1

Suggested amendments to MF/2 (Rev1)

to update it in line with the amendments
made to MF/1 by revision 5

GENERAL CONDITIONS
SUB – CLAUSE 1.1.AA
Add new sub-clause

‘1.1.aa “UK Construction Act” means the Housing Grants, Construction and
Regeneration Act 1996 (incorporating any amendments brought into force
by the Local Democracy Economic Development and Construction Act 2009 or
otherwise from time to time).’

SUB-CLAUSE 8.1
Delete ‘Performance’ from the heading.

Delete current sub-clause and replace by:

8.1 If required by the Purchaser the Contractor shall provide the guarantee
or bond of a parent company, bank or other surety for the due performance of
the Contract. Unless otherwise specified in the Special Conditions, the term of the
bond or guarantee shall be in the relevant form annexed to the Conditions.

Unless otherwise specified in the Contract the Contractor shall provide the bond
or guarantee at his own expense.

The amount of the bond or guarantee, the period of its validity, the arrangements
for its release and the currency of any monetary transactions involved shall be
stated in the Special Conditions.

[Note: a Parent Company Guarantee and Demand Bond as contained in MF/1

Rev5 are annexed to these amendments.]

SUB-CLAUSE 21.2
In line 8 after ‘Contract Price’ insert ‘or will have an effect on the Programme’.

SUB-CLAUSE 25.8
Replace current sub-clause by:

25.8 If any defect of the kind referred to in sub-clause 25.2 (Making good
defects) shall appear in any part of the Works within a period of three years
after the date of the taking-over of such part of the Works, the same shall be
made good by the Contractor by repair or replacement at the Contractor’s
option provided that the defect would not have been disclosed by a reasonable
examination prior to the expiry of the Defects Liability Period.

SUB-CLAUSE 28.2
Replace current sub-clause by:

28.2 If payment of any sum payable under sub-clause 28.1 (Payment) is

delayed, the Contractor shall be entitled to receive simple interest on the amount
unpaid during the period of delay. The interest shall be at the rate of four
per cent above the Bank of England Base Rate in force from time to time during

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the period of delay (or at such other rate as may be specified in the Special
Conditions). The Contractor shall be entitled to interest without formal notice
and without prejudice to any other right or remedy, The parties acknowledge
that the Purchaser’s liability under this clause 28.2 is a substantial remedy for the
purposes of section 9(1) of the Late Payment of Commercial Debts (Interest) Act
1998, where applicable.

SUB-CLAUSE 34.3
Replace current sub-clause by:

34.3. The Purchaser shall not be liable to make any further payments to the
Contractor until the Cost of execution and all other expenses incurred by the
Purchaser in completing the Works have been ascertained and the amount
incurred certified by the Engineer (herein called ‘the Cost of Completion’). If
the Cost of Completion when added to the Termination Value exceeds the total
amount which the Engineer certifies would have been payable to the Contractor
for the execution of the Works, the Engineer shall certify such excess and the
Contractor shall upon demand pay to the Purchaser the amount of such excess.
Any such excess shall be deemed a debt due by the Contractor to the Purchaser
and shall be recoverable accordingly. If there is no such excess, the Contractor
shall be entitled to the Termination Value and shall be paid or shall repay to the
Purchaser as the case may be the difference, if any, between the Termination
Value and the total of all payments received by the Contractor at the date of
termination.

SUB-CLAUSE 40.2
Delete.

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APPENDIX TO GENERAL CONDITIONS

Delete paragraph headed Person to appoint arbitrator and replace by:

Person to SUB-CLAUSES 37.1(b) and 37.2(a)

appoint
The President of the Institution of Mechanical Engineers
adjudicator or
arbitrator (‘the The President of the Institution of Engineering and Technology
Nominator’)
(delete as appropriate)
Other (insert)..................

Rules governing SUB-CLAUSE 37.1(c)

Adjudication
………………………………………

SPECIAL CONDITIONS
Aide-Memoire to their preparation
CLAUSE 8.1
Delete ‘Procedure for forfeiture [……] (claims on bond)’

CLAUSES 28.1 AND 37

Note; Where the UK Construction Act applies, the terms of payment and
disputes provisions will need to address the provisions of the UK Construction
Act, otherwise scheme provisions imposed by Regulations made by Statutory
Instrument pursuant to the UK Construction Act will apply. Clauses which address
the UK Construction Act are found in MF/1 and can be adapted.]

Sub-Contract
CLAUSE 18 AND EIGHTH SCHEDULE
[Note: Where the UK Construction Act applies, the terms of payment and
disputes provisions will need to address the provisions of the UK Construction
Act, otherwise scheme provisions imposed by Regulations made by Statutory
Instrument pursuant to the UK Construction Act will apply. Clauses which address
the UK Construction Act are found in MF/1 and can be adapted.]

FORM OF SUPERVISION CONTRACT

CLAUSE 25
Delete.

THE SIXTH SCHEDULE

Delete all words from the heading clause 23 onwards.
Insert:
‘[Note: Where the UK Construction Act applies, the terms of payment and
dispute provisions will need to address the provisions of the UK Construction
Act, otherwise scheme provisions imposed by Regulations made by Statutory
Instrument pursuant to the UK Construction Act will apply. Clauses which address
the UK Construction Act are found in MF/1 and can be adapted.]’

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ADDENDA
Form of Parent Company Guarantee
Demand Bond

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FORM OF PARENT COMPANY GUARANTEE

THIS GUARANTEE is made on 201[ ]

BETWEEN

(1) [insert name of Guarantor], a company incorporated under the laws

of England and Wales with company number [insert company number
of Guarantor], whose registered office is at ………..(the ‘Guarantor’);
and

(2) [insert name of Purchaser], a company incorporated under the laws of

England and Wales with company number [insert name of Purchaser]
whose registered office is at ……. (the ‘Purchaser’ which expression
shall include its permitted assignees)

WHEREAS

(A) This Guarantee is supplemental to a [proposed] agreement (the

‘Contract’) to be entered into between [insert name of Contractor]
(the ‘Contractor’) and the Purchaser in relation to [insert Contract
Title and/or reference number] (and the term ‘Contract’ shall include
any variation of the terms agreed between the Purchaser and the
Contractor).

(B) The Guarantor has agreed with the Purchaser to guarantee due
performance by the Contractor of its obligations under the Contract
subject to the terms and conditions set out below.

It is hereby agreed as follows:

1.0 Interpretation

In this Guarantee (including the above recitals):

(a) capitalised terms shall have the meanings given to them in the
Contract;

(b) a reference to ‘the Guarantor’ or the ‘Purchaser’ includes any

successor(s) in title;

(c) a reference to any document includes that document as

amended, varied, or supplemented;

(d) the headings in this Guarantee are to be ignored in construing it.

2.0 Guarantee

2.1 In consideration of the Purchaser entering into the Contract, the

Guarantor hereby unconditionally and irrevocably guarantees to
the Purchaser that the Contractor will duly perform and observe all the
obligations on the Contractor under the Contract.

2.2 The Guarantor further warrants that if the Contractor goes into
liquidation and the liquidator disclaims the Contract, the liability of
the guarantor hereunder shall remain in full force and effect in respect
of any claims, demands, losses, damages, and liabilities related to such
liquidation or the termination of the Contract.

2.3 The Guarantor acknowledges having received a copy of the Contract.

2.4 In no event shall this Guarantee impose any greater obligation or liability
on the Guarantor (either as to length of or amount of liability) than

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if the Guarantor were jointly and severally liable with the Contractor
under the Contract.

3.0 Guarantee Discharge and release

3.1 This Guarantee shall be effective from the date hereof and shall continue
regardless of any intermediate payment or discharge in whole or in part
of performance.

3.2 Upon the expiry of the Contractor’s obligations and/or liabilities under
the Contract or the settlement of any claims by the Guarantor to the
maximum extent of the Contractor’s liability under the Contract, this
Guarantee shall cease to have effect.

4.0 Waiver of Defences

4.1 The liabilities and obligations of the Guarantor under this Guarantee
shall remain in force notwithstanding any winding up, dissolution,
reconstruction or reorganisation, or any change in the constitution of
the Contractor.

4.2 The liabilities or obligations of the Guarantor under this Guarantee

shall not be affected by the Purchaser:

(a) serving a notice upon the Contractor as contemplated by the

Contract or agreeing with the Contractor any amendment,
variation, or assignment, of the Contract.

(b) taking, dealing with, enforcing, abstaining from enforcing,

surrendering or releasing any security, or other right or interest
held by the Purchaser.

4.3 The Guarantor hereby waives any right it may otherwise have of first
requiring the Purchaser to proceed against or enforce any other rights
or security or claim payment against any person before claiming against
the Guarantor under this Guarantee.

4.4 The Guarantee shall not be discharged nor will any liabilities hereunder
be affected by the incapacity or lack of corporate power or authorisation
on the part of the Contractor to enter into and perform the Contract.

5.0 Representations and Warranties

The Guarantor now warrants to the Purchaser that:

(a) it is a corporation duly organised and validly existing under the

laws of England and Wales;

(b) it has the corporate power to enter into and perform this
Guarantee, and that it has taken all necessary action to
authorise the entry of the Guarantor into the Guarantee, which
constitutes its legal, valid and binding obligation.

6.0 Notices

All notices in connection with, this Guarantee will be given in writing by

letter, fax or email and is deemed to be given as follows:

(a) if by letter, when delivered;

(b) if by facsimile, when transmitted and full transmission has been

separately notified by telephone by the transmitting party;

(c) if by email, when the email has been received at the designated
email address.

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The address, facsimile numbers and email addresses of the parties hereto are as
follows (or such other alternatives as may be notified by the relevant party):

Guarantor: Address:

Attention:

Facsimile:

Email

Purchaser: Address:

Attention:

Facsimile:

Email

8. Assignment

This Guarantee is personal to the parties and may not be transferred or assigned to
any person, firm or company, without the previous consent of the other save that
it may be assigned to a subsequent purchaser to whom the Contract is assigned.

9. Waivers

No failure or delay by the Purchaser in exercising any right or remedy pursuant

to this Guarantee shall impair that right or remedy or operate as a waiver or
variation.

10. Entire Agreement

10.1 This Guarantee sets out the entire agreement and understanding
between the parties hereto in respect of the matters referred to herein.

10.2 This Guarantee has been duly executed and delivered as a deed on the
date first above written.

11.0 Invalidity

If any provision of this Guarantee becomes invalid, illegal or unenforceable

in any respect under any law, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired.

12.0 Third Party Rights

A person who is not a party to this Guarantee shall have no right under the
Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.

13.0. Governing Law

This Guarantee is governed by and shall be construed in accordance with the

laws of England and Wales.

EXECUTED as a deed by
the GUARANTOR acting by }
two directors or a director and the Secretary [ ........................... ] (Signature)

EXECUTED as a deed by
the PURCHASER acting by

two directors or a director and the Secretary [ ........................... ] (Signature)

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FORM OF DEMAND BOND

DEMAND GUARANTEE

<Beneficiary>
<Name>
<Address>

Date [ ]

Dear Sirs,

OUR GUARANTEE REF:

We are informed that ........................... (hereinafter called the Contractor) have

entered into a contract with you, for the supply of ........................... and that a
bank Guarantee for .......................... being ........................... % of the contract is
required.

On behalf of the Contractor, we <name of bank> Bank, <address of bank>,

hereby give you our guarantee and undertake to pay you any amount or amounts
not exceeding in total a maximum of ........................... on receipt of your first
demand in writing over original handwritten signatures accompanied by your
signed statement certifying that the Contractor is in breach of his obligations
under the underlying contract, and the respect in which the Contractor is in
breach. Any claims must bear the confirmation of your bankers that the
signatures thereon are authentic.

For the avoidance of doubt any document(s) received by way of facsimile or

similar electronic means is/are not acceptable for any purpose(s) under this
guarantee.

This Guarantee is valid for written demands received by us on or before

........................... after which date our liability to you under this guarantee will
cease and this guarantee will be of no further effect. If at such date we have not
received any claim under this guarantee, it will automatically become null and
void, whether returned to us or not.

This guarantee is personal to you and is not assignable.

This guarantee shall be governed by English Law and is subject to the Uniform
Rules for Demand Guarantees of the International Chamber of Commerce
(Publication No 758).

On expiry of the guarantee, please return this document to us.

Yours faithfully,

Executed as a deed
for and on behalf of

<name of bank>

Signed……………………………………

Signed……………………………………

Countersigned……………………………

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AMENDMENT SLIP No.1

TO
MODEL FORM OF GENERAL CONDITIONS
OF CONTRACT, MF/2

1. Foreword
This amendment slip provides recommended additional provisions for the Model
Form MF/2 general conditions, the MF/2 Form of Sub-Contract and the MF/2
Form of Supervision Contract to take account of the Contracts (Rights of Third
Parties) Act 1999 (“the Act”). It is emphasised that these additional provisions
are models only and should be adapted and supplemented, where necessary,
to reflect particular intentions.

The reason for these suggested changes is because the Act provides that in
certain circumstances third parties will be allowed to enforce contractual
terms. Those circumstances are (i) if the contract expressly provides that a third
party may do so or (ii) if a term purports to confer a benefit on a third party.
The expression “purports to confer a benefit” is uncertain in meaning and
potentially far-reaching. The following Special Conditions will prevent third
parties unintentionally being allowed to enforce terms.

The provisions of the Act extend to England, Wales and Northern Ireland and
so will apply only to contracts which are subject to the laws of these countries.
The Act applies only to contracts entered into after 11th May 2000.

2. Historical note
This first amendment slip to MF/2 was introduced in July 2000 and was thereafter
included with copies of MF/2 (rev 1).

3. Amendments to MF/2 relating to the Contracts (Rights of Third Parties)

Act 1999

3.1 The following new additional suggested Special Condition should be

added after page 32 of MF/2 (rev 1).

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ADDITIONAL SPECIAL CONDITION FOR USE

WHERE THE CONTRACT IS SUBJECT TO THE
CONTRACTS (RIGHTS OF THIRD PARTIES)
ACT 1999

Foreword
If it is desired that third parties should not unintentionally have a benefit
conferred upon them and become entitled to enforce terms of the Contract,
the following suggested additional sub-clause to the general conditions may
be used.

Assignment and sub-contracting

3.3 Unless otherwise provided, the Purchaser and the Contractor
do not intend any term of the Contract to be enforceable by a party
other than themselves.

(Also, amend clause 3 heading so that it reads Assignment,

sub-contracting and third party benefits.)

3.2 The following new suggested sub-clause should be added to the

Sub-Contract at page 34.

2.3 The Contractor and the Sub-Contractor do not intend any

term of the Sub-Contract to be enforceable by a party other than
themselves.

3.3 The following new suggested clause should be added to the Supervision
Contract at page 56.

Third party 26.1 The Purchaser and the Contractor

benefits do not intend any term of the Supervision
Contract to be enforceable by a party other
than themselves.

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