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Last edited 06 Oct 2020
In very general terms, an agreement is an understanding and statement of intent between two or more parties, which has often been negotiated and sets out their respective rights and responsibilities.
Whether an agreement is legally enforceable will depend on its type and form. A non-binding agreement, also known as a ‘gentleman’s agreement’ is typically oral (but can be written), or may be part of an unspoken agreement, and relies on an understanding between the parties that they will honour the agreement as opposed to it being enforceable. A binding agreement is also known as a contract and creates rights and obligations between the parties.
There are four essentials in forming a contract:
- Two or more parties.
- An intention to create legal relations.
- An agreement.
- Consideration. (Save for contracts made under seal, and subject to the Contracts (Rights of Third Parties) Act, the courts will not enforce gratuitous promises. There must be valuable consideration. Valuable consideration is 'something of value in the eye of the law'.
For more information see: Essentials of a contract.
Contracts may be executed under seal (signed by the parties, witnessed and most importantly made clear that it is executed as a deed) or under hand (a 'simple contract' that is just signed by the parties). For more information see: Contracts under seal v under hand.
Contract documents for a construction contract will often include ‘articles of agreement’. These set out the core obligations of the parties involved. Typically, they consist of four sections:
- Contract Particulars.
For more information, see Articles of agreement.
When an agreement is made to appoint consultants, this generally referred to as an appointment rather than a contract. For more information see: Appointing consultants.
Other types of contractual agreement include:
- Framework agreements, often used by clients that are continuously commissioning construction work, to allow them to invite tenders from suppliers of goods and services to be carried out over a period of time on a call-off basis as and when required. For more information, see Framework contract.
- Partnering is a broad term used to describe a collaborative management approach that encourages openness and trust between parties to a contract. The parties become dependent on one another for success and this requires a change in culture, attitude and procedures throughout the supply chain. Partnering can be arranged either by use of a traditional contract with a separate partnering agreement, or by use of a contract with an aligned partnering agreement. For more information, see Partnering.
- Pre-Construction Services Agreements (PCSAs) enable clients to employ contractors before the main construction contract commences. Typically, they are part of a two-stage tender process, used in the first stage to procure contractor involvement in the design process. For more information, see Pre-construction services agreement.
There are many other types of agreements used in the construction industry, including:
- Planning performance agreement.
- Service level agreement.
- Concession agreement.
- Non-disclosure agreement.
- Working rule agreement.
- Heritage partnership agreement.
- Hold harmless agreement.
- Listed building heritage partnership agreement.
- Project labor agreement (PLA).
- Reservation agreement for property purchase.
- Section 38 agreement - adoption of highways.
- Section 184 agreement - vehicle crossings over footways and verges
- Section 278 agreement - works to existing highways.
 Related articles on Designing Buildings Wiki
- Alternative dispute resolution.
- Breach of contract.
- Collaborative practices.
- Construction contract.
- Duress and undue influence.
- Legal action.
- Legal agreements.
- Letter of intent.
- Maverick buying.
- Memorandum of understanding.
- Partnering and joint ventures.
- Standard form of contract.
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