Misc Contracts Issues

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.

Drawings

Generally, the drawings are produced by the design team. Many modern buildings are complex so that the production of the relevant drawings is itself a process which must be coordinated and planned.

Drawings provide a model of the design, concept and ideas behind a building. Formal drawings will be required as the basis of a planning application. Further detailed drawings will comprise the instructions for the contractor relating to the construction of the building.

There may be detailed drawings from specialist subcontractors and others. The process of coordination will be important. Upon completion as-built drawings will show how the building was completed and may form the basis for future maintenance and works.

Specifications and Bills of Quantities

Building agreements will commonly set out schedules setting out the quantities and dimensions in generic items. They will not generally be contract documents. However, they will be useful in providing information to others such as quantity surveyors and builders.

Specifications may set out the methods for construction, quality of finish, workmanship and materials to be employed. They may set out specific performance requirements.

Where the bills of quantity are used, the information will be generally contained in the bills. Many simpler works may be capable of definition by drawings and specifications alone.

Bills of quantities are prepared in accordance with published standards of measurement. The contracts will generally provide and warrant that the bills have been prepared in accordance with standard methods of measurement. In some cases,the quantity is an estimate The bills of quantities will usually serve to determine the valuation of variations directly or indirectly.

The purpose and effect of the bill of quantities will depend on whether it is specified as a contract document or not. When bills are incorporated, they define the quantity and quality of the work. However, the contract may require that the overall quality is of the type described in the contract. In this case the actual materials and quality of them set out may be subject to tests by the contract administrator.

Originally bills of quantities were used for tendering purposes. This is still their principal purpose in the context of engineering contracts. In more complex cases bills of quantity may be inadequate to serve all the conflicting purposes for which they are prepared.

Bills usually consist of preliminaries, preambles and particulars of measured work. They measure and provide a  detailed quantification of the works. The preliminaries set out the definition and the scope of work. They will include particulars of the project, lists of drawings, descriptions of the site, scope of the work, details of documentation and management arrangements. Preambles were formerly a separate description of the materials and workmanship to be employed in the works. They are now less common.

Prime and Provisional Sums

A prime cost sum refers to works under the building contract that are to be carried out under the direction of the main contractor, by nominated subcontractors, suppliers or others. They will usually have been selected prior to the main contractor. As the main contractor does not control the pricing of this aspect of the work, a set amount is simply included in the bills to which the contractor may add a price for attendance including supervision, accommodation and plant,and also for profit.

Provisional sums are sums that are not yet finalised when the bills are prepared. They may be to allow for contingencies. The employer may not necessarily expend the sums concerned.

There may be contract instructions containing more information than the above documents. There may be schedules and further drawings setting out information. They may be necessary to execute the work. They must not be outside the scope of the contract or impose additional works on the contractor. If they do, a variation may be permitted by the architect/contract administrator.

The contractor will generally provide a program of work for approval. The program itself is not binding. Certain dates in it such as the specified date for completion may be binding in the sense that liability for liquidated damages will arise if it is not achieved.

 

Under standard form documents,the contract administrator may make directions in relation to discrepancies between the works. In some cases,this may entitle the contractor to additional time. If they constitute a variation then additional monies may fall due.

Liability of Contractors

The liability of the contractor derives from the express and implied terms of the contract. In some circumstances the contractor may also incur liability under the law of torts/civil wrongs.

The basic contractual obligations of the contractor are determined by the terms of the contract. The general principles of contract law will apply in relation to defining the terms of the contract and interpreting them. The contract may be spread amongst a number of documents.

General contract provisions apply to exemption The courts will seek to interpret the contract as expressed in the contract documents. The parol evidence rule applies. Generally, evidence will not be admitted to add, vary, contradict or detract from the written terms. However, there are exceptions.e.g.

• where words have a technical meaning which requires expert explanation
• where there are background circumstances that inform the contract
• where there is ambiguity or contradiction.

The contractor must use proper workmanship and use materials of good quality and fit for the purpose. There may be an implied warranty that the works will be fit for purpose.

The contractor’s basic obligation is to construct the works in accordance with the documents on time. Where the bill of quantities is part of the contract and contains a statement of the works, the contractor’s obligation is to do what is provided in the bill. If this is insufficient the contractor must pay for additional works necessary to complete the job as contemplated.

The contractor must comply with the express and implied terms of the contract. Where the bills form part of the contract, he must comply with the standards set out in the bills. He must also comply with implied obligations such that materials will be of merchantable quality.

Standard Required

Many building contracts provide that works are to be to the satisfaction of the contract administrator. However, the contract administrator does not possess absolute discretion in this regard. He must act reasonably.

here there are obligations in the contract to ensure that the work is of satisfactory quality, the contractor will generally be obliged to both satisfy this requirement as well as the specific requirement in the contract document.

It is generally the interpretation that the general requirements to provide good and workmanlike materials are not met, even though specified materials are used unless these have been selected by the employer. This is so even though materials have been approved by the contract administrator/architect.

The contract will state or imply that the works must be undertaken with proper skill and care. This is sometimes expressed in a good and workmanlike manner. Generally, the contract administrator may order that work be replaced where he is of the view that it is not in compliance with the contract.

The materials are to be of the respective types specified in the contract. Where not specified, they are to be of merchantable quality. They must also be fit for purpose, provided the employer is relying on the contractor’s skill. This will only be the case where the contractor may choose the material. If the employer has specified them, there is no reliance.

Where the bills specify the material to be used and the contractor has limited discretion, it may be held the employer has not intended to rely on the contractor’s skill and judgment.

In a traditional contracting job, there is no implied or expressed term that the final works itself will be fit for purpose. This may be the case however in design and build arrangement.

Liability to Others

Where there is a sufficiently proximate relationship between the contractor and a third party, there may be a liability in tort. In principle, where the relevant facts satisfy the possibility of a claim both for breach of contract and for tort. the claimant may choose which claim to make.

Where the relationship is sufficiently proximate and the claimant has relied on the defendant for professional services there may be a liability in tort. The relationship between a contractor or other design professional is likely to give rise to a duty of care in torts. It is less clear whether the relationship between an employer and contractor will do so. In these cases, it appears that there is a duty in contract only and no concurrent duty in tort.