Ethiopian Legal Brief

Unit IV Contracts of Public Works

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Unit IV Contracts of Public Works

Unit IV

Contracts of Public Works

Introduction

Objectives:

At the end of this chapter students will be able to:

– define public works and related issues,

– understand the basics of formation of contracts of public works

– appreciate the way the contracts are performed there by understanding the respective rights and duties of the parties

–  concentrating on one aspect of contracts of public works, identify the basic types of construction contracts, consider the parties to such a contract, understand how these contracts are important now a days…

4.1 Definition of Public Works

Art. 3244 (1)

“A contract of public works is a contract whereby a person, the contractor, binds himself in favor of an administrative authority to construct, maintain or repair a public work in consideration of a price”.

Unlike concessions, the specific service to be provided is described in contracts of public works. This undertaking on the part of the contractor is either to construct, maintain or repair a public work. Accordingly, when the undertaking is to simply supply materials for the purpose of carrying out a public work, then the contract will not be that of public works. (3244/2/).  Generally contracts relating to the construction and development as well as the maintenance and repairing of buildings, housing, bridges, highways, water supply and sewage disposal facilities, dams and other power supply facilities form part of contracts of public works. What makes the contracts that of public works is their widespread affective dimension in the sense that their availability, use and administration involve the public at large.

The history of contracts of public works tells us one thing. That the contracts are made not only to enable the construction, maintenance and repair of the works, but also to generate employment prospects to the unemployed section of the society. This was partly the construction history of United States. It is now part of the contemporary history of Ethiopia.

Example:

The locality of J is to have a 31 km all weather road. It accordingly wants to allocate the work to an efficient construction company. In this case the contract to be concluded between J and the competent construction company will be a contract of public works. While J is called the client the company is called the contractor.

Types of Contracts of Public Works

 Contracts of public works take different forms. The suitable type is determined based on the nature of the project. The normal type of contract is called measurement contract. Measurement contract goes by other different nomenclatures such as re-measurement contract, build-only contract, unit price contract and the traditional method contract. The other type of contract is the design and build contract. We have also other types of contracts such as management contract, construction management contract, turnkey contract, cost plus fee contract and partnering contract. The predominantly practiced types of contracts are the measurement contracts and the design and build contracts. While measurement contracts are highly practiced in developing countries the design and build contracts are very much practiced in developed countries. The specialization the countries take with this regard is attributable to the nature of each type of contracts. Measurement contracts are far less sophisticated than design and build contracts. Taken with the capacity of contractors in developing countries, authorities resort to measurement contracts which involve their intensive participation on the project. Let us briefly consider the two types of contracts:

Measurement Contract: under this type of contract the design is made by a person provided for this very purpose usually called a consultant engineer. The construction is carried out by another person. Such type of contract presupposes the impossibility of presenting a full-fledged design during the allocation of the work. The name measurement contract by itself implies the fact the work is measurable.

  1. Design and Build Contract: under this type of contract, the contractor undertakes to make the design and build the work. To this end, the contractor has full obligation to make the design and to build the work. Thus under this type of contract, the obligation is two fold. The degree of obligation is higher under design and build contract. Because of this, the cost of this contract is higher.  This does not mean that the owner of the work has no say on the work. Far from it, the contractor must solicit the advice of experts on the work and the interest of the owner of the work on the design. To better express the interest of the owner of the work the same comes up with a conceptual design.

 Because of the types of contracts of public works we have, different standards are being devised, drafted and distributed. These new standards try to preserve the contractual balance and distribute responsibility in a delicate way. The prominent standard form contract we have in the world is the Federation International Des Ingeniers Conseils’ (FIDIC) standard. Till now, we have five standard editions of FIDIC. In its kind, FIDIC is a measurement contract.

FIDIC contract is build by eight documents arranged in a hierarchical order as

  1. The contract agreement
  2. The letter of acceptance
  3. The tender
  4. The conditions of Contract Part II(Particular Conditions)
  5. The conditions of Contract Part I(General Conditions)
  6. The specifications
  7. The Drawings, and
  8. The Priced Bill of Quantities.

 Formation of the Contract

Administrative contracts highly involve the public interest. Quality of the service that we have to provide to the public really matters. The inverse relation often times, between quality and price makes attaining quality a difficult task. The basic consideration of our law is quality. That is why under Art. 3246 competition will be waged among skilled persons or among specialized undertakings. Skill and specialization are therefore the ground rules to pick-up possible contractors. 

Still, Art 3246 is cognizant enough of the role of competition. In normally operating economy, competition leads to efficiency. It is even possible to reverse the relationship between quality and price. This is so because Art 3246 authorized administrative authorities to “put up for competition the working out of a project of a work…”  

The relevance of projects is many folds. On the part of administrative authorities, it helps them to assess the cost that a specific project will consume and the quality of the work resulting from the project.

The possible competitors will be screened out and the authorities will “freely choose the persons whom they admit to take part in the competition.” (3247/3/). 

These are only procedures, because simple admission of persons to participate in competition in no way is indicative of the conclusion of the contract. It is one step ahead in the contract. After the preparation of the list, the authorities will announce the winner and allot the contract to such a winner. Reasons of selection need not be explicit. The authorities should allot the contract to the competitor they think fit.   

 The” fitness” standard we have is a default standard: applicable only in the absence of express undertaking to choose the competitor who is ranged first. Selecting the person who is ranged first corresponds to the fitness standard because this competitor stood first based on some standards of fitness. The proviso “to whom they think fit” must by itself have a standard. The administrative authorities must have an express standard to adjudge a competitor as fit and unfit. By doing so, the authorities will comply with one of the constitutional principle called transparency. This is a logical continuation of Art 3248 under which administrative authorities are obliged to be strictly bound to respect the rules of the competition made by them.  

Try to justify how Art 3249, second sentence, is a logical continuation of Art 3248?

The contract will be concluded only after application of Art. 3249. 

Contract Procurement Alternatives

 The process of selecting the contractor and entering into an arrangement with the same is tantamount to procurement of work thereby necessitating as the case may be procurement by open bidding, restricted tendering or direct procurement.

 Performance of the Contract

The normal performance of contract of public works involves three elements on the part of both parties. Generally, direction of work, payment of price and acceptance of work are the elements. Some correspond to administrative authorities and others to the contractor. Let us begin with the first. 

4.3.1 Rights of Administrative Authorities

In aggregate the basic rights take two shapes. One is the right to direct the work. The other is the right to supervise the contractor. Art. 3250 (1) establishes this right of supervision as “The administrative authorities may supervise the performance of the works”.

As to the direction right, Art 3250 (2) says” they may also prescribe to the contractor the manner of performance of his work”.

4.3.1.1 Right to Supervise

This right involves two things on the part of the contractor and also the administrative authorities. Administrative authorities may directly supervise the works of the contractor. To this end, they may enter the yards at any time and require the contractor the information necessary for their control. (3251 (1)) Authorities may also make regulations that ensure good order and security in the yards.

The consequent obligations on the contractor are observing the regulations made and furnishing the necessary information to administrative authorities. (3251/2/). 

These arrangements are mandatory to the extent that no one party to the contract may agree to the contrary.  

The supervisory role of administrative authorities is not limited to supervise only works and yards but also the personnel of the undertaking. In addition to this, materials may also be supervised. With relation to personnel, the authorities may require that employees be changed or dismissed. The quality of materials shall also be controlled by administrative authorities. 

4.3.1.2 Right to Direct

This right to direct involves regulating the development of the works and prescribing to the contractor the manner of performance of such works. This involves the how of the work.

To this end, administrative authorities may give plans and models. Not only this, administrative authorities have the right to arrange the rhythm of works. This is to mean that the authorities may fix the period of time for the performance of the work. A general period may be fixed to this end. Or special periods for each work might still be fixed. 

Fixing a general period by administrative authorities entails another responsibility of “specifying the time at which the works shall begin.”

But arranging the rhythm of the work is not only about fixing general and special periods. It is also about “regulating the order, sequence and the rhythm of the works within the general period laid down in the contract”.

On default of fixed periods indicating the starting point, the law provides us with one:

    A/ periods shall run from the date of notification of the contract.

         (See Art. 3254(1) cum 3249).

     B/ periods shall run from the materialization of a condition. 

4.3.1.3 Right to Demolish (3256)

Administrative authorities have this right of ordering the demolition and the reconstruction of any defective work at the expense of the contractor. This is usually the case in contracts of measurement or re-measurement where the contractor agrees only to build while the administrative authorities undertake to provide the design and model of the work. Otherwise, the situation is rare. We can raise questions concerning the validity of a demolition order. Can the authorities order the demolition of a work without any condition? Who should decide whether a work is defective or not? What type of defect justifies demolition? Does the magnitude have any contribution to the decision the authorities make?  

4.3.2 Rights & Duties of the Contractor

It will not be a hard remark to say contractors have very limited right with relation to administrative authorities. Even the way in which the article is devised to confer rights on contractors is negative. It magnifies than ever the administrative prerogatives of administrative authorities. 

As such, contractors are prohibited from demanding compensation from administrative authorities save for the fault that the latter might commit. (3259(2)). 

What rights do contractors have? Art 3259 gives them the right to demand compensation, but only after observing certain legal considerations. 

Under normal course of things compensation cannot be demanded as of right (see Art.3259 (1)) Compensation however is due when:

A/ damage is caused due to the fault of administrative authorities by either making abusive requirements or by postponing the performance of the contract (3259(2)). Abusive requirements show the malicious intent of administrative authorities. Postponing the performance of the contract makes things more burdensome on the contractor.

 Contractors in need of compensation must establish many things.

I. The existence of damage: to get compensation, proving injury to a legitimate interest is a requirement.

II. The existence of fault: the contractor must prove the existence of fault on the part of the authorities. The usual types of faults are those related with abuse of power.  

III. Violation of the contract: the terms of the contract must be violated to get compensation from the authorities.

B/ damage is caused, regardless of fault, by the aggravation of the normal conditions of performance of the contract. (3259(3)) The first rule is partly based on the principle that no one should benefit from his/her fault. This one is based on the idea that persons should make good what they have made bad. When the administrative authorities make the performance of the contract more burdensome, they are those which should make the ways of performing the contract suitable to the contractor.

 . When parties enter in to a contract, they foresee expenses and costs. Parties make a risk assessment plan and agree or disagree to enter in to a venture. When a party is forced to bear what he/she has not foreseen before, this will completely ruin the plan of such a party. It will also make parties skeptical of the system there by to withdraw from engaging in similar activities in the future. It is because of this and other reasons the law protects from unreasonable shift in the balance of the contract as sponsored the authorities.   

4.3.3 Payment: Modalities and Time

Payment is performance or only part of it. While generally it is indicative of the conclusive performance of the contract sometimes, at times like this, payment is only the performance. When we started discussing about contract of public works, we defined the same under Art.3244 making reference to “price”. Contract of public works is a contract in “consideration of a price.” Specifically the contractor binds himself in favor of administrative authorities so that the latter will pay him a price.

Thus, under our current discussion, we will try to see how this issue is regulated. 
 
 4.3.3.1 Modalities

Different types of payment are recognized. We have contract with a fixed price under which contractors will get their payment in a lump sum. (3261) On the other hand, we have contract with series of prices. Here without determining the extent of the work, price is fixed based on the different types of work that the contract envisages. We have different prices for different works. (3262). 

It is also possible to determine the extent of the final work and determine the services of prices applicable to each kind of work. The type of contracts determines the form of payment that a system follows. In the case of measurement contract for example, lump sum payment is unthinkable. The construction cost of the project is disbursed on the basis of each work accomplished. The basis of payment is unit rate as determined by the contract. The price will be multiplied by the quantity of the work. The total amount of the work during the allocation of the contract may increase or decrease during the actual accomplishment of the work. The price of the work is payable periodically usually on a monthly basis. Payment is made after the measurement made by the architect or the concerned expert. The payment is registered on a document called certificate of payment. Arithmetic errors, if any, may be corrected in the next payment. That is why measurement contract is also called re-measurement contract. The total cost of the project can be known only after the completion of the work.  What we have to know however is the truism that Ethiopian law acknowledges both forms of payment. Between the extremes, parties have the freedom to adhere to anyone form. It is however advisable parties agree to one of the forms of payment depending on the exigencies of the project and other rational considerations which relate to the advantages and disadvantages of each form of payment.

Do you see the difference between Art 3262 and Art 3263? Can you appreciate the relevance of each? Which one is more important? On what basis?

Parties are given the mandate to fix by their contracts the manner in which payment of price is to be undertaken. That is what we can gather from the provisions that we previously considered and others which generally relate to the manner of effecting payment. 

The freedom of parties on the modality of effecting payment is not without any control. Art 3267 comes up with a standard. No contract will arrange a clause of deferred payment. Even so, it can be only by bills of exchange or by annual installments. 

4.3.3.2 Time of Payment

The time fixed by parties and conditions fixed by them as well are crucial to determine time of payment. Art.3268 (1) says “where the ascertainment of the services performed constitutes a preliminary condition for the determination of the price, such ascertainment shall be made within the periods specified in the contract”. 

One thing we have to know here is we cannot fix the time of payment without first fixing what is going to be paid. What if the contract does not regulate such issues? Art 3268(2) raises more questions than it answers. Let us see this. 

We can imagine two defaults:

1/ when the contract generally defaults to regulate the issue under Art.3268 (1).

2/ when one of the parties defaults to undertake the requirements envisaged under Art.3268 (1) even when the contract is not defaulting. 

4.3.4 Acceptance of Work

As the contractor has a right to payment, the administrative authorities have the right of taking possession of the work done. 

4.3.4.1 What is Acceptance?

Acceptance is not merely taking possession of the work. Rather it is the delivery of the work. Acceptance is “a joint ascertainment of the works made immediately after the completion of the works”. As such it is an examination of the works by the contractor and the administrative authorities.

Generally we have two types of acceptance- Provisional acceptance and final acceptance. Even though both involve in the ascertainment of the works, there are areas of departure between the two ways of acceptance. 
 

Provisional Acceptance

This involves the ascertainment of the works both by the contractor and the authorities. What makes provisional acceptance special, among other things, is that it is made under reservation. Though it involves the effective taking of possession, the acceptance is made under reservation. 

A/ Effects

On the other hand, the effects of provisional acceptance are different from that of final acceptance. The effects of provisional acceptance are two fold. In the first place provisional acceptance does not imply the exoneration of the contractor from any defect (Art 3275(1)).In the second place, it shall amount to a tacit acceptance of the modifications  there under.(3275)2(2). 

More informally, provisional acceptance marks the beginning of the period of warrant whose expiry marks the final acceptance of the work. (3275(3)).

B/ Risks

Provisional acceptance is a critical decision which will help us determine transfer of risk. 

What is the rule?

Art. 1758 (1) reads: “The debtor bound to deliver a thing shall bear the risk of loss of or damage to such thing (until delivery) is made in accordance with the contract”.  

Art 3276 (1) is not different from Art 1758 (1) in stating the rule. But one thing you should question is “is it only when the loss or damage results from force majeure that the contractor will bear the costs? Why? Why not?” 

Sticking to Art 3276 (1) leads us to an affirmative determination. But one can question the soundness of Art 3276 (1) taken lightly. If the contractor bears the damage or loss caused  by force majeure before the making of provisional acceptance, even for a stronger reason he can bear the damage caused regardless of the cause( i.e. for damages caused while he was able to avoid or defer them). 

Final Acceptance

This is the definite appropriation of the works after ascertaining that the contractor has performed his obligations in their entirety (Art. 3279(1)).

The definiteness of the appropriation strengthens this assertion. In addition, the effect of final acceptance is evidence to the validity of the assertion we made. 

Final acceptance involves both parties in the ascertaining procedure. Art.3279 is strict in this sense. It requires the joint presence of the parties and the making of record as well. Therefore, the issue is clear with regard to the absence of the administrative authorities during the

Just like any other rule of payment on the event of contestation or doubt as to the creditor (see Art.1744), Art 3280(1) authorizes the contractor to require the court to ascertain that the works are in a condition to be accepted. 

Unlike the situation under Art.1744, ascertainment by the court will not automatically result in a conclusive acceptance of the work. If a period of warranty is fixed, the expiration of such period marks the final acceptance of the work. Otherwise, final acceptance will be deemed to have taken place when the day fixed by the court arrives. 

4.3.4.2 Effect of Acceptance (Art.3281)

Final acceptance relieves the contractor from his obligation of maintaining the works. Before the final acceptance of the work, the contractor has the obligation of maintaining the work. What is this obligation? This obligation refers to the fact of preserving the work in a purposive manner. Before delivering the work, the contractor must ascertain that the work is fit for the purpose it is made. He/she can meet this end if the same can maintain the work in every manner.  The acceptance will irrevocably place the works in the hands of administrative authorities. The same will put such an obligation in the hands of the authorities. It will also entitle the contractor to payments that are due to him but still not made waiting the arrival of this date.  

4.4 Revision of Contract

4.4.1 Unilateral Modification: The Contractor

The right to unilaterally modify the contract is not a privilege operative in favor of the contractor. In the strict sense our civil code does not provide such a right i.e. a right to unilaterally modify a contract to the contractor. Even under normal course of things, a contract can be varied only by a court of law (Art 1763). What we have under Art 3268 is not unilateral modification of the contract. Rather the contractual right extends only to requiring the revision of the contract. Even this right of requiring revision is conditional upon other issues mentioned under Art. 3286(1). Hence, the contractor should encounter material difficulties of an absolutely abnormal nature, unforeseeable at the time of the contract.

What makes the modification unilateral probably is the fact that the administrative authorities are placed in a situation they cannot question the validity of the request. If the conditions mentioned under 3286(1) are fulfilled, Art.3286 (2) obliges administrative authorities to bear part of the exceptional expenses. However, administrative authorities have one choice -preferring to cancel the contract.

If the difficulty is not that much material or of an abnormal nature i.e. if it simply compels the contractor to perform a supplementary work not mentioned in the contract, in this case he may initiate the work after having obtained a requisition order. However, if the supplementary work is very necessary in the absolute sense, and of an urgent nature, the contractor should initiate the work without a requisition order. In this case, administrative authorities will not have the chance of canceling the contract. They would rather simply compensate the contactor.

Example

The Ministry of Defense has entered in to a contract with a domestic construction company to construct a military complex which incidentally involves the residents of over twelve hundred military officers. After the completion of the significant portion of the complex, the contractor came across a silly still critical omission in the building- the complex has no stairs. Because the contract was a build- only contract, the design was made by another contractor to whom the contractor at hand has no legal relation. And it was in the design that the stairs were missing. Now the contractor wants to know your position as to the possibility of constructing the stairs as of self help. What will be your position?

4.4.2. Unilateral Modification: The administrative Authorities

This right of administrative authorities makes them special parties to a contractual arrangement. This is a prerogative in two senses.

  1. “During the currency of the contract… the administrative authorities may impose unilaterally upon the contractor changes in the original conditions of the contract” (Art 3283 (1). They may even order the contractor to perform works not even mentioned in the contract. There however reservations held by the law with this respect. Accordingly:
    1. the changes under Art.3283(1) may affect only the provisions which affect the arrangement of the public works,
    1. those changes under Art.3283(1) may not affect the financial position of the contractor,
    1. new works under Art.3284 involve payment of compensation and they are conditioned on the same
    1. new works may not imply imposing tasks which completely differ in terms of object from the work mentioned in the contract,
    1. new works may not dictate new ways of performing them,
    1. Unilateral revisions may entitle the contractor to cancel the contract “where the increase or reduction of the work required by the administrative authorities involves a variation of more than one-sixth of the cost mentioned in the contract.”
  2. The imposition by the administrative authorities is irrevocable even by an otherwise stipulation in a contract. The contracting parties may not agree to the effect that the administrative authority cannot unilaterally modify the contract.

 4.4.3 Revision by a Court

Courts may vary a contract based on different considerations. For equity considerations variations may be made. On the other hand, courts are entitled to vary administrative contacts. This is an exception to the rule under Art 1764(1). Thus, a contract cannot be varied simply because it has become more onerous. The law holds “A contract shall remain in force notwithstanding that the conditions of its performance have changed and the obligations assumed by a party have become more onerous than he foresaw.” Furthermore, the law is explicit with regard to the limitations that we have against courts with relation to contracts. As such courts shall not make contracts for parties under the guise of variation. The effect of economic changes must be regulated by the parties and not by courts. However, under Art.1767 (1) an administrative contract may be varied even when it is made more onerous than before. But, the court may vary the contract only when the contract was made onerous because of an official decision. This “official decision” should not be any type of official decision. For sure, an official decision is a measure taken by a grant of compensation. Does this mean that the official decision may not entitle the court to vary the contract? See Article 1767 (2) with Art 3193 (1) and Art 1767 (1) with Art.3193 (1). It is wise to consider the reference Art. 1767(2) makes to Articles 3191-3193. These three articles further elaborate on the exception under Art.1767. Read the articles and discuss whether they return us back to the rule under Art.1764?  

Non-performance of Contracts of Public Works

Effects of Non-Performance

The general effects of non-performance are dealt with when we discussed generally “non performance of administrative contracts”. Non-performance of contract of public works occurs when parties default in different ways. The section dealing with non-performance in our civil code magnifies the contractor as the only defaulting party. But because of the nature of the obligation that the contractor assumes, a special section for non-performance is important. Because the special section dealing with administrative contracts does not regulate the default on the part of authorities, it does not mean that the law does not regulate them generally. The presumption is the obligations assumed on their part is not that special which will not require special regulation other than the one we have under the general part. So it is reasonable to avoid any confusion that the code invites you in. Non-performance ensues when the contractor fails to undertake the obligations that he assumed under the contract. Basically, the obligation of the contractor is to construct, maintain or repair a public work. If he/she fails to do one of the things he undertook to do under the contract, we say there is non-performance. Non-performance has two special consequences. In the first place it results in the state control of the project. On the other hand, it may result in re-allocation of the work to another contractor. Let us briefly see these two effects.

  1. State Control-This is a process where works began by a contractor are placed under the domain of the state. It is possible to infer this from Art 3288 (1) which says partly “… declaration of state control may be made where the contractor fails to perform his obligation.”

A state control is on the other hand a decision, next to being a process. So it is a declaration to the effect that contract of public works shall become under state control. Mostly order of state control presupposes failure to carry out obligations as a result of lack of resource. Inadequate resource to carry out the works within a given time is a ground for authorities to assume the full responsibility of carrying out the work.

What comes under state control is the project. The ground of making the declaration on the other hand is the non-performance evidenced by the contractor.

Declaration of state control must be made after putting the contractor in default. After ten day’s of summoning the contractor to perform his obligations, administrative authorities may make the declaration.

The effects of state control are two fold. From the start, the declaration will temporarily deprive the contractor of contract. What does this mean? The effect of depriving one’s contract may even be prohibition of exercising one’s rights in a contract. Is this fair?

On the other hand, the declaration will force the contractor to bear the expenses of control. What possible expenses can you guess? Such expenses may include costs of administering the remaining work, cost of preservation or any other related cost.

State control is not permanent. Especially Art.3289 (1) which explains on the effects of state control tries to tell us that the declaration is temporary. This nature however is conditional on one thing:

    “[Showing] that he has the necessary means to resume the works and    to carry them out to completion.” (Art 3290).

Under such a condition, the contractor may be allowed to resume the work. Such a decision by the administrative authority is called an order of cessation.

  1. The Allocation -The other effect of non-performance is re-allocation. As the name itself implies, reallocation is giving the work away to other person than the contractor. As to Art 3291, reallocation presupposes different conditions. One such prerequisite is the foreseeability of the matter. This is to mean that the contract should expressly foresee the possibility of reallocating the contract .Foreseeability may involve the situation in which the authorities are in. For example, the conditions may convince the authorities that they should not put the contract under state control. This again may be based on a cost-benefit analysis that a rational authority will make.  Secondly, reallocation presupposes cancellation. It is only contract that is cancelled that can be reallocated (Art. 3291 (1)).

Another condition which is worth considering is the “new contractor” requirement. The purpose of reallocation is to allow new contractors to take the work and act accordingly. Reallocation should not be in favor of the old contractor. The possibility of participation in the reallocation is barred by Art 3291 (1).

Reallocation may be made in two ways. Auction may be one option. Agreement on the other hand is also possible to effect reallocation.  Such a procedure has a different consequence than that of state control. Reallocation affects the arrangement in a permanent way, while state control has a temporary effect. In terms of effect, reallocation imposes a burden of bearing consequences, while state control involves costs and risks (Art 3291(2). We have two consequences (burdens. One is the burden of bearing the consequences of the transaction. But which transaction is the provision referring to? As you might observe from Art. 3291 (1), administrative authorities will enter into a transaction when they decide to reallocate the contract. They are forced to reallocate either by auction or private arrangement. Such transactions have consequences as well as costs. The code prefers consequences rather than costs here. Do not forget that consequences are wider than costs Can you show this? Among others, consequences may mean those side effects that the new contract will bring about.

Delay of Construction and Its Effect

Construction contracts stand on three pillars namely quality, price and time. Unless the contract proceeds compromising the disparities among these pillars, it will be terminated somewhere in point of time.  FIDIC contract has devised its own way to compromise the possible disparities. As such a mechanism of evaluating the problems that may ensue and proposing a plan that enables increase or decrease in time and price are some of the solutions that FIDIC has come up with. Concerning time, if the time fixed to conclude the project lapses, the contractor shall pay a liquated damage to the owner of the work.

Summary

Contracts of public works are undertaken by administrative authorities mainly to provide the public with important utilities such as roads, dams, power supplies, bridges and houses.

 While the provision of these utilities underscores the necessity of their construction, other objectives such as provision employment prospects on the part of governments are taken as important parts.

Contracts of public works involve at least two parties. namely the grantee and the grantor. Though the two enter into an arrangement, they hardly represent themselves. As such contracts of public works are arranged to benefit the public. The parties agree in the interest of a third party.

Because of this, the law takes a special precaution in regulating the actions of those involved in the contract.

The predominant type of contracts of public works is construction contract. Again construction contracts take different forms each form highly associated with the economic status of the nations practicing it.

The formation of contracts of public works involves the procurement of work whereby the application of Proclamation No. 430/2005 is important. Depending on the law open bidding, restricted tendering and direct procurement are some of the modes of procurement.

The parties involved in the contract have their own respective roles in the form of rights and duties. While the authorities predominantly have a supervisory function, the contractor plays a functional role.

Payment, revision and cancellation are considered as some of the effects of contracts of public works.

Review Questions

  1. What does a public work mean? Discuss by mentioning all the possible elements of the same.
  2. Why do we give the responsibility of supervising a public work to the government?
  3. How does the FIDIC contract substantiate the Ethiopian Civil Code?
  4. What are the effects of non-performance of contracts of public works?
  5. Analyze the concept of state control and the causes of the same.
  6. What is measurement contract? Why is it called a measurement contract?

Explain the difference between measurement contract and design and build contract.

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