§ 2 A Typology of Risk Allocation – The Example of FIDIC Suite…: VI. The Consequences of the Occurrence of an Exception

In the Rainbow Suite the matter is now regulated in more detail both by reference…

Notwithstanding any other provision of this Clause, if any event or circumstance outside the control of the Parties (including, but not limited to, Force Majeure) arises which makes it impossible or unlawful for either or both Parties to fulfil its or their contractual obligations or which, under the law governing the Contract, entitles the Parties to be released from further performance of the Contract, then upon notice by either Party to the other Party of such event or circumstance:…

(a) the Parties shall be discharged from further performance ……

The 2017 edition Clause 18.6 provided a further refinement and made the release subject…

In addition to any other provision of this Clause, if any event arises outside the control of the Parties (including, but not limited to, an Exceptional Event) which …

(a) makes it impossible or unlawful for either Party or both Parties to fulfil their contractual obligations; or…

(b) under the law governing the Contract, entitles the Parties to be released from further performance of the Contract,…

and if the Parties are unable to agree on an amendment to the Contract that would permit the continued performance of the Contract, then after either Party gives a Notice to the other Part of such event: …

(i) the Parties shall be discharged from further performance ……

The same consequence, but under a different expression (“excused” instead of “discharged”),…

… the affected Party shall be excused performance of the prevented obligation for so long as such Exceptional Event prevents the affected Party from performing them. Other than the performance of the prevented obligations, the affected Party shall not be excused performance of all other obligations under the Contract.…

In the 1957 edition of the Red Book, Clause 20 (1) excludes Excepted Risks from the Contractor’s responsibility for Care of the Works. To the extent required by the Engineer, the Contractor had, however, to “repair and make good”, at the cost of the Employer, any “damage loss or injury” caused by such risk. The obligation was made “subject always to the provisions of Clause 65” concerning Special Risks which provided a broader and more detailed regulation:

(1) The Contractor shall be under no liability by way of indemnity or otherwise for or in respect of destruction of or damage to the Works […] or Temporary Works or to property whether of the Employer or third parties or for or in respect of injury or loss of life which is the consequence whether direct or indirect of [Special Risks] and the Employer shall indemnify and save harmless the Contractor against and from the same and against and from all claims demands proceedings damages costs charges and expenses whatsoever arising thereout or in connection therewith and shall compensate the Contractor for any loss of or damage to property of the Contractor used or intended to be used for the purposes of the Works (including property in transit to the Site) and occasioned either directly or indirectly by said special risk.…

§ 2 A Typology of Risk Allocation – The Example of FIDIC Suite of Contracts

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VI. The Consequences of the Occurrence of an Exception