Building Contracts

Standard Contracts Background

The standard forms of building contracts used in Ireland have evolved through a number of editions since the 19th century. The Irish contracts and British contracts have a similar broad origin. In the UK, the Joint Contracts Tribunal was established in the 1930s and became responsible for subsequent revisions of the standard form contract.

The Royal Institute of the Architecture of Ireland forms of building contract is almost invariably used for any significant size construction contracts in Ireland. The form of contract is issued by the RIAI in agreement with the Construction Industry Federation and the Society of Chartered Surveyors in the Republic of Ireland.

There is a separate but similar form of contract used by Government departments and local authorities. It is also published by the RIAI in consultation with the above bodies but approved by the Department of Finance. The RIAI has also produced a shorter form contract.

The standard forms are very intricate and have very long-established meanings. They are commonly employed with relatively few modifications. Sometimes they are employed without regard to the allocation of risks and obligations that they provide for.

Needless to say, the broad principles of contract law apply to building and construction contracts. However, many of the implied areas that would apply in a sparser contract, do not apply, because specific provision is made for the issue concerned.

The standard forms evolved and established meanings so that unexpected consequences may flow from variations or amendments. The first Irish standard form was developed in 1910 between the RIAI and master builders. It was based broadly on earlier RIBA forms in the UK.

Standard Form Contracts

Almost invariably,  standard form building contracts as adopted or amended are used. The terms of the contract and their application will usually be clear. However, in other cases, he parties may not have formalised their agreement and there may be scope for ambiguity.

The standard institute building contracts typically contain articles of agreement, conditions of contract, drawings and specifications. In some cases the bill of quantities will be part of the contract while in other cases it will not be. If they are part of the contract then, they set out the extent and the particulars of the works so that variations from it should be measured and priced.

The articles of agreement contain the key terms. They may be inserted in manuscript into the standard form. They contain information specific to the particular contract including the parties, basic price and other key variables.

Key Terms Inserted

The basic part of the agreement names the employer and contractor. It incorporates the terms and conditions. It provides for the completion and execution of the works shown in the contract documents and/or described in the specification, the bill of quantities, and conditions. They together form the contract.

The contract sum is specified. It may or may not be subject to variation in accordance with the general terms.

The architect is nominated. In effect, the architect is the contract administrator and performs certain key functions. In respect of certain functions, that architect must be independent of both parties. This is notwithstanding that he is almost invariably appointed by the employer.

There will commonly be a quantity surveyor for particular purposes. He may be nominated by the employer or the architect on his behalf.

Instructions

The contractor must carry out the works in accordance with the contract documents and with the directions and to the reasonable satisfaction of the architect. The architect has absolute discretion and from time to time may issue further drawings details and written and or oral instructions regarding certain matters.

This provision allows for flexibility as may be necessary for more complex projects. Architect’s instructions must be within the broad scope of the contract and may not be simply arbitrary result in a fundamental change in its scope.

The architect’s instructions may provide for a variation of the price. They may include modifications of the design quality and quantity of the works or the addition omission or substitution of any work.  They may be made for the purpose of correcting discrepancies between the contract documents.

Instructions may provide for the removal of materials and the substitution of materials and goods. They may provide for the removal and re-execution of works which in the architect’s opinion are not in accordance with the contract.

These provisions emphasise the architect’s supervisory powers. The fact that the architect does not identify and condemn work does not absolve the contractor from responsibility for faults in the work.

The architect may give directions postponing the execution of work, requiring defects to be made good, dismissing persons who are believed to be incompetent or guilty of misconduct requiring making good the defect and generally other matters pertaining to the contract.

Compliance with  Instructions

The contractor is obliged to comply with the architect’s instructions. If compliance involves a variation, the procedure for price variation applies. If the instruction arises from defective work, non-compliant materials or something else which is the contractor’s fault then there would be no price variation. Indeed, the employer may have a right to compensation.

If the compliance involves the contractor incurring expense beyond that provided for or contemplated by the contract the contractor must inform the architect. Unless the instruction is issued by reason of a breach of obligations, the cost, loss or expense is added to the contract sum.

If the architect’s instructions are not complied with within five days, the employer may pay other persons to execute the works concerned and the costs are recovered from the contractor.

The architect may instruct the contractor in respect of alterations, additions or omissions in the work. Where appropriate a fair and reasonable variation of price arises on a fair and reasonable basis.

The discretion of the architect does not in any sense imply that he has control of the site. His role is as an administrator principally.

Contractors Duties

The contractors will provide everything necessary for the proper execution of the work in the accordance with the proper interpretation of the contract document. This applies whether the same are fully or partly shown or described provided they can be reasonably inferred from the contract documents. If there is a discrepancy between the contract documents, the contractor may apply to the architect for directions.

The contractor is responsible for fees and charges payable by law under legislation to any governmental, local or public sector company relating to the works and fees thereon. If they are not expressed to be the responsibility of the contractor or not included in the contract sum then there may be added to the contract price.

The architect is to provide to the contractor either by drawings or personal supervision and instructions at the time of setting out the works, such information as will enable the contractor to set out the work. All materials and workmanship are to be of the kind set out in the contract documents. The contractor on request of the architect must furnish the latter with data as to prove the materials comply.

The contractor shall arrange and carry out tests that the architect may require. The architect may require work to be opened up to vouch whether it is compliant. In broad terms, the contractor covers the cost if he is at fault.

The contractor is obliged to keep a foreman on site. Instructions given by him are deemed given to the contractor.

The architect and persons authorized by him are to have access to the works the contractor’s workshops and other places where work are prepared for the contract.

Site safety is the responsibility of the contractor.

The employer is entitled to appoint a clerk of works whose duty is to act as an inspector under the direction of the architect. The contractor must afford him every facility in the performance of that duty. The clerical works may be vetoed by the contractor if he has objections and reasons which the architect considers sufficient.

The clerk of work’s role is limited. He has no power to give instructions. His function is to vouch that the work are being carried out in compliance with the contract document. He will be present on-site with a view to assisting the architect in the discharge of his functions of supervision and control.

Ownership of Materials

Materials and goods and equipment owned by the contractor brought on to the site are deemed to be the property of the employer. They may not be removed without the consent of the architect. The contract permits the contractor the exclusive use thereof until the event happens by which the employer is entitled to exclude the contractor from the site.

Want of materials, goods, plants, et cetera are removed from the site with consent they reinvest in the contractor. Surplus goods, plants, et cetera are removed by the contract at the end of the contract and vests in the contractor. If the contractor fails to remove it within a reasonable time then the employer may sell them after deducting the balance of costs and charges in connection with the sale, paying the balance to the contractor.