ArLlcle 878 of 1he Clvll 1ransacLlons Law lederal Law no 3 of 1983 1he Clvll 1ransacLlons Law" sLaLes

1he conLracLor shall be llable Lo bear any damage or loss resulLlng from hls acL or deslgn wheLher or
noL by way of Lrespass or defaulL Powever Lhe llablllLy for damages shall noL be lnvoked lf Lhls resulLs
from an unavoldable accldenL"
ArLlcle 880 of Lhe Clvll 1ransacLlons Law sLaLes
1 lf a [ob conLracL ls for consLrucLlon of bulldlngs or oLher flxed lnsLallaLlon deslgned by an
archlLecL and execuLed by Lhe conLracLor under hls (archlLecL's) supervlslon Lhey shall be
-@ llable Lo lndemnlfy Lhe cllenL for any LoLal or parLlal dllapldaLlon LhaL occurs wlLhln Len
years ln Lhe bulldlngs or lnsLallaLlons consLrucLed or erecLed by Lhem and for any defecL LhaL
LhreaLens Lhe sLrengLh and safeLy of Lhe sLrucLure lf no longer perlod ls flxed ln Lhe conLracL
unless Lhe Lwo conLracLlng parLles wanL Lhe lnsLallaLlon Lo survlve for a perlod of less Lhan Len
years
2 1he llablllLy for sald lndemnlLy shall remaln even lf Lhe faulL or dllapldaLlon arlses from a defecL
ln Lhe land lLself or lf Lhe cllenL agrees Lo Lhe consLrucLlon of Lhe defecLlve bulldlngs or
lnsLallaLlons
3 1he Len years perlod shall sLarL from Lhe dellvery of Lhe works

under uAL law Lhe conLracLor ls sub[ecL Lo unllmlLed llablllLy for ma[or defecLs affecLlng Lhe sLablllLy
and safeLy of a sLrucLure Powever Lhe conLracLor may be exempLed from defecLs whlch are Lhe resulL
of acLs whlch Lhe conLracLor could noL have prevenLed lf Lhe execuLlon of Lhe deslgn was supervlsed by
Lhe archlLecL Lhan Lhe conLracLor and archlLecL may be [olnLly llable for ma[or defecLs under uAL law
dependlng on how Lhe conLracL ls drafLed ConLracLors and archlLecLs cannoL conLracL ouL of Lhelr
llablllLy Powever archlLecLs can llmlL Lhe scope of Lhelr llablllLy Lo drawlng and deslgn errors under
ArLlcle 881 of Lhe Clvll 1ransacLlons Law as long as Lhey only deslgn and do noL supervlse Lhe
lmplemenLaLlon of Lhe deslgn
ArLlcle 882 of Lhe Clvll 1ransacLlons Law sLaLes
Lvery condlLlon whlch Lends Lo exempL Lhe conLracLor or Lhe archlLecL from hls or her llablllLy for
damages or Lo mlnlmlze such llablllLy shall be vold"
Powever Lhe way around Lhls for Lhe conLracLor ls Lo speclfy llquldaLed damages ln Lhe evenL of delay
or defecL due Lo Lhe conLracLor lor example ln Lhe consLrucLlon conLracL Lhe conLracLor could sLaLe
LhaL Lhe maxlmum amounL of damages Lhe conLracLor would have Lo pay Lhe employer would be 10 of
Lhe conLracL prlce ln Lhe evenL of a ma[or defecL whlch affecLed Lhe sLablllLy of Lhe sLrucLure or delay ln
regards Lo mlnor defecLs whlch do noL affecL Lhe sLablllLy of Lhe sLrucLure lL ls posslble Lo llmlL Lhe
conLracLor's llablllLy 1he employer can requesL an lrrevocable bank guaranLee from Lhe conLracLor for
Lhe llquldaLed damages amounL
ln Lhe llulC conLracL damages for delay can be ln Lhe form of llquldaLed damages however defecLs
llablllLy remalns unllmlLed lurLhermore under Lhe llulC conLracL Lhe conLracLor ls requlred Lo provlde
a performance guaranLee Lo Lhe employer and lL has Lo be valld and enforceable unLll Lhe conLracLor has
execuLed and compleLed Lhe works and has remedled any defecLs ln facL Lhe conLracLor ls obllgaLed Lo
exLend Lhe valldlLy of Lhe performance guaranLee unLll Lhe works have been compleLed and any defecLs
have been remedled ln addlLlon Lhe llulC ConLracL clearly sLaLes Lhe procedure for employers Lo make
clalms agalnsL Lhe performance guaranLee ln conLrasL Lo Lhe uAL law lL may be useful Lo use llulC
provlslons such as Lhese Lo flll ln Lhe gaps of Lhe uAL law however wlLh Lhe knowledge LhaL uAL law
supersedes Lhe llulC provlslons and lL may be unpredlcLable how Lhe uAL courLs would [udge such a
maLLer
lor example ln Clause 42 of Lhe llulC ConLracL erformance SecurlLy lL sLaLes
1he Lmployer shall noL make a clalm under Lhe erformance SecurlLy excepL for amounLs Lo whlch Lhe
Lmployer ls enLlLled under Lhe ConLracL ln Lhe evenL of
a) fallure by Lhe ConLracLor Lo exLend Lhe valldlLy of Lhe erformance SecurlLy as descrlbed ln Lhe
precedlng paragraph ln whlch evenL Lhe Lmployer may clalm Lhe full amounL of Lhe erformance
SecurlLy
b) fallure by Lhe ConLracLor Lo pay Lhe Lmployer an amounL due as elLher agreed by Lhe ConLracLor or
deLermlned under SubClause 23 Lmployer's Clalms or Clause 20 Clalms ulspuLes and ArblLraLlon
wlLhln 42 days afLer Lhls agreemenL or deLermlnaLlon
c) fallure by Lhe ConLracLor Lo remedy a defaulL wlLhln 42 days afLer recelvlng Lhe Lmployer's noLlce
requlrlng Lhe defaulL Lo be remedled or
d) clrcumsLances whlch enLlLle Lhe Lmployer Lo LermlnaLlon under SubClause 132 1ermlnaLlon by
Lmployer lrrespecLlve of wheLher noLlce of LermlnaLlon has been glven
1he Lmployer shall lndemnlfy and hold Lhe ConLracLor harmless agalnsL and from all damages losses
and expenses (lncludlng legal fees and expenses) resulLlng from a clalm under Lhe erformance SecurlLy
Lo Lhe exLenL Lo whlch Lhe Lmployer was noL enLlLled Lo make Lhe clalm 1he Lmployer shall reLurn Lhe
erformance SecurlLy Lo Lhe ConLracLor wlLhln 21 days afLer recelvlng a copy of Lhe erformance
CerLlflcaLe"
LlquldaLed damages ln consLrucLlon conLracLs may be sub[ecL Lo ad[usLmenL ln Lhe uAL courLs lf Lhe
[udge decldes LhaL Lhe damages amounL does noL falrly reflecL Lhe losses lncurred by Lhe employer
1hus lL ls besL Lo sLaLe a deLalled llquldaLed damages clause explalnlng Lhe lnLenLlons of Lhe parLles and
poLenLlal llablllLles whlch boLh parLles foresee ln order for Lhe provlslon Lo be upheld ln Lhe uAL courLs
ConLrasL Lo llulC 1999 8edbook ConLracL (llulC ConLracL")
ArLlcle 111 CompleLlon of CuLsLandlng Work and 8emedylng uefecLs of Lhe llulC ConLracL sLaLes
ln order LhaL Lhe Works and ConLracLor's uocumenLs and each SecLlon shall be ln Lhe condlLlon
requlred by Lhe ConLracL (falr wear and Lear excepLed) by Lhe explry daLe of Lhe relevanL uefecLs
noLlflcaLlon erlod or as soon as pracLlcable LhereafLer Lhe ConLracLor shall
1 compleLe any work whlch ls ouLsLandlng on Lhe daLe sLaLed ln a 1aklngCver CerLlflcaLe wlLhln
such reasonable Llme as ls lnsLrucLed by Lhe Lnglneer and
2 execuLe all work requlred Lo remedy defecLs or damage as may be noLlfled by (or on behalf of)
Lhe Lmployer on or before Lhe explry daLe of Lhe uefecLs noLlflcaLlon erlod for Lhe Works or
SecLlon (as Lhe case may be) lf a defecL appears or damage occurs Lhe ConLracLor shall be
noLlfled accordlngly by (or on behalf of) Lhe Lmployer"

Clause 112 CosL of 8emedylng uefecLs of Lhe llulC ConLracL sLaLes
All work referred Lo ln sub paragraph b of subClause 111 (CompleLlon of CuLsLandlng Work and
8emedylng uefecLs) shall be execuLed aL Lhe rlsk and cosL of Lhe ConLracLor lf and Lo Lhe exLenL LhaL Lhe
work ls aLLrlbuLable Lo
1 any deslgn for whlch Lhe ConLracLor ls responslble
2 lanL MaLerlals or workmanshlp noL belng ln accordance wlLh Lhe ConLracL
3 or fallure by Lhe ConLracLor Lo comply wlLh any oLher obllgaLlon

lf and Lo Lhe exLenL LhaL such work ls aLLrlbuLable Lo any oLher cause Lhe ConLracLor shall be noLlfled
prompLly by (or on behalf of) Lhe Lmployer and SubClause 133 (varlaLlon rocedure) shall apply"
Clause 1110 unfulfllled CbllgaLlons of Lhe llulC ConLracL sLaLes
AfLer Lhe erformance CerLlflcaLe has been lssued each arLy shall remaln llable for Lhe fulflllmenL of
any obllgaLlon whlch remalns unperformed aL LhaL Llme lor Lhe purposes of deLermlnlng Lhe naLure
and exLenL of unperformed obllgaLlons Lhe ConLracL shall be deemed Lo remaln ln force"
ConLracLor's llablllLy under uAL law and Lhe llulC ConLracL ls relaLlvely equlvalenL Lo each oLher 1he
llulC ConLracL conLalns more deLalled procedure ln Lerms of noLlflcaLlon of defecLs and Lhe scope of
llablllLy of Lhe conLracLor ls wlder under llulC Lhan under uAL law as Lhe conLracLor ls llable for
1 any deslgn for whlch Lhe ConLracLor ls responslble
2 lanL MaLerlals or workmanshlp noL belng ln accordance wlLh Lhe ConLracL
3 or fallure by Lhe ConLracLor Lo comply wlLh any oLher obllgaLlon"

lurLhermore Lhe llulC ConLracL ln Clause 114 goes lnLo more deLall Lhan uAL law ln Lerms of Lhe
conLracLor's rlsk and employer's rlghLs lf Lhe ConLracLor falls Lo recLlfy Lhe defecL
Clause 114 lallure Lo 8emedy uefecLs of Lhe llulC ConLracL sLaLes
lf Lhe ConLracLor falls Lo remedy any defecL or damage wlLhln a reasonable Llme a daLe may be flxed by
(or on behalf of) Lhe Lmployer on or by whlch Lhe defecL or damage ls Lo be remedled 1he ConLracLor
shall be glven reasonable noLlce of Lhls daLe
lf Lhe ConLracLor falls Lo remedy Lhe defecL or damage by Lhls noLlfled daLe and Lhls remedlal work was
Lo be execuLed aL Lhe cosL of Lhe ConLracLor under SubClause 112 (cosL of remedylng defecLs) Lhe
Lmployer may (aL hls or her opLlon)
1 Carry ouL Lhe work hlmself or by oLhers ln a reasonable manner and aL Lhe ConLracLor's cosL
buL Lhe ConLracLor shall have no responslblllLy for Lhls work and Lhe ConLracLor shall sub[ecL Lo
SubClause 23 (Lmployer's Clalms) pay Lo Lhe Lmployer Lhe cosLs reasonably lncurred by Lhe
Lmployer ln remedylng Lhe defecL or damage
2 8equlre Lhe Lnglneer Lo agree or deLermlne a reasonable reducLlon ln Lhe ConLracL rlce ln
accordance wlLh SubClause 33 (ueLermlnaLlons) or beneflL of Lhe Works or any ma[or parL of
Lhe Works LermlnaLe Lhe ConLracL as a whole or ln respecL of such ma[or parL whlch cannoL be
puL Lo Lhe lnLended use WlLhouL pre[udlce Lo any oLher rlghLs under Lhe ConLracL or oLherwlse
Lhe Lmployer shall Lhen be enLlLled Lo recover all sums pald for Lhe Works or for such parL (as
Lhe case may be) plus flnanclng cosLs and Lhe cosL of dlsmanLllng Lhe same clearlng Lhe SlLe and
reLurnlng lanL and MaLerlals Lo Lhe ConLracLor"

1he llulC ConLracL provldes a clause for llquldaLed damages ln Lhe form of delay damages
Clause 87 of Lhe llulC ConLracL uelay uamages sLaLes
lf Lhe ConLracLor falls Lo comply wlLh SubClause 82 1lme for CompleLlon Lhe ConLracLor shall sub[ecL
Lo SubClause 23 Lmployer's Clalms pay delay damages Lo Lhe Lmployer for Lhls defaulL 1hese delay
damages shall be Lhe sum sLaLed ln Lhe Appendlx Lo 1ender whlch shall be pald for every day whlch
shall elapse beLween Lhe relevanL 1lme for CompleLlon and Lhe daLe sLaLed ln Lhe 1aklngCver
CerLlflcaLe Powever Lhe LoLal amounL due under Lhls SubClause shall noL exceed Lhe maxlmum
amounL of delay damages (lf any) sLaLed ln Lhe Appendlx Lo 1ender
1hese delay damages shall be Lhe only damages due from Lhe ConLracLor for such defaulL oLher Lhan ln
Lhe evenL of LermlnaLlon under SubClause 132 1ermlnaLlon by Lmployer prlor Lo compleLlon of Lhe
Works 1hese damages shall noL relleve Lhe ConLracLor from hls obllgaLlon Lo compleLe Lhe Works or
from any oLher duLles obllgaLlons or responslblllLles whlch he may have under Lhe ConLracL"
Powever Lhls clause applles Lo delay and noL defecLs llablllLy ln regards Lo defecLs llablllLy under llulC
Lhe conLracLor ls sub[ecL Lo SecLlon 11 of Lhe llulC ConLracL whlch some of Lhe provlslons are
menLloned hereln and are noL sub[ecL Lo llquldaLed damages
So you mlghL be asklng yourself 'where does Lhe employer's llablllLy lle?"
1he llulC ConLracL ls obvlously lopslded ln Lhe employer's favor
Clause 1414 of Lhe llulC ConLracL CessaLlon of Lmployer's LlablllLy sLaLes
1he Lmployer shall noL be llable Lo Lhe ConLracLor for any maLLer or Lhlng under or ln connecLlon wlLh
Lhe ConLracL or execuLlon of Lhe Works excepL Lo Lhe exLenL LhaL Lhe ConLracLor shall have lncluded an
amounL expressly for lL
a) ln Lhe llnal SLaLemenL and also
b) excepL for maLLers arlslng afLer Lhe 1aklng Cver CerLlflcaLe for Lhe Works ln Lhe SLaLemenL aL
compleLlon descrlbed ln SubClause 1410 SLaLemenL of CompleLlon
Powever Lhls SubClause shall noL llmlL Lhe Lmployer's llablllLy under hls lndemnlflcaLlon obllgaLlons or
Lhe Lmployer's llablllLy ln case of fraud dellberaLe defaulL or reckless mlsconducL by Lhe Lmployer"
Clause 133 of Lhe llulC ConLracL Lmployer's LnLlLlemenL Lo 1ermlnaLlon sLaLes
1he Lmployer shall be enLlLled Lo LermlnaLe Lhe ConLracL aL any Llme for Lhe Lmployer's convenlence
by glvlng noLlce of such LermlnaLlon Lo Lhe ConLracLor 1he LermlnaLlon shall Lake effecL 28 days afLer
Lhe laLer of Lhe daLes on whlch Lhe ConLracLor recelves Lhls noLlce or Lhe Lmployer reLurns Lhe
erformance SecurlLy 1he Lmployer shall noL LermlnaLe Lhe ConLracL under Lhls SubClause ln order Lo
execuLe Lhe Works hlmself or Lo arrange for Lhe Works Lo be execuLed by anoLher conLracLor
AfLer Lhls LermlnaLlon Lhe ConLracLor shall proceed ln accordance wlLh SubClause 163 CessaLlon of
Work and 8emoval of ConLracLor's LqulpmenL and shall be pald ln accordance wlLh SubClause 196
CpLlonal 1ermlnaLlon aymenL and 8elease"
Clause 172 of Lhe llulC ConLracL ConLracLor's Care of Lhe Works sLaLes
1he ConLracLor shall Lake full responslblllLy for Lhe care of Lhe Works and Coods from Lhe
CommencemenL uaLe unLll Lhe 1aklngCver CerLlflcaLe ls lssued (or ls deemed Lo be lssued under Sub
Clause 101 1aklng Cver of Lhe Works and SecLlons for Lhe Works when responslblllLy for Lhe care of
Lhe Works shall pass Lo Lhe Lmployer lf a 1aklngCver CerLlflcaLe ls lssued (or ls deemed Lo be lssued)
for any SecLlon or parL of Lhe Works responslblllLy for Lhe care of Lhe SecLlon or parL shall Lhen pass Lo
Lhe Lmployer
AfLer responslblllLy has accordlngly passed Lo Lhe Lmployer Lhe ConLracLor shall Lake responslblllLy for
Lhe care of any work whlch ls ouLsLandlng on Lhe daLe sLaLed ln a 1aklngCver CerLlflcaLe unLll Lhls
ouLsLandlng work has been compleLed
lf any loss or damage happens Lo Lhe Works Coods or ConLracLor's uocumenLs durlng Lhe perlod when
Lhe ConLracLor ls responslble for Lhelr care from any cause noL llsLed ln SubClause 173 Lmployer's
8lsks Lhe ConLracLor shall recLlfy Lhe loss or damage aL Lhe ConLracLor's rlsk and cosL so LhaL Lhe
Works Coods and ConLracLor's uocumenLs conform wlLh Lhe ConLracL
1he ConLracLor shall be llable for any loss or damage caused by any acLlons performed by Lhe ConLracLor
afLer a 1aklng Cver CerLlflcaLe has been lssued 1he ConLracLor shall also be llable for any loss or
damage whlch occurs afLer a 1aklng Cver CerLlflcaLe has been lssued and whlch arose from a prevlous
evenL for whlch Lhe ConLracLor was llable"
1herefore noL only does Lhe conLracLor bear Lhe brunL of llablllLy from commencemenL of works unLll
Lhe Laklng over cerLlflcaLe ls lssued under llulC however Lhe employer seems Lo have free relgn Lo
LermlnaLe Lhe conLracL aL anyLlme for almosL any reason and make clalms agalnsL Lhe performance
guaranLee 1he only place conLracLor's seem Lo be proLecLed ls ln Lhe delay damages or llquldaLed
damages for delay provlslon Powever Lhe door ls wlde open for defecL llablllLy and llablllLy for care for
Lhe works from Lhe commencemenL of Lhe works Lo Lhe lssuance of Lhe Laklng over cerLlflcaLe
Powever Lhe conLracLor sLlll seems Lo remaln llable even afLer Lhe Laklng over cerLlflcaLes ls lssued
1he ConLracLor shall be llable for any loss or damage caused by any acLlons performed by Lhe
ConLracLor afLer a 1aklng Cver CerLlflcaLe has been lssued 1he ConLracLor shall also be llable for any
loss or damage whlch occurs afLer a 1aklng Cver CerLlflcaLe has been lssued and whlch arose from a
prevlous evenL for whlch Lhe ConLracLor was llable"
1he full exLenL of Lhe dlsproporLlonal llablllLy of Lhe CcnLracLor ls expllclLly deLalled ln Lhe llulC ConLracL
whlle Lhe archlLecL and employer seem Lo be exposed Lo very low levels of llablllLy 1he uAL law
aLLempLs Lo draw a balance beLween Lhe llablllLy of Lhe conLracLor and Lhe archlLecL however sLlll
underexposes Lhe employer Lo llablllLy Why ls lL LhaL Lhe mosL powerful always geL off scoL free?