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Clients /Consultant Model Services Agreement (White Book) Fifth Edition 2017

Price: R 971.30 EXCL VAT
Stock Code: 7097
ISBN: 978-2-88432-078-8

THE NEW CLIENT/CONSULTANT MODEL SERVICES AGREEMENT (the White Book) is suitable for general use for most services provided by consulting engineers, including pre-investment and feasibility studies, detailed design, construction administration and project management, both for Employer-led design teams, and for Contractor-led design teams on design and build commissions.

The Agreement is suitable for international projects but can equally be used on domestic projects. In fact, during the development of this Model Agreement, FIDIC looked at over 20 different forms of agreement used by member associations.  It is recognised that, whilst there are numerous clauses which will be generally applicable in most situations, there are some provisions which must necessarily vary to take account of the circumstances and locality in which the Services are to be performed. The General Conditions are linked with the Particular Conditions by the corresponding numbering of the clauses so that the General Conditions and Particular Conditions together comprise the conditions governing the rights and obligations of the parties. Those familiar with the FIDIC forms of construction contract will recognise the similarity in approach.

The Particular Conditions must be specially drafted to suit each individual Agreement and type of Service. References to the General Conditions are in Part A whilst any amendments to the General Conditions or additional clauses are in Part B. These pages must be completed for incorporation into the Agreement.

HOW THIS IS DONE ? FIDIC intends to publish an updated “White Book Guide” which will include commentary on the clauses in the White Book and guidance on completion of the Appendices.  Users of the White Book in the meantime can refer to various other FIDIC publications available in the FIDIC Bookshop.  Those involved in preparing a Scope of Work in Appendix 1 may wish to consult the two FIDIC Definition of Services guides.

WHAT’S NEW IN THE WHITE BOOK? This Fifth Edition of the White Book has enhanced the “duty of care” obligations placed on the Consultant in providing specified services to a client.  In doing so, FIDIC considered the following issues, all of significance to consulting engineers anywhere:

  • up to date practice worldwide in drafting consultancy agreements
  • a fair balance of risk between the Client and the Consultant
  • the professional’s obligation with respect to due skill and care, and fitness for purpose
  • the availability of suitable insurance

FIDIC has recognised considerable pressure from some parts of the industry to enhance the obligations placed on the Consultant to ensure that the professional services and deliverables are fit for purpose. The problem confronting FIDIC is that there is no common understanding of due skill and care or fitness for purpose, either between clients and consultants, or between legal advisors in various jurisdictions, despite the wide usage of such terms globally.

In looking at this problem FIDIC accepted that the Client is entitled to expect that the professional services will be completed correctly and that all the specific contractual requirements will be met.  If these are not correct, or any requirement has not been fulfilled, then the Client should be entitled to appropriate redress against the Consultant. This approach assumes that the Consultant is fully experienced and competent in the delivery of the relevant services, and accordingly, an appropriate stipulation has been added to the new White Book.

It is all about understanding the nature of the services of the consulting engineers, and assessing a fair balance of risk between the Client and the Consultant.

It is well known in the industry that Consultant’s cover their liability under contract by taking out professional indemnity insurance. FIDIC is satisfied that professional indemnity insurance policies do not cover liability for defective or inadequate services without evidence of fault or breach on the part of the Consultant. Such insurance only covers liability where there is a failure on the part of the Consultant to use the reasonable skill and care to be expected from an experienced consultant (this in turn links to another long standing debate within the industry, on selecting the appropriate consultant based on quality and experience (rather than on price).

The Task Group also examined whether the normal obligation placed on Consultants to use reasonable skill and care in delivering their services was an industry standard. The 20 standard forms of appointment used in other countries were closely examined. It was noted that none of these forms of appointment required professional services to be fit for purpose.  Nor did they impose strict liability for defects. The standard, whether expressed or implied, is reasonable skill and care. Accordingly, the Task Group determined that it was not a fair or reasonable balance of risk to make the Consultant strictly liable for the outcome of professional services in situations where there was no evidence of fault or breach by the consultant.

Further information on the practices in different countries, and the challenges faced, because of ignorance on, or lack of understanding about the key issues, are available in the Foreword and in other FIDIC guides.

Users of this Fifth Edition Agreement will therefore be confident that common used and accepted standards are used, emphasizing the Consultant’s obligation to use the reasonable skill and care to be expected from a consultant experienced in the provision of services for projects of similar size and complexity. In addition, it is recognised that the services must be performed with a view to satisfying any function and purpose described in the Agreement, but without extending this commonly accepted obligation.  As such, this obligation should be fully insured under any professional indemnity insurance policy, in order to benefit both the Client and the Consultant – this represents the correct balance of risk between the two parties.

This document can be ordered from Ms Patience Tsotetsi at Tel: 011 463 2022 or Email: patience@cesa.co.za.