How to Remedy Defects after Taking Over in the 1999 FIDIC Red Book

“Defects are one of the major causes of disputes. It is common to see disagreement of parties while managing a defect-related process.”

Clause 11 [Defects Liability] in the 1999 Edition of the Red Book states the Procedures regarding Defects after Taking Over.

The issue of Taking-Over Certificate indicates the commencement of “Defects Notification Period”.

1   Notifying the Contractor 

The Employer is to notify (whether himself or by the Engineer) the Contractor;

to remedy the defects and damage for the Works.

on or before the expiry date of “Defects Notification Period”.

2   Defects Notification Period

Sub-Clause 1.1.3.7 defines and describes the “Defects Notification Period” which is;

Calculated from the date on which the Works are completed under Sub-Clause 10.1 [Taking Over of the Works and Sections].

Declared in the Appendix to Tender (with any extension under Sub-Clause 11.3 [Extension of Defects Notification Period]).

3   Remedying the Defects 

3.1  Cost of Remedying Defects

Under Sub-Clause 11.2 [Cost of Remedying Defects] the Contractor will be responsible for the cost of the Work which is attributable to [1];

Any design which the Contractor is responsible.

Plant, Materials or Workmanship not being in accordance with the Contract.

Failure by the Contractor to comply with any other obligation.

If any defect or damage is attributable to another cause, Sub-Clause 13.3 [Variation Procedure] is to apply.

3.2  Access to the Site

The Contractor has a right to access the Work if it is not inconsistent with the Employer’s reasonable Security restrictions.

3.3  Remedy Out of the Site

In case of any defect or damage which cannot be remedied promptly on site, with;

The Employer’s Consent.

Increasing the Performance Security amount or providing other appropriate security.

3.4  Further Tests

If the Performance of the Works are affected after remedying a defect; the Engineer may require repetition of any test;

Within 28 days after remedying the defect.

In accordance with the terms of the previous tests.

The Party liable for the remedial work is to bear the Cost of the further tests.

4 Failure to Remedy 

If the Contractor fails to remedy the defect within a notified date, the Employer may;

Carry out the Work himself or by others, Contractor bears the cost without any responsibility.

Require the Engineer to agree or determine a reduction in the Contract Price.

If the defect has significant effects on the contract or Works then the Employer is to be entitled to recover all sums paid for Work plus financing cost, clearing site and returning the Plant to the Contractor.

5   Extension of Defects Notification Period

5.1 Notice to the Contractor

In accordance with Sub-Clause 2.5 [Employer’s Claims], if the Employer considers himself to be entitled to any extension of the “Defects Notification Period”, the Employer or the Engineer is to give notice to the Contractor before the expiry date of such period.

5.2 Entitlement for Extension

The Employer is to be entitled to extension if the Works, Section or a major item of Plant cannot be used due to a defect.

5.3 Determination Regarding the Extension

The Engineer is to proceed in accordance with Sub-Clause 3.5 [Determinations] to agree or determine the extension in accordance with Sub-Clause 11.3 [Extension of Defects Notification Period].

6   Issuance of the Performance Certificate 

The Engineer is to issue Performance Certificate within 28 days after the latest of the expiry dates of the Defects Notification Periods, or as soon as thereafter the Contractor has [2];

Supplied all the Contractor’s Documents.

Completed and tested all the Works, including remedying any defects.

Unfulfilled Obligations;

Each Party is to remain liable for the underperformed obligations after the “Issuance of the Performance Certificate”.

FOOTNOTES

1. The same Sub-Paragraph letters are used as in Sub-Clause 11.2 [Cost of Remedying Defects] of the 1999 FIDIC Red Book.

2. The same Sub-Paragraph letters are used as in Sub-Clause 11.9 [Performance Certificate] of the 1999 FIDIC Red Book.

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