CLAUSE 19 : Employers Responsibilities

Throughout the project, the Contractor is it be careful to keep the site safe and
orderly including by providing guards, fencing etc., and will take reasonable steps
to protect the environment and avoid nuisance and pollution.

The Employer will have corresponding duties if he employs his own workmen or
other contractors.

In the 4th Edition, clause 19 has been much expanded. Clause 19 of the 3rd
Edition was entitled "Watching and Lighting" and is now contained in clause
19.1(b) with some amendments. The rest of sub-clause 19.1 and the whole of
sub-clause 19.2 are new.

19.1 The part of this clause requiring reasonable steps to protect the
environment is a new and welcome addition to the 4th Edition. The question it
raises is whether the Engineer is empowered to instruct the Contractor, for
example, to modify his machinery in order to render it more environmentally
friendly or in order to avoid damage or nuisance and, if the Engineer has such
powers, whether such instructions would entitle the Contractor to any
compensation. The Engineer is entitled to issue instructions which touch or
concern the works under clause 13.1 (Work to be in accordance with contract). It
would seem to be clear that an instruction in relation to machinery to be used on
the site would fall within the Engineer's powers, but if the instruction requires the
Contractor to remedy a breach of this clause of the contract, then there can be
no question of payment. Otherwise, the instruction would be a variation within
clause 51 (Variations)

"Site" is defined to include areas where works are to be carried out but which are
not yet in the possession of the Contractor. For comment on the definition of Site
see under clause 1.1(f)(vii) and under clause 42.1 (Possession of Site and
access thereto). Similarly, "Works" covers the entirety of the works whether
handed over or not.

Damage to persons or property of third parties is also dealt with under clause
22.1 (Damage to persons and property), whereby the Contractor indemnifies the
Employer against losses and claims resulting from such damage.

19.2 As always when an Employer insists upon using his right under clauses
such as clause 31 (Opportunities for other contractors), there is ample scope for
difficulty and a clash of duties and responsibilities in practice. The concurrent
obligations of the Employer, his other contractors and the Contractor for safety
and the maintenance of the site in an orderly state is a potential source of
difficulty. Other clauses permitting the Employer to use other contractors are
clause 39.2 (Default of Contractor in compliance) and clause 49.4 (Contractor's
failure to carry out instructions).

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CLAUSE 20 : Contractors Responsibilities

The Contractor is fully responsible for the care of the works, from the
commencement date until the works or any section or part is taken over by the
Employer. The Contractor will also take responsibility for any outstanding works
which he undertakes to finish during the Defects Liability Period.

The Contractor is to rectify at his own cost any damage to the works before they
are taken over unless caused by one of the Employer's risks. He will also rectify
any damage done by him during the Defects Liability Period including damage
done during a search.

If the damage is due to one of the Employer's risks, the Engineer will decide what
rectification should take place and will determine the Contractor's costs. If the
damage was only partly due to an Employer's risk, the Contractor will be paid a
proportion only.

The list of Employer's risks is set out.

Although reorganised, re-worded and clarified, this clause is not fundamentally

changed in principle from the 3rd Edition but note the significant changes to sub-
clause 20.4, particularly items (g) and (h).

This clause contains an allocation of risk between Contractor and Employer and
clause 21 (Insurance of Works and Contractor's Equipment) contains the
obligation to insure those risks. Similarly clause 22 (Damage to persons and
property) deals with the risk and clause 23 (Third party insurance) covers the
obligation to insure.

Clauses 20 to 25 and clause 65 (Special risks) impose risk and insurance

liabilities in layers as follows:-

(a) responsibility is allocated to the Contractor by clauses 20, 22 and 24,

subject to exceptions in sub-clause 20.4 (Employer's risks) and clause 65
(Special risks);

(b) liability to insure is imposed by clauses 21, 23 and 24;

(c) if full recovery is not achieved from insurers, liability reverts to (a) above
pursuant to clause 21.3 (Responsibility for amounts not recovered); and

(d) if either party is in breach of its insurance obligations under the contract or
its obligations under the contracts of insurance, they become liable for any
consequential loss pursuant to clause 25.3 (Remedy on Contractor's failure to
insure) and clause 25.4 (Compliance with policy conditions).

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20.1 Greater clarity would be achieved in sub-clause (b) if the reference was to
outstanding "work" rather than "Works". This would conform with the usage in
clause 48 (Taking-over certificate) and clause 49 (Defects liability). There should
be no outstanding Works as the entirety of the Works would have been taken
over by the Employer. The use of the term "Works" is a change from the 3rd
Edition where "work" was used. It is presumed that the draftsman had in mind
the final phrase of sub-clause 49.1 whereby "the Works" are obliquely redefined.

It should be noted that it is the issue of the Taking-over certificate that is

significant for insurance purposes and not any date stated in it. The Contractor
must maintain his policies regardless of any agreement on site that substantial
completion has been achieved.

There will be an overlap of responsibility when the Contractor is returning to part

of the Works taken over by the Employer in order to complete some perhaps
minor element of outstanding works. It is submitted that the formula used in sub-
clause 20.2 rendering the Contractor liable "for any loss or damage to Works
occasioned by him in the course of any operations ... under clauses 49 and 50"
would be more satisfactory.

Contractors should bear in mind that the duty to care for the works includes
Plant. This may mean a duty to insure machinery that is to be obtained by the
Employer, perhaps from its own factories, that may be transported by the
Employer, and that may be subject to testing off-site by technicians employed by
the Employer. Altogether, the Contractor's responsibility may extend far beyond
matters within his control, a factor to be taken into account in arranging insurance
for the project.

20.2/20.3 If the Works are damaged by, for example, an explosion of

materials stored by the Contractor, then the Contractor is obliged to rectify and
rebuild the works. If however, the explosion was due to war or insurrection or
one of the other Employer's risks, the Employer through the Engineer is given the
choice as to whether to rebuild or not. Thus, the Employer's use of the insurance
money and the Contractor's right to execute the works depends on whether an
event falls within clause 20.4 (Employer's risks) or not.

"...from any cause whatsoever...". The breadth of this phrase has the curious
result that if the damage is done by the Employer other than by his use or
occupation or if it is done by the Engineer other than by his design of the works,
the Contractor is liable for the cost of any rectification work instructed. The same
applies for damage by "other contractors" of the Employer. This allocation of risk
is not too objectionable in the context of insurance but, as clause 21.3
(Responsibility for amounts not recovered) makes clear, the Contractor would
bear these losses if for any reason the insurance did not cover them.

An innovation in the 4th Edition is the way in which clause 20.3 deals with
circumstances where the loss or damage derives from a combination of
Employer's risks and other risks.

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The underlying obligation of the Contractor is to complete the works. This
obligation is subject to any applicable law of frustration or force majeure as well
as to a number of clauses such as clause 13 (Work to be in accordance with the
contract) and clause 66.1 (Payment in event of release from performance). If the
works are damaged by the Contractor or by a cause for which he is responsible,
the Contractor's obligation to complete is unaffected. If the event of damage for
which the Employer is responsible, the Contractor's obligation and, indeed, right
to complete the works is qualified by the right of the Engineer to dictate the
extent of the rectification required. The remedial works would effectively be
treated as a variation entitling the Contractor to the valuation of his work under
clause 52. The delay consequent upon the damage would qualify either as
"delay, impediment or prevention by the Employer" under clause 44.1 (Extension
of time for completion), as (a) additional work or (e) special circumstances.
Conversely, it follows from the "full responsibility" taken by the Contractor for the
care of the works other than in relation to Employer's risks, that no extension of
time will be granted for loss or damage to the Works from risks other than
Employer's risks. Thus the Contractor will be well advised to ensure that the
relevant insurance cover includes his liability for liquidated damages, if such
cover is available.

Clause 53.1 (Notice of claims) applies to claims under this sub-clause so that the
Contractor has 28 days of the event to notify the Engineer of an intention to
claim. The notice requirement of clause 52.2 (Power of Engineer to fix rates)
does not, it is submitted, apply for the reasons set out under that sub-clause.

"...during the period for which the Contractor is responsible for the care
thereof...". The Contractor's obligation to rectify loss and damage is limited to the
period prior to the issue of the Taking-Over Certificate. It would obviously be
unsatisfactory if the Contractor was obliged to re-mobilise in order to repair
damage caused by the Employer's risks. However, "the period" is less than
precise due to clause 20.1(b) which places responsibility for care on the
Contractor during the Defects Liability Period for the work which he is completing
or remedying. The effect of clause 20.2 seems to be that if the loss or damage
happens to a part of the works for which the Contractor has a continuing
responsibility, then he is obliged to rectify it but not otherwise. In this context, it
should be borne in mind that if a defect emerges in any part of the works, the
Contractor would be obliged to re-mobilise all necessary equipment and
manpower to search for the cause of the defect under clause 50.1 (Contractor to
search) and clause 49.2 (Completion of outstanding work and remedying
defects). This re-mobilisation obligation is so even if the costs are not ultimately
payable by the Contractor because, for example, the defect is found to be a
design problem.

For discussion of the Engineer's power to waive strict compliance with the
specification, see the commentary under clause 2.1 (Engineer's duties and
authority) and clause 13.1 (Work to be in accordance with the contract).

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20.4 This clause should be read in conjunction with clause 65 (Special risks),
which are defined as Employer's risks (a), (c), (d) and (e) as well as (b) provided
that the rebellion etc relates to the country in which the Works are to be
executed. Clause 65 makes it clear that the Contractor is not liable for the
consequences of special risks upon the Works or other property nor for injury or
loss of life. However, there is a conflict between sub-clause 20.3 and clause
65.3 (Damage to Works by special risks). Under 20.3, the Contractor is obliged
to rectify the damage caused by the Employer's risks at the Employer's expense
only if required by the Engineer to do so. Similarly, clause 49.2 (Completion of
outstanding work and remedying defects) requires the Contractor to carry out
such remedial works as the Engineer instructs. Clause 65.3 on the other hand,
expressly entitles the Contractor to payment for rectifying the damage "so far as
may be required by the Engineer or as may be necessary for the completion of
the Works" (underlining added). Thus, despite the fact that four of the five
special risks may well be uninsured, the Employer is obliged to pay for such of
the Contractor's repair works as are necessary for the completion of the Works.
An exception to this is if the risk concerned is the outbreak of war which would
entitle the Employer to determine the contract under clause 65.6 (Outbreak of
war). Alternatively, either party could seek to rely upon clause 66.1 (Release
from performance) in the event that they thought the contract to be frustrated; or
the Employer could give an "economic dislocation" notice under clause 69.1
(Default of Employer) bringing about the termination of the contract by the
Contractor.

It is submitted that the conflict should be resolved in favour of the Contractor's

right and obligation to complete the works and that the Engineer's role is confined
to instructing the Contractor which portions of the damaged work he requires to
be rectified in order to achieve the completion of the works to his satisfaction. In
the 3rd Edition, the equivalent words to those in 20.3 were "if and to the extent
required by the Engineer and subject always to the provisions of clause 65
hereof ...". Such conflict only arises where the works have been damaged in
such a way or to such extent that completion would be impossible without repair.
If the damage is to a peripheral part of the works, it is right that the Employer and
Engineer should have the option to omit the work.

"(e) riot...". Insurance for riot is not readily available but the Contractor is obliged
by clause 21 (Insurance of Works) and possibly clause 23 (Third party insurance)
to cover this risk.

"(f)...due to the use or occupation by the Employer...". As the risk passes to the
Employer on the issue of a Taking-Over Certificate, which the Engineer is obliged
by clause 48.2 (Taking over of Sections or parts) to issue upon the occupation or
use by the Employer, this clause only covers limited circumstances. However,
clause 48 is far from straightforward and needs careful reading.

"(g) loss or damage to the extent that it is due to the design...". In the 3rd Edition,
loss or damage had to be "solely" due to design so that if it could be shown that,
for example, poor workmanship contributed to any extent to the loss or damage,

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