The Development of Norwegian Standard Form Contracts in the North Sea and their Utilisation in other related Business Sectors

Abstract

This article presents some main features of the Norwegian Standard Form Contracts used in the offshore petroleum sector for services, and their feasibility for utilisation in related type of services, such as, for instance, various types of onshore construction projects. The aim of establishing these Standard Form Contracts in the first place was to regulate a long standing, expensive and high risk development project. The projects are often characterised by extensive development of the scope of work during the project period. To regulate such a “dynamic element” of a project, an advanced variation order system, which regulates both intended and not intended events with an impact on the execution during the course of the contract, was developed. This variation order system is more elaborated and formalised than in comparable standard form contracts for construction work and similar. Another important feature of the Standard Form Contracts is the distribution of risks and liabilities, which is based on a mutual indemnification system. An important element when working out the two abovementioned features was the balance between extensively elaborated contractual mechanisms on the one hand and arranging for a contract administration system not too cumbersome on the other. The Norwegian Standard Form Contracts have to a large degree been successful in finding such a balance as evidenced by its wide application in the business , and one might say the features of the variation order system and the distribution of risks and liabilities in many ways capture the essence of the Standard Form Contracts.