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Should the contractor bear full responsibility for all risks and costs arising from unforeseen circumstances (force majeure) in a turnkey project?
Of course not. For example, natural disasters or major social incidents that occur during the project timeline are also beyond the capacity of the general contractor to handle.
The contract should specify this, but if there are aspects of the project that the general contractor cannot anticipate, then it is the general contractor who has to cover those costs. The most common phrase used in contracts these days is “including but not limited to”; the client uses this wording to avoid taking on risks
In a turnkey project, each party shall bear its own risks and costs arising from unforeseen circumstances (force majeure), and they shall be exempt from liability to one another.
In accordance with the provisions on risks and responsibilities in the General Conditions of the FIDIC Conditions of Contract for Design, Procurement and Construction (EPC)/Turnkey Projects, if losses or damages resulting from an alteration to the employer’s (client’s) risks cause delays and/or additional costs to the contractor, the contractor shall notify the employer (client) accordingly and has the right to claim an extension of time and payment for such costs in accordance with the ‘Contractor’s Claims’ clause of the contract. Under FIDIC’s “Design, Procurement and Construction (EPC)/Turnkey Project Conditions”, employer’s risks include: “war, hostilities, invasion, external acts” ; Rebellion, terrorism, revolution, **, ****, or seizure of power, and civil war in the country where the project is located ; Disturbances, noise, or chaos in the country where the project is located by personnel of the contractor, and by other employees of the contractor and subcontractors ; . . . The 5 items such as “unforeseeable circumstances” – that is, force majeure: some abnormal event or situation for which one party has no control ; This party cannot make reasonable preparations for it before signing the contract ; After it occurs, something that party cannot reasonably avoid or overcome ; Cannot be primarily attributed to others ; When the above conditions are met, it includes not only the aforementioned unforeseen events but also natural disasters (such as earthquakes, hurricanes, typhoons, or volcanic activity). Regarding LZ’s issue, it should primarily be determined based on the reference text of the contract signed; if FIDIC contract conditions apply, then the contractor has the possibility to file a claim ; Otherwise, one can only proceed in accordance with the relevant terms of the contract, and most domestic contracts are handled as mentioned by the person from Building 4. For reference!