Prominence Supply of Equipment and Materials
(Правовое руководство по составлению строительных контрактов)
In structuring provisions in their contract concerning the supply of equipment and materials, the parties might bear in mind that supply of equipment and materials by the contractor under a works contract has features which may differ from those in respect of delivery of goods under a sales contract (paragraph 2).
The parties may wish to consider whether certain issues connected with the supply of equipment and materials should be settled in their works contract in accordance with a particular trade term as interpreted in the International Rules for the Interpretation of Trade Terms (INCOTERMS). Since trade terms are interpreted in INCOTERMS primarily in the context of sales contracts, some issues in a works contract may need to be resolved in a manner different from that in INCOTERMS (paragraph 3).
The necessity for and nature of the description in the contract of equipment and materials to be supplied by the contractor may depend upon the contracting approach chosen by the purchaser as well as the extent of the contractor's obligations (paragraphs 6 and 7).
It is advisable to specify in the contract the time when and the place where equipment and materials are to be supplied. In some cases, the contract might obligate the contractor to supply equipment and materials on a specified date; in other cases, it might obligate him to supply them within a specified period of time. The place of supply may depend upon whether or not the purchaser is to take over the equipment and materials (paragraphs 8 to 10).
The contract may specify which party is obligated to arrange for the transport of equipment and materials and to bear the costs connected with that transport. It may also deal with such ancillary issues as the packing of the equipment and materials, permits required for the transport, marking of the equipment and materials, and delivery to the purchaser of the documents connected with the transport (paragraphs 11 to 14).
The contract might specify which party is to arrange customs clearance of the equipment and materials and to pay the customs duties (paragraphs 15 and 16).
The parties should take into account any legal rules in the country where the works is to be constructed which prohibit the import of certain equipment and materials, and any legal rules which prohibit the export of certain equipment and materials from the contractor's country or another country from which they are to be exported. The contract might allocate responsibility for obtaining necessary import or export licences. The contract might also provide that its entry into force depends upon the granting of all import and export licences which are required at the time the contract is entered into, except in respect of such licences as are not obtainable before the start of construction (paragraphs 17 and 18).
Equipment and materials supplied by the contractor may need to be taken over by the purchaser in order to store them, or prior to their being incorporated in the works by the purchaser, or by a contractor other than the one who supplied them. The contract might contain provisions concerning the checking by the purchaser of equipment and materials taken over by him, and the giving of notice of a lack of conformity (paragraphs 19 and 20). The contract may establish the responsibilities of the parties in connection with the storage of equipment and materials on site. If the equipment and materials are to be stored by the purchaser, the contract might establish the extent of the purchaser's responsibility for loss of or damage to the equipment or materials during storage (paragraphs 21 to 26).
If the purchaser assumes the obligation to supply certain equipment and materials needed for the construction of the works by the contractor, it is advisable for the contract to specify the quantity and quality of the equipment and materials to be supplied, as well as the time when they are to be supplied. In addition, the contract might obligate the contractor to inspect the equipment and materials promptly after they have been supplied by the purchaser, and require notice to be given to the purchaser of any lack of conformity of the equipment and materials (paragraphs 27 to 29).