2.1 Conditions of Subcontract

O Mon TPP No.
2 Construction Project Conditions of Subcontract

Mechanical Work Package A Subcontract No. OMON-ME-002

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CONDITIONS OF SUBCONTRACT

Subcontract
for
Mechanical Work Package A
O Mon TPP No.2 Construction Project
in
Cantho, Vietnam

(Subcontract No. OMON-ME-002)

O Mon TPP No.2 Construction Project Conditions of Subcontract

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CONTENTS

1 General Provisions

1.1 Definitions
1.2 Interpretation
1.3 Communications
1.4 Law and Language
1.5 Priority of Documents
1.6 Subcontract Agreement
1.7 The Contract
1.8 Assignment
1.9 Care and Supply of Documents
1.10 Employers/Contractors Use of Subcontractors Documents
1.11 Subcontractors Use of Employers/Contractors Documents
1.12 Confidential Details
1.13 Compliance with Laws
1.14 J oint and Several Liability
1.15 Details to be Confidential
1.16 Delayed Drawings, Instructions or Free-Issue Materials

2 The Contractor

2.1 Contractors Representative
2.2 Delegation by Contractors Representative
2.3 Instructions of Contractors Representative
2.4 Determinations
2.5 Contractors Claims
2.6 Right of Access to the Site
2.7 Permits, Licenses or Approvals

3 The Subcontractor

3.1 Subcontractors General Obligations
3.2 Performance Security
3.3 Subcontractors Representative
3.4 Subcontractors
3.5 Nominated Subcontractors
3.6 Assignment of Benefit of Subcontract
3.7 Co-operation
3.8 Setting Out
3.9 Safety Procedures
3.10 Quality Assurance

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3.11 Site Data
3.12 Sufficiency of Accepted Subcontract Amount
3.13 Unforeseeable Physical Conditions
3.14 Rights of Way and Facilities
3.15 Avoidance of Interference
3.16 Access Route
3.17 Transport of Goods
3.18 Subcontractors Equipment
3.19 Protection of Environment
3.20 Electricity, Water and Gas
3.21 Employers/Contractors Equipment and Free-Issue Material
3.22 Progress Reports
3.23 Security of Site
3.24 Subcontractors Operation on Site
3.25 Fossils

4 Design

4.1 General Design Obligations
4.2 Subcontractors Documents
4.3 Subcontractors Undertaking
4.4 Technical Standards and Regulations
4.5 Training
4.6 As-Built Documents
4.7 Operation and Maintenance Manuals
4.8 Design Error

5 Staff and Labor

5.1 Engagement of Staff and Labor
5.2 Rates of Wages and Conditions of Labor
5.3 Persons in Service of Employer/Contractor
5.4 Labor Laws
5.5 Working Hours
5.6 Facilities for Staff and Labor
5.7 Health and Safety
5.8 Subcontractors Superintendence
5.9 Subcontractors Personnel
5.10 Records of Subcontractors Personnel and Equipment
5.11 Disorderly Conduct

6 Plant, Materials and Workmanship

6.1 Manner of Execution
6.2 Samples
6.3 Inspection
6.4 Testing

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6.5 Rejection
6.6 Remedial Work
6.7 Ownership of Plant and Materials
6.8 Royalties

7 Commencement, Delays and Suspension

7.1 Commencement of Subcontract Works
7.2 Time for Completion
7.3 Program
7.4 Extension of Time for Completion
7.5 Rate of Progress
7.6 Delay Damages
7.7 Suspension of Work
7.8 Consequences of Suspension
7.9 Payment for Plant and Materials in Event of Suspension
7.10 Prolonged Suspension
7.11 Resumption of Work

8 Tests on Completion

8.1 Subcontractors Obligations
8.2 Delayed Tests
8.3 Retesting
8.4 Failure to Pass Tests on Completion

9 Contractors Taking Over

9.1 Taking Over of Subcontract Works and Sections
9.2 Taking Over of Parts of Subcontract Works
9.3 Surfaces Requiring Reinstatement

10 Defects Liabil ity

10.1 Completion of Outstanding Work and Remedying Defects
10.2 Cost of Remedying Defects
10.3 Extension of Defects Notification Period
10.4 Failure to Remedy Defects
10.5 Removal of Defective Work
10.6 Further Tests
10.7 Right of Access
10.8 Subcontractor to Search
10.9 Performance Certificate
10.10 Unfulfilled Obligations
10.11 Clearance of Site


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11 Tests after Completion

11.1 Procedure for Tests after Completion
11.2 Retesting
11.3 Failure to Pass Tests after Completion

12 Variations and Adjustments

12.1 Right to Vary
12.2 Value Engineering
12.3 Variation Procedure
12.4 Payment in Applicable Currencies
12.5 Provisional Sums
12.6 Daywork
12.7 Adjustments for Changes in Legislation and Cost

13 Subcontract Price and Payment

13.1 Subcontract Works to be Measured
13.2 Method of Measurement
13.3 Evaluation
13.4 Omissions
13.5 Subcontract Price
13.6 Advance Payment
13.7 Application for Interim Payment Certificates
13.8 Schedule of Payments
13.9 Plant and Materials intended for Subcontract Works
13.10 Issue of Interim Payment Certificates
13.11 Payment
13.12 Delayed Payment
13.13 Payment of Retention Money
13.14 Statement at Completion
13.15 Application for Final Payment Certificate
13.16 Discharge
13.17 Issue of Final Payment Certificate
13.18 Cessation of Contractors Liability
13.19 Currencies of Payment

14 Termination by Contractor

14.1 Notice to Correct
14.2 Termination by Contractor
14.3 Valuation at Date of Termination
14.4 Payment after Termination
14.5 Contractors Entitlement to Termination


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15 Suspension and Termination by Subcontractor

15.1 Subcontractors Entitlement to Suspend Work
15.2 Termination by Subcontractor
15.3 Cessation of Work and Removal of Subcontractors Equipment
15.4 Payment on Termination

16 Ri sk and Responsibility

16.1 Indemnities
16.2 Subcontractors Care of Subcontract Works
16.3 Employers Risks and Consequences
16.4 Intellectual and Industrial Property Rights
16.5 Limitation of Liability
16.6 Use of Employers or Contractors Accommodation/Facilities

17 Insurance

17.1 General Requirements for Insurances
17.2 Insurance for Subcontract Works
17.3 Insurance against Injury to Persons and Damage to Property
17.4 Insurance for Subcontractors Equipment
17.5 Insurance for Subcontractors Personnel

18 Force Majeure

18.1 Definition of Force Majeure
18.2 Notice of Force Majeure
18.3 Duty to Minimize Delay
18.4 Consequences of Force Majeure
18.5 Force Majeure Affecting Subcontractor
18.6 Optional Termination, Payment and Release
18.7 Release from Performance under Law

19 Cl aims, Disputes and Arbitration

19.1 Subcontractors Claims
19.2 Amicable Settlement
19.3 Arbitration
19.4 Dispute with Employer

Annexes: A Form of Subcontract Agreement
B Form of Performance Security Demand Guarantee
C Form of Performance Security Surety Bond
D Form of Advance Payment Guarantee
E Form of Retention Money Guarantee

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1 General Provisions

1.1 Definitions

In the Conditions of Subcontract (these Conditions), the following words and expressions
shall have the meanings stated. Words indicating persons or parties include corporations and
other legal entities, except where the context requires otherwise:

1.1.1 The Subcontract

1.1.1.1 Subcontract means the Subcontract Agreement, the Letter of Acceptance, the Letter of
Tender, these Conditions, the Specification, the Drawings, the completed Schedules, the
appended clauses of the Contract and the further documents (if any) which are listed in the
Subcontract Agreement or in the Letter of Acceptance.

1.1.1.2 Subcontract Agreement means the subcontract agreement referred to in Sub-Clause 1.6
(Subcontract Agreement).

1.1.1.3 Letter of Acceptance means the letter of formal acceptance, signed by the Contractor, of
the Letter of Tender, including any annexed memoranda comprising agreement between and
signed by both Parties. If there is no such letter of acceptance, the expression Letter of
Acceptance means the Subcontract Agreement and the date of issuing or receiving the
Letter of Acceptance means the date of signing the Subcontract Agreement.

1.1.1.4 Letter of Tender means the document entitled letter of tender, which was completed by the
Subcontractor and includes the signed offer to the Contractor for the Subcontract Works.

1.1.1.5 Specification means the document entitled specification, as included in the Subcontract,
and any additions and modifications to the specification in accordance with the Subcontract.
Such document specifies the Subcontract Works.

1.1.1.6 Drawings means the drawings of the Subcontract Works, as included in the Subcontract,
and any additional and modified drawings issued by (or on behalf of) the Contractor in
accordance with the Subcontract.

1.1.1.7 Schedules means the document(s) entitled schedules, completed by the Subcontractor and
submitted with the Letter of Tender, as included in the Subcontract. Such document may
include the Bill of Quantities, data, lists, and schedules of rates and/or prices.

1.1.1.8 Tender means the Letter of Tender and all other documents which the Subcontractor
submitted with the Letter of Tender, as included in the Subcontract.

1.1.1.9 Appendix to Tender means the completed pages entitled appendix to tender which are
appended to and form part of the Letter of Tender.


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1.1.1.10 Bill of Quantities , Daywork Schedule and Schedule of Payments mean the
documents so named (if any) which are comprised in the Schedules.

1.1.1.11 Contract means the contract made between the Employer and the Contractor in relation to
the O Mon TPP No.2 Construction Project at O Mon district, Cantho City, the Socialist
Republic of Vietnam.

1.1.2 Parties and Persons

1.1.2.1 Party means the Contractor or the Subcontractor, as the context requires.

1.1.2.2 Contractor means the person named as contractor in the Appendix to Tender and the legal
successors in title to this person.

1.1.2.3 Subcontractor means the person(s) named as subcontractor in the Letter of Tender
accepted by the Contractor and the legal successors in title to this person(s).

1.1.2.4 Employer means the person named as employer in the Appendix to Tender and the legal
successors in title to this person, who is called as the COMPANY in the Contract.

1.1.2.5 Contractors Representative means the person appointed by the Contractor under Sub-
Clause 2.1 (Contractor s Representative), who acts on behalf of the Contractor.

1.1.2.6 Subcontractor s Representative means the person named by the Subcontractor in the
Subcontract or appointed from time to time by the Subcontractor under Sub-Clause 3.3
(Subcontractor s Representative), who acts on behalf of the Subcontractor.

1.1.2.7 Contractors Personnel means the Contractors Representative, the assistants referred to
in Sub-Clause 2.2 (Delegation by Contractor s Representative) and all other staff, labour
and other employees of the Contractor, and any other personnel notified to the
Subcontractor by the Contractor as Contractors Personnel.

1.1.2.8 Subcontractor s Personnel means the Subcontractors Representative and all personnel
whom the Subcontractor utilizes on Site, who may include the staff, labor and other
employees of the Subcontractor and of each subcontractor, and any other personnel
assisting the Subcontractor in the execution of the Subcontract Works.

1.1.2.9 Employers Personnel means all personnel whom the Employer utilizes on Site, who may
include the staff, labor and other employees of the Employer.

1.1.2.10 subcontractor means any person named in the Subcontract as a subcontractor, or any
person appointed as a subcontractor for a part of the Subcontract Works, and the legal
successors in title to each of these persons.

1.1.3 Dates, Tests, Peri od and Completion

1.1.3.1 Commencement Date means the date notified under Sub-Clause 7.1 (Commencement of
Subcontract Works).

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1.1.3.2 Time for Completion means the time for completing the Subcontract Works or a Section
(as the case may be) under Sub-Clause 7.2 (Time for Compl etion), as stated in the
Appendix to Tender (with any extension under Sub-Clause 7.4 (Extension of Time for
Completion)), calculated from the Commencement Date.

1.1.3.3 Tests on Compl etion means the tests which are specified in the Subcontract or agreed by
both Parties or instructed as a Variation, and which are carried out under Clause 8 (Tests
on Completion) before the Subcontract Works or a Section (as the case may be) are taken
over by the Contractor.

1.1.3.4 Taking-Over Certificate means a certificate issued under Clause 9 (Contractors Taking
Over).

1.1.3.5 Tests after Completion means the tests (if any) which are specified in the Subcontract and
which are carried out under Clause 11 (Tests after Completion) after the Subcontract
Works or a Section (as the case may be) are taken over by the Contractor.

1.1.3.6 Defects Notification Period means the period for notifying defects in the Subcontract
Works or a Section (as the case may be) under Sub-Clause 10.1 (Completion of
Outstanding Work and Remedying Defects), as stated in the Appendix to Tender, with
any extension under Sub-Clause 10.3 (Extension of Defects Notification Period),
calculated from the date on which the Subcontract Works or Section is completed as
certified under Sub-Clause 9.1 (Taking Over of Subcontract Works and Sections).

1.1.3.7 Performance Certificate means the certificate issued under Sub-Clause 10.9
(Performance Certifi cate).

1.1.3.8 day means a calendar day and year means 365 days.

1.1.4 Money and Payments

1.1.4.1 Accepted Subcontract Amount means the amount accepted in the Letter of Acceptance
for the execution and completion of the Subcontract Works and the remedying of any
defects.

1.1.4.2 Subcontract Pri ce means the price defined in Sub-Clause 13.5 (Subcontract Price), and
includes adjustments in accordance with the Subcontract.

1.1.4.3 Cost means all expenditure reasonably incurred (or to be incurred) by the Subcontractor,
whether on or off the Site, including overhead and similar charges, but does not include
profit.

1.1.4.4 Final Payment Certificate means the payment certificate issued under Sub-Clause 13.17
(Issue of Final Payment Certificate).

1.1.4.5 Final Statement means the statement defined in Sub-Clause 13.15 (Application for Final
Payment Certificate).

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1.1.4.6 Foreign Currency means a currency (if any) in which part (or all) of the Subcontract Price
is payable, but not the Local Currency.

1.1.4.7 Interim Payment Certificate means a payment certificate issued under Clause 13
(Subcontract Pri ce and Payment), other than the Final Payment Certificate.

1.1.4.8 Local Currency means the currency of the Country.

1.1.4.9 Payment Certifi cate means a payment certificate issued under Clause 13 (Subcontract
Pri ce and Payment).

1.1.4.10 Provisional Sum means a sum (if any) which is specified in the Subcontract as a
provisional sum, for the execution of any part of the Subcontract Works or for the supply of
Plant, Materials or services under Sub-Clause 12.5 (Provisional Sums).

1.1.4.11 Retention Money means the accumulated retention moneys which the Contractor retains
under Sub-Clause 13.7 (Application for Interim Payment Certifi cates) and pays under
Sub-Clause 13.13 (Payment of Retention Money).

1.1.4.12 Statement means a statement submitted by the Subcontractor as part of an application,
under Clause 13 (Subcontract Pri ce and Payment), for a payment certificate.

1.1.5 Subcontract Works and Goods

1.1.5.1 Subcontractor s Equipment means all apparatus, machinery, vehicles and other things
required for the execution and completion of the Subcontract Works and the remedying of
any defects. However, Subcontractors Equipment excludes Temporary Subcontract Works,
Employers Equipment (if any), Contractors Equipment (if any), Plant, Materials and any
other things intended to form or forming part of the Permanent Subcontract Works.

1.1.5.2 Goods means Subcontractors Equipment, Materials, Plant and Temporary Subcontract
Works, or any of them as appropriate.

1.1.5.3 Materials means things of all kinds (other than Plant) intended to form or forming part of the
Permanent Subcontract Works, including the supply-only materials (if any) to be supplied by
the Subcontractor under the Subcontract.

1.1.5.4 Permanent Subcontract Works means the permanent works to be executed by the
Subcontractor under the Subcontract.

1.1.5.5 Plant means the apparatus, machinery and vehicles intended to form or forming part of the
Permanent Subcontract Works.

1.1.5.6 Section means a part of the Subcontract Works specified in the Appendix to Tender as a
Section (if any).


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1.1.5.7 Temporary Subcontract Works means all temporary works of every kind (other than
Subcontractors Equipment) required on Site for the execution and completion of the
Permanent Subcontract Works and the remedying of any defects.

1.1.5.8 Subcontract Works means the Permanent Subcontract Works and Temporary Subcontract
Works, or either of them as appropriate.

1.1.6 Other Definitions

1.1.6.1 Subcontractors Documents means the calculations, computer programs and other
software, drawings, manuals, models and other documents of a technical nature (if any)
supplied by the Subcontractor under the Subcontract.

1.1.6.2 Contractors Equipment means the apparatus, machinery and vehicles (if any) made
available by the Contractor for the use of the Subcontractor in the execution of the
Subcontract Works, as stated in the Specification or any part of the Subcontract, but does
not include Plant which has not been taken over by the Contractor.

1.1.6.3 Country means the country in which the Site (or most of it) is located, where the Permanent
Subcontract Works are to be executed.

1.1.6.4 Employer s Equipment means the apparatus, machinery and vehicles (if any) made
available by the Employer through the Contractor for the use of the Subcontractor in the
execution of the Subcontract Works, as stated in the Specification or any part of the
Subcontract, but does not include Plant which has not been taken over by the Employer.

1.1.6.5 Force Majeure is defined in Clause 18 (Force Majeure).

1.1.6.6 Laws means all national (or state) legislation, statutes, ordinances and other laws, and
regulations and by-laws of any legally constituted public authority.

1.1.6.7 Performance Security means the security (or securities, if any) under Sub-Clause 3.2
(Performance Security).

1.1.6.8 Site means the places where the Permanent Subcontract Works are to be executed and to
which Plant and Materials are to be delivered, and any other places as may be specified in
the Subcontract as forming part of the Site.

1.1.6.9 Unforeseeable means not reasonably foreseeable by an experienced contractor by the
date for submission of the Tender.

1.1.6.10 Variation means any change to the Subcontract Works, which is instructed or approved as
a variation under Clause 12 (Vari atios and Adjustments).

1.2 Interpretation

In the Subcontract, except where the context requires otherwise:


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(a) words indicating one gender include all genders,
(b) words indicating singular also include the plural and words indicating the plural also
include singular,
(c) provisions indicating the word agree, agreed or agreement requires the agreement
to be recorded in writing, and
(d) written or in writing means hand-written, type-written, printed or electronically made,
and resulting in a permanent record.

The marginal words and other headings shall not be taken into consideration in the
interpretation of these Conditions.

1.3 Communications

Wherever these Conditions provide for the giving or issuing of approvals, certificates,
consents, determinations, notices and requests, these communications shall be:

(a) in writing and delivered by hand (against receipt), sent by mail or courier, or transmitted
using any of the agreed systems of electronic transmission as stated in the Appendix to
Tender, and
(b) delivered, sent or transmitted to the address for the recipients communications stated in
the Appendix to Tender. However:

(i) if the recipient gives notice of another address, communications shall thereafter be
delivered accordingly, and
(ii) if the recipient has not stated otherwise when requesting an approval or consent, it
may be sent to the address from which the request was issued.

1.4 Law and Language

The Subcontract shall be governed by the law of the country (or other jurisdiction) stated in
the Appendix to Tender.

If there are versions of any part of the Subcontract which are written in more than one
language, the version which is in the ruling language stated in the Appendix to Tender shall
prevail.

The language for communications shall be that stated in the Appendix to Tender. If no
language is stated there, the language for communications shall be the language in which
the Subcontract (or most of it) is written.

1.5 Priority of Documents

The documents forming the Subcontract are to be taken as mutually explanatory of one
another. For the purpose of interpretation, the priority of the documents shall be in
accordance with the following sequence:

(a) the Subcontract Agreement,
(b) the Letter of Acceptance,

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(c) the Letter of Tender,
(d) the Addenda Nos. ______ (if any),
(e) these Conditions of Subcontract,
(f) the Specification,
(g) the Drawings,
(h) the completed Schedules, and
(i) the appended clauses of the Contract.

If an ambiguity or discrepancy is found in the documents, the Contractor shall issue any
necessary clarification or instruction.

1.6 Subcontract Agreement

The Parties shall enter into a Subcontract Agreement after the Subcontractor receives the
Letter of Acceptance, unless they agree otherwise. The Subcontract Agreement shall be
based upon the form annexed to these Conditions. The costs of stamp duties and similar
charges (if any) imposed by law in connection with entry into the Subcontract Agreement shall
be borne by the respective Parties.

1.7 The Contract

Certain clauses of the Contract are appended to and incorporated into this Subcontract. The
Subcontractor shall conform as necessary to permit the Contractor to comply in every respect
with these clauses, except as otherwise stated in the Subcontract.

In respect to the provisions of the Contract, the Subcontractor shall accept the same
responsibilities, obligations and liabilities towards the Contractor as the Contractor accepts
towards the Employer in respect of the Subcontract Works and any other matter under the
Subcontract, except as otherwise stated in the Subcontract.

In case of conflict between the appended clauses of the Contract and the other Clauses of
this Subcontract, the documents shall rule in the order prescribed herein.

1.8 Assignment

Neither Party shall assign the whole or any part of the Subcontract or any benefit or interest in
or under the Subcontract. However, either Party:

(a) may assign the whole or any part with the prior agreement of the other Party, at the sole
discretion of such other Party, and
(b) may, as security in favour of a bank or financial institution, assign its right to any moneys
due, or to become due, under the Subcontract.

1.9 Care and Suppl y of Documents

The Specification and Drawings shall be in the custody and care of the Contractor. Unless
otherwise stated in the Subcontract, one (1) copies of the Subcontract and of each
subsequent Specification and Drawing, with one (1) additional copies of any material which

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can not be reproduced to an equal standard by photocopying, (or one (1) electronic file), shall
be supplied to the Subcontractor, who may make or request further copies at the cost of the
Subcontractor.

Each of the Subcontractors Documents shall be in the custody and care of the Subcontractor,
unless and until taken over by the Contractor. Unless otherwise stated in the Subcontract, the
Subcontractor shall supply to the Contractor the number of copies of the Subcontractors
Documents that the Contractor shall supply to the Employer and any other parties under the
Contract, together with three (3) additional copies, and one (1) reproducible copy of any
material which can not be reproduced to an equal standard by photocopying (or one (1)
electronic file).

The Subcontractor shall keep, on the Site, a copy of the Subcontract, publications named in
the Specification and Drawings, the Subcontractors Documents (if any), the Drawings and
Variations and other communications given under the Subcontract. The Employers
Personnel and Contractors Personnel shall have the right of access to all these documents
at all reasonable times.

If a Party becomes aware of an error or defect of a technical nature in a document which was
prepared for use in executing the Subcontract Works, the Party shall promptly give notice to
the other Party of such error or defect.

1.10 Employers / Contractors Use of Subcontractors Documents

Except as otherwise stated in the Subcontract, the Subcontractor shall, as between the
Parties, retain the copyright and other intellectual property rights in the Subcontractors
Documents and other design documents made by (or on behalf of) the Subcontractor.

The Subcontractor shall be deemed (by signing the Subcontract) to give to the Employer and
the Contractor a non-terminable transferable non-exclusive royalty-free license to copy, use
and communicate the Subcontractors Documents, including making and using modifications
of them. This license shall:

(a) apply throughout the actual or intended working life (whichever is longer) of the relevant
parts of the Subcontract Works,
(b) entitle any person in proper possession of the relevant part of the Subcontract Works to
copy, use and communicate the Subcontractors Documents for the purposes of
completing, operating, maintaining, altering, adjusting, repairing and demolishing the
Subcontract Works, and
(c) in the case of Subcontractors Documents which are in the form of computer program
and other software, permit their use on any computer on the Site and other places as
envisaged by the Subcontract, including replacements of any computers supplied by the
Subcontractor.

The Subcontractors Documents and other design documents made by (or on behalf of) the
Subcontractor shall not, without the Subcontractors consent, be used, copied or
communicated to a third party by or on behalf of the Contractor for purposes other than those
permitted under this Sub-Clause.

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1.11 Subcontractors Use of Employers / Contractors Documents

As between the Parties, the Employer and the Contractor shall retain their respective
copyrights and other intellectual property rights in the Specification, the Drawings and other
documents made by or on behalf of them respectively. The Subcontractor may, at his cost,
copy, use and obtain communication of these documents for the purposes of the Subcontract.
They shall not, without the consents of the respective parties of the Employer and the
Contractor, be copied, used or communicated to a third party by the Subcontractor, except as
necessary for the purposes of the Subcontract.

1.12 Confidential Details

The Subcontractor shall disclose all such confidential and other information as the Contractor
may reasonably require in order to verify the Subcontractors compliance with the
Subcontract.

1.13 Compliance with Laws

The Subcontractor shall, in performing the Subcontract, comply with applicable Laws.

Unless otherwise stated in the Subcontract, the Subcontractor shall give all notices, pay all
taxes, duties and fees, and obtain all permits, licenses and approvals, as required by the
Laws in relation to the execution and completion of the Subcontract Works and the
remedying of any defects, and the Subcontractor shall indemnify and hold the Contractor
harmless against and from the consequences of any failure to do so.

1.14 Joint and Several Liability

If the Subcontractor constitutes (under applicable Laws) a joint venture, consortium or other
unincorporated grouping of two or more persons:

(a) these persons shall be deemed to be jointly and severally liable to the Contractor for the
performance of the Subcontract,
(b) these persons shall notify the Contractor of their leader who shall have authority to bind
the Subcontractor and each of these persons, and
(c) the Subcontractor shall not alter its composition or legal status without the prior consent
of the Contractor.

If the Subcontractor or any entity constituting a joint venture, consortium or other
unincorporated grouping of two or more persons is a subsidiary company, they shall submit to
the Contractor a parent company guarantee as stated in the Instructions to Tenderers or
otherwise agreed by the Contractor.

1.15 Detail s to be Confidential

The Subcontractor shall treat the details of the Subcontract as private and confidential,
except to the extent necessary to carry out obligations under it or to comply with applicable
Laws. The Subcontractor shall not publish, permit to be published, or disclose any particulars

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of the Subcontract Works in any trade or technical paper or elsewhere without the prior
agreement of the Contractor.

1.16 Delayed Drawings, Instructions or Free-Issue Material s

The Subcontractor shall give notice to the Contractor whenever the Subcontract Works are
likely to be delayed or disrupted if any necessary drawing, instruction or free-issue material is
not provided to the Subcontractor within a particular time, which shall be reasonable. The
notice shall include details of the necessary drawing, instruction or free-issue material, details
of why and by when it should be provided, and details of the nature and amount of the delay
or disruption likely to be suffered if it is late.

If the Subcontractor suffers delay and/or incurs Cost as a result of a failure of the Contractor
to provide the notified drawing, instruction or free-issue material within a time which is
reasonable and is specified in the notice with supporting details, the Subcontractor shall give
a further notice to the Contractor for:

(a) an extension of time for any such delay, if completion is or will be delayed, under Sub-
Clause 7.4 (Extension of Time for Compl etion), and
(b) payment of any such Cost, which shall be included in the Subcontract Price.

After receiving this further notice, the Contractor shall proceed in accordance with Sub-Clause
2.4 (Determinations) to agree or determine these matters.

However, if and to the extent that the Contractors failure was caused by any error or delay by
the Subcontractor, including an error in, or delay in the submission of, any of the
Subcontractors Documents, the Subcontractor shall not be entitled to such extension of time
or Cost.

2 The Contractor

2.1 Contractor s Representative

The Contractor shall appoint the Contractors Representative who shall carry out the duties
assigned and exercise the authority delegated to him by the Contractor to act on behalf of the
Contractor under the Subcontract, and may also revoke such appointment and appoint a
replacement. The appointment, revocation or replacement shall be in writing and shall not
take effect until a notice thereof has been delivered to the Subcontractor.

The Contractors Representative or the Subcontractors Representative may require the other
to attend a management meeting in order to review the arrangements for future work. The
Contractors Representative shall record the business of management meeting and supply
copies of the record to those attending the meeting. In the record, responsibilities for any
actions to be taken shall be in accordance with the Subcontract.


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2.2 Delegation by Contractors Representative

The Contractors Representative may from time to time assign duties and delegate authority
to assistants, and may also revoke such assignment or delegation. These assistants may
include independent inspectors appointed to inspect and/or test items of Plant and/or
Materials. The assignment, delegation or revocation shall be in writing and shall not take
effect until a notice thereof has been delivered to the Subcontractor. However, unless
otherwise agreed by both Parties, the Contractors Representative shall not delegate the
authority to determine any matter in accordance with Sub-Clause 2.4 (Determinations).

Each assistant, to whom duties have been assigned or authority has been delegated, shall
only be authorized to issue instructions to the Subcontractor to the extent defined by the
delegation. Any approval, check, certificate, consent, examination, inspection, instruction,
notice, proposal, request, test, or similar act by an assistant, in accordance with the
delegation, shall have the same effect as though the act had been an act of the Contractors
Representative. However:

(a) any failure to disapprove any work, Plant or Materials shall not constitute approval, and
shall therefore not prejudice the right of the Contractor to reject the work, Plant or
Materials,
(b) if the Subcontractor questions any determination or instruction of an assistant, the
Subcontractor may refer the matter to the Contractors Representative, who shall
promptly confirm, reverse or vary the determination or instruction.

2.3 Instructions of Contractors Representative

The Contractors Representative may issue to the Subcontractor (at any time) instructions and
additional or modified Drawings which may be necessary for the execution of the Subcontract
Works and the remedying of any defects, all in accordance with the Subcontract. The
Subcontractor shall only take instructions from the Contractors Representative, or from an
assistant to whom the appropriate authority has been delegated under this Clause. If an
instruction constitutes a Variation, Clause 12 (Variations and Adjustments) shall apply.

The Subcontractor shall comply with the instructions given by the Contractors Representative
or delegated assistant, on any matter related to the Subcontract.

2.4 Determinations

Whenever the Contractors Representative shall proceed in accordance with this Sub-Clause
to agree or determine any matter, the Contractors Representative shall consult with the
Subcontractor in an endeavor to reach agreement. If agreement is not achieved, the
Contractors Representative shall make a fair determination in accordance with the
Subcontract, taking due regard of all relevant circumstances.

The Contractors Representative shall give notice to the Subcontractor of each agreement or
determination, with supporting particulars. Each Party shall give effect to each agreement or
determination unless and until revised under Clause 19 (Claims, Di sputes and Arbitration).


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2.5 Contractors Cl ai ms

If the Contractor considers himself to be entitled to any payment under any Clause of these
Conditions or otherwise in connection with the Subcontract, and/or to any extension of the
Defects Notification Period, the Contractor shall give notice and particulars to the
Subcontractor. However, notice is not required for payments due under Sub-Clause 3.20
(Electricity, Water and Gas), under Sub-Clause 3.21 (Employers / Contractors
Equipment and Free-Issue Material ), or for other services requested by the Subcontractor.

The notice shall be given as soon as practicable after the Contractor became aware of the
event or circumstances giving rise to the claim. A notice relating to any extension of the
Defects Notification Period shall be given before the expiry of such period.

The particulars shall specify the Clause or other basis of the claim, and shall include
substantiation of the amount and/or extension to which the Contractor considers himself to be
entitled in connection with the Subcontract. The Contractor shall then proceed in accordance
with Sub-Clause 2.4 (Determinations) to agree or determine (i) the amount (if any) which the
Contractor is entitled to be paid by the Subcontractor, and/or (ii) the extension (if any) of the
Defects Notification Period in accordance with Sub-Clause 10.3 (Extension of Defects
Notification Period).

This amount may be included as a deduction in the Subcontract Price and Payment
Certificates. The Contractor shall be entitled to set off against or make any deduction from an
amount certified in a Payment Certificate, or to otherwise claim against the Subcontractor, in
accordance with this Sub-Clause.

2.6 Right of Access to the Site

The Contractor shall make arrangements with the Employer to give the Subcontractor right
of access to and possession of all parts of the Site within the time (or times) stated in the
Appendix to Tender. The right and possession may not be exclusive to the Subcontractor. If
no such time is stated in the Appendix to Tender, the Contractor shall arrange to give the
Subcontractor right of access to and possession of the Site within such times as may be
required to enable the Subcontractor to proceed in accordance with the program submitted
under Sub-Clause 7.3 (Program).

2.7 Permits, Licenses or Approvals

The Subcontractor shall obtain himself all permits, licenses and approvals which the
Subcontractor is required to obtain under Sub-Clause 1.13 (Compl iance with Laws).

The Contractor shall (when he is in a position to do so) provide reasonable assistance to the
Subcontractor at the request of the Subcontractor for the Subcontractors applications for
such permits, licenses and approvals.


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3 The Subcontractor

3.1 Subcontractor s General Obligations

The Subcontractor shall design (if and to the extent specified in the Subcontract), execute
and complete the Subcontract Works in accordance with the Subcontract and with the
Contractors instructions, and shall remedy any defects in the Subcontract Works.

Except as otherwise stated in the Subcontract, the Subcontractor shall provide the Plant and
Subcontractors Documents, and all Subcontractors Personnel, Goods, consumables and
other things and services, whether of temporary or permanent nature, required in and for this
design, execution, completion and remedying of defects, as specified in the Subcontract.

The Subcontractor shall be responsible for the adequacy, stability and safety of all Site
operations and of all methods of construction. Except to the extent specified in the
Subcontract, the Subcontractor (i) shall be responsible for all Subcontractors Documents,
Temporary Subcontract Works, and such design as provided by the Subcontractor in
accordance with the Subcontract, and (ii) shall not otherwise be responsible for the design or
specification of the Subcontract Works provided by the Contractor.

The Subcontractor shall, whenever required by the Contractor, submit details of the
arrangements and methods which the Subcontractor proposes to adopt for the execution of
the Subcontract Works. No signification alteration to these arrangements and methods shall
be made without this having previously been notified to the Contractor.

3.2 Performance Security

The Subcontractor shall obtain at his cost a Performance Security for proper performance, in
the amount and currencies stated in the Appendix to Tender. If an amount is not stated in the
Appendix to Tender, this Sub-Clause shall not apply.

The Subcontractor shall deliver the Performance Security to the Contractor within thirty (30)
days (or otherwise acceptable to the Contractor) after receiving the Letter of Acceptance. The
Performance Security shall be issued by an entity and from within a country (or other
jurisdiction) approved by the Contractor, and shall be in the form annexed to these Conditions
or in another form approved by the Contractor.

The Subcontractor shall ensure that the Performance Security is valid and enforceable until
the Subcontractor has executed and completed the Subcontract Works and remedied any
defects. If the terms of the Performance Security specify its expiry date, and the
Subcontractor has not become entitled to receive the Performance Certificate by the date
thirty (30) days prior to the expiry date, the Subcontractor shall extend the validity of the
Performance Security until the Subcontract Works have been completed and any defects
have been remedied.

The Contractor may make a claim under the Performance Security for amounts to which he is
entitled under the Subcontract in the event of:


Page 14 of 78

(a) failure by the Subcontractor to extend the validity of the Performance Security as
described in the preceding paragraph, in which event the Contractor may claim the full
amount of the Performance Security,
(b) failure by the Subcontractor to pay the Contractor an amount due, as either agreed by
the Subcontractor or determined under Sub-Clause 2.5 (Contractors Clai ms) or
Clause 19 (Cl aims, Disputes and Arbitration), within thirty (30) days after this
agreement or determination,
(c) failure by the Subcontractor to remedy a default within thirty (30) days after receiving the
Contractors notice requiring the default to be remedied, or
(d) circumstances which entitle the Contractor to termination under Sub-Clause 14.2
(Termination by Contractor), irrespective of whether notice of termination has been
given.

The Contractor shall return the Performance Security to the Subcontractor within thirty (30)
days after issuing the Performance Certificate.

3.3 Subcontractors Representative

The Subcontractor shall appoint the Subcontractors Representative and shall give him all
authority necessary to act on the Subcontractors behalf under the Subcontract.

Unless the Subcontractors Representative is named in the Subcontract, the Subcontractor
shall, prior to the Commencement Date, submit to the Contractor for consent the name and
particulars of the person the Subcontractor proposes to appoint as Subcontractors
Representative. If consent is withheld or subsequently revoked, or if the appointed person
fails to act as Subcontractors Representative, the Subcontractor shall similarly submit the
name and particulars of another suitable person for such appointment.

The Subcontractor shall not, without the prior consent of the Contractor, revoke the
appointment of the Subcontractors Representative or appoint a replacement.

The whole time of the Subcontractors Representative shall be given to directing the
Subcontractors performance of the Subcontract. If the Subcontractors Representative is to
be temporarily absent from the Site during the execution of the Subcontract Works, a suitable
replacement person shall be appointed, subject to the Contractors prior consent, and the
Contractor shall be notified accordingly.

The Subcontractors Representative shall, on behalf of the Subcontractor, receive instructions
under Sub-Clause 2.3 (Instructions of Contractors Representative).

The Subcontractors Representative may delegate any powers, functions and authority to any
competent person, and may at any time revoke the delegation. Any delegation or revocation
shall not take effect until the Contractor has received prior notice signed by the
Subcontractors Representative, naming the person and specifying the powers, functions and
authority being delegated or revoked.

The Subcontractors Representative and all these persons shall be fluent in the language for
communications defined in Sub-Clause 1.4 (Law and Language). If the Subcontractors

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Representative, or these persons, is not fluent in such language, the Subcontractor shall
make a competent interpreter available during all working hours.

3.4 Subcontractors

The Subcontractor shall not subcontract the whole of the Subcontract Works.

The Subcontractor shall be responsible for the acts or defaults of any subcontractor, his
agent or employees, as if they were the acts or defaults of the Subcontractor. Unless
otherwise stated in the Subcontract:

(a) the Subcontractor shall not be required to obtain consent to a subcontract for which the
subcontractor is named in the Subcontract,
(b) the prior consent of the Contractor shall be obtained to other proposed subcontractors,
(c) the Subcontractor shall give the Contractor not less than thirty (30) days notice of the
intended date of the commencement of each subcontractors work, and of the
commencement of such work on the Site,
(d) each subcontract shall include provisions which would entitle the Contractor to require
the subcontract to be assigned to the Employer or the Contractor (as the case may be)
under Sub-Clause 3.6 (Assignment of Benefit of Subcontract) (if or when applicable)
or in the event of termination under Sub-Clause 14.2 (Termination by Contractor),
Sub-Clause 14.5 (Contractors Entitlement to Termination) or Sub-Clause 15.2
(Termination by Subcontractor), and
(e) the prior consent of the Contractor shall be obtained to the suppliers of the Plant and/or
Materials of the major specific manufactured or prefabricated items.

3.5 Nominated Subcontractors

In this Sub-Clause, nominated subcontractor means a subcontractor (if any) who is stated
in the Subcontract as being a nominated subcontractor, or whom the Contractor, under
Clause 12 (Vari ations and Adjustments), instructs the Subcontractor to employ as a
subcontractor.

The Subcontractor shall not be under any obligation to employ a nominated subcontractor
against whom the Subcontractor raises reasonable objection by notice to the Contractor as
soon as practicable, with supporting particulars.

3.6 Assignment of Benefit of Subcontract

If a subcontractors obligations extend beyond the expiry date of the relevant Defects
Notification Period and the Contractor instructs the Subcontractor to assign the benefit of
such obligations to the Contractor or the Employer (as the case may be), then the
Subcontractor shall do so. Similarly, if any of the Subcontractors obligations extend beyond
the date of the relevant Defects Notification period under the Contract and the Employer
instructs the Contractor to assign the benefit of such obligations to the Employer, then the
Contractor shall be entitled to do so. Unless otherwise stated in the assignment, the
Contractor shall have no liability to the Subcontractor for anything arising between the
Employer and the Subcontractor after the assignment takes effect.

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3.7 Co-operation

The Subcontractor shall, as specified in the Subcontract or as instructed by the Contractor,
allow appropriate opportunities for carrying out work to:

(a) the Employers Personnel and/or the Contractors Personnel,
(b) any other contractors employed by the Employer and/or the Contractor, and
(c) the personnel of any legally constituted public authorities,

who may be employed in the execution on or near the Site of any work not included in the
Subcontract.

Any such instruction shall constitute a Variation if and to the extent that it causes the
Subcontractor to incur Unforeseeable Cost. Services for these personnel and other
contractors may include the use of Subcontractors Equipment, Temporary Subcontract
Works or access arrangements which are the responsibility of the Subcontractor.

The Subcontractor shall be responsible for his activities on the Site, and shall coordinate his
own activities with those of other contractors.

If, under the Subcontract, the Contractor is required to give to the Subcontractor possession
of any foundation, structure, plant or means of access in accordance with the Subcontractors
Documents, the Subcontractor shall submit such documents to the Contractor in the time and
manner stated in the Specification.

3.8 Setting Out

The Subcontractor shall set out the Subcontract Works in relation to original points, lines,
levels of reference specified in the Subcontract or notified by the Contractor. The
Subcontractor shall be responsible for the correct positioning of all parts of the Subcontract
Works, and shall rectify any error in the positions, levels, dimensions or alignments of the
Subcontract Works.

The Contractor shall be responsible for any error in these specified or notified items of
reference, but Subcontractor shall use all reasonable efforts to verify their accuracy before
they are used.

3.9 Safety Procedures

The Subcontractor shall:

(a) comply with all applicable safety regulations,
(b) take care of the safety of all persons entitled to be on the Site,
(c) use reasonable efforts to keep the Site and Subcontract Works clear of unnecessary
obstruction so as to avoid danger to these persons,
(d) provide fencing, lighting, guarding and watching of the Subcontract Works until
completion and taking over under Clause 9 (Contractors Taking Over), and

Page 17 of 78

(e) provide any Temporary Subcontract Works (including roadways, footways, guards and
fences) which may be necessary, because of the execution of the Subcontract Works,
for the use and protection of the public and of owners and occupiers of the adjacent land.

3.10 Quality Assurance

The Subcontractor shall institute a quality assurance system to demonstrate compliance with
the requirements of the Subcontract. The system shall be in accordance with the details
stated in the Subcontract. The Contractor shall be entitled to audit any aspect of the system.

Details of all procedures and compliance documents shall be submitted to the Contractor for
information before each design and execution stage is commenced. When any document of a
technical nature is issued to the Contractor, evidence of the prior approval by the
Subcontractor himself shall be apparent on the document itself.

Compliance with the quality assurance system shall not relieve the Subcontractor of any of
his duties, obligations or responsibilities under the Subcontract.

3.11 Site Data

The Subcontractor shall be deemed to have obtained all necessary information as to risks,
contingencies and other circumstances which may influence or affect the Tender or
Subcontract Works. The Subcontractor shall also be deemed to have inspected and
examined the Site, its surroundings, the above data and other available information, and to
have been satisfied before submitting the Tender as to all matters, including (without
limitation):

(a) the form and nature of the Site, including sub-surface conditions,
(b) the hydrological and climatic conditions,
(c) the extent and nature of the work and Goods necessary for the execution and completion
of the Subcontract Works and the remedying of any defects,
(d) the Laws, procedures and labor practices of the Country, and
(e) the Subcontractors requirements for access, accommodation, facilities, personnel,
power, transport, water and other services.

3.12 Suffici ency of Accepted Subcontract Amount

The Subcontractor shall be deemed to:

(a) have satisfied himself as to the correctness and sufficiency of the Accepted Subcontract
Amount, and
(b) have based the Accepted Subcontract Amount on the data, interpretations, necessary
information, inspections, examinations and satisfaction as to all relevant matters referred
to in Sub-Clause 3.11 (Site Data).

Unless otherwise stated in the Subcontract, the Accepted Subcontract Amount covers all the
Subcontractors obligations under the Subcontract (including those under Provisional Sums, if

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any) and all things necessary for the proper execution and completion of the Subcontract
Works and the remedying of any defects.

3.13 Unforeseeabl e Physical Conditions

In this Sub-Clause, physical conditions means natural physical conditions and manmade
and other physical obstructions and pollutions, which the Subcontractor encounters at the
Site when executing the Subcontract Works, including sub-surface and hydrological
conditions but excluding climatic conditions.

If the Subcontractor encounters adverse physical conditions which he considers to have been
Unforeseeable, the Subcontractor shall give notice to the Contractor as soon as practicable.

This notice shall describe the physical conditions, so that they can be inspected by the
Contractor, and shall set out the reasons why the Subcontractor considers them to be
Unforeseeable. The Subcontractor shall continue executing the Subcontract Works, using
such proper and reasonable measures as are appropriate for the physical conditions, and
shall comply with any instructions which the Contractor may give.

If the Subcontractor encounters physical conditions which are Unforeseeable, gives such
notice, and suffers delay and/or incurs Cost due to these conditions, the Subcontractor shall
be entitled subject to Sub-Clause 19.1 (Subcontractors Claims) to compensation only to
the extent that the Employer agrees or determines under the Contract in respect of such
effect.

3.14 Rights of Way and Facilities

The Subcontractor shall bear all costs and charges for special and/or temporary right of way
which he may require, including those for access to the Site. The Subcontractor shall also
obtain, at his risk and cost, any additional facilities outside the Site which he may require for
the purposes of the Subcontract Works.

3.15 Avoidance of Interference

The Subcontractor shall not interfere unnecessarily or improperly with:

(a) the convenience of the public, or
(b) the access to and use and occupation of all roads and footpaths, irrespective of whether
they are public or in the possession of the Employer or of others.

The Subcontractor shall indemnify and hold the Contractor harmless against and from all
damages, losses and expenses (including legal fees and expenses) resulting from any such
unnecessary and improper interference.

3.16 Access Route

The Subcontractor shall be deemed to have been satisfied as to the suitability and availability
of access routes to the Site. The Subcontractor shall use reasonable efforts to prevent any

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road or bridge from being damaged by the Subcontractors traffic or by the Subcontractors
Personnel. These efforts shall include the proper use of appropriate vehicles and routes.

Except as otherwise stated in these Conditions:

(a) the Subcontractor shall (as between the Parties) be responsible for any maintenance
which may be required for his use of access routes,
(b) the Subcontractor shall provide all necessary signs or directions along access routes,
and shall obtain any permission which may be required from the relevant authorities for
his use of routes, signs and directions,
(c) the Contractor shall not be responsible for any claims which may arise from the use or
otherwise of any access route,
(d) the Contractor does not guarantee the suitability or availability of particular access
routes, and
(e) Costs due to non-suitability or non-availability, for the use required by the Subcontractor,
of the access routes shall be borne by the Subcontractor.

3.17 Transport of Goods

Unless otherwise stated in the Subcontract:

(a) the Subcontractor shall give the Contractor not less than twenty (20) days notice of the
date on which any Plant or a major item of other Goods, which is supplied by the
Subcontractor, will be delivered to the Site,
(b) the Subcontractor shall be responsible for packing, loading, transporting, receiving,
unloading, storing and protecting all Goods and other things required for the Subcontract
Works, and
(c) the Subcontractor shall indemnify and hold harmless the Contractor against and from all
damages, losses and expenses (including legal fees and expenses) resulting from the
transport of Goods, and shall negotiate and pay all claims arising from his transport.

3.18 Subcontractor s Equipment

The Subcontractor shall be responsible for all Subcontractors Equipment. When brought on
to the Site, Subcontractors Equipment shall be deemed to be exclusively intended for the
execution of the Subcontract Works. The Subcontractor shall not remove from the Site any
major items of Subcontractors Equipment without the consent of the Contractor. However,
consent will not be required for vehicles transporting Goods or Subcontractors Personnel off
Site.

3.19 Protection of Environment

The Subcontractor shall take all reasonable steps to protect the environment (both on and off
the Site) and to limit damage and nuisance to people and property resulting from pollution,
noise and other results of his operations.


Page 20 of 78

The Subcontractor shall ensure that emissions, surface discharges and effluent from the
Subcontractors activities shall not exceed the values indicated in the Specification, and shall
not exceed the values prescribed by applicable Laws.

3.20 El ectri city, Water and Gas

The Subcontractor shall, except as stated below or as otherwise stated in the Subcontract,
be responsible for the provision of all power, water and other services he may require.

The Subcontractor may use for the purposes of the Subcontract Works such supplies of
electricity, water, gas and other services if they are available on the Site for such purpose and
of which details and prices are given in the Specification. The Subcontractor shall, at his risk
and cost, provide any apparatus necessary for his use of these services and for measuring
the quantities consumed.

The quantities consumed and the amounts due (at these prices) for such services shall be
agreed or determined by the Contractor in accordance with Sub-Clause 2.4 (Determinations)
and Sub-Clause 2.5 (Contractor s Claims). The Subcontractor shall pay these amounts to
the Contractor or otherwise as instructed by the Contractor.

3.21 Employers / Contractors Equipment and Free-Issue Material

The Contractor shall make the Employers Equipment and/or the Contractors Equipment (if
any) available for the use of the Subcontractor in the execution of the Subcontract Works in
accordance with the details, arrangements and prices stated in the Specification. Unless
otherwise stated in the Subcontract:

(a) the Contractor shall (between the Parties) be responsible for both Employers Equipment
and Contractors Equipment, except that
(b) the Subcontractor shall be responsible for each item of Employers Equipment and/or
Contractors Equipment whilst any of the Subcontractors Personnel is operating it,
driving it, directing it or in possession or control of it.

The appropriate quantities and amounts due (at such stated prices) for the use of Employers
Equipment and/or Contractors Equipment shall be agreed or determined by the Contractor in
accordance with Sub-Clause 2.4 (Determinations) and Sub-Clause 2.5 (Contractors
Claims). The Subcontractor shall pay these amounts to the Contractor or otherwise as
instructed by the Contractor.

The Contractor shall supply, free of charge, the free-issue materials (if any) in accordance
with the details stated in the Specification. The Contractor shall, at his risk and cost, provide
these materials at the place and on the terms stated in the Appendix to Tender, or otherwise
specified in the Subcontract. The Subcontractor shall then visually inspect them, and shall
promptly give notice to the Contractor of any shortage, defect or default in these materials.
Unless otherwise agreed by both Parties, the Contractor shall immediately rectify the noticed
shortage, defect or default.


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After this visual inspection, the free-issue materials shall come under the care, custody and
control of the Subcontractor. The Subcontractors obligations of inspection, care, custody and
control shall not relieve the Contractor of liability for any shortage, defect or default not
apparent from a visual inspection.

If the Subcontractor requires that any free-issue materials are to be supplied by the
Contractor in excess of the quantities given in the Specification for the purposes of the
Subcontract Works and such requirement is not attributable to the Contractor, the Contractor
may supply the additional quantities of the free-issue materials at the Subcontractors costs at
the prices given in the Specification or otherwise agreed between the Parties. The
appropriate quantities and the amounts due (at such given prices) for the supply of such
additional free-issue materials shall be agreed or determined by the Contractor in accordance
with Sub-Clause 2.4 (Determinations) and Sub-Clause 2.5 (Contractors Claims). The
Subcontractor shall pay these amounts to the Contractor.

If, any of the free-issue materials remain unused at the time of the completion of the
Subcontract Works, or any other time, and such unused free-issue materials are not to be
required for incorporation into the Subcontract Works, the Subcontractor shall return such
items to the Contractor at a designated place on or adjacent to the Site, or properly dispose
of such surplus material, as required by the Contractor.

3.22 Progress Reports

Unless otherwise stated in the Subcontract, monthly progress reports shall be prepared by
the Subcontractor and submitted to the Contractor in such number of copies as required by
the Contractor. The first report shall cover the period up to the end of the first calendar month
following the Commencement Date. Reports shall be submitted monthly thereafter, each
within seven (7) days after the last day of the period to which it relates.

Reporting shall continue until the Subcontractor has completed all works which is known to
be outstanding at the completion date stated in the Taking Over Certificate for the
Subcontract Works.

Each report shall include:

(a) charts and detailed descriptions of progress, including each stage of design (if any),
Subcontractors Documents, procurement, manufacture, delivery to the Site,
construction, erection and testing, and commissioning and trial operation, to the extent
applicable,
(b) photograph showing the status of manufacture and of progress on the Site,
(c) for the manufacture of each main item of Plant and Materials, the name of the
manufacturer, manufacture location, percentage progress, and the actual or expected
dates of:
(i) commencement of manufacture,
(ii) Subcontractors inspections,
(iii) test, and
(iv) shipment and arrival at the Site,


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(d) details described in Sub-Clause 5.10 (Records of Subcontractors Personnel and
Equipment),
(e) copies of quality assurance documents, test results and certificates of Materials,
(f) list of Variations and notices given under Sub-Clause 2.5 (Contractor s Clai ms) and
notices given under Sub-Clause 19.1 (Subcontractor s Claims),
(g) safety statistics, including details of any hazardous incidents and activities relating to
environmental aspects and public relations, and
(h) comparison of actual and planned progress, with details of any events or circumstances
which may jeopardize the completion in accordance with the Subcontract, and the
measures being (or to be) adopted to overcome delays.

3.23 Security of Site

Unless otherwise stated in the Subcontract, the Subcontractor shall be responsible for
keeping unauthorized persons off the Site.

3.24 Subcontractor s Operation on Site

The Subcontractor shall confine his operations to the Site, and to any additional areas which
may be obtained by the Subcontractor and agreed by the Contractor as working areas. The
Subcontractor shall take all necessary precautions to keep Subcontractors Equipment and
Subcontractors Personnel within the Site and these additional areas, and to keep them off
adjacent land.

During the execution of the Subcontract Works, the Subcontractor shall keep the Site free
from all unnecessary obstruction, and shall store or dispose of any Subcontractors
Equipment or surplus materials. The Subcontractor shall clear away and remove from the
Site any wreckage, rubbish and Temporary Subcontract Works which are no longer required.

Upon the issue of a Taking-Over Certificate, the Subcontractor shall clear away and remove,
from that part of the Site and Subcontract Works to which the Taking-Over Certificate refers,
all Subcontractors Equipment, surplus materials, wreckage, rubbish and Temporary
Subcontract Works. The Subcontract shall leave that part of the Site and Subcontract Works
in a clean and safe condition. However, the Subcontractor may retain on Site, during the
Defects Notification Period, such Goods as are required for the Subcontractor to fulfill
obligations under the Subcontract.

3.25 Fossil s

All fossils, coins, articles of value or antiquity, and structures and other remains or items of
geological or archaeological interest found on the Site shall be placed under the care and
authority of the Employer or as otherwise instructed by the Contractor. The Subcontractor
shall take reasonable precautions to prevent Subcontractors Personnel or other persons
from removing or damaging any of these findings.

The Subcontractor shall, upon discovery of any such finding, promptly give notice to the
Contractor, who shall issue instructions for dealing with it.


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4 Design

4.1 General Design Obligations

If the Subcontract specifies that the Subcontractor shall design any part of the Permanent
Subcontract Works, the Subcontractor shall carry out, and be responsible for, the design of
such part of the Subcontract Works. Design shall be prepared by qualified designers who are
engineers or other professionals who comply with the criteria (if any) stated in the
Specification and Drawings. Unless otherwise stated in the Subcontract, the Subcontractor
shall submit to the Contractor for consent the name and particulars of each proposed
designer and design subcontractor.

The Subcontractor warrants that he, his designers and design subcontractors have the
experience and capability necessary for the design. The Subcontractor undertakes that the
designers shall be available to attend discussions with the Contractor at all reasonable times,
until the expiry date of the relevant Defects Notification Period.

Upon receiving notice under Sub-Clause 7.1 (Commencement of Subcontract Works), the
Subcontractor shall scrutinize the requirements of the design (including criteria and
calculations, if any) and the items of reference mentioned in Sub-Clause 3.8 (Setting Out).
Within a reasonable period as soon as possible, the Subcontractor shall give notice to the
Contractor of any error, fault or other defect found in the requirement of the design or these
items of reference.

4.2 Subcontractors Documents

The Subcontractor shall submit to the Contractor the Subcontractors Documents in
accordance with the procedures specified in the Subcontract. The Subcontractors
Documents shall comprise the technical documents specified in the Subcontract, documents
required to satisfy all regulatory approvals, and the documents described in Sub-Clause 4.6
(As-Built Documents) and Sub-Clause 4.7 (Operation and Maintenance Manual s).
Unless otherwise stated in the Subcontract or instructed by the Contractor, the
Subcontractors Documents shall be written in the language for communications defined in
Sub-Clause 1.4 (Law and Language).

The Subcontractor shall prepare all Subcontractors Documents, and shall also prepare any
other documents necessary to instruct the Subcontractors Personnel. The Employers
Personnel and the Contractors Personnel shall have the right to inspect the preparation of all
these documents, wherever they are being prepared.

If the Subcontract describes the Subcontractors Documents which are to be submitted to the
Contractor for review or for approval, they shall be submitted to the Contractor accordingly.
In the case of a Subcontractors Document which has been submitted for the Contractors
approval, the Contractor shall give notice to the Subcontractor that the Subcontractors
Document is approved, with or without comments, or that it fails (to the extent stated) to
comply with the Subcontract, and execution of such part of the Subcontract Works shall not
commence until the Contractor has approved the Subcontractors Documents or otherwise
instructed to do so.

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If the Contractor instructs that further Subcontractors Documents are required, the
Subcontractor shall prepare them promptly.

Any approval or consent, or any review by the Contractor of the Subcontractors Documents
shall not relieve the Subcontractor from any obligation or responsibility.

4.3 Subcontractors Undertaking

The Subcontractor undertakes that the design, the Subcontractors Documents, the execution
and the completed Subcontract Works will be in accordance with:

(a) the Laws in the Country, and
(b) the documents forming the Subcontract, as altered or modified by Variations.

4.4 Technical Standards and Regulations

The design, the Subcontractors Documents, the execution and the completed Subcontract
Works shall comply with the Countrys technical standards, building, construction and
environmental Laws, Laws applicable to the product being produced from the Subcontract
Works, and other standards specified in the Subcontract, applicable to the Subcontract
Works, or defined by the applicable Laws.

All these Laws shall, in respect of the Subcontract Works and each Section, be those
prevailing when the Subcontract Works or Section are taken over by the Contractor under
Clause 9 (Contractors Taking Over). References in the Subcontract to published
standards shall be understood to be references to the edition applicable on the date entered
into the Subcontract between the Parties, unless stated otherwise.

If changed or new applicable standards come into force in the Country after entering into the
Subcontract between the Parties, the Subcontractor shall give notice to the Contractor and (if
appropriate) submit proposals for compliance.

4.5 Training

The Subcontractor shall carry out the training of the Employers Personnel in the operation
and maintenance of the Subcontract Works to the extent specified in the Subcontract. If the
Subcontract specifies training which is to be carried out before taking-over, the Subcontract
Works shall not be considered to have been completed for the purposes of taking-over under
Sub-Clause 9.1 (Taking Over of Subcontract Works and Sections) until this training has
been completed.

4.6 As-Built Documents

The Subcontractor shall prepare, and keep up-to-date, a complete set of as-built records of
the execution of the Subcontract Works, showing the exact as-built locations, sizes and
details of the work as executed. These records shall be kept on the Site and shall be used
exclusively for the purposes of this Sub-Clause.

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Unless otherwise stated in the Subcontract, the Subcontractor shall supply to the Contractor
the number and type of the as-built documents of the material that the Contractor shall
supply to the Employer and any other parties under the Contract, together with three (3)
additional copies, for the part of the Subcontract Works which the Subcontractor design, at
the time the Contractor shall submit them to the Employer under the Contract.

For the part of the Subcontract Works which the Subcontractor does not design, the
Subcontractor shall supply to the Contractor one (1) full set of mark-up documents showing
all work as built to enable the Contractor to prepare and supply to the Employer complete set
of the as-built documents at the time and in the manner prescribed in the Contract.

The Subcontract Works shall not be considered to have been completed for the purposes of
taking-over under Sub-Clause 9.1 (Taking Over of Subcontract Works and Sections) until
the Contractor has received these documents.

4.7 Operation and Maintenance Manuals

Unless otherwise stated in the Subcontract, the Subcontractor shall supply to the Contractor
the number and type of the operation and maintenance manuals in sufficient detail for the
Employer to operate, maintain, dismantle, reassemble, adjust and repair the Plant that the
Contractor shall supply to the Employer under the Contract, together with three (3) additional
copies, for the part of the Subcontract Works which the Subcontractor design, at the time the
Contractor shall submit them to the Employer under the Contract.

The Subcontract Works shall not be considered to have been completed for the purposes of
taking-over under Sub-Clause 9.1 (Taking Over of Subcontract Works and Sections) until
the Contractor has received the operation and maintenance manuals in such detail
acceptable to the Contractor, and any other manuals specified in the Subcontract for these
purposes.

4.8 Design Error

If errors, omissions, ambiguities, inconsistencies, inadequacies or other defects are found in
the Subcontractors Documents, they and the Subcontract Works shall be corrected at the
Subcontractors cost, notwithstanding any consent or approval under this Clause.

5 Staff and Labor

5.1 Engagement of Staff and Labor

Unless otherwise stated in the Subcontract, the Subcontractor shall make arrangements for
the engagement of all staff and labor, local or otherwise, and for their payment, housing,
feeding and transport.

5.2 Rates of Wages and Conditions of Labor


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The Subcontractor shall pay rates of wages, and observe conditions of labor, which are not
lower than those established for the trade or industry where the work is carried out. If no
established rates or conditions are applicable, the Subcontractor shall pay rates of wages
and observe conditions which are not lower than the general level of wages and conditions
observed locally by employers whose trade or industry is similar to that of the Subcontractor.

5.3 Persons in Servi ce of Employer/Contractor

The Subcontractor shall not recruit, or attempt to recruit, staff and labor from amongst the
Employers Personnel and/or the Contractors Personnel.

5.4 Labor Laws

The Subcontractor shall comply with all relevant labor Laws applicable to the Subcontractors
Personnel, including Laws relating to their employment, health, safety, welfare, immigration
and emigration, and shall allow them all their legal rights.

The Subcontractor shall require his employees to obey all applicable Laws, including those
concerning safety at work.

5.5 Working Hours

No work shall be carried out on the Site on locally recognized days of rest, or outside the
normal working hours stated in the Appendix to Tender, unless:

(a) otherwise stated in the Subcontract,
(b) the Contractor gives consent, or
(c) the work is unavoidable, or necessary for the protection of life or property or for the
safety of the Subcontract Works, in which case the Subcontractor shall immediately
advise the Contractor.

5.6 Facilities for Staff and Labor

Unless otherwise stated in the Subcontract, the Subcontractor shall provide and maintain all
necessary accommodation and welfare facilities for the Subcontractors Personnel. The
Subcontractor shall also provide facilities for the Employers Personnel and/or the
Contractors Personnel if otherwise stated in the Subcontract to do so.

The Subcontractor shall not permit any of the Subcontractors Personnel to maintain any
temporary or permanent living quarters within the structures forming part of the Permanent
Subcontract Works.

5.7 Health and Safety

The Subcontractor shall at all times take all reasonable precautions to maintain the health
and safety of the Subcontractors Personnel. Unless otherwise stated in the Subcontract, the
Subcontractor shall, in collaboration with local health authorities, ensure that medical staff,
first aid facilities, sick bay and ambulance service are available at all times at the Site and at

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any accommodation for Subcontractors Personnel (if otherwise stated in the Subcontract, for
Contractors Personnel and Employers Personnel also) and that suitable arrangements are
made for all necessary welfares and hygiene requirements and for the prevention of
epidemics.

The Subcontractor shall appoint an accident prevention officer at the Site, responsible for
maintaining safety and protection against accident. This person shall be qualified for this
responsibility, and shall have the authority to issue instructions and take protective measures
to prevent accidents. Throughout the execution of the Subcontract Works, the Subcontractor
shall provide whatever is required by this person to exercise this responsibility and authority.

The Subcontractor shall send to the Contractor details of any accident as soon as practicable
after its occurrence. The Subcontractor shall maintain records and make reports concerning
health, safety and welfare of persons, and damage to property, as the Contractor may
reasonably require.

5.8 Subcontractor s Superintendence

Throughout the execution of the Subcontract Works, and as long thereafter as is necessary
to fulfill the Subcontractors obligations, the Subcontractor shall provide all necessary
superintendence to plan, arrange, direct, manage, inspect and test the work.

Superintendence shall be given by a sufficient number of persons having adequate
knowledge of the language for communications defined in Sub-Clause 1.4 (Law and
Language) and of the operations to be carried out (including the methods and techniques
required, the hazards likely to be encountered and methods of preventing accidents), for the
satisfactory and safe execution of the Subcontract Works. A reasonable proportion of the
Subcontractors superintending staff shall have a working knowledge of such language for
communications, or the Subcontractor shall have sufficient number of interpreters available
on Site during all working hours.

5.9 Subcontractor s Personnel

The Subcontractors Personnel shall be appropriately qualified, skilled and experienced in
their respective trades and occupations. The Contractor may require the Subcontractor to
remove (or cause to be removed) any person employed on the Site or Subcontract Works,
including the Subcontractors Representative if applicable, who

(a) persists in any of misconduct or lack of care,
(b) carries out duties incompetently or negligently,
(c) fails to conform with any provisions of the Subcontract, or
(d) persists in any conduct which is prejudicial to safety, health, or the protection of the
environment.

If appropriate, the Subcontractor shall then appoint (or cause to be appointed) a suitable
replacement person.


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5.10 Records of Subcontractor s Personnel and Equipment

The Subcontractor shall submit, to the Contractor, details showing the number of each class
of Subcontractors Personnel and of each type of Subcontractors Equipment on the Site.
Details shall be submitted each calendar month, in a form approved by the Contractor, until
the Subcontractor has completed all work which is known to be outstanding at the
completion date stated in the Taking-Over Certificate for the Subcontract Works.

5.11 Disorderl y Conduct

The Subcontractor shall at all times take all reasonable precautions to prevent any unlawful,
riotous or disorderly conduct by or amongst the Subcontractors Personnel, and to preserve
peace and protection of persons and property on and near the Site.

6 Pl ant, Materials and Workmanship

6.1 Manner of Execution

The Subcontractor shall carry out the manufacture of Plant, the production and manufacture
of Materials, and all other execution of the Subcontract Works:

(a) in the manner (if any) specified in the Subcontract,
(b) in a proper workmanlike and careful manner, in accordance with recognized good
practice, and
(c) with properly equipped facilities and non-hazardous Materials, except as otherwise
specified in the Subcontract.

6.2 Samples

The Subcontractor shall submit the following samples of Materials, and relevant information,
to the Contractor for consent prior to using the Materials in or for the Works:

(a) manufacturers standard samples of Materials and samples specified in the Subcontract,
all at the Subcontractors cost, and
(b) additional samples instructed by the Contractor.

Each sample shall be labeled as to origin and intended use in the Subcontract Works.

6.3 Inspection

The Employers Personnel and/or the Contractors Personnel (as the case may be) shall at
all reasonable times:

(a) have full access to all part of the Site and to all places from which natural Materials are
being obtained, and
(b) during production, manufacture and construction (at the Site and elsewhere), be entitled
to examine, inspect, measure and test the materials and workmanship, and to check the
progress of manufacture of Plant and production and manufacture of Materials.

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The Subcontractor shall give the Employers Personnel and/or the Contractors Personnel (as
the case may be) full opportunity to carry out these activities, including providing access,
facilities, permissions and safety equipment. No such activity shall relieve the Subcontractor
from any obligation or responsibility.

The Subcontractor shall give notice to the Contractor whenever any work is ready and before
it is covered up, put out of sight, or packaged for storage or transport. The Contractor shall
then (with or without the Employer) either carry out the examination, inspection,
measurement or testing, or promptly give notice to the Subcontractor that the Contractor
does not require to do so. If the Subcontractor fails to give the notice, he shall, if and when
required by the Contractor, uncover the work and thereafter reinstate and make good, at the
Subcontractors cost.

6.4 Testing

This Sub-Clause shall apply to all tests specified in the Subcontract, other than the Tests
after Completion (if any).

Except as otherwise stated in the Subcontract, the Subcontractor shall provide all apparatus,
assistance, documents and other information, electricity, equipment, fuel, consumables,
instruments, labor, materials, and suitably qualified and experienced staff, as are necessary
to carry out the specified tests efficiently. The Subcontractor shall agree, with the Contractor,
the time and place for the specified testing of any Plant, Materials and other parts of the
Subcontract Works.

The Contractor may, under Clause 12 (Variations and Adjustments), vary the location or
details of specified tests, or instruct the Subcontractor to carry out additional tests. If these
varied or additional tests show that the tested Plant, Materials or workmanship is not in
accordance with the Subcontract and such defect is not attributable to the Contractor, the
cost of carrying out this Variation shall be borne by the Subcontractor, notwithstanding other
provisions of the Subcontract.

The Contractor shall give the Subcontractor not less than 24 hours notice of the Contractors
intention to attend the tests. If the Contractor does not attend at the time and place agreed,
the Subcontractor may proceed with the tests, unless otherwise instructed by the Contractor,
and the tests shall then be deemed to have been made in the Contractors presence.

The Subcontractor shall promptly forward to the Contractor duly certified reports of the tests.
When the specified tests have been passed, the Contractor shall endorse the
Subcontractors test certificate, or issue a certificate to him, to that effect.

6.5 Rej ection

If, as a result of an examination, inspection, measurement or testing, any Plant, Materials or
workmanship is found to be defective or otherwise not in accordance with the Subcontract,
the Contractor may reject the Plant, Materials or workmanship by giving notice to the
Subcontractor, with reasons. The Subcontractor shall then promptly make good the defect

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and ensure that the rejected item complies with the Subcontract, unless such defect is
attributable to the Contractor.

If the Contractor requires this Plant, Materials or workmanship to be retested, the tests shall
be repeated under the same terms and conditions. If the rejection and retesting which are
attributable to the Subcontractor cause the Contractor to incur additional costs, the
Subcontractor shall subject to Sub-Clause 2.5 (Contractors Cl aims) and pay these costs to
the Contractor.

6.6 Remedial Work

Notwithstanding any previous test or certification, the Contractor may, if such events are
attributable to the Subcontractor, instruct the Subcontractor to:

(a) remove from the Site and replace any Plant or Materials which is not in accordance with
the Subcontract,
(b) remove and re-execute any other work which is not in accordance with the Subcontract,
and
(c) execute any work which is urgently required for the safety of the Subcontract Works,
whether because of an accident, unforeseeable event or otherwise.

The Subcontractor shall comply with the instruction within a reasonable time, which shall be
the time (if any) specified in the instruction, or immediately if urgency is specified under sub-
paragraph (c).

If the Subcontractor fails to comply with the instruction, the Contractor shall be entitled to
employ and pay other persons to carry out the work. Except to the extent that the
Subcontractor would have been entitled to payment for the work, the Subcontractor shall
subject to Sub-Clause 2.5 (Contractors Claims) and pay to the Contractor all cost arising
from this failure.

6.7 Ownership of Pl ant and Materials

Each item of Plant and Materials shall, to the extent consistent with the Laws of the Country,
become the property of the Employer or the Contractor (as the case may be) at whichever is
the earlier of the following times, free from lien and other encumbrances:

(a) when it is delivered to the Site,
(b) when the Subcontractor is entitled to payment of the value of the Plant and/or Materials
under Sub-Clause 7.9 (Payment for Pl ant and Materi als in Event of Suspension), or
(c) when it becomes property of the Employer in accordance with the Contract.

6.8 Royalti es

Unless otherwise stated in the Subcontract, the Subcontractor shall pay all royalties, rents
and other payments for:

(a) natural Materials obtained from outside the Site, and
(b) the disposal of material from demolitions and excavations and of other surplus material

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(whether natural or man-made), except to the extent that disposal areas within the Site
are specified in the Subcontract for use of the Subcontractor free of charge.

7 Commencement, Delays and Suspension

7.1 Commencement of Subcontract Works

The Contractor shall give the Subcontractor not less than seven (7) days notice of the
Commencement Date. Unless otherwise stated in the Letter of Acceptance, the
Commencement Date shall be within sixty (60) days after the Subcontractor receives the
Letter of Acceptance.

The Subcontractor shall commence the execution of the Subcontract Works as soon as is
reasonably practicable after the Commencement Date, and shall then proceed with the
Subcontract Works with due expedition and without delay.

7.2 Time for Compl etion

The Subcontractor shall complete the whole of the Subcontract Works, and each Section (if
any), within the Time for Completion for the Subcontract Works or Section (as the case may
be), including:

(a) achieving the passing of the Tests on Completion, and
(b) completing all work which is stated in the Subcontract as being required for the
Subcontract Works or Section to be considered to be completed for the purposes of
taking-over under Sub-Clause 9.1 (Taking Over of Subcontract Works and Sections).

7.3 Program

The Subcontractor shall submit a detailed time program to the Contractor within thirty (30)
days after receiving the notice under Sub-Clause 7.1 (Commencement of Subcontract
Works). The Subcontractor shall also submit a revised program whenever the previous
program is inconsistent with actual progress or with the Subcontractors obligations. Each
program shall include:

(a) the order in which the Subcontractor intends to carry out the Subcontract Works,
including the anticipated timing of each stage of design (if any), Subcontractors
Documents, procurement, manufacture, inspection, delivery to Site, construction,
erection, testing, commissioning and trial operation, as appropriate,
(b) the periods for reviews under Sub-Clause 4.2 (Subcontractors Documents) and for
any other submissions, approvals and consents specified in the Subcontract,
(c) the sequence and timing of inspections and tests specified in the Subcontract, and
(d) a supporting report which includes:

(i) a general description of the methods which the Subcontractor intends to adopt, and
of the major stages, in the execution of the Subcontract Works, and

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(ii) details showing the Subcontractors reasonable estimate of the number of each
class of Subcontractors Personnel and of each type of Subcontractors Equipment,
required on the Site for each major stage.

The program shall be subject to approval of the Contractor. Unless the Contractor, within
twenty (20) days after receiving a program, gives notice to the Subcontractor stating the
extent to which he does not approve, the Subcontractor shall proceed in accordance with the
program, subject to his other obligations under the Subcontract. The Employers Personnel
and/or the Contractors Personnel (as the case may be) shall be entitled to rely upon the
program when planning their activities.

The Subcontractor shall promptly give notice to the Contractor of specific probable future
events or circumstances which may adversely affect the work, increase the Subcontract
Price or delay the execution of the Subcontract Works, with submission of an estimate of the
anticipated effect of the future events or circumstances.

If, at any time, the Contractor gives notice to the Subcontractor that a program fails (to the
extent stated) to comply with the Subcontract or to be consistent with actual progress and the
Subcontractors stated intentions, the Subcontractor shall submit a revised program to the
Contractor in accordance with this Sub-Clause.

7.4 Extension of Time for Completion

If completion for the purposes of Sub-Clause 9.1 (Taking Over of Subcontract Works and
Sections) is or will be delayed by a cause of which the Subcontractor considers himself to
be entitled to an extension of the Time for Completion, the Subcontractor shall give notice to
the Contractor in accordance with Sub-Clause 19.1 (Subcontractors Clai ms).

7.5 Rate of Progress

If at any time,

(a) actual progress is too slow to complete within the Time for Completion, and/or
(b) progress has fallen (or will fall) behind the current program under Sub-Clause 7.3
(Program),
other than as a result of a cause of which the Subcontractor is entitled to an extension of the
Time for Completion, then the Contractor may instruct the Subcontractor to submit, under
Sub-Clause 7.3 (Program), a revised program and supporting report describing the revised
methods which the Subcontractor proposes to adopt in order to expedite progress and
complete the Subcontract Works within the Time for Completion.

Unless the Contractor notifies otherwise, the Subcontractor shall adopt these revised
methods, which may require increases in the working hours and/or in the numbers of
Subcontractors Personnel and/or Goods, at the risk and cost of the Subcontractor. If these
revised methods cause the Contractor to incur additional costs, the Subcontractor shall
subject to Sub-Clause 2.5 (Contractors Claims) and pay these costs to the Contractor, in
addition to delay damages (if any) under Sub-Clause 7.6 (Delay Damages).


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7.6 Del ay Damages

If the Subcontractor fails to comply with Sub-Clause 7.2 (Time for Completion), the
Subcontractor shall subject to Sub-Clause 2.5 (Contractors Claims) and pay delay
damages to the Contractor for this default. These delay damages shall be the sum stated in
the Appendix to Tender, which shall be paid for every day which shall elapse between the
relevant Time for Completion and the date stated in the Taking-Over Certificate. However,
the total amount due under this Sub-Clause shall not exceed the maximum amount of delay
damages (if any) stated in the Appendix to Tender.

These delay damages shall be the only damages due from the Subcontractor for such
default, other than in the event of termination under Sub-Clause 14.2 (Termi nation by
Contractor) prior to completion of the Subcontract Works. These damages shall not relieve
the Subcontractor from his obligation to complete the Subcontract Works, or from any other
duties, obligations or responsibilities which he may have under the Subcontract.

7.7 Suspension of Work

The Contractor may at any time instruct the Subcontractor to suspend progress of part or all
of the Subcontract Works. During such suspension, the Subcontractor shall protect, store
and secure such part or the Subcontract Works against any deterioration, loss or damage.

The Contractor may also notify the cause for the suspension. If and to the extent that the
cause is notified and is the responsibility of the Subcontractor, the following Sub-Clauses 7.8,
7.9 and 7.10 shall not apply.

7.8 Consequences of Suspension

If the Subcontractor suffers delay and/or incurs Cost from complying with the Contractors
instructions under Sub-Clause 7.7 (Suspension of Work) and/or from resuming the work,
the Subcontractor shall give notice to the Contractor for:

(a) an extension of time for any such delay, if completion is or will be delayed, under Sub-
Clause 7.4 (Extension of Time for Compl etion), an

After receiving this notice, the Contractor shall proceed in accordance with Sub-Clause 2.4
(Determines) to agree or determine these matters.

In the event that the suspension is attributable to the Employer, the Subcontractor shall be
entitled to an extension of time and/or to payment of the Cost only to the extent that the
Employer agrees or determines for such matters.

The Subcontractor shall not be entitled to an extension of time for, or to payment of the Cost
incurred in making good the consequences of the Subcontractors faulty design,
workmanship or materials, or of the Subcontractors failure to protect, store or secure in
accordance with Sub-Clause 7.7 (Suspension of Work).


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7.9 Payment for Plant and Materials in Event of Suspension

The Subcontractor shall, to the extent accepted by the Employer under the Contract, be
entitled to payment of the value (as at the date of suspension) of the Plant and/or Materials
which have not been delivered to Site, if:

(a) the work on Plant or delivery of Plant and/or Materials has been suspended for more
than the period (if any) specified in the Contract for the same subject, and
(b) the Subcontractor has marked the Plant and/or Materials as the Employers property or
the Contractors property (as the case may be) in accordance with the Contractors
instructions.

7.10 Prolonged Suspension

If the suspension under Sub-Clause 7.7 (Suspension of Work) has continued for more than
the period specified in the Contract for the same subject, the Subcontractor may request the
Contractors permission to proceed. If the Contractor does not give permission within the
period specified in the Contract for the same purpose after being requested to do so, the
Subcontractor may, by giving notice to the Contractor, treat the suspension as an omission
under Clause 12 (Variations and Adjustments) of the affected part of the Subcontract
Works. If the suspension affects the whole of the Subcontract Works, the Subcontractor may
give notice of termination to the Contractor.

7.11 Resumption of Work

After the permission or instruction to proceed is given, the Subcontractor and the Contractor
shall jointly examine the Subcontract Works and the Plant and Materials affected by the
suspension. The Subcontractor shall make good any deterioration or defect in or loss of the
Subcontract Works or Plant or Materials, which has occurred during the suspension.

8 Tests on Compl etion

8.1 Subcontractor s Obligations

The Subcontractor shall, as stated in the Subcontract, carry out the Tests on Completion in
accordance with this Clause and Sub-Clause 6.4 (Testing), after providing the documents in
accordance with Sub-Clause 4.6 (As-Built Documents) and Sub-Clause 4.7 (Operation
and Maintenance Manual s).

The Subcontractor shall give to the Contractor not less than twenty (20) days (or longer
period, if required under the Contract) notice of the date after which the Subcontractor will
be ready to carry out each of the Tests on Completion. Unless otherwise agreed, the Tests
on Completion shall be carried out within fifteen (15) days (or the period stated in the
Contract, if any) after this date, on such day or days as the Contractor instructs.

As soon as the Subcontract Works, or a Section, have passed any Tests on Completion, the
Subcontractor shall submit a certified report of the results of these Tests to the Contractor.

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8.2 Del ayed Tests

If the Tests on Completion are being unduly delayed by the Subcontractor, the Contractor
may by notice require the Subcontractor to carry out the Tests within twenty (20) days after
receiving the notice. The Subcontractor shall carry out the Tests on such day or days within
that period as the Subcontractor may fix and of which he shall give notice to the Contractor.

If the Subcontractor fails to carry out the Tests on Completion within the period of twenty (20)
days, the Contractor may proceed with the Tests at the risk and cost of the Subcontractor.
The Tests on Completion shall then be deemed to have been carried out in the presence of
the Subcontractor and the results of the Tests shall be accepted as accurate.

8.3 Retesting

If the Subcontract Works, or a Section, fail to pass on Tests on Completion, Sub-Clause 6.5
(Rejection) shall apply, and it shall require the failed Tests, and Tests on Completion on any
related work, to be repeated under the same terms and conditions.

8.4 Failure to Pass Tests on Completion

If the Subcontract Works, or a Section, fail to pass the Tests on Completion repeated under
Sub-Clause 8.3 (Retesting), the Contractor shall be entitled to:

(a) order further repetition of Tests on Completion under Sub-Clause 8.3,
(b) if the failure deprives the Employer of substantially the whole benefit of the Works or
Section on account of a default or failure of the Subcontractor, reject the Subcontract
Works or Section (as the case may be), in which event the Contractor shall have the
same remedies as are provided in sub-paragraph (c) of Sub-Clause 10.4 (Fail ure to
Remedy Defects), or
(c) issue a Taking-Over Certificate, if the Employer so accepts.

In the event of sub-paragraph (c), the Subcontractor shall proceed in accordance with all
other obligations under the Subcontract, and the Subcontract Price shall be reduced by
such amount as shall be appropriate to cover the reduced value to the Employer and all
other costs incurred by the Contractor as a result of this failure. Unless the relevant
reduction for this failure is stated (or its method of calculation is defined) in the Subcontract,
the Contractor may require the reduction to be (i) agreed by both Parties (in full satisfaction
of this failure only) and paid before this Taking-Over Certificate is issued, or (ii) determined
and paid under Sub-Clause 2.4 (Determinations) and Sub-Clause 2.5 (Contractors
Claims).

9 Contractors Taking Over

9.1 Taking Over of Subcontract Works and Sections

Except as stated in Sub-Clause 8.4 (Failure to Pass Tests on Completion), the
Subcontract Works shall be taken over by the Contractor when (i) the Subcontract Works

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have been completed in accordance with the Subcontract, including the matters described
in Sub-Clause 7.2 (Time for Completion) and except as allowed in sub-paragraph (a)
below, and (ii) a Taking-Over Certificate for the Subcontract Works has been issued, or is
deemed to have been issued in accordance with this Sub-Clause.

Unless otherwise stated in the Subcontract, the Subcontractor may apply by notice to the
Contractor for a Taking-Over Certificate not earlier than fifteen (15) days before the
Subcontract Works will, in the Subcontractors opinion, be complete and ready for taking
over. If the Subcontract Works are divided into Sections, the Subcontractor may similarly
apply for a Taking-Over Certificate for each Section.

The Contractor shall, within thirty (30) days after receiving the Subcontractors application or
otherwise in consideration of the relevant conditions of Contract:

(a) issue the Taking-Over Certificate to the Subcontractor, stating the date on which the
Subcontract Works or Section were completed in accordance with the Subcontract,
except for any minor outstanding work and defects which will not substantially affect
the use of the Subcontract Works or Section for their intended purpose (either until or
whilst this work is completed and these defects are remedied), or
(b) reject the application, giving reasons and specifying the work required to be done by
the Subcontractor to enable the Taking-Over Certificate to be issued. The
Subcontractor shall then complete the work before issuing a further notice under this
Sub-Clause.

If the Contractor fails either to issue the Taking-Over Certificate or to reject the
Subcontractors application within the period of thirty (30) days, and if the Subcontract
Works or Section (as the case may be) are substantially in accordance with the Subcontract,
the Taking-Over Certificate shall be deemed to have been issued on the last day of that
period.

9.2 Taking Over of Parts of Subcontract Works

The Contractor may, at his sole discretion, issue a Taking-Over Certificate for any part of
the Permanent Subcontract Works.

After the Contractor has issued a Taking-Over Certificate for a part of the Subcontract
Works, the Subcontractor shall be given the earliest opportunity to take such steps as may
be necessary to carry out any outstanding Tests on Completion (if any). The Subcontractor
shall carry out these Tests on Completion as soon as practicable before the expiry date of
the relevant Defects Notification Period.

If a Taking-Over Certificate has been issued for a part of the Subcontract Works (other than
a Section), the delay damages thereafter for completion of the remainder of the Subcontract
Works shall be reduced. Similarly, the delay damages for the remainder of the Section (if
any) in which this part is included shall also be reduced. For any period of delay after the
date stated in the Taking-Over Certificate, the proportional reduction in these delay
damages shall be calculated as the proportion which the value of the part so certified bears
to the value of the Subcontract Works or Section (as the case may be) as a whole. The

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Contractor shall proceed in accordance with Sub-Clause 2.4 (Determinations) to agree or
determine these proportions. The provision of this paragraph shall only apply to the daily
rate of delay damages under Sub-Clause 7.6 (Delay Damages), and shall not affect the
maximum amount of these damages.

9.3 Surfaces Requi ring Reinstatement

Except as otherwise stated in the Taking-Over Certificate, a certificate for a Section or part
of the Subcontract Works shall not be deemed to certify completion of any ground or other
surfaces requiring reinstatement.

10 Defects Liabi lity

10.1 Completion of Outstanding Work and Remedying Defects

In order that the Subcontract Works and Subcontractors Documents, and each Section,
shall be in the condition required by the Subcontract (fair wear and tear excepted) by the
expiry date of the relevant Defects Notification Period or as soon as practicable thereafter,
the Subcontractor shall:

(a) complete any work which is outstanding on the date stated in a Taking-Over Certificate,
within such reasonable time as is instructed by the Contractor, and
(b) execute all work required to remedy defects or damage, as may be notified by (or on
behalf of) the Contractor on or before the expiry date of the Defects Notification Period
for the Subcontract Works or Section (as the case may be).

If a defect appears or damage occurs, the Subcontractor shall be notified accordingly by (or
on behalf of) the Contractor.

10.2 Cost of Remedying Defects

All work referred to in sub-paragraph (b) of Sub-Clause 10.1 (Compl etion of Outstanding
Work and Remedying Defects) shall be executed at the risk and cost of the
Subcontractor, if and to the extent that the work is attributable to:

(a) any design for which the Subcontractor is responsible,
(b) Plant. Materials or workmanship, which have been provided by (or under the
responsibility of) the Subcontractor, not being in accordance with the Subcontract,
(c) improper operation or maintenance which was attributable to matters for which the
Subcontractor is responsible (under Sub-Clause 4.5 to 4.7 or otherwise), or
(d) failure by the Subcontractor to comply with any other obligation.

If and to the extent that such work is attributable to any other cause for which the
Subcontractor is not responsible, the Subcontractor shall be notified promptly by (or on
behalf of) the Contractor, and Sub-Clause 12.3 (Variation Procedure) shall apply.

10.3 Extension of Defects Notification Period


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The Contractor shall be entitled, subject to Sub-Clause 2.5 (Contractors Cl aims) or
Clause 12 (Variations and Adjustments), to an extension of the Defects Notification
Period for the Subcontract Works or a Section if and to the extent that it is required to do so
under the Contract.

10.4 Failure to Remedy Defects

If the Subcontractor fails to remedy any defect or damage within a reasonable time, a date
may be fixed by (or on behalf of) the Contractor, on or by which the defect or damage is to
be remedied. The Subcontractor shall be given reasonable notice of this date.

If the Subcontractor fails to remedy the defect or damage by this notified date and this
remedial work was to be executed at the cost of the Subcontractor under Sub-Clause 10.2
(Cost of Remedying Defects), the Contractor may (at his option):

(a) carry out the work himself or by others, in a reasonable manner and at the
Subcontractors cost, and the Subcontractor shall subject to Sub-Clause 2.5
(Contractors Cl aims) and pay to the Contractor the cost reasonably incurred by the
Contractor in remedying the defect or damage,
(b) require to agree or determine a reasonable reduction in the Subcontract Price in
accordance with Sub-Clause 2.4 (Determinations), or
(c) If the defect or damage deprives the Employer of substantially the whole benefit of the
Subcontract Works or any major part of the Subcontract Works, terminate the
Subcontract as a whole, or in respect of such major part which cannot be put into the
intended use. Without prejudice to any other rights, under the Subcontract or otherwise,
the Contractor shall then be entitled to recover all sums paid for the Subcontract Works
or for such part (as the case may be), plus all other cost and loss incurred by the
Contractor as a result of this failure, which shall include the cost of dismantling the
same, clearing the Site and returning Plant and Materials to the Subcontractor.

10.5 Removal of Defective Work

If the defect or damage, which was to be remedied at the cost of the Subcontractor under
Sub-Clause 10.2 (Cost of Remedying Defects), cannot be remedied expeditiously on the
Site and the Contractor gives consent, the Subcontractor may remove from the Site for the
purposes of repair such items of Plant as are defective or damaged. This consent may
require the Subcontractor to increase the amount of Performance Security by the full
replacement cost of these items, or to provide other appropriate security.

10.6 Further Tests

If the work of remedying of any defect or damage may affect the performance of the
Subcontract Works, the Contractor may require the repetition of any of the tests described
in the Subcontract. The requirement shall be made by notice within thirty (30) days after the
defect or damage is remedied.


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These tests shall be carried out in accordance with the terms applicable to the previous
tests, except that they shall be carried out at the risk and cost of the Party liable, under Sub-
Clause 10.2 (Cost of Remedying Defects), for the cost of remedial work.

10.7 Right of Access

Until the Performance Certificate has been issued, the Subcontractor shall have such right
of access to the Subcontract Works as is reasonably required in order to comply with this
Clause and is allowed under the Contract for compliance of this Clause.

10.8 Subcontractor to Search

The Subcontractor shall, if required by the Contractor, search for the cause of any defect,
under the direction of the Contractor. Unless the defect is to be remedied at the cost of the
Subcontractor under Sub-Clause 10.2 (Cost of Remedying Defects), the Cost of search
shall be agreed or determined by the Contractor in accordance with Sub-Clause 2.4
(Determinations) and shall be included in the Subcontract Price.

10.9 Performance Certificate

Performance of the Subcontractors obligations shall not be considered to have been
completed until the Contractor has issued the Performance Certificate to the Subcontractor,
stating the date on which the Subcontractor completed his obligations under the
Subcontract.

The Contractor shall issue the Performance Certificate within thirty (30) days after the latest
of the expiry date of the Defects Notification Periods, or as soon thereafter as the
Subcontractor has supplied all the Subcontractors Documents and completed and tested all
the Subcontract Works, including remedying any defects.

Only the Performance Certificate shall be deemed to constitute acceptance of the
Subcontract Works.

10.10 Unfulfilled Obl i gations

After the Performance Certificate has been issued, each Party shall remain liable for the
fulfillment of any obligation which remains unperformed at that time. For the purposes of
determining the nature and extent of unperformed obligations, the Subcontract shall be
deemed to remain in force.

10.11 Clearance of Si te

Upon receiving the Performance Certificate, the Subcontractor shall remove any remaining
Subcontractors Equipment, surplus material, wreckage, rubbish and Temporary
Subcontract Works from the Site, except those that become the property of the Employer (if
any) in accordance with the Contract.


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If any of these items are not removed within the days as the Contractor instructs after the
Performance Certificate has been issued, the Contractor may sell or otherwise dispose of
such items. The Contractor shall be entitled to be paid the costs incurred in connection with,
or attributable to, such sale or disposal and restoring the Site.

Any balance of the moneys from the sale shall be paid to the Subcontractor. If these
moneys are less than the Contractors costs, the Subcontractor shall pay outstanding
balance to the Contractor.

11 Tests after Completion

11.1 Procedure for Tests after Completion

If Tests after Completion are specified in the Subcontract, this Clause shall apply.

Unless otherwise stated in the Subcontract, the Subcontractor shall:

(a) provide all such things as are necessary to be provided by the Subcontractor to carry
out the Tests after Completion efficiently, as specified in the Subcontract, and
(b) carry out the work necessary for the Tests after Completion to the extent specified in
the Subcontract or otherwise requested by the Contractor, in the presence of the
Contractors Personnel and/or the Employers Personnel (as the case may be).
The Tests after Completion shall be carried out after the Subcontract Works or Section have
been taken over by the Contractor (as between the Contractor and the Subcontractor). The
Contractor shall give to the Subcontractor a notice of date after which the Tests after
Completion will be carried out. Unless otherwise agreed, these Tests shall be carried out on
the day or days determined by the Contractor (as between the Contractor and the
Subcontractor).

If the Subcontractor does not attend at the time and place noticed, the Contractor may
proceed with the Tests after Completion, which shall be deemed to have been made in the
Subcontractors presence, and the Subcontractor shall accept the readings as accurate.

The results of the Tests after Completion shall be compiled and evaluated by both Parties
and the Employer (as the case may be).

11.2 Retesting

If the Subcontract Works, or a Section, fail to pass the Tests after Completion:

(a) sub-paragraph (b) of Sub-Clause 10.1 (Completi on of Outstanding Work and
Remedying Defects) shall apply, and
(b) either Party may then require the failed Tests, and the Tests after Completion on any
related work, to be repeated under the same terms and conditions.

If and to the extent that this failure and retesting are attributable to any of the matters listed
in sub-paragraph (a) to (d) of Sub-Clause 10.2 (Cost of Remedying Defects) and cause

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the Contractor to incur additional costs, the Subcontractor shall subject to Sub-Clause 2.5
(Contractors Claims) and pay these costs to the Contractor.

If and to the extent that such failure and retesting are attributable to any other cause for
which the Subcontractor is not responsible, the Subcontractor shall be notified promptly by
(or on behalf of) the Contractor, and Sub-Clause 12.3 (Variation Procedure) shall apply.

11.3 Failure to Pass Tests after Completion

If the following conditions apply, namely:

(a) the Subcontract Works, or a Section, fail to pass any or all of the Tests after Completion
for any reason attributable to the Subcontractor,
(b) the relevant sum payable as non-performance damages for this failure is stated (or its
method of calculation is defined) in the Subcontract, and
(c) the Subcontractor pays this relevant sum to the Contractor during the Defects
Notification Period,

then the Subcontract Works or Section shall be deemed to have passed these Tests after
Completion.
If the Subcontract Works, or Section, fail to pass a Test after Completion for any reason
attributable to either the Contractor or the Subcontractor, or in combination of both, and
either the Contractor or the Subcontractor (as the case may be) proposes to make
adjustments or modifications to the Subcontract Works or such Section, the Subcontractor
may be instructed by (or on behalf of) the Contractor that right of access to the Subcontract
Works or Section cannot be given until a time that is convenient to the Employer. The
Subcontractor shall then remain liable to carry out the adjustments or modifications and to
satisfy this Test, within a reasonable period of receiving notice by (or on behalf of) the
Contractor of the time that is convenient to the Employer. However, if the Subcontractor
does not receive this notice during the relevant Defects Notification Period, the
Subcontractor shall be relieved of this obligation.

If the Subcontractor incurs additional Cost as a result of failure to pass a Test after
Completion and cause of such failure is attributable to the Subcontractor, the Subcontractor
shall not be entitled to payment of any such Cost.

12 Vari ations and Adjustments

12.1 Right to Vary

Variations may be initiated by the Contractor at any time during the whole period of the
Subcontract, either by an instruction or by a request for the Subcontractor to submit a
proposal.

The Subcontractor shall execute and be bound by each Variation, unless the Subcontractor
promptly gives notice to the Contractor stating (with supporting particulars) that (i) the
Subcontractor cannot readily obtain the Goods required for the Variation, (ii) it will reduce
the safety or suitability of the Subcontract Works, or (iii) it will have an adverse impact on
the Time for Completion or any other liability of the Subcontractor under the Subcontract.

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Upon receiving this notice, the Contractor shall cancel, confirm or vary the instruction.

Each Variation may include:

(a) changes to the quantities of any item of work included in the Subcontract (however,
such changes do not necessarily constitute a Variation),
(b) changes to the quality and other characteristics of any item of work,
(c) changes to the levels, positions and/or dimensions of any part of the Subcontract Works,
(d) omission of any work,
(e) any additional work, Plant, Materials or services necessary for the Permanent
Subcontract Works, including any associated Tests on Completion, boreholes and other
testing and exploratory work, or
(f) changes to the sequence or timing of the execution of the Subcontract Works.

The Subcontractor shall not make any alteration and/or modification of the Permanent
Subcontract Works, unless and until the Contractor instructs or approves a Variation.

12.2 Value Engineeri ng

The Subcontractor may, at any time, submit to the Contractor a written proposal which (in
the Subcontractors opinion) will, if adopted, (i) accelerate completion, (ii) reduce the cost to
the Contractor and/or the Employer of executing, maintaining or operating the Subcontract
Works, (iii) improve the efficiency or value to the Employer of the completed Subcontract
Works, or (iv) otherwise be of benefit to the Contractor and/or the Employer.

The proposal shall be prepared at the cost of the Subcontractor and shall include the items
listed in Sub-Clause 12.3 (Variation Procedure).

If this change results in saving cost or derives benefit to the Contractor or the Employer (as
the case may be) and the Contractor approves such change, the Contractor shall proceed
in accordance with Sub-Clause 2.4 (Determinations) to agree or determine a fee, which
shall be included in the Subcontract Price. This fee shall be half (50 %) of the cost saved or
the benefit derived to the Contractor (as the case may be).

12.3 Vari ation Procedure

If the Contractor requests a proposal, prior to instructing a Variation, the Subcontractor shall
respond in writing as soon as practicable, either by giving reasons why he cannot comply (if
this is the case) or by submitting:

(a) a description of the proposed design and/or work to be performed and a program for its
execution,
(b) the Subcontractors proposal for any necessary modifications to the program according
to Sub-Clause 7.3 (Program) and to the Time for Completion, and
(c) the Subcontractors proposal for evaluation of the Variation.

The Contractor shall, as soon as practicable after receiving such proposal (under Sub-
Clause 12.2 (Value Engi neering) or otherwise), respond with approval, disapproval or

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comments. The Subcontractor shall not delay any work whilst awaiting a response.

Each instruction to execute a Variation, with any requirements for the recording of Costs,
shall be issued by the Contractor to the Subcontractor, who shall acknowledge receipt.

Each Variation shall be evaluated in accordance with Sub-Clause 13.3 (Evaluation), unless
the Contractor otherwise instructs or approves in accordance with this Clause.

12.4 Payment in Applicable Currenci es

If the Subcontract provides for payment of the Subcontract Price in more than one currency,
then whenever an adjustment is agreed, approved or determined as stated above, the
amount payable in each of the applicable currencies shall be specified. For this purpose,
reference shall be made to the actual or expected currency proportions of the Cost of the
varied work, and to the proportions of various currencies specified for payment of the
Subcontract Price.

12.5 Provisional Sums

Each Provisional Sum (if any) shall only be used, in whole or in part, in accordance with the
Contractors instructions, and the Subcontract Price shall be adjusted accordingly. The total
sum paid to the Subcontractor shall include only such amounts, for the work, supplies or
services to which the Provisional Sum relates, as the Contractor shall have instructed. For
each Provisional Sum, the Contractor may instruct:

(a) work to be executed (including Plant, Materials or services to be supplied) by the
Subcontractor and valued under Sub-Clause 12.3 (Vari ation Procedure), and/or
(b) Plant, Materials or services to be purchased by the Subcontractor, from a nominated
subcontractor (as defined in Sub-Clause 3.5 (Nominated Subcontractors)) or
otherwise, and for which there shall be included in the Subcontract Price:

(i) the actual amounts paid (or due to be paid) by the Subcontractor, and
(ii) a sum for overhead charges and profit, calculated as a percentage of these actual
amounts by applying the relevant percentage rate (if any) stated in the appropriate
Schedule. If there is no such rate, the percentage rate stated in the Appendix to
Tender shall be applied.

The Subcontractor shall, when required by the Contractor, produce quotations, invoices,
vouchers and accounts or receipts in substantiation.

12.6 Daywork

For work of a minor or incidental nature, the Contractor may instruct that a Variation shall
be executed on a daywork basis. The work shall then be valued in accordance with the
Daywork Schedule included in the Subcontract, and the following procedure shall apply. If a
Daywork Schedule is not included in the Subcontract, this Sub-Clause shall not apply.

Before ordering Goods for the work, the Subcontractor shall submit quotations to the

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Contractor for approval. When applying for payment, the Subcontractor shall submit
invoices, vouchers and accounts or receipts for any Goods.

Except for any items for which the Daywork Schedule specifies that payment is not due, the
Subcontractor shall deliver each day to the Contractor accurate statements in duplicate
which shall include the following details of the resources used in executing the previous
days work:

(a) the names, occupation and time of Subcontractors Personnel,
(b) the identification, type and time of Subcontractors Equipment and Temporary
Subcontract Works, and
(c) the quantities and types of Plant and Materials used.

One copy of each statement will, if correct, or when agreed, be signed by the Contractor
and returned to the Subcontractor. The Subcontractor shall then submit priced statements
of these resources to the Contractor, prior to their inclusion in the next statement under
Sub-Clause 13.7 (Application for Interim Payment Certificates).

12.7 Adjustments for Changes in Legi slation and Cost

Unless otherwise allowed under the Contract for the same effect, the Subcontract Price
shall not be adjusted to take account of any increase or decrease in Cost resulting from a
change in the Laws of the Country (including the introduction of new Laws and repeal or
modification of existing Laws) or in the judicial or official governmental interpretation of such
Laws, made after entering into the Subcontract between the Parties, which affect the
Subcontractor in the performance of obligations under the Subcontract.

If the Subcontractor suffers (or will suffer) delay and/or incurs (or will incur) additional Cost
as a result of these changes in the Laws or in such interpretations made after entering into
the Subcontract and the Contractor is entitled to an adjustment under the Contract for the
same effect, the Subcontractor shall give notice to the Contractor for:

(a) an extension of time for any such delay, if completion is or will be delayed, under
Sub-Clause 7.4 (Extension of Time for Completion), and

(Determinations) to agree or determine these matters.

Except as otherwise stated in the Subcontract, the Accepted Subcontract Amount and all
rates or prices stated in the Subcontract shall be deemed to have included all amounts to
cover the contingency of rises and falls in Costs for all circumstances which may affect the
Subcontractor in the performance of obligations under the Subcontract. The amounts
payable to the Subcontractor shall not be adjusted for rises or falls in the cost of labor,
Goods and other inputs to the Subcontract Works, except as otherwise stated in the
Subcontract.


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13 Subcontract Pri ce and Payment

13.1 Subcontract Works to be Measured

Except as otherwise stated in the Subcontract, the Subcontract Works shall be measured,
and valued for payment, in accordance with this Clause.

Whenever the Contractor requires any part of the Subcontract Works to be measured,
reasonable notice shall be given to the Subcontractors Representative, who shall:

(a) promptly prepare and submit the measurement to the Contractor,
(b) either attend or send another qualified representative to assist the Contractor in
determining the measurement, and
(c) supply any particulars requested by the Contractor.
Except as otherwise stated in the Subcontract, whenever any Subcontract Works are to be
measured from records, these shall be prepared by the Subcontractor and submitted to the
Contractor for agreement or determination. The Subcontractor shall, as and when
requested, attend to examine and agree the measurement with the Contractor, and shall
sign the same when agreed. If the Subcontractor fails to submit the measurement or to
attend or send a representative within a reasonable time as requested by the Contractor,
the measurement made by (or on behalf of) the Contractor shall be accepted as accurate.

If the Subcontractor examines and disagrees the measurement determined by the
Contractor, and/or does not sign it as agreed, then the Subcontractor shall give notice to the
Contractor of the respects in which the measurement is asserted to be inaccurate. After
receiving this notice, the Contractor shall review the measurement and either confirm or
vary it. If the Subcontractor does not so give notice to the Contractor within ten (10) days
after being requested to agree the measurement, the measurement determined by the
Contractor shall be accepted as accurate.

13.2 Method of Measurement

Except as otherwise stated in the Subcontract and notwithstanding local practice:

(a) measurement shall be made of the net actual quantity of each item of the Subcontract
Works according to the records of the Subcontract Works acceptable to the Contractor,
and
(b) the method of measurement shall be in accordance with the Bill of Quantities or other
applicable provisions of the Subcontract (if any).

13.3 Evaluation

Except as otherwise stated in the Subcontract, the Subcontractor shall prepare and submit
to the Contractor, within a reasonable time as requested by the Contractor, all documents
necessary for agreement or determination of the Subcontract Price by evaluating each item
of work, applying the measurement agreed or determined in accordance with the above
Sub-Clauses 13.1 and 13.2 and the appropriate rate or price for the item.


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The Contractor shall then, upon receiving the documents, proceed in accordance with Sub-
Clause 2.4 (Determinati ons) to agree or determine the Subcontract Price. The
Subcontractor shall, as and when requested, attend to examine and agree the evaluation
with the Contractor, and shall sign the same when agreed. If the Subcontractor fails to
submit the evaluation or to attend within a reasonable time as requested by the Contractor,
the evaluation made or determined by (or on behalf of) the Contractor shall be accepted as
accurate.

If the Subcontractor examines and disagrees the evaluation determined by the Contractor,
and/or does not sign it as agreed, then the Subcontractor shall give notice to the Contractor
of the respects in which the evaluation is asserted to be inaccurate. After receiving this
notice, the Contractor shall review the evaluation and either confirm or vary it. If the
Subcontractor does not so give notice to the Contractor within ten (10) days after being
requested to agree the evaluation, the evaluation determined by the Contractor shall be
accepted as accurate.

For each item of work, the appropriate rate or price for the item shall be the rate or price
specified for such item in the Subcontract or, if there is no such item, specified for similar
work. However, a new rate or price shall be appropriate for an item of work if:

(a) adjustment to the Subcontract Price is made in accordance with provisions of the
Subcontract,
(b) this item is not specified in the Subcontract as a fixed rate item,
(c) the work is instructed under Clause 12 (Variations and Adjustments),
(d) no rate or price is specified in the Subcontract for this item, and
(e) no specified rate or price is appropriate because the item of work is not of similar
character, or is not executed under similar conditions, as any item in the Subcontract.

Each new rate or price shall be derived from any relevant rates or prices in the Subcontract,
with reasonable adjustments to take account of the matters described in the above sub-
paragraphs, as applicable. If no rates or prices are relevant for the derivation of a new rate
or price, it shall be derived from the reasonable Cost of executing the work, together with
reasonable profit, taking account of any other relevant matters, where the percentage rate
stated in the Appendix to Tender shall be applied for overhead charges and profit.

Until such time as an appropriate rate or price is agreed or determined, the Contractor shall
determine a provisional rate or price for the purposes of Interim Payment Certificates.

13.4 Omissions

Whenever the omission of any work forms part (or all) of a Variation, the value of which has
not been agreed, if:

(a) the Subcontractor will incur (or has incurred) cost which, if the work had not been
omitted, would have been deemed to be covered by a sum forming part of the
Accepted Subcontract Amount,
(b) the omission of the work will result (or has resulted) in this sum not forming part of
the Subcontract Price, and

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(c) this cost is not deemed to be included in the evaluation of any substituted work,

then the Subcontractor shall give notice to the Contractor accordingly, with supporting
particulars. Upon receiving this notice, the Contractor shall proceed in accordance with
Sub-Clause 2.4 (Determinations) to agree or determine this cost, which shall be included
in the Subcontract Price.

13.5 Subcontract Pri ce

Unless otherwise stated in the Subcontract:

(a) the Subcontract Price shall be agreed or determined under Sub-Clause 13.3
(Evaluation) and be subject to adjustments in accordance with the Subcontract,
(b) the Subcontractor shall pay all taxes, duties and fees required to be paid by him under
the Subcontract, and the Subcontract Price shall not be adjusted for any of these
costs except as stated in Sub-Clause 12.7 (Adjustments for Changes in Legisl ation
and Cost),
(c) any quantities which are set out in the Bill of Quantities or other Schedule are
estimated quantities and are not to be taken as the actual and correct quantities:

(i) of the Subcontract Works which the Subcontractor is required to execute, or
(ii) for the purposes of Sub-Clauses 13.1, 13.2 and 13.3, and

(d) the Subcontractor shall submit to the Contractor, within thirty (30) days after the
Commencement Date, a proposed breakdown of each lump sum price (if any) in the
Schedules. The Contractor may take account of the breakdown when preparing
Payment Certificates, but shall not be bound by it.

13.6 Advance Payment

The Contractor shall make an advance payment, as an interest-free loan for mobilization
and design (if any), when the Subcontractor submits a guarantee in accordance with this
Sub-Clause. The total advance payment, the number and timing of installments (if more
than one), and applicable currencies and proportions, shall be as stated in the Appendix to
Tender.

Unless and until the Contractor receives this guarantee, or if the total advance payment is
not stated in the Appendix to Tender, this Sub-Clause shall not apply.

The Contractor shall issue an Interim Payment Certificate for the first installment after
receiving a Statement under Sub-Clause 13.7 (Application for Interim Payment
Certificates) and after the Contractor receives (i) the Performance Security in accordance
with Sub-Clause 3.2 (Performance Security) and (ii) a guarantee in amounts and
currencies equal to the advance payment. This guarantee shall be issued by an entity and
from within a country (or other jurisdiction) approved by the Contractor, and shall be in the
form annexed to these Conditions or in another form approved by the Contractor.

The Subcontractor shall ensure that the guarantee is valid and enforceable until the

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advance payment has been repaid, but its amount may be progressively reduced by the
amount repaid by the Subcontractor as indicated in the Payment Certificates. If the terms of
the guarantee specify its expiry date, and the advance payment has not been repaid by the
date thirty (30) days prior to the expiry date, the Subcontractor shall extend the validity of
the guarantee until the advance payment has been repaid.
The advance payment shall be repaid through percentage deductions in Payment
Certificates. Unless other percentages are stated in the Appendix to Tender:
(a) deductions shall commence from the first interim payment (excluding the advance
payment, deductions and repayments of retention), and
(b) deductions shall be made at the amortization rate (which shall be the same as the
rate of the advance payment) of the amount of each Payment Certificate (excluding
the advance payment and deductions and repayments of retention) in the currencies
and proportions of the advance payment, until such time as the advance payment
has been repaid.

If the advance payment has not been repaid prior to the issue of the Taking-Over Certificate
for the Subcontract Works or prior to termination under Clause 14 (Termination by
Contractor), Clause 15 (Suspension and Terminati on by Subcontractor) or Clause 18
(Force Majeure) or by any other cause (as the case may be), the whole of the balance
then outstanding shall immediately become due and payable by the Subcontractor to the
Contractor.

13.7 Application for Interim Payment Certificates

The Subcontractor shall submit a Statement to the Contractor in the number of copies
required by the Contractor after the end of the period of payment stated in the Subcontract
(if not stated, after the end of each month), in a form approved by the Contractor, showing
in detail the amounts to which the Subcontractor considers himself to be entitled, together
with supporting documents which shall include the relevant report on progress in
accordance with Sub-Clause 3.22 (Progress Reports).

The statement shall include the following items, as applicable, which shall be expressed in
the currencies in which the Subcontract Price is payable, in the sequence listed:

(a) the estimated contract value of the Subcontract Works executed and the
Subcontractors Documents produced up to the end of the period of payment
(including Variations but excluding items described in paragraph (b) to (g) below),
(b) any amounts to be added and deducted for changes in legislation and cost, in
accordance with Sub-Clause 12.7 (Adjustments for Changes in Legisl ation and
Cost),
(c) any amounts to be deducted for retention, calculated by applying the percentage of
retention stated in the Appendix to Tender to the total of the above amounts,
(d) any amounts to be added and deducted for the advance payment and repayments
in accordance with Sub-Clause 13.6 (Advance Payment),
(e) any amounts to be added and deducted for Plant and Materials in accordance with
Sub-Clause 13.9 (Pl ant and Materials intended for Subcontract Works),
(f) any other additions or deductions which may have become due under the
Subcontract or otherwise, including those under Clause 19 (Claims, Disputes and

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Arbitration), and
(g) the deduction of the amounts certified in all previous Payment Certificates.

13.8 Schedule of Payments

If the Subcontract includes a Schedule of Payments specifying the installments in which the
Subcontract Price will be paid, then, unless otherwise stated in this Schedule:
(a) the installments quoted in the Schedule of Payments shall be the estimated contract
values for the purposes of sub-paragraph (a) of Sub-Clause 13.7 (Application for
Interim Payment Certificates),
(b) Sub-Clause 13.9 (Pl ant and Material s intended for Subcontract Works) shall not
apply, and
(c) if these installments are not defined by reference to the actual progress achieved in
executing the Subcontract Works, and if actual progress is found to be less than that
on which the Schedule of Payments was based, then the Contractor may proceed in
accordance with Sub-Clause 2.4 (Determinations) to agree or determine revised
installments, which shall take account of the extent to which progress is less than that
on which the installments were previously based.

If the Subcontract does not include a Schedule of Payments, the Subcontractor shall
submit non-binding estimates of the payments which he expects to become due during
each quarterly period. The first estimate shall be submitted within forty five (45) days after
the Commencement Date. Revised estimates shall be submitted at quarterly intervals, until
the Taking-Over Certificate has been issued for the Subcontract Works.

13.9 Pl ant and Materials intended for Subcontract Works

If this Sub-Clause applies, Interim Payment Certificates shall include, under sub-paragraph
(e) of Sub-Clause 13.7 (Application for Interi m Payment Certificates), (i) an amount for
Plant and Materials which have been sent to the Site for incorporation in the Permanent
Subcontract Works, and (ii) a reduction when the contract value of such Plant and
Materials is included as part of the Subcontract Works under sub-paragraph (a) of Sub-
Clause 13.7 (Application for Interim Payment Certifi cates).

If the lists referred to in sub-paragraph (b)(i) or (c)(i) below are not included in the Appendix
to Tender, this Sub-Clause shall not apply.

The Contractor shall determine and certify each addition if the following conditions are
satisfied:

(a) the Subcontractor has:

(i) kept satisfactory records (including the orders, receipts, Costs and use of Plant
and Materials) which are available for inspection, and
(ii) submitted a statement of the Cost of acquiring and delivering the Plant and
Materials to the Site, supported by satisfactory evidence,

and either:

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(b) the relevant Plant and Materials:

(i) are those listed in the Appendix to Tender for payment when shipped,
(ii) have been shipped to the Country, en route to the Site, in accordance with the
Subcontract, and
(iii) are described in a clean shipped bill of lading or other evidence of shipment,
which has been submitted to the Contractor together with evidence of payment
of freight and insurance, any other documents reasonably required, and a bank
guarantee in a form and issued by an entity approved by the Contractor in
amounts and currencies equal to the amount due under this Sub-Clause. This
guarantee shall be valid until the Plant and Materials are properly stored on Site
and protected against loss, damage or deterioration,

or

(c) the relevant Plant and Materials:

(i) are those listed in the Appendix to Tender for payment when delivered to the Site,
and
(ii) have been delivered to and are properly stored on the Site, are protected against
loss, damage or deterioration, and appear to be in accordance with the
Subcontract.

The additional amount to be certified shall be the equivalent of eighty percent (80 %) of the
Contractors determination of the cost of the Plant and Materials (including delivery to Site),
taking account of the documents mentioned in this Sub-Clause and of the contract value of
the Plant and Materials.

The currencies for this additional amount shall be the same as those in which payment will
become due when the contract value is included under sub-paragraph (a) of Sub-Clause
13.7 (Appli cation for Interim Payment Certificates). At that time, the Payment Certificate
shall include the applicable reduction which shall be equivalent to, and in the same
currencies and proportions as, this additional amount for the relevant Plant and Materials.

13.10 Issue of Interi m Payment Certificates

No amount will be certified or paid until the Contractor has received and approved the
Performance Security. Thereafter, the Contractor shall, within thirty (30) days after
receiving a Statement and supporting documents, issue to the Subcontractor an Interim
Payment Certificate which shall state the amount which the Contractor fairly determines to
be due, with supporting particulars.

However, prior to issuing the Taking-Over Certificate for the Subcontract Works, the
Contractor shall not be bound to issue an Interim Payment Certificate in an amount which
would (after retention and other deductions) be less than the minimum amount of Interim
Payment Certificates (if any) stated in the Appendix to Tender. In this event, the Contractor
shall give notice to the Subcontractor accordingly.

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An Interim Payment Certificate shall not be withheld for any other reason, although:

(a) If anything supplied or work done by the Subcontractor is not in accordance with the
Subcontract, the cost of rectification or replacement may be withheld until rectification
or replacement has been completed, and/or
(b) if the Subcontractor was or is failing to perform any work or obligation in
accordance with the Subcontract, and had been so notified by the Contractor, the
value of this work or obligation may be withheld until the work or obligation has been
performed.

The Contractor may in any Payment Certificate make any correction or modification that
should properly be made to any previous Payment Certificate. A Payment Certificate shall
not be deemed to indicate the Contractors acceptance, approval, consent or satisfaction.

13.11 Payment

The Contractor shall pay to the Subcontractor:

(a) the first installment of the advance payment within thirty (30) days after receiving
the documents in accordance with Sub-Clause 3.2 (Performance Security) and
Sub-Clause 13.6 (Advance Payment), and the corresponding advance payment
from the Employer (when made under the Contract), whichever is the later.
(b) the amount certified in each Interim Payment Certificate within thirty (30) days after
issuing the relevant Interim Payment Certificate to the Subcontractor, and
(c) the amount certified in the Final Payment Certificate within thirty (30) days after
issuing the Final Payment Certificate to the Subcontractor.

Payment of the amount due in each currency shall be made into the bank account,
nominated by the Subcontractor or otherwise as may be agreed between the Parties, in
the Country. Any bank charges (if any) incurred in relation to the payments shall be borne
by the Subcontractor.

13.12 Delayed Payment

If either Party does not receive payment in accordance with the Subcontract, such Party
shall be entitled to receive financing charges compounded yearly on the amount unpaid
during the period of delay. Unless otherwise stated in the Subcontract, these financing
charges shall be calculated at the annual rate of one percent (1 %) point above the
discount rate of the central bank in the country of the currency of payment, and shall be
paid in such currency.

The unpaid Party shall be entitled to this payment without formal notice or certification, and
without prejudice to any other right or remedy.

13.13 Payment of Retention Money

When the Taking-Over Certificate has been issued for the Subcontract Works, and the

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Subcontract Works have passed all specified tests (including the Tests after Completion, if
any), the first half of the Retention Money shall be certified by the Contractor for payment
to the Subcontractor. If a Taking-Over Certificate is issued for a Section or part of the
Subcontract Works, a proportion of the Retention Money shall be certified and paid when
the Section passes all tests. This proportion shall be two-fifths (40 %) of the proportion
calculated by dividing the estimated contract value of the Section or part by the estimated
final Subcontract Price.

Promptly after the latest of the expiry dates of the Defect Notification Periods, the
outstanding balance of the Retention Money shall be certified by the Contractor for
payment to the Subcontractor. If a Taking-Over Certificate was issued for a Section, a
proportion of the second half of the Retention Money shall be certified and paid promptly
after the expiry date of the Defect Notification Period for the Section. This proportion shall
be two-fifths (40 %) of the proportion calculated by dividing the estimated contract value of
the Section by the estimated final Subcontract Price.

However, if any work remains to be executed under Clause 10 (Defects Liability) or
Clause 11 (Tests after Completion), the Contractor shall be entitled to withhold
certification of the estimated cost of this work until it has been executed.

When the retention money under the Contract is released to the Contractor by a guarantee
submitted by the Contractor to the Employer or both Parties agree for the release of the
Retention Money to the Subcontractor, the Contractor shall certify and make payment of
the Retention Money to the Subcontractor at the same proportion released under the
Contract or as agreed by both Parties if the Subcontractor submits to the Contractor a
guarantee, in the form annexed to these Conditions, or in another form and provided by an
entity approved by the Contractor, in the amounts and currencies equal to the payment.

This guarantee shall be in lieu of the Retention Money and the Subcontractor shall ensure
that the guarantee is valid and enforceable until the same time of the release of the
Retention Money as intended in the Subcontract.

13.14 Statement at Completion

Within sixty (60) days after receiving the Taking-Over Certificate for the Subcontract Works,
the Subcontractor shall submit to the Contractor two (2) copies of a Statement at
completion with supporting documents, in accordance with Sub-Clause 13.7 (Application
for Interim Payment Certificates), showing:

(a) the value of all work done in accordance with the Subcontract up to the date stated in
the Taking-Over Certificate for the Subcontract Works,
(b) any further sums which the Subcontractor considers to be due, and
(c) an estimate of any other amounts which the Subcontractor considers will become due
to him under the Subcontract. Estimated amounts shall be shown separately in this
Statement at completion.

The Contractor shall then certify in accordance with Sub-Clause 13.10 (Issue of Interim
Payment Certificates).

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13.15 Appli cation for Final Payment Certificate

Within thirty (30) days after receiving the Performance Certificate, the Subcontractor shall
submit to the Contractor two (2) copies of a draft final statement with supporting
documents showing in detail in a form approved by the Contractor:

(a) the value of all work done in accordance with the Subcontract, and
(b) any further sums which the Subcontractor considers to be due to him under the
Subcontract or otherwise.

If the Contractor disagrees with or can not verify any part of the draft final statement, the
Subcontractor shall submit such further information as the Contractor may reasonably
require and shall make such changes in the draft as may be agreed between them. The
Subcontractor shall then prepare and submit to the Contractor the final statement as
agreed. This agreed statement is referred to in these Conditions as the Final Statement.

However if, following discussions between the Contractor and the Subcontractor and any
changes to the draft final statement which are agreed, it becomes evident that a dispute
exists, the Contractor shall issue to the Subcontractor an Interim Payment Certificate for
the agreed part of the draft final statement. Thereafter, if the dispute is finally resolved
under Sub-Clause 19.2 (Amicable Settlement), the Subcontractor shall then prepare and
submit to the Contractor a Final Statement.

13.16 Di scharge

When submitting the Final Statement, the Subcontractor shall submit a written discharge
in the form approved by the Contractor which confirms that the total of the Final Statement
represents full and final settlement of all moneys due to the Subcontractor under or in
connection with the Subcontract. This discharge may state that it becomes effective when
the Subcontractor has received the Performance Security and the outstanding balance of
this total, in which event the discharge shall be effective on such date.

13.17 Issue of Final Payment Certificate

Within thirty (30) days after receiving the Final Statement and written discharge in
accordance with Sub-Clause 13.15 (Application for Fi nal Payment Certificate) and Sub-
Clause 13.16 (Discharge), the Contractor shall issue to the Subcontractor the Final
Payment Certificate which shall state:

(a) the amount which is finally due, and
(b) after giving credit to the Contractor for all amounts previously certified for payment by
the Contractor and for all sums to which the Contractor is entitled, the balance (if any)
due from the Contractor to the Subcontractor or from the Subcontractor to the
Contractor, as the case may be.

If the Subcontractor has not applied for a Final Payment Certificate in accordance with
Sub-Clause 13.15 (Application for Final Payment Certificate) and Sub-Clause 13.16

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(Discharge), the Contractor shall request the Subcontractor to do so. If the Subcontractor
fails to submit an application within a period of fifteen (15) days from the date so
requested, the Contractor shall issue the Final Payment Certificate for such amount as he
fairly determines to be due.

13.18 Cessation of Contractors Liability

The Contractor shall not be liable to the Subcontractor for any matter or thing under or in
connection with the Subcontract or execution of the Subcontract Works, except to the
extent that the Subcontractor shall have included an amount expressly for it:

(a) in the Final Statement, and also
(b) (except for matters or things arising after the issue of the Taking-Over Certificate for
the Subcontract Works) in the Statement at completion described in Sub-Clause
13.14 (Statement at Completion).

However, this Sub-Clause shall not limit the Contractors liability under his indemnification
obligations, or the Contractors liability in any case of fraud, deliberate default or reckless
misconduct by the Contractor.

13.19 Currencies of Payment

The Subcontract Price shall be paid in the currency or currencies named in the Appendix
to Tender. Unless otherwise stated in the Subcontract, if more than one currency is so
named, payments shall be made as follows:

(a) If the Accepted Subcontract Amount was expressed in Local Currency only:

(i) the proportions or amounts of the Local and Foreign Currencies, and the fixed
rates of exchange to be used for calculating the payments, shall be as stated in
the Appendix to Tender, except as otherwise agreed by both Parties,
(ii) payments and deductions under Sub-Clause 12.5 (Provisional Sums) and Sub-
Clause 12.7 (Adjustments for Changes in Legisl ation and Cost) shall be
made in the applicable currencies and proportions, and
(iii) other payments and deductions under sub-paragraph (a) to (d) of Sub-
Clause13.7 (Application for Interi m Payment Certi ficates) shall be made in
the currencies and proportions specified in sub-paragraph (a)(i) above,

(b) payment of the damages specified in the Appendix to Tender shall be made in the
currencies and proportions specified in the Appendix to Tender,
(c) other payments to the Contractor by the Subcontractor shall be made in the
currency in which the sum was expended by the Contractor, or in such currency as
may be agreed by both Parties,
(d) if any amount payable by the Subcontractor to the Contractor in a particular
currency exceeds the sum payable by the Contractor to the Subcontractor in that
currency, the Contractor may recover the balance of this amount from the sums
otherwise payable to the Subcontractor in other currencies, and
(e) if no rates of exchange are stated in the Appendix to Tender, they shall be those
prevailing on the date of the Letter of Tender and determined by the central bank of

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the Country.

14 Termination by Contractor

14.1 Notice to Correct

If the Subcontractor fails to carry out any obligation under the Subcontract, the Contractor
may by notice require the Subcontractor to make good the failure and remedy it within a
specified reasonable time.

14.2 Termination by Contractor

The Contractor shall be entitled to terminate the Subcontract, if the Subcontractor:

(a) fails to comply with Sub-Clause 3.2 (Performance Security) or with a notice under
Sub-Clause 14.1 (Notice to Correct),
(b) abandons the Subcontract Works or otherwise plainly demonstrates the intention not
to continue performance of his obligations under the Subcontract,
(c) without reasonable excuse fails:

(i) to proceed with the Subcontract Works in accordance with Clause 7
(Commencement, Delays and Suspension), or
(ii) to comply with a notice issued under Sub-Clause 6.5 (Rejection) or Sub-
Clause 6.6 (Remedi al Work), within fifteen (15) days after receiving it,

(d) subcontracts the whole of the Subcontract Works or assigns the Subcontract without
the required agreement,
(e) becomes bankrupt or insolvent, goes into liquidation, has a receiving or
administration order made against him, compounds with his creditors, or carries on
business under a receiver, trustee or manager for the benefit of his creditors, or if
any act is done or event occurs which (under applicable Laws) has a similar effect to
any of these acts or events, or
(f) gives or offers to give (directly or indirectly) to any person any bribe, gift, gratuity,
commission or other thing of value, as an inducement or reward:

(i) for doing or forbearing to do any action in relation to the Subcontract, or
(ii) for showing or forbearing to show favor or disfavor to any person in relation to
the Subcontract,

or if any of the Subcontractors Personnel, agents or subcontractors gives or offers
to give (directly or indirectly) to any person any such inducement or reward as is
described in this sub-paragraph (f). However, lawful inducements and rewards to
Subcontractors Personnel shall not entitle termination.

In any of these events or circumstances, the Contractor may, upon giving ten (10) days
notice to the Subcontractor, terminate the Subcontract and expel the Subcontractor from
the Site. However, in the case of paragraph (e) or (f), the Contractor may by notice

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terminate the Subcontract immediately.

The Contractors election to terminate the Subcontract shall not prejudice any other rights
of the Contractor, under the Subcontract or otherwise.

The Subcontractor shall then leave the Site and deliver any required Goods, all
Subcontractors Documents, and other design documents made by or for him, to the
Contractor. However, the Subcontractor shall use his best efforts to comply immediately
with any reasonable instructions included in the notice (i) for the assignment of any
subcontract, and (ii) for the protection of life or property or for the safety of the Subcontract
Works.

After termination, the Contractor may complete the Subcontract Works and/or arrange for
any other entities to do so. The Contractor and these entities may then use any Goods,
Subcontractors Documents and other design documents made by or on behalf of the
Subcontractor.

The Contractor shall then give notice that the Subcontractors Equipment and Temporary
Subcontract Works will be released to the Subcontractor at or near the Site. The
Subcontractor shall promptly arrange their removal, at the risk and cost of the
Subcontractor. However, if by this time the Subcontractor has failed to make a payment
due to the Contractor, these items may be sold by the Contractor in order to recover this
payment. Any balance of the proceeds shall then be paid to the Subcontractor.

14.3 Valuation at Date of Termination

As soon as practicable after a notice of termination under Sub-Clause 14.2 (Termination
by Contractor) has taken effect, the Contractor shall proceed in accordance with Sub-
Clause 2.4 (Determinations) to agree or determine the value of the Subcontract Works,
Goods and Subcontractors Documents, and any other sum due to the Subcontractor for
work executed in accordance with the Subcontract.

14.4 Payment after Termination

After a notice of termination under Sub-Clause 14.2 (Termination by Contractor) has
taken effect, the Contractor may:

(a) proceed in accordance with Sub-Clause 2.5 (Contractors Cl aims),
(b) withhold further payments to the Subcontractor until the cost of execution,
completion and remedying of any defects, damages for delay in completion (if any),
and all other costs incurred by the Contractor, have been established, and/or
(c) recover from the Subcontractor any losses and damages incurred by the Contractor
and any extra costs of completing the Subcontract Works, after allowing for any sum
due to the Subcontractor under Sub-Clause 14.3 (Valuation at Date of
Termination). After recovering any such losses, damages and extra costs, the
Contractor shall pay any balance to the Subcontractor.


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14.5 Contractor s Entitlement to Termination

The Contractor shall be entitled to terminate the Subcontract, at any time for the
Contractors convenience, by giving notice of such termination to the Subcontractor. The
termination shall take effect as stated in the notice (if not stated, ten (10) days after the
later of the dates on which the Subcontractor receives this notice or the Contractor returns
the Performance Security). The Contractor shall not terminate the Subcontract under this
Sub-Clause in order to execute the Subcontract Works himself or to arrange for the
Subcontract Works to be executed by another contractor.

After this termination, the Contractor shall promptly return the Performance Security to the
Subcontractor, and the Subcontractor shall proceed in accordance with Sub-Clause 15.3
(Cessation of Work and Removal of Subcontractors Equipment) and shall be paid in
accordance with Sub-Clause 18.6 (Optional Terminati on, Payment and Release).

In the events of this termination, the Contractor shall be entitled to assign at his sole
discretion the whole or part of the Subcontract to the Employer, including any of the
subcontracts made between the Subcontractor and his subcontractors, if the Employer
instructs the Contractor to do so. Unless otherwise stated in the assignment, the
Contractor shall have no liability to the Subcontractor for anything arising between the
Employer and the Subcontractor after the assignment takes effect.

However, if this termination is caused by the Employers termination of the Contract for his
convenience, the Contractor shall pay the Subcontractor only the amount to the extent
that is paid by the Employer in accordance with the Contract in respect of the Subcontract.

15 Suspension and Termination by Subcontractor

15.1 Subcontractors Entitlement to Suspend Work

If the Contractor fails to certify in accordance with Sub-Clause 13.10 (Issue of Interim
Payment Certificates) or to comply with Sub-Clause 13.11 (Payment), the Subcontractor
may, after giving not less than sixty (60) days notice to the Contractor, suspend work (or
reduce the rate of work) unless and until the Subcontractor has received the Payment
Certificate, reasonable evidence or payment, as the case may be and as described in the
notice.

The Subcontractors action shall not prejudice his entitlement to termination under Sub-
Clause 15.2 (Termination by Subcontractor).

If the Subcontractor subsequently receives such Payment Certificate, evidence or
payment (as described in the relevant Sub-Clause and in the above notice) before giving a
notice to termination, the Subcontractor shall resume normal working as soon as is
reasonably practicable.

If the Subcontractor suffers delay and/or incurs Cost as a result of suspending work (or

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reducing the rate of work) in accordance with this Sub-Clause, the Subcontractor shall give
notice to the Contractor for:


(Determinations) to agree or determine these matters.

15.2 Termination by Subcontractor

The Subcontractor shall be entitled to terminate the Subcontract if:

(a) the Contractor fails to issue the relevant Payment Certificate or to pay the amount due
under an Interim Payment Certificate within thirty (30) days after a notice stated in
Sub-Clause 15.1 (Subcontractor s Entitl ement to Suspend Work) has taken effect,
(b) the Contractor fails to comply with Sub-Clause 1.6 (Subcontract Agreement) or Sub-
Clause 1.8 (Assignment),
(c) the Contractor substantially fails to perform his obligations under the Subcontract,
(d) the Contract is terminated by any cause not attributable to the Subcontractor,
(e) a prolonged suspension affects the whole of the Subcontract Works as described in
Sub-Clause 7.10 (Prolonged Suspension), or
(f) the Contractor becomes bankrupt or insolvent, goes into liquidation, has a receiving or
administration order made against him, compounds with his creditors, or carries on
business under a receiver, trustee or manager for benefit of his creditors, or if any act
is done or event occurs which (under applicable Laws) has a similar effect to any of
these acts or events.

In any of these events or circumstances, the Subcontractor may, upon giving thirty (30)
days notice to the Contractor, terminate the Subcontract. However, in the case of sub-
paragraph (d), (e) or (f), the Subcontractor may by notice terminate the Subcontract
immediately.
In the events of this termination, the Contractor shall be entitled to assign at his sole
discretion the whole or part of the Subcontract to the Employer, including any of the
subcontracts made between the Subcontractor and his subcontractors, if the Employer
instructs the Contractor to do so. Unless otherwise stated in the assignment, the Contractor
shall have no liability to the Subcontractor for anything arising between the Employer and
the Subcontractor after the assignment takes effect.

The Subcontractors election to terminate the Subcontract shall not prejudice any other
rights of the Subcontractor, under the Subcontract or otherwise.

15.3 Cessation of Work and Removal of Subcontractors Equipment

After a notice of termination under Sub-Clause 14.5 (Contractor s Entitlement to
Termination), Sub-Clause 15.2 (Termination by Subcontractor) or Sub-Clause 18.6
(Optional Termination, Payment and Rel ease) has taken effect, the Subcontractor shall

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promptly:

(a) cease all further work, except for such work as may have been instructed by the
Contractor for the protection of life or property or for the safety of the Subcontract
Works,
(b) hand over Subcontractors Documents, Plant, Materials and other work, for which the
Subcontractor has received payment, and
(c) remove all other Goods from the Site, except as necessary for safety, and leave the
Site.

15.4 Payment on Termination

After a notice of termination under Sub-Clause 15.2 (Termination by Subcontractor) has
taken effect, the Contractor shall promptly:

(a) return the Performance Security to the Subcontractor, and
(b) pay the Subcontractor in accordance with Sub-Clause 18.6 (Optional Termination,
Payment and Release).

16 Ri sk and Responsibility

16.1 Indemniti es

The Subcontractor shall indemnify and hold harmless the Contractor, the Contractors
Personnel, and their respective agents, against and from all claims, damages, losses and
expenses (including legal fees and expenses) in respect of:

(a) bodily injury, sickness, disease or death, of any person whatsoever arising out of or
in the course of or by reason of the Subcontractors design (if any), the execution and
completion of the Subcontract Works and the remedying of any defects, unless
attributable to any negligence, willful act or breach of the Subcontract by the
Contractor, the Contractors Personnel, or any of their respective agents, and
(b) damage to or loss of any property, real or personal (other than the Subcontract
Works), to the extent that such damage or loss:

(i) rises out of or in the course of or by reason of the Subcontractors design (if any),
the execution and completion of the Subcontract Works and the remedying of any
defects, and
(ii) is attributable to any negligence, willful act or breach of the Subcontract by the
Subcontractor, the Subcontractors Personnel, their respective agents, or anyone
directly or indirectly employed by any of them.

The Contractor shall indemnify and hold harmless the Subcontractor, the Subcontractors
Personnel, and their respective agents, against and from all claims, damages, losses and
expenses (including legal fees and expenses) in respect of bodily injury, sickness, disease
or death, which is attributable to any negligence, willful act or breach of the Subcontract by
the Contractor, the Contractors Personnel, or any of their respective agents.


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16.2 Subcontractor s Care of Subcontract Works

The Subcontractor shall take full responsibility for the care of the Subcontract Works and
Goods, including the free-issue materials (if any) stated in Sub-Clause 3.21
(Employers/Contractor s Equipment and Free-Issue Materi al ) from the
Commencement Date until the Taking-Over Certificate is issued (or is deemed to be issued
under Sub-Clause 9.1 (Taking Over of Works and Sections)) for the Subcontract Works,
when the responsibility for the care of the Subcontract Works shall pass to the Contractor.
If a Taking-Over Certificate is issued (or is so deemed to be issued) for any Section or part
of the Subcontract Works, responsibility for the care of the Section or part shall pass to the
Contractor.

After responsibility has accordingly passed to the Contractor, the Subcontractor shall take
responsibility for the care of any work which is outstanding on the date stated in a Taking-
Over Certificate, until this outstanding work has been completed.
If any loss or damage happens to the Subcontract Works, Goods or Subcontractors
Documents from any cause during the period when the Subcontractor is responsible for
their care, the Subcontractor shall rectify the loss or damage at the Subcontractors risk
and cost, so that the Subcontract Works, Goods and Subcontractors Documents conform
with the Subcontract.

The Subcontractor shall be liable for any loss or damage caused by any actions performed
by the Subcontractor after a Taking-Over Certificate has been issued. The Subcontractor
shall also be liable for any loss or damage which occurs after a Taking-Over Certificate has
been issued and which arose from a previous event for which the Subcontractor was liable.

16.3 Employers Risks and Consequences

The Employers Risks are those (if any) as stated in the Contract as the Employers risks or
in the same meaning.

If and to the extent that any of the Employers Risks results in loss or damage to the
Subcontract Works, Goods or Subcontractors Documents, the Subcontractor shall
promptly give notice to the Contractor and rectify this loss or damage to the extent required
by the Contractor.

If the Subcontractor suffers delay and/or incurs Cost from rectifying this loss or damage,
the Subcontractor shall give a further notice to the Contractor and shall be entitled, subject
to Sub-Clause 19.1 (Subcontractors Cl aims) and to the extent agreed by the Employer
for such effect under the Contract, to:


After receiving this further notice, the Contractor shall proceed in accordance with Sub-
Clause 2.4 (Determinations) to agree or determine these matters.

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16.4 Intel lectual and Industrial Property Rights

In this Sub-Clause, infringement means an infringement (or alleged infringement) of any
patent, registered design, copyright, trade mark, trade name, trade secret or other
intellectual or industrial property right relating to the Works, and claim means a claim (or
proceedings pursuing a claim) alleging an infringement.

Whenever a Party does not give notice to the other Party of any claim within twenty (20)
days of receiving the claim, the first Party shall be deemed to have waived any right to
indemnity under this Sub-Clause.

The Contractor shall indemnify and hold the Subcontractor harmless against and from any
claim alleging an infringement which is attributable to the Contractor.

The Subcontractor shall indemnify and hold the Contractor harmless against and from any
other claim which arises out of or in relation to (i) the manufacture, use, sale or import of
any Goods supplied by (or on behalf of) the Subcontractor, or (ii) any design for which the
Subcontractor is responsible.

If a Party is entitled to be indemnified under this Sub-Clause, the indemnifying Party may
at its cost conduct negotiations for the settlement of the claim, and any litigation or
arbitration which may arise from it. The other Party shall, at the request and cost of the
indemnifying Party, assist in contesting the claim. This other Party (and its Personnel) shall
not make any admission which might be prejudicial to the indemnifying Party, unless the
indemnifying Party failed to take over the conduct of any negotiations, litigation or
arbitration upon being requested to do so by such other Party.

16.5 Limitation of Liability

Neither Party shall be liable to the other Party for loss of use of any Subcontract Works,
loss of profit, loss of any contract or for any indirect or consequential loss or damage which
may be suffered by the other Party in connection with the Subcontract, except as
otherwise stated in the Subcontract.

The total liability of the Subcontractor to the Contractor, under or in connection with the
Subcontract other than under Sub-Clause 3.20 (El ectricity, Water and Gas), Sub-Clause
3.21 (Employers/Contractors Equipment and Free-Issue Material ), Sub-Clause 16.1
(Indemnities) and Sub-Clause 16.4 (Intellectual and Industrial Property Rights), shall
not exceed the sum stated in the Appendix to Tender or (if a sum is not so stated) the
Accepted Subcontract Amount.

This Sub-Clause shall not limit liability in any case of fraud, deliberate default or reckless
misconduct by the defaulting Party.

16.6 Use of Employers or Contractors Accommodation/Faciliti es

If the Subcontractor is to use or occupy any of the Employers facilities and/or the

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Contractors facilities (as the case may be) temporarily, the Subcontractor shall take full
responsibility for the care of such items, from the respective dates of use or occupation by
the Subcontractor, up to the respective dates of hand-over or cessation of occupation.

If any loss or damage happens to any of these items while the Subcontractor is
responsible for their care, arising from any cause whatsoever other than those for which
the Employer or the Contractor is liable, the Subcontractor shall, at his own Cost, rectify
the loss or damage to the satisfaction of the Contractor.

17 Insurance

17.1 General Requirements for Insurances

In this Clause, insuring Party means, for each type of insurance, the Party responsible for
effecting and maintaining the insurance specified in the relevant Sub-Clause.

Whenever the Subcontractor is insuring Party, each insurance shall be effected with
insurers and in the terms approved by the Contractor. These terms shall be consistent with
any terms agreed by both Parties before the date of the Letter of Acceptance. If no such
agreement has been made before the date of the Letter of Acceptance, they shall be
approved by the Contractor at the commercially reasonable terms.

Whenever the Employer or the Contractor is insuring Party, each insurance shall be
effected with insurers and in the terms consistent with the details described in the
Subcontract.

If a policy is required to indemnify joint insured, the cover shall apply separately to each
insured as though a separate policy had been issued for each of the joint insured. If a
policy indemnifies additional joint insured including the Subcontractor, (i) the Contractor
shall act under the policy on behalf of these additional joint insured if the Employer does
not do so, (ii) additional joint insured shall not be entitled to receive payments directly from
the insurer or to have other direct dealings with the insurer, and (iii) the insuring Party shall
require all additional joint insured to comply with the conditions stipulated in the policy.

Each policy insuring against loss or damage shall provide for payments to be made in the
currencies required to rectify the loss or damage. Payments received from insurers shall be
used for the rectification of the loss or damage.

The relevant insuring Party shall, within the respective periods stated in the Appendix to
Tender (calculated from the Commencement Date), submit to the other Party:

(a) evidence that the insurances described in this Clause have been effected, and
(b) copies of the policies for the insurances described in this Clause.

When each premium is paid by the Subcontractor, the Subcontractor shall submit evidence
of payment to the Contractor.


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Each Party shall comply with the conditions stipulated in each of the insurance policies.
The insuring Party shall keep the insurers informed of any relevant changes to the
execution of the Subcontract Works and ensure that insurance is maintained in
accordance with this Clause.

Neither Party shall make any material alteration to the terms of any insurance without the
prior approval of the other Party. If an insurer makes (or attempt to make) any alteration,
the Party first notified by the insurer shall promptly give notice to the other Party.

If the insuring Party fails to effect and keep in force any of the insurances it is required to
effect and maintain under the Subcontract, or fails to provide satisfactory evidence and
copies of the policies in accordance with this Sub-Clause, the other Party may (at his
option and without prejudice to any other right or remedy) effect insurance for the relevant
coverage and pay the premiums due. The insuring Party shall pay the amount of these
premiums to the other Party, and the Subcontract Price shall be adjusted accordingly.

Nothing in this Clause limits the obligations, liabilities or responsibilities of the
Subcontractor or the Contractor, under the other terms of the Subcontract or otherwise.
Any amount not insured or not recovered from the insurers shall be borne by the
Subcontractor and/or the Contractor in accordance with these obligations, liabilities or
responsibilities. However, if insuring Party fails to effect and keep in force an insurance
which is available and which it is required to effect and maintain under the Subcontract,
and the other Party neither approves the omission nor effects insurance for the coverage
relevant to this default, any moneys which should have been recoverable under this
insurance shall be paid by the insuring Party.

Payment by one Party to the other Party shall be subject to Sub-Clause 2.5 (Contractors
Claims) or Sub-Clause 19.1 (Subcontractors Claims), as applicable.

Each Party shall bear himself the amount of his loss not recovered from the insurer on
account of the deductibles stated in the Appendix to Tender or otherwise agreed between
the Parties.

17.2 Insurance for Subcontract Works

The insuring Party stated in the Appendix to Tender shall insure the Subcontract Works,
Plant, Materials, including the free-issue materials (if any) supplied by the Contractor under
Sub-Clause 3.21 (Employers/Contractors Equipment and Free-Issue Material ), and
Subcontractors Documents for not less than the full reinstatement cost (except for the
amount of deductibles stated in the Appendix to Tender or otherwise agreed between the
Parties) including the costs of demolition, removal of debris and professional fees and profit.
This insurance shall be effective from (or prior to) the date by which the evidence is to be
submitted under sub-paragraph (a) of Sub-Clause 17.1 (General Requirements for
Insurances), until the date of issue of the Taking-Over Certificate for the Subcontract
Works under Sub-Clause 9.1 (Taking Over of Subcontract Works and Sections).

The insuring Party shall maintain this insurance to provide cover until the date of issue of
the Performance Certificate under Sub-Clause 10.9 (Performance Certificate), for loss or

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damage for which the Subcontractor is liable arising from a cause occurring prior to the
issue of the Taking-Over Certificate, and for loss or damage caused by the Subcontractor
in the course of any other operations (including those under Clause 10 (Defects Li ability)).

Unless otherwise stated in the Subcontract, insurance under this Sub-Clause:

(a) shall be effected and maintained by the Party stated in the Appendix to Tender as
insuring Party for this insurance,
(b) shall be in the joint name of the Employer and the Contractor with any additional joint
insured, including the Subcontractor who shall not be entitled to receive payments
directly from the insurers, payment being held or allocated between the Parties for
the sole purpose of rectifying the loss or damage,
(c) shall cover all loss and damage from any cause, except as otherwise stated in the
Subcontract (if any) and the risks which are not insurable at commercially reasonable
terms,
(d) shall be subject to the deductibles per occurrence of not more than the amount stated
in the Appendix to Tender (if an amount is not so stated, this sub-paragraph shall not
apply), and
(e) may however exclude loss of, damage to, and reinstatement of:

(i) a part of the Subcontract Works which is in a defective condition due to a defect
in its design, materials or workmanship (but cover shall include any other parts
which are lost or damaged as a direct result of this defective condition and not as
described in sub-paragraph (ii) below),
(ii) a part of the Subcontract Works which is lost or damaged in order to reinstate
any other part of the Subcontract Works if this other part is in a defective
condition due to a defect in its design, materials or workmanship,
(iii) a part of the Subcontract Works which has been taken over by the Employer,
except to the extent that the Contractor is liable for the loss or damage, and
(iv) Goods while they are not in the Country, subject to Sub-Clause 13.9 (Pl ant and
Materi als intended for Subcontract Works).

Unless otherwise stated in the Subcontract, if the Subcontractor designs any part of the
Subcontract Works, the Subcontractor shall effect professional indemnity insurance, which
shall cover the risk of professional negligence in the design of the Subcontract Works
provided by the Subcontractor. This insurance shall be for a limit of not less than the full
reinstatement cost of the relevant part of the Subcontract Works designed by the
Subcontractor including the costs of demolition, removal of debris and professional fees
and profit.

17.3 Insurance agai nst Injury to Persons and Damage to Property

The insuring Party stated in the Appendix to Tender shall insure against each Partys
liability for any loss, damage, death or bodily injury which may occur to any physical
property (except things insured under Sub-Clause 17.2 (Insurance for Subcontract
Works) and Sub-Clause 17.4 (Insurance for Subcontractors Equipment), and
Contractors Equipment and Employers Equipment, if any) or to any person (except
persons insured under Sub-Clause 17.5 (Insurance for Subcontractors Personnel ))

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which may arise out of the Subcontractors performance of the Subcontract and occurring
before the issue of the Performance Certificate.

This insurance shall be for a limit per occurrence not less than the amount and with the
deductibles stated in the Appendix to Tender, with no limit on the number of occurrences.

Unless otherwise stated in the Subcontract, the insurance specified in this Sub-Clause:

(a) shall be effected and maintained by the Party stated in the Appendix to Tender as
insuring Party for this insurance,
(b) shall be in the joint name of the Employer and the Contractor with any additional joint
insured, including the Subcontractor, and
(c) shall be extended to cover liability of all loss or damage to the property of the
Employer and Contractor (except things insured under Sub-Clause 17.2) arising out
of the Subcontractors performance of the Subcontract.

17.4 Insurance for Subcontractors Equipment

The Subcontractor shall insure the Subcontractors Equipment for not less than the full
replacement value, including delivery to the Site. For each item of such things, the
insurance shall be effective while it is being transported to the Site and until it is no longer
required for its purpose in the performance of the Subcontract.

17.5 Insurance for Subcontractors Personnel

The Subcontractor shall effect and maintain insurance against liability for claims, damages,
losses and expenses (including legal fees and expenses) arising from injury, sickness,
disease or death of any person employed by the Subcontractor or any other of the
Subcontractors Personnel.

The Employer and the Contractor shall also be indemnified under the policy of insurance,
except that this insurance may exclude losses and claims to the extent that they arise from
any act or neglect of the Employer or the Contractor, or their personnel.

The insurance shall be maintained in full force and effect during the whole time that these
personnel are assisting in the execution of the Subcontract Works. For a subcontractors
employees, the insurance may be effected by the subcontractor, but the Subcontractor
shall be responsible for compliance with this Clause.

18 Force Majeure

18.1 Definition of Force Majeure

In this Clause, Force Majeure means such an exceptional event or circumstance as
defined in the relevant clause of the Contract and compatible with the law governing the
Subcontract:

(a) which is beyond a Partys control,

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(b) which such Party could not reasonably have provided against before entering into
the Subcontract,
(c) which, having arisen, such Party could not reasonably have avoided or overcome,
and
(d) which is not substantially attributable to the other Party.

Force Majeure may include, to the extent defined in the Contract but is not limited to,
exceptional events or circumstances of the kind listed below, so long as conditions (a) to (d)
above are satisfied:

(i) war, hostilities (whether war be declared or not), invasion, act of foreign
enemies,
(ii) rebellion, terrorism, revolution, insurrection, military or usurped power, or civil
war,
(iii) riot, commotion, disorder, strike or lockout by persons other than the
Subcontractors Personnel and other employees of the Subcontractor and his
subcontractors,
(iv) munitions of war, explosive materials, ionizing radiation or contamination by
radio-activity, except as may be attributable to the Subcontractors use of such
munitions, explosives, radiation or radio-activity, and
(v) natural catastrophes such as earthquake, hurricane, flood, typhoon or
volcanic activity.

18.2 Notice of Force Majeure

If a Party is or will be prevented from performing any of its obligations under the
Subcontract by Force Majeure, then it shall give notice to the other Party of the event or
circumstances constituting the Force Majeure and shall specify the obligations, the
performance of which is or will be prevented. The notice shall be given within the time
reasonably earlier than the time by which the Contractor shall give notice to the Employer
under the Contract after the Party became aware, or should have become aware, of the
relevant event or circumstance constituting Force Majeure.

18.3 Duty to Minimize Delay

Each Party shall at all times use all reasonable endeavors to minimize any delay in the
performance of the Subcontract as a result of Force Majeure.

A Party shall promptly give notice to the other Party when it ceases to be affected by the
Force Majeure.

18.4 Consequences of Force Majeure

If the Subcontractor is prevented from performing any of his obligations under the
Subcontract by Force Majeure of which notice has been given under Sub-Clause 18.2
(Notice of Force Majeure), and suffers delay and/or incurs Cost by reason of such Force
Majeure, the Subcontractor shall be entitled, subject to Sub-Clause 19.1 (Subcontractors
Claims), to:

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(Determinations) to agree or determine these matters. However, the Subcontractors
entitlement shall be limited to the extent agreed by the Employer for such effect under the
Contract.

18.5 Force Majeure Affecting Subcontractor

If any subcontractor is entitled under any contract or agreement relating to the Subcontract
Works to relief from force majeure on terms additional to or broader than those specified in
this Clause, such additional or broader force majeure events or circumstances shall not
excuse the Subcontractors non-performance or entitle him to relief under this Clause.

18.6 Optional Termination, Payment and Rel ease

If the execution of substantially all the Subcontract Works in progress is prevented for the
continuous period, or for the multiple periods, (as the case may be) specified in the
Contract by reason of Force Majeure of which notice has been given under Sub-Clause
18.2 (Notice of Force Maj eure), then either Party may give to the other Party a notice of
termination of the Subcontract, so long as the same effect is stated in the Contract to do so.
In this event, the termination shall take effect in accordance with the Contract.

Upon the termination, the Contractor shall promptly return the Performance Security to the
Subcontractor, and the Subcontractor shall submit to the Contractor the Final Statement
and the written discharge in accordance with Sub-Clause 13.15 (Application for Final
Payment Certificate) and Sub-Clause 13.16 (Discharge). The Contractor shall then issue
to the Subcontractor the Final Payment Certificate in accordance with Sub-Clause 13.17
(Issue of Final Payment Certificate), which shall include:

(a) the amounts payable for any work carried out for which a price is stated in the
Subcontract,
(b) the Cost of Plant and Materials ordered for the Subcontract Works which have been
delivered to the Subcontractor, or of which the Subcontractor is liable to accept
delivery: these Plant and Materials shall become the property of the Contractor when
paid by the Contractor, and the Subcontractor shall place the same at the
Contractors disposal,
(c) any other Cost or liability which in the circumstances was reasonably incurred by the
Subcontractor in the expectation of completing the Subcontract Works,
(d) the Cost of removal of Temporary Subcontract Works and Subcontractors Equipment
from the Site and the return of these items to the Subcontractors work in his country
(or to any other destination at no greater cost), and
(e) the Cost of repatriation of the Subcontractors staff and labor employed wholly in
connection with the Works at the date of termination.


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The Contractor shall pay the amount certified in the Final Payment Certificate within thirty
(30) days after issuing the Final Payment Certificate.

However, if the Contract provides otherwise for payment of the same effect as this
termination under the Contract, the Contractor shall pay the Subcontractor in respect of
this termination only the amount to the extent that is paid by the Employer in accordance
with the Contract in respect of the Subcontract.

18.7 Release from Performance under Law

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 make it
impossible or unlawful for either or both Parties to fulfill its or their contractual obligations
or which, under the law governing the Subcontract, entitles the Parties to be released from
further performance of the Subcontract, then upon notice by either Party to the other Party
of such event or circumstance:

(a) the Parties shall be discharged from further performance, without prejudice to the
rights of either Party in respect of any previous breach of the Subcontract, and
(b) the sum payable by the Contractor to the Subcontractor shall be the same as would
have been payable under Sub-Clause 18.6 (Optional Termination, Payment and
Release) if the Subcontract had been terminated under Sub-Clause 18.6.

19 Cl aims, Disputes and Arbitration
.
19.1 Subcontractors Claims

If the Subcontractor considers himself to be entitled to any extension of the Time for
Completion and/or any additional payment, under any Clause of these Conditions or
otherwise in connection with the Subcontract, the Subcontractor shall give notice to the
Contractor, describing the event or circumstance giving rise to the claim. The notice shall
be given as soon as practicable, and not later than ten (10) days after the Subcontractor
became aware, or should have become aware, of the event or circumstance (However, in
the event of claim arising out of or in connection with the Employers acts or defaults, the
notice shall be given not later than the time reasonably required by the Contractor in order
to give notice to the Employer for the same effect under the Contract).

If the Subcontractor fails to give notice of claim within such period as stated above, the
Time for Completion shall not be extended, the Subcontractor shall not be entitled to
additional payment, and the Contractor shall be discharged from all liability in connection
with the claim. Otherwise, the following provisions of this Sub-Clause shall apply.

The Subcontractor shall also submit any other notices which are required by the
Subcontract, and supporting particulars for the claim, all as relevant to such event or
circumstance.


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The Subcontractor shall keep such contemporary records as may be necessary to
substantiate any claim, either on the Site or at another location acceptable to the
Contractor. Without admitting the Contractors liability, the Contractor may, after receiving
any notice under this Sub-Clause, monitor the record-keeping and/or instruct the
Subcontractor to keep further contemporary records. The Subcontractor shall permit the
Contractor to inspect all these records, and shall (if instructed) submit copies to the
Contractor.

Within thirty (30) days after the Subcontractor became aware (or should have become
aware) of the event or circumstance giving rise to the claim (or not later than the time
reasonably required by the Contractor for the same purpose under the Contract), or within
such other period as may be proposed by the Subcontractor and approved by the
Contractor, the Subcontractor shall submit to the Contractor a fully detailed claim which
includes full supporting particulars of the basis of the claim and of the extension of time
and/or additional payment claimed.

If the event or circumstance giving rise to the claim has a continuing effect:

(a) this fully detailed claim should be considered as interim,
(b) the Subcontractor shall submit further interim claims at monthly interval, giving the
accumulated delay and/or amount claimed, and such further particulars as the
Contractor may reasonably require, and
(c) the Subcontractor shall submit a final claim within twenty (20) days after the end of
the effects resulting from the event or circumstance, or within such other period as
may be proposed by the Subcontractor and approved by the Contractor.

Within thirty (30) days after receiving a claim or any further particulars supporting a
previous claim, or within such other period as reasonably determined by the Contractor,
the Contractor shall respond with approval, or with disapproval and detailed comments.
He may also request any necessary further particulars, but shall nevertheless give his
response on the principles of the claim within such time.

Each Payment Certificate shall include such amounts for any claim as have been
reasonably substantiated as due under the relevant provision of the Subcontract. Unless
and until the particulars supplied are sufficient to substantiate the whole of the claim, the
Subcontractor shall only be entitled to payment for such part of the claim as he has been
able to substantiate.

The Contractor shall proceed in accordance with Sub-Clause 2.4 (Determinations) to
agree or determine (i) the extension (if any) of the Time for Completion in accordance with
Sub-Clause 7.4 (Extension of Time for Compl etion), and/or (ii) the additional payment
(if any) to which the Subcontractor is entitled under the Subcontract.

In the event that the Subcontractor makes any claim to the Contractor arising out of or in
connection with the Employers acts or defaults, both Parties shall use all reasonable
endeavors to substantiate the claim and the Subcontractor shall be entitled to payment
only to the extent agreed by the Employer for such claim under the Contract. As far as the
Contractor has used his reasonable endeavors to substantiate the claim, the

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Subcontractor shall assume all risks of non-recovery from the Employer, waive any and all
rights against the Contractor, and accept as full accord for his claim whatever amount is
received by the Contractor from the Employer on his behalf.

The requirements of this Sub-Clause are in addition to those of any other Sub-Clause
which may apply to claim. If the Subcontractor fails to comply with this or another Sub-
Clause in relation to any claim, any extension of time or additional payment shall take
account of the extent (if any) to which the failure has prevented or prejudiced proper
investigation of the claim, unless the claim is excluded under the second paragraph of this
Sub-Clause.

19.2 Amicabl e Settlement

If a dispute of any kind whatsoever arises between the Parties out of or in connection with
the Subcontract or the execution of the Subcontract Works, including any dispute as to
any certificate, determination, instruction, opinion or valuation of the Contractor, either
Party may give notice in writing to the other Party for settlement of the dispute and such
notice shall state that it is given under this Sub-Clause.

The Party who has given the notice of the dispute shall promptly make available to the
other Party all such information, access to all the relevant records, and appropriate
facilities, as the other Party may require for the purpose of making a decision on the
dispute.

Within sixty (60) days after receiving such notice, or within such other period as may be
agreed between the Parties, the other Party shall give its decision, which shall be
reasoned and shall state that it is given under this Sub-Clause.

If the Party who has given the notice of the dispute is dissatisfied with the other Partys
decision, then he shall, within twenty (20) days after receiving the decision, give notice to
the other Party of his dissatisfaction. If the other Party fails to give its decision within the
period of sixty (60) days (or otherwise agreed) after receiving such notice of the dispute,
the Party who has given the notice of the dispute shall, within twenty (20) days after this
period has expired, give notice to the other Party of his dissatisfaction.

In either event, this notice of dissatisfaction shall state that it is given under this Sub-
Clause, and shall set out the matter in dispute and the reason(s) for dissatisfaction.

If the other Party has given his decision as to matter in dispute to the Party who had given
the notice of the dispute, and no notice of dissatisfaction has been given by the Party who
had given the notice of the dispute within twenty (20) days after he received the other
Partys decision, then the decision shall become final and binding upon both Parties.

Where notice of dissatisfaction has been given as stated above, both Parties shall attempt
to settle the dispute amicably before the commencement of arbitration. However, unless
both Parties agree otherwise, arbitration may be commenced on or after the sixtieth (60
th
)
days after the day on which notice of dissatisfaction was given, even if no attempt at
amicable settlement has been made.

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19.3 Arbitration

Unless settled amicably, any dispute in respect of which the other Partys decision (if any)
has not become final and binding shall be finally settled by international arbitration. Unless
otherwise agreed by both Parties:

(a) any and all dispute shall be referred to the arbitration not later than one (1) year after
the date of the Performance Certificate under Sub-Clause 10.9 (Performance
Certificate) (or the date of the termination of the Subcontract), or such earlier date as
may be prescribed by Laws (as the case may be), after which such reference
pursuant to this Clause shall be absolutely barred,
(b) the dispute shall be finally settled under the Rules of Arbitration of the International
Chamber of Commerce, and
(c) the arbitration shall be conducted in the language for communications defined in
Sub-Clause 1.4 (Law and Language) at the place of arbitration stated in the
Appendix to Tender.

The arbitrator(s) shall have full power to open up, review and revise any certificate,
determination, instruction, opinion or valuation and any decision of the Contractor,
relevant to the dispute.

Neither Party shall be limited in the proceedings before the arbitrator(s) to the evidence or
argument previously put before the other Party to obtain his decision, or to the reasons for
dissatisfaction given in his notice of dissatisfaction. Any decision to which notice of
dissatisfaction was given shall be admissible in evidence in the arbitration.

Arbitration may be commenced prior to or after completion of the Subcontract Works. The
obligations of the Parties shall not be altered by reason of any arbitration being conducted
during the progress of the Subcontract Works.

19.4 Di spute with Employer

If any dispute arises between the Employer and the Contractor which touches or concerns
the Subcontract Works, then, in place of the arbitration under Sub-Clause 19.3
(Arbitration) and provided that the dispute resolution clause of the Contract is
incorporated in the Subcontract, the Contractor may by notice to the Subcontractor require
that any dispute under this Subcontract in that connection shall be dealt with jointly with
the dispute between the Employer and the Contractor. In connection with such joint
dispute the Subcontractor shall be bound in the same manner as the Contractor by any
award by an arbitrator.


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Annexes: A Form of Subcontract Agreement
B Form of Performance Security Demand Guarantee
C Form of Performance Security Surety Bond
D Form of Advance Payment Guarantee
E Form of Retenti on Money Guarantee

The above forms are annexed to these Conditions as acceptable ones for their respective
purposes. The following forms, which (except for Annex A) incorporate Uniform Rules
published by the International Chamber of Commerce (the ICC, which is based at 38
Cours Albert 1er, 75008 Paris, France), may have to be amended to comply with the
applicable law


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Annex A FORM OF SUBCONTRACT AGREEMENT

This Agreement is made the ___day of __________ 2013 between Daelim Industrial Co., Ltd.,
whose address is Khu vuc Thoi Loi, Phuong Phuoc Thoi Quan O Mon, Thanh Pho Can Tho, Vietnam
(hereinafter called the "Contractor") of the one part, and _____________ (Name of the
Subcontractor), a company organized and existing under the laws of _____________ (Country) and
whose address is ____________ (Address of the Subcontractors principal place of business)
(hereinafter called the "Subcontractor") of the other part, each of the foregoing are hereinafter called
individually as a Party and collectively as the Parties.

Whereas the Contractor entered into a contract (hereinafter called the Contract) with Vietnam
Electricity(EVN) (hereinafter called the Employer or the COMPANY) in relation to the O Mon
Thermal Power Plant Unit No. 2 Construction Project in O Mon District, Cantho Province, Socialist
Republic of Vietnam, and

Whereas the Contractor desires, for the purpose of the performance of the Contract, that the Works
known as Mechanical Work Package A for O Mon Thermal Power Plant Unit No. 2 Construction
Project should be executed by the Subcontractor, and has accepted a Tender by the Subcontractor for
the execution and completion of these Subcontract Works and the remedying of any defects therein,

Now Therefore, in consideration of the mutual promises and covenants set forth herein, the Parti es
hereto hereby agree as follows:

1. In this Agreement words and expressions shall have the same meanings as are respectively
assigned to them in the Conditions of Subcontract hereinafter referred to.

2. The following documents shall be deemed to form and be read and construed as part of this
Agreement:

(a) the Letter of Acceptance dated _________________,
(b) the Letter of Tender dated ___________________,
(c) the Addenda Nos. ______ (if any),
(d) the Conditions of Subcontract,
(e) the Specification,
(f) the Drawings,
(g) the completed Schedules, and
(h) the clauses of Contract.

3. The Accepted Subcontract Amount shall be the sum of USD____________ (U.S. Dollar
_____________________________ only).

4. The Commencement Date shall be _______________ 2013, and the Time for Completion shall be
_____days, calculated from the Commencement Date, until the dates for completing all works
which are stated in the Subcontract as being required for the Subcontract Works to be considered
to be completed for the purpose of taking-over under Sub-Clause 9.1 (Taking Over of
Subcontract Works and Sections) of the Conditions of Subcontract:

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5. In consideration of the payments to be made by the Contractor to the Subcontractor as hereinafter
mentioned, the Subcontractor hereby covenants with the Contractor to execute and complete the
Subcontract Works and remedy any defects therein, in conformity with the provisions of the
Subcontract.

6. The Contractor hereby covenants to pay the Subcontractor, in consideration of the execution and
completion of the Subcontract Works and the remedying of defects therein, the Subcontract Price
at the times and in the manner prescribed by the Subcontract.

In Witness whereof the Parties hereto have caused this Agreement to be executed the day and year
first before written in accordance with their respective laws.

For and on behalf of the Contractor, For and on behalf of the Subcontractor,
Daelim Industrial Co., Ltd. (Name of Subcontractor)

Signed by: Signed by:
Title: Title:

Date: _____________________ Date: _____________________


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(On the guarantors letterhead)

Daelim Industrial Co., Ltd. Ref. No.:
Khu vuc Thoi Loi, Phuong Phuoc Thoi Quan Date:
O Mon, Thanh Pho Can Tho, Vietnam

Annex B Form of Performance Security - Demand Guarantee

With reference to the Subcontract for Mechanical Work Package A for O Mon Thermal Power Plant
Unit No. 2 Construction Project in O Mon District, Cantho Province, Socialist Republic of Vietnam
(Subcontract No. ), we have been informed that ____________ (name of the Subcontractor)
(hereinafter called the Principal) is your Subcontractor under such Subcontract, which requires him to
obtain a performance security.

At the request of the Principal, we, _____________ (name of bank), hereby irrevocably undertake to
pay you, the Beneficiary/Contractor, any sum or sums not exceeding in total the amount of
USD_________________ (the guaranteed amount, U.S. Dollar ____________________________)
upon receipt by us of your demand in writing and your written statement stating:

(a) that the Principal is in breach of his obligation(s) under the Subcontract, and
(b) the respect in which the Principal is in breach.

Any demand for payment must contain your signature which must be authenticated by your bankers or
by a notary public. The authenticated demand and statement must be received by us at this office on
or before ___________________ (the date ninety (90) days after the expected expi ry of the
Defects Notification Peri od for the Subcontract Works) (the expiry date), when this guarantee
shall expire and shall be returned to us.

We have been informed that the Beneficiary may require the Principal to extend this guarantee if the
performance certificate under the Subcontract has not been issued by the date thirty (30) days prior to
such expiry date. We undertake to pay you such guaranteed amount upon receipt by us, within such
period of thirty (30) days, of your demand in writing and your written statement that the performance
certificate has not been issued and that this guarantee has not been extended.

This guarantee shall be governed by the laws of and shall be
subject to the Uniform Rules for Demand Guarantees, published as number 458 by the International
Chamber of Commerce, except as stated above.

Yours sincerely,
(name of bank)

.
(name of signatory /title)

Page 76 of 78



Annex C Form of Performance Security - Surety Bond

With reference to the Subcontract for O Mon Thermal Power Plant Unit No. 2 Construction Project in O
Mon District, Cantho Province, Socialist Republic of Vietnam (Subcontract No. ), by this Bond,
____________________________ (name and address of Subcontractor) (who is the Subcontractor
under such Subcontract) as Principal and _______________________ (name and address of
guarantor) as Guarantor are irrevocably held and firmly bound to you, the Beneficiary/Contractor, in
the total amount of USD____________ (the Bond Amount, U.S. Dollar
__________________________) for the due performance of all such Principals obligations and
liabilities under the Subcontract.

This Bond shall become effective on the Commencement Date defined in the Subcontract.

Upon default by the Principal to perform any contractual obligation, or upon the occurrence of any of
the events and circumstances listed in sub-clause 14.2 of the conditions of the Subcontract, the
Guarantor shall satisfy and discharge the damages sustained by the Beneficiary due to such default,
event or circumstances. However, the total liability of the Guarantor shall not exceed the Bond Amount.

The obligations and liabilities of the Guarantor shall not be discharged by any allowance of time or
other indulgence whatsoever by the Beneficiary to the Principal, or by any variation or suspension of
the works to be executed under the Subcontract, or by any amendment to the Subcontract or to the
constitution of the Principal or the Beneficiary, or by any other matters, whether with or without the
knowledge or consent of the Guarantor.

Any claim under this Bond must be received by the Guarantor on or before ______________ (the
date ninety (90) days after the expected expi ry of the Defects Notification Period for the
Subcontract Works) (the expiry date), when this Bond shall expire and shall be returned to the
Guarantor.

The benefit of this bond may be assigned subject to the provisions for assignment of the Subcontract,
and subject to the receipt by the Guarantor of evidence of full compliance with such provisions.

This Bond shall be governed by the laws of . This Bond incorporates and shall
be subject to the Uniform Rules for Contract Bonds, published as number 524 by the International
Chamber of Commerce, and words used in this Bond shall bear the meanings set out in such Rules.

Wherefore this Bond has been issued by the Principal and Guarantor on ____________ (date)

For and on behalf of the Principal: _______________(signature) _______________ (name/title)

For and on behalf of the Guarantor: _______________(signature) _______________ (name/title)


Page 77 of 78


Annex D Form of Advance Payment Guarantee

Mon District, Cantho Province, Socialist Republic of Vietnam (Subcontract No. ), we have
been informed that __________________ (name of Subcontractor) (hereinafter called the
Principal) is your Subcontractor under such Subcontract and wishes to receive an advance payment,
for which the Subcontract requires him to obtain a guarantee.

At the request of the Principal, we, ________________ (name of bank), hereby irrevocably undertake
to pay you, the Beneficiary/Contractor, any sum or sums not exceeding in total the amount of
USD_____________ (the guaranteed amount, U.S. Dollar________________________) upon
receipt by us of your demand in writing and your written statement stating:

(a) that the Principal has failed to repay the advance payment in accordance with the conditions of
the Subcontract, and
(b) the amount which the Principal has failed to repay.

This guarantee shall become effective upon receipt of the advance payment by the Principal. Such
guaranteed amount shall be reduced by the amounts of the advance payment repaid to you, as
evidenced by your notices issued under sub-clause 13.10 of the conditions of the Subcontract.
Following receipt from the Principal of a copy of each purported notice, we shall promptly notify you of
the revised guaranteed amount accordingly.

or before ___________________ (the date ninety (90) days after the expected expi ry of the Time
for Completion) (the expiry date), when this guarantee shall expire and shall be returned to us.

We have been informed that the Beneficiary may require the Principal to extend this guarantee if
advance payment has not been repaid by the date thirty (30) days prior to such expiry date. We
undertake to pay you such guaranteed amount upon receipt by us, within such period of thirty (30)
days, of your demand in writing and your written statement that the advance payment has not been
repaid and that this guarantee has not been extended.

This guarantee shall be governed by the laws of and shall be subject to
the Uniform Rules for Demand Guarantees, published as number 458 by the International Chamber of
Commerce, except as stated above.

Yours sincerely,
(name of bank)
.

Page 78 of 78


Annex E Form of Retention Money Guarantee

Mon District, Cantho Province, Socialist Republic of Vietnam (Subcontract No. ), we have
been informed that _________________ (name of Subcontractor) (hereinafter called the Principal)
is your Subcontractor under such Subcontract and wishes to receive early payment of (part of) the
retention money, for which the Subcontract requires him to obtain a guarantee.

At the request of the Principal, we, ________________ (name of bank), hereby irrevocably undertake
to pay you, the Beneficiary/Contractor, any sum or sums not exceeding in total the amount of
USD_____________ (the guaranteed amount, U.S. Dollar___________________) upon receipt by
us of your demand in writing and your written statement stating:

(a) that the Principal has failed to carry out his obligation(s) to rectify certain defect(s) for which he is
responsible under the Subcontract, and
(b) the nature of such defect(s).

At any time, our liability under this guarantee shall not exceed the total amount of retention money
released to the Principal by you, as evidenced by your notices issued under sub-clause 13.10 of the
conditions of the Subcontract with a copy being passed to us.

or before _______________________ (the date ninety (90) days after the expected expiry of the
Defects Notification Peri od for the Subcontract Works) (the expiry date), when this guarantee
shall expire and shall be returned to us.

We have been informed that the Beneficiary may require the Principal to extend this guarantee if
performance certificate under the Subcontract has not been issued by the date thirty (30) days prior to
such expiry date. We undertake to pay you such guaranteed amount upon receipt by us, within such
period of thirty (30) days, of your demand in writing and your written statement that the performance
certificate has not been issued and that this guarantee has not been extended.

This guarantee shall be governed by the laws of and shall be subject to the
Uniform Rules for Demand Guarantees, published as number 458 by the International Chamber of
Commerce, except as stated above.

Yours sincerely,
(name of bank)

.

2.1 Conditions of Subcontract

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O Mon TPP No.

2 Construction Project Conditions of Subcontract

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