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What is Supplementary Contract?

In the Construction Industry, Supplementary Contract means a contract entered in to between the same parties of the original contract for varied work and terms that has changed the underlying basis of the existing contract in respect of its scope and price and or time.

The word "Supplementary" has to be understood in the proper sense and it should not be mixed or confused with the word "Addendum".

There are no specific rules or conditions to say when and what circumstances a Supplementary Contract is made and entered into.

With the major downturn in world economy and in financial markets during the last few months, all sectors in Sri Lanka are cautious about investments and resulting significant restraint on financial activities. Globally property and real estate market is the worst affected and the drastic drop in reduction of oil and metal prices is still continuing. Being secondary industry or sec-tor in national production of any country, the construction in-dustry receives the direct impact of catastrophic development. The impact of the global financial crisis mainly reflects in ex-ternal trade sector in Sri Lanka primarily due to the reduction of prices in tea and rubber. In such an unfavourable economic situation the budget proposals for year 2009 were presented on 6 November 2008 by the Hon. Minister of Finance. This budget includes some attractive proposals such as reduction of fuel prices, reduction of standard VAT and increase in public sector salaries.

The FIDIC conditions or its amended versions to suit with the local customary practice are the most popular form of contract widely used in the construction industry internationally. The International Federation of Consulting Engineers (Federation Internationale des Ingenieurs Conseils - FIDIC) has issued five editions of such forms of contracts since 1957. The latest edition was issued in 1999 after 12 years of successful practice since its previous edition in 1987. The 1999 edition with its 20 clauses, compared to 72 clauses in 1987 edition, has addressed several contentious issues and some new concepts to deal with ever evolving construction industry. Most of the new concepts addressed in 99 versions are beneficial to the both the Employer and the Contractor to safeguard their respective rights. Further this version has taken every effort to keep a fair balance of risks between the contracting parties.The following sections analyzes in detail the extent to which FIDIC-99 is Contractor friendly - or not.

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