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
- General Provisions
- Tender Offer and Acceptance
- The Employer
- Employer´s Representative
- The Contractor
- Design by Contractor
- Employer´s Liabilities
- Time for Completion
- Taking-Over
- Remedying Defects
- Variations and Claims
- Contract Price and Payment
- Breach
- Risk and Responsibility
- Insurance
- Applicable Law and Competent Jurisdiction
- 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:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.