This Practice Note looks at how defects are dealt with under the FIDIC Red, Yellow and Silver Books (pre-2017 editions). For defects under the 2017 editions, see Practice Note: FIDIC Contracts 2017—defects. For a more general discussion on defects, see Practice Note: Defects claims in construction. What is a defect under FIDIC contracts? As with many standard form contracts, FIDIC does not contain a definition of ‘defect’. ‘Defect’ generally means that some of the work or materials does not conform with the requirements of the contract (for further commentary on the meaning of this term, see Practice Note: Defects claims in construction — What is a defect?). Clause 4.1 provides that the Contractor shall design, execute and complete the Works in accordance with the Contract, and shall remedy any defects in the Works. Clause 11 provides that the Contractor should ensure that Works are in the condition required by the Contract by the expiry of the relevant Defects Notification Period (DNP) or as soon as practicable thereafter; this obligation includes the execution of all work required to remedy

A covenant is a form of contract. The doctrine of privity of contract establishes that the rights and liabilities created by a contract bind the parties to it but no-one else. However, in the case of a covenant relating to land, property law principles may allow that covenant to be enforced by and/or against persons other than the original parties. The applicable principles are: • in most cases, the benefit of a restrictive covenant and a positive covenant is enforceable by successors in title by virtue of it 'running with the land' both in common law and in equity • subject to certain requirements, the burden of a restrictive covenant will run with the land in equity only (so as to be enforceable against successors in title), but • the burden of a positive covenant will not run with the land (but see Statutory exceptions below) The fact that the burden of positive covenants does not run with the land is generally regarded as a serious deficiency in English property law. It is not possible

This Checklist sets out a number of practical steps that an employer should consider taking where a sub-contractor engaged by main contractor becomes insolvent during a construction project. This Checklist assumes that the employer has entered into a written contract with a main contractor for construction works which are not yet complete (and that the employer still wants to complete the works), and that the contractor has also entered into a written contract with the relevant sub-contractor. It assumes that it is not a PFI project. The actions to be taken in any specific situation will of course depend on the terms of the contract(s) between the parties and the status of the works at the time of the sub-contractor’s insolvency, but this Checklist is intended to provide a starting point for the employer if such circumstances occur. For guidance on how to spot potential problems with solvency and how to protect the employer’s position at the outset of a project, see Practice Note: Construction insolvency—how to spot problems and how to protect yourself—employers. The

_______________________________________ [NAME OF PROJECT] request for disclosure and safeguards regarding [THIRD-PARTY SUPPORT OR USE OF TECHNOLOGY] BY [THE DISPUTE BOARD OR [DB member name] (DISPUTE BOARD MEMBER)] [Date] _______________________________________ Requesting Party: [Name of Party 1] [Address] [Telephone/Fax Number] [Email address] [ON THE HEADED NOTEPAPER OF THE reQUESTING PARTY] The Other Party: [Name of Party 2] [Address] [Telephone/Fax Number] [Email address] The Dispute Board: [Name of DB member] [Address] [Telephone/Fax Number] [Email address] [ [Name of DB Member 2] [Address] [Telephone/Fax Number] [Email address] [Name of DB Member 3] [Address] [Telephone/Fax Number] [Email address]] [[The Engineer/Employer’s Representative] [Address] [Telephone/Fax Number] [Email address]] [NAME OF PROJECT]: request for disclosure and safeguards regarding [third party support OR technology] used or proposed to be used by [the Dispute Board OR [DB member name] as a Dispute Board member] We refer to the contract between the Requesting Party and the Other Party for [brief description of project] dated [date] (the Contract), which provides for the use of a dispute board (the Dispute Board). [The Contract incorporates the [relevant institutional dispute board rules] (the Applicable Rules)] [The Parties have agreed to use the [relevant institutional dispute board rules and details of where the parties agreed to use them]

This Deed is made on [insert date] day of [insert month] 20[insert year] Parties 1 [insert name] (Company Number [insert number]) whose registered office is at [insert address] (the ‘Contractor’); [and] 2 [insert name] (Company Number [insert number]) whose registered office is at [insert address] (the ‘Beneficiary’ which expression shall include successors in title and any permitted assignee)[; and OR .] 3 [[insert name] (Company Number [insert number]) whose registered office is at [insert address] (the ‘Employer’).] WHEREAS (A) [[insert name] (Company Number [insert number])whose registered office is at [insert address] (the ‘Employer’) OR The Employer] has entered into a building contract dated [insert date] with the Contractor (the ‘Building Contract’) relating to the [design and ]construction of certain works as defined under the Building Contract (the ‘Works’) in connection with the development known as [insert name] (the ‘Project’). (B) The Beneficiary has agreed to [provide finance in connection with OR purchase a freehold interest in OR enter into a lease for [insert details] at] the Project. (C) The Contractor has agreed to execute this Deed in favour of the Beneficiary.

[DRAFT ]SETTLEMENT AGREEMENT—pre-action settlement Subject to contract, parties’ signature Care needs to be taken to ensure that a binding settlement agreement comes into effect precisely at the point in time when you intend it to do so and that you do not, inadvertently, conclude a binding agreement ahead of ensuring that all the terms you wish to see included are agreed and included. Use of phrases such as ‘subject to contract’ and ‘subject to signature by parties’ may be used to assist with ensuring that the agreement becomes binding only once these labels have been removed. Be aware, however, that the parties’ intentions and conduct, viewed objectively, may also be taken into consideration when determining whether or not a binding settlement was concluded. Note that this Precedent is for use when settling a claim before proceedings have been issued. The label ‘(pre-action settlement)’ should be removed when adapting the Precedent for your purposes (regardless of whether or not the settlement is being concluded pre-action). [WITHOUT PREJUDICE AND SUBJECT TO CONTRACT [SUBJECT TO SIGNATURE

Arbitration analysis: This decision concerns Olam Global Agri Pte Ltd’s (Seller or Olam) section 69 appeal under the Arbitration Act 1996 (the ‘Act’) against a Grain and Feed Trade Association (GAFTA) Board of Appeal (BOA) award (BOA Award) in favour of Holbud Ltd (Buyer or ‘Holbud’) arising out of a GAFTA 49 FOB sale contract dated 19 November 2021 (the ‘Contract’). The appeal raised two issues: (a) whether an innocent party must prove its own ability to perform its contractual obligations in order to recover substantial damages where the counterparty has repudiated the contract by wrongly declaring force majeure; and (b) whether Clause 6 of GAFTA 49 (‘Clause 6’) permits a substitute vessel to be nominated at any time before the innocent party accepts that repudiation. In setting aside the BOA Award, the Commercial Court held that a wrongful force majeure notice does not, without more, relieve the Buyer of the need to prove it could have performed its own obligations to recover substantial damages. The court also found that Clause 6 does not permit substitution of a nominated vessel outside the clause’s strict timing requirements. Holbud’s claim for substantial damages therefore failed. The case underscores the corrective function of section 69 of the Act (‘Section 69’) and provides important guidance on the application of the compensatory principle in assessing damages following repudiatory breach. Written by Dr Ademola Bamgbose, solicitor advocate and senior associate at Hogan Lovells, London and Sofie Gowran, trainee solicitor at Hogan Lovells, London.

The Chartered Institute of Arbitrators (CIArb) has published an analysis of three significant Technology and Construction Court (TCC) decisions from 2025 regarding adjudication under the Housing Grants, Construction and Regeneration Act 1996.  In Grove Construction v Bagshot Manor Ltd [2025] EWHC 591, the court clarified that contractors cannot adjudicate against assignees, confirming that an assignment does not transfer the burdens of a contract without a formal novation agreement. The Lapp Industries v First Formations Ltd [2025] EWHC 943 case examined whether multiple work orders should be treated as separate contracts or as variations of a single contract, the adjudicator’s decision to consider them as part of one contract was upheld and claims of a breach of natural justice were dismissed. In Midas Construction v Harmsworth Pension Funds Trustees Ltd [2025] EWHC 1122, the court addressed security for cost requirements when the claimant is insolvent, emphasising that security arrangements should leave the responding party in a position equivalent to that of dealing with a solvent claimant, and rejecting the claimant’s attempt to stage security payments. Collectively, these decisions provide clarity on jurisdiction, natural justice requirements, and security staging, and offer essential guidance for construction adjudications.

The Local Government and Housing Directorate and Cladding Remediation Directorate have published new guidance on verifying cladding remediation building warrant applications. This guidance supports the implementation of the Building (Scotland) Amendment Regulations 2022, SI 2022/136, which banned combustible cladding materials for buildings over 11 metres effective 1 June 2022. Under these regulations, materials must achieve European Classification A1 or A2-s1, d0 in accordance with BS EN 13501-1:2018 standards. Separately, Cabinet Secretary for Housing Mairi McAllan has reported that Persimmon, Taylor Wimpey, Barratt Redrow and Springfield have signed the Developer Remediation Contract published on 21 November 2025. Meanwhile, Miller, Cala, and Bellway have confirmed they are in the process of signing the contract.

This week's edition of Commercial weekly highlights includes: judgment of the Court of Appeal in Orion Shipping and Trading Ltd Llc v Great Asia Maritime Ltd where the court allowed the appeal against the High Court judgment that had overturned an arbitral award granting damages for loss of bargain, judgment of the Court of Appeal in Advanced Multi-Technology for Medical Industry v Uniserve Ltd where the court ruled on appeals arising from disputes over a supply contract and a commission contract signed during the peak of the COVID-19 pandemic, and news that the Competition and Markets Authority has published guidance on how to report suspected breaches of competition or consumer law, detailing the process and expectations for complainants.

The Health Research Authority (HRA) has released a draft Investigator Initiated Study Agreement, developed alongside devolved administrations, for use between non-commercial sponsors and commercial organisations. Typically when this research takes place it can take a long time to get an agreement because there is no standard contract available. The HRA produced this template agreement in response to Lord O'Shaughnessy's review of clinical trials identifying this issue and as part of the NHS Recovery Resilience and Growth programme to make it easier to set up clinical research in the NHS. The draft has been developed by the R&D Forum contracts group, who are NHS contract managers, with support from the UK Four Nations contracts leads and will be receiving comments on the draft model agreement until 9.00 am on 13 May 2024.

The National Crime Agency (NCA) has reported that former solicitor, Philip Shiner, has pleaded guilty to three counts of fraud at Southwark Crown Court. Shiner applied for approximately £200,000 in Legal Aid funding to represent clients against the Ministry of Defence for ill treatment of Iraqi detainees after the 2003 Iraq war. Shiner received around £3m in the value of the contract and failed to disclose that an agent, acting on Shiner's behalf and with his knowledge, was cold calling and making unsolicited approaches to potential clients in Iraq. Shiner also failed to disclose that a witness statement provided to the Legal Services Commission (now the Legal Aid Agency) was gained by an unsolicited approach and that he was paying referral fees. The Legal Aid contract, obtained through fraud, allowed Shiner to pursue the judicial review.