25.

3 The principle that the Employer should take out insurance himself in the
event that the Contractor does not do so is obviously sound as is the Employer's
right to deduct the premiums from monies otherwise due to the Contractor. The
detailed working of this clause could give rise to considerable argument however.
If a Contractor effects insurance but fails through an oversight to provide the
policy to the Employer within 3 months of the commencement date, is the
Employer entitled to take out insurance and maintain it for the entirety of the
remainder of the contract? If so, does the Contractor's obligation to insure
lapse? What if the Contractor is able to obtain the insurance much more cheaply
than the Employer? Is the Employer under any duty to mitigate his loss?
Happily, these questions should arise only rarely in practice as contractors
generally recognise the importance of insurance.

For a comment on whether non-disclosure leading to the avoidance of a policy of

insurance is a failure to insure or a failure to comply, see under clause 21.3
(Responsibility for amounts not recovered).

25.4 This sub-clause has to be read with clause 21.3 (Responsibility for
amounts not recovered) and clause 23.1 (Third party insurance). Clause 21.3
makes it clear that the Employer and the Contractor bear any losses through
damage to the works which are not insured or not recovered from the insurers, in
accordance with the division of risks set out in clause 20 (Care of Works). If the
failure of insurance or recovery is due to a breach of condition by, for example,
the Employer when the risk was otherwise upon the Contractor, this sub-clause
will, it is submitted, overrule the effect of clause 21.3 and the Employer will bear
the loss. For a comment on whether non-disclosure leading to the avoidance of a
policy of insurance is a failure to insure or a failure to comply, see under clause
21.3 (Responsibility for amounts not recovered).

Similarly, this clause would appear to overrule the preservation of the indemnities
given under clause 22 (Damage to persons and property).

Loss caused to the Contractor by the Employer's failure to comply with conditions
of an insurance policy taken out by a subcontractor in joint names with the
Employer would be recoverable from the Employer if the policy could be said to
have been "effected pursuant to the Contract". Clause 24.2 (Insurance against
accidents to workmen) envisages the Contractor procuring the insurance by
subcontractors so that such policies could, it is submitted, be regarded as falling
within the terms of this sub-clause.

Part II to this clause, as to clause 21 (Insurance of Works) and clause 23 (Third

Party Insurance) provides alternative wording in the event that the Employer
decides to take out those insurance policies himself.

CLAUSE 26 : legislations and Regulations

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The Contractor should comply with all local legislation and regulations and the
rules of all public bodies and companies affected by the works. The Contractor
will indemnify the Employer against any breaches, but the Employer will be
responsible for and will indemnify the Contractor in respect of matters such as
planning permission.

This clause represents a welcome simplification when compared with the 3rd
Edition. The final sentence is new and forms a necessary link with clause 22.2
(Exceptions) and clause 22.3 (Indemnity by Employer) which make damage
resulting from the very existence of the project the responsibility of the Employer.
Missing from the 4th Edition is any provision whereby the Employer repays fees
properly incurred by the Contractor. There is no other mention of such fees in
the contract so that normal practice would be to include a provisional or
contingency sum or a lump sum item in the Bill of Quantities.

Difficulties can arise when part of the Engineer's design is found to conflict with a
local law. If the discrepancy is found before the work is executed, the Contractor
can seek a variation of the works. The Employer would not, it is submitted, be
entitled to deny the Contractor payment of any costs consequent upon the
variation on the grounds that the Contractor had undertaken to conform with local
regulations and therefore should not be entitled to further payment for doing so.
The Contractor has undertaken that he will conform with the local law in the
execution of the works. He is not undertaking that the works as designed so
conforms. It would, it is submitted, place intolerable burdens upon tenderers if
they had to check the design for compliance.

Another area of difficulty that frequently occurs is when delays and costs are
incurred as a result of the rules and regulations of the various utilities whose
pipes and cables pass under or are connected to the works. The design of the
works is normally the Engineer's concern, but liaison with the utility companies is
the Contractor's responsibility. In many countries, the procedure for re-routing,
for example, a telephone cable may be a long and bureaucratic process. It is
submitted that the Contractor would be obliged to show severe delay of this sort
to qualify as "special circumstances" entitling the Contractor to an extension of
time under clause 44.1 (Extension of time for completion).

A very interesting question arises when the Employer is an arm of the

government of the country in which the project is sited and the utility concerned is
also government-owned. Thus, the Contractor could be dealing with the Ministry
of Public Works as Employer and the Ministry of Telecommunications in relation
to the relocation of a cable. A Contractor will seek to argue that delays caused
by the Ministry of Telecommunications fall within the ambit of "delay, impediment
or prevention by the Employer" under clause 44.1(d). The answer lies within the
administrative law of the country in which the project takes place. If the
government can be said to be "one and indivisable" so that the two Ministries are
merely manifestations of the same legal person, the Contractor may well
succeed. In civil code countries, with legal systems based on the French model,
a contract with a ministry would normally be an administrative contract and the

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doctrine of Fait du Prince could apply: this would make an act of one arm of
government a potential ground for claim under a contract with another as the
state is not regarded as comprising separate entities but as a single whole.

The boundary between the Contractor's duty of conformity with local rules and
regulations on the one hand and the Employer's responsibility for "planning,
zoning or other similar permission required" on the other hand is likely to cause
difficulty. The reference in the sentence to clause 22 (Damage to persons and
property) and in particular the indemnity in respect of the exceptions set out in
clause 22.2 may be intended to give guidance to the scope of the words "other
similar permission".

This clause should be read with clause 70.2 (Subsequent legislation) which does
not detract in any way from the duty to comply but reimburses the Contractor in
respect of costs caused by changes in relevant laws after a certain date. It
should also be read with clause 5.1 (Language/s and law) and the commentary
thereto, clause 13 (Work to be in accordance with the contract) which requires
the Contractor to execute the works "unless it is legally...impossible" and clause
66.1 (Release from Performance).

Government Employers may wish to exempt Contractors from certain taxes and
duties in order to ensure, for example, that all the funding available is spent on
the project and not on taxes. A clause to that effect should be inserted in Part II.

CLAUSE 27 : Fossils

Items of value or interest discovered on the site belong to the Employer. The
Contractor shall take steps to preserve such articles and will tell the Engineer
immediately and follow his instructions. The Contractor will be entitled to an
extension of time and reimbursement of his costs in relation to such instructions.

The only change of principle in the 4th Edition is the power of the Engineer to
grant an extension of time for delays caused by instructions. The standard 4th
Edition wording for the Engineer's determination of extension of time and cost
has been introduced.

The purpose of this clause is to endeavour to ensure that items of interest are
handed over to the Employer. Apart from the potential value of such items, the
Contractor would have good reason to seek to hide such discoveries if the
Contractor would suffer financially as a consequence of the discovery. For this
reason, almost every standard form of contract has a fossils or antiquities clause
placing the financial risk of such discoveries on the Employer.

"...as between the Contractor and the Employer...". Local legislation may require
all finds to be handed over to the state and third parties may have claims over
the articles uncovered. The contract of course can only govern relations between
the two parties.

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The Contractor's entitlement to extension of time and costs is only "by reason of
such instructions". Thus, if critical work stops whilst the Engineer is acquainted
with the discovery and whilst decisions are made, possibly by the importation of
experts, and the result is only an instruction by the Engineer to proceed because
for example, the discovery is of no value, the Contractor will apparently be
entitled to no extension of time. This may be unfortunate in that it contradicts the
purpose of the clause and the Contractor will have to make decisions as to
whether the discovery is of value and interest and will be taking a risk if he stops
the work and informs the Engineer. This will tempt contractors to take the safe
course and say nothing. To achieve its objective, the clause should allow the
Contractor an extension of time at least whenever a genuine discovery causes
critical work to come to a halt.

This clause is the only occasion in the contract where the Contractor is required
to "acquaint" the Engineer of something, as normally a written notice of some
description is required. Written confirmation of the fact that the Engineer has
been informed would be a sensible precaution for the Contractor.

CLAUSE 28 : Patent Rights

The Contractor will indemnify the Employer from all claims for infringement of
patent rights etc. in relation to Contractor's Equipment, materials or plant except
where the infringement results from the Engineer's design or the Specification.

The Contractor is to pay all costs for obtaining materials for the Works.

In the 4th Edition, this clause has been divided into two sub-clauses and uses
somewhat different vocabulary. The phrase "or for incorporation in" in sub-
clause 28.1 is new. The exception in relation to the Engineer's design or
specification is also new and has been introduced to allow for the fact that
normally the Contractor has little control over the materials and plant to be
incorporated and thus should not be liable for infringements as a consequence.
Now it is only where the Contractor or a subcontractor selects the equipment,
material or plant that the Contractor is liable for infringements.

This clause raises the queation as to who is liable to pay royalties or licence fees
other than in respect of matters dealt with in sub-clause 28.2. The phrase
"damages...and expenses...in relation thereto" appears to be broad enough to
cover payments made in order to avoid the infringement, but the exception
assumes that the infringement has already occurred. This clause could usefully
be clarified. Meanwhile, as it would perhaps impose an excessive burden upon
tenderers to require them to investigate the potential liability for royalties etc., a
provisional sum would, it is submitted, produce a sensible result, particularly as it
is the Engineer's design and he is best placed to make the necessary enquiries.

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CLAUSE 29 : Interference at work site

The Contractor shall complete the project causing a minimum of interference to

the convenience of the public or the access to adjacent properties and roads.
The Contractor shall indemnify the Employer against claims arising from such
interference if the Contractor is responsible.

This clause is virtually unchanged from the 3rd Edition.

This clause should be read in conjunction with clause 19.1 (Safety, security and
protection of the environment) whereby the Contractor is to "avoid damage or
nuisance to persons or to property of the public or others" and clause 22
(Damage to persons and property). The latter clause at 22.2(a) to (c) makes the
Employer responsible for the damage and claims which are the inevitable
consequence of the execution and existence of the project. This clause, which
could easily have been combined with clause 22, is the corollary, namely that the
Contractor is liable for the avoidable claims etc. arising from the works.

Altogether in the contract, some 13 indemnities are given or are to be given by

nominated subcontractors or insurance policies of which 7 are given to the
Employer by the Contractor and 4 to the Contractor by the Employer. This
proliferation of indemnities must be borne in mind when the parties consider
whether their liabilities in relation to the project are at an end. When the
Contractor is giving his written discharge under clause 60.7 (Discharge), he
should be aware that his right to indemnity is compromised in respect of liabilities
incurred at the date of the discharge, but not, it is submitted, in respect of future
liabilities. See also clause 60.9 (Cessation of Employer's liability) and clause
62.2 (Unfulfilled obligations) and the comments under those clauses.

CLAUSE 30 : Damage at work site

The Contractor shall take all reasonable steps to avoid damage to roads and
bridges including by the careful selection of routes and distribution of loads.

Unless the contract says otherwise, the Contractor is responsible for any
alterations to roads and bridges necessary for the transportation to site of
Contractor's Equipment or Temporary Works and shall indemnify the Employer
against any claim arising from damage.

If any damage arises due to the transportation of materials or Plant, the

Contractor shall inform the Engineer and Employer. If the local law so provides,
the haulier and not the Employer shall be liable for such damage. Otherwise, the
Employer shall pay for the damage and indemnify the Contractor except to the
extent that the Engineer considers the damage was due to lack of care by the
Contractor. The Employer may deduct the Contractor's share of the damage

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from sums otherwise due to the Contractor. The Employer is to inform and
consult with the Contractor in relation to settlement negotiations.

The same principles apply to any necessary waterborne transport.

Sub-clause 30.1 and 30.4 are virtually unchanged from the 3rd Edition save as to
vocabulary. Sub-clauses 30.2 and 30.3 have however been fundamentally
altered.

This clause should be read in conjunction of clause 19.1 (Safety, security and
protection of the environment), clause 22 (Damage to persons and property) and
clause 29.1 (Interference with traffic and adjoining properties). Damage to roads
and bridges should be insured pursuant to clause 23.1 (Third party insurance)
save to the extent that the damage "is the unavoidable result of the execution
and completion of the Work": see clause 22.2 (Exceptions). However, in respect
of Contractor's Equipment or Temporary Works, the Contractor is responsible for
damage regardless of its avoidability. The Contractor is therefore liable for such
damage as insurance will not be available in respect of the unavoidable.

In respect of damage due to the transportation of materials or plant under sub-

clause 30.3, the Contractor is only liable if he has failed to use every reasonable
means to prevent damage.

In arriving at their prices, tenderers will be obliged to obtain information about the
bearing capacity of roads and bridges which will be used in the transportation of
materials etc. to the site. Under clause 11.1 (Inspection of Site) the Contractor
will be deemed to have inspected the surroundings of the site both as to the
"extent and nature of work and materials necessary" and "the means of access to
the site". In relation to their equipment and proposed Temporary Works, they will
be obliged to include for the cost of any necessary strengthening or
improvements and for the cost of repairs.

In relation to any strengthening of bridges etc. needed for movement of materials

and plant, the Contractor is apparently not responsible for or obliged to pay the
cost of such strengthening, but must "use every reasonable means" to prevent
damage. The interpretation of such "reasonable means" should presumably be
limited to matters of the sort particularised in clause 30.1. It is therefore
submitted that a Contractor is entitled to a variation in respect of any
strengthening etc. which is necessitated only by the transportation of materials or
Plant. It is not immediately obvious why the Contractor should not be asked to
price for all strengthening necessitated by the works with additional payment only
in the event of additional strengthening being required for the execution of some
varied or additional work. In the 3rd Edition, the Contractor was obliged to notify
the Engineer of any exceptional load which was likely to cause damage and
make proposals for the necessary strengthening. Unless the Engineer served a
counter-notice denying the necessity for strengthening or modifying the
proposals, the Contractor would be paid. If the foregoing commentary is correct
and the Contractor has no duty to strengthen roads and bridges which may be

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