Art. No.

Subject
Contract Agreement, Ownership of Plant and Import Permits/Duties
37.1 Since the Boiler is being manufactured in India and the STG is being manufactured in the
and Czech Republic, the “Title” of ownership might ideally pass outside GB country limits- at
11.3 earlier of FOB or payment.
Since the passing of titles within GB effectively constitutes a “Sale” by DPS, this
constitutes not only income for DPS within GB- for which Income Tax has to be paid, but
also makes DPS liable for various “Sales” Taxes (e.g. stamp duties, registration fees,
octroi, excise, etc.)
I do not know whether the formulation of three separate Contracts (with separate scope,
price and payment terms) have been investigated- for one “Onshore” component in GBP
and two other “Off-shore”, such that the income from “Off-shore” components are derived
beyond the territorial limits of GB. Upon receipt of proper/expert Tax advice, this has the
potential of saving a lot of taxes for DPS on the off-shore supply component.
If there are no specific Corporate Procedures prohibiting High Sea Sales (HSS), DPS
might investigate this option. All Sales Tax and Income Tax is avoided, but Insurance
formalities and Customs clearance are more cumbersome.
Custom duties are necessarily “pass-through” cost-items from which DPS has no gain or
profit and should therefore have no risk or loss. The responsibility of clearing Customs
(both in Time and Money) should remain Client responsibility.
4.7 Ideally, the following things should exist prior to coming into force (signing) of the Contract:
1. Client able to guarantee unrestricted access to site.
2. Permits necessary for commencement of Works in place
3. Insurance(s) in place (EAR, TPL, motor, etc.)
4. Quality / Quantity / Timing of Construction power / water / utilities / fuel
5. Client to provide evidence of ability to provide Grid Access (Back- Charging) and
Export of Power (full load)
6. The Contract should come into force only after suitable site survey. Contractor to
accept only foundation risks (soil bearing capacity, etc.) and climatological risks. If
not, the Contractor to be provided EoT (Extension of Time) and Costs for finding and
searching for all hinderances to maintaining the project schedule.
7. The Client is able to guarantee emissions and effluent disposal licenses.
8. Check whether re-export licenses are required for long terms supply agreement
(LTSA) repair contracts.
9. DPS should not agree to obtain permits “in Client’s name”.
6 Changes in costs to incorporate Client’s obligations and risks. Force Majeure to be
covered (typical, but not exhaustive lists; foreseeable but not preventable) together with
events beyond Contractor’s control (which are not FM- e.g. insolvency/cessation of
business of suppliers/sub-contractors).
6.8 Client’s training to be detailed exhaustively in a separate schedule prior to commencement
of Contract
6.10 Price variation formula not found in the Contract.
8 Performance Bond or Guarantee
1. DPS should ideally specify a maximum fixed monetary limit (cap), NOT a fixed
percentage of the contract price (10%)- which can vary during the course of
execution of the project!
2. DPS should insist on a fixed calendar expiry date (not open-ended) and certainly
not contingent to the Client issuing a “Take-Over Certificate”.
3. DPS should try to secure a conditional (= surety) bond and never a first-demand
bond (which should be insured against unfair recall if unavoidable!).
4. DPS should try to incorporate an express requirement that a written statement of
default will accompany any call on the bond, specifying the breach complained of
(Contract clause / nature of default)
11.8 Breach of Client’s general obligations should clearly stipulate the following criteria:
1) Clear differentiation from Indemnity provisions
2) Check when transfer of risks occur (PAC)
3) Loss or Damage (incl. Accidents) caused by acts/omission of Client or 3 rd parties
(incl. Client’s other contractors)- ensuring that DPS is protected by Client’s
insurance cover (First Loss Payee)
13.1 Consider withdrawal of general DPS obligations. This is a legal minefield.
15 Design and Drawings (provisions are too sweeping for DPS!)
1) This is to be limited to “approval” for key documents only.

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Art. No. Subject
2) A deemed approval provision is essential for:
a. Bulk material orders and low value orders e.g < = £ 1 million
b. Suppliers and sub-contractors on the pre-agreed list
c. All companies within the Doosan group.
15.9 Purchaser’s use of Contractor’s drawings:
1) Client’s right to use DPS IP is to be based on “irrevocable, non-transferable,
royalty-free license” only for the “completion, operation, maintenance, repair and
adjustment of the Works”.
2) Purchaser does not gain access to Contractor Intellectual Property as a result of
this project (certainly not waiving all moral rights to designs and drawings!)
3) Contractor is not obliged to share manufacturing drawings of spare parts!
4) Purchaser cannot use drawings provided by Contractor to source spares and
operating essentials from third parties, if DPS itself has not done the same
(certainly not for Steam Turbine spares).
5) However, it is to be confirmed whether NPL can approach ENMAS for spares
directly without involving DPS after taking over the Plant.
24 Delivery:
1) All deliveries to specified with proper reference to INCOTERMS 2000
2) Clarify DPS position with respect to Taxation vis-a-vis requirement of “Transfer of
Title”
3) Link major payment milestones against deliveries:
a. DPS to define and limit the documents needed to prove delivery- it should
always be DPS providing the documents- never the Client!
b. Payments against delivery should not be linked to Client’s “Approval”.
25 Suspension:
1) DPS to have clear security against:
a. Delayed payment (incorporation of Interest Component). Impact on
positive cash flow to be confirmed.
b. Insolvency of Client
c. Material breach- e.g. failure to certify progress, etc.
2) DPS must have the right to recover:
a. All payments due at termination
b. Work in progress
c. Costs incurred or committed (suppliers/subcontractors, shipping costs,
insurance premiums, bank charges)
d. All other costs arising from de/re-mobilisation and/or, termination.
3) Consider acquiring “private buyer risk” if necessary.
27 Variations must consider:
1) Client has sufficient funds to pay for the variation before the work starts.
2) Client cannot alter the scope of work/ material supply significantly.
3) DPS should have the right to propose price-neutral changes.
28, 29 There are several comments to be made regarding “Commissioning and Tests on
Completion”.
I have not found any reference to the “Commercial Operation Date” (COD) in the draft of
the Contract. As per my understanding, the COD is initiated immediately after the first time
the Plant is Synchronized with the Grid- with the first export of electric power. This is the
“Completion Date” as per the GB Grid code.
As per Art. 5.10.2, Cl. No. 15.1 of the General Specification, the Client mandates
“Operation at MCR for at least 48 hours”. Hence, COD begins before the commencement
of the 28 day Operability Test, with the Client NOT taking over the ownership of the Plant.
Since DPS remains the owner of the Plant until the Client becomes the owner of the Plant,
DPS should start claiming benefits of depreciation of its assets immediately after COD!
DPS should also claim as it income from the proceeds of the sale of electricity to the Grid.
As per Art. 28.3 of the Contract, it is not possible that “Any Product produced by the Works
during trial operation shall be the property of the Purchaser”. This is not possible until the
Purchaser assumes ownership of the Plant with a transfer of title and issuing the
Provisional Acceptance Certificate.
It is vitally important for DPS to retain control of the sequence of ALL testing procedures.
With reference to the Inspection and Testing Sequence as per Art. 5.2 of the General
Specification, there should be a clear “Provisional Acceptance Certificate” (PAC) and a
“Final Acceptance Certificate” (FAC) with clear contractual obligations / triggering events,

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which should be explicitly documented in the Contract documentation (transfer of risks,
payments, reduction of bonds, etc.).
According to my understanding, the Client has to issue the “Provisional Acceptance
Certificate” (PAC) immediately after the “Operability Test” as outlined in Art. 5.11 of the
General Specification. There is no way to “Reject” the Plant after a “Take-Over” Certificate
has been issued.
There should always be a “deemed Acceptance” clause such that if the Client starts to
operate the Plant commercially after the completion of Operability Tests, then it releases
DPS from the obligation of undergoing Performance Tests. In such a case, only the
demonstration of Availability Guarantees separates the issuance of Final Acceptance
Certificates (FAC) after the issuance of Provisional Acceptance Certificates (PAC).
It is vital to incorporate the provision of multiple opportunities to be made available for “Re-
Testing”; as per DPS requirement (not dependent on Client’s approval).
It is vital to note that “heat rate tests” as per Art. 5.10.2.3 of the General Specification –
Tests on Commissioning on Turbine and Generator are to be specifically excluded, from
the ambit of any testing regime apart from “Performance Test”. Hence, Art. 28.16.4 of the
Contract is to be specifically excluded as it explicitly contradicts Art. 5.11.2 of the General
Specification “Operability Test Procedure”- “During the Operability Test period, the net
power output shall be within at least 95% of the guaranteed value. If the net power output
is not within 95% of the guaranteed value, or emission or noise limits are outside their
absolute limits, the Test shall be deemed to have failed”.
There should be DPS “buy-down” provision such that “performance” LD’s can be activated
or “make-good” provisions incorporated to avoid Plant rejection if there is a provision to
achieve statutory levels of Noise and Emissions without being able to meet the criteria
mentioned in the Client specifications.
It is vital to incorporate a provision in Art. 28.2 of the draft Contract that the Contractor
shall not prevented from achieving Operability tests due to limitations in Power Off-take
conditions imposed by the Grid Operator, and any such externally imposed delays should
be automatically added to the Project Schedule. It should also be mentioned explicitly that
power output would be calibrated against Grid Operating Frequency and Power Factor (to
be submitted as Correction Curves).
The above provision of Correction Curves vis-a-vis Grid Operating Frequency might be
modified if the Client allows the generation of TMCR Output with THO operation during
under-frequency operation (this would achieve the same purpose of an Availability
Guarantee Snapshot).
There should be explicit reference to key triggers activated by the issue of the PAC:
1. At least 95% payment
2. End of Delay LD’s
3. Transfer of Risk- Client starts paying Insurance Premiums while simultaneously
ensuring that DPS is protected by Client’s insurance cover (First Loss Payee).
4. Substantial Reduction of Performance Bond (Client should not have undue
leverage in retaining the full amount of the Performance Bond until FAC)
Art. 28.17 & 28.18 of the draft Contract to be rejected in-Toto with the following
statements:
The Liquidated Damages shall be in full and final settlement and the sole and exclusive
remedy for any Contractor’s delay in supply and/or erection and/or performance. The rate
of Liquidated Damages for delay may only be based on the price of the delayed store or
part thereof. The Cumulative Liquidated Damages for delays in supply and erection to be
[ 5 % ] {check as per DPS norms} of the delayed portion price. The Cumulative Liquidated
Damages for performance to be [ 10 % ] {check as per DPS norms} of the contract value.
In case of the cap on LD’s being exceeded, the Client can terminate the Contract and
complete the work at the remaining Cost to be borne by DPS, without being able to
“Reject” the Plant. On no account should DPS be liable for returning all the money
received from the Client and “re-instating” the Site to its primeval, pristine condition prior to
the start of Project! In such cases, Client can encash the Bank Guarantees.
This rides over and above Art. 34 of the draft Contract, specifically Art 34.5. It should be
clarified that LD’s constitute the full and final settlement and leads to final termination of
the Contract- the Client might only be liable for a working plant at the expense of DPS. No
future claims of the Client would be entertained by DPS!
While penalty clauses are generally unenforceable in English Courts, the mere acceptance
of the fact that circumstances leading to the payment of LD’s by DPS do not constitute a

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“penalty” should not be a tacit acknowledgement of the fact that DPS would be liable
for damages “AT LARGE”. This would make DPS liable for all consequential
damages which might be suffered by the Client in perpetuity (LIABLE FOR AN
INFINITE AMOUNT OF MONEY FOR AN INFINITE AMOUNT OF TIME!). This should be
explicitly provisioned in the Contract.
35 Performance Test conditions should incorporate all the above conditions together with an
opportunity / entitlement for DPS to “buy-down” (with additional, voluntary LD’s over and
above the contractually agreed Caps) rather than trigger an encashment of Bank
Guarantees. While “Rejection” of the plant would no longer be possible, “AT LARGE”
liabilities should be explicitly ruled out!
35.9 Plant Availability has to be measured by a SINGLE mutually acceptable standard like
VGB- RV 808, NERC GADS or IEEE 762. I would personally prefer DPS to proceed with
VGB in keeping with the philosophy of other Testing Standards.
36 Defect Liability
The wording of the draft Contract is too wide and exposes DPS to unquantifiable /
unmitigated risks. The glaring wordings leap out below:
 Art. 36.3.1 (b) and (d) “Plant, Materials or workmanship not being in accordance with
the Contract”, “failure by the Contractor to comply with any other obligation under the
Contract”. DPS obligations only limited to “defects in design, workmanship or
materials”
 Art. 36.5.1: DPS is being asked to extend the Warranty period for the whole Works for
defect arising in a part!
 Art. 36.6.3: DPS cannot sign in to “Consequential Damage” obligations of the Client.
 Art. 36.7: DPS should never agree to increase the Performance Bond by the full
replacement cost of the items which the Contractor is to remove from the Site for
repairs/replacement.
 Art. 36.8: DPS should not accept any responsibility for “Further Tests” similar to “Tests
of Completion” or “Performance Tests” during the Defect Liability Period (DLP). This
provides the Client with the opportunity to turn the clock back and to pass over
ownership rights, warranties risks, etc. back to DPS. This is of tremendous risk for
DPS!
 Art. 36.10: At the end of the DLP, it is not enough for the Client to issue a “Certificate
for making Good Defects”! The Client is to issue a “Final Acceptance Certificate”
(FAC) which not only incorporates the fact that DPS has repaired all known defects
and is henceforth only liable for “Latent Defect Obligations”. This should be linked to
clear contractual obligations / triggering events, which should be explicitly documented
in the Contract documentation (final payments, cessation of bonds, etc.).
 Art. 36.11: DPS should absolutely refuse to search for the cause ANY defect under the
direction of the Purchaser’s representative. This makes DPS liable for
unquantifiable expenditure over an unlimited period of time. This also makes
DPS liable for the failure to find a defect without any time limit, which can later
be classified as a latent defect, making DPS liable for “Evergreen Warranties”.
The following principles should be explicitly mentioned in the Contract:
1. Clearly mention that the warranties stated in the Contract are the only warranties given
in respect of defects, expressly excluding all other warranties implied by law, e.g.:
 Fitness for purpose (which might be any purpose defined by the Client to be
“his” purpose!)
 Merchantability/Satisfactory Quality
 Claims for monetary damages caused by the defect- all consequential
damages and “advanced loss of profits” (to him and to third parties, which
might be Clients of the Client!)
 Excluding “Latent Defects”- which is the onus of the Client to prove that they
must have existed at PAC and not discovered during the entire schedule of
the Warranty Period, which is the same as the Defect Liability Period.
2. Repair or Replacement of the defective part (and the damage arising out of the defect)
is to be based exclusively on the judgment of DPS, without any recommendation or
approval of the Client (no Client inspections, Type Tests, hold points, etc.)
3. The responsibility of DPS shall not extend to defects/damages arising out of:
 Normal wear and tear,
 Failure to adhere to the O&M manual and any subsequent amendments
issued thereof,

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 Any repair or modification initiated or undertaken by the Purchaser during
DLP without proper notification / recourse to the Contractor and without the
Contractor’s knowledge or consent (which shall not be denied
unreasonably).
4. There should be an explicit mention of the final cut-off date when all liability of DPS
for any defects ceases. It should be limited to 48 months {DPS to check!} from PAC.
It is important to check whether DPS can obtain insurance coverage for (consequential)
damages arising out of any defect beyond 24 months from PAC up to 48 months from
PAC. It is generally easier for the Client to obtain such insurance. DPS to check
whether it can pay such insurance premium to the Client and be assigned as the first
loss payee. During this period, DPS would remain responsible for BOTH the defect and
the damages arising out of the defect- e.g. if an LP blade failure wrecks the turbine, TG
building and leads to loss of life, or there is a boiler explosion; DPS would be
responsible for the entire damages.
5. At the milestone date of the end of the DLP (24 months from PAC) and the start of the
LDNP (Latent Defect Notification Period) which would extend to 48 months from PAC,
DPS stops paying the insurance premium for consequential damages and relinquishes
the rights of a first loss payee.
36.12, Latent Defect Liability
36.13, It is essential to include an explicit definition of “latent defects” and the liabilities of DPS.
36.14, 1. Whether “patent” or “latent”, the defect must have existed at PAC.
36.15 2. Client must be able to prove that any particular defect “was not discoverable”
(has actually remained latent- hidden) during the entire stretch of the Warranty
Period or DLP and only discovered after the start of LDNP. This prevents the
Client from tagging every defect detected after DLP as a latent defect!
3. DPS should be liable for the “latent defect” only if it is demonstrated to be a case
of “negligence” (which is difficult for the Client to prove!) and the defect ONLY
has a “substantially material effect on working plant performance” (no free re-
painting of buildings, no free replacement of valves/strainers) and not for
increased safety, redundancy or operating/working margins.
4. Maximum period must not exceed 48 months from PAC, never from FAC (which
is not controlled by DPS).
5. In case of an acknowledgement of DPS liability for “latent defect”, the liability of
DPS extends to repair/replacement of the defective part ONLY.
6. In contrast to DLP, during the LDNP (between the 24th and 48th month from PAC),
the liability of DPS does not extend to consequential damages (if a turbine
blade failure leads to the same damages as above, DPS would only replace the
turbine blade and not even replace the rotor on which the blade was sitting).
7. The responsibility of DPS shall not extend to defects/damages arising out of:
i. Normal wear and tear,
ii. Failure to adhere to the O&M manual and any subsequent amendments
issued thereof,
iii. Any repair or modification initiated or undertaken by the Purchaser during
DLP without proper notification / recourse to the Contractor and without
the Contractor’s knowledge or consent (which shall not be denied
unreasonably).
In Art. 36.14.2, the words “at its own cost in accordance with Good Industry Practice
and with a minimum disruption to the operation of the business of the Purchaser at
the Site” should be deleted. The words “good industry practice” are totally subjective and
subjects DPS to infinite liabilities. DPS cannot ever guarantee “minimum disruption to the
operation of the business” and hence cannot be responsible for consequential damages
like loss of revenues deemed to accrue from export of generated power.
Art. 36.15.3 is to removed in-Toto.
Art. 36.17 DPS should not undertake any remedial tests to establish the suitability of parts
repaired/replaced under latent defects liability. This is to be removed in-Toto.
Art. 36.17.3, 36.18 During the conduct of the LDNP, DPS should have UNRESTRICTED
access to the Complete Plant and all its Operational Details, including details of technical
and commercial nature against which it might be liable for claims.
Art. 36.19.1, 2 and 3 Cross-linking of EPC and O&M Contracts is a sure recipe for
financial/legal disaster. Any dispute regarding one would drag in the other (leading to
freezing or return of payments). There should always be a clean partition of the EPC

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Contract and the O&M contract and no spill-over of LDNP obligations should be off-loaded
to the O&M contract. This repudiates every basis of Client obligations and ownership
asserted above.
42.1 Remove the words “unregistered design right”.
43 The scope of the Indemnities should be explicitly mentioned in the Contract to be “third”
parties other than DPS and the Client, be they individuals or legal entities.
Hence, indemnities must be limited to:
 Death or injury to persons
 Loss or damage to third party property- EXCLUDING the Works. There should always
be a back-to-back arrangement for specialist contractors to have their own insurance
for machinery and workmen to avoid “third party” risk for DPS!
 This does not make DPS liable for losses suffered by the Client WITHOUT any
involvement of the “third parties” to avoid “double jeopardy”. This should include only
fines / penalties / damages claimed ON the Client BY third parties (e.g. Environment
Regualtor)
 All indemnity obligations to be based on “fault” or “negligence” other than IPR. DPS
probably cannot carry any insurance but must indemnify the Client- he cannot use the
Equipment/Works to settle his dues and then claim it back from DPS!
 If both Client and DPS are at fault, then liability must be shared- the extent of the fault
to be borne by DPS must decided by courts/adjudicators.
 DPS to expressly exclude any Indemnity obligation for Owner’s Risks.
44.3 Limitations of Contractor’s Liability
The following words are to be added in the end of this article:
This limit covers all potential liability of the Contractor to the Purchaser, whether under the
contract or at law.
44.4 Exclusive remedies:
The following words are to be added in the end of this article:
The Purchaser does not rely on any representations or warranties except those
expressly stated in the Contract, and for which express remedies are stated in the
Contract. Accordingly, except as expressly provided for in this Contract, neither party shall
be obligated or liable to the other in respect of damages or losses suffered by the other
which arise out of, under or in connection with the Contract or the Works, whether by
reason or in consequence of any breach of contract or of statutory duty or tortuous or
negligent act or omission.
45.1 The Purchaser’s Risks should begin with:
 Fault, error, defect or omission in the design of any part of the Works by the Purchaser
or his authorized representatives, the responsibility for which has been disclaimed by
the Contractor in the manner provided for Art. 15.1 and 15.2.
And end with:
 Force Majeure except to the extent insured under the insurance policies to be effected
by the Contractor in accordance with Art. 47 (Insurance)
46.1 Remove the words:
Notwithstanding any other provision of this Clause Force Majeure shall not apply
to obligations of either party to make payments to the other party under the
Contract.
47 Insurance: I do not know whether this is an evolution from earlier versions, but seems
risky!
If DPS does not carry Construction Erection All Risks, then neither DPS goods nor
services at Site (including coverage of design and manufacturing risks) nor consequential
damages/delay due to defective parts are covered!
Absence of the above does not cover Waiver of Subrogation such that Insurers can
subrogate against DPS suppliers and sub-contractors.