Establishing a Valid Contract

FORMATION OF CONSTRUCTION
CONTRACTS Risk Allocation in Construction
Contracts

Design-Build Contracts in
Construction

Public Private Partnership Contracts

Construction Management

Standard Forms of Construction

Contracts

Valuation Methodologies

Damages and Specific Relief

 03. Contracts- in Construction
i. Traditional Model: Design-Bid-
01. Establishing a Valid Contract Build.

i. Introduction and context. ii. A Variation: Build-Only

ii. Common Disputes: Formation. iii. Design and Build (Turnkey)
iii. Anticipation vs. Validity. Contracts
iv. Single-Contractor
Responsibility.
02. Risk Allocation in
Construction Contracts
i. Balancing Risk Factors

ii. Introduction and context.

iii. Common Risk Disputes.
iv. Diverse Risk Perceptions.
04. Public Private Partnership 05. Construction Projects
Contracts Delivery Methods

i. Build – Own – Operate i. Construction Management at

Contracts Risk (CMAR)
ii. Job Order Contracts.
ii. Build – Operate – Transfer
Contracts iii. Construction Management
iii. EPC Contracts (Engineering, multi-Prime (CMMP)
Procurement, and iv. Integrated Project Delivery
Construction) (IPD)
iv. Cost Plus Fixed Fee Contracts v. Parallel Phases and Efficiency.
(CPFF) vi. A Hybrid Approach
v. Lump-Sum Contracts
06. Valuation Methodologies
i. Selecting the Right Pricing
Approach

ii. Disputes Arising from

Construction Contracts
iii. Delays in Construction Projects
and concurrent delays
iv. Extension of Time (EOT) and
critical path analysis.
v. Variation in Construction
Contracts
vi. Valuation Clause at DAB
vii. Damages and Specific Relief

07. Dispute resolution

Mechanisms and Indian law.
i. Specific Relief Act, 1963, and its
amendments.
 ii. Specific performance,
substituted performance, and
related legal changes.

08. FIDIC
FORMATION OF CONSTRUCTION
CONTRACTS
01. Establishing a Valid Contract
1) Introduction
In the realm of construction contracts, there
are no unique legal doctrines, but rather the
application of fundamental contract principles
within a specific context. To navigate this, it is
crucial to comprehend the context in which
each clause of a construction contract is
interpreted. As an initial step, the pivotal
question revolves around whether a valid
contract has been created.
2) Common Disputes:
Formation
Disputes often arise during the formation of
construction contracts, primarily due to the
intricate pre-contract negotiations. These
negotiations involve a multitude of elements
such as offers, counter-offers, tenders, and
related documents. Parties may initiate work
in anticipation of contract execution, raising
concerns when one party fails to acknowledge
work performed. Such disputes can result in
losses for the performing party or claims for
delays by the employer, further complicating
matters.
 3) Anticipation vs. Validity
Construction contracts are unique as they may
be perceived differently by the parties
involved. One party may expect work to
commence in anticipation of a valid contract,
while the performing party may not recognize
the contract's existence. These disparities in
expectations can lead to issues like delayed
work and claims, underscoring the importance
of clear and unambiguous contract formation
in the construction industry.
02. Risk Allocation in Construction
Contracts
1) Balancing Risk Factors
Contracts don't possess overarching,
specialized rules, but instead, risk distribution
relies on general contractual principles.
Understanding the context in which each
contractual clause is placed is essential for
effective risk management.
2) Common Risk Disputes
Disputes often center around the allocation of
risk. Construction projects inherently entail
significant uncertainties. Parties may differ in
their interpretation of how risks should be
distributed, leading to conflicts.
3) Diverse Risk
Perceptions
While one party may assume certain risks to
be allocated to the other, the counterparty
may have a contrasting viewpoint. These
differences can trigger disagreements,
potentially causing project delays and financial
losses. It underscores the necessity of well-
defined risk allocation mechanisms to
maintain clarity and harmony throughout the
project.
03. Contracts in construction
1) Traditional Model:
Design-Build Contracts in
Construction
The Design-Bid-Build model is a conventional
approach to construction projects, comprising
three primary phases: design, bid, and build.
Initially, during the design phase, the
employer engages a design team and assumes
responsibility for all project design aspects,
including quality and standards. Once the
substantial design is complete, the employer
invites bids for the construction phase.
Contractors or multiple contractors, handling
various work packages, can submit bids. Upon
selecting a contractor, the initial design can be
negotiated and finalized.
a. Advantages and Disadvantages
This model offers several advantages. The
employer maintains full control over project
design and has direct contractual relationships
with the design team for the design phase and
the contractor for the construction phase,
ensuring a high degree of design compliance
and cost clarity. However, this separation of
design and construction phases can extend
the project timeline and potentially
complicate issues of liability in case of
contractual breaches. The employer may also
lack direct connections with sub-contractors
or suppliers unless direct agreements are
established.

2) A Variation: Build-Only
A slight variation is the Build-Only model,
where the employer contracts directly with
the design team. Subsequently, the employer
can transfer this contract to the contractor,
making the design team a sub-consultant to
the contractor. This approach simplifies the
employer's point of contact, as the contractor
assumes responsibility for both design and
construction within a single contract. The
FIDIC Red Book serves as a standard form for
build-only contracts.
3) Design and Build
(Turnkey) Contracts
For Large Infrastructure Projects the Design
and Build or Turnkey model is commonly
employed, particularly when the contractor
has the experience and capability to assume
significant risks. This approach begins with the
employer working with the design team to
provide a preliminary design during the tender
stage. Upon a contractor's successful bid, the
contractor takes charge of completing the
design in collaboration with the design team.
4) Single-Contractor
Responsibility
In this model, a single contractor takes on the
roles of design, construction, and
procurement. Besides physical construction,
the contractor also manages the design
process. The contractor's ultimate
responsibility is delivering a fully operational
facility to the employer.
b. Advantages and Disadvantages
The Turnkey model offers distinct advantages.
Design, construction, and procurement can
proceed concurrently, enabling faster project
progress. Risk allocation is simplified because
a single entity bears all the responsibilities.
However, if the employer introduces design
changes, disputes may arise regarding
additional costs and project delays. Although
gaining popularity, this model has its
challenges.
04. Public Private Partnership The public sector grants the private sector
Contracts party the right to develop and operate a
facility or system for a specified period. The
1) Build – Own – Operate
private sector entity does not own the project
Contracts
but constructs it and operates it for a
In this model, a private entity constructs,
designated concession period. After this
owns, and operates a facility, providing its
period, the project is transferred to the
product or service to users or beneficiaries. A
government entity.
notable example is private sector participation
in the power sector. The private entity may
enter into a long-term power purchase
agreement with the government. The asset
ownership and service/facility provision
responsibilities lie with the private entity.
2) Build – Operate –
Transfer Contracts
In a Build Operate Transfer (BOT) Project, the
private entity generates revenue through fees
charged to users or the government entity.
 3) EPC Contracts (Engineering, efficiency and ensures compliance with
Procurement, and Construction) specified quality standards.
Comprehensive Project Execution 4) Cost Plus Fixed Fee
EPC contracts are the cornerstone of Contracts (CPFF)
construction projects where all aspects, from
Flexible Pricing Structure
engineering and procurement to construction,
Cost Plus Fixed Fee contracts are
are integrated into a single contract. In this
characterized by a flexible pricing structure. In
model, a single contractor is entrusted with
these contracts, the contractor is reimbursed
the responsibility to design, procure materials,
for the actual costs incurred during
and execute the construction. It is a favored
construction, plus a predetermined fixed fee
choice for projects necessitating precise
as profit. These contracts are employed when
technical specifications and quality standards.
the project scope and requirements are
Streamlined Execution uncertain.
EPC contracts offer the advantage of
streamlining project execution. A single entity
manages the design, sourcing of materials,
and construction, minimizing coordination
complexities. This model enhances project
Balancing Uncertainty and Compensation projects with a clear and stable scope.
CPFF contracts offer flexibility when project However, contractors may factor in
requirements are unclear. Contractors are contingencies, potentially increasing overall
compensated fairly for actual costs, and the project costs.
fixed fee ensures a predictable profit.
These various contract models cater to the
However, these contracts demand
diverse needs of construction projects,
transparency and oversight to prevent
allowing stakeholders to select the one that
unnecessary expenses.
best aligns with project complexity and
5) Lump Sum Contracts requirements.
Defined Project Costs
Lump Sum contracts are known for their fixed-
price structure, with the contractor agreeing
to complete the project for a predetermined
sum. These contracts are suitable for projects
with well-defined scope and specifications.
Budget Predictability
Lump Sum contracts offer budget
predictability for employers. They are ideal for
05. Construction Projects
Delivery methods
i. Construction Management at
Risk (CMAR)
An offshoot of the DBB process, CMAR takes a
similar approach, but the owner hires
a construction manager (CM) to oversee the
project. The CM becomes the owner’s
representative, supervising every phase from
design to construction.
During design, the CM calculates a guaranteed
maximum price (GMP) and submits it to the
owner for approval. If the project is completed
for less than the GMP, the owner will often
reward the CM—but if the project ends up
costing more, the CM might have to make up
the difference.
a. Pros of CMAR
Owners can work directly with designers
Builders are part of the collaboration from the
beginning, helping to develop more accurate
budget expectations and speeding project
delivery
Owners can take more of a hands-off
approach to management
b. Cons of CMAR
There’s no direct contract between designer
and contractor in this method, meaning the
owner must bridge the gap to resolve
problems
Owner is responsible for the success of the
design plans
Finding a trustworthy and experienced CM is
essential—if the owner fails in this, the entire
project could become a nightmare
CMAR is a great option for busy owners
who don’t want to be involved in every
phase of the construction project—as long
as they can find a good CM to be their
representative.
ii. Job Order Contracting (JOC)
Known as an indefinite-delivery, indefinite-
quantity (IDIQ) project delivery method, JOC is
an open-ended approach allowing multiple
projects to fall under a single long-term
contract. Instead of sending individual
projects to a bidding process, owners gather
bids from contractors once and can then use
their services as long as the contract lasts.
JOC uses a catalog of pre-priced tasks known
as the Construction Task Catalog® (CTC).
Contractors agree upon their rates and they
are listed in the catalog, making it easy for
owners to choose a bidder and award the
contract.
Once under contract, the contractor may be
called upon to fulfill tasks for the owner at any
time along the way. Individual projects start
out with meetings between owners and
contractors to determine scope and budget
expectations. This method speeds up the
procurement process from several months to
just a few weeks, also reducing costs and
administrative overhead.
a. Pros of JOC
Time-efficient and cost-efficient
Less administrative work
Allows owners to complete many projects
under a single contract, with only one bidding
cycle
b. Cons of JOC
If the Construction Task Catalog (CTC) is
unclear or includes unspecific listings or
misleading prices, it can create confusion and
potential headaches for the owner—and slow
down the project
Not ideal for complex, one-time construction
projects
The JOC approach works best for small or
medium-size projects and owners who
complete a high volume of projects every
year. It simplifies the bidding and
contracting process and can save a
considerable amount of time and money,
when done right.
iii. Construction Management
Multi-Prime (CMMP)
Like DBB, CMMP includes three project phases
—design, bid, and build. But with CMMP, the
owner establishes individual contracts with
general and trade contractors for specific
elements of the work, such as plumbing,
architecture, and electrical needs. The owner
acts as the general contractor on the project,
overseeing the plans and specs and taking
responsibility for design details.
 a. Pros of CMMP
Owner has control over the entire project
through individual contracts with trades and
contractors
Designer and contractors work directly for the
owner
b. Cons of CMMP
There’s no central coordination for
contractors, so the owner must play this role
The many different contracts might lead to
confusion and lack of coordination between
trades and contractors
Overall budget can be difficult to calculate and
oversee because of the many individual
contracts
CMMP may be a good choice for
experienced owners who want to be
involved at every level of the project. It
also might be the only choice available in
some states for public sector projects.
iv. Integrated Project Delivery
(IPD)
One of the most popular newer project
delivery methods, IPD is built on ideas of
teamwork and shared responsibility and pairs
well with the lean construction
management approach to projects.
With IPD, a single contract is established
between owner, designer, and general
contractor. When the contract is set up before
the project begins, that means all contractors,
subcontractors, and trades are in
communication with the owner from the
outset. The owner often sets incentives for
design and construction teams, with the aim Owners must be prepared to anticipate
of fostering collaboration and goal alignment. whether team members will work well
together—or clash
a. Pros of IPD
Increased collaboration and teamwork
between stakeholders
With the use of digital tools and lean
methodology, IPD can provide better
communication and efficiency
Project risk is shared equally among
stakeholders

b. Cons of IPD
IPD is still new, and many traditional
construction professionals are unfamiliar (and
potentially uncomfortable) with it, meaning
there’s a bigger learning curve at the outset
Getting the contract right is essential for IPD’s
success, consuming more effort and time
before the project begins

06. Valuation Methodologies
i. Selecting the Right Pricing
Approach
Once the construction contract form is
decided, the next step is to determine the
pricing methodology. Several pricing
approaches are available:
Fixed Price Contract / Lump Sum: In this
method, the contractor receives a
predetermined lump sum payment based on
anticipated costs, with price escalation
typically governed by predefined conditions.
The lump sum should cover actual costs,
overheads, and profit.
Cost-Plus Price: Common in complex projects
with unpredictable costs, this method ensures
actual costs are reimbursed to the contractor,
along with a profit fee.
Target Cost: A variation of cost-plus pricing,
target costing specifies a cost target agreed
upon by the employer and contractor. Any
overage is shared according to agreed
proportions. The contractor is paid for actual
costs plus a profit and indirect costs. Bonus
provisions can incentivize cost savings.
Unit Price/Measured Works: Combining
aspects of fixed price and cost-plus methods,
this approach itemizes construction work into
separate tasks and prices them according to a
bill of quantities specifying quantities and
work descriptions.
Guaranteed Maximum Price: This method
divides the project into two phases. The first
phase covers preliminary investigation and
feasibility studies on a cost-plus basis,
allowing the employer to abandon the project
if costs are too high. The second phase
operates on a lump sum basis with a
Guaranteed Maximum Price.
Each pricing approach offers different
advantages and suits different project
requirements, complexity, and risk profiles.
Selecting the appropriate method is crucial to
project success and cost management.
ii. Disputes Arising from
Construction Contracts
Construction contracts are complex
documents, and due to the long project
lifecycle, they often lead to disputes. Disputes
can arise during the contract formation stage,
involving issues like the existence of a valid
contract and interpretation of contractual
provisions. Bank guarantee disputes,
fraudulent tenders, and conditional vs.
unconditional guarantees also give rise to
legal issues.
The most substantial disputes, however, occur
during project performance. Delays in project
completion are a common source of disputes.
These delays may result from various factors,
including breaches of contract, wrongful
termination, and wrongful bank guarantee
invocation. Other disputes can emerge from
withholding retention amounts, non-
rectification of defects during the defects
liability period, and more.
Once a dispute arises, it must be identified,
and risks must be allocated. Legal remedies
such as specific performance of the contract,
damages, and injunctions are available to non-
iii. Delays in Construction Projects
compliant parties. Liability can also arise
Nearly every construction contract specifies a
under tort law.
completion time, which can be categorized as
practical and substantial. The interpretation of
practical and substantial completion can vary
between contracts. The assessment of
practical or substantial completion depends
on the analysis of the work done, and
contracts typically outline obligations post-
completion. Delays can result in claims for
liquidated damages, but contractors may
avoid these consequences if delays are
attributable to the employer or other factors
outside their control.
Delays can be caused by a variety of factors,
including breaches, modifications to project
requirements, or external unforeseen events
like force majeure. Concurrent delays occur
when multiple events, attributable to different
parties, contribute to project delays. The
consequences of concurrent delays differ
between jurisdictions.
In India, there is no definitive approach to
concurrent delays, but the Essar Projects
(India) Ltd. vs. Gail (India) Ltd. case highlighted
how concurrency can affect liability and
additional costs.
Consequences for delays are typically
governed by liquidated damages provisions in
contracts. In their absence, general contract
law provisions determine the employer's right
to claim damages. Proving actual loss is
essential to claim damages under Indian
contract law, which often leads to disputes
over which party caused the delay and its
impact on the project's critical path.
 iv. Extension of Time (EOT) and
critical path analysis.
Construction contracts typically require
contractors to complete the work by a
specified completion date. However, certain
circumstances may lead to an entitlement to
an extension of time (EOT), relieving the
contractor from paying liquidated damages for
delays. These circumstances include delays
attributable to parties other than the
contractor or other delay provisions in the
contract. Extension of time clauses are
common in construction contracts.
When assessing an EOT application, the
relevant authority must determine the delay's
impact on the entire construction project. The
authority identifies critical events and maps
subsequent activities to identify the critical
path. They also consider factors contributing
to delays at each stage and exclude them if
the contractor contributed to them. The
contract administrator, such as an engineer or
architect, typically handles these
determinations.
a. Critical Path and Float
In construction projects, understanding delays
involves analyzing project schedules,
identifying the critical path, and assessing
deviations. The critical path is the sequence of
connected activities that dictates the project's
overall duration. The critical path typically
links the activities that a contractor must
complete to prevent project delays. Delays in
any activity on the critical path will result in an
overall project delay.
"Float" represents the total time that an
activity can be delayed without affecting the
entire project timeline. Float is the buffer time
for non-critical activities. It is essential to
identify the origin of individual delay events
for critical path activities to assess the extent
of the delay and the associated liability.
Various methods can be employed to assess
critical path delay.
b. Types of Delay Analysis
Methodology
1. As Planned vs. As Built: This method
directly compares the original plan with the
actual progress, but it may not consider
complex activities or multiple events causing
delays.
2. As Planned But For: Adjusted schedules
are prepared by incorporating a particular
party's delays in the as-planned schedules to
identify responsible parties.
3. As Built But For: This method accounts
for the actual progress and deducts matters
caused by the employer, determining when
the project could have completed without
these defaults.
4. As-Planned Impacted: This technique
assesses the impact of delay events on the
planned program, often used when work is yet
to be completed.
5. Time-Impact: Each delay event's impact is
determined on the as-built schedule until the
point of commencement of that event,
followed by an analysis of its impact using the
as-planned schedule.
The choice of delay analysis method depends
on the nature of the delay claims in dispute
and the availability of relevant information.
III. Interplay between the Indian Contract Act
and Delay
The Indian Contract Act provides mechanisms
for dealing with delay in contracts. If a party
fails to fulfill its promise within the agreed
time when "time is of the essence," the
contract becomes voidable at the option of
the promisee. If time is not of the essence,
and no specific time is mentioned, the Act
allows for performance within a reasonable
time. Unilaterally assuming stipulated times
and canceling a contract based on such
assumptions is not permissible, and the
intention of the parties must be determined
based on the contract's terms, typically
through courts or arbitral tribunals.
v. Variation in Construction
Contracts
Variations in construction contracts refer to
changes or modifications to the original
contract. These changes can include design
alterations, quantity modifications, or
adjustments to the scope of work. Variations
empower the employer to order necessary
changes and ensure contractors are
compensated for directed modifications. The
power to order variations must be expressly
provided in the original contract.
a. Contract limitations on power
To order variations, such as restricting
variations beyond a certain proportion of the
work's value or granting the contractor the
right to claim additional payment for work
exceeding the specified proportion.
Standard form contracts often include
provisions granting the contract administrator
authority to issue instructions for variations,
accompanied by adjustment provisions
allowing parties to modify the contract price
and payment schedule.
Contractors are typically entitled to payment
for variations when the work goes beyond the
original scope, was ordered by or on behalf of
the employer, and the employer expressly or
impliedly agreed to pay for it. Certain
variations may not be permissible without the
contractor's consent, such as accelerating
progress or changing the nature of the works,
among others. These principles have been
established in leading cases.
b. Formal Requirements of
Variation
Variations in construction contracts usually
require written notification by the employer
or their authorized agent or principal
engineer. Complying with the conditions of
variations is essential for both parties.
Disputes can arise over what constitutes a
"variation in writing." For instance, sketches
describing the variation in the architect's
office might not suffice, while a letter signed
by the architect authorizing the work would
be considered adequate. Some contracts,
particularly in turnkey projects, may require
the contractor to highlight variations that
could impact project timelines or budgets.
This helps the employer understand the
potential delays and make informed decisions
about the variations.
 c. Variation Valuation Clauses
These clauses provide a methodology for
determining the value of a variation when the
parties don't agree on the price. They typically
offer two approaches: one based on separate
rates and prices, and the other derived from
the contract pricing breakdown. It's crucial to
consider not only the work directly resulting
from variations but also all associated
changes.
vi. Valuation Clause at DAB
In the FIDIC Suite of Contracts (Silver Book),
Clause 13.3 redirects parties to Sub-Clause 3.5
for determining adjustments in contract price
and payment schedule. The determination
involves a consultation between the employer
and contractor, with a fair determination
process if they fail to reach an agreement.
Disagreements based on this fair
determination can be referred to the Dispute
Adjudication Board (DAB).
Disputes relating to variation orders often
revolve around the scope of the variation, the
reasonableness of extension of time claims,
and additional costs incurred. Disputes can
also arise from non-compliance with
procedural requirements, such as notice for
variations, objections to variations, or timely
presentation of time and cost analyses. The
range of potential disputes highlights the
importance of careful contract drafting to
protect stakeholders' rights and allocate risks
appropriately.
vii. . Damages and Relief
a. Damages
Under Indian law, compensation for breach of
contract is governed by Sections 73 and 74 of
the Indian Contract Act, 1872. These sections
provide the basis for awarding damages.
Section 73: This section deals with actual
damages resulting from a breach of contract
and allows for the award of unliquidated
damages. Such damages are awarded by the
courts based on an assessment of the actual
loss or injury suffered by the party due to the
breach.
Section 74: This section deals with liquidated
damages, which are damages that are pre-
determined and stipulated in the contract. To
claim damages under Section 74, there must
be a breach of contract. In cases of valid
contract termination without any violation of
the contract terms, a claim for damages
should not arise, as there is no breach. Section
74 outlines that:
• Liquidated damages should be
reasonable and not exceed the sum agreed
upon in the contract.
• Compensation should be provided when
parties knew or should have known that such
loss or damage could arise when entering into
the contract.
Liquidated damages are typically calculated
based on a percentage of the total contract
price per day or week of delay, with a
maximum cap. However, the overall level of
damages is often limited by a limitation of
liability clause in the contract.
It is important to note that even when parties
agree on liquidated damages, the courts will
assess factors like the reasonableness of the
sum, mitigation of losses, and other
circumstances to ensure that the
compensation is fair and not excessive. The
aim of awarding damages is to make good the
actual loss or damage caused by the breach,
and there can be no compensation without
legal injury.
b. Specific Relief
The Specific Relief Act, 1963, provides
remedies for breach of contract in India. The
Specific Relief (Amendment) Act, 2018,
introduced significant changes to this Act,
making specific performance of the contract
mandatory at the discretion of the party filing
the suit. It also introduced the concept of
"substituted performance," allowing the
affected party to ensure the contract's
performance by a third party and recover
expenses from the party committing the
breach. The Act allows courts to engage
technical experts to assist in complex matters
and mandates the disposal of suits within
twelve months of serving summons to the
defendant.
The Act also bars courts from granting
injunctions in infrastructure project contracts
if it would significantly delay or hinder project
progress. Specialized courts are established
for infrastructure project-related disputes. The
amendment also changes the nature of
compensation, making it mandatory as an
additional remedy to specific performance.
These amendments aim to expedite the
resolution of disputes and make the
construction industry more efficient but also
increase the burden on parties.
07. Dispute Resolution
Mechanisms and Indian Law
Dispute resolution include Multi-Tier Dispute
Resolution Clauses (MTDRC), Dispute
Adjudication Boards (DAB), and occasionally
resort to local courts.
MTDRC allows parties to customize their
dispute resolution mechanism by combining
various Alternative Dispute Resolution (ADR)
methods. For long-term projects that require
relationship preservation, mediation,
conciliation, or negotiation is preferred as the
first-tier resolution. Smaller and simpler
projects may directly opt for arbitration to
expedite resolution. The number of tiers
should be balanced to prevent delays. Many
standard form contracts include MTDRCs.
Types of ADR mechanisms utilized within
MTDRC:
i. Negotiation: Parties attempt to resolve
disputes amicably through direct negotiations
to avoid escalation.
ii. Mediation or Conciliation: A neutral third-
party assists parties in dispute resolution. The
distinction between mediation and
conciliation is the level of intervention by the
neutral party.
iii. Arbitration: Impartial arbitrators make
binding awards based on submissions and
evidence.
iv. Expert Determination: Specific disputes are by offering interim dispute resolution without
submitted to experts appointed by parties, project disruption. It is particularly vital to
who issue decisions based on available prevent cost overruns. DABs were initially
materials. The binding nature depends on used in projects financed by the World Bank
party agreement. and are now common in large construction
projects in India.
v. Arb-Med-Arb: Combines aspects of
arbitration and mediation, encouraging non-
adversarial proceedings while creating binding
Composition, Jurisdiction, and Decisions of the
results through arbitration.
DAB: A panel of neutral members, often
experts in the field, is appointed on a
contractual basis. They issue binding interim
Enforceability of MTDRCs in India: Indian
orders, which can be revised by amicable
courts enforce pre-arbitral steps in MTDRCs,
settlement, an arbitral award, or a court
provided certain criteria are met, such as clear
decision.
language, time-bound steps, and parties'
conduct not waiving enforcement.
Enforcement of DAB Decisions: Parties are
obligated to implement DAB decisions. If a
DAB or Dispute Review Board (DRB) ensures
party is dissatisfied or fails to comply, the
time and cost savings in construction projects
dispute may proceed to arbitration, which can
lead to delays. Challenges to DAB decisions in
arbitration and litigation are not uncommon,
as these decisions are not statutorily final and
binding.
The evidence in construction disputes
encompasses a variety of sources, including
documents, witness testimony, and expert
evidence. Among these, documentary
evidence holds a crucial role due to its
reliability.
Documentary Evidence: This evidence includes
pre-contractual documents, contract-related
documents, correspondence, and cost
documentation, among others.
Witness Testimony: Fact witnesses provide
contextual analysis of disclosed documents
and help construct a factual background of the
dispute.
Expert Evidence: Due to the complexity of
construction disputes, expert opinions are
essential. They interpret industry standards
and assist in claims quantification. Expert
evidence can be party-appointed or tribunal-
appointed.
Briefing an Expert: Parties must provide clear,
written instructions to experts to ensure
transparency, independence, and impartiality.
Forms of Expert Evidence: Expert evidence
comes in the form of written reports and oral
testimony. Joint expert meetings and hot
tubbing are techniques used to streamline
expert evidence presentation.
08. FIDIC
a. Internationally Recognized
Standards
Internationally, various organizations have
developed flexible standard form contracts
that companies and governments can adopt to
expedite negotiation and adoption of terms
while allowing for jurisdiction and industry-
specific customization. The International
Federation of Consulting Engineers (FIDIC)
offers standard forms of contract for civil
engineering construction used worldwide.
b. Different FIDIC Contracts
• The Green Book: Short Form Contract (First
Edition 1999) - Suitable for small-scale projects.
• The Red Book (MDB Edition 2005): Conditions of
Contract for Construction for Building and Engineering
works designed by the Employer - Simplified version for
Multilateral Development Banks.
• The Yellow Book: Conditions of Contract for Plant
and Design-Build designed by the Contractor (First
Edition 1999) - Applicable to the provision of electrical
and mechanical plant.
• The Orange Book: Conditions of contract
for Design-Build and Turnkey (First Edition
1995) - Rarely used.
• The Silver Book: Conditions of Contract
for EPC/Turnkey Projects (First Edition 1999) -
Suitable for process, power, and private-
infrastructure projects.
• DBO Contract: Conditions of contract for
Design, Build, and Operate Projects (2008) - A
general framework for international projects.
Additionally, the New Engineering Contract
(NEC) and various other standard forms like
the Joint Contract Tribunal (JCT), Association
of Consultant Engineers (ACE), and Association
of Consultants Architects (ACA) are also widely
used in the construction industry.

II. HARVEY v. FACEY
⮚ Citation: 1893 A.C. 552
⮚ Introduction: invitation to an offer is
not an offer
⮚ Parties: Facey & Harvey
⮚ Brief facts: Mr. Facey was a real estate
owner who was interested to sell his
property which was in Jamaica. Harvey
who was interested in buying that property
sent a telegraph asking he would sell his
property to Harvey on lowest cash price to
be paid. Replying to his telegraph Facey
replied to his second question only.
Facey’s telegraph read, lowest price for
Bumper Hall Pen is £900. To which
Harvey later replied, he agreed to buy
Bumper Hall Pen which was asked for and
he also asked Facey to send him property
deed so that he could get early
possession. Facey denied to sell his
property to Harvey at that price. Later,
Harvey filed a case in the court of appeal,
Harvey won the case. Facey who
was unhappy appealed against the
decision and case went to Privy
Council which upheld the trial court’s
decision.
⮚ Issue(s): Was there any offer from
Facey to sell the property for £900?
⮚ Decision: It was held by the Privy
Council that; it would be a contract only if
Facey had replied to Harvey’s third
telegraph. Harvey took Facey’s response
to his question as an offer to sell at the
named price by him. There was no
commitment to sell the property because
the offer which was made by the Harvey
by replying to the invitation of an offer
was not accepted. Thus, there was no
contract between the two.
IV. MOHORI BIBEE v.
DHARMODAS GHOSE
⮚ Citation: 1903 30 Cal 539
⮚ Introduction: competency or Ccapacity
of the parties to contract / Minor’s
contract
⮚ Parties involved: Dharmodas Ghose
& Mohori Bibee
⮚ Brief facts: Plaintiff, Dharmodas Ghose
was in need of money therefore, he
pledged his property and asked for loan of
Rs. 20,000 from the moneylender Brahmo
Dutt. The debt amount given was less than
Rs. 20,000. Brahmo Dutt who was acting
as attorney at that time on the behalf of
the moneylender, knew that Dharmodas
Ghose was a minor. Plaintiff filed a suit
against Brahmo Dutt stating that the
mortgage deed should be null and void
because he was a minor at the time of
contract and hence, it should be cancelled.
Later, Brahmo Dutt passed away and
the appeal was prosecuted by his
executors. And it was contended by
the defendant that plaintiff should not be
excused as he misrepresented his age to
him. Even if the deed is void, the debt that
was advanced to him i.e., Rs. 10,500
should be repaid.
⮚ Issue(s):
1. Was the mortgage deed void?
2. Deed signed by defendant was voidable
or not?
3.Was the defendant entitled liable to
receive the mortgage money?
⮚ Decision: The Privy Council held that
the; person who mortgaged the property
was infant at the time of execution. So, the
contract or mortgage deed which was
made between the plaintiff and the
defendant was not merely voidable but it
was void. It also held that any contract
with a minor or an infant is ‘void ab-
initio’. Since minors are incompetent to
contract hence, such contracts are void
and invalid in the eyes of law. The minor
is not obliged to pay back the amount that
was advanced to him as he was not bound
by the promise that was executed in
contract.
Minor is a person who has not attained
or is below the age of 18 years.
And any contract entered into with a
minor shall be be null and void (void ab
initio) owing to his incapacity. Dealings
done by the minors without the
knowledge and consent of their
custodians or parents shall not be liable
to them.
V. RAFFELS v. WICHELHAUS
⮚ Citation: 2 H. & C. 906
⮚ Introduction: consensus ad idem-
“meeting of minds”
⮚ Parties: Raffels & Wichelhaus
⮚ Brief facts: Mr. Raffels and Mr.
Whichelhaus had a contract that
Mr. Raffels would send him 125 bales of
Surat cotton via a ship named peerless
from Bombay. But there were two ships
with the name peerless. The same name of
two different ships mislead them and they
agreed upon two different ships in their
minds, which means there was no meeting
of mind while binding the contract. When
the ship containing cotton
reached Liverpool in December,
Wichelhaus refused to receive the
shipment and to pay for it. In his
understanding the consignment was late as
he mis- understood that the ship
earmarked with nomenclature as some
other which was supposed to reach in the
month of October. Both of them had mis-
understanding in reference to ship names.
Later, due to this delay according the
defendant who did not received the order
was sued for the breach of contract by the
plaintiff (Raffels).
⮚ Issue(s): Was there an enforceable
contract between the parties?
⮚ Decision: The court held that the
contract was vague and hence, it was
not an enforceable contract. For binding
of a contract, there should be meeting of
minds between the parties.In this case,
there was no consensus ad-idem. At the
time they had entered into this contract,
there was ambiguity on the issue as to
which ship shall carry the cotton to
be delivered. Since, it was a well-
documented deed and not a fraud
and hence, it should not be interrupted by
extrinsic evidence.
This case briefs has been prepared by
Ms. Urvi Yadav, who was an intern at
MyLawman & edited by Ms. Samreen
Ahmed, Research Assistant, ARIL,
MyLawman.