1.

Conditions and what is meant by Force majeure (Three clauses)

and
case: - if I am owner and i frame the contract clause then the
benefit of doubt must be given to opposite party.

✅ A. Meaning of Force Majeure

 Definition:
Force Majeure (Latin for “superior force”) refers to unforeseen events beyond the
control of either party that prevent performance of contractual obligations.
 Purpose:
It protects the parties from liabilities or penalties due to uncontrollable events,
such as natural disasters, war, or governmental restrictions.
 Essence in Contracts:
It ensures that neither party is penalized when they are unable to perform duties due
to circumstances that could not be foreseen or prevented.

✅ B. Conditions for Invoking Force Majeure

1. The event must be beyond the control of the affected party.

2. The event must prevent or delay performance of contractual obligations.
3. The affected party must notify the other party within a stipulated period.
4. The affected party must demonstrate that reasonable steps were taken to mitigate the
impact.

✅ C. Three Example Clauses of Force Majeure

1. Natural Calamities Clause:

“Neither party shall be held liable for delay in performance due to acts of God
including but not limited to earthquakes, floods, cyclones, storms, and other natural
disasters.”
2. War and Political Unrest Clause:
“Performance shall be excused in the event of war, civil commotion, strikes, lockouts,
or terrorist activities that affect the execution of the contract.”
3. Government Orders Clause:
“In case of governmental restrictions such as lockdowns, change in law, or revocation
of permits, the affected party shall be excused from timely performance of the
contract.”
✅ D. Case Study Example

 Scenario:
Generator breakdown at the construction site caused the contractor to incur losses.
The generator was to be provided by the owner.
 Owner’s Argument:
Invoked Force Majeure clause, claiming breakdown was beyond their control.
 Clause Language:
“Force Majeure includes events that cannot with reasonable diligence be controlled
or prevented.”
 Arbitrator’s Ruling:
o The owner could have taken preventive action (e.g., standby generator).
o Therefore, generator breakdown does not qualify as Force Majeure.
o The owner was held liable for lack of diligence.

✅ E. If You Are the Owner – Benefit of Doubt to Contractor

 Legal Principle – Contra Proferentem:

When a contract clause is ambiguous, the interpretation goes against the drafter
(i.e., the owner in this case).
 Implication:
If you, the owner, frame the Force Majeure clause, and there is ambiguity, the
benefit of doubt must go to the contractor.
 Why?
Courts presume that the drafter had better control and understanding of the wording,
so responsibility lies with them to avoid ambiguity.

✅ Conclusion

 Frame Force Majeure clauses clearly and comprehensively.

 Include both events and the mitigation responsibilities.
 If you are drafting the clause, ensure clarity, or risk unfavorable interpretations under
Contra Proferentem.
2. Different steps of project management

🔶 1. Initiation Phase

 Objective: Define the project at a broad level.

 Key Activities:
o Identify project stakeholders.
o Define project goals, purpose, and feasibility.
o Conduct a preliminary feasibility study or business case.
o Prepare a Project Charter (formal authorization).
 Output: Go/No-Go decision for planning phase.

🔶 2. Planning Phase

 Objective: Establish the roadmap for the project.

 Key Activities:
o Define scope (Work Breakdown Structure - WBS).
o Develop schedule (Gantt chart, CPM).
o Estimate and allocate budget and resources.
o Identify risks and develop mitigation plans.
o Prepare Quality Management, Communication, and Procurement plans.
o Set performance indicators (cost, schedule, quality).
 Output: Project Management Plan (PMP), Risk Register, Schedule Baseline.

🔶 3. Execution Phase

 Objective: Perform the work as per plan.

 Key Activities:
o Mobilize resources (manpower, equipment, materials).
o Manage procurement and logistics.
o Assign tasks and manage teams.
o Execute activities and follow QA/QC protocols.
o Ensure compliance with design, safety, and quality standards.
 Output: Work progress, status reports, partial deliverables.
🔶 4. Monitoring and Controlling Phase

 Objective: Ensure project stays on track with scope, time, and cost.
 Key Activities:
o Use tools like Earned Value Management (EVM).
o Track progress against baseline (schedule, cost, scope).
o Monitor risk status and apply corrective actions.
o Control changes via Change Control Board.
o Conduct internal reviews, audits, and inspections.
 Output: Performance reports, issue logs, revised project plan.

🔶 5. Closing Phase

 Objective: Formal completion and handover of the project.

 Key Activities:
o Ensure all work is completed per contract.
o Conduct final inspections and tests.
o Obtain Completion Certificate and client sign-off.
o Release resources and settle final accounts.
o Archive documents and prepare “Lessons Learned” report.
o Celebrate achievements and recognize team effort.
 Output: Final Project Report, Handover Documents, Archived Records.

🔷 Summary Chart for Quick Revision:

Phase Key Output

Initiation Project Charter

Planning Project Management Plan (PMP)

Execution Deliverables, Progress Reports

Monitoring & Control Variance Reports, Risk Updates

Closure Final Report, Lessons Learned

3. What are the Major Contract Documents?

 Agreement

 The signed legal contract that binds both parties.

 Specifies contract amount, start and completion dates, and references all other
documents.

 General Conditions of Contract (GCC)

 Provides standard terms and conditions that apply to most contracts (e.g., FIDIC,
CPWD GCC).
 Covers roles, responsibilities, payments, delays, force majeure, dispute resolution, etc.

 Special Conditions of Contract (SCC)

 Contains project-specific provisions or deviations from the GCC.

 Tailored to suit unique project requirements, location, or employer policy.

 Specifications

 Describes materials, workmanship, standards, and methods.

 Can be open (generic) or closed (brand-specific) or based on codes (ISI, IRC,
MORTH).

 Drawings

 Includes working drawings, architectural, structural, electrical layouts.

 Essential for site execution and quantity estimation.

 Bill of Quantities (BOQ) / Schedule of Rates (SOR)

 Provides an itemized list of works with quantities and estimated rates.

 Used for costing and interim payments.

 Letter of Acceptance (LoA)

 Issued by the employer to the selected contractor.

 Confirms award of contract and includes critical start conditions.

 Addenda & Clarifications

 Changes made during the bidding process before award of contract.

 Legally binding if referenced in the agreement.

 Change Orders / Amendments

 Post-contract changes in scope, price, or timeline.

  Require agreement of both parties and formal documentation.

 Insurance and Guarantees

 Performance guarantees, Advance Bank Guarantees, and insurance policies (e.g.,

CAR, EAR).

 Completion Certificates

 Issued after substantial and final completion.

 Acts as a trigger for final billing and defect liability period.
4. Red Flag Clauses in Project Management (7 Critical
Clauses)

🔷 1. Variation Clause (Change in Scope)

 Allows the employer to alter specifications, quantities, or scope.

 Risks:
o Dispute over rate analysis.
o Delay in execution due to unapproved changes.
 Red Flag:
o Absence of method for pricing or EOT entitlement.

🔷 2. Delay and Extension of Time (EOT) Clause

 Covers project delays due to contractor or employer.

 Risks:
o Ambiguity in delay attribution.
o LDs may apply even for delays not caused by contractor.
 Red Flag:
o No clear procedure for applying for EOT.

🔷 3. Liquidated Damages (LD) Clause

 Specifies pre-determined penalty per day of delay.

 Risks:
o May be excessive or unfair.
o Can be enforced even if partial work is usable.
 Red Flag:
o LD without grace period or cap on amount.

🔷 4. Force Majeure Clause

 Excuses performance due to unforeseen events.

 Risks:
o Vague or limited list of events.
o No provision for EOT or cost recovery.
 Red Flag:
o Ambiguity in whether event qualifies as force majeure.
🔷 5. Termination Clause

 Allows either party to end the contract under defined conditions.

 Risks:
o Unilateral rights or no provision for partial termination.
o Harsh consequences for default without notice period.
 Red Flag:
o No cure period before termination.

🔷 6. Payment Terms Clause

 Governs milestone payments, advance recovery, interest on delay.

 Risks:
o Delay in bills certification and payment.
o Lack of clause for interest on delayed payments.
 Red Flag:
o Ambiguous milestone descriptions or timelines.

🔷 7. Defect Liability Period (DLP) Clause

 Period post-handover during which contractor must rectify defects.

 Risks:
o Undefined start of DLP (virtual vs final completion).
o Withheld retention money without defined release conditions.
 Red Flag:
o Vague wording on what constitutes a "defect".

🔸 Additional Examples from Your PPTs

From [21] RED FLAG CLAUSES:

 Time of Completion
 Suspension of Work
 Taking Over Conditions
 Safety and Environmental Sustainability

These all contribute to potential disputes and are termed "killer clauses" if not properly
reviewed or clarified.
5. How the Project is to be closed

Project closure is the final phase in the project management life cycle. It ensures that all
project activities are completed, deliverables are handed over, contracts are closed, and all
stakeholders formally accept the project.

🔷 A. Objectives of Project Closure

 Formally conclude project activities.

 Transfer ownership of deliverables to the client.
 Release resources (manpower, materials, equipment).
 Finalize payments, contracts, and documentation.
 Capture lessons learned for future projects.

🔷 B. Steps in Project Closure

1. Completion of Scope and Work Verification

 Conduct a final inspection to ensure all contract requirements are met.

 Verify against the BOQ, specifications, and drawings.
 Prepare and submit as-built drawings and O&M manuals.

2. Handover to the Client

 Submit:
o Keys, documents, warranties, test certificates, and manuals.
o All deliverables as per the contract.
 Take Acknowledgment Receipt from the client.
 Obtain Completion Certificate or Substantial Completion Certificate.

3. Final Billing and Payment

 Reconcile all interim and final bills.

 Submit final bill (within 3 months of physical completion as per CPWD).
 Include all approved variations, claims, and extras.
 Ensure retention money and security deposit refund (as per DLP clause).
 Release performance bank guarantees (if no defects are found).
4. Contract Closure

 Review all contractual obligations for fulfillment.

 Issue a No Dues Certificate.
 Close all open purchase orders and subcontract agreements.
 Archive legal and financial documentation.

5. Demobilization of Resources

 Remove machinery, equipment, and temporary facilities from the site.

 Release labor and site staff.
 Restore the site if required by the contract (e.g., site clearance).

6. Defect Liability Period (DLP)

 Maintain the project for a specific period (usually 12 months or one monsoon).
 Address any defects reported by the client.
 After DLP, release any withheld payments and provide a Defect-Free Certificate.

7. Lessons Learned and Project Closure Report

 Conduct a post-project review meeting with key team members.

 Document:
o Challenges faced.
o Innovations used.
o What worked and what didn’t.
 Prepare a Project Closure Report for future reference.

🔷 C. Documents to be Finalized at Closure

 Final Bill
 Completion Certificate
 Handover Checklist
 As-Built Drawings
 Defect Liability Clearance Certificate
 Final Claim Statements
 Project Closure Report
🔷 D. Importance of Project Closure

 Ensures no legal or financial liabilities remain.

 Builds trust with the client for future work.
 Supports knowledge management within the organization.
 Improves future project performance through recorded lessons.

6. ADR (Alternative Dispute Resolution) Mechanisms

🔷 A. Meaning of ADR

 ADR refers to out-of-court settlement mechanisms to resolve disputes without

going through lengthy litigation.
 It is widely used in construction contracts to save time, cost, and relationships.
 Encouraged under Section 89 of the Civil Procedure Code, 1908 and the Arbitration
and Conciliation Act, 1996 in India.

🔷 B. Types of ADR Mechanisms

1. Negotiation

 Informal discussion between disputing parties to arrive at a mutual settlement.

 No third party is involved.
 Cost-effective and fastest resolution method.
 Non-binding unless documented as a settlement agreement.

2. Mediation

 A neutral third party (mediator) helps parties reach a voluntary agreement.

 Mediator facilitates dialogue, does not impose a decision.
 Confidential and flexible.
 Non-binding unless a settlement is recorded in writing.

3. Conciliation

 Similar to mediation but the conciliator can suggest solutions.

 Governed by Part III of the Arbitration and Conciliation Act, 1996.
  Conciliator’s role is more proactive.
 Settlement agreement is binding like an arbitral award on agreed terms.

4. Arbitration

 A formal, quasi-judicial process.

 Dispute referred to one or more arbitrators (as per agreement).
 Arbitrator gives a binding award enforceable in court.
 Preferred for construction disputes under contracts like FIDIC.

5. Adjudication

 Common in international construction (especially FIDIC contracts).

 An adjudicator (temporary) is appointed to give a decision within 28–42 days.
 Decision is binding unless challenged in arbitration.

6. Dispute Review Board (DRB)

 A panel of experts appointed at project start.

 DRB monitors progress and hears disputes during execution.
 Issues recommendations or decisions.
 Used in large infrastructure projects (e.g., highways, dams).

🔷 C. Advantages of ADR

 Faster and more efficient than litigation.

 Preserves business relationships.
 Cost-effective.
 Private and confidential.
 Flexibility in process.
7. Major Contents of an Arbitration Agreement
An arbitration agreement is a written clause or document in which parties agree to settle
disputes via arbitration instead of litigation.

🔷 A. Essential Features

1. Intention to Arbitrate
o A clear clause that all or certain disputes will be resolved through arbitration.
2. Scope of Disputes
o Should specify which types of disputes are arbitrable (e.g., technical,
financial, legal).
3. Number of Arbitrators
o Can be one or a panel (usually three).
o For 3 arbitrators: Each party appoints one; those two appoint the third
(presiding arbitrator).
4. Seat and Venue of Arbitration
o Determines the jurisdictional law (procedural law or lex arbitri).
o Example: "The seat of arbitration shall be New Delhi, India."
5. Governing Law
o Substantive law under which the contract is governed (e.g., Indian Contract
Act).
6. Language of Arbitration
o Commonly English or the language of the contract.
7. Arbitration Rules
o Rules to be followed (e.g., UNCITRAL, ICC, SIAC, ICA).
o If institutional, the rules of the chosen arbitration body apply.
8. Binding Nature of Award
o Statement that the award will be final and binding on both parties.
9. Confidentiality Clause
o Obligates parties and arbitrators to maintain secrecy of proceedings.
10. Cost Sharing Arrangement

 Who will bear the cost of arbitration and under what conditions.

11. Procedure for Appointment of Arbitrators

 Includes fallback mechanism if one party fails to appoint.

🔷 B. Sample Arbitration Clause

“Any dispute or difference arising out of or in connection with this contract shall be referred
to and finally resolved by arbitration in accordance with the Arbitration and Conciliation Act,
1996. The seat of arbitration shall be Pune, India. The tribunal shall consist of a sole
arbitrator mutually appointed by both parties. The language of arbitration shall be English.”

8. When the Award Declared by Arbitrator Can Be Set

Aside
Under Section 34 of the Arbitration and Conciliation Act, 1996, an arbitral award can be set
aside by the court under the following grounds:

🔷 A. Grounds for Setting Aside an Award

1. Party was under incapacity

o One of the parties was legally incompetent (minor, unsound mind, etc.).
2. Invalid arbitration agreement
o If the agreement was not valid under the law it was subjected to.
3. Lack of proper notice
o Party was not given proper notice of the appointment of arbitrator or of the
proceedings.
4. Inability to present case
o If a party was not able to present their evidence or argument due to unfair
process.
5. Award deals with matters beyond the scope of arbitration
o Arbitrator ruled on issues not covered by the arbitration agreement.
6. Improper composition of tribunal or procedure
o If the procedure was not in accordance with the parties’ agreement.
7. Award is in conflict with the public policy of India
o For example:
o Award induced by fraud or corruption.
o Violation of fundamental policy of Indian law.
o Conflict with morality or justice.
8. Patent illegality (domestic awards only)
o Legal error apparent on the face of the award.

🔷 B. Limitation Period

 An application to set aside the award must be made within 3 months from the date
of receiving the award.
 An additional 30 days may be granted by court for sufficient cause.
9. Duties and Responsibilities of Arbitrator
An arbitrator is a neutral third party who facilitates and decides on disputes referred under
an arbitration agreement.

🔷 A. Core Duties

1. Impartiality and Independence

o Must act without bias or favoritism.
o Disclose any conflict of interest.
2. Fair Hearing
o Give both parties equal opportunity to present their case.
3. Follow Principles of Natural Justice
o Rule against bias and right to be heard.
4. Render Reasoned Awards
o Award must be well-reasoned and justified, unless parties have agreed
otherwise.
5. Follow Agreed Rules/Procedures
o Conduct proceedings as per contract, institutional rules (e.g., ICC), or
Arbitration Act.
6. Maintain Confidentiality
o Keep all proceedings and documents confidential.
7. Timely Disposal
o In India, award must be passed within 12 months from completion of
pleadings (extendable by 6 months).
8. Uphold Integrity
o Ensure arbitration is not misused to delay justice.

🔷 B. Ethical Obligations

 Avoid ex-parte communication.

 Disclose any financial or professional interest.
 Avoid unnecessary adjournments and ensure cost-effective process.
10. Interpretation of Clauses
Interpretation of contract clauses becomes necessary when there’s ambiguity, conflict, or
dispute in the contract.

🔷 A. Key Principles of Clause Interpretation

1. Literal Rule
o Interpret as per plain, ordinary meaning of the words used.
2. Contextual or Holistic Reading
o Clause must be interpreted in the context of entire contract, not in isolation.
3. Contra Proferentem Rule
o If a clause is ambiguous, interpret against the drafter (usually the
employer/owner).
4. Harmonious Construction
o Reconcile conflicting clauses so that none are redundant.
5. Ejusdem Generis (Of the Same Kind)
o When general words follow specific words, they are interpreted in the same
class.
6. Purpose-Oriented (Teleological)
o Consider the object and purpose of the clause and the contract.
7. Trade Usage and Practice
o Use industry practices and norms for interpreting technical clauses.
8. Specific Prevails Over General
o If a specific clause conflicts with a general clause, the specific one prevails.

🔷 B. Example from Case

A clause said protesters are not allowed “in the vicinity of a prohibited place.” One protester
claimed he was inside, not in the "vicinity."

Court held: Vicinity means “on or near” the prohibited place.

Interpretation should be logical, not absurd, and align with intent of law.