FIDIC Yellow Book
Conditions of Contract for
Plant and Design-Build
For electrical and mechanical plant, and for
building works, designed by the Contractor
First Edition 1999
The Yellow Book provides conditions of contract for construction works where the design is carried out by the Contractor. The current Yellow Book bears little resemblance to its predecessors. The current edition drops the words “electrical and mechanical works” from the title and in line with the rest of the FIDIC suite the focus is now more on type of procurement rather than the nature of the works.
The Yellow Book is therefore applicable to the provision of electrical and/or mechanical plant, and for the design and execution of building or engineering works. Under the usual arrangements for this type of contract, the Contractor designs and provides the works in accordance with the Employer’s requirements which may include any combination of civil, mechanical, electrical and/or construction works.
Administration of the project and supervision of the works is carried out by an Engineer who is employed by the Employer. The Engineer is responsible, amongst other things, for issuing instructions, certifying payments and determining completion.
Interim payments of the lump sum Contract Price are made as work proceeds, and are typically based on instalments specified in a schedule Where the engineer is required to determine a matter or settle a claim he is required to consult with each of the parties to try and reach an agreement. If agreement cannot be reached the engineer must make a fair determination taking due regard of all relevant circumstances. If an engineer’s determination is not agreed by either of the parties then the dispute will be referred to a Dispute Adjudication Board for a decision. The DAB is formed of one or three people who are jointly appointed by the parties. If the decision of the DAB is not accepted by any of the parties then the final step will be resolution via an international arbitration.
The General Conditions and the Particular Conditions together comprise the Conditions.
Guidance is provided for the preparation of Particular Conditions should it be necessary to modify the General Conditions. The Guidance also contains various forms of security such as parent company guarantee, advance payment bond and a retention guarantee which can be selected as applicable.
What are the most popular forms & the FIDIC approach to risk allocation?
The most well known forms of FIDIC Contract are The Red Book (traditional conditions), The Yellow Book (D&B conditions) and The Silver Book (EPC/turnkey conditions).
The contract structure is generally the same:
- General provisions (Clause 1)
- The Employer, Employer’s Administration or Engineer, Contractor, Nominated Subcontractors OR Design (Clauses 2-5)
- Staff and labour, Plant, materials and workmanship (Clauses 6-7)
- Commencement, delays and suspension, Tests on completion, Employer’s taking over, Defects Liability, Tests after completion (Clauses 8-11/12)
- Measurement and Evaluation OR Variations and Adjustments, Contract Price and Payment (Clauses 12-14)
- Termination by Employer, Suspension and Termination by Contractor (Clauses 15-16)
- Risk and Responsibility (Clause 17)
- Insurance (Clause 18)
- Force Majeure (Clause 19)
- Claims, Disputes and Arbitration (Clause 20
- The 1999 Red Book is globally the most commonly used standard form contract for construction and engineering works where most or all the works are designed by, or on behalf of, the employer.
When profiling risk, FIDIC has historically allocated risk based on which party is best placed to assume the risk; in contrast, The Silver book adopts a market practice approach, placing the majority of risk on the contractor, primarily including design and design co-ordination, along with any employer design.
With The The Yellow Book, the employer takes on risks such as unforeseeable ground conditions, unforeseeable operations of the forces of nature, Force Majeure (such as acts of war, terrorism and natural disasters) planning and environmental permits, and changes to the law. The party who prepares the design takes on the responsibility for its defects.
We are always delighted to provide you with further advice in relation to FIDIC!