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LEGAL INSIGHT

Construction activities always carry the risk of unforeseen situations and objective events on-site, which may cause the project delays or incur additional construction costs for the Contractor.

From the perspective of the Employer—as the owner or the party with the right to manage the Site — are presumed to be familiar with the conditions of the Site (both natural and man-made). In contrast, the Contractor often has little to no prior information about the Site. Furthermore, during the bidding phase, the Contractor has only a very limited amount of time to investigate and survey the Site. Therefore, in order to create a balance of interests and risks between the Employer and the Contractor, Sub-Clause 4.12 of the General Conditions ("GC") in the 2017 FIDIC Red Book ("Red Book") stipulates that the Employer shall bear the risk of unforeseen physical conditions occurring at the Site. Accordingly, the Contractor shall be entitled to an extension of time for completion ("EOT") and reimbursement of additional costs by the Employer.

However, it should also be acknowledged that, as a professional construction entity, the Contractor has the obligation to assess and consider the conditions of the Site before submitting the Bid Documents. This obligation is stipulated in Sub-Clause 4.10 of the GC. Therefore, it would be unreasonable to assign all Site-related risks to the Employer, especially when these are risks that the Contractor could have reasonably foreseen.

In this article, ATIM will analyze the provisions of Sub-Clauses 4.10 and 4.12 of the 2017 Red Book’s GC to clarify the correlation between these two Sub-Clauses and the conditions under which the Contractor is entitled to make a claim. Based on this analysis, ATIM will also provide recommendations for Contractors to safeguard their rights when applying Sub-Clause 4.12 of the GC.

For details, please refer here.

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If your business has questions or needs further advice, don't hesitate to get in touch with Ms. Huynh (Managing Partner) - huynhnt@atim.com.vn/ 0919200280