Last edited 10 Nov 2022

Construction contract

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[edit] Introduction

This article refers to the contract for the main contractor to construct the works (and on some contracts also to design, operate and finance the project). For agreements for the appointment of consultants, independent client advisers, site inspectorate, project managers, client representatives, etc., see the article on Appointing consultants.

[edit] What is a construction contract?

The classic 19th-century definition of a contract is 'a promise or set of promises which the law will enforce' (ref. Pollock, Principles of Contract 13th edition). That is, there is reciprocity of undertaking passing between the promisor and the promisee. In a contract, the rights and obligations are created by the acts of agreement between the parties to the contractual arrangement.

Construction contracts are agreements between a client or employer and a contractor or other supplier to carry out works in relation to a construction project.

[edit] How is a construction contract procured?

The National Construction Contracts and Law Report 2018, published by NBS, suggested the following mix of procurement routes in the construction industry:

For more information see: What is the most common procurement route?

The 'traditional' procurement route is a single-stage process, where the design is developed in detail by a consultant team working for the client and a contractor is then appointed under a lump-sum construction contract.

For more information see: Traditional contract.

[edit] What are the main types of construction contract?

In the procurement of construction, contracts are generally:

[edit] What are the main standard forms of construction contract in the UK?

English law does not require a particular form to contracts, therefore the terms and ultimately the risk allocation is the choice of the parties involved. Standard Form Contracts (SFC) aim to minimise the time and cost of negotiating contracts. Some of the the main standard forms of construction contract in the UK are listed below.

[edit] JCT (The Joint Contracts Tribunal)

[edit] ACA (Association of Consultant Architects)

[edit] Chartered Institute of Building

[edit] FIDIC (Fédération Internationale des Ingénieurs-Conseils)

[edit] NEC (The New Engineering Contract): Engineering and Construction Contract)

For more information, see NEC.

[edit] Other forms of contract

Other less commonly used forms of contract include:

[edit] Contract conditions

Contract conditions set out the principal legal relationship between the parties to a construction project, determining the allocation of risk and consequently, price.

See: Contract conditions for more information.

[edit] Modified standard forms of contract

Some professionals believe that parties should not amend standard contracts as there is a complex interaction between many of the terms and modification can change the balance of risk and create legal uncertainty. The Latham Report recommended the use of standard contracts without amendments (Latham, 1994) and amendment was also criticised by Lloyd QC in Royal Brompton Hospital National Health Trust v Hammond and Others:

However, some argue that no standard contract could allow for all the varying specifics of every individual project. There are also situations where amendment is necessary; for example if certain clauses become obsolete or the industry shifts and requires the inclusion of new terms.

For more information see: Modifying clauses in standard forms of contract.

[edit] Bespoke contracts

24% of respondents to the National Construction Contracts and Law Survey 2012 indicated that they use purpose-written bespoke contracts. Not only is this considered inadvisable because of the risk that bespoke contracts may not adequately or fairly make provision for all circumstances, and that they are not supported by a history of case law, but it is also a poor reflection of how inflexible and ineffective the industry perceives many of the standard forms of contract to be.

For more information, see Bespoke construction contract.

[edit] Pre-construction services agreements

NB: The first stage appointment of a two-stage procurement process might be made using a separate pre-construction services agreement (PCA or PCSA), sometimes called early works agreements, rather than under the provisions of the main, second-stage contract.

For more information see: Pre-construction services agreements.

[edit] Sub contracts

As buildings become increasingly complicated, so it becomes less and less likely that any one contractor will have the required skills to carry out all of the works necessary to construct them, and it may not make good commercial sense to take on new employees for one project that would then have to be laid off for the next.

Increasingly therefore, contractors will use sub-contractors to carry out particular elements of the works. This has lead to the creation of a wide range of sub-contracts.

For more information see: Sub-contractor.

[edit] Related articles on Designing Buildings

[edit] External references


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Everything which is mentioned here is right. Thank you for sharing such information.

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