Question 1

The Employer has prepared a contract for a waste-to-energy project based on the FIDIC Yellow Book (edition 1999). You are preparing negotiations on behalf of one of the Subcontractors with the Contractor. The main Contractor will manage the design and build of the Works, whereby the Subcontractor will deliver critical systems regarding power generation and cooling. The Contractor intends to contract the main Contract backto-back with the Subcontractor. In the proposed back-to-back subcontract, the following amendment is proposed through Particular Conditions: "Sub-Clause 4.4. The following paragraph is added: The Subcontractor is required to scrutinize the Employer's Requirements in a manner identical to the obligations of the Contractor as stated in Sub-Clause 5.1 of the Main Contract. The Subcontractor will indemnify and hold harmless (up to the maximum liability of the Subcontractor) the Contractor with regard to any error, fault or other defect found in the Employer's Requirements, its items of reference or Contractor's design of the Works for the scope part for which Subcontractor is contracted." What is your advice to the Subcontractor (SC) in regard to entering this proposed subcontract?

Options :

A :

I would advise the SC to enter the Contract with the request to the Contractor to delete this amendment in the Particular Conditions. If the Contractor does not agree to do so, at least the Subcontractor has tried its best.

B :

I would advise the SC not to enter this contract because the Contractor is obliged to act in accordance with good faith. A proposed paragraph like this opposes good faith.

C :

I would advise the SC not to enter this contract, because Sub-Clause 4.4 describes the obligations of SC towards Contractor, but this amendment positions the SC in a vulnerable position for claims regarding all errors, faults or other Defects (whether originating from the Employer's Requirements or the design of the Contractor). Essentially, this means the SC becomes liable for the design part, which is within the scope of Contractor even without SC having the opportunity to review it.

D :

I would advise the SC to discuss this amendment with the insurance company just to be sure there will be no transfer of risks. This amendment is mainly a consequence of the FIDIC Yellow Book structure, where the Contractor has obligations in terms of scrutinizing the Employer's Requirements. This amendment makes this obligation more explicit. If the insurance company has no problems with insuring the parts which will be delivered by SC to Contractor, the SC can accept this risk and enter into the subcontract.

Answer: C

Question 2

Which of the following cases will allow the Employer to claim under the Performance Security? [2017 Edition] (2 correct answers apply) Choose all of the correct answers (multiple possibilities).

Options :

A : The Contractor failed to renew the Tender Security.

B : The Contractor abandons the Works and the Employer did not issue Notice of termination.

C : The Employer had submitted a claim under Sub-Clause 20.2.

D : The Engineer had issued instruction to replace part of the Works.

E : The Contractor failed to extend the validity of the Performance Security.

Answer: A,E

Question 3

You are the new Contract Manager of the Contractor in a bridge project using FIDIC Yellow Book (edition 2017). The project had been suspended due to a material change in the Employer's financial arrangement. You have worked with your team to identify several failures of the Employer in carrying its obligations under the Contract. Which one of the following does NOT allow the Contractor to issue Notice to terminate the Contract?

Options :

A : A prolonged suspension for more than 1 year has affected the whole of the Works.

B : The Contractor does not receive the amount due under the latest Payment Certificate for more than 4 months after the due date.

C : The Contractor has requested the Employer but has not received any evidence that the financial arrangement is being maintained, despite having sent a notice thereto 4 months earlier

D : The Employer failed to comply with a final and binding determination issued by the Engineer, and such failure constitutes a material breach of the Employer's obligations under the Contract.

Answer: C

Question 4

Which two of the following statements are correct regarding Dispute under the FIDIC Red, Yellow, and Silver Books (edition 2017)? Choose all of the correct answers (multiple possibilities)

Options :

A :

In case the Engineer refuses to issue a Performance Certificate or to issue one with a correct date under Sub-Clause 11.9, and the Contractor has disagreed with the requested entitlement or relief in connection with this refusal, Dispute shall be deemed to have arisen.

B :

If a Party is dissatisfied with the determination and has given Notice of Dissatisfaction (NOD) to the other party within a strict 28-day time limit, a Dispute arises and either Party may proceed under SubClause 21.4 to obtain a DAAB decision on it.

C :

The Dispute must be submitted to the Dispute Avoidance and Adjudication Board (DAAB) within 42 days, otherwise the NOD is deemed to have lapsed and is no longer valid.

D : Both 'Disagreement' and 'Dispute' are defined terms under the Conditions of Contract.

Answer: A,B

Question 5

Under the FIDIC Yellow Book (both editions), the Contract is administered by the Employer (unless it appoints an Employer's Representative) who endeavours to reach agreement with the Contractor on each claim. Is this statement true or false?

Options :

A : True

B : False

Answer: A

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