Plain-language explanations of key terms — for engineers and project managers, not lawyers.
The law that governs the interpretation and enforcement of the contract. In international construction contracts, the governing law is usually specified explicitly and may differ from the law of the country where the project is located. Governing law affects how ambiguities are resolved, what implied terms are read into the contract, and the enforceability of particular clauses. It must be distinguished from the seat of arbitration, which determines the procedural law of any arbitration.
In construction, a guarantee is a commitment by one party to answer for the performance or obligations of another. Examples include parent company guarantees (where a parent guarantees the obligations of a subsidiary contractor), performance bonds, and advance payment guarantees. Guarantees must be carefully distinguished from indemnities, and the trigger conditions (on-demand vs. conditional) must be clearly understood.
The physical and subsurface conditions of the site, including soil type, groundwater, contamination, and geological features. Responsibility for ground conditions risk is one of the most significant — and most frequently disputed — issues in construction contracts. Under FIDIC Red Book Sub-Clause 4.12, the contractor may claim additional time and money for unforeseeable physical conditions. Under FIDIC Silver Book, the contractor bears almost all ground conditions risk.