1. Introduction

The conditions of contract for construction for building and engineering works designed by the employer under the FIDIC red book place the design obligations on the employer (except where otherwise specified in the contract).  According to the definition of the word ‘drawings’ in sub-clause 1.1.1.6 FIDIC states as follows: “means the drawings of the Works, as included in the Contract and any additional and modified drawings issued by (or on behalf of) the Employer in accordance with the Contract.”  During the execution of the contract the employer issues further drawings and instructions to the contractor that more often than not, contain errors which may delay the contractor in executing the works.  The article will look at the contractor’s remedies in the event that he is delayed and/or incurs costs as a result of such errors. 

2. Discovering error or defects in the drawings

Sub-clause 4.1 states: “The Contractor shall…execute and complete the Works in accordance with the Contract and with the Engineer’s instructions, and shall remedy any defects in the Works.” Should the contractor discover any error or defect of a technical nature in a document which was prepared for use in executing the works, it shall promptly give notice to the employer of such error or defect (sub-clause 1.8). This particular obligation found in sub-clause 1.8 falls on the employer as well.

3. The possible tacit term

When read together, sub-clauses 4.1 and 1.8 mean that the contractor cannot proceed to execute the works if it has discovered an error or defect of a technical nature in a document such as an “Issued for Construction” drawing. Therefore, the contract may be interpreted that it contains a tacit term that the employer’s instructions must be correct in order for the contractor to proceed with executing the works. A tacit term or implied term was described by Corbett AJA in Alfred McAlpine & Son (Pty) Limited v Tvl Provincial Administration 1974 3 SA 506 (A) 531-532 as:
“...an unexpressed provision of the contract which derives from the common intention of the parties, as inferred by the Court from the express terms of the contract and the surrounding circumstances. In supplying such an implied term the Court, in truth, declares the whole contract entered into by the parties:”

Implying a tacit term such as this passes the test in that the implication must be necessary and not merely reasonable. This is confirmed as far back as 1891 in a judgment passed by the Queen’s Bench in Hamlyn and Co V Wood and Co 1891, 2 QB 494. This decision was subsequently quoted in SA Mutual Aid Society v Cape Town Chamber of Commerce 1962 1 SA 598 (A) 615D: “A term is sought to be implied in an agreement for the very reason that the parties failed to agree expressly thereon. Where the parties have expressly agreed upon a term and given expression to that agreement in the written contract in unambiguous terms no reference can be had to surrounding circumstances in order to subvert the meaning to be derived from a consideration of the language of the agreement only.”

The consequences of this tacit term, and the consequences in the event of the contractor not notifying the employer of an error which it has discovered is further explored and, in his book ‘The FIDIC forms of contact’ (3rd edition, p. 194), Nael G. Bunni states that the engineer owes a duty of care in respect of the design and supervision of the works and would incur a liability to the contractor if his design is such that a competent contractor could not have avoided any resultant damage. Bunni goes on to quote Oldschool v Gleeson (Construction) Ltd 1976 4 Build LR 103 where Judge Stabb QC, in support of Bunni’s statement, held as follows: “...The contractor cannot seek to pass the blame for incompetent work on to the consulting engineer on the grounds that he failed to intervene to prevent it…the responsibility of the consulting engineer is for the design of the engineering components of the works and his supervisory responsibility is to his client to ensure that the works are carried out in accordance with that design. But if, as was suggested here, the design was so faulty that a competent contractor in the course of executing the works could not have avoided the resulting damage, then on principle it seems to me that the consulting engineer responsible for that design should bear the loss.”

4. Remedies in the contract

It must be noted that sub-clause 1.8 (care and supply of documents) does not contain a condition entitling the contractor to claim an extension of time for completion and/or additional payment in the event of the discovered error delays the contractor or costing it additional money to rectify it.

The contractor’s remedies for a delay and incurring additional costs are found in sub-clause 8.4 (extension of time for completion) and more specifically sub-clause 8.4 (a) – in instances where the engineer issues an instruction to remedy the error in its design and the instruction amounts to a variation in accordance with the contract; alternatively sub-clause (e) (extension of time for completion) in instances when the contractor is delayed, prevented or impeded by the employer, the employer’s personnel or the employer’s other contractors on the site from completing the works where the error has this effect. Sub-clause 8.4(a) should be read in conjunction with clause 13 (variations).

If the new drawing remedies the error found in the existing drawing it may constitute a variation under sub-clause 13.1 (right to vary). If the drawing (which is an instruction under the contract) fits the description of a variation then sub-clause 13.3 (variation procedure) contains the conditions relevant to the procedure for implementing such a variation. Sub-clause 12.3 (evaluation) then sets out the method in which the variation is evaluated.

The contractor is still obliged to notify the engineer in terms of sub-clause 20.1 of its intention to claim additional payment and/or an extension of time for completion within the 28-day time period.

5. Conclusion

We quite often find contractors trying to force a claim for an error in the design based on sub-clause 1.9 (delayed drawings or instructions) for the simple reason that this provision in sub-clause 1.8 (care and supply of documents) is often overlooked. The difference, although it may appear obvious, between a claim for a delayed drawing or instruction and one based on an error in the drawing is quite large but the effect may be the same. The consequences of the contractor not notifying the engineer of an error or defect which it has discovered will be at its own risk.

Written by Niel Coertse, Associate at MDA Consulting