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ICC Model Contract Turnkey Supply of an Industrial Plant Contract

ICC Model Turnkey Supply of an Industrial Plant Contract

This new title in the ICC series of model contracts covers a particular category of turnkey contracts, one that is limited to the plant or production line and does not extend to items which "surround" the plant, such as buildings, supply of energy, etc.

Turnkey contracts take a range of forms and at present no single model contract covers them all. The Model Contract for the Turnkey Supply of an Industrial Plant has special characteristics:

The supplier's main obligation is to supply the equipment and assist the purchaser during erection and start up
The supplier performs its obligations within facilities that are under the purchaser's
control
This model contract is generally governed by the rules on sale contracts.

This ICC model contract takes account of all of these specifics and contains enough flexibility for the parties to work out special situations for themselves.

Foreword	9
Introduction
1. The turnkey contract considered in this model	10
2. The drafting techniques used	11
3. The entry into force of the contract	11
4. Shipment of the equipment	12
5. The various stages of performance of the contract	13
6. Contract price and payment conditions	14
7. Non-performance and its consequences	14
8. Force majeure	15
9. Applicable law	15
10. Local rules relevant for the performance of the contract	16
11. Jurisdiction and arbitration	17
ICC Model Contract For the Turnkey Supply of an Industrial Plant
Chapter 1: General Clauses
1. Definitions	20
2. Good faith and fair dealing	22
2.1 Good faith in performing the contract	22
2.2 Good faith in interpreting the contract	22
3. Entry into force of the contract	22
3.1 Enty into force	22
3.2Commencement Date	22
3.3 Non-occurence of the Commencement Date	22
4. Subject matter and scope of the contract	23
4.1 Scope	23
4.2 Supplier's obligation	23
4.3 Scope of purchaser's work	23
4.4 Guaranteed performance	23
4.5 Purchaser's general obligation to observe Supplier's instructions	23
4.6 Complete plant	24
4.7 Laws, regulations	24
4.8 Purchaser's duty to cooperate	24
5. Alterations and additional work	24
5.1 Non-substantial alterations	24
5.2 Alterations requested by the purchaser	25
6. Assignment - Subcontractors - Parties' representatives	25
6.1 Prohibition of assignment	25
6.2 Sub-contractors and sub-suppliers	25
6.3 Liability for sub-contractors and sub-suppliers	25
6.4 Project representative and site representative	25
7. Time schedules and co-operation	25
7.1 Time schedule	25
7.2 Alterations to the time schedules	26
Chapter 2: Supply of Technical Documentation, Equipment and Spare Parts
8. Layout	27
8.1 Layout	27
8.2 Corrections to the layout	27
9. Technical documentation	27
9.1 Technical documentation to be provided by the supplier	27
9.2 Corrections to the technical documentation	27
9.3 Use of the technical documentation	28
10. Supply of the equipment	28
10.1 Deadlines for shipping	28
10.2 Storage	28
11. Shipment - Packing - Marking	28
11.1 Reference of Incoterms	28
11.2 Shipment	28
11.3 Packing	28
11.4 Marking - Packing list and other documents	28
11.5 Transfer of risk	28
12. Taking delivery of the equipment	28
12.1 Ta king delivery of the equipment	28
12.2 Examination of the equipment	28
12.3 Notification	29
12.4 Joint examination of the equipment at arrival	29
12.5 Missing or damaged equipment	29
13. Spare parts, raw materials and components	29
13.1 Spare parts	29
13.2 Cost of spare parts	29
Chapter 3: Erection, Testing, Taking over and Training
14. Obligations of the parties	30
14.1 Scope of supplier's obligations	30
14.2 Purchaser's personnel	30
14.3 Preparatory work	30
14.4 Storage of the equipment	30
14.5 Erection equipment	30
14.6 Telephone and fax connections	30
15. Management of the site	30
15.1 Responsibilites of the Parties with respect to operations at the site	30
15.2 Work diary	31
15.3 Interpreter	31
16. Supplier's personnel	31
16.1 Number of persons and duration	31
16.2 Additional manpower	31
17. Travel and lodging expenses of supplier's personnel	31
17.1 Travel expenses	31
17.2 Living expenses	32
18. Erection	32
18.1 Noice of availability and conformation by purchaser	32
18.2 Personnel present at site	32
18.3 Preparation of the erection	32
18.4 Commencement of the erection	32
18.5 Carrying out the erection	32
19. Erection testing	32
19.1 Commencement of erection testing	32
19.2 Performance of erection testing	33
19.3 Completion of erection testing	33
20. Erection Certificate	33
20.1 Drawing up for the erection certificate	33
20.2 Default of deficiencies	33
20.3 Completion of erection testing in absence of the purchaser	33
21. Start up of the plant	33
21.1 Commencement of startup	33
21.2 Operation of the plant during start up	34
21.3 Purchaser's obligation during start up	34
22. Performance testing	34
22.1 Commencement of the tests	34
22.2 Performance of tests and protocol	34
22.3 Repeated performance testing	34
22.4 Time-limit for performance testing	34
22.5 Modifications, additions and repairs	35
23. Taking over	35
23.1 Taking over	35
23.2 Taking over certificate	35
23.3 Minor adjustments, etc.	35
23.4 No right to dispose of the plant	35
23.5 Taking into operation without the suppliers permission	36
23.6 Responsibility for care, custody and control	36
24. Training of purchaser's personnel	36
24.1 Personnel to be put at the purchaser's disposal for training	36
24.2 Training in the supplier's country	36
24.3 Training at the site	36
24.4 No provision of production know-how without seperate agreement	36
Chapter 4: Price, Payment Conditions, Bank Guaranties
25. Contract price	37
25.1 Contract price	37
25.2 Price revision	37
26. Payment conditions	37
26.1 General	37
26.2 Documentary Credit (L/C)	37
26.3 Payment security	38
26.4 Delay interest	38
27. Bank guarantees provided by the supplier	38
27.1 Advance payment guarantee	38
27.2 Performance guarantee	39
28. Taxes, duties, etc.	39
28.1 Taxes and other charges payable in the country	39
28.2 Taxes and other charges payable outside the country	39
Chapter 5: Non Performance and its Consequences
29. Consequences of non-performance - Liquidated damages	40
29.1 Late delivery of equipment	40
29.2 Late take-over	40
29.3 Cumulation of liquidated damages	40
29.4 Non attainment of the guaranteed performance	40
29.5 Suspension of performance	40
30. Contract termination	41
30.1 Termination of supplier's default	41
30.2 Termination of purchaser's default	41
30.3 Termination in case of lasting force majeure	41
30.4 Effects of termination on obligations already performed	42
30.5 Supplier's obligation in case of non-attainment of the minimum performance levels	42
30.6 Compensation for the loss suffered	42
30.7 Sole remedy	42
31. Defects in the plant after taking over	42
31.1 Warranty	42
31.2 Defects liability period	42
31.3 Conditions for liability defects	42
31.4 Notification of defects	43
31.5 Making good of defect	43
31.6 Immediate action in connection with risk of damage	43
31.7 Liability for replaced or repaired parts	43
31.8 Property in replaced defective parts	43
31.9 Final period for making good defects	43
31.10 Failure to make good after defects	43
31.11 Unjustified notification of defects	44
32. Limitation of liability	44
32.1 Sole reason for termination	44
32.2 Indirect or consequential damages	44
32.3 Fraud and wilful misconduct	44
Chapter 6: Final Clauses
33. Force majeure	45
33.1 Definition of force majeure	45
33.2 Failure to perform by a third party	45
33.3 Listed impedements	45
33.4 Consequences of force majeure	46
33.5 Temporary force majeure	46
33.6 Duty to mitigate	46
33.7 Contract termination in case of lasting force majeure	46
34. Confidentiality	47
34.1 Definition of confidential information	47
34.2 Duty of confidentiality	47
34.3 Disclosure to emplyees	47
34.4 Storage of confidential information	47
34.5 Survival	47
35. Contract documents	48
35.1 Contract and contract documents	48
35.2 Attachments	48
36. Applicable law	49
36.1 Option A or Option B	49
36.2 Internationally mandatory rules	49
37. Resolution of disputes	49
37.1 Alternative dispute resolution	49
37.2 Arbitration or litigation	50
Contract Schedules: Specific issues to be determined by the parties
Contract Schedule A: Definition of the site	52
Contract Schedule B: Events to occur before the commencement date (Article 3.2)	53
Contract Schedule C: Contract termination before effectiveness (Article 3.3)	54
Contract Schedule D: Information needed for preparing the layout of the plant (Article 8.1)	55
Contract Schedule E: Shipment of Equipment - Marking - Packing list and other documents	56
Contract Schedule F: Price of the contract (Article 25)	57
Contract Schedule G: Payment conditions (Article 26)	58
Contract Schedule H: Bank guaranties provided by the supplier (Article 27)	59
Contract Schedule I: Liquidated damages for delay (Article 29)	60
Annexes
Annex 1:General description of the plant, guaranteed performance and minimum performance levels	61
Annex 2: Equipment and other goods to be provided by the supplier	63
Annex 3: Main sub-contractors and sub-suppliers (Article 6.2)	64
Annex 4: Technical documentation to be provided by the supplier (Article 9)	65
Annex 5: Time schedule	66
Annex 6: Raw materials, components and consumables	67
Annex 7: Technical personnel provided by the supplier for supervision and assistance (Article 16)	68
Annex 8: Erection equipment (specification)/Specialised personnel provided by purchaser	69
Annex 9: Performance test procedures - Price reduction in case of non-attainment of the guaranteed performance	71
Annex 10: Training of the purchaser's personnel (Article 24)	72
Annex 11: Taking over certificate	73
Annex 12: Transfer of technology (know-how) license	74
Appendices
Appendix 1: United Nations Convention on the International Sales of Goods	75
Appendix 2: Unidroit Pronciples of International Commercial Contracts	101
ICC at a Glance	117
Selected ICC publications	118

Foreword

By Maria Livanos Cattaui, former Secretary General of ICC

Maria Cattaui

The purpose of this ICC model contract is to save resources for companies and their advisers by providing a balanced contractual framework that facilitates and shortens the negotioation process between parties negociating the turnkey supply of an industrial plant.