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ARTICLE · 26 MARCH 2025

Legal Developments In Construction Law: March 2025

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The employer, under two contracts based on the 1999 FIDIC Plant and Design-Build Yellow Book, terminated the contracts for convenience.

United StatesReal Estate and Construction
Richard Craven
Richard Craven
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1. Privy Council rules out contractor's cancellation charges in FIDIC Yellow Book termination claim

The employer, under two contracts based on the 1999 FIDIC Plant and Design-Build Yellow Book, terminated the contracts for convenience. Upon termination under the 1999 edition, the contractor is not entitled to compensation for loss of profit but is entitled to payment for work done, the cost of plant and materials ordered and delivered (or for delivery costs for which the Contractor is liable), and, under condition 19.6(c), to costs "... reasonably incurred... in the expectation of completing the works".

Over a year before the termination, relying on preliminary designs, the contractor had contracted with a third party for the purchase of equipment for the works. Those contracts were terminated before being performed, when the main contracts were terminated, but on cancellation the contractor was liable to pay cancellation charges calculated as 30% of the total

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