Clause 53 of the Conditions of Contract specifies the procedure which the Contractor must follow in the event that he intends to make a claim under the Contract. A variant of this clause is also included within the current editions of the FIDIC forms of contract and may also to be found in many other standard forms.
In the event that the Contractor intends to claim any additional payment under the Contract Clause 53 makes it a mandatory requirement that the Contractor shall give notice of his intention to the engineer within 28 days of the event giving rise to the claim as stated in Sub-Clause 53.1.
The Contractor is then duty bound to keep such contemporary records as may reasonably be necessary to support any claim he subsequently makes. This is stated clearly in Sub-Clause 53.2 of the Conditions of Contract as is the requirement for the Contractor to maintain such contemporary records as the Engineer may instruct which are reasonable and material to the claim.
The Engineer is given rights to inspect those records and to call for further contemporary records. The Contractor is then to send the engineer an account giving detailed particulars of the amount claimed and the grounds upon which the claim is based either on an interim basis where the event extends beyond 28 days or within 28 days from the date when the event ended which gave rise to the claim.
Sub-Clause 53.4 states that if the contractor fails to comply with any of the provisions of Sub-Clause 53.1, 53.2 53.3 or 53.4 then his entitlement to payment is restricted to such amounts as the Engineer assesses the claim to be worth based upon whatever contemporary records are available.
It is evident that the purpose of Clause 53 and similar clauses as contained within other standard forms of contract is to provide an orderly and systematic method of dealing with claims for additional payment. They require the Contractor notify the Engineer at the time the claim arises and to maintain contemporary records together with submission of timely and/or regular accounts of any such claims. Clearly this is aimed at facilitating the early resolution of any questions or uncertainties at the time the claim arises, with the likelihood that enquiries and answers can be obtained whilst resources and witnesses are still readily available.
The obligations of Clause 53 fall almost entirely on the shoulders of the Contractor and the wording of the contract is mandatory the Contractor shall do these things. The essential substance of such clauses is, therefore, that if there are no contemporary records to support the Contractors claim, the claim will fail.
Interestingly ‘contemporary records’ is not a defined term within the FIDIC Conditions of Contract thus we must look to common law and previous judgments to try and establish a definition of contemporary records. Such a definition was provided in the case of Attorney General for the Falkland Islands v Gordon Forbes Construction by Judge Saunders who concluded that:
‘Contemporary records meant original or primary documents or copies thereof, produced or prepared at or about the time giving rise to the claim, whether by or for the Contractor or Employer. The making of the record does not have to be instant, and whether or not a record was to be regarded as contemporary would depend on the facts surrounding the making of that record. It would, however, be exceptional if any record could be regarded as contemporary if made more than a few weeks after the event.’
Indeed Judge Sanders continued:
‘That it would be perverse if a Contractor who had failed to comply with the terms of the Contract should then be allowed to produce non-contemporary records to support a claim, particularly as these could not properly be investigated by the Engineer at a later date. The rights of the Engineer to inspect the records at the time the claim arose were fundamental to the FIDIC procedure.’
Judge Sanders then went on to confirm:
‘There are, however, exceptions where witness statements may be brought into play, if contemporary records are in some way ambiguous or unclear, it would be acceptable for the tribunal to take into account witness statements which seek to resolve that ambiguity or lack of clarity.’
Judge Sanders further recorded:
‘That a valid claim might exist, despite the absence of direct contemporary records, where inferences could be drawn from the existing contemporary records to show that otherwise unsupported parts of a claim were valid.’
The Judges strict interpretation of the definition of contemporary records and their use in the support of claims in respect of the FIDIC form of contract allows Contractors little room for manoeuvre. It is clear that the requirement for the Contractor to maintain good records of activities on site in the event of a claim is paramount should he wish to succeed in recovery of monies resulting from such as it is evident that the burden of proof in all such matters rests with the Contractor.
Finally examples of contemporary records would be:
Daily Equipment, Plant and Labour Returns or Records
Invoices and Purchase Orders
Testing Records and Data
Requests for inspection
Requests for information
Minutes of meetings
Delivery / Shipping Documentation
Material Requisition & Order Forms
The list is endless and it is the onus is on the Contractor to maintain such records so as to prove his entitlement to financial claims. Contractors should always take account of the quote of Max Abrahamson in his book Engineering Law and The ICE Contract:
” A party to a dispute, particularly if there is an arbitration will learn three lessons (often too late) the importance of records, the importance of records and the importance of record.”