Some Comments on Drafting Usages in a FIDIC Contract

I’ve long been aware of contracts promulgated by FIDIC, an international standards organization for the construction industry. But I’d lost track of whether I’d written anything about FIDIC contracts, so during my recent Abu Dhabi seminar I confidently proclaimed that I had. When one of the participants subsequently pointed out that it appeared that in fact I hadn’t, I knew that I had to rectify that. Hence this post.

I’ve noted below some comments regarding the language of one of the FIDIC contracts, “Conditions of Contract for Plant and Design-Build for Electrical and Mechanical Plant and for Building and Engineering Works Designed by the Contractor,” otherwise known as the “Plant and Design-Build Contract.” It was issued in 1999. A seminar participant was kind enough to email me a copy, but I also found a copy online, here. (If anyone at FIDIC would prefer that I not link to that copy, I’d be happy to remove the link.) [Updated January 27, 2013: At the request of FIDIC, I’ve removed the link.]

As usual, substantive deal points are beyond the scope of these comments. Instead, I’m interested in the general drafting usages. I stopped after the first few pages; I think I included enough comments to make my point. And that point is that this FIDIC contract was doubtless drafted by experts in construction transactions, but not by experts in contract drafting: this contract is just another example of suboptimal traditional contract drafting.

If there’s a broader point, it’s that this should come as no surprise. I’ve examined several contracts promulgated by trade groups, and each of them has been nothing to write home about. (For another example, go here for my post about the 2002 ISDA master agreement.) It wouldn’t take much for a trade group to make sure that any contract it promulgates is a model of clarity.

Both the FIDIC contract and the ISDA contract were prepared more than ten years ago. Perhaps if new versions were prepared now, the drafting would be more rigorous. But I wouldn’t count on it.

So here are my comments (the number at the beginning of each comment refers to the relevant section of the contract). Many of the comments are trivial enough, taken on their own. But what matters is the cumulative effect of all the suboptimal usages; taken together, they exact a real toll on the reader.

  • 1: The contract leads with stuff that the contract parties care least about, namely definitions and other “general provisions.” I’d lead with deal terms. Regarding where to place a definition section, see MSCD 6.71–73. [Updated April 20, 2015: But see Lars-Henrik’s comment below.]
  • 1.1: “the following words and expressions shall have the meanings stated.” This is the first of many, many, examples of unhelpfully broad use of shall. The chaotic handling of categories of contract language is the single biggest problem with the language of this contract.
  • 1.1: “Words indicating persons or parties include corporations and other legal entities, except where the context requires otherwise.” Hey, let’s have a fight over whether the context requires otherwise!
  • 1.1.1.1: For reasons explained in MSCD 4.40–43, I recommend not using this sort of enumeration (1.1.1.1), known as the “multiple-numeration system.” In in this particular context, I wouldn’t enumerate at all the autonomous definitions in a definition section.
  • 1.1.1.6: Using (s) to denote singular or plural isn’t a good idea; see MSCD 17.28. Neither is using and/or; see MSCD 11.78–82.
  • 1.1.2.4: This definition cross-refers to a “Sub-Clause.” MSCD 4.5 explains why I prefer section; MSCD 4.96 explains why you shouldn’t use initial capitals in cross-references; and MSCD 4.94 explains why in a cross-reference to a subsection you should use the word section (or, if you insist, clause).
  • 1.1.3.9: Why are “day” and “year” the only defined terms that don’t use an initial capital letter? MSCD 6.8 says, “Don’t make exceptions to use of initial capitals when creating a particular defined term.”
  • 1.2: “words indicating the singular also include the plural and words indicating the plural also include the singular …” As explained in in MSCD 15.19, this is overbroad, in addition to being clumsy. Note that the elements of this “Interpretation” section are preceded by the weasel words “except where the context requires otherwise.”
  • 1.2, 1.3: These and other sections include one or more unenumerated paragraphs. MSCD 4.22 says not to do that; it makes cross-referencing more awkward. And see this post for a dispute involving confusion caused in part by an unenumerated paragraph.
  • 1.5: “The documents forming the Contract are to be taken as mutually explanatory of one another.” As anyone who has attended one of my seminars would know, the first question I’d ask of this sentence is, What category of contract language should it be? In its current form, it’s an odd variant of language of obligation; I suspect that language of policy would make more sense. But a more immediate problem is that I don’t know what it’s trying to say.
  • 1.7: “either Party … may assign the whole or any part with the prior agreement of the other Party, at the sole discretion of such other Party …” See MSCD 3.168–96 for why sole discretion is problematic.
  • 1.7: “any moneys due, or to become due, under the Contract.” See MSCD 13.164 for the shortcomings of due or to become due.
  • 1.8: “unless and until taken over by the Employer.” See MSCD 13.721–22 regarding the redundancy in unless and until.
  • 1.8: “The Employer’s Personnel shall have the right of access to all these documents at all reasonable times.” See MSCD 3.207–08 for an explanation of why it would be preferable to express this as an obligation imposed on the Contractor.
  • 1.8: “the Party shall promptly give notice to the other Party of such error or defect.” Use of such instead of this, that, these, or those is a hallmark of dreadfully legalistic writing; see MSCD 13.636.
  • 1.12: “all such confidential and other information as the Engineer may reasonably require in order to verify the Contractor’s compliance with the Contract.” See MSCD 3.338 for why may is redundant in this context. And to is always a more concise alternative to in order to.
  • 1.13: “the Employer shall indemnify and hold the Contractor harmless against and from …” *Adams beats head against wall, sobbing* See MSCD 13.323–33 regarding indemnify and hold harmless. And see this post regarding prepositions used with indemnify.
  • 1.14: “these persons shall be deemed to be jointly and severally liable to the Employer.” The phrase joint and several doesn’t mean what people think it means; see MSCD 13.350–61.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.