Construction Consortium Agreement

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Within a consortium, the potential profit or loss depends on the performance of the party concerned within its scope. The actual benefits are not known to the other partner. One party may have a loss, while the other makes a profit without having to compensate it. The entire project team consists of a joint venture, including support functions such as staff. The joint venture can «purchase/rent» resources from consortium partners or third parties. As part of a consortium, each party pays its own accounts and taxes. The typical formulations of a consortium agreement are: «Each party is fully and solely responsible for the payment of all taxes, taxes, social contributions and similar taxes (including penalties and interest) of any kind collected in connection with its delivery, or its staff or the staff of its subcontractors, and carries out all declarations, registrations and execution of any other obligations to the relevant tax authorities.» Together, they choose a leader to coordinate and present «a face to the customer.» Normally the party with the largest volume becomes leader. The chief cannot bind the parties without the prior agreement of all. Only in very exceptional cases can the Guide act immediately. He has to do it impartially! This is only to preserve rights for the consortium or to avoid imminent risks or damage. This is the case, for example, in an emergency related to health and safety or environmental damage.

A consortium and a joint venture are opportunities for two or more parties to come together and participate in a tender. And if they succeed, they will execute the contract together. Thanks to «shared and multiple responsibility,» the employer is no less well off than that of a single contractor. In fact, common -several means that the employer can go either or both to fulfill the contract or get damages. The employer is therefore in a better position and has the opportunity to rely on two or more companies to resolve a breach of contract. From the employer`s point of view, there can be no big difference between a joint venture and a consortium. However, the way contractors work is totally different for both solutions. It is important that employers and contractors understand these differences. For employers, this improves the understanding of contractors` behaviour.

For contractors, every aspect of their relationship depends on the solutions chosen: price, margin, perimeter, liquidated damage, billing, etc. A consortium requires a clear division of the scope between the parties. It is important to ensure that nothing is within the scope of the consortium`s partners. Together, they are naturally responsible for the entire scope of the employer. The scope of each party should be defined at the time of the conclusion of the consortium agreement or shortly thereafter. On the basis of this allocation, everyone will prepare their share of the common offer. As noted above, the consortium partners are jointly liable to the employer.

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