Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
Adama University
School of Information & Technology
Department of Civil Engineering & Architecture
Construction Law & Contract Course
For
Postgraduate Students of
Construction Management
Lecture Notes
On
Construction Contract: The Ethiopian Context
Organized & Delivered by
Zewdu Tefera Worke
December 10, 2009
1
Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
Construction Law & Contract
Construction Contract: The Ethiopian Context
Table of Contents
I.
II.
III.
IV.
Background
Administrative Contract
The MoWUD Conditions of Contract
The PPA Conditions of Contract
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Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
Construction Law & Contract
Lecture Notes On
Construction Contract: The Ethiopian Context
Deliverd by: Zewdu Tefera Worke
--------------------------------------------------------------------------------------------1.
Background
 Under this part of the Course, we shall try to cover, only in general
terms, the issue of:


Administrative Contract;
The Standard Conditions of Contracts in use in
Ethiopia i.e. the Conditions of Contract:
o Of the MoWUD( Ministry of Works & Urban
Development); and
o PPA (Public Procurement Agency) of the
Ministry of Finance & Economic Development).
 The Law of Administrative Contract is an important concept in
relation to Public Procurement especially with respect to Public
Works since 1960.
 The MoWUD Conditions of Contract are important local conditions
of contract. The current one is valid since 1994. Such conditions of
contract highly resembles that of FIDIC’s conditions of contract. It
applies for civil engineering works.
 The PPA Conditions of Contract are recent one. They have been
issued in January 2006. They are applicable to all possible sorts of
public (federal) procurement.
 We shall examine them, in turn.
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Zewdu Tefera Worke, Engineering Contracts Lawyer
2.
Administrative Contract
 An administrative contract is a special type of contract, recognized
under the Civil Code.
 It is separately regulated under Article 3131-Article 3306 of the Civil
Code.
 It is a contract to be signed between a public (government) authority
& a private party.
 Definition: See Article 3132 for the definition of Administrative
Contract under the Civil Code:
 A contract shall be deemed to be an administrative contract
where:
a) it is expressly qualified as such by the law or by the
parties; or
b) it is connected with an activity of the public service and
implies a permanent participation of the party contracting
with the administrative authorities in the execution of
such services; or
c) it contains one or more provisions which could only have
been inspired by urgent considerations of general interest
extraneous to relations between private individuals.
 Elements: France & Ethiopia
 France
 one of the parties to the contract must be a public authority
(persona publique);
 the contract must be executed in the interest of the public
service(interet general);
 the contract must satisfy one of the following two conditions;
 there must be a direct participation by the contractant in
the execution of the public service itself; or
 the contract must contain at least one “clause exorbitant
du droit commune…”i.e. extra legal rules;
 Ethiopia
 one of the parties should be a public authority; as per Article
3132(a) cum Article 3131 of the Civil Code;
 designated as an administrative contract by law (ex. contract
of concession of public services, contract of public works &
contract of supplies) or qualified as such by the parties; see
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Zewdu Tefera Worke, Engineering Contracts Lawyer
Article 3132(b) cum Article 1767(2) including Article 3191Article 3193;
 there must be a public interest or service; i.e. general interest
of the public in its mission; an organ charged with carrying it
out; special prerogatives conferred on such organ; see Article
 there must be a permanent (rather direct) participation of a
contractant;
 there must be a “clause exorbitant” or urgent consideration
for the general interest which is extraneous to private
contracts, which implies the existence of prerogatives in the
hands of the public authority which is not the case in private
contracts;
 Not all contracts to be signed between the public authority & the
private contracting party may be categorized under the
administrative contract.
 The legal effect of a contract being an administrative contract is that
the administrative authority & the private contracting party are not
at equal footing.
 Difference
 The difference between the administrative(Public Works)
contract & private law contract being that:
 the private law contracts are made by two equal parties
for two equal interests;
 while the administrative contract are entered in to by two
unequal parties for the interest of the general good-which
subordinates the individual interest to that of the public;
 It is up on the recognized powers of eminent domain that the
French division in the field of Administrative Contract is
grounded.
 The Ethiopian law of administrative contract, which has
been based on the French model, has accepted such sheer
distinction between private contract & that of administrative
contract.
 There are the following sub-types of Administrative Contracts.
 These are:
 Concession of Public Services; (Article 3207-Article 3243);
 Contract of Public Works; (Article 3244-Article 3296); and
 Contract of Supplies; (Article 3297-Article 3206)
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Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
 The Contract of Public Works is more relevant for this Course.
 The very feature of an Administrative Contract is that the balance of
the said contract is tilted towards the public authority.
 This imbalance of the contract is legally justified on the basis of public
interest.
 Therefore, the whole theory of the law of administrative contract is
based on balancing the interest or profit motive of the individual on
one hand, and the interest of the general good on the other, of which
by far the important is that of the public good.
 For example, in terms of : termination of contract by public authorities
convenience; (see Article 3180 of the Civil Code)
for
 the non-performance by the public authorities of their
obligations shall not entitle the other (private contracting
)party to fail to perform its obligations; (see Article 3177(1)
of the Civil Code)
 the
administrative
authorities
may…unilaterally
impose…certain modifications of the contract…(see Article
3179 & Article 3283 of the Civil Code);
 the court may not order the administrative authorities to
perform their obligation; (see Article 3194(1) of the Civil
Code)
 others;
 There are certain principles which show this imbalance. They are all
recognized under the civil law legal system.

These principles are the following.
 Theorie des sujetions imprevues
 Literally, it means the theory of unforeseen (physical)
constraints.
 The theory permits compensation of a contractor who
encounters exceptional physical constraints which is not due
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Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
to any act of the administration (public authority) & was not
foreseen at the time of the contract.
 The following contract clause may be illustrative in this
instance.
 Under FIDIC Red Book 4th Edition

Clause 12.2
Conditions
Adverse
Physical
Obstructions
or
 Theorie de l’imprevision
 Literally, it means the theory of want of (non-physical)
foresight.
 The theory compensates the Contractor in the event of
unforeseeable financial, economic & political circumstances.
 The following contract clause & legal provisions may be
illustrative in this instance.
 Under FIDIC




Clause 20.4 Employer’s Risks
Clause 65 Special Risks
Clause 70.1 Increase or Decrease of Costs
Clause 72.1 Rates of Exchange
 Under MoWUD



Clause 20.2 Excepted Risks
Clause 65.2 Special Risks
Clause 70.1 Increase or Decrease of Cost
 Under the Civil Code

Article 3185 Unforeseen Events
 Under PPA


Clause 10 Employer’s & Contractor’s Risks
Clause 11 Employer’s Risks
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Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
 Fait du Prince;
 It means act of government.
 The theory provides an opportunity for the Contractor (in
case the act of government increases the obligation of the
contractor & which was not foreseen when the contract was
entered in to) to obtain full reimbursement where the
administration has somehow intervened by changing the law
or acting in a way that alters the economic balance of the
contract.
 In this context, it is worthy of note that normally for the
purposes of Fait du Prince, the government is regarded as
one & indivisible so that an action of one ministry which
affected a Contractor in a contract with another ministry
would be a ground upon which the Contractor would be
entitled to rely to obtain compensation.
 The act of government may come in to picture in terms of
enacting laws or regulations or orders and other measures;
 Such measures are known, under the Civil Code, as General
Measures (see Article 3190 & Article 3191) & Particular
Measures (see Article 3192 & Article 3193). The issue of
compensation is not automatic in all cases.
 Effects:


the act must directly modify the contract; or
the act must prevent the enforcement of some of the
provisions of the contract;
 If such conditions been fulfilled, the contractant may be
entitled to compensation.
 The following contract clauses & legal provisions may be
illustrative to the understanding of the theory.
 Under FIDIC



Clause 51.1 Variations- Power of the Administration to
Vary Contract
Clause 70.2 Subsequent Legislation
Clause 71.1 Currency Restrictions
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Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
 Under MoWUD


Clause 51.1 Variations
Clause 70.7 Subsequent Legislation
 Under the Civil Code (Acts of Government)

Article 3190 General Measures 1. Affecting Substance
of Contract;

Article
3191 2. Making the Performance of the
Contract More Onerous;

Article 3192
Particular Measures
Contracting Authorities;

Article 3193
Authority;
1.Taken by
2. Taken by Another (public)
 These theories are not applicable to the contracting parties with
equal footing i.e. within the context of private construction contract.
 Private construction contracts in Ethiopia are also separately
regulated under the Civil Code.
 To this effect the following sections of the Civil Code are highly
relevant:
 Article 2610-Article 2631 of the Civil Code; i.e.
Contract of Works & Labour; and

3.
Article 3019-Article 3040 of the Civil Code; i.e. Contract
of Work & Labour relating to Immovables;
The MoWUD Standard Conditions of Contract
 Officially, known as “Standard Conditions of Contract for
Construction of Civil Work Projects”.
 It has been in practice since December, 1994.
 It contains 75 clauses including Form of Agreement & Form of
Performance Bond.
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Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
 It structure & content resembles that of FIDIC Standard Conditions
of Contract for Civil Engineering Works, Fourth Edition, 1987.
 The Project Delivery System adopted is that of Design-Bid-Build.
 The type of contract is based on bill of quantities or BOQ i.e. it is an
ad measurement contract type (see Clauses 55-57).
 The role of the Engineer is envisaged & maintained.
 The general framework of the said conditions of contract includes the
following items,






















definitions & interpretation;
engineer & engineer’s representative;
assignment & subletting(of the construction contract);
contract documents;
general obligations (of the contractor);
provision of labour, materials & workmanship;
commencement time & delays;
maintenance & defects, alterations;
additions & omissions;
plant, temporary works & materials;
measurement;
provisional sums;
nominated subcontractors;
certificate & payment;
remedies & power(in case of the default of the contractor);
special risks (of the employer);
frustration(of the contract);
settlement of disputes(by arbitration);
notices;
default of the employer;
changes in costs & legislation; and
other matters (like the issue of warranty in respect of defects
of construction, taxation, explosives, contract confidential,
and publicity);
 However, there are certain differences between the MoWUD & the
FIDIC Conditions of Contracts concerning substance & otherwise.
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Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
4.
The PPA Standard Conditions of Contract
 The PPA, under its legal mandate provided under The Public
Procurement Proclamation, it has prepared & issued certain standard
tender & contract documents for the purpose of public procurement.
 The conditions of contract are applicable to the procurements of the
federal government.
 The Standard Conditions of Contract cover the following types of
procurement.
 These are Standard Conditions of Contract for the procurement of:




Consultancy Services;
Non-consultancy Services;
Works;
Goods;
Including Simple Request for Quotations & Local Purchase
Order;
 Procurement of Works
 The Standard Conditions of Contract for the purpose of the
procurement of Works have been prepared for:
 International Competitive Bidding (ICB); and
 National Competitive Bidding (NCB), separately.
 User’s Guide has also been prepared, separately, both for the ICB &
the NCB.
 The Conditions of Contract have been also prepared both in Amharic
& English language.
 The conditions of contract are based on Design-Bid-Build project
delivery system.
 The type of contract could be based on BOQ, in which case it
becomes measurement based.
 Or based on Activities Schedule, in which case it becomes lump sum.
 The role of the engineer is envisaged.
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Organized by:
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 Such conditions of contract are expressly qualified
administrative contract. See Article 3132(a) of the Civil Code.
as
an
 The documentation of PPA is divided in to the following three parts,
namely,
 Bidding Procedure;
 Schedule of Requirements; and
 Contract;
 Bidding Procedure & Documentation
 Under this part, the following are included, namely,
 Section 1 Instruction To Tenderers(ITB);






General;
Bidding Documents;
Preparation of Bids;
Submission of Bids;
Bid Opening & Evaluation;
Award of Contract;
 Section 2 Bid Data Sheet(BDS)
 Section 3 Evaluation & Qualification Criteria (EQC)






Average Annual Volume of Construction Work;
Experience as Prime Contractor;
Acquisition of essential Equipment( by way of
ownership, hire or lease);
Personnel;
Liquid Assets and/or Credit Facilities;
The issue of Joint Venture;
 Section 4 Bidding Forms




Bid Submission Form;
Priced Schedules (BOQ OR Schedule of Activities);
Bid Security;
Qualification Information;
 Section 5 Eligible Countries
 Schedule of Requirements & Documentation
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Zewdu Tefera Worke, Engineering Contracts Lawyer
 Section 6 Schedule of Requirements
 Scope of Works;
 Technical Specification;
 Drawings;
 Bill of Quantities or Activity Schedule;
 Contract & Contract Documentation
 Under this part, the following are included.
 Section 7 General Conditions of Contract (GCC)
 The GCC is composed of 62 Clauses.
 It contains the following parts.





General; (Clause 1-Clause 26)
Time Control; (Clause 27-Clause 32)
Quality Control; (Clause 33-Clause 36)
Cost Control; (Clause 37-Clause 54)
Finishing the Contract; (Clause 55-Clause 62)
 General
 This section includes the following items: definitions,
interpretations, language & law, engineer’s decision,
delegation,
communications,
sub-contracting,
other
contractors, personnel, employer’s & contractor’s risks,
insurance, site investigation reports, queries about the special
conditions of contract, contractor to construct the works, the
works to be completed by the intended completion date,
approval by the engineer, safety, discoveries, possession of
site, access to site, instructions, disputes, procedure for
disputes, replacement of adjudicator.
 Time Control
 This section includes the following items: program, extension
of the intended completion date, acceleration, delays ordered
by the engineer, management meetings, and early warning.
 Quality Control
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Zewdu Tefera Worke, Engineering Contracts Lawyer
 This section includes the following items: identifying defects,
tests, correction of defects, uncorrected defects.
 Cost Control
 This section includes the following items: BOQ or activity
schedule, change in the BOQ or activity schedule, variations,
payment for variations, cash flow forecasts, payment
certificates, payments, compensation events, tax, currencies,
price adjustment, retention, liquidated damages, bonus,
advance payment, securities, day works, and cost of repairs.
 Finishing the Contract
 This section includes the following items: completion, taking
over, final account, operating & maintenance manuals,
termination, payment upon termination, property, and
release from performance.
 Section 8 Special Conditions of Contract (SCC)
 Section 9 Contract Forms




Agreement;
Performance Bank Guarantee;
Performance Bond;
Advance Payment Guarantee;
 Other Procurements & Related Documentation
 By the other documentation we mean the documentation that have
been prepared for the procurement of: Consultancy Services;
 Non-Consultancy Services;
 Goods;
 The documentation has been prepared both for ICB & NCB.
 The documents have been prepared both in Amharic & English
language.
 They do all have the following structure.
 They are divided in to the following major parts, namely,
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Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
 Bidding Procedure;
 Schedule of Requirements; and
 Contract;
 Bidding Procedure & Documentation
 Under this part, the following are included.




Section 1 ITB;
Section 2 BDS;
Section 3 Evaluation Criteria;
Section 4 Bidding Forms;
 For Consultancy Services


For Technical Proposal;
For Financial Proposal;
 For Non-Consultancy Services




Bid Submission Sheet;
Bid Security;
Price Schedule; and
Qualification Form;
 For Procurement of Goods




Bid Submission Sheet;
Price Schedule for Goods & Related Services
Bid Security; and
Manufacturer’s Authorization;
 Section 5 Eligible Countries;
 Schedule of Requirements & Documentation
 Section 6
 For Consultancy & Non-Consultancy Services
 Terms of Reference
 For Procurements of Goods
 Statement of Requirements
o List of Goods & Related Services;
o Delivery & Completion Schedule;
o Technical Specifications & Compliance Sheet;
and
o Drawings;
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Zewdu Tefera Worke, Engineering Contracts Lawyer
 Contract & Contract Documentation
 Section 7 GCC
 Section 8 SCC
 Section 9 Contract Forms
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Organized by:
Zewdu Tefera Worke, Engineering Contracts Lawyer
Construction Law & Contract
Reference Materials For
Construction Contract: The Ethiopian Context
---------------------------------------------------------------------------------------------------1.
2.
The Civil Code of Ethiopia;
The FIDIC international Conditions of Contract for Civil Engineering
Works (4th Edition, 1987 & 1992(as amended);
3. FIDIC 4th A Practical Guide, by E.C.Corbett, Commentary of International
Construction Contract, 1991; (specially with respect to Administrative
Contract & the summaries of the very messages of the whole provisions of
the general conditions of contract of FIDIC)
4. The Ministry of Works & Urban Development Standard Conditions of
Contract for Construction of Civil Work Projects (December, 1994);
5. The PPA Conditions of Contract for Works (January, 2006) for
International Competitive Bidding (ICB);
6. The PPA Conditions of Contract for Works (January, 2006) for National
Competitive Bidding (NCB);
7. User’s Guide for Standard Bidding Document for the Procurement of
Works for ICB;
8. User’s Guide for Standard Bidding Document for the Procurement of
Works for NCB;
9. Kebede Gebre Mariam, The Concept of Administrative Contract in French
& Ethiopian Law, Haile Selassie University, Faculty of Law,
1967;Unpublished
10. Other documents
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