The contracts usually have a clause specifying priority of documents. There is a provision for ‘Priority of Documents’ in FIDIC Contract Documents too, which is mentioned under clause 1.5 of the document. This clause sets the order of precedence of documents incorporated in a contract. The question arises, what is the need of providing a ‘Priority of Document Clause’ in a contract?
Index
Why the ‘Priority of Documents Clause’ is Important in a Contract?
Specifying priority of documents is extremely important in construction contracts. The construction contracts are complex in nature. It is nearly impossible to provide every provision in a single document in these type of contracts. Incorporating so many documents in a contract may cause inconsistency in between the documents and its provisions. Therefore, inserting a ‘Priority of documents clause’ in a contract makes sense. In case of any discrepancies between the various documents, the contract is read as per the priority of the documents specified in the relevant clause of the contract. Setting priority of documents is very much needed because sometimes different document in the same contract contradict each other.
For e.g., if the bill of quantity mentions a particular quantity of any item to be performed and the drawings are indicating some other meaning, then which provision is to be followed?
From my practical experience, I have seen that in some cases, the ‘Bill of Quantities’ of ‘Schedule of Rates’ documents stipulates some specifications of an item and the drawings give different specifications of the same item.
In all the above or similar cases, a confusion arises for the contractor as well as for the client regarding the provision to be followed.
If there would not be any priority specified in the contract, then this will become a cause for dispute and litigation between the client and the contractor. Setting the ‘Priority of Documents’ under a relevant clause gives clear cut direction to the client and the contractor to follow a particular provision and hence avoid potential cause of dispute. In this article, the provisions for priority of documents stipulated under different FIDIC Documents is analyzed.
A number of the Multilateral Development Banks (MDBs) such as ‘the World Bank’, Asian Development Bank (ADB)’, etc., have for many years adopted the FIDIC Conditions of Contract for Construction as part of the Standard Bidding Documents which the MDBs require their borrowers or aid recipients to follow. The priority of documents clause provided under these Standard Bidding Documents has also been discussed in this article.
As Per FIDIC Red Book (Condition of Contract for Construction)
Clause 1.5, ‘Priority of Documents’ of General Conditions
The documents forming the Contract are to be taken as mutually explanatory of one another. If there is any conflict, ambiguity or discrepancy, the priority of the documents shall be in accordance with the following sequence:
(a) the Contract Agreement;
(b) the Letter of Acceptance;
(c) the Letter of Tender;
(d) the Particular Conditions Part A – Contract Data;
(e) the Particular Conditions Part B – Special Provisions;
(f) these General Conditions;
(g) the Specification;
(h) the Drawings;
(i) the Schedules;
(j) the JV Undertaking (if the Contractor is a JV); and
(k) any other documents forming part of the Contract.
If a Party finds an ambiguity or discrepancy in the documents, that Party shall promptly give a Notice to the Engineer, describing the ambiguity or discrepancy. After receiving such Notice, or if the Engineer finds an ambiguity or discrepancy in the documents, the Engineer shall issue the necessary clarification or instruction.
As Per FIDIC Silver Book (Condition of Contract for EPC_Turnkey Projects)
Clause 1.5, ‘Priority of Documents’ of General Conditions
The documents forming the Contract are to be taken as mutually explanatory of one another. If there is any conflict, ambiguity or discrepancy, the priority of the documents shall be in accordance with the following sequence:
(a) the Contract Agreement;
(b) the Particular Conditions Part A – Contract Data;
(c) the Particular Conditions Part B – Special Provisions;
(d) these General Conditions;
(e) the Employer’s Requirements;
(f) the Schedules;
(g) the Tender;
(h) the JV Undertaking (if the Contractor is a JV); and
(i) any other documents forming part of the Contract.
If a Party finds an ambiguity or discrepancy in the documents, that Party shall promptly give a Notice to the other Party, describing the ambiguity or discrepancy. After giving or receiving such Notice, the Employer shall issue the necessary clarification or instruction.
As Per FIDIC MDB Red Book (MDB Harmonised Edition) for Building and Engineering Works Designed by the Employer
Clause 1.5, ‘Priority of Documents’ of General Conditions
The documents forming the Contract are to be taken as mutually explanatory of one another. For the purposes of interpretation, the priority of the documents shall be in accordance with the following sequence:
(a) the Contract Agreement (if any),
(b) the Letter of Acceptance,
(c) the Letter of Tender,
(d) the Particular Conditions – Part A,
(e) the Particular Conditions – Part B,
(f) these General Conditions,
(g) the Specification,
(h) the Drawings, and
(i) the Schedules and any other documents forming part of the Contract.
If an ambiguity or discrepancy is found in the documents, the Engineer shall issue any necessary clarification or instruction.
As Per FIDIC Yellow Book (Condition of Contract for Plant)
Clause 1.5, ‘Priority of Documents’ of General Conditions
The documents forming the Contract are to be taken as mutually explanatory of one another. If there is any conflict, ambiguity or discrepancy, the priority of the documents shall be in accordance with the following sequence:
(a) the Contract Agreement;
(b) the Letter of Acceptance;
(c) the Letter of Tender,
(d) the Particular Conditions Part A – Contract Data;
(e) the Particular Conditions Part B – Special Provisions;
(f) these General Conditions;
g) the Employer’s Requirements;
(h) the Schedules;
(i) the Contractor’s Proposal;
(j) the JV Undertaking (if the Contractor is a JV); and
(k) any other documents forming part of the Contract.
If a Party finds an ambiguity or discrepancy in the documents, that Party shall promptly give a Notice to the Engineer, describing the ambiguity or discrepancy. After receiving such Notice, or if the Engineer finds an ambiguity or discrepancy in the documents, the Engineer shall issue the necessary clarification or instruction.
Conclusion
Setting the ‘Priority of Documents’ Clause in not only construction contact but in other complex contracts is necessary. In case of inconsistency between the documents, the risk of disputes and litigations enhances. One way of safeguarding against the danger of disputes is by including a priority of documents clause. This is a clause that lists the contract documents in order of precedence. In the case of any inconsistency or ambiguity, the document that is higher on the list is given preference. This clause provides clear direction about which provision is to be followed. This clause is beneficial for both the contactor as well as the client. Generally, this clause is provided in the ‘General Conditions of Contract (GCC)’.
Reference:
- FIDIC Conditions of Contract for Plant & Design Build, Second Edition, 2017
- FIDIC Conditions of Contract for Construction, Second Edition, 2017
- FIDIC Conditions of Contract for EPC/ Turnkey Projects, Second Edition, 2017
- FIDIC Conditions of Contract for Construction, MDB Harmonised Edition, For Building and Engineering Works Designed by the Employer, MBD Harmonised Edition, 2005
- https://fidic.org/
