is why the moment there is employers delay event whether it is concurrent
with conductors delay or not, the EOT has to be given. That's what protocol says.Regarding
cost, it says if the contractor incurs additional bus that are forced both by employer delay and
contractor delay, then the contractor should only recover compensation if it is able to separate
the additional cost caused by the employee delay from those caused by the contractor delay. So
this is virtually impossible how you can?Separate the cost between these two because what
delay events happen at the same time, so it's very difficult. Therefore the the rule of thumb is
when there is concurrent delay, there is an entitlement for time. However, when it comes to
cost.You are. As long as you can separate the cost between the two delay events you can
claim. Otherwise, no.A few other terms in uh delays, the critical path is P long R Now before we
talk about critical path, let's understand what is a program. The program is a is a network of
activities which are logically sequence. So there is a logical sequence one activity after the
other, you know?So you do the excavation, you do the compacting, after that you do the
blinding concrete. Likewise, there is logical sequence and it's the network of activities. So, so in
this network of activities with the logical sequence, there is a longest continuous path that is
called critical path, the longest continuous path.There can be several uh uh paths which are
continuous path. But what we consider as critical path is the longest one, longest critical path.
So. So the important importance of critical path is there is no plot available in the activities.Is the
critical part. That means if there is any delay in an activity which is in the critical path, there will
be delay to the project completion. It is inevitable. So that is why it is important to identify the
critical path and then.When, when, if you're attending progress meetings, you might understand
how, how, how, how important are these activities which are falling within the critical path and
that are focused and the whole efforts are made not to, you know, 'cause any delays to these
activities.The other activities which are not in the critical path, they do, they do not impact the
overall completion date. Therefore they can be delayed and you know this, there is less
importance given to those activities. However, even if there is a delay in those activities that can
incur additional cost to the contractor, that's a different matter which has to be.To 1 then yeah.
So whole delay should must be avoided at all cases, but especially those impact in the critical
path must be avoided. Otherwise there will be delays to the present completion.Uh, then
mitigation work acceleration we discuss about mitigation, uh, like this is mitigation is a
contractual responsibility contract is not supposed to incur additional cost by resequencing
consuming plot and all can do mitigation.Various acceleration comes in two different forms,
directive acceleration and constructive acceleration. So directive acceleration happens when the
employer delays the project and therefore the contractor is now given in your team. However,
the employer still wants the project to be completed within the original competition date.Yes,
possible. And in that case the employee can direct the contractor to observe it.However, there is
no contractual mechanism for employee to direct the contractor. A supplementary agreement
will have to be signed between the two parties and the supplementary agreement will create
explain what measures the conductor will take, undertake to, you know, accelerate the works
and how much money.The contract the employee will have to pay to the contractor's additional
charges per solution and what will be what would be the revised completion date after
activation. All these terms has to be agreed in the supplementary agreement. If that is the case,
it's called directive acceleration.The constructive acceleration comes from the contractor's site
himself. Now when this is when there is a delay by the contractor. Now in this situation the
because the delays are by the conductor he will not get EOT and if he doesn't accelerate the
project then he will likely complete the project play. So when he completes the project.He will be
liable for penalties. He can do a calculation how much is the penalty I have to pay if I do not tax
away and how much is the money that I will need to accelerate and complete the project earlier.
And then he can do a commercial comparison and see if it is worth to do acceleration and
recover.Recover the delays and complete the project by the original complete and date as soon
as possible so we can reduce this liability for penalties. So it's a purely a commercial decision
taken by the commercial management and the general management of that company. There
can be non commercial reasons also for.Constructive regulation to maintain the reputation in the
market, maintain good relationship with the client and all these things can also be taken into
account in that decision.Free plot versus project plot. Freeport plot is as I said like the the the
activities which are not warning within the critical path will have free plot.Free plot is the plot
which is available uh for an activity. Uh. It is the difference between the early start and the latest
start. That means that activity can be delayed by so much duration without impacting the
succeeding activity. The sub trade law.Whereas Forget no Short is a situation where as per the
baseline program submitted by the contractor, the project as a hall is getting completed earlier
than the time for completion stipulated in the contract. They say time for competition in the
contract is 12 months. If the contractors program says he completes the works in 10 months,
that means there is two months of project flow available. But.In in in actual scenario, it is very
rare that you will come across this situation. The contractors usually submit the program called
in accordance with the time for completion and he will try to use whatever the flaws within the
within the project for his benefit within the program for his benefit.Uh, delay analysis method.But
these are, you know, when there are delays then there are several ways that delays can be
analyzed and the extension of time can be calculated. We are not expected no in detail about
this because this is another specialist area called delay analytics.Much deeply in terms of
methods, there are 4 methods as planned impacted, 44 common use methods. There can be
other methods as well but as plan impacted. Here you get the as planned program and impact
the delays to find out what would be the impact of the of the delays.So when you are impacting
Dallas, you are impacting only the delays which are uh, not, you know, which are excusable.
Like, uh, if the conduct is culpable for the lift, they are not impacted because he is not getting
muted for those only the excusable delays are impacted.Uh, the other type is as planned as
when you get the aspirin program. This happens after the project is completed, uh, as a
forensic, uh, delay, uh, analysis, uh, analysis method. So here.You get the Asplant and the
aspirin. Compare what programs to identify the deviations and come up with a calculation for
your collapse. As built is again forensic. So we get the spill program and we remove the
executable delays from that as field program. When you remove the excusable delay then you
will know how much is.Conductor's liability and based on that you come up with a calculation for
your T Then the other method is time slice or window analysis where the project is divided into
different windows and and the delays are impacted to each window separately to come up with
a calculation.Uh, then let's talk about, uh, claim claim site. So we talk about the time site. Now
this is the cost site. Uh, a claim is a legitimate request for additional compensation, uh, on
account of a change or a breach of contract. So that's a claim.So similar to time.Uh.And games
are also subject to stringent notice provisions and uh.S same uh scenario that we that I
described about uh notices will be applicable to claims also, but then the when the notices are
condition president and in claims after serving the Northeast, the contractor is required to
maintain contemporary cost. These are records which are kept.Same time as the event
happens and then request engineer to inspect these container records and recommend to
maintain any further requests as necessary and then using these containment records the
contractor can substantiate their claim.At the you know the substantial thing can be again
provided in term basis and the final substantial can be provided once the event is fully
completed and.If the contractor, you know, fails to comply with all the procedures in the claims,
uh, uh, claim claims, uh, subcloses relating to claims, the engineer cannot reject the claim
involved. The engineer still has to evaluate whatever the substantiation received from the
contractor and based on that, he has to make a determination.So once he does the
determination then that that amount has to be included within the incident payment certificates
issued by the engineer in the contractors applied payment against those claims.Just very briefly,
uh, regarding types of claim.Mainly there are two types of claims. One is contractual claims, the
other one is.uh uh the uh the the

You know the payments and all to be at least antecedent breach and anticipate anti battery
breach are two different terms that come across in the during this termination and decision
breach is a situation where.The breaches occurred in the past for antecedent whereas
anticipatory breach is a bridge that is likely to occur in the future in the situation in that payment
situation, if that employees going into liquidation that is an anticipatory bridge that means in
future the employees.Unlikely to meet his financial obligation. Anticipatory anticipant deals in the
past. There is a breach of software.Final accounts, again, I'm not going to any detail. This is
very straightforward, uh, pretty types of contracts explain in detail starting with top final state
one and then drop. Final state statement is agreed between engineer and the contractor. Final
statement will be submitted with the discharge letter.And the discharge letter basically say it's
an advocating given by the contractor is taking that the amount is stated in the final state fund is
the full and final settlement and no further monies will be due from that employer after the
amount is released in the final statement.And the final famous certificate will be issued based on
that and the final payment will be made by the country employer to the contractor.So the
contracts are not not considered close.Until the defect liability certificate or the performance
certificate is issued by the contract and the final payment is made to be issued by the engineer,
the final payment is made to the contractor.We're producing on liquidated damages. So what is
meant by liquidated is, uh, the IT is represented by a monetary value ascertain means this is
already determined in the concern. So that is why we call liquidated in a certain it is represented
by a monetary value already stated in.Regarding the liquidated certain damages, there are
couple of clauses that I would like to again discuss, uh, from civil court, he says in Article 389, if
the amount of compensation is not fixed by law or by the contract, the judge will assess it in an
amount equivalent to the damage impact suffered at the time of occurrence thereof.Now, uh,
now here if the contractor is let's say in Delhi and there is no EOT entitlement, is it purely
because of contractors on fault? He's in delay and he has completed project in delay two
months, let's say. Now in this situation, the employer suffered a lost fight because he is he is
getting the work completed.Uh, two months late, that means he has lost the opportunity to make
revenue during those two months or maybe he has some penalties to, uh, the people that he
has, uh, uh, made a sales agreement with by whatever means, uh, there is chance that the
employer has been cut some loss.So what this article says is if the amount of compensation is
not fixed by law or by the contract, the check does the latency in an amount equivalent to the
damage in fact suffered at the time of. So you can agree in your contract the liquidated and
ascertain damages of the penalties, whichever the way that you call it, if if that that amount is
agreed, then it is.What did you do in the contract? If that amount is not agreed in the contract
then the judge can determine the value. This is UN liquidated damage. So liquidated damages
are those amounts which are already stated. Maybe you might have some contracts where
there is no mention about liquidated damages, right. So in that situation not load if the
construct.Recent delay and because of that if the employer suffers lock, the employer can still
go to court and get relief because there is an article civil for the article supporting that Article
389. In Article 390, it says the contracting parties may fix the amount of compensation in
advance by making a provision therefore in the contract.Subsequent agreement subject to
provision of law. So they are giving you know flexibility for the parties to agree the amount in
advance in your contract. That is what we do in liquidated damages. We say if there is a delay,
the contractor has to be so. And so now for the day or per week, you know as stipulated in the
contract. So they are making a provision.That was in the contract or even you can agree that
subsequently when the delay actually happened, both parties can come and come into an
agreement. OK, this is the amount I will pay for this delay. So they are they are giving the
parties full freedom to to agree. So these are general provisions.However, it goes on to say in
Article 2, the judge may, in all cases, upon the application of either of the parties, very such
agreements so as to make the compensation equal to the loss and any agreement to the
contrary shall be won some mandate to the provision.So, uh, first of all they say if you want, you
agree.However, if a party comes to the court and challenge OK at the at the start of the
contract, yes, I agree that I will pay this much for delay. However, now I find that the employee
has not suffered any loss because during this period.There was no opportunity for the employer
to uh, you know, make any revenue for employee has still not solved any, any of these
properties. So there is no penalty and all that. If the contractor can go to the court, then he can,
you know, he can cancel the compensation as a whole, he can at least reduce the amount.So
therefore, the amounts that we agree as delay penalties in our contest can be challenged, uh,
in, in UAE based on those, uh, civil, uh, Civil Code articles that, that we just saw.So why then
now what is the point of having equated a damages work? Because although they can be
challenged in the court, when you have this liquidated damages closed in your contract, it will
motivate the contractor to complete the work some time. Also, it will give an automatic remedy
like as soon as there is a delay, the employee can recover.So if if the conductor wants to
challenge that, then he has to go to the court and get it challenged. So it's a lengthy process,
not, not, not easy to do. Therefore the employers will still prefer to have liquidated
damages.Process data in their contracts. With that, we come to the last topic today, which is
defect rectification period or defect notification period or defect liability period as it is called in
Physics 1987, so we spoke about.Defects evidence now latent defects which will take some
time, so at least there is 12 months of defect liability period that is to test the facility for all
weather conditions, because during 12 months cycles you will find all the weather conditions,
the hot season, cold season, rainy season, dry season.Windy season, all these weather,
weather conditions will, uh will be there and the building can be tested for all these conditions
and what happens after the defect liability period.Uh, how at the end of defect liability period, uh,
the engineer has to issue the defect liability certificate and the, uh, the balance retention will
have to be released and the contractor will have to submit the final statement. The final form
process has to start.And the contractors all obligations for insurance will will will be concluded
once the defect lability certificate is should and the performance security has to be released
after the certificate is issued. And what are the liabilities of the conduct after defect liability
certificate?Is it should? If there are any unfulfilled obligations, then the contract is still liable for
those. If there are any extended warranties given for certain specific works, the contract is still
liable to one of those warranties. The senior liabilities therefore, period of 10 years after taking
hours after handing over and the confidentiality.If the contractor assigned to those, he has to
maintain those undertakings. Alright, so with that we come to the end of this session.We have
taken more time than we usually expected. Or else let me see if I can at least go to a few
questions.Walk back if uh, is there any Max uh, LD uh, limitation we can have or is it uh,
depends on the contract? Yeah, you can uh, specify the maximum amount of liquidated
damages in your contract. Usually it is 10%.Uh, plus sometimes 2% for engineers, uh, charges
as well. So yeah, you're free to agree that in your contract, but however, if it is challenging the
court, then the judge will decide how much is to be paid as liquidated damages because the
Dutch will accept the actual loss suffered by the employer.What is the difference between LD
and LED? It is same liquidated damages or liquidated and ascertain damages? A means N so
not difference.How the employee can deduct when the contractors failure to ensure via
employees claim? So now this is automatic memory. The conditions clearly state that the
employee can deduct the premium from the payments becoming due to the contractor. There is
no requirement to establish a claim or anything. It is an automatic remedy stated in the
conditions. You can deduct from the payments made to the.Insurance for oxide materials. What
is the name of that? Is it called marine? No, not marine insurance. It is. There is no particular
name.You can.Uh, it, it, it can be, you know, insurance for materials or whatever the name that
is given and, uh, uh.I'm I'm not sure whether where you got the word marine insurance is
from.Uh, if TOC uh, issued for a uh, partial completion, then defect liability period performance
certificate also to be issued for that part? Yes, as as soon as taking a certificate is issued for a
part, then the defect liability period will start for that part.From that date onwards.Uh, if yours
then uh second-half of retention to be released in two stage yeah, the retention at yeah. So
when the TOC is issued, the related portion of the retention will have to be released. However,
the second portion of the retention has to be released in two different ways. In physics forms
predicate 87 it is always.At the end of last defect Liability period Pedigree 1999 as, as and when
each defect liability period is completed, the related quotient will have to be released for the
second portion as well.Oh, there is very long question, will not have time to go to that. Uh, how
the rates are fixed in lump sum contract. Uh, the rates are fixed in uh, I mean lump sum means
the work will not be remissured, that is only relating to the quantities.Whether the race are fixed
or not is something that you have to define in your contract. Now if the race are not fixed that
means the race will be subject to fluctuations. So if the race of subject to fluctuation, price
fluctuation then you have to specify the mechanism for agreeing the flight fluctuation which is
not here. Now we do not have.Excess published in UAE So in in the contracts that we make
here, normally the price fluctuation is not applicable. Therefore, the rates are fixed for the
duration of the contract. The duration of the contract is from the commencement of the from the
from the from the contract start date, which is the starting date of the contract up to the.Defect
liability certificate date.How to make visiting certificate? Is it prepared by the contractor party or
to get from? No, the westing certificate has to be issued by the party who is holding the
ownership of the materials. Now if these materials let's say, are still with the supplier in his
manufacturing yard, then the supplier is the one who has the ownership of those materials.The
supplier has to issue a letter.You know, transporting the ownership of those materials to the
employer. So whoever who has the ownership of the materials has to issue the investing
certificate. What is required is within the certificate, it should confirm that the ownership of the
material is transferred to the employer.A construction contract if a defect is found at the
completion stage, the entire designs with. How can case determine the responsibility of the
party for the defects from work and picture of design? Are there any court cases within Gulf
region? No.Uh, I'm not sure about the court cases, but, uh, when it comes to a defect, uh, now
whether that defect is due to a design error or.Uh, the constructability issue is something that
needs to be resolved by a third party. Now the the engineer.It as as because the the design is.
The design is issued by the engineer and the conductor does the sub drawing and conductor
also an experience contractor right? So if there is an issue in the design then the contractor has
also.Uh has an obligation to notify that to engineer and uh, if the contractor has reflected that in
its sub drawing which is approved by the engineer and now that work is carried out on site and
now there is a defect. So who is liable for that defect? Is it, is it design error or is it construction?
Even it's, uh, it's very complicated area. Now if this is, uh, now, maybe it is joint responsibility,
then it comes to, you know.You know joint and several liability clause there is there is article
which is addressing joint and several liability. In that case what the article says is each person is
responsible for the damages equivalent to his.Yeah, equal to his share of default. You know
what is his share. So this needs to be then decided by the course, you know who.You know
what? What is the portion that should be attributable to each party?Could you please explain
about reinsurance? Reinsurance, I don't know, I mean.Is is not something which is commonly
adapted like reinsurance, uh.I don't know. I haven't come across reinsurance in
construction.Alright, OK.As per physique, the insurance for the work shall be obtained with the
joint names of both employee and the contractor. Is it required to avoid the subrogation?No, uh,
vendor is the ya as per predict. Uh, the insurance for work should be obtained in the joint
names. That means uh, uh, each party can uh, make a claim against the same insurance. So
because each party can make a claim against the same insurance.The subrogation rise, uh, you
know, has to be waived. Otherwise what the insurance company can do is insurance company
can pay the damages of the employer and try to recover that from the contractor. So in that
case, the meaning of the insurance will not be fulfilled.So This is why the subrogation rise has
have to be avoided or waived. Hope for a for a for a insurance policy take another joint names
to be fully operational.What are the factors to be considered when fixing the third party
insurance amount? Factors to be considered is the value of the third party. Uh, you know, what
is the risk, you know, to the third party, you know, like for example, if you're building, if you're
building.A new building next to Burj Khalifa, for example, your third party right will be huge. You
know, if something goes wrong and if if some crack happens to you know, Burj Khalifa, then
how much it will take to rectify that, you know, it depends on you know, what is there in, in the
adjacent plots.And you know who are the people you know expected to visit? So it has to be
assessed case by case depending on the the situation applicable for each each project.Alright,
OK. So those are the questions we have. I think with that we can close the session today. So it
has been more than five hours. I hope this has been helpful for your APC process and I wish
you all the best.And, uh, I will be sharing, uh, the slides that we have used, uh, during this
session and also some notes for you to practice further and wish you all the best. With that, uh, I
will hand over to the organizers at, uh, SLQS to wind up the session. Thank you all.thank you
very much again