Standard form for building contract
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About AIAC's SFC

AIAC's Standard Form of Contracts (SFC) is a suite of standard form contracts that are customizable and freely available for print and download. AIAC's SFC was inspired by the prevalent issues plaguing the Malaysian construction industry, aimed at filling the gaps of existing standard form building contracts in governing relationships, rights and duties of parties to a building construction project. It is user-friendly, incorporates Plain English Drafting, and includes clearer provisions to guide users in interpreting the contract. AIAC's SFC is Malaysia’s first ever CIPAA-compliant suite of building contracts and contains more mechanisms for parties to resolve disputes and deadlocks including mediation, encouraging parties to continue work despite disputes, while preserving parties’ rights till completion. The hallmark of AIAC's SFC is continuity of works and working relationships.

Message from our Director

Datuk Professor Sundra Rajoo spoke on the Standard Form of Building Contracts by AIAC on BFM Radio Station on 23rd March 2018. In case you have missed it, click play for the podcast.

KEY FEATURES

Customizable and free
Over 60 definitions of words and expressions for greater clarity (exceptionally inclement weather, fossils & antiquities)
Comprehensive ADR provisions providing for mediation and arbitration while also contemplating the latest legal developments in adjudication
Enlarged powers for the Architect, with powers to delegate his powers to an appointed representative
Clearly sets out accountability between Employer and Architect
Specific time periods for parties to carry out obligations under the SFC
Enhanced provisions on nominated sub-contractors and suppliers
Enhanced provisions on payment, valuation, variation, extension of time and making good defects
Provisions addressing bribery and corruption

BENEFITS

Free of charge– AIAC’s Standard Form of Building Contracts (AIAC’s SFC) will be uploaded on its website. Interested users may download it for free for use, and are free to make any amendments to suit his requirements.
CIPAA Compliant– AIAC’s SFC have taken into account the provisions of CIPAA 2012, and their effect on contract management as well as duties and obligations of the parties in relation thereto.
Greater transparency– Greater transparency with regard to the duties and obligations of all parties concerned, e.g. the Employer, Contractor, Nominated Sub-Contractor, Architect and Consultant, which aims to enhance trust and better working relationship between all parties.
Greater focus on continuity of projects – Enhanced provisions to prevent deadlocks and reduce conflict during, and after completion of the Works. Provides options where rights are infringed, offering greater protection for all.
Reinforces the Principles of Integrity – AIAC’s SFC have included provisions against bribery and corrupt practices, and reinforces the principles of integrity in the implementation of construction projects.
Pragmatic Dispute Resolution Clause– AIAC SFC provide suitable arbitration mechanisms made available by the AIAC, including Fast Track Arbitration procedure, taking into account the amount in dispute involved. In addition, the parties in dispute may refer to mediation at any time, whether before or concurrently with any arbitration, litigation or adjudication proceeding.
Greater Transparency & Accountability while Drawing from past experiences– Fills the gaps and provides procedures dealing with practical contract issues during the implementation of the Works, with a view to avoiding deadlocks, and thereby promoting smooth progress of the works.

The Suite of Contracts

Main Contract

With Quantities

Main Contract

Without Quantities

Standard Sub

Contract

Minor Works

Contract

“The 2018 Edition of AIAC’s SFC derives from the original 2017 edition and is reflective of the name change recently undergone by the AIAC (formerly known as KLRCA).

While retaining the original guiding-principles set out in the original 2017 edition, AIAC’s latest SFC includes enhancements that add clarity, strengthen integrity, and clear any ambiguity in so far as obligations and accountability of parties are concerned.

Click here for a summary of the new and key features of AIAC’s SFC 2018 Edition.

Access to Site	The Employer is responsible to provide the suitable access to site for the Contractor to work on, and the Contractor is responsible for the proper maintenance of the necessary access provided by the Employer. If special and other rights of way are required, the Contractor shall be responsible to provide them.
Valuation of Variations	The provision governing Variations is enhanced to include a timeline and procedure for the valuation of Variations. This procedure clearly sets out the obligations of all parties involved in the construction contract to ensure that Variations are properly and timeously dealt with to avoid future disputes. The feedback from the ground after the publication of the 2017 Edition of AIAC’s SFC was that the problems arising from lack of clear procedure on valuation of variation often left the relevant consultants, contractor and employer in uncertainty as to their obligations, more often than not, leading to delays and distrust and in some cases, even abandonment of works.
Calls on Performance Bond	The provision on Performance Bond is enhanced to state clearly when the Employer may be allowed to call on the Performance Bond and utilise the monies. The enhanced provision provides that the Employer is allowed to call on the Performance Bond only if there is no or insufficient certified sums due and payable to the Contractor from which the Employer is able to deduct. This is to make sure that Performance Bond is called upon only when there are insufficient or lack of monies which can be withheld or utilised by the Employer to cover the remediation of the breaches by the Contractor. However, the right of the Employer to call on the Performance Bond after determination of the Contractor’s employment by the Employer under Clause 25 is maintained.
Work Programme & Progress Reports	The provisions on parties’ obligations with regard to submission of Work Programme and Progress Reports are enhanced.
Meaning of Practical Completion	The definition of Practical Completion has been simplified to cater for different types of building projects and nature of works.
Insurance Obligations	The provision on insurance obligations is also refined. The new provision makes it clear that any payment receipts from the insurer under insurance to which the Contractor is entitled, should be paid to Contractor in one lump sum, rather than by way of instalments.
Delay Events	The clause on Delay Events, particularly in relation to delay events caused by the re-nomination of Nominated Sub-Contractors/Suppliers (NSC) has been further elaborated to make it clear that the delay should also include delay arising from the additional time needed by the new Nominated Sub-Contractor/Supplier (NSC) to complete the subject NSC work.

We want to hear from you!

IF YOU HAVE ANY QUESTIONS, COMMENTS OR GENERAL FEEDBACK ON AIAC’S SFC ,DO REACH OUT TO US HERE TO HELP US BETTER SERVE YOU.

AIAC, BANGUNAN SULAIMAN,
JALAN SULTAN HISHAMUDDIN,
50000 KUALA LUMPUR, MALAYSIA

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About AIAC's SFC

KEY FEATURES

BENEFITS

The Suite of Contracts

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