RESOLUTION OF THE CABINET OF MINISTERS OF THE AZERBAIJAN REPUBLIC

of June 7, 1994 No. 228

About approval of Rules about works agreements on capital construction

For the purpose of the increase in economic interest and responsibility of the parties participating in investment process the Cabinet of Ministers of the Azerbaijan Republic decides strengthenings of agreement discipline and ensuring rational use of financial resources on objects under construction:

1. Approve the "Rules about works agreements on capital construction" provided by the State committee on construction and architecture of the Azerbaijan Republic, approved with the Ministries of Economics of finance and justice (are applied).

2. Charge to the Cabinet of Ministers of the Nakhchivan Autonomous Republic, to republic local executive bodies, the ministries, committees, the companies, concerns, the companies and the organizations since 1994 in case of creation of contract agreements in construction of facilities to be guided by these rules and to make corresponding changes in earlier signed agreements.

3. Charge to the Ministry of emergency situations of the Azerbaijan Republic to organize the necessary methodological assistance and to make necessary explanations in case of creation of contract contracts for capital construction by new rules.

4. Recognize invalid Items 1, of 2, of 3, of 5, of 6, of 7, of 8, of the 9th Section I of the resolution of Council of Ministers of the Azerbaijani SSR of January 20, 1987 No. 23 and the Section II, Item 13 "The list of the invalid orders of the Government of the Azerbaijani SSR concerning capital construction about the companies, associations and the organizations which passed to complete self-financing and self-financing", the Council of Ministers of the Azerbaijani SSR approved by the resolution of December 4, 1987 No. 433.

5. Impose control of execution of the resolution on department of construction, construction materials and construction industry of the Executive officer of the Cabinet of Ministers of the Azerbaijan Republic.

Approved by the resolution of the Cabinet of Ministers of the Azerbaijan Republic of June 7, 1994 No. 228

Rules about works agreements on capital construction

I. General provisions

1.1. These rules determine procedure for the conclusion and execution of works agreements on capital construction, the rights and obligations of customers and contractors, and also economic interests and responsibility. (1)

Agreement parties of the contract are based these rules and other existing regulating documents.

Conditions of the works agreements signed on the objects brought in the list of the state needs are determined according to Regulations on the state order. These objects are distributed generally on tender.

1.2. The works agreement is the main document regulating relations between the organizations of the customer and contractor.

At the request of the Customer Podryadchik assumes liability, using own materials or the customer's materials, to perform specific work in certain time according to existing rules and rules, and also with terms of the contract. And the customer assumes liability to take over the performed work and to make at the scheduled time payment at agreed price.

The works agreement is signed on capital construction and repair, reconstruction of the companies, buildings and constructions, accomplishment of the installation, commissioning and other works connected with the site of arrangement of object.

1.3. The basic principle of relations of agreement parties of the contract is independence within the existing legal bases.

This principle is performed on the basis of the following directions:

- production and economic independence:

The contractor, observing economic, social, environmental and other state norms and rules creates the production program, develops and approves all technical and economic indicators of the activities;

- Works agreement priority:

The contractor independently signs contracts (contracts) both with customers, and with suppliers, banks, project and with other organizations;

- contract prices:

The contractor prepares calculation of job cost, provided in the agreement, according to the rules and recommendations existing in the planned period.

Offered by the Contractor taking into account the expected real costs of production, and also profit margins and market conditions and accepted (as a rule by transactions) the Customer contract prices, cannot be changed without the consent of the parties.

1.4. In construction and investment activities regulation from the state of the following factors of the market relations is provided:

- legal providing consumer interests, taxation, financial credit policy, licensing, regulation, certification, standardization, economic and health control, anti-monopoly actions, etc.

1.5. Investors or according to their order citizens of the Azerbaijan Republic, and also foreign citizens or legal entities can become Customer on capital construction.

During investment the Customer can transfer the right to management to other legal entity or the citizen acting on behalf of the Customer and protecting its interests.

According to the Works agreement the Customer bears property responsibility to the contractor for default on obligations in full or for its inadequate accomplishment.

1.6. Irrespective of pattern of ownership construction, project and construction and other organization and the companies, and also the separate physical persons and legal entities which are participating in implementation of construction or undertook functions of coordination of works the intermediary organizations can be Contractors.

The Contractor if the agreement does not provide performance of work only by the contractor, can attract other subcontract organizations to accomplishment of part of installation and construction works. In these cases for performance of works at the scheduled time and with required quality all responsibility to the Customer is born by the Prime contractor, and he addresses subcontractor as the Customer.

1.7. Depending on essence the Works agreement is subdivided into agreements on construction, project and surveying works, research and development works.

1.8. The following agreement types of the contract consist in construction practice:

- turnkey agreement;

- complex agreements;

- separate direct agreements;

1.8.1. If the Contractor, having performed complex works and deliveries, assumes responsibility for asset construction and acts as the Customer and controlling over other persons participating on construction in this case the turnkey agreement is signed. And in cases when the Customer undertakes part of works, supply and other obligations, complete responsibility for turnkey commissioning of the object are born by the Contractor.

1.8.2. If the Contractor undertakes responsibility for complex work and supply, for accomplishment of construction and engineering works, delivery and installation of equipment and industrial plants the complex agreement is signed.

According to the complex agreement the Prime contractor assumes coordination of works and bears responsibility for accomplishment of these works to the Customer.

The Customer, responsible for completion of all works on object, provides also coordination of the works provided in the complex agreement with works of other agreements.

The complex agreement, as a rule, covers the main part of construction and supply of object therefore this agreement is considered as the General agreement.

1.8.3. Irrespective of ensuring construction works with the equipment and materials separate direct agreements are signed for accomplishment of certain construction or special engineering works on the separate objects constituting part of complex.

Separate agreements are signed when the author (owner) of production technology in object under construction is the Customer.

In the separate agreements Contractor bears the responsibility only for direct commitments done by it work and the provided services, for full completion of asset construction (complex) and coordination of all works the Customer bears.

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