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K&L Construction Law Blog

Legal issues, news, and regulations concerning the construction industry

New Jersey Appellate Court Holds That Coverage Exists for Consequential Damages Caused By Subcontractors’ Defective Work

Posted in Uncategorized

By Denise N. Yasinow, Loly G. Tor, and Christopher A. Barbarisi, K&L Gates, Newark

This past summer, the Superior Court of New Jersey, Appellate Division issued a favorable decision for owners, real estate developers, and general contractors regarding insurance coverage for damages caused by the faulty work of their subcontractors.  In Cypress Point Condominium Association, Inc. v. Adria Towers, LLC,[1] the Court held that unexpected and unintended consequential damages caused by a subcontractor’s defective work constitutes “property damage” caused by an “occurrence” under a commercial general liability (“CGL”) insurance policy.  Thus, these types of consequential damages are recoverable.

The Cypress Point decision roundly rejected the Third Circuit’s opinion in Pennsylvania National Mutual Casualty Insurance Co. v. Parkshore Development Corp.,[2] which concluded that faulty workmanship performed by a contractor or a subcontractor that causes damage to the general contractor’s work is not an “occurrence.”

In Cypress Point, the plaintiff, a condominium association, brought an action against the association’s developer, the developer’s two insurers, and various subcontractors.  The developer served as the general contractor on the condominium project and hired the subcontractors to perform all construction work.  The plaintiff sought coverage from the insurers under the developer’s CGL policies for consequential damages caused by the subcontractors’ defective work.  According to the plaintiff, the subcontractors improperly installed the roof, flashing, gutters and leaders, brick and EIFS facade, windows, doors, and sealants.  The faulty workmanship caused consequential damages to the common areas of the condominium complex and to the unit owners’ property.

The trial court granted summary judgment to one insurer and dismissed the complaint against the other insurer as moot, determining that there was no “property damage” or “occurrence” as required by the policy to trigger coverage.

On appeal, the plaintiff raised two main arguments.  First, the plaintiff argued that under a plain reading of the policy language, consequential damages constitute “property damage” and an “occurrence.”  Second, the plaintiff argued that the trial judge erroneously placed substantial reliance on the holdings in Weedo v. Stone–E–Brick, Inc., 81 N.J. 233 (1979) and Firemen’s Insurance Co. of Newark v. National Union Fire Insurance Co., 387 N.J. Super. 434 (App. Div. 2006) to determine whether there existed “property damage” and an “occurrence.”

On the first argument, the Cypress Point Court found that consequential damages constitute “property damage” and an “occurrence” as defined in the policy.  On the second argument, the Court concluded that the trial judge erroneously applied the holdings in Weedo and Firemen’s and readily distinguished the cases on two grounds.  First, the Court concluded that Weedo and Firemen’s involved only replacement costs of correcting the defective work itself (cost of replacing stucco in Weedo and replacing firewalls in Firemen’s) rather than the costs of curing consequential damages caused by defective work.  Second, the Court concluded that Weedo and Firemen’s interpreted different language than the policy language at issue in Cypress Point.

Indeed, the policies in Weedo and Firemen’s followed the Insurance Services Office, Inc.’s (“ISO”) 1973 standard CGL form (the “1973 ISO form”) whereas the policy in Cypress Point followed the 1986 standard CGL form (the “1986 ISO form”).  The Court found that there are two critical differences between the 1973 ISO form and the 1986 ISO form.  First, “occurrence” is defined differently.  Second, and most importantly, the 1986 ISO form includes a significant exception for subcontractors in the “Your Work” exclusion, which states: “[t]his exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor.”  The 1973 ISO form contains no subcontractor exception to the “Your Work” exclusion.  As such, the Court found that the subcontractor exception demonstrates that consequential damages caused by a subcontractor’s faulty workmanship are considered differently than property damage caused by a general contractor’s work.  Therefore, a developer would “reasonably expect that consequential damages caused by the subcontractors’ faulty workmanship constituted ‘property damage’ caused by an ‘occurrence.’”

The Cypress Point decision is significant to policyholders, as New Jersey has joined the current majority of states holding that defective construction work causing consequential damages gives rise to an “occurrence” and “property damage.”  Furthermore, as long as the policies at issue follow the 1986 ISO form rather than the 1973 ISO form, there is a strong argument under New Jersey law that consequential damages from defective work performed by a subcontractor are always recoverable by additional insureds, such as the general contractor, the developer, and/or the owner.

[1] 441 N.J. Super. 369 (App. Div. 2015)

[2] 403 F. App’x 770, 772 (3d Cir. 2010)

Materials Available: EPC Contracting Issues in the Oil & Gas Industry

Posted in Asia Pacific, Europe, Industry Events, Middle East, The Americas

K&L Gates and Marsh recently co-sponsored a one-day, complimentary seminar titled “EPC Contracting Issues in the Oil & Gas Industry.”

The seminar featured six hour-long sessions, including a luncheon presentation by Robert Peterson, senior partner at Oliver Wyman, and an industry roundtable review panel consisting of industry experts from Exxon Mobil, Phillips 66, Chicago Bridge & Iron Company, Fluor, and Aker Solutions.

More than 100 representatives from leading energy companies attended the seminar at the JW Marriott Houston Downtown.

Houston partners Randel Young and John Sullivan III, Pittsburgh partners Richard Paciaroni and Jason Richey, London partner Matthew Smith, Washington, D.C. partner Steven Sparling, and Dallas partner Beth Petronio, along with Pittsburgh associate Jackie Celender, presented during the seminar.

Seminar materials can be found here.

Materials Available: 2015 Legal Update – Construction and Engineering Seminar

Posted in Articles and Publications, Europe, Industry Events

On 7 October 2015, the K&L Gates London office held a 2015 Legal Update – Construction and Engineering breakfast seminar.  The seminar featured the following topics:

  • CDM 2015: The End of the Transition – Nicola Ellis, Special Counsel
    The Construction (Design and Management) Regulations 2015 came into force on 6 April. This session highlights the key changes that were introduced, the practical effects of those changes and the consequences of the transitional provisions coming to an end on 6 October.
  • Construction Law UpdateInga Hall, Special Counsel
    A summary of some of the recent key construction and engineering cases that have come before the courts, and the implications of those decisions.
  • The NEC3 Suite: Beyond the ECC – Matthew Smith, Partner
    This session looks at the true range of options the NEC3 suite of contracts offers and gives an insight into which issues are addressed consistently across the suite, and highlights the key differences between specific forms.

To view a copy of the materials from this seminar,  please click here.

Update on Legal Advice Privilege

Posted in Articles and Publications, Europe

By Mike R. Stewart and Nita Mistry, K&L Gates London

In common law jurisdictions, legal professional privilege prevents communications between a professional legal adviser and their clients from being disclosed.  There are two main types of privilege:

  • Legal advice privilege, which protects confidential communications between lawyers and their clients; and
  • Litigation privilege, which protects confidential communications, provided that such communications have been created for the dominant purpose of obtaining legal advice for litigation.

This update focuses on recent developments concerning legal advice privilege .

The current position (in English Law) is that legal advice privilege protects:

  • The confidentiality of communications;
  • Between lawyers and client;
  • Created for the purpose of giving or receiving legal advice;
  • Regardless of whether litigation is pending or contemplated.

In 2003, the English Court of Appeal sought to limit the meaning of a corporate client in the context of legal advice privilege. The key case is that of Three Rivers District Council v Governor and Company of the Bank of England (No 5) [2003] QB 1556 (Three Rivers (No 5)). In this case, the Court of Appeal took a restrictive interpretation of the meaning of a “client” when determining if communications were privileged.  It follows that, as a matter of English law:

  • Not all employees are considered to be the “client”.
  • In the case of individuals, the client is the individual instructing the lawyer.
  • In the case of a corporate entity, the client is those employees of an organisation responsible for communicating with the legal advisers.

The Three Rivers decision has caused difficulties for corporate entities.  Some employees may not be considered part of the “client” for the purposes of legal advice privilege.  This means that communications or documents prepared by those employees will not be privileged.

Even a communication or document that is prepared by one employee to enable another employee to seek legal advice from a lawyer will not be privileged (unless the communication or document that is prepared is for the purpose of contemplated litigation).  In considering whether communications and documents are protected by legal advice privilege, it must be determined who within the company is the “client” instructing the lawyer.

Hong Kong Court of Appeal in Citic Pacific Limited v Secretary for Justice and Commissioner of Police (29/06/2015, CACV 7/2012)

In a significant judgment, the Hong Kong Court of Appeal (HKCA) has departed from English law adopting a wider test for the application of legal advice privilege.

First Instance Decision

Citic Pacific Limited (the “Company”) was being investigated by the regulatory authorities in relation to a profit warning announcement.  The company made a claim to privilege in respect of a large number of documents and other material seized by the police.

The judge held that some of the documents seized did not attract legal advice privilege because they were communications between certain of the company’s employees which were not communications on behalf of the company.

The Hong Kong Court of Appeal

The HKCA was asked to determine:

  • Whether the first instance judge was correct to decide that privilege was limited to direct communications between those in the group legal department and its external lawyers;
  • Whether Three Rivers (No 5) was good law in Hong Kong; and
  • The proper approach to the definition of a “client” for the purpose of legal advice privilege.

The HKCA rejected the restrictive view adopted by both the first instance judge in Citic Pacific and the English Court of Appeal in Three Rivers (No 5).  The court held that:

“In the context of a corporation, where the necessary information may have to be acquired by the management from employees in different departments or at various levels of the corporate structure, there is a need to protect the process of gathering such information for the purpose of getting legal advice…it is unlikely that a small group of employees within the legal department of a corporation would be likely to have all the technical knowledge or skills that may be required to obtain information for, and put together, suitable instructions to the corporation’s lawyers”.

The HKCA adopts a wider test for the application of legal advice privilege. The “client” is simply the corporation as a whole.  All employees within the corporation are considered the “client”.

The question is which employees should be regarded as being authorised to act for it in the process of obtaining legal advice.  The HKCA adopted a “dominant purpose” test for this.  It is only internal confidential documents or communications, prepared by an employee for the dominant purpose that they be used to obtain legal advice, that will be protected by legal advice privilege.

In summary, legal advice privilege under Hong Kong law now extends to confidential internal communication:

  • between employees of a client organisation, provided that
  • those communications were created for the sole or dominant purpose of obtaining legal advice.

The Future for English law?

Three Rivers (No 5) still remains binding under English law and has not been overruled.

The dominant purpose test does not apply to English law in the context of legal advice privilege.

The position may be challenged in the future in light of the more liberal approach taken in Hong Kong and other common law jurisdictions.

Illinois Now Allows Bonding Off of Mechanics Liens on Private Projects

Posted in Articles and Publications, The Americas

By Jesse G. Shallcross, K&L Gates, Chicago

On July 29, 2015, Illinois Governor Bruce Rauner signed into law an amendment to the Illinois Mechanics Lien Act which allows a property owner, contractor or other party with an interest in real property which is subject to a mechanics lien claim filed against the property by an aggrieved contractor, subcontractor or material supplier on a private project to substitute a surety bond for such mechanics lien claim.[1]  The new law is scheduled to take effect on January 1, 2016.

Illinois now joins the ranks of no less than 35 other states that provide for the right of an interested party to substitute a surety bond for real property against which a mechanics lien claim is filed, also known as “bonding off” a mechanics lien claim, on private projects.

Under the new law, (i) at any time, such interested party (referred to in the statute as an “applicant”) may file a petition with the county where the property is located to bond off a mechanics lien claim filed against the property, or (ii) if there is already a pending court action to enforce a lien claim, the applicant may, within five months after the filing of the complaint, apply to become a party thereto and file a petition to bond off the lien claim.  The bond must be issued by an A-rated surety company in an amount equal to 175% of the claim.

Bonding off a mechanics lien claim allows the property owner or other party having an interest in the property to substitute the claimant’s lien on the property with a guaranty of a surety to provide a sum of money to the claimant if the claimant is successful in his claim.  This is generally beneficial to owners, developers, general contractors and the like, as they are free to forge ahead on a construction project without being hamstrung by pesky subcontractor liens encumbering the property.

However, the new law also benefits aggrieved contractors, subcontractors and suppliers, particularly those who would prevail in court.  The bond is required to be issued in the amount of 175% of the claim amount, and the law explicitly grants the prevailing party an award for attorney’s fees.  Additionally, and perhaps most importantly, substituting a surety bond for a lien on real estate allows a successful claimant to collect on a judgment without potentially having to wait for a final disposition of the property, which may be subject to the security interests and liens of other creditors.

The new amendment to the Mechanics Lien Act does not apply to public projects, as Illinois does not allow mechanics liens to attach to real property owned by the state to begin with.  With respect to private projects, however, there is no such prohibition against mechanics liens but rather a statutory right granted to aggrieved contractors, subcontractors and suppliers under the Act.  Therefore, an amendment to the Act was required to allow a property owner, contractor or other interested party to override this statutory right and bond off a mechanic’s lien.

The law was the culmination of two-and-a-half years of efforts involving multiple parties, spearheaded by Paul Peterson of Chicago Title Insurance Company.  The bill was drafted by the Chicago Bar Association and co-sponsored by the Illinois State Bar Association and Illinois Land Title Association.


[1] See Public Act 099-0178; 770 ILCS 60/38.1

A New Australian Standard (AS 11000) to Replace the General Conditions of Contract (AS 4000 and AS 2124)

Posted in Articles and Publications, Asia Pacific

By Sandra Steele, K&L Gates, Sydney

The AS 4000 and AS 2124 General Conditions of Contract are widely used forms of procurement in the Australian construction industry. A technical committee has recently drafted a new standard form contract (AS 11000) to supersede these previous forms.

The drafters have sought to provide a balanced approach to risk allocation and have updated the standards for certain legislative changes and case law including for GST and security of payment legislation. Despite the extensive amendments, as the AS 11000 is drafted as a national standard form contract, some State and Territory specific legislation and case law has not been included.

Changes in the AS 11000 From the AS 4000 and AS 2124

Beneficial to the Principal

  • The contractor has an obligation to provide the superintendent with a notice of delay within five business days of becoming aware of anything which will probably cause the delay and advise whether it intends to claim an extension of time (EOT) for the delay.
  • The superintendent has a different timeframe to make its assessment of an EOT (from 28 days in the previous versions to 20 business days in the AS 11000) and is also entitled to request further information from the contractor, which effectively extends the timeframe for another 20 business days.
  • The contractor has a specific obligation to rectify any work upon becoming aware of any work that is not in compliance with the contract without the necessity of a direction to do so.
  • The superintendent has the power to direct the acceleration of the works.

Beneficial to the Contractor

  • The contractor is entitled to an EOT for any delay occurring prior to practical completion, if the delay is beyond its reasonable control.
  • The contractor is entitled to an EOT, but not delay damages, for any overlapping delay.
  • The contractor is entitled to delay costs for every working day the subject of an EOT due to a variation.
  • The contractor is entitled to notify the superintendent if it believes that a direction from the superintendent may actually be a variation.
  • Rates and prices for variations include an allowance for profit and overheads, unless otherwise stated in the contract.

Other Changes

  • Good faith requirements:the parties are required to act in good faith.
  • Early warning procedure:the parties must follow an early warning procedure (notification, issue resolution meeting and notice of dispute) for issues that impact on time, cost, scope or quality under the contract.
  • Programs:the requirements of the program have been set out in greater detail than in the previous versions of the contract.
  • Superintendents:the dual roles of the Superintendent are set out more clearly in the AS 11000 in an attempt to clarify the scope of the Superintendent’s roles.
  • Security of Payment Act:timeframes for payment claims, payment schedules and payment in the relevant Security of Payment legislation in each State and Territory is included in the AS 11000.
  • GST:a clause dealing with GST has been included.
  • Dispute resolution:a more robust dispute resolution clause, with a number of alternative dispute resolution options, has been included to suit a range of different construction projects.

Next Steps

All changes and revisions are only proposed at the moment and may be subject to modification following the public comment process. We will keep you updated as further information is released by Standards Australia.

Harris v. West Bay Builders: Award of Attorney’s Fees Not Mandatory Under California Prompt Payment Statutes

Posted in Case Summaries, The Americas

By Timothy L. Pierce and Hector H. Espinosa, K&L Gates, Los Angeles

California’s prompt payment statutes, found at Business and Professions Code section 7108.5 and Public Contract Code sections 7107 and 10262.5, each contain a fee-shifting provision, stating that the prevailing party “shall” be entitled to his or her attorney’s fees and costs. In James L. Harris Painting & Decorating, Inc. v. West Bay Builders, Inc. (No. C072169), the California Court of Appeals confirmed that a trial court can, in its discretion, choose not to award either party attorney’s fees under the prompt payment statutes if the trial court determines that neither party “prevailed.”

In Harris, the prime contractor (West Bay) on a public school renovation project hired a painting subcontractor (Harris) to apply certain paint and water repellant materials on the project. Shortly after performance began, West Bay and Harris disagreed as to Harris’s scope of work under the terms of the subcontract.  Harris alleged that West Bay was requiring it to perform extra work not contemplated in the original subcontract; conversely, West Bay accused Harris of failing to perform its contractual obligations and, ultimately, walking off of the job without justification.  Harris filed a complaint against West Bay for breach of contract and failure to comply with applicable prompt payment statutes.  West Bay cross-claimed, alleging that Harris failed to complete the work in accordance with the subcontract.  At trial, a jury decided that Harris and West Bay both breached the terms of the subcontract and, as a result, did not award damages to either party. In light of the jury’s verdict, the trial court then declined to award attorney’s fees.[1]

West Bay and Safeco (West Bay’s surety) appealed the trial court’s decision not to award attorney’s fees, arguing that an award of attorney’s fees to the prevailing party is mandatory under the prompt payments statutes (“shall” award attorney’s fees) and that the trial judge, therefore, abused his discretion in refusing to award any attorney’s fees whatsoever.  According to West Bay, neither party prevailed on their breach of contract claims but West Bay did prevail as it pertained to Harris’s allegations of prompt payment violations.

The Court of Appeals disagreed with West Bay, holding that a trial court retains discretion to determine what constitutes a “prevailing party” under  the prompt payment statutes (“…when a defendant cannot in any realistic sense be said to have been successful, fees need not be awarded.  For this reason, the trial court had discretion under the prompt payment statutes in this case to determine there was no prevailing party for purpose of attorney fee shifting.”).  This determination must be based on “a practical level, after considering what each party accomplished via the litigation.” Id. (internal citations omitted).  In this case, the trial court determined that, as a practical matter, neither party “prevailed.”  To the extent that West Bay succeeded in defending against Harris’s claim that West Bay violated the prompt payment statutes, this success was inextricably intertwined with the parties’ dueling breach of contract actions which, according to the judge, entitled neither party to an award of attorney’s fees.

The Harris opinion firmly establishes that in spite of the fee-shifting provisions, a trial court can decline to award attorney’s fees to either party under the prompt payment statutes if the court determines that, as a practical matter, neither party “prevailed.”


[1] The Judge’s Order stated:  “The Jury denied all relief. Fairness dictates that each side should pay its own attorney’s fees.”

FTR v. Rio: Penalties Assessed Against School District for Withholding Contractor Funds

Posted in Case Summaries, The Americas

By Timothy L. Pierce and Benjamin Kussman,  K&L Gates, Los Angeles

In East West Bank v. Rio School District, 235 Cal. App. 4th 742 (2015), the California Court of Appeals upheld a trial court’s assessment of $1,537,404.96 in statutory penalties against the Rio School District (the “District”) for the District’s failure to timely release contractor funds pursuant to Public Contract Code Section 7107.  The Court concluded, in what constitutes a departure from another recent Court of Appeals ruling interpreting the same statutory provision[1], that Section 7101 does not allow a public entity to withhold contractor retainage on the basis of a dispute over the cost of contract work.

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Unreasonable disadvantage to contractor: Securing warranty claims by standard terms and condi-tions restricted by German Federal Supreme Court

Posted in Articles and Publications, Europe

By Christoph Mank, K&L Gates, Berlin


Standard terms and conditions in German construction contracts often contain requirements to provide a warranty bond to secure performance by the contractor of its warranty obligations under the contract. These requirements often stipulate the contractor to provide both a performance guarantee and a warranty bond.

The warranty bond secures the contractor’s warranty obligations during the warranty period (typically arising after the acceptance and take-over of the construction works) and is often in an amount of not more than 5% of the contract sum. This practice has been established due to prior case law by the German Federal Supreme Court. According to the Federal Supreme Court, the client´s security interest after acceptance of the construction is significantly lower than its security interest during performance.

The Issue

A potential issue arises if security is provided both with regard to the contractual performance (in the form of a performance guarantee) and warranty claims (in the form of a warranty bond) and if these guarantees are combined in such a way that a security of more than 5% is granted to the client.

This issue was recently subject of several decisions of the Federal Supreme Court. In one case the contractor was obliged to provide a guarantee securing the contractual performance in an amount of 5% of the contract sum. Furthermore, the contract stipulated that the client was entitled to withhold 2% of the contract sum to secure its warranty claims if the contractor did not provide a warranty bond in an amount of 2%. The security agreement furthermore stipulated that the contract performance guarantee should only be returned by the client after unreserved acceptance of the final payment by the contractor and if (i) the contractor had duly performed, (ii) all claims (also from third parties) had been settled and (iii) the agreed warranty bond had been provided.

Decision of the German Federal Supreme Court

The Federal Supreme Court held that such a security agreement is invalid due to the combination of contract performance guarantee and warranty bond. Such a security agreement represents an unreasonable disadvantage to the contractor and grants the client an excess security.

As the return of the contract performance guarantee is made dependent on the unreserved acceptance of the final payment, the security agreement enables the client to keep its security for contractual performance even longer after the acceptance of the construction because an unreserved acceptance of the final payment is not mandatory. Rather, a dispute could arise regarding outstanding claims of the contractor, which could last for years, especially if the dispute is brought before court. In this way, the Court stated, warranty claims would be secured by the contract performance guarantee and the client would receive a security for its warranty claims for a period beyond the acceptance in an amount of 7%. The Court decided that this situation represents an unreasonable disadvantage to the contractor because the amount of the security provided for the period after acceptance, which has been accepted by the Federal Supreme Court at 5%, was significantly exceeded.


In contracts governed by German law, care should be taken in future to ensure that the contract performance guarantee and the warranty bond are not combined in such a way that they grant security to the client for a significant period after the acceptance of the construction, that exceeds the permissible amount of 5%. The replacement of the contract performance guarantee by the warranty bond should not be made dependent on the unreserved acceptance of the final payment by the contractor.

Good Faith in the Middle East

Posted in Articles and Publications, Middle East

By Darran J. Jenkins, K&L Gates, Doha

The concept of good faith as applicable in the Civil law jurisdictions of Qatar and the United Arab Emirates (“UAE”) is one that may be unfamiliar to lawyers from a common law background where good faith is applies in a very limited fashion, if at all. [1]

The Position in the Middle East

The position in Qatar is set out in Article 172 of the Qatar Civil Code[2]:

1.    The contract must be performed in accordance with its contents and in a manner which consistent with the requirements of good faith.

2.    The contract is not confined to obliging a contracting party to its contents, but also includes its requirements in accordance with the law, custom and equity as per the nature of the obligation.

The corresponding article in the UAE Civil Code[3] is Article 246 which states:

“(1)     The contract must be performed in accordance with its contents, and in a manner consistent with the requirements of good faith.

(2)     The contract shall not be restricted to an obligation upon the contracting party to do that which is (expressly) contained in it, but shall also embrace that which is appurtenant to it by virtue of the law, custom, and the nature of the transaction.”

In Bahrain, Article 127 of the Civil Code[4] requires:

A contract is not only limited to its expressed conditions, but also as regards everything which according to law, usage and equity is deemed in view of the nature of the obligation, to be a necessary sequel to the contract, taking into consideration custom and usage, requirements of equity, nature of business, good faith and honesty.”

And Article 129 provides:

A contract must be performed in accordance with its contents and in compliance with the requirements of good faith and honesty.”

Each of these Civil Codes takes an almost identical approach to the treatment of good faith. As a result, a contract will not be interpreted using solely its terms but will be interpreted against the requirements of customs, equity and good faith.

The requirement to act in good faith is a strong, positive obligation on the parties to a contract.  It is not merely a requirement not to act in bad faith and not to deceive one another. Each party is instead under a legal obligation to exercise good faith in the performance of its contractual obligations and it is dealings with the other party. In a construction context, the duty of good faith would require an employer to cooperate with the contractor and deal with change requests in a timely and fair manner, whilst a contractor would be obliged to avoid delaying the performance of their works.

It is interesting to note that the obligation within the Qatar Civil Code is to perform the contract in good faith but it does not extend to negotiating the contract in good faith. The parties are free to adopt an adversarial approach to negotiation of the contract to try to obtain the best possible deal for themselves. Only once the contract has been signed does the duty to act in good faith arise.

In relation to insurance contracts, the duty to perform in good faith under the Civil Code does not in any way limit the duty of the insured to act with utmost good faith when placing the policy.  This is because the Civil Code also recognizes and enforces a higher standard of care where the parties have agreed it should apply.

[1] Please note, all English extracts in this Article are taken from an unofficial English translation of the Qatar and UAE Civil Code, reference should always be made to the original Arabic text.

[2] Law Number 22 of 2004

[3] Law Number 5 of 1985

[4] Law Number 19 of 2001