No.

Subject

Traditional contract

Alliance contract

Material difference and trade-off between traditional contract and alliance contract

2

Warranties and commitments

The Contractor warrants that it:

and its Consultants will be suitably qualified and experienced and will exercise due skill, care and diligence in the execution and completion of the work under the Contract;

has examined and carefully checked any Preliminary Design provided by the Principal and that such Preliminary Design is suitable, appropriate and adequate;

will execute and complete its Design Obligations in accordance with the Principal's Project Requirements; and

will execute and complete the work under the Contract so that the Works when completed will be fit for its stated purposes and comply with all the requirements of the contract and Legislative Requirements.

The requirements of an alliance contract relating to the manner in which the Participants will perform the Works are more limited than under a traditional contract.

Under the alliance contract, the Participants make 'commitments' to each other (consistent with assuming joint responsibility for the Works) to:

act in good faith* in performing their obligations under the alliance contract;

work together to meet the objectives set out in the Owner's VfM Statement;

establish an alliance culture based on the Alliance Charter and acting at all times with a best-for-project* approach;

establish a 'no blame' culture in relation to disputes, errors and mistakes which may arise under the alliance contract; and

maintain a transparent 'open book' system for allowing access to documentation and information relating to the Works (including documentation and information in respect of the costs incurred by the Participants).

Under a traditional contract, the Contractor provides warranties to the Principal as to the manner in which the Works will be performed. A breach by the Contractor of the warranties under a traditional contract will confer on the Principal a possible right to terminate the contract and/or sue the Contractor for damages.

Under an alliance contract, the requirements relating to the manner in which the Works will be performed by the Participants are more limited than under a traditional contract. Under the alliance contract, the Participants provide each other with 'commitments' in respect of the performance of the Works (consistent with assuming joint responsibility for the Works). These commitments include acting in good faith* and doing all things necessary to complete the Works (with due skill, care and diligence) in accordance with the alliance contract. The key trade-off is that the Participants agree that they will not sue each other in respect of the performance of the Works, with limited exceptions including a breach of the relevant 'commitments' by any of the Participants. Any poor performance by the Participants will be reflected in the Risk or Reward* regime. The Owner may exercise its right to terminate for convenience, but will be obliged to make a termination payment to the Non-Owner Participants.