Article

International Construction Contract

The International Construction Contract governs the relations between a company (Contractor) and its client, located in different countries, for the undertaking of a works project, generally house or office building, although it may also be used for other civil works, for example, mechanical or electrical constructions.

The contract stipulates a clear and practical tender offer and acceptance procedure between the Contractor and the Client. The Client specifications and requirements as regards the works project which are to be undertaken by the Contractor are included in the Annex to the Contract.

The contract includes the most common clauses used for these types of contract tailored to construction in the international area: General clauses, offer and acceptance, project, contract price and terms of payment, termination period, breach, insurance etc.

In the International Construction Contract, it is commonplace that the disputes are subject to the laws and Courts of the country in which the work is carried out and as regards to major projects to International Arbitration.

 

Parties Clauses

  1. General Provisions
  2. Tender Offer and Acceptance
  3. The Employer
  4. Employer´s Representative
  5. The Contractor
  6. Design by Contractor
  7. Employer´s Liabilities
  8. Time for Completion
  9. Taking-Over
  10. Remedying Defects
  11. Variations and Claims
  12. Contract Price and Payment
  13. Breach
  14. Risk and Responsibility
  15. Insurance
  16. Applicable Law and Competent Jurisdiction
  17. Language

 

Sample of Content

DATE: ……………………..

BETWEEN:

…………………………… [company legal name] whose registered office is at ……………………………….

[address, city and country] and registration/tax number is …………………………, represented by

……………………………………………………. [name and surname, position] (hereinafter referred to as

“the Employer”),

 

AND:

…………………………… [company legal name] whose registered office is at ……………………………….

[address, city and country] and registration/tax number is …………………………, represented by

……………………………………………………. [ name and surname position] (hereinafter referred to as

“the Contractor”),

 

IT IS AGREED AS FOLLOWS:

 

  1. GENERAL PROVISIONS

 

1.1 Definitions

In the Contract as defined below, the following words and expressions shall have the meaning

assigned to them, except where the context requires otherwise:

“Contract” means the Agreement and the other documents listed in the Annex.

 

“Specification” means the document as listed in the Annex, including Employer´s requirements

in respect of design to be carried out by the Contractor, if any, and any Variation to such

document.

 

“Drawings” means the Employer´s drawings of the Works as listed in the Annex, and any

variation on of such drawings.

 

“Employer” means the person named in the Contract and the legal successors in title to said

person, but not (except with the consent of the Employer) any assignee.

 

“Contractor” means the person named in the Contract and the legal successors in title to said

person but not any (except with the consent of the Employer) any assignee.

 

“Party” means either the Employer or the Contractor

 

“Commencement Day” means the date ………. [insert number of days, usually 14] days following

the date the Contract comes into effect or any other date agreed between the Parties.

 

“Day” means a calendar day.

 

“Time for Completion” means the time for completing the Works as stated in the Annex (or as

extended under Sub-Clause 8.3, calculated from the Commencement Date).

 

“Cost” means all expenditure properly incurred (or to be incurred) by the Contractor, whether

on or off the Site, including overheads and similar charges, but does not include profit

 

“Contractor´s Equipment” means all apparatus, machinery, vehicles, facilities and other things

required for the execution of the Works but does not include Materials or Plant Machinery.

 

“Country” means the country in which the site is located.

 

“Employers Liabilities” means those matters listed in Sub-Clause 7.1.

 

“Force Majeure” means an exceptional event or circumstances which is beyond a Party´s control

and which such Party could not reasonably have envisaged prior to the execution of the Contract.

 

“Materials” are items of all kinds (other than Plant Machinery) intended to form or forming part

of the permanent work.

 

“Plant” means the machinery and apparatus intended to form or forming part of the permanent

work.

 

“Site” means the places provided by the Employer where the Works are to be executed, and any

other places specified in the Contract as becoming part of the Site.

 

“Variation” means a change to the Specification and/or Drawings (if any) which is instructed by

the Employer under Sub-Clause 11.1

“Works” means all work and design (if any) to be performed by the Contractor including

temporary work and any Variation.

 

1.2 Communications

 

Whenever provision is made for the giving or issue of any notice, instruction, or other notification

by any person, unless otherwise specified such communication shall be written in the language

stated in Clause 17 and shall not be unreasonably withheld or delayed.

 

1.3 Statutory Obligations

 

The Contractor shall comply with the laws of the country where activities are performed. The

contractor shall give all notices and pay all fees and other charges in respect of the Works.

 

 

 

  1. TENDER OFFER AND ACCEPTANCE

 

2.1 Description of the Works

 

The Employer desires the execution of certain Works described as follows:

………………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………

 

2.2 Tender Offer

 

The Contractor offers to execute the Works in conformity with the Contract for the Sum of:

………………………………………………………………. [in words] (………………………………….) [in figures]

or such other sum as may be ascertained under the Contract.

 

2.3 Acceptance

 

The Employer has by signing this Contract, accepted the Contractor´s offer and agrees that in

consideration of the execution of the Works by the Contractor, The Employer shall pay the

amounts to the Contractor pursuant to the Contract.

 

 

  1. THE EMPLOYER

 

3.1 Provision of Site

 

The Employer shall provide the Site and right to access thereto at the times stated in the Annex.

3.2 Permits and Licenses

 

The Employer shall, if requested by the Contractor, shall render assistance to the latter when

applying for permits, licenses or approvals which are required for the Works.

 

3.3 Employer´s Instructions

 

The Contractor shall comply with all instructions given by the Employer in respect of the Works

including the suspension of all or part of the Works.

 

 

  1. EMPLOYER´S REPRESENTATIVE

 

4.1 Authorized Person

 

One of the Employer´s personnel shall have the authority to act for him. This authorized person shall

be as stated in the Annex, or as otherwise notified by the Employer to the Contractor.

 

4.2 Employer´s Representative

 

The Employer may also appoint a firm or individual to carry out certain duties. The appointee

may be named in the Annex, or notified by the Employer to the Contractor from time to time.

The Employer shall notify the Contractor of the delegated duties and authority of this Employer´s

representative.

 

 

  1. THE CONTRACTOR

 

5.1  General Obligations

 

The Contractor shall carry out the Works properly and in accordance with the Contract. The

Contractor shall provide as supervision, labour, Materials, Plant and Contractor´s Equipment

which may be required. All Materials and Plant on Site shall be deemed to be property of the

Employer.

 

5.2 Contractor´s Representative

 

The Contractor shall submit to the Employer for consent the name and particulars of the person

authorized to receive instructions on behalf of the Contractor.

 

5.3 Subcontracting

 

The Contractor shall not subcontract the whole of the Works. The Contactor shall not

subcontract any part or the Works without the consent of the Employer.

 

5.4 Performance Security

 

As stated in the Annex, shall deliver to the Employer within 14 days of the Commencement Date

performance security for the amount and in a form specified in the Annex.

 

  1. DESIGN BY CONTRACTOR

 

6.1 Contractor´s Design

 

The Contractor shall carry put design the extent specified as referred to in the Annex. The

Contractor shall promptly submit to the Employer all designs prepared by him. Within 14 days

of receipt by the Employer shall notify any comments or, if the design submitted is not in

accordance with the Contract, shall reject t it stating the reasons. The Contractor shall not

construct any element of the permanent work designed by him 14 says the design has been

submitted to the Employer or where the design to that element has been rejected. Design that

has been rejected shall promptly amend and resubmitted. The Contractor shall resubmit all

designs commented in taking these comments into account as necessary.

 

6.2 Responsibility for Design

 

The Contractor shall remain responsible for his tendered design and the design under this

Clause, both of which be fit for the intended purposes defined in the Contract and he shall also

remain responsible for any infringement of any patent or copyright in respect of the same. The

Employer shall be responsible for the Specification and Drawings.

 

 

  1. EMPLOYER´S LIABILITIES

 

7.1 Employer´s Liabilities

 

In this Contract Employer´s liabilities mean:

 

(a)  War, hostilities (whether war declared or no not), invasion, act of foreign enemies

within the country.

(b) Rebellion, terrorism, insurrection, military or usurped power, or civil war, within the

country.

(c) Riot, commotion or disorder by persons other than the Contractor´s personnel and

other employees, affecting the Site and/or Works.

 

Some Tips

 

Contracts drafted by the legal experts of Global Negotiator cover all relevant aspects that are

negotiated and agreed in the different types of business between companies. However, when

these contracts are used you should take into account some recommendations common to all

of them that are described in this User Guide.

 

DATE

 

The date when the contract comes into force is the one that appears in its header, as mentioned

in the final paragraphs of the contract, before signatures (This Contract comes into force on the

date written above).

 

In some contracts -for example in the Supply Contract- the date of coming into force is also

mentioned in one of the clauses. In these cases, you have to verify that the two dates inserted

in the contract (in the heading and in the corresponding clause) are the same, in order to avoid

discrepancies.

 

PARTIES

 

Be sure to insert in the first page of the contract the full details of the Parties:

 

• When a Party is a company you must insert the following information: legal name, legal form

(limited, incorporated, etc.), full address, registration data, and fiscal identification number.

 

• When a Party is an individual that works as an independent professional (for example a

commercial agent) you must insert the following information: full name, profession, full

address and fiscal identification number.

 

CLAUSES

 

Clauses with different alternatives: choose the most favorable

 

In the most important clauses of each contract (exclusivity, payment terms, applicable law and

competent jurisdiction, etc.) several drafting alternatives are proposed so you can choose the

most appropriate to each situation. Therefore, the user before submitting the contract to the

other Party must choose the alternatives that seem best suited to their interests and eliminate

the rest.

 

Clauses with blank spaces to be completed

 

In several clauses of the contract blank spaces appear with dots (…………………..) that the user

has to complete inserting text. Following the dots, between brackets, you will see the data and

explanations to insert the text.

 

• When the text between brackets is in normal letters (the same as the contract) and

separated by “,” or the word “o”, the user must insert one of the options suggested.

 

Example of blank space (……..) with options to select between brackets:

 

Orders handled before completion of the present Contract which produces sales transactions

within ………. [1, 2, 3, 6] months shall entitle the Agent to receive the corresponding commission.

In this case, the user must choose between options 1, 2, 3 or 6 months and insert one in the blank

space (……..).

 

• When the text between brackets is in italics the user has to insert the data and information

requested and eliminate the bracketed text.

 

Example of blank space – (………) to insert text:

 

Both parties, by mutual consent, resolve to refer any dispute to the Rules of Conciliation and

Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in

accordance with said Rules. The place of arbitration shall be ……….. [city and country]. In this

case, the user must insert in the blank space (………..) the city and country chosen to conduct

the arbitration and afterward eliminate the bracketed text [city and country].

 

 Notices Clause

 

Sometimes it may happen that the official address of the Parties which appear at the beginning

of the contract is different from which is to be used for communications between the Parties

during the terms of the contract. In this case, the user should include at the end of the contract

a Notices Clause.

 

Example of Notices Clause:

 

Notices. – In order to comply with their contractual obligations, the Parties establish the

following address for the provision of notices related to this contract:

– Party 1 ……………………………………………………. [insert full address].

– Party 2 ……………………………………………………. [insert full address].

 

 

ANNEXES

 

The contracts incorporate some Annexes, each of them, referenced to the corresponding Clause.

Annexes are drafted in commonly used formats, although the user must adapt these formats

and the text inserted in them to each particular situation.

 

 

SIGNATURES

 

People who sign

 

Persons signing the contract on behalf of the company must have the authority to do so and

preferably, be entitled on the basis of a power of attorney. Below the signature, in addition to

the full name of the person that signs his/her position must be inserted. When one of the Parties

who signs is a natural person (for example a commercial agent in an Agency Contract) obviously

he or she is the person that has to sign the contract.

 

The laws of some countries require that contracts, to be valid, shall be signed in front of

witnesses or a public notary. Therefore, before signing a contract you should be informed about

the requirements that may exist in each country.

 

Place and date of signature

 

Usually, contracts are signed by both Parties on the same date and place. Nevertheless, in

international contracts, due to physical distance, it is common that each of the Parties sign in

different dates and places. This contract provides for both alternatives so it comes to choosing

the most appropriate to each situation.

 

Number of copies

 

Usually, the Parties sign two copies of the contract, each Party retaining one of them, but can

also arise the need to sign more copies. In this case, all you have to do is mention explicitly the

number of copies to be signed in the paragraph that is included at the end of the contract (Both

Parties declare their conformity to the present contract, which is signed in …… copies, each of

which shall be considered an original).

 

 

GENERAL RECOMMENDATIONS

 

The Parties must sign all pages of the contract, including Annexes, so they are also valid. It is

better to use ball point or pen (not pencil) in a color other than black (e.g.: blue); this makes it

easier to distinguish an original document from a photocopy.

 

It is preferable (although no mandatory) to express sums of money and percentages in words

and figures. Of course, the words and figures for a given amount must match exactly. You also

must insert the currency in which the amounts are expressed. It is advisable to use the rules

establish by ISO that name each currency by three capital letters (EUR for euro, USD for dollar,

GBP for sterling pound, JPY for Japanese yen, etc. – you can get the acronyms of every currency

in the website www.oanda.com).

 

Once you have chosen the best alternatives of each clause and have completed the blank spaces

you should revise the whole contract to remove remaining paragraphs and correct any errors.

 

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