Safeguarding Your Project: The “Care of the Works” Clause in EPC Contracts

The “Care of the Works” clause acts as a safety net in Engineering, Procurement, and Construction (EPC) contracts. This clause outlines the Contractor’s responsibilities for maintaining and protecting the completed project until a specified period, often called the “Defects Liability Period” or “Warranty Period”. Its purpose is to ensure the project’s integrity and functionality after handover.

Let’s delve into the key elements of this crucial clause:

1. Contractor’s Responsibility
   • The Contractor bears the primary responsibility under this clause. This includes:
     • Repair and Replacement: Fixing any defects, damages, or failures caused by poor workmanship, faulty design, or substandard materials. The Contractor can choose to repair or replace the affected elements.
     • Maintenance: Beyond addressing defects, the Contractor may also be responsible for routine maintenance to keep the project in good working order. This encompasses regular maintenance activities, replacing worn parts, and ensuring optimal system and equipment performance.
2. Exclusions from Contractor’s Responsibility
   • The clause also clarifies situations where the Contractor is not liable, such as:
     • Owner’s Risks: Losses or damages stemming directly from the Owner’s actions, third-party contractors hired by the Owner, or other external parties are not the Contractor’s responsibility.
     • Uninsurable Risks: “Force Majeure” events, unforeseeable circumstances beyond either party’s control that cannot be insured against, also fall outside the Contractor’s liability under this clause.
3. Risk Transfer Date
   • A critical aspect is the risk transfer date. This is the point where project responsibility shifts from the Contractor to the Owner. Typically, this occurs upon project delivery or formal acceptance. From this point onwards, the Owner assumes the risk of loss or damage, signifying reduced liability for the Contractor.
4. Legal and Financial Implications
   • To ensure adherence to their obligations under this clause, Contractors often need to provide a performance bond or similar financial security. This acts as a guarantee for fulfilling their maintenance and repair duties during the defined period. Failure to comply can result in financial penalties or other legal consequences for the Contractor, highlighting the importance of this clause in protecting the project post-completion.

In conclusion, the “Care of the Works” clause in an EPC contract is a critical provision. It addresses maintenance, protection, and liability aspects of a construction project. It clearly outlines the Contractor’s repair and maintenance responsibilities during the Defects Liability Period, details exclusions from this responsibility, and specifies when risk is transferred to the Owner. Understanding and negotiating the terms of this clause is essential for both parties to ensure clarity, effective risk management, and a successful project.

Created by iax, Enhanced by AI

Proudly powered by WordPress

• Facebook
• Twitter
• WordPress