3rd Brazilian Congress on Tunnels and Underground Structures. International Seminar "South American Tunnelling - SAT 2012.
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1 3rd Brazilian Congress on Tunnels and Underground Structures International Seminar "South American Tunnelling - SAT 2012 Júlio César Bueno
2 General Aspects
3
4
5 Acts of Good Third Party Employer Contractor
6 Acts of Good Third Party Employer Contractor
7 Acts of Good Third Party Employer Contractor
8 Acts of Good Third Party Employer Contractor
9 Acts of Good Third Party Employer Contractor
10 Acts of Good Third Party Employer Designer Contractor Subcontractor
11 Acts of Good Third Party Employer Designer Contractor Subcontractor
12 Acts of Good Third Party Employer Contractor Subcontractor Designer
13 Acts of Good Third Party Employer Contractor
14 International Approach: Two opposing views
15 The general rule: contractor s liability If a contractor has promised - in unqualified terms - to construct a building or other structure for a lump sum price, no excuse for late performance or nonperformance that the site conditions were worse than anticipated Agreed price is all that the contractor is entitled to be paid for doing so The risk of adverse site conditions, whether they be known or latent, is with the contractor
16 The general rule: contractor s liability US case law United States v Spearin (1918), 248 U.S. 132 Where one agrees to do, for a fixed sum, a thing possible to be performed, he will not be excused or become entitled to additional compensation, because unforeseen difficulties are encountered. Thus, one who undertakes to erect a structure upon a particular site, ordinarily assumes the risk of subsidence of soil. UK case law Bottoms v York Corporation (1892), Hudson Fourth Edition, Vol 2 Table of Cases; Workshop Tarmacadam Co Ltd v Hannaby (1995) 66 Con LR 105, CA
17 The If otherwise general rule: expected, contractor s contract liability should have an specific contractual release for the contractor Unless a contract makes specific provision for a contractor to be entitled to an extension of time for completion, additional compensation, or both, in the event of adverse conditions being encountered, the risk of those conditions will remain with the contractor Clauses dealing with force majeure or exceptionally weather conditions ARE NOT sufficiente as they ARE NOT to be considered the same as unforeseen bad ground
18 The general rule: contractor s liability Enhancing the general rule s application? Contractor has knowledge of the site Contractor has inspected the site or shall be deemed to have inspected it Contractor has satisfied itself on the form and nature of the site, including the soil and subsurface How far can these provisions go? Need to qualify reasonable knowledge or inspection Was the contractor really able to get to know the site, inspected it and to be satisfied?
19 A contract rule: risk with the owner Many standard forms give contractors extension of time and price increase in case of unforeseen ground conditions ICE - Institute of Civil Engineers (clause 12) NEC - Engineering and Construction Contract (clause 60.1) FIDIC - International Federation of Consulting Engineers (clause 4.12, of the new Red Book )
20 In those standard forms, owner may be excluded from A contract liability rule: when risk contractor with the owner ought to have anticipated such conditions Such forms apply the concept of imputed knowledge in opposition to actual knowledge What site investigations an experienced contractor ought to have conducted? What information an experienced contractor would have gleaned? How an experienced contractor ought to have interpreted the information?
21 A contract rule: risk with the owner In contrast, some US State legislatures provides a baseline of expected ground conditions and seek potential distinctions only A differing site condition clause entitles the contractor to additional time for completion and compensation No need for inquiry on what site conditions the contractor ought to have anticipated
22 About the information provided to contractor
23 1) Owner does not provide any information to contractor - No Information System 2) Owner provides information to contractor but does not warrant the accuracy of such information Disclaimer System 3) Owner provides information to contractor and warrants the accuracy and/or the completeness of such information DSC System
24 Disclaimer System Some special considerations for public owners Stenerson v City of Kalispell, (1981) 629 P.2d 773 Mont. Public entity either knew or should have known that the information would be relied on by bidders Is it fair to make such distinction?
25 DSC System The owner may find that shifting risk to the contractor is not in the owner s best interest In such a case, the owner may choose to accept the risk of unforeseen site and subsurface conditions The owner may be taken to warranty contractually, either expressly or by necessary implication, that the information provided to the contractor is accurate and should be followed Bacal Construction (Midlands) Ltd v Northampton Development Corporation (1975), 8 BLR 88, CA
26 DSC System Type I DSC Requires that there be an actual physical condition encountered at the site that differs materially from the conditions indicated in the contract document Type II DSC Requires a variance between the site condition actually encountered and that which would be reasonably expected at the time the contract was made
27 DSC System The applicability of the Spearin Doctrine in the USA United States v Spearin (1918), 248 U.S. 132 If the contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be responsible for the consequences of defects in the plans and specifications. (...) This responsibility of the owner is not overcome by the usual clauses requiring builders to visit the site, to check the plans, and to inform themselves of the requirements of the work.
28 DSC System Confront with UK case law Under English law, an owner who provides plans or specifications to a contractor does not warrant that the work described in the plans and specifications is capable of being performed at all, or that is capable of being performed in a particular manner Thorn v The Mayor and Commonalty of London (1876), LR 1 HL 120
29 DSC System Misrepresentation When erroneous information is provided to a tenderer, and the tenderer, in reliance upon it, enters into a building or engineering contract, there may be an actionable misrepresentation, sounding in damages Possible distinction between innocent misrepresentation (an erroneuous statment) and a fraudulentmisrepresentation
30
31
32 Ground s elements and related risk types Information Interpretation (subjective) Information (objective) Incorrect Incomplete
33 Ground s elements and related risk types Probability Foreseen Unforeseen Aparent Real
34 Specific issues in Brazil
35 Specific issues in Brazil Importance of the management of the contract The day-by-day in opposition to the pacta sunt servanda principle Possible change in the allocation of responsibility
36 Specific The theory issues in of Brazil unpredictability or rebus sic stantibus clause in the new Civil Code The absolute unpredictability concept Complete change in the conditions of the contract Extreme burdensome A clear benefit to the other party
37 Specific issues in Brazil Continuous obligation of the parties to mitigate the risks during the contract Simply allocation of risk does not prevent the application of good-faith rules
38 DBB / DESIGN-BID-BUILD
39 EPCM / ENGINEERING PROCUREMENT CONSTRUCTION MANAGEMENT
40 EC+P / EPC HÍBRIDO / SPLIT EPC
41 EPC / ENGINEERING PROCUREMENT CONSTRUCTION
42 EPC / ENGINEERING PROCUREMENT CONSTRUCTION
43 O QUE É UMA ALIANÇA? EPCM Contratado 1 Engineering DBB Engineering VALE Construction VALE Procurement EPCM Contratado 2 Procurement VALE Engineering Construction Alianza Procurement Contratado 1 Engineering Contratado Construction Engineering VALE Construction VALE Contratado Procurement Contratado 2 Procurement Split EPC Construction EPC
44 SOLUÇÃO DE CONFLITOS
45 Conclusion
46 Conclusions Ground Risks, in the form of unforeseen geological and/or geotechnical conditions, are a serious factor in cost and schedule control on all major civil engineering projects The amounts of money, involved in claims arising from these geotechnical problems, is enormous and needs to be taken very seriously by financing agencies and all players in the construction industry
47 Conclusions Inadequate site investigations rank as one of the major contributors to ground risk. More realistic allocations of time and money have to be made to these site investigation programs It is also important that geologists and geotechnical engineers make more efficient use of the resources allocated for site investigation
48 Contact information Júlio César Bueno LL.M (Cantab) Ph.D (USP) Pinheiro Neto Advogados Rua Hungria, São Paulo - SP Brazil Tel: +55 (11) Fax: +55 (11) juliobueno@pinheironeto.com.br
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