On this page we try to provide general information and useful links related to the basic concept of construction contracts. Most of the information is in the public domain and we collate it here for your convenience. & Disclaimer
Some general observations on Construction Contracts
It’s worth remembering that “contractors” do not take their name from the work they do, but from the construction contracts they enter into.
Legal agreements provide the foundation for all construction projects, the world over.
On many occasions the contract is usually stored away in the company safe, with the intention that it is never seen again. Sometimes it is not needed. But when things have already started to go wrong, it may be too late to take the agreement out again and see what should have been done differently.
The time to make any necessary changes to the agreement is before execution, or signature. Making changes to agreements during the currency of the project can be fraught with danger and the situation should be avoided, if at all possible. If it’s considered absolutely necessary to make changes then the parties should consider the use of a Supplemental Agreement to the contract.
As always, we strongly advise that you employ the services of a good construction lawyer before contemplating any changes to legal agreements.
In addition, a well advised party to any significant commercial agreement needs to know more than just what words are on the signed pages.
Every system of law adds or varies the parties? rights and obligations” in some way or another.
It’s also worth remembering that all construction claims are based on legal rights.
If a party has no legal basis for its claim, no amount of evidence, experience or expertise can prevent it failing. It is therefore essential, at the very outset, to identify what rights it is that a party is seeking to base their claim on.
At the outset, a well worded set of terms & conditions of a contract will save a lot of trouble later in the project. Generally, the written agreements should be short and concise and succinctly convey the spirit of the contract.
Long convoluted terms & conditions sometimes only lead to confusion and conflicting clauses. Especially when appended to Model Forms of contract.
The important terms of a contract usually comprise the following four elements;
1. The definition of the work to be done.
2. The price to be paid for that work.
3. The time in which the work has to be done.
4. The amount of damages to be paid in the event of delay or other non-performance.
Another essential component of a contract is the mutual exchange of obligations. This usually sets out in the written agreement and can form the basis of the contract deliverables.
Intention to create legal relations.
Very often, during the pre-contract negotiations period, several offers and counter-offers may be made prior to the final acceptance. The parties should consider marking all the correspondence entered into during this period with the heading of “subject to contract”. This simple expedient tells everyone concerned that there is no intention to create legal relations until the final contract agreement is executed and parties are not to be bound by the prior statements.
It’s important to note that the above criteria also applies to casual correspondence such as emails. Of course, a good document management system, along with robust project controls & procedures, will help to avoid these pitfalls.
Sometimes contracts use an “entire agreement clause” to try to define the point when legal relations were created but they are not entirely reliable in certain circumstances.
Similarly, if and when a dispute arises, the parties should consider to use the heading of “without prejudice”, on the dispute related correspondence, in order to avoid any possible erroneous statements being used against the author in any future legal proceedings.
Traditional Model Forms
Bespoke Agreements
Forms of Sub-contract
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