The application of FIDIC conditions of contract to the contract of ‘locatio operis’ : an assessment

Abstract

The contract is the law of the parties. It is drawn up to define what is required to be carried out in return for a payment. A construction dispute can be the outcome of various factors. These include delays in the project, failure to comply with the pre-set project specifications and parameters, exceeding costs and time frames. The lack of clarity in the contract description can also be the source of this problem, in fact, the FIDIC contracts contain guidance for interpretation and the mechanisms to minimise as much as possible vague provisions. This dissertation sets out to analyse how a well drafted contract can avoid certain disputes in the construction industry. The provisions of the Civil Code dealing with Locatio Operis (Contract of Works) shall be discussed to obtain a deeper understanding of the problems surrounding construction contracts. The focus shall be the protection offered to the parties and the remedies available for breach of contract. Namely, termination, specific performance, withholding performance, price adjustment, damages, and an action for payment. FIDIC general conditions give the parties the tools needed to ensure quality contract documents. Since our local provisions are limited on this matter, most of the legal activity in this regard is contractually drafted. Therefore, the importance of clear, elaborate provisions persists. The assessment conducted throughout this research brings out not only the benefits of adopting such a standard form, but also discusses practical solutions for when a rigid format, such as, FIDIC would not be ideal. This analysis revolved around current industry practices being used to ascertain the FIDIC level of protection with simplified contractual clauses, whilst still tallying perfectly with the law. This study is a well needed ‘breathe of fresh air’ in the building industry, which desperately requires review of its regulations and modus operandi.