Clause 9.4 Failure to Pass Tests on Completion [FIDIC Yellow Book 1999]

Initial Failure to Pass Tests on Completion

The flowchart starts with the Works or a Section failing to pass the Tests on Completion, even after retesting under Clause 9.3. This is the triggering event that sets off the decision-making process for the Engineer and the Employer.

Engineer’s Options

1. Order Further Tests (Green Block): The Engineer can order further repetition of Tests on Completion under Clause 9.3. This is the first option and is represented by the green block.
2. Reject the Works or Section (Red Block): If the failure is so significant that it deprives the Employer of substantially the whole benefit of the Works or Section, the Engineer has the option to reject the Works or Section. This is a critical decision point and is represented by the red block.
3. Issue a Taking-Over Certificate (Blue Block): Alternatively, the Engineer can issue a Taking-Over Certificate if the Employer so requests. This is represented by the blue block.

Employer’s Remedies (Light Red Block)

If the Engineer chooses to reject the Works or Section, the Employer has the same remedies as provided in sub-paragraph (c) of Clause 11.4. These remedies are:

1. Carry Out the Work Himself: The Employer may carry out the work himself or by others, at the Contractor’s cost.
2. Reduce Contract Price: The Employer may require a reasonable reduction in the Contract Price.
3. Terminate the Contract: If the defect or damage deprives the Employer of substantially the whole benefit of the Works or any major part of the Works, the Employer can terminate the Contract as a whole or in respect of such major part.

Contract Price Reduction (Yellow Block)

If the Engineer issues a Taking-Over Certificate, the Contract Price shall be reduced by an amount appropriate to cover the reduced value to the Employer due to the failure. This is represented by the yellow block.