Construction Contract & Law Course Background

Graduate Program: Construction Technology & Management

Construction Contract & Law Course

Formula, Background & Objectives of the Course

Organized & Delivered by:
Zewdu Tefera Worke
Engineering Contracts Lawyer
March, 2017
Addis Ababa, Ethiopia

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 Construction Contract & Law Course Background

Construction Contract & Law Course

Table of Contents
Formula of the Course
 L: Law;
 K: Contract;
 P: Persons;
 D: Delivery;
 R: Relationship;
 O: Obligation;
 L: Liability;
 E: Enforcement;
 V: Variability of all concepts above;

Background of the Course

 Fundamentals: The Conceptual Framework
 Law, Legal Systems & the Ethiopian Context
 The Law of Contract
 Project Delivery System
 Construction Contract: The Consensual Framework
 International Construction Contract
 Local Construction Contract
 Construction Sub-contract
 Construction Claims & Disputes
 Consulting Engineering Services Contract
 Business Services Contract
 Construction Law: The Regulatory Framework
 Construction Law
 Regulation of Liability
Objectives of the Course

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 Construction Contract & Law Course Background

I. Background & Objectives of the Course

1. Background of the Course

The socio-economic development of a given country requires, inter alia, the study, design,
procurement, execution, financing, supervision & management of infrastructural & other physical
facility development projects. The course, however, focuses particularly on building &
construction projects of civil engineering nature. These projects may encompass the following
categories of projects: building projects; water & energy related projects; transportation &
communication related projects.
The study, design, procurement, execution, financing, supervision & management of civil
engineering works including building structures, imperatively require regulation of same in terms
of contract & law.
To this effect, the Course is, generally, categorized in to the following three major parts, namely, in
to: Part I: Fundamentals; Part II: Construction Contract; and Part III: Construction Law.

Part I: Fundamentals: The Conceptual Framework

This sub-part of the Course deals with the following three areas: a) Law, Legal Systems & the
Ethiopian context, b) the Law of Contract; and c) Construction Project Delivery Systems.
a) Law, Legal Systems & the Ethiopian Context
This sub-part of the Course deals with general introduction /background to law, the world’s two
major legal systems, i.e. the common law & the continental (civil law) legal system, the Ethiopian
legal system & legal framework. This part is very critical to discuss the fundamental concepts of
law & legal systems including the Ethiopian dimension in respect thereof.
b) The Law of Contract
The law of contract is a fundamental requirement to understand the formation, effects & proof of
construction contract. Therefore, the Course attempts, under this sub-part, to cover the legal
elements, in terms of capacity, consent, object & form, to be fulfilled for the valid formation of a
construction contract & the contractual & legal effects of contract like construction contract
including proof of contracts like as related to construction contract.
c) Construction Project Delivery Systems
This sub-part deals with the importance of differentiating & understanding the very concept of
construction project delivery systems, as a broad mechanism for systematic & regulated division of
labor within a given construction project stakeholders like the employer & the contractor;

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 Construction Contract & Law Course Background

categories of delivery systems; and the relationship between delivery & payment system and form
of contract. Delivery system is a key concept to select the contract type & the governing law, as well.

Part II: Construction Contract: The Consensual Framework

The role of contract is evident in construction. The Construction Contract establishes a legally
recognized and enforceable contractual framework of roles, risks, rights, obligations and liabilities
of and between the contracting parties, notably, the employer & the contractor. It, thus, formalizes
& legalizes the promises of the contracting parties & provides sanctions against & remedies for in
case of deviations from the said promises.
This sub-part of the Course deals with Construction Contract & further divided in to the following
six sub-parts: viz., a) international construction contract; b) local construction contract; c)
construction sub-contract; d) construction claims & disputes; e) consulting services contract; and
f) business services contract;
a) International Construction Contract
This sub-part of the Course deals with international construction contract based on specific &
relevant international standard conditions of construction contract, notably that of Federation
Internationale Des Ingenieurs-Conseils (FIDIC) Multilateral Development Banks (MDB)
Harmonized Edition (2006 & 2010) developed based on the New Red Book (FIDIC 1999) including
other earlier editions of FIDIC relevant & applicable to building & civil engineering works.
b) Local Construction Contract
This sub-part of the Course deals with construction contract within the Ethiopian context based on
the Public Procurement & Property Administration Agency (PPA) Conditions of Contract for
Works (PPA 2011) & other relevant conditions of contract in use, if any, including some concepts in
relation to the law of administrative contract, contract of work & labor as provided in the Civil
Code of Ethiopia. Construction contract is divided in to two categories: public & private
construction contract. What are then the essential differences between the two categories of
construction contracts in Ethiopia?
c) Construction Sub-contract
This sub-part of the Course deals with the definition of sub-contract, as a family to vicarious
performance, special features & issues within the context of international sub-contracting
arrangement based on international (FIDIC) Conditions of Construction Sub-contract (1994 &
2011). Two types of sub-contracting arrangements are identified, viz.,: domestic & nominated sub-

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 Construction Contract & Law Course Background

contract. The course will attempt also to discuss the legal relationship between the main contractor
& the sub-contractor, the prime liability of the main contractor for the sub-contractor, and the
possible contractual relationship, obligation & liability between the said sub-contractor & the
employer, if any.
d) Construction Claims & Disputes
This sub-part of the Course deals with the fundamental concepts & the steps to be followed or the
requirements to be fulfilled in submitting, processing & finalizing construction claims & the
different methods & approaches in relation to construction dispute i.e. prevention, settlement &
resolution of same.
Construction Project, as any other project, is expected to be completed within the agreed time
(schedule); cost (budget); (technical) quality and safety (including environmental) parameters.
However, deviations, due to various reasons, may occur during commencement, execution and
completion phase of a given construction project including payment under the contract with respect
to the agreed parameters. Claims, if not well managed & resolved, will, definitely arise, paving the
way for disputes. Disputes, if not prevented, should amicably be settled or otherwise to be resolved
by judgmental process.
e) Consulting Engineering Services Contract
Under this sub-part of the Course, we try to deal with some introductory concepts about the
contractual arrangement & the legal effects in selecting & engaging a consulting engineer
(including architects for building projects) based on a given professional services agreement. The
treatment of this part of the Course is very essential & desirable in terms of the role of the
consulting engineer in terms of studying, designing & supervising or administering a given building
project or civil engineering project. The engineer is not a party to the underlined construction
contract, however.
f) Business Services Contract
Under the business services, the Course attempts to deal with the provision of various possible
business services needed to the realization of a given construction project. Although, there is an
indispensable legal framework for most of the business services, such services are procured mostly
on contractual basis. The focus shall then be on insurance, banking & transportation (of capital
goods) services including on construction equipment lease services.

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 Construction Contract & Law Course Background

Part III: Construction Law: The Regulatory Framework

There is no as such a unified & comprehensive construction law in Ethiopia, which regulates the
whole spectrum or cycles or phases of a given construction project. The relevant legal regulation of
same seems, however, scattered & diverse. Some legal regulations are not, often, confined or unique
to be applied for construction projects. They may also apply for other projects or businesses, as
well.
The course thus attempts to cover the following three broad areas in terms of legal regulation viz.,:
laws of Ethiopia; laws of other countries; and international law both public & private.
The laws of Ethiopia may cover the following three sources of laws: legislative sources (like relevant
proclamations); executive sources (like relevant regulations); and judiciary sources (like relevant
precedents established by the federal Supreme Court cassation division).
As a regulatory framework, the following areas are governed by Ethiopian applicable laws: the
construction industry; the construction program; the construction project; construction
technology; construction professionals; construction companies; construction companies or
construction professionals associations; contract; contracting persons; security; disputes; and
liability. On liability, there shall be a dedicated discussion thereon as related to civil, penal &
administrative liability as related to the construction industry.

2. General Objectives of the Course

By the end of the Course, the student is expected:
I. with respect to Fundamentals
 to understand the general concepts about law & the two (world) legal systems, the
Ethiopian legal system & legal framework; its significance to the construction law &
contract;
 to understand the general concepts of the law of contract; the legal elements needed for the
formation of a valid (construction) contract; the effects & proof of contract & other related
concepts;
 to identify & understand the different categories of construction project delivery systems &
the payment system associated therewith; including their implications on the rights-
obligations/risks-liability-structure of the employer & of the contractor;
II. with respect to Construction Contract
 to identify & explore the very structure, scope, detail contents and features; including the
possible rights, obligations, risks & remedial rights or liabilities of the contracting parties

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to the construction contract based on suitable & applicable standard conditions of

construction contract both within the international and local construction contract context
and the application of same; including, but not limited to, the concept of administrative
contract & contract of works & labour within the context of the local construction contract;
 to explore & understand the definition, the need for, the types, the special features & key
issues of a construction sub-contract specially in its international dimension;
 to identify, explore, and understand the causes, dimensions & management of construction
claims; the possible legal and/or contractual remedies related to claims; the requirements
for construction claims & the processes of same; the concept, causes & nature or
dimensions of construction disputes; the possibility of preventing construction disputes &
the available consensual and/or coercive resolution mechanisms of construction disputes;
 to understand, in general terms, the role of the (consulting) engineer in building & civil
engineering projects & the conceptual background to the consulting engineering service
agreements;
 to identify & explore the possible business services (like banking; insurance; transportation;
equipment leasing;…)required for the realization of the objectives of a given construction
project; the legal framework & some specific contractual features associated therewith;
III. with respect to Construction Law
 to identify & explore the scope of applicable laws; to understand the possible legal
regulation of different & relevant aspects of construction from the perspectives of: the laws
of Ethiopia; the laws of other countries; and of international law; and particularly;
 to explore the specific applicable laws in terms of the broad legal regulation as related to:
the construction industry; the construction program; the construction project; the
construction technology; the construction professionals; the construction companies;
regulation of persons/institutions involved in the construction projects; regulation of
different categories of contracts; regulation of the required security regimes (contractual vs.
legal; commercial vs. non-commercial); regulation of construction disputes; and
regulation of the liability dimensions (civil; penal; administrative;) associated therewith;

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