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into account. Thus, where bills of quantities specified the type of material to be used as hardcore, but left the contractor some discretion as to what was supplied, it was held that the employer had not intended to rely on the contractor’s skill and judgement, but had believed that it was unnecessary to lay down a more detailed definition. There was accordingly no implied guarantee by the contractor as to the suitability of the hardcore.7 The implied term as to the fitness of the materials used has also been made express by clause 2.3.3 of JCT SBC 11 through the wording ‘a standard appropriate to the works’.
11.1.5Suitability of the building
Quite apart from the obligation to provide suitable materials, a contractor may in some circumstances be subject to an implied term that the building itself, when completed, will be fit for its intended purpose. Such a term, which will normally be implied only into ‘design and build’ contracts, is dealt with in Chapter 13.
11.2STATUTORY OBLIGATIONS
Statutory obligations are the obligations imposed by Acts of Parliament and other legislation such as government regulations. All parties must of course obey the law and are thus bound by these obligations. However, failure by the contractor to comply with a statutory obligation would not in itself amount to a breach of contract for which the employer could claim damages. That will only be the case where the contract specifically requires the contractor to comply with the relevant statutory rules.
The reason for making compliance a contractual requirement is that, where the contract works are carried on in such a way as to breach a statute, the effect may well be that the employer becomes liable to criminal prosecution or to civil actions brought by third parties who are adversely affected. By placing a contractual obligation of compliance on the contractor, the contract seeks to ensure that, in such circumstances, the employer will be entitled to claim an indemnity from the contractor.
Statutory obligations are sometimes expressly mentioned within various standard forms. The JCT and ICC forms, for example, are drafted primarily for use in the UK and hence include some references to statutory obligations, evident by references to CDM regulations or adjudication. NEC3 and FIDIC forms, by contrast, are not country-specific. NEC3 requires the contractor to carry out the works only in accordance with the Works Information. There is no separate requirement to comply with any statutory obligations. Instead, under clause 18.1, the contractor is to notify the project manager if the contractor considers that the works information requires any actions that are illegal or impossible, after which the project manager may issue instructions. By contrast, under FIDIC clause 1.13 the contractor is to comply with all applicable laws and (clause 6.4) both the
7 Rotherham Metropolitan Borough Council v Frank Haslam Milan & Co Ltd (1996) 78 BLR 1.
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contractor and its employees are to obey labour laws. The comments in the subsections below relate to UK-based forms.
11.2.1Contractor’s duties
In the UK, the most important provisions controlling building work are likely to be the Building Regulations 1985, the Health and Safety at Work Act 1974 and the Construction (Design and Management) Regulations 2015, but the contractor’s obligation extends much wider than these. JCT SBC 11 clauses 1.1 and 2.1 make it clear that there must be compliance with local authority byelaws, and also with regulations made by statutory undertakers such as electricity, gas and water boards, to whose systems the works are to be connected.
In relation to any fees, charges, rates or taxes payable in respect of the works, JCT SBC 11 clause 2.21 again places the primary obligation of paying these upon the contractor. However, the ultimate cost will be borne by the employer, for the amounts are to be added to the contract sum.
The position outlined above is in general terms followed by ICC 11 in clauses 26 and 27. However, no doubt because the nature of civil engineering projects makes it more likely that work will be done in streets or other highways, the clauses cover these eventualities in considerable detail.
Contractors should be aware of sanctions that might arise from some particular actions or failures during the course of the works. A contractor could be convicted for corporate manslaughter under the Corporate Manslaughter and Corporate Homicide Act 2007. This culpability may arise if a person’s death, whether an employee or visitor, is found to have been caused by the way in which the contractor’s activities are managed or organized by its senior management. A conviction would follow if this amounts to a gross breach of a relevant duty of care owed by the organization to the deceased. Under the Bribery Act 2010 an organization can be prosecuted for bribery or for being bribed, particularly in its dealings with public bodies and officials.
11.2.2Divergence between statutory requirements and contract
The obligations of the contractor described above are subject to an important qualification under JCT SBC 11 clause 2.17.3. If the reason why there is a breach of statute is that the work, as designed, does not conform to statutory requirements, then responsibility for this falls upon the employer and not upon the contractor. The contractor’s only obligation is to notify the contract administrator of any apparent divergence between the contract documents and the statutory requirements. Provided the contractor does this (and it is to be noted that, somewhat strangely, the contract does not require a positive search for such divergences), the contract administrator must then, within seven days, issue instructions so as to bring the works into line with the statutory requirements. Such instructions will be treated as a variation, which means that the contractor will be paid for extra work. Further, where compliance with the instructions causes delay
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or disruption, the contractor will be entitled to claim an extension of time and for loss and/or expense.
The treatment of divergences described here applies to most JCT contracts and also to ICC 11. However, the JCT form DB 05 is very different. Except where the Employer’s Requirements are specifically stated to be in accordance with statutory requirements, it is the contractor’s responsibility to ensure that the work as designed and built does not contravene the law. As a result, any divergence must be put right at the contractor’s own expense.
11.2.3Emergency work
JCT SBC 11 clause 2.18 makes provision for the circumstance where emergency work is necessary in order to comply with statutory requirements. This is likely to occur where work is necessary to ensure the continuing safety of people and property; for example, where a neighbouring property has become unsafe and may collapse on to the site. The contractor must immediately (i.e. without waiting for instructions from the contract administrator) undertake such limited work and supply such limited materials as are necessary to ensure compliance with statutory obligations. Provided that the emergency is then shown to have arisen because of a divergence between the contract documents and the statutory requirements, the contractor’s work will be valued as a variation.
The ICC 11 form does not mention emergency work at all, which suggests that the cost of such work is to be borne entirely by the contractor. Where the emergency arises because of a divergence between the contract documents and statutory requirements, the engineer must issue a variation instruction and the contractor will be paid for this work. However, even here it is arguable that the contractor will remain uncompensated both for the earlier abortive work and for the cost of removing it.
11.2.4Health and safety in the UK
Under JCT SBC 11 clause 3.23 the contractor acknowledges awareness of the Construction (Design and Management) Regulations 2015 and must provide information requested to prepare the health and safety file to the Principal Designer. If acting as Principal Contractor the contractor must additionally ensure that the Construction Phase Plan is prepared and received by the employer before the construction work is commenced. The contractor must also ensure that welfare facilities provided during the works comply with the regulations.
11.3CO-ORDINATION AND MANAGEMENT
Apart from the main contractor’s role as builder (which may be very limited where extensive use is made of sub-contractors, or even non-existent under a management contract), the main contractor has an important part to play in managing the site and the persons who work on it. This covers several issues, dealt with below.
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11.3.1Control of persons on the site
The main contractor is responsible for programming the overall project and coordinating the contributions made by various other persons and organizations, notably sub-contractors. As to the extent to which the contractor bears responsibility for the defaults of such sub-contractors, even when they are nominated, this is dealt with in Chapter 19.
Apart from sub-contractors, an important group of participants in construction projects consists of statutory undertakers. There are two types of these: those who exercise some sort of power over the works, and those who have to undertake work on the site. Examples of the first type are the public bodies exercising supervision over the design, quality or safety of the works by the enforcement of planning legislation or building regulations. Examples of the second type are those public bodies or private firms providing utility services such as gas, water, electricity and drainage. With the latter, the contractor must co-ordinate and connect with their work, but will not have the same powers of control as over sub-contractors.
In the UK it is often the case that statutory undertakings will undertake work that is not part of their statutory powers. Similarly, private firms may undertake work subject to statutory regulation and also work that is not. For example, an electricity board may be employed to carry out sub-contract works. In this case, they are not treated as a statutory undertaking, but are in the same position as any other sub-contractor (whether nominated or domestic). It is obviously of great importance to know in what capacity a statutory undertaking is operating in any particular case, but unfortunately this is not always clear, especially where they exceed their powers.8
Although overall responsibility for the way that work is carried out lies with the contractor, the contract administrator has a supervisory role to play. To enable this to take place, standard forms provide that the contract administrator should have access to the site. JCT SBC 11 clause 3.1 provides that the contractor must allow the contract administrator to have access to the works and to the contractor’s workshops at all reasonable times. The contractor is also required to ensure that such access is also possible to the workshops of sub-contractors. Furthermore, if the employer exercises the right to appoint a clerk of works (see Section 18.1.1) to act as inspector under the directions of the contract administrator, JCT SBC clause 3.4 requires the contractor to afford every reasonable facility for the performance of that duty. Under NEC3 a wide-ranging provision at clause 27 obliges the contractor to provide access to work being done and to materials and plant store on site. Access under FIDIC 1999 Red Book is more limited. The employer’s personnel are to have access to all parts of the site from which natural materials are being obtained, and access to examine, inspect, measure and test work on site (clause 7.3).
It may finally be noted, as a practical feature of the contractor’s responsibility for management and co-ordination, that JCT SBC clause 3.2 specifically requires the contractor to keep constantly upon the works ‘a competent person-in-charge’.
8 Henry Boot Construction Ltd v Central Lancashire New Town Development Corporation (1980) 15 BLR 1.
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FIDIC 1999 Red Book similarly requires there to be a Contractor’s Representative whose whole time is to be given to directing the works (clause 4.3).
11.3.2Exclusion of persons from the works
All the main standard-form contracts give power to the contract administrator to order the exclusion from the works of specified persons. Under clause 3.21 of JCT SBC 05, such an instruction, which must not be issued ‘unreasonably or vexatiously’, extends beyond the contractor’s own employees to include the employees of sub-contractors. In earlier editions of the form, the clause appeared immediately after the contract provisions in respect of bad workmanship which suggests that its purpose is to exclude persistent bad performers, although this was not made explicit. The strict wording would appear to entitle the contract administrator to exclude militant shop stewards and the like, but this would probably be a misuse of the provision. However, the question of unreasonableness, or vexation, is one which can only be decided by an arbitrator/judge.
Under the Construction (Design and Management) Regulations 2015, applicable to work carried out in the UK, the contractor must exclude all unauthorized persons from the site. This additional requirement applies to all construction work as defined by the regulations and it places a very strict obligation on a contractor to maintain proper security and careful governance of admissions to site. This particular regulation (regulation 10) carries civil as well as criminal liability.
NEC3 provides under clause 24.2 a power of exclusion in general terms in that the project manager may instruct removal of a contractor’s employee by giving reasons. Thereafter the employee is to have no further connection with the contract.
FIDIC 1999 Red Book clause 6.9 requires the contractor to employ only those people who are properly skilled and undertake their duties with an appropriate level of care. The engineer has the power to order the removal from site of any contractor’s employee who persists in any misconduct or lack of care; carries out duties incompetently or negligently; fails to conform with any provisions of the Contract; or persists in any conduct which is prejudicial to safety, health, or the protection of the environment.
11.3.3Antiquities
Contractual provisions dealing with the discovery of interesting objects, new or old, during the course of the work are necessary for various reasons. One important reason is that the removal or disturbance of such objects may actually destroy their worth. The employer or statutory authorities may wish to intervene, taking control of the site to allow archaeological investigations to be carried out. A difficulty is that such investigations can continue for many months. One example of this was the discovery of Shakespeare’s Globe Theatre in London, where an archaeological find of great importance delayed a very large and expensive development project for a considerable period of time. More generally, fossils may be valuable, and some types may completely degrade on exposure to atmosphere for even a short
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length of time. Further, one of the most significant features of a fossil is the exact location in which it is found. It must be left in place, for a random fossil is of little use to a palaeontologist without data about its location. A third problem relates to the ownership of treasure trove.
JCT clause 3.22 covers these issues, beginning with a general statement that all fossils, antiquities and other objects of interest or value which may be found on the site or in excavating it during the progress of the Works shall become the employer’s property. This provokes three comments:
The phrase all fossils is a rather unfortunate one because, if the site is on chalk or limestone, it will include every single shovelful of material!
The phrase other objects of interest or value means that this clause does not only apply to old objects; it can equally apply to new things, provided that they are of interest or value.
It is important to appreciate that this clause only settles the issue of ownership as between the employer and the contractor. It can have no bearing on the relative rights of, say, landlord and tenant, where the site is held under a lease. In such circumstances it is necessary to refer to the general law governing the right to any objects found.
The remainder of clause 3.22 (also followed in general terms by ICC 11 clause 32) lays down detailed provisions as to what shall happen where such an object is discovered. The contractor is not to disturb the object, but must take all necessary steps to preserve it in the exact position and condition in which it was found. The contract administrator is to be informed forthwith of the discovery, so that instructions can be given as to what to do. If this delays progress of the works then the contractor is entitled to an extension of time under clauses 2.28, 2.29, 3.23. Any loss/expense incurred by the contractor is also reimbursable.
Apart from the contractual provisions governing antiquities, attention must be paid to the Ancient Monuments and Archaeological Areas Act 1979. This empowers the Secretary of State and local authorities to designate areas of archaeological importance, which will be registered under the Local Land Charges Act 1979. Under the Act, if any operations are to be undertaken on a designated area, which would disturb the ground, an ‘Operations Notice’ must first be served on the local authority. The Secretary of State then has a power to delay the building work, and no compensation is payable unless the archaeologists damage the site. If the provisions of this Act are contravened, criminal penalties may be imposed, and there is also power to issue injunctions preventing any further contravention.
These statutory provisions are not covered directly by clause 3.22, which only apply to objects found during the progress of the works. But there are provisions in JCT SBC 11 that seem to address this situation. When the UK government, by exercising its statutory powers, directly affects the execution of the works, the contractor is entitled to an extension of time (clause 2.29.13) and, if the operations are suspended for the period of suspension stated in the contract particulars, both parties are entitled to terminate the contract (clause 8.11.1.5).
NEC3 contains a very short provision under clause 73.1 relating to antiquities. If a historical object is found then the contractor is not to remove it and is to advise the project manager. The project manager then instructs the contractor how to deal with it.