- •Introduction
- •List of tables
- •List of figures
- •Table of cases
- •Table of statutes
- •Glossary
- •1 UK construction sector context
- •1.1 The nature of the sector
- •1.2 The nature of professionalism in construction
- •1.3 The nature of projects
- •1.4 Procurement methods
- •2 Roles and relationships
- •2.1 Common problems
- •2.2 Client roles
- •2.3 Consultant roles
- •2.4 Professional services agreements
- •2.5 Architect
- •2.6 Quantity surveyor
- •2.7 Typical terms in professional services agreements
- •2.8 Integrated documentation
- •3 General contracting
- •3.1 Background
- •3.2 Use of general contracting
- •3.3 Basic characteristics
- •3.4 Risk in general contracting
- •3.5 Standardized approaches to general contracting
- •4 Design-build
- •4.1 Background
- •4.2 Features of DB contracts
- •4.3 Use of the JCT design build form (JCT DB 11)
- •4.4 Characteristics of JCT DB 11
- •4.5 Risk in DB
- •4.6 Approaches to DB
- •5 Construction management
- •5.1 Background
- •5.2 Use of construction management contracts
- •5.3 Principles of CM contracting
- •5.4 Overview of JCT CM Contract
- •5.5 Allocation of risk in construction management
- •5.6 Approaches to construction management
- •6 Collaborative contracting
- •6.1 Background
- •6.2 Use of collaborative contracting
- •6.3 Principles of collaborative contracting
- •6.4 Characteristics of collaborative contracting
- •6.5 Risk in collaborative contracting
- •6.6 Approaches to collaborative contracting
- •7 Risk allocation and procurement decisions
- •7.1 Types of risk in construction contracts
- •7.2 Dealing with risk
- •7.3 Procurement
- •7.4 Identifying and choosing procurement methods
- •7.5 Characteristics of procurement methods
- •8 Contract choice
- •8.1 Use of standard contracts
- •8.2 Contract drafting
- •8.3 JCT contracts
- •8.5 The burgeoning landscape of standard forms
- •9 Tendering and contract formation
- •9.1 The meaning of construction contracts
- •9.2 The formation of contracts by agreement
- •9.3 Contracts made by tender
- •10 Liability in contract and tort
- •10.1 Express terms
- •10.2 Exemption clauses
- •10.3 Incorporation by reference
- •10.4 Implied terms
- •10.5 Liability in tort for negligence
- •11.1 Standard of work
- •11.2 Statutory obligations
- •11.4 Transfer of materials
- •12.1 Implied obligations
- •12.3 Responsibility for the contract administrator
- •12.4 Responsibility for site conditions
- •12.5 Health and safety
- •13 Responsibility for design
- •13.1 Design management
- •13.2 Design duties in law
- •13.3 Legal responsibility for design
- •14 Time
- •14.1 Commencement
- •14.2 Progress
- •14.3 Completion
- •14.5 Adjustments of time
- •15 Payment
- •15.2 The contract sum
- •15.3 Variations
- •15.4 Fluctuations
- •15.5 Retention money
- •16.1 Contract claims and damages
- •16.2 Grounds for contractual claims
- •16.3 Claims procedures
- •16.4 Quantification of claims
- •17 Insurance and bonds
- •17.1 Insurance
- •17.2 Bonds and guarantees
- •18 Role of the contract administrator
- •18.2 Contract administrator as independent certifier
- •19 Sub-contracts
- •19.3 The contractual chain
- •19.7 Collateral warranties
- •20 Financial remedies for breach of contract
- •20.1 General damages
- •20.2 Liquidated damages
- •20.3 Quantum meruit claims
- •21 Defective buildings and subsequent owners
- •21.1 Claims in negligence
- •21.2 Statutory protection
- •21.3 Alternative forms of legal protection
- •21.4 Assessment of damages
- •22 Suspension and termination of contracts
- •22.1 Suspension of work
- •22.2 Termination for breach at common law
- •22.3 Termination under JCT contracts
- •22.4 Termination under NEC contracts
- •22.5 Termination under FIDIC contracts
- •22.6 Termination of contract by frustration
- •23 Non-adversarial dispute resolution
- •23.1 Background to disputes
- •23.2 The nature of construction disputes
- •23.3 The role of the contract administrator
- •23.4 Methods of dispute resolution
- •24 Adversarial dispute resolution
- •24.1 Adjudication
- •24.2 Arbitration
- •24.3 Litigation
- •24.4 Arbitration or litigation?
- •References
- •Author index
- •Subject index
Construction Contracts
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First edition published 1992 by E & F N Spon
Second edition published 1996
Third edition published 2000 by Spon Press
Fourth edition published 2008 by Taylor & Francis
This edition published 2015 by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
And by Routledge
711 Third Avenue, New York, NY 10017, USA
Routledge is an imprint of the Taylor & Francis Group, an informa business
©1992, 1996, 2000, 2008 John Murdoch and Will Hughes
©2015 Will Hughes, Ronan Champion and John Murdoch
The right of Will Hughes, Ronan Champion and John Murdoch to be identified as authors of this work has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.
Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.
The publisher makes no representation, express or implied, with regard to the accuracy of the information contained in this book and cannot accept any legal responsibility or liability for any efforts or omissions that may be made.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Hughes, Will (William Paul), 1956author.
Construction contracts : law and management / Will Hughes, Ronan Champion and John Murdoch. -- 5th edition.
pages cm
Includes bibliographical references and index.
1. Construction contracts--England. I. Murdoch, J. R., author. II. Champion, Ronan, author. III. Title.
KD1641.H84 2015 343.4107’8624--dc23 2014047697
ISBN: 978-0-415-65705-1 (hbk)
ISBN: 978-0-415-65704-4 (pbk)
ISBN: 978-1-315-69521-1 (ebk)
Publisher’s Note
Camera-ready copy prepared in Times New Roman by Will Hughes
Contents
Introduction ................................................................................................ |
v |
||
List of tables .............................................................................................. |
vii |
||
List of figures ............................................................................................. |
ix |
||
Table of cases ............................................................................................. |
xi |
||
Table of statutes...................................................................................... |
xxv |
||
Glossary................................................................................................. |
|
xxvii |
|
1 |
UK construction sector context ...................................................... |
1 |
|
|
1.1 The nature of the sector ..................................................................... |
1 |
|
|
1.2 The nature of professionalism in construction................................... |
6 |
|
|
1.3 The nature of projects ........................................................................ |
8 |
|
|
1.4 |
Procurement methods ...................................................................... |
11 |
2 |
Roles and relationships ................................................................. |
13 |
|
|
2.1 |
Common problems........................................................................... |
13 |
|
2.2 |
Client roles....................................................................................... |
18 |
|
2.3 |
Consultant roles ............................................................................... |
20 |
|
2.4 |
Professional services agreements..................................................... |
21 |
|
2.5 |
Architect .......................................................................................... |
22 |
|
2.6 |
Quantity surveyor ............................................................................ |
24 |
|
2.7 Typical terms in professional services agreements.......................... |
24 |
|
|
2.8 |
Integrated documentation ................................................................ |
28 |
3 |
General contracting....................................................................... |
31 |
|
|
3.1 |
Background...................................................................................... |
31 |
|
3.2 Use of general contracting ............................................................... |
34 |
|
|
3.3 |
Basic characteristics......................................................................... |
40 |
|
3.4 Risk in general contracting .............................................................. |
45 |
|
|
3.5 Standardized approaches to general contracting.............................. |
49 |
|
4 |
Design-build ................................................................................... |
51 |
|
|
4.1 |
Background...................................................................................... |
51 |
|
4.2 Features of DB contracts.................................................................. |
53 |
|
|
4.3 Use of the JCT design build form (JCT DB 11) .............................. |
56 |
|
|
4.4 Characteristics of JCT DB 11 .......................................................... |
61 |
|
|
4.5 |
Risk in DB ....................................................................................... |
64 |
|
4.6 |
Approaches to DB............................................................................ |
66 |
5 |
Construction management............................................................ |
69 |
|
|
5.1 |
Background...................................................................................... |
69 |
|
5.2 Use of construction management contracts ..................................... |
71 |
|
|
5.3 Principles of CM contracting........................................................... |
73 |
ii |
Construction Contracts |
|
|
|
5.4 Overview of JCT CM Contract........................................................ |
75 |
|
|
5.5 Allocation of risk in construction management ............................... |
77 |
|
|
5.6 Approaches to construction management ........................................ |
79 |
|
6 |
Collaborative contracting ............................................................. |
81 |
|
|
6.1 |
Background...................................................................................... |
81 |
|
6.2 Use of collaborative contracting...................................................... |
82 |
|
|
6.3 Principles of collaborative contracting ............................................ |
84 |
|
|
6.4 Characteristics of collaborative contracting..................................... |
84 |
|
|
6.5 Risk in collaborative contracting ..................................................... |
90 |
|
|
6.6 Approaches to collaborative contracting ......................................... |
91 |
|
7 |
Risk allocation and procurement decisions................................. |
93 |
|
|
7.1 Types of risk in construction contracts ............................................ |
93 |
|
|
7.2 |
Dealing with risk.............................................................................. |
94 |
|
7.3 |
Procurement..................................................................................... |
99 |
|
7.4 Identifying and choosing procurement methods............................ |
103 |
|
|
7.5 Characteristics of procurement methods........................................ |
107 |
|
8 |
Contract choice ............................................................................ |
117 |
|
|
8.1 Use of standard contracts............................................................... |
117 |
|
|
8.2 |
Contract drafting............................................................................ |
120 |
|
8.3 |
JCT contracts ................................................................................. |
120 |
|
8.4 |
Other standard-form contracts ....................................................... |
127 |
|
8.5 The burgeoning landscape of standard forms ................................ |
132 |
|
9 |
Tendering and contract formation............................................. |
133 |
|
|
9.1 The meaning of construction contracts.......................................... |
133 |
|
|
9.2 The formation of contracts by agreement ...................................... |
134 |
|
|
9.3 Contracts made by tender .............................................................. |
144 |
|
10 |
Liability in contract and tort ...................................................... |
157 |
|
|
10.1 |
Express terms................................................................................. |
157 |
|
10.2 |
Exemption clauses ......................................................................... |
166 |
|
10.3 |
Incorporation by reference............................................................. |
168 |
|
10.4 |
Implied terms................................................................................. |
169 |
|
10.5 Liability in tort for negligence....................................................... |
172 |
|
11 |
Contractor’s obligations.............................................................. |
175 |
|
|
11.1 |
Standard of work............................................................................ |
175 |
|
11.2 |
Statutory obligations...................................................................... |
179 |
|
11.3 |
Co-ordination and management..................................................... |
181 |
|
11.4 |
Transfer of materials...................................................................... |
185 |
12 |
Employer’s obligations................................................................ |
187 |
|
|
12.1 |
Implied obligations........................................................................ |
187 |
|
12.2 |
Employer’s express obligations..................................................... |
190 |
|
12.3 Responsibility for the contract administrator................................. |
192 |
|
|
12.4 Responsibility for site conditions .................................................. |
193 |
|
|
12.5 |
Health and safety ........................................................................... |
196 |
Contents iii
13 |
Responsibility for design............................................................. |
197 |
|
|
13.1 |
Design management....................................................................... |
197 |
|
13.2 Design duties in law....................................................................... |
198 |
|
|
13.3 Legal responsibility for design ...................................................... |
204 |
|
14 |
Time |
.............................................................................................. |
209 |
|
14.1 |
Commencement............................................................................. |
209 |
|
14.2 |
Progress ......................................................................................... |
211 |
|
14.3 |
Completion .................................................................................... |
212 |
|
14.4 Contractor’s obligations after completion...................................... |
216 |
|
|
14.5 |
Adjustments of time....................................................................... |
217 |
15 |
Payment ........................................................................................ |
229 |
|
|
15.1 Employer’s obligation to pay......................................................... |
229 |
|
|
15.2 |
The contract sum............................................................................ |
233 |
|
15.3 |
Variations....................................................................................... |
234 |
|
15.4 |
Fluctuations ................................................................................... |
243 |
|
15.5 |
Retention money............................................................................ |
244 |
16 |
Contractors’ delay and disruption costs.................................... |
249 |
|
|
16.1 Contract claims and damages ........................................................ |
249 |
|
|
16.2 Grounds for contractual claims...................................................... |
251 |
|
|
16.3 |
Claims procedures ......................................................................... |
254 |
|
16.4 |
Quantification of claims................................................................. |
256 |
17 |
Insurance and bonds ................................................................... |
267 |
|
|
17.1 |
Insurance........................................................................................ |
267 |
|
17.2 |
Bonds and guarantees .................................................................... |
277 |
18 |
Role of the contract administrator............................................. |
283 |
|
|
18.1 Contract administrator as the employer’s agent............................. |
283 |
|
|
18.2 Contract administrator as independent certifier............................. |
294 |
|
19 |
Sub-contracts ............................................................................... |
303 |
|
|
19.1 Reasons for the prevalence of sub-contracting .............................. |
303 |
|
|
19.2 The legal basis of sub-contracting ................................................. |
305 |
|
|
19.3 |
The contractual chain..................................................................... |
306 |
|
19.4 |
Domestic sub-contracts.................................................................. |
307 |
|
19.5 |
Defaults of sub-contractors............................................................ |
309 |
|
19.6 |
Rights of sub-contractors............................................................... |
313 |
|
19.7 |
Collateral warranties...................................................................... |
319 |
|
19.8 Employer selection of sub-contractors........................................... |
324 |
|
20 |
Financial remedies for breach of contract................................. |
331 |
|
|
20.1 |
General damages............................................................................ |
331 |
|
20.2 |
Liquidated damages....................................................................... |
336 |
|
20.3 |
Quantum meruit claims.................................................................. |
341 |
|
20.4 Non-payment as a contractual remedy........................................... |
342 |
|
21 |
Defective buildings and subsequent owners .............................. |
347 |
|
|
21.1 |
Claims in negligence...................................................................... |
347 |
|
21.2 |
Statutory protection ....................................................................... |
350 |
iv |
Construction Contracts |
|
|
|
21.3 Alternative forms of legal protection............................................. |
353 |
|
|
21.4 |
Assessment of damages ................................................................. |
358 |
22 |
Suspension and termination of contracts .................................. |
361 |
|
|
22.1 |
Suspension of work ........................................................................ |
361 |
|
22.2 Termination for breach at common law......................................... |
362 |
|
|
22.3 Termination under JCT contracts................................................... |
369 |
|
|
22.4 Termination under NEC contracts ................................................. |
375 |
|
|
22.5 Termination under FIDIC contracts............................................... |
376 |
|
|
22.6 Termination of contract by frustration........................................... |
377 |
|
23 |
Non-adversarial dispute resolution............................................ |
379 |
|
|
23.1 |
Background to disputes .................................................................. |
379 |
|
23.2 The nature of construction disputes............................................... |
382 |
|
|
23.3 The role of the contract administrator............................................ |
384 |
|
|
23.4 Methods of dispute resolution........................................................ |
384 |
|
|
23.5 References to ADR procedures in standard forms......................... |
389 |
|
24 |
Adversarial dispute resolution.................................................... |
391 |
|
|
24.1 |
Adjudication .................................................................................. |
391 |
|
24.2 |
Arbitration ..................................................................................... |
398 |
|
24.3 |
Litigation ....................................................................................... |
407 |
|
24.4 |
Arbitration or litigation? ................................................................ |
409 |
References |
............................................................................................... |
415 |
|
Author index ........................................................................................... |
421 |
||
Subject index........................................................................................... |
423 |
Introduction
This book is aimed primarily at students for whom the study of building or civil engineering contracts forms part of a construction-based course. We have had in mind the syllabus requirements for first degrees in Building, Civil Engineering, Architecture, Quantity Surveying and Building Surveying, as well as those of postgraduate courses in Construction Management and Project Management. We have also assumed that such students will already have been introduced to the general principles of English law, especially those relating to contract and tort. As a result, while aspects of those subjects that are of particular relevance to construction are dealt with here, the reader must look elsewhere for the general legal background.
In producing this fifth edition, we have again been greatly assisted by the many helpful comments made by reviewers and users of previous editions. Nonetheless, our basic aim is identical to that which underpinned the first edition: to provide an explanation of the fundamental principles of construction contract law, rather than a clause-by-clause analysis of any particular standard-form contract. As a result, the book is based not just on one standard-form contract. We draw frequently upon particular standard-form contracts, such as JCT SBC 11, FIDIC 1999 Red Book, NEC3 and ICC 11 for our illustrations of particular points and to contrast different approaches to specific issues. The choice and range of contracts reflects the preeminent positions occupied by the forms currently in use, both in the UK and internationally. Indeed, by dealing with these contracts in the context of making general points about construction contract law, we hope that we generate insights for users in a wider range of countries than the UK.
Finally, we repeat our previous warning as to the dangers inherent in a little learning. Neither this book, nor the courses for which it is intended, seek to produce construction lawyers. The objective is rather to enable those who are not lawyers to resolve simple construction disputes before they become litigious, and to recognize when matters require professional legal advice. We feel that every construction practitioner should understand the legal framework in which they operate. The extent of this understanding should be enough to enable them to instruct and brief specialist construction lawyers. We hope that this is also the aim of every construction student. Ultimately, our aspiration is that this book will help construction practitioners to understand the impact of contract law on their work in construction projects of all kinds, in diverse countries.
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List of tables
Table 2.1: Structure of responsibilities in construction projects |
................15 |
Table 7.1: Principles of procurement ....................................................... |
105 |
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