"And don’t ever, ever cross that line"

or what?

Dear Charleston,

Everyone should be working within the law. That is the General idea. When you encounter a problem that you can not solve by using your Contract, then you go to court to resolve it.

If you visit the Lawyers society at the country of interest then you can buy their Civil Law book from their library. Some counties have more developed systems than others depending on the need that rose during the past years.

Best Regards,

Samer

Dear Francis,

The force majeure definition stated in FIDIC clause 19/1 can be verified. But the duration of the increased cost of construction lasted for short duration.

I have been running the numbers for most of the Construction Material, and the curves are all looking like a mountain. Interstingly enough, the prices are lower now. And contractors with big projects who stood through the past few months are making a lot of money on their old unit rates.

It all depends on how much work you did through that period. If you slowed down your business during the high prices cycle (Feb - Sept 09) and increased the activities after the end of November 09, then you (contractor) would be making a lot of money. You just have to increase the amount of work on the old contracts with the high unit rates in order to close the losses that were incurred during the months of high prices.

Best Regards,

Samer

Hi Samer,

I will try to prepare and EOT based on force majeure (World Financial Crisis).... Just to make my consultant’s planning engineer busy...

Thnx and more power,
Francis

Dear Francis,

The crisis can be explained with the following store:

A man goes to a village and askes to buy a donkey, so a person say, I will sell you my donkey for 1$. And the man buys the donkey for 1$. Then the man says I need two more donkeys. So another villager says I will sell you my two donkies for $2 each. And the man pays $2 for each. The the man says I need 4 more donkeys. And a villagers says I will sell you the donkies for 4 dollars ea. So the man pays 4$ each. And the man keeps paying higher until he has all the donkies in the village paying up to $20 each.

The man says, I need more donkies. I will pay 50$/ea. But the villagers have no more donkies! I man raises to 60, 70, 80, 90, 100$/ea, but no one has donkies. The man leaves town!!

A new man comes to town saying he has donkies for sale for $75/ea. All the villagers go to their banks to get loan to buy donkies for $75/ea to sell them to the 1st man for 100$/ea to make a quick 25$/ea. The banks give them the loans. The villagers buy their original donkies that are worth $1 for the new price of $75. The 2nd man sells all the donkies back to the villagers and goes out of town.

Now the villagers have their own donkies back with loans up to their ears and no money in the banks. The two men are no where to be found. Hence, global financial crisis in the big blue marble village.

...The End...

Best Regards,

Samer

Hi Mike,

If you’re talking about age being up that’s also my concern.

Cheers..

Hi Anoon,

I have a friend who invested in the market. He started at 10K. After few year when the market was on the way up, the money he invested ballooned to about 100K. He cashed 50K and have a good life while the remaining 50K he kept in the market. After several more years the 50K became 200K. Encouraged by the growth he kept his money in the market. The financial tsunami came, in a matter of week the 200K became 50K. And the he said he lost 150K.

I don’t think so. on paper yes.

Mike,

Sorry Mike I can pick up what you mean. You are already UP fully supported by experience. I don’t see anyway down.

Cheers..

Anything up will fall down.

Cheers..

Hi Raviraj

I would not rely on a wikipedia definition in support of a legal prosecution but even then it says it is not force majeure:

"where non-performance is caused by the usual and natural consequences of external forces"

Which is an economic downturn - even a global one.

It happens every 8 - 10 years - this is my third.

Look for 50 or 100 year events and you will be getting closer.

You cannot even rely on exceptional weather such as floods or tsunamis because with global warming these are to be expected as regular events.

As Ken said - lets put this one to bed unless Charleston has any more to add.

Best regards

Mike Testro.

Wikipedia says,

Force Majeure (French for "superior force") is a common clause in contracts which essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, or "act of God" (e.g., flooding, earthquake, volcano), prevents one or both parties from fulfilling their obligations under the contract. However, force majeure is not intended to excuse negligence or other malfeasance of a party, as where non-performance is caused by the usual and natural consequences of external forces (e.g., predicted rain stops an outdoor event), or where the intervening circumstances are specifically contemplated.

Considering the terminology stated above, is recession not a war type situation which cant be controlled by either party and nor any party is aware of weeks before!!

??

Lets put this one to bed - economic woes are NOT force majeure!

Recession is caused by man (more specifically this time round bankers!!) It is not an act of God.

It matters not whether the event affects both parties equally, unequally or at all.

Force majeure events are forces of nature or other natural events which are outside the control of the parties and which could not have been forseen at the time the contract was formed.

Examples being flood, lighting strikes, storms, earthquakes etc.

Specifically not acts of God (by virtue they are man-made): strikes, wars, lock-outs, insolvency, and economic hardship.

Some contracts allow the parties to rely on "difficulties in securing materials, labour or plant to carry out the works", so for example if a quarry closes down because of recession and therefore stone is no longer available locally, then that might be a compensation event but it is NOT forece majeure.

OK?

Dear Ravi,

If both side are getting hurt because of an event, then it makes common sense to agree on the consequences of this event without any delay damages to both sides.

Best Regards,

Samer

Dear Charleston.

If you need to use the FIDIC clause, then you will need to make sure that all the 4 conditions in Clause 19.1 apply to your case.

From experience, I would tell you that it does not apply outside the boundaries of the country where the project is being executed. In your case, you have plenty of examples around you to use if you want.

If you need to use it, then you should give notice as soon as it arise per clause 19.2 and your duty is to minimize the delay per clause 19.3.

Follow your contract clauses and use it if you need to.

Good luck,

Samer

Hi Charleston

"an example of the force majeure delays inlcude extraordiary economic disruption"

What is your authority for this statement - is it part of a conract clause that you are quoting from?

Ken