Incoterms_® and Commercial Contracts

Article 1 DEFINITIONS

1.1 As used in this Contract, the following terms shall have the meanings set out below. Words indicating persons or parties include corporations and other legal entities, as well as unincorporated joint ventures, except where the context requires otherwise.

“Appendix” or “Appendices” means the appendix or appendices to the Contract referred to throughout these Conditions of Contract, which describe particular aspects of the Works.

“Article” means any article or sub-article of these Conditions of Contract as the context requires.

“Assumptions” are statements provided by either Party in writing setting out its assumptions (if any) in relation to the Works, prior to the signature of the Main Contract Form.

“Business Day” means, unless otherwise agreed, a Day in the Country or, in the case of a local Business Day, in the country in question, on which banks are open for general business.

“CDB” means the Combined Dispute Board appointed under this Contract.

“Certificate of Completion” is a certificate issued for Completion of Construction or Mechanical Completion, as the case may be.

“Certificate of Final Acceptance” is the certificate issued according to Article 49.14.

“Completion” means Completion of Construction or Mechanical Completion.

“Completion of Construction” or “Mechanical Completion”, unless otherwise defined herein, is the moment the Works have been physically completed to the extent that they are ready to start commissioning.

“Conditions of Contract” means these conditions of contract.

“Contract” means the Main Contract Form, including the Schedule of Contractual Amendments and these Conditions of Contract together with all Appendices and subsequent alterations and additions agreed in writing, as set out more precisely in Article 7.

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“Contract Date” means the Date the Contract is signed and enters into force as set out in Article 2.

“Contract Price” means the price set out in the Contract for the provision, on a turnkey basis, of the Works, including the supply of all the goods and services that are indicated in this Contract, subject to such additions thereto or deductions therefrom as may be made in accordance with the provisions of the Contract.

“Contractor” means the legal or natural person(s) named as contractor in the Contract, its agents, assignees agreed by the Employer and the legal successors in title to this or these person(s).

“Contractor’s Documents” means all physical documents, software and any other form of recording and transferring of information submitted by the Contractor under this Contract to the Employer, including, without limitation, the construction documents, operation and maintenance manuals and as-built drawings, all as specified in this Contract, or, if there is no such specification, as may be identified by referring to the requirements of Article 33.

“Contractor’s Equipment” means the Equipment provided by the Contractor for the Works and/or as may be set out in an Appendix.

“Contractor’s Personnel” means physical persons in the employ of or seconded to the Contractor and acting for it, or other persons authorized to act for the Contractor in relation to the Works.

“Contractor’s Variation Proposal” has the meaning set out in Article 35.9.

“Contractual Performance” means the performance levels of the Works (if any) that are guaranteed by the Contractor to be achieved during the Performance Tests as may be set out in an Appendix to this Contract.

“Cost” includes any element of actual expense plus overheads.

“Country” means the country where the Site is located.

“Day”, “Days” or “Date/s” mean, unless otherwise agreed, references to a 24-hour calendar day in the Gregorian calendar with “year” meaning 365 days under that calendar, unless it is a 366-day leap year. Periods of time are calculated from the day after receipt of the relevant instruction or other action requiring an activity to commence.

“Defect” means a non-conformity with the Contract requirements.

“Defect Correction Period” means the period for correction of Defects as established under Article 49.

“Delay Damages” means the monetary compensation paid under Article 37.

“Design” includes sketches, schemes, models, plans, drawings, technical criteria or standards, and descriptions with aesthetic or functional elements for making up a building, machine, facility or other object or process intended for the Works. Design also includes, without limitation, performance descriptions, specifications or requirements.

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“Employer” means the legal or natural person(s) named as employer in the Contract, its agents, assignees agreed by the Contractor and the legal successors in title to this or these person(s). If the Employer named in the Contract does not have separate legal personality under the laws governing its status, the Employer includes any organization of which it is a part that does have separate legal personality.

“Employer’s Equipment” means any Equipment provided by the Employer for the Works and/or as may be set out in an Appendix.

“Employer’s Personnel” means physical persons in the employ of or seconded to the Employer and acting for it, or other persons authorized to act for the Employer in relation to the Works.

“Employer’s Requirements” means the document(s) sent to the Contractor, prior to the Reference Date, setting out the Employer’s requirements for the Works, as included in the Contract, and set out in an Appendix (if any), and any Variations. The Employer’s Requirements include, without limitation, documents specifying the purpose, scope, time-frame for construction, and/or design and/or other technical criteria, and/or conceptual elements for the Works.

“Equipment” means all appliances, machinery, vehicles, tools or other things required by the Contractor for the execution and completion of the Works and the remedying of any Defects. Equipment excludes, however, Temporary Works, Plant, materials and any other things intended to form, or forming, part of the Works.

“Final Acceptance” has the meaning set out in Article 49.13.

“Force Majeure” has the meaning set out in Article 56.

“Good Industry Practice” means (i) the exercise of that degree of skill, diligence, prudence and foresight that would reasonably and ordinarily be expected from a skilled and experienced person engaged in the same type of undertaking under the same or similar conditions; or, (ii) the practices in similar industries.

“Hazardous Materials” means any hazardous or toxic substance or hazardous or toxic waste, contaminant, or pollutant as defined in or regulated by the law governing such matters.

“Instruction” is an Employer’s requirement, whether in writing or not, that the Contractor does or refrains from doing something, or performs tasks at a different time. All non-written Instructions are to be confirmed in writing. An Instruction may or may not be a Variation.

“Invoice Period” shall mean, if not otherwise defined, a calendar month commencing on the first Day of the month and ending on the last Day of the month. The first Invoice Period shall begin on the Day the Notice to Proceed becomes effective.

“Main Contract Form” means the main contract form, including the Schedule of Contractual Amendments, to which these Conditions of Contract and Appendices are supplemental.

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“Method Statement” means a statement or statements submitted by the Contractor and noted or accepted by the Employer describing how the Contractor proposes to meet the Employer’s Requirements. The Method Statement may or may not be described as such but will consist of one or more submissions, normally accepted or known by the Employer or its representatives, detailing how the Contractor intends to deploy Plant, personnel, material, Equipment and other resources to accomplish the Works in the Time to Taking-Over.

“Minimum Performance” means the minimal level of performance of the Works (if any) to be achieved during Performance Tests, as are set out in this Contract.

“Notice” has the meaning set out in Article 36.5.

“Notice to Proceed” means the notice given under Article 36.3, which sets the Start Date and first Day of the Time to Taking-Over.

“Payment Certificate” means a certificate issued under Article 42.

“Performance Tests” means those tests (if any) to be performed, specified as such in the Contract, in accordance with an Appendix (if any).

“Plant” means any and all apparatus, machinery or devices (if any) intended to form, or forming, part of the Works.

“Project” means, if the context so requires, the larger project (if any) the Employer is developing, of which the Works are a part.

“Punch List” has the meaning set out in Article 47.10.

“Reference Date” means, in the case of a bidding procedure without negotiations, the Date 28 Days prior to the latest Date for the submission of Tenders, and, in the case of a negotiated contract, the Date 28 Days prior to the first signature on the Contract.

“Representative” means the physical person(s) appointed from time to time by the Contractor or the Employer under Article 18 to act as such under the Contract.

“Rules” has the meaning set out in Article 66.2.

“Schedule of Contractual Amendments” means the annexure to the Main Contract Form described as the Schedule of Contractual Amendments and referred to throughout these Conditions of Contract, which Schedule describes particular amendments to this Contract.

“Schedule of Contractual Dates” is the schedule (if any) set out in or in accordance with Article 38.1.

“Section” means any part of the Works or Site as the context requires.

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“Site” (or “Sites” as the context requires) means the land or other places made available to the Contractor by or on behalf of the Employer and on, under, in or through which the Works are to be constructed. The Site does not include places the Contractor has taken possession of or has access to for the purposes of the Works, but which were not made available to the Contractor by or on behalf of the Employer.

“Start Date” means the Date determined in accordance with Article 36.3.

“Sub-contractor” means any person named in the Contract as a subcontractor, or any person appointed as a sub-contractor, for a part of the Works, and the legal successors in title and/or interest to this or these person(s).

“Taking-Over” or “Provisional Acceptance” means the moment when the Works are, or are deemed to be, provisionally accepted by the Employer under Article 47. Taking-Over or Provisional Acceptance can be accomplished by Section, if the Parties agree, or will occur in fact if the Employer actually takes possession of Sections of the Works.

“Taking-Over Certificate” means the Certificate(s) issued under Article 47.

“Taking-Over Conditions” has the meaning set forth in Article 47.2.

“Temporary Works” means all temporary works of every kind required in or around the Site for the construction and/or completion of the Works and the remedying of any Defects.

“Tender” means the Contractor’s tender (Contractor’s offer to execute the Works) and any additions or modifications to that document or its appendices.

“Time Schedule” means the schedule provided for under Article 38.4.

“Time to Taking-Over” means the number of Days the Contractor has to achieve Taking-Over of the Works or particular Sections of the Works, as this time may be amended in accordance with the Contract.

“Variation” includes any change to the Project or Works, or their location, or the time in which they or any part of them are to be constructed, including, without limitation, any change to the type, form or composition of materials to be used, sequence(s) or timing of construction, performance or other specifications, or any changes relating to the Design.

“VAT/GST” means the local consumption tax charged on any goods and/or services (usually described as a percentage of the selling price) howsoever described.

“Works” means the physical works to be completed by the Contractor under this Contract and the associated supplies and services, including software as appropriate.

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Article 2 ENTRY INTO FORCE OF THE CONTRACT

2.1 This Contract shall enter into force and be binding on the Parties on the Date it is signed (the “Contract Date”). The responsibility for, and expense of stamp duties and similar charges (if any) imposed by law in connection with the signature of this Contract shall be borne by the Employer.³

Article 3 GOOD FAITH AND FAIR DEALING

3.1 In carrying out their obligations under this Contract the Parties will act in accordance with the principles of good faith and fair dealing. The provisions of this Contract, as well as any statements made by the Parties in connection with it, shall be interpreted in accordance with the principles of good faith and fair dealing.

3.2 Good faith and fair dealing in this context includes, without limiting this duty, the duty to co-operate, not to intentionally mislead, and to carry out the Contract to the mutual benefit of both Parties, accepting that each is entitled to achieve its reasonable objectives, and requires the Parties to:

1. share information relevant to the other Party, subject only to obligations of confidentiality;
2. co-operate and consult in such manner as necessary to achieve the completion of the Works;
3. warn of the potential consequences, including cost consequences, of proposed actions;
4. avoid unnecessary interference in each other’s activities; and
5. respond to enquiries in a timely manner, which, if possible, will not impede the progress of the Works.

3.3 Whenever consultation is required by this Contract, it means there shall be a direct exchange of opinions prior to any final decisions being taken about the matter requiring consultation.

Article 4 LANGUAGE OF THE CONTRACT

4.1 Unless otherwise specified in the Schedule of Contractual Amendments or otherwise in the Contract, the ruling language of this Contract and any disputes or differences decided in relation to it, is English.

4.2 If there are versions of any part of the Contract that are written in more than one language, the version that is in the ruling language will prevail.

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4.3 Unless otherwise agreed in writing, the language for day-to-day communications between the Parties on or off the Site shall be the ruling language.

4.4 Minor communications that do not need to be recorded may be in any language.

Article 5 APPLICABLE LAWS

GOVERNING SUBSTANTIVE LAW

5.1 This Contract shall be governed by and construed in accordance with the law(s) agreed by the Parties in Appendix 1, Schedule of Contractual Amendments⁴. In the absence of such agreement, this Contract shall be governed by and construed in accordance with the law(s) of the Country. Such choice of law shall refer only to substantive law and shall not include its conflict-of-law rules.

LAWS AND REGULATIONS OF THE COUNTRY

5.2 The Parties shall, in performing the Contract, comply with all laws in force in the Country that must be observed by those who perform activities in the Country (such as, for instance, safety measures, exchange control limitations, etc.)⁵.

Article 6 NEW OR CHANGED LAWS, STANDARDS, REGULATIONS, ETC.

6.1 If there is a change of applicable laws, regulations, standards, internal procedures or their interpretation after the Reference Date, which affects the performance of the Contract, each Party shall give notice to the other.

6.2 In the event that:

(a) compliance is required, and

(b) compliance affects the Cost of the Works and/or the time of execution of the Works

the Contractor shall be entitled to a Variation and the corresponding effect in time and Cost shall be taken into account in the time and Cost provisions herein, with certification of any additional or reduced Costs as early as possible.

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Article 7 INTERPRETATION OF THE CONTRACT

7.1 The documents forming the Contract are to be read together and interpreted as mutually explanatory of one another. If there is a direct inconsistency in specific obligations, then for the purposes of interpretation, and unless otherwise agreed, the priority of the Contract documents shall be in accordance with the following sequence:

(1) The Main Contract Form and the Schedule of Contractual Amendments;

(2) The Conditions of Contract;

(3) The Appendices (if any) (excluding the Schedule of Contractual Amendments);

(4) The Employer’s Requirements;

(5) The Tender;

(6) The Assumptions (if any); and

(7) Any other documents forming part of the Contract.

7.2 The higher priority interpretation shall be adopted only to the extent required to deal with an inconsistency. Specific terms agreed take priority over general statements, and terms in Contract documents created at a later Date govern over terms in earlier Contract documents. Subject to the foregoing, the terms of the groups of documents set out in Article 7.1 all have equal importance within their group.

Article 8 ASSUMPTIONS; STATEMENTS ABOUT DISTANCES, MEASURES, DIMENSIONS AND QUANTITIES

8.1 If either Party does not accept an Assumption of the other Party or wishes to have it varied, it must indicate this in writing to the other Party, specifically identifying which Assumption it does not accept, prior to signature of the Contract. Disagreement notified after the signature of the Contract will not be taken into account (e.g. in relation to Costs or assessment of extensions of the Time to Taking-Over), unless otherwise agreed by the Parties.

8.2 It is agreed that when either Party states or has stated distances, dimensions, strengths, qualities, quantities or volumes, these statements or figures are taken as statements of fact. Each Party must make reasonable efforts to ensure that the statement is accurate.

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Article 9 OBTAINING PERMITS, PLANNING AND OTHER PERMISSIONS

9.1 Unless otherwise set out in the Schedule of Contractual Amendments, each Party shall obtain at its own expense all permits, licences or approvals from all local, state/provincial or national government authorities or public service undertakings, that are required to be obtained by it in its name and that are necessary for the execution of the Works, including those that are required for the performance by both the Contractor and the Employer of their respective obligations, materials under the Contract, and those required for the importation of the Contractor’s Equipment and the Plant into the Country.

9.2 Each Party shall, at the request of the other Party, assist the other Party in a timely and expeditious manner in obtaining permits, licences or approvals, that are required for the performance of any part of the Works, for delivery (including clearance through customs) of Plant, materials and Contractor’s Equipment, and for the completion of the Works. Such requests may also include requests for assistance in applying for any necessary government consent to the exportation of the Contractor’s Equipment when it is removed from the Site.

Article 10 GUARANTEES, BONDS OR OTHER SECURITIES

10.1 To the extent provided in the Schedule of Contractual Amendments or elsewhere in the Contract, each Party shall provide (at its own expense) the guarantee(s), bonds or other securities required under the Contract.

10.2 Unless otherwise agreed, each Party shall deliver any guarantee(s), bonds or other securities to the other Party within 28 Days after the Contract Date. Each such security shall be issued by an entity and from within a country (or other jurisdiction) acceptable to the other Party, and shall be in the form set out in an Appendix to this Contract (if any), or as otherwise agreed by the Parties.

Article 11 DEMANDS UNDER GUARANTEES, BONDS OR OTHER SECURITIES

11.1 Neither Party shall make a claim under any guarantee, bond or other security, however described, unless there has been a decision by the CDB specifying the amounts to which they are entitled under the Contract, or for its breach.

11.2 Each Party hereby indemnifies and holds the other Party harmless for all damages, losses and expenses (including legal fees and expenses) resulting from a claim under any guarantee, bond or other security to the extent to which the Party making such claim was not entitled to make the claim or the value of the claim exceeded the Party’s proper entitlement.

11.3 Unless otherwise agreed, each Party shall return the guarantee(s), bonds or other securities to the other Party within 21 Days after the security expires, and/or when the Contractor has become entitled to receive the Final Certificate. In any event, all securities howsoever described will include or be deemed by the Parties to include a term that they are to become invalid, null and void on the Date that they should have been returned, whether returned or not.

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11.4 To the extent that either Party holds funds or securities to which the other Party or a third party is, or will become, beneficially entitled, the Party holding the funds hereby agrees that it does so as trustee, for the benefit of the other Party or the third party.

Article 12 NO AGENCY – INDEPENDENT CONTRACTOR

12.1 The Parties agree that neither Party will perform any act or make any statement to any person to the effect that it is acting or has acted under this Contract as agent for the other Party.

12.2 The Contractor shall be an independent contractor with respect to the Project, each of its parts, and the Works, and neither the Contractor nor its Subcontractors nor the employees of either shall be deemed to be agents, representatives, employees or servants of the Employer in the performance of the Works, or any part thereof, or in any manner dealt with herein.

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