Views in the last 30 days: 145
Estimated read time: 15 minute(s)
FIDIC Clause 1 – Definitions, Interpretation & Priority of Documents
Clause 1 (in both 1999 and 2017 Editions) builds the contract’s language engine. It explains who’s who, what’s what, and how to read every word that follows. Here’s why Clause 1 is mission-critical for project success.
🔎 Essential Definitions (Flip to Learn!)
Employer
The party who contracts and pays for the works (often the Owner/Client).
Contractor
The party responsible for carrying out and completing the Works.
Engineer
The Engineer administers the contract and acts as the Employer’s agent (esp. in Yellow Book).
Unforeseeable
Not reasonably foreseeable by an experienced contractor by the Base Date (crucial for risk).
Base Date
A key reference date for what information was available and what risks are shared.
🗂️ Interpretation & Priority Rules
- Hierarchy of Documents: Sets the order for resolving contradictions. (E.g., Contract Agreement overrides Employer’s Requirements, etc.)
- Reading Words: Singular includes plural, “day” means calendar day, etc.
- Language & Communications: Specifies contract language and, in 2017, gives rules for Notices and electronic comms.
Tip: If two documents clash, always check the priority table in Clause 1.2—this avoids costly disputes!
📊 1999 vs 2017 – What Changed?
- Concise list of definitions (e.g., “Cost,” “Employer’s Requirements,” “Works,” etc.).
- Simple guidance for document hierarchy and interpretation.
- Limited detail on communications—mainly refers to written notices.
- New and expanded definitions: “Notice,” “Notice of Dissatisfaction,” “Compliance Verification System,” etc.
- Greater detail in interpretation rules, including electronic communications.
- Specific reference to “Claim,” “Employer-Supplied Materials,” and “Exceptional Event” instead of just “Force Majeure.”
Why Clause 1 Matters: Every claim, risk allocation, and communication depends on shared language. Get Clause 1 right and you build on solid ground!
Breakdown of Clause 1
A. Overall Structure
1999 Edition: Sub-clauses 1.1 (Definitions) to 1.14 (Joint and Several Liability).
Example groupings: Definitions, Interpretation, Communications, Law & Language, Priority of Documents, etc.
Example groupings: Definitions, Interpretation, Communications, Law & Language, Priority of Documents, etc.
2017 Edition: Expanded sub-clauses: 1.1.1–1.1.90 (Definitions), 1.15 (Limitation of Liability), 1.16 (Contract Termination), and more.
Far more comprehensive, covering new risks and digital comms.
Far more comprehensive, covering new risks and digital comms.
Pro Tip: Regardless of edition, Clause 1 is your contract’s built-in dictionary and rulebook. Always start here when in doubt!
B. Detailed Look at Sub-Clauses
1999 Edition Highlights
- Grouped definitions: Contract, Parties, Dates, Money, Works, Miscellaneous.
- Definitions in Sub-Clauses 1.1.1.1 to 1.1.6.9.
- Sub-clauses up to 1.14 (Joint and Several Liability).
- Simple, efficient for traditional project risk.
2017 Edition Highlights
- Massive expansion: 90 definitions (1.1.1–1.1.90).
- New sub-clauses: 1.15 (Limitation of Liability), 1.16 (Contract Termination).
- Modernized for digital & global projects.
- Clarifies new risk, claims, & comms terms.
🌐 Key 2017 Definitions (expand to explore)
“Claim” (Sub-Clause 1.1.5)
A formal request or assertion by one Party to another for payment, extension of time, or other contractual relief.
“No-objection” (Sub-Clause 1.1.55)
When the Engineer has no objection to the Contractor’s Document—this is not an “approval,” but it means you can proceed.
“Employer-Supplied Materials” (Sub-Clause 1.1.34)
Specifies what materials the Employer must provide, and how they are to be used by the Contractor.
“Exceptional Event” vs. “Force Majeure”
2017 Edition prefers “Exceptional Event”—broader than “Force Majeure”—covering various unexpected, uncontrollable events affecting performance.
Why it matters: Every definition and sub-clause helps avoid costly disputes. If a term or document meaning is unclear, always start with Clause 1!
2️⃣ Key Interpretative Rules & Document Priority (Clause 1.2 – 1.5)
1. Interpretation (Sub-Clause 1.2):
- Headings/marginal notes aren’t contractually binding.
- Singular includes plural; “in writing” means any permanent, retrievable record.
- 2017 Edition: Explicit on legal phrases (“shall” vs. “may”, “include” vs. “including”).
💡 Real-World Tip: “Shall be deemed” (Legal Fictions)
If the contract says an action “shall be deemed” to occur (e.g., Engineer missing a deadline), Clause 1.2 makes that automatic. It’s not a suggestion—it’s a trigger!
2. Communications, Notices & Language (Sub-Clauses 1.3 & 1.4):
- 1999: 1.3 covers communications; 1.4 covers law/language.
- 2017: 1.3 is “Notices & Other Communications”—must be labeled as a “Notice” and follow set protocols.
Example: If you find a design error and want more time, your claim email must be clearly titled “Notice” and sent to the correct address—or it may not count!
💡 Real-World Pitfall: Label Your Notices!
Sending a “FYI Letter” instead of a labeled “Notice” might mean you lose your claim rights. Always use the contract’s required terms.
3. 🗂️ Priority of Documents (Sub-Clause 1.5)
Contract Agreement
Letter of Acceptance
Letter of Tender
Particular Conditions
General Conditions
Employer’s Requirements
Schedules
Contractor’s Proposal
How to Use: If there’s a contradiction between documents, the higher-ranked document in this stack wins.
Example: If the Employer’s Requirements contradict the Particular Conditions, the Particular Conditions prevail.
Example: If the Employer’s Requirements contradict the Particular Conditions, the Particular Conditions prevail.
📄4. Contract Agreement & Assignment (1.6–1.7)
- Signing the contract: Must happen within the set days after the Letter of Acceptance (28 days in 1999 / 35 in 2017).
- Assignment: You cannot assign (transfer) rights or obligations unless both sides agree—or it’s about assigning payments to a bank (FIDIC usually allows this).
🚫
Warning: No party can “hand over” their contract responsibilities without explicit agreement. Avoid accidental breaches!
📑5. Care, Supply & Confidentiality of Documents (1.8–1.12)
- Everyone: Must keep track of their project documents (designs, Employer’s Requirements, etc.).
- Errors: Promptly notify if you spot mistakes in any contract documents (spelled out in Sub-Clause 1.9 in 1999; expanded in 2017 with disclaimers, possibly BIM if referenced).
- Confidentiality: Keep all sensitive information private.
- Copyright: Contractor owns copyright on design docs, but Employer can use them for operating and maintaining the works.
💡 Pitfall: Who Owns the Design?
Contractors often think they keep full control over their design documents. Not so—while you own the copyright, FIDIC lets the Employer use your documents for the finished project.
⚖️6. Compliance & Joint/Several Liability (1.13–1.14)
🏛️
Employer:
Gets the “big-picture” approvals (planning, zoning, etc.).
Gets the “big-picture” approvals (planning, zoning, etc.).
👷♂️
Contractor:
Responsible for operational permits (health, safety, import licenses, etc.).
Responsible for operational permits (health, safety, import licenses, etc.).
🤝
Joint Venture:
Joint & several liability: The Employer can claim the full debt/responsibility from any JV partner.
Joint & several liability: The Employer can claim the full debt/responsibility from any JV partner.
⚠️
Remember: If you’re in a JV, you’re each “on the hook” for everything. The Employer can pursue one or all JV members for any problem.
7Limitation of Liability (2017 Only, Sub-Clause 1.15)
Caps Contractor’s liability at the sum stated in the Contract Data (unless the loss comes from fraud, deliberate default, gross negligence, or reckless misconduct).
Why This Matters:
Clause 1.15 is your safety net if you’re facing massive claims for accidents or defects—but you lose that protection if your behavior crosses into the “reckless” or “fraudulent” zone.
Clause 1.15 is your safety net if you’re facing massive claims for accidents or defects—but you lose that protection if your behavior crosses into the “reckless” or “fraudulent” zone.
Limitation does not apply to:
- Fraud
- Deliberate default
- Gross negligence
- Reckless misconduct
8Contract Termination (2017 Only, Sub-Clause 1.16)
Termination (under Clause 1.16) doesn’t require any special process—just what the contract or law already says.
This makes it easier to connect the statement to expanded procedures in Clauses 15 & 16 (2017 Edition).
This makes it easier to connect the statement to expanded procedures in Clauses 15 & 16 (2017 Edition).
Why This Matters:
Clause 1.16 streamlines the rules: no extra hoops to jump through, but be sure to follow contract and legal requirements for a valid termination.
Clause 1.16 streamlines the rules: no extra hoops to jump through, but be sure to follow contract and legal requirements for a valid termination.
3️⃣ Key Interpretations and Implications
Clause 1 is the “lens” for your whole FIDIC contract. Every definition and rule here shapes how you read—and argue—every other clause. Here’s how it ripples through your risk, claims, and real-world project choices:
Definitions Drive Risk Allocation
| Definition | Why It Matters | Example Clause |
|---|---|---|
| Unforeseeable | Determines who bears the risk for unexpected conditions. | Sub-Clause 4.12 |
| Cost | Shapes what expenses the Contractor can claim. | Clause 20 (1999), Clauses 20/21 (2017) |
Real-World Example:
Discover unexpectedly tough ground conditions? If your contract defines “Unforeseeable” narrowly, you may have a tough time getting paid for the extra work. A broader, Contractor-friendly definition means the Employer shares more of the risk.
Discover unexpectedly tough ground conditions? If your contract defines “Unforeseeable” narrowly, you may have a tough time getting paid for the extra work. A broader, Contractor-friendly definition means the Employer shares more of the risk.
“Hey, did we remember to check if these conditions are truly ‘unforeseeable’ under Clause 1, or do we risk a dispute with the Engineer?”
2. Hierarchy of Documents Resolves Conflicting Provisions
Clause 1.5 is your contract’s referee—if different documents say different things, it decides which one controls. The more “major” the document, the higher it ranks. (Click to highlight the highest priority!)
Contract Agreement
Letter of Acceptance
Letter of Tender
Particular Conditions
General Conditions
Employer’s Requirements
Schedules
Contractor’s Proposal
Real-World Example:
If your Particular Conditions grant a 20% advance payment but Schedules/Employer’s Requirements say “No advance payment,” Clause 1.5 typically gives Particular Conditions priority—so you get the advance!
If your Particular Conditions grant a 20% advance payment but Schedules/Employer’s Requirements say “No advance payment,” Clause 1.5 typically gives Particular Conditions priority—so you get the advance!
“Let’s check the priority list in Clause 1.5. We might have a conflict between the Schedules and the Letter of Acceptance—so which rules?”
3. Joint and Several Liability for JVs
Under Clause 1.14, if you’re in a joint venture, the Employer can recover the full amount from any one JV partner. Risk-sharing among partners only happens later, via your own JV agreement.
Heads-up: Each JV member is 100% on the hook for the whole contract if the Employer claims. Sort out your internal “back-to-back” agreement before signing!
Real-World Example:
If a JV gets hit with $5M in delay damages, the Employer can demand all $5M from just one member—then it’s up to that member to get reimbursed by their partners.
If a JV gets hit with $5M in delay damages, the Employer can demand all $5M from just one member—then it’s up to that member to get reimbursed by their partners.
“Have we hammered out our internal JV agreement? If the Employer demands all the damages from us, we need to ensure we can recover the other members’ portions.”
4. Notice Requirements and Formalities
Checklist for Valid Notices (2017, Clause 1.3):
- Label as “Notice” (don’t call it “FYI letter”!)
- Reference the relevant sub-clause (e.g., “Notice under Sub-Clause 1.3”)
- Send to the correct address (as per Contract Data)
- Use a permanent, retrievable form (email, registered mail, etc.)
Tip: If you don’t follow all the steps, your Notice could be invalid—and your claim, variation, or instruction might be lost!
What can go wrong? If you label your letter “FYI” instead of “Notice,” or send it to the wrong address, the Employer may claim your request is not valid. You could lose extension of time or payment rights!
Make sure to label that letter as a ‘Notice under Sub-Clause 1.3’—otherwise, the Employer might say it doesn’t count! Let’s follow the exact format and send it to the specified email and physical address.
5. Limitation of Liability and Other 2017 Additions
🛡️ Contractor’s liability capped at the sum in the Contract Data (except for fraud, deliberate default, or reckless misconduct).
Example: If a design error leads to multi-million-dollar claims, Clause 1.15 could shield you—but only if you weren’t reckless or fraudulent.
Wait, is our liability capped in Clause 1.15, or did the Particular Conditions remove the cap? We need to check the Contract Data to be sure.
6. Clause 1’s Influence on Claims & Disputes (Especially in 2017)
Clause 1
(definitions: Claim, Notice, Cost)
(definitions: Claim, Notice, Cost)
➡️
Trigger Claim/Dispute
(e.g., Exceptional Event)
(e.g., Exceptional Event)
➡️
Follow Procedures
(Clause 20/21, Notices)
(Clause 20/21, Notices)
Key 2017 “Claim” Requirements:
- “Claim” must match Clause 1.1.5’s definition
- Notice must follow all Clause 1.3 formalities
- Refer to the right sub-clause in all communications
- Use exact wording (“Notice of claim” or “Notice of Dissatisfaction”)
Tip: Get the words and procedures right from the start—otherwise, your claim may be delayed or denied!
Real-World Example:
If claiming an extension of time for unforeseen weather, always double-check the Clause 1 definitions for “Cost,” “Exceptional Event,” and “Claim.” If you must issue a “Notice of claim,” get the phrase and address exactly right.
If claiming an extension of time for unforeseen weather, always double-check the Clause 1 definitions for “Cost,” “Exceptional Event,” and “Claim.” If you must issue a “Notice of claim,” get the phrase and address exactly right.
We plan to file under Sub-Clause 20.2 for an extension. Let’s confirm the definition of ‘Claim’ in Clause 1.1.5 to see if it covers this scenario.
4️⃣ Cross-Referencing with Other Clauses
Clause 1 is your contract’s “central station.” Its definitions and rules are referenced across almost every other clause. Here’s how it connects:
Clause 1
(Definitions, Priority, Interpretation)
(Definitions, Priority, Interpretation)
Clause 4
The Contractor
The Contractor
- “Unforeseeable” (physical conditions, 4.12)
- “Base Date” (pricing info, 4.12)
- “Cost” (additional payments)
Clause 8
Commencement & Delays
Commencement & Delays
- “Commencement Date” (see Clause 1 definition)
- “Day”/“Year” for damages & periods
- Refer to Clause 1 for all timing terms
Why you’ll reference Clause 1:
When seeking extra time or payment, always check both the clause on entitlements (like 4.12 or 8.4) and Clause 1 for definitions and timing rules.
When seeking extra time or payment, always check both the clause on entitlements (like 4.12 or 8.4) and Clause 1 for definitions and timing rules.
Example: Can’t figure out what counts as the official “Commencement Date”? Clause 1.1.3.2 (1999) or 1.1.6 (2017) gives you the Engineer’s Notice as the answer.
Think of Clause 1 as your “station map”—it helps you find your way through every other provision.
Think of Clause 1 as your “station map”—it helps you find your way through every other provision.
Clause 13 – Variations & Adjustments and Clause 17/18 – Risk & Exceptional Events
Clause 1
⟶
Clause 13: Variations & Adjustments
⟶
- Defines Variation (“change to Employer’s Requirements or Works”)
- Clarifies Cost and Cost Plus Profit
- Invokes Priority of Documents if Variation conflicts with Employer’s Requirements
Clause 17/18: Risk & Exceptional Events
- 1999: “Risk & Responsibility” (Clause 17), “Force Majeure” (Clause 19)
- 2017: “Care of the Works” (17), “Exceptional Events” (18)
- All reference definitions like “Exceptional Event,” “Base Date,” “Laws,” and “Notice” from Clause 1
Why you’ll reference Clause 1:
Whether you’re arguing for more payment after a Variation or handling a force majeure/exceptional event, you’ll always pivot back to the official definitions and Notice requirements in Clause 1.
Whether you’re arguing for more payment after a Variation or handling a force majeure/exceptional event, you’ll always pivot back to the official definitions and Notice requirements in Clause 1.
🧑💼 Illustration: Variation Cost Dispute
Negotiating a Variation for new mechanical works? If the Employer says it’s a “minimal” Cost but you think it’s significant, use Clause 1’s definitions of “Cost” (and “Cost Plus Profit”) to prove your case—especially for the Engineer’s assessment.
Scenario:
A flood disrupts your site. In 1999, check Clause 19 for Force Majeure. In 2017, check Clause 18 for “Exceptional Event.” In both, you’ll always reference Clause 1 for definitions of “Exceptional Event,” “Unforeseeable,” “Country,” or “Laws”—plus how to issue a proper Notice.
A flood disrupts your site. In 1999, check Clause 19 for Force Majeure. In 2017, check Clause 18 for “Exceptional Event.” In both, you’ll always reference Clause 1 for definitions of “Exceptional Event,” “Unforeseeable,” “Country,” or “Laws”—plus how to issue a proper Notice.
Clause 19 (1999) / Clause 20 (2017): Force Majeure, Claims & Arbitration
1999: Force Majeure & Claims
- Clause 19: Defines Force Majeure by reference to Clause 1
- Claims for time/cost rely on Clause 1’s definitions (“Cost”, “Force Majeure”, “Laws”)
- Notice formalities refer back to Clause 1
2017: Exceptional Events & Claims
- Clause 18: “Exceptional Events” replaces Force Majeure
- Clause 19: Now covers Insurance
- Clause 20: “Employer’s and Contractor’s Claims” with clear Notice/Claim rules—definitions in Clause 1
- Clause 21: “Disputes & Arbitration” (NODs defined in Clause 1)
Key Takeaway: When making a claim for Force Majeure/Exceptional Event, or triggering arbitration, always check Clause 1 for up-to-date definitions and Notice requirements. Missing a step can mean losing your rights!
Sample Claims & Dispute Pathway
Step 1: Contractor faces a Force Majeure/Exceptional Event (e.g., flood, new law, government order).
Step 2: Checks Clause 1 for the definition of the Event, “Cost,” and Notice rules.
Step 3: Issues a Notice (with all required labels/addresses—see Clause 1).
Step 4: If payment or time is disputed, moves to Clause 20 (2017) or Clause 20/Arbitration (1999)—again, using “Notice of Claim” or “Notice of Dissatisfaction” as defined in Clause 1.
7. Clause 15 & 16 – Termination (Both Editions)
Notice to Correct
(15.1)
➡️
(15.1)
Failure to Comply
➡️
Notice of Termination
➡️
Contract Terminated
Don’t get caught out: If a Notice isn’t valid under Clause 1’s definition (wrong label, address, or missing info), the entire termination could be challenged.
Example: If the Employer issues a “Notice to Correct” (15.1) but fails the format, the Contractor can challenge the termination’s validity. In 2017, Clause 1.16 says: just follow the contract—no extra hoops!
🎮 Bonus Tip: Clause 1 and “Project Document Tetris”
Definition
Notice
Priority
Interpret
Cost
Unforeseeable
Comms
- Definition: What “day,” “Cost,” or “Unforeseeable” means
- Notice: How to send/receive contract communications
- Priority: Which document controls if there’s a conflict
- Interpretation: How to read legal/contract terms
- Cost: How extra work is valued or claimed
- Unforeseeable: Risk and claim triggers
- Comms: Ensures everyone is in sync
Contractual “pile-up” alert! Forget a Clause 1 “piece” and your contract could jam up—just like Tetris. Always drop the right piece at the right time!
Tip: Whenever Clauses 2, 8, 13, 17, 19, or 20 reference definitions or Notices, always check Clause 1—make sure every piece fits for a smooth project.
5️⃣ What If Scenarios?
6️⃣ Suggestions for Clarity and Improvement
Define Key Terms Precisely
Add project-unique terms (e.g., local authorities, permits) clearly to Clause 1.1 or in Particular Conditions under “Other Definitions.”
Explicitly Reference Local Codes
If your project is in India, for example, reference Indian codes/standards in the definition of “Laws,” or create a special sub-definition for them.
Apply Golden Principle GP2: Clarity of Amendments
If Particular Conditions modify Clause 1, state exactly whether a sub-clause is “deleted and replaced” or “added.” Never leave ambiguity—make it clear what text is in force!
Consider Strengthening Notice Requirements
For complex/multi-party projects, detail required content for Notices (what, when, to whom, how) beyond basic FIDIC. Avoid “I thought you knew” misunderstandings!
Avoid Overlapping Definitions
Cross-check your Particular Conditions so you don’t add definitions that contradict or duplicate those in Clause 1.
Golden Principle (GP2): Be unambiguous—state if you’re “deleting and replacing” or “adding” a clause. That’s true clarity!
Clarity check: Contradictory or vague definitions can lead to disputes, delays, or unenforceable contract terms. Review everything—especially after amendments!
7️⃣ Final Takeaways
Clause 1 = The Foundation of Your Contract
- Definitions & Rules: Clause 1 underpins every provision. Review it thoroughly from Day 1.
- Document Hierarchy: Clause 1.5 guides how to resolve inconsistencies and avoid contractual stalemates.
- Notices & Communications: Especially in 2017, key communications must be labeled “Notice” and comply with Clause 1 rules.
- JV Liability: Clause 1 imposes joint and several liability for Joint Ventures. Draft robust internal JV agreements!
2017 Update: Many more definitions (Claims, Exceptional Events, DAAB, etc.) and stricter form requirements—less confusion, but higher compliance demands.
Consistency & Clarity: Review Clause 1 during contract formation. It smooths administration and prevents disputes down the road.
Prefer learning by video? Watch our detailed walkthrough of the FIDIC Yellow Book 1999. It covers all the topics above, step-by-step!