Main Clauses and Sub-Clauses of FIDIC Red Book

(1999 Edition) with Examples

Here’s a detailed breakdown of the main clauses and sub-clauses in FIDIC Red Book (1999
Edition), including examples to help you better understand each clause's function in a contract.
FIDIC contracts are typically used for international construction projects, and the Red Book is
primarily for construction works where the Employer provides the design.

1. General Provisions (Clause 1)

1.1 Definitions

 Purpose: Defines key terms used throughout the contract to ensure clarity.
 Example: "Works" refers to the entire scope of construction works specified in the
contract.

1.2 Interpretation

 Purpose: Rules for interpreting the contract. Defines the usage of singular/plural terms,
gender references, and language rules.
 Example: The term “Engineer” is considered singular or plural depending on context,
meaning both an individual and a team of engineers.

1.3 Priority of Documents

 Purpose: Establishes which documents take precedence in case of conflict.

 Example: If there’s a conflict between the Special Conditions and the General
Conditions, the Special Conditions take precedence.

2. The Employer (Clause 2)

2.1 Employer's Name

 Purpose: Identifies the official name and legal standing of the Employer.
 Example: "The Employer is XYZ Construction Ltd., incorporated in the UK."

2.2 Employer’s Responsibilities

 Purpose: Describes the Employer’s duties, such as providing access to the site, relevant
information, and approvals.
 Example: The Employer must provide the Contractor with all necessary documents
related to the site’s existing conditions.

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2.3 Employer’s Representative

 Purpose: Specifies the authority and responsibilities of the Employer’s appointed

representative.
 Example: The Employer’s representative will be responsible for issuing instructions and
approving variations.

2.4 Employer’s Instructions

 Purpose: Details how the Employer issues instructions to the Contractor, typically in
writing.
 Example: The Employer issues an instruction via email requiring the Contractor to
change the material specifications.

3. The Engineer (Clause 3)

3.1 Engineer’s Duties and Authority

 Purpose: Specifies the Engineer’s role in overseeing the construction and their authority
to issue instructions and make decisions.
 Example: The Engineer is authorized to approve drawings, inspect work, and provide
directions regarding the project’s progress.

3.2 Engineer’s Representative

 Purpose: The Engineer may appoint a representative to assist in overseeing the project
on their behalf.
 Example: The Engineer assigns an assistant engineer to conduct daily inspections and
report back on progress.

4. The Contractor (Clause 4)

4.1 Contractor’s General Obligations

 Purpose: Outlines the Contractor’s obligation to carry out the work as per the contract.
 Example: The Contractor must execute the project in compliance with the Employer’s
design and schedule.

4.2 Performance Security

 Purpose: Requires the Contractor to provide security for performance in case of default.
 Example: The Contractor submits a bank guarantee of 10% of the contract price to
ensure performance.

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4.3 Subcontracting

 Purpose: Specifies conditions for subcontracting part of the work, including Employer
approval.
 Example: The Contractor subcontracts electrical works but seeks prior approval from
the Employer before proceeding.

4.4 Contractor’s Personnel

 Purpose: Ensures the Contractor employs qualified personnel.

 Example: The Contractor appoints a certified project manager to oversee construction
activities.

5. Design (Clause 5)

5.1 Contractor’s Design Obligations

 Purpose: Specifies when the Contractor is responsible for designing parts of the work.
 Example: In a design-build contract, the Contractor is responsible for designing the
structural elements of the building.

5.2 Design Review

 Purpose: Outlines the Engineer’s role in reviewing the Contractor’s designs.

 Example: The Contractor submits structural drawings to the Engineer for review and
approval.

6. Staff and Labour (Clause 6)

6.1 Engagement of Staff

 Purpose: The Contractor must employ sufficient and skilled staff.

 Example: The Contractor hires a team of carpenters, electricians, and foremen to meet
the project requirements.

6.2 Rates of Wages and Conditions of Employment

 Purpose: Ensures the Contractor complies with local labor laws and provides fair wages
and benefits.
 Example: The Contractor must pay employees in accordance with the local minimum
wage laws and provide health benefits.

6.3 Health and Safety

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  Purpose: The Contractor is responsible for maintaining a safe working environment.
 Example: The Contractor installs proper scaffolding and provides safety helmets and
protective gear to all workers.

7. Plant, Materials, and Workmanship (Clause 7)

7.1 Quality of Plant and Materials

 Purpose: The Contractor must ensure the quality of materials and plant used for the
project.
 Example: The Contractor uses high-quality concrete and steel as per the project
specifications.

7.2 Inspection of Materials

 Purpose: The Engineer has the right to inspect materials before they are used.
 Example: The Engineer inspects the steel beams delivered to the site to ensure they
meet specifications.

7.3 Workmanship

 Purpose: Work must be carried out with proper craftsmanship and in line with the
contract’s requirements.
 Example: The Contractor must ensure that all masonry is laid perfectly to specifications.

8. Commencement, Delays, and Suspension (Clause 8)

8.1 Commencement of Work

 Purpose: Defines when the work is scheduled to begin.

 Example: The Contractor begins work on the project on the 1st of March as agreed in
the contract.

8.2 Time for Completion

 Purpose: Specifies the agreed completion time for the project.

 Example: The project must be completed within 18 months from the commencement
date.

8.3 Delay in Completion

 Purpose: Provides provisions for dealing with delays in the project.

 Example: If the project is delayed due to unforeseen weather conditions, the Contractor
may be entitled to an extension of time.

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8.4 Suspension

 Purpose: The Employer may suspend the works under certain circumstances.
 Example: The Employer suspends work for two weeks due to a safety concern.

9. Tests on Completion (Clause 9)

9.1 Completion of Work

 Purpose: Defines what constitutes the completion of the work.

 Example: The work is considered complete when all major construction and finishing
tasks are finished, and the site is ready for handover.

9.2 Inspection and Testing

 Purpose: Specifies that the work must pass tests before final completion.
 Example: The electrical system is tested to ensure it complies with safety and
functionality standards before the final handover.

10. Employer’s Risks (Clause 10)

10.1 Risks Indemnified by Employer

 Purpose: Specifies the risks borne by the Employer.

 Example: The Employer bears the risk of damage to the work if caused by an earthquake
(a force majeure event).

10.2 Contractor’s Compensation

 Purpose: The Contractor may claim compensation if certain Employer-related risks

occur.
 Example: The Contractor claims compensation for extra costs incurred due to a site
condition unknown at the time of signing the contract.

11. Contractor’s Risks (Clause 11)

11.1 Risks Indemnified by Contractor

 Purpose: Specifies the risks borne by the Contractor.

 Example: The Contractor is responsible for any damage to the works due to negligence,
such as failing to secure scaffolding properly.

12. Force Majeure (Clause 12)

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12.1 Definition of Force Majeure

 Purpose: Defines events outside the control of both parties (e.g., natural disasters, war)
that can delay or prevent work.
 Example: The Contractor can claim an extension of time if work is delayed due to a
natural disaster like a flood.

12.2 Procedures for Claiming Force Majeure

 Purpose: Specifies the steps for claiming force majeure.

 Example: The Contractor must notify the Employer within 14 days of the force majeure
event to seek an extension of time.

13. Insurance (Clause 13)

13.1 Types of Insurance

 Purpose: Details the types of insurance the Employer and Contractor must obtain.
 Example: The Contractor must maintain insurance against damage to the work, personal
injury, and worker’s compensation.

14. Indemnities (Clause 14)

14.1 Indemnity for Damages

 Purpose: Specifies indemnification provisions for damages caused by the Contractor’s

negligence.
 Example: The Contractor indemnifies the Employer against claims arising from faulty
work or injuries caused by unsafe practices.

15. Termination (Clause 15)

15.1 Termination by Employer

 Purpose: Allows the Employer to terminate the contract under certain circumstances,
such as default by the Contractor.
 Example: The Employer may terminate the contract if the Contractor fails to complete
the work within the agreed period, after giving appropriate notice.

15.2 Termination by Contractor

 Purpose: Allows the Contractor to terminate the contract under specific circumstances,
such as non-payment by the Employer.

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  Example: The Contractor can terminate the contract if the Employer has failed to pay a
due amount within a certain period.

15.3 Consequences of Termination

 Purpose: Specifies the consequences of contract termination, including rights to

payment, costs, and damages.
 Example: If terminated by the Employer, the Contractor is entitled to compensation for
work performed until termination and for any costs incurred as a result of the
termination.

15.4 Employer’s Default

 Purpose: Defines the situation where the Employer is in default, including failure to give
possession of the site, or failure to make payments.
 Example: If the Employer does not provide the Contractor with access to the site, this
constitutes a default, entitling the Contractor to terminate the contract.

16. Suspension (Clause 16)

16.1 Right to Suspend Work

 Purpose: Provides the Contractor with the right to suspend work if the Employer fails to
fulfill certain obligations.
 Example: The Contractor has the right to suspend work if the Employer does not pay for
the work completed within the agreed time.

16.2 Suspension Procedure

 Purpose: Details the process for suspending work, including notification and
justification.
 Example: The Contractor sends a written notice to the Employer explaining the reason
for suspension due to a delay in payments.

16.3 Payment for Work During Suspension

 Purpose: The Contractor is entitled to payment for work carried out prior to suspension.
 Example: If the suspension lasts more than 30 days, the Contractor can request
payment for work completed until the suspension was implemented.

16.4 Resumption of Work

 Purpose: Specifies the process for resuming work once the suspension cause is rectified.

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  Example: Upon payment, the Employer requests the Contractor to resume work within
7 days, after which work resumes as per the original schedule.

17. Measurement and Evaluation (Clause 17)

17.1 Method of Measurement

 Purpose: Defines the method by which the work will be measured for payment
purposes.
 Example: Work will be measured according to the "Standard Method of Measurement
for Building Works," which outlines how quantities and work quality are determined.

17.2 Adjustments for Changes in Quantities

 Purpose: Allows for adjustments in the contract sum based on changes in quantities of
work.
 Example: If the Employer requires additional excavation, the contract price will be
adjusted based on the new quantity of work.

17.3 Measurement of Work

 Purpose: Specifies that the Engineer will measure the work as it progresses.
 Example: The Engineer measures the amount of concrete poured on-site and agrees on
the quantities for invoicing.

17.4 Evaluation of Work

 Purpose: Provides rules for evaluating work that is not measured in quantities, such as
lump-sum items.
 Example: The Engineer evaluates the value of additional work, not previously priced,
and agrees on a rate with the Contractor.

18. Variations (Clause 18)

18.1 Right to Order Variations

 Purpose: Allows the Employer to instruct the Contractor to make changes to the scope
of work.
 Example: The Employer orders a variation to change the layout of the building, which
requires additional work and materials.

18.2 Valuation of Variations

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  Purpose: Outlines the procedure for valuing variations to the contract.
 Example: The Engineer values the variation at a rate agreed upon for similar work, and
the Contractor is paid accordingly.

18.3 Variations Resulting in an Extension of Time

 Purpose: Provides for an extension of time if the variation causes a delay.

 Example: A variation to add an extra floor delays the project by 3 months. The
Contractor is entitled to an extension of time.

18.4 Provisional Sums

 Purpose: The contract may include provisional sums for items not fully defined at the
time of the contract signing.
 Example: A provisional sum of $50,000 is set aside for unforeseen works that may arise
during the construction process.

19. Claims, Disputes, and Arbitration (Clause 19)

19.1 Notice of Claims

 Purpose: Requires parties to provide timely notice of claims related to delays, additional
work, or other issues.
 Example: The Contractor submits a notice of claim for additional time due to delays
caused by adverse weather conditions.

19.2 Substantiation of Claims

 Purpose: Requires the Contractor to substantiate claims with supporting

documentation.
 Example: The Contractor provides records, such as weather reports and site logs, to
substantiate the claim for time extension due to weather.

19.3 Dispute Resolution Procedure

 Purpose: Establishes the steps to be followed to resolve disputes, including negotiation,

mediation, and arbitration.
 Example: If a dispute arises over a variation, the Contractor and Employer attempt to
resolve it through negotiation. If unsuccessful, they proceed to arbitration.

19.4 Arbitration

 Purpose: Specifies the process for resolving disputes through arbitration.

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  Example: If a dispute over the contract price is unresolved through mediation, both
parties agree to submit the matter to arbitration as per the FIDIC rules.

20. Final Provisions (Clause 20)

20.1 Governing Law

 Purpose: Specifies the law that governs the contract, typically the law of the country
where the project is located or the law agreed by the parties.
 Example: The contract is governed by the laws of the United Kingdom.

20.2 Language and Notices

 Purpose: Specifies the language for the contract and how notices should be
communicated.
 Example: The contract is written in English, and all notices must be sent via registered
mail or email to the addresses provided in the contract.

20.3 Entire Agreement

 Purpose: States that the contract represents the entire agreement between the parties.
 Example: Any previous discussions or agreements not included in the contract
documents are not legally binding.

21. Miscellaneous Provisions (Clause 21)

21.1 Severability

 Purpose: Ensures that if one part of the contract is found to be unenforceable, the rest
of the contract remains valid.
 Example: If a specific clause is deemed unenforceable by a court, the remaining clauses
of the contract still apply.

21.2 Waiver

 Purpose: Specifies that the failure of either party to enforce a provision of the contract
does not waive their right to enforce it later.
 Example: If the Employer delays in issuing a notice but does so later, they can still
enforce the clause without losing the right to do so.

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