Construction industry has different law, conditions, terms
In the construction industry, different conditions, terms or elements exist to ensure that the contract is carried out in a well stipulated manner and that the parties are governed to act in the interests of each other. The conditions are as discussed below.
Key conditions used in construction contracts
The first condition entails the intentions of the parties involved in the contract. The parties are bound to act in a on mutual trust and cooperation for the contract to be wholly successful (10.1). The terms and conditions used in the contract ought to be helpfully and fully defined to both parties of the contract so as to enhance clear understanding (11). Communication is very essential while entering into the contract to ensure that all the parties are in agreements as they fully have an understanding of the terms. All forms of communication that ensues in the contract are formal and should all be done in writing and incase a period for reply is specified in the contract data, then this should specifically done within that period (12).
The employer has the power and is in lead control of the contract. He may consequently give instructions or directions that alter or change the works information on how the contract will be carried out (13.2). Such are binding and must be followed to the letter to ensure a workable contract. The site that the construction will take place should be accessed by the contractor to enhance early planning of the construction. The contractor must be allowed by the employer to access and use the site and should provide the services well stated in the works information (14). Where the contractor may notice or may require to bring attention to the employer about something in regard to the contract, such early warnings in regard to how the contract should be carried out are a significant requirement (15). This further helps in ensuring that the parties very well understand the terms binding them in the contract.
As regards, the condition of time to the contractor may not start before the set date and completion may be on or before the set completion date (30.1). The contractor must submit a scheduled forecast or programme of activities to be carried out throughout the contract (31). He may not start before, and the completion of the contract may be before, or after the completion date as stated in the contract. The element of time is a major concern in the construction industry as failure to meet the scheduled time may lead to inconveniencing the employer. The employer is entitled to instruct the contactor to stop or restart the work according to how he sees its progress. In cases where there are delays due to certain events occurring, this may constitute compensation (60). Such events may arise from the action or inaction by the employer though also includes some neutral causes such as physical conditions beyond the control of the employer. The procedures for notifying quotations, compensating events are stipulated in the contract forms (62 and 63).
In regard to the condition or element of control, to start with, the early warnings obligation as regards the contract and its practice may constitute a control mechanism which is very vital in the contract (15). The employer has the overall say as pertains the working out of the construction contract. The employer may delegate any actions and may similarly cancel any delegation (13.4). An employee may be removed through his instructions (21.3). Hence the control condition will cover the employers requirements and the expected standards of the project. The quality of the project should not be compromised, and any defects noticed should brought to the attention of the employer and a defects certificate produced (41.3). Before a defects certificate is issued, the contractor is liable for replacement of lost plant and materials and any damages to the works (43.1).
The condition concerning the costs involved in the project, price and other forms of payment, that is, money, the contractor is required to make an application for payment by the stipulated assessment day, once a month (50.1). The application entails a detailed account of how the money has been used and assessed (50.2). A certificate is normally issued to certify the amount to be paid in accordance to the work performed, that is, the degree of completion. Ordinarily, the employer is to pay within three weeks after the next assessment day (51). Officers such as the in the certification of work completed.
The statutory obligation condition is implied, and arises in instances of breach of the statutory duty by the employer. The contractor in such cases is indemnified against claims or proceedings and costs arising thereby (81.1). Specifically, in regard to the health and safety and CDM stipulated regulations, there is no express reference in that regard. The only instance of such provision could be through the provision of reasons for termination of the contract by the employer for the contractor breaks a regulation (90.3).
Insurance is very vital in the construction contract. There is an insurance table provided in the contract within which the contractor is to provide joint names for insurance purposes (82.1). There are several forms of insurance with basic and a major reason for compensation or replacement cost in respect of loss or damage to plant, materials, individuals and the works. The insurance cover extends from the starting date to the completion date in the case of plants and materials and defects certificate in the case of the works. The other form of insurance is the liability insurance. This insurance insures the owner from possible accruing legal liabilities for another persons loss. Moreover, insurance is also required to cover the contractors liability for damages to property other than works, and injury or death to persons for the minimum cover as stated in the contract. The contract stipulates the extent to which the contractors liability for loss or damage to the employers property will be covered with the insurance (80.1).
Termination is another basic element of the contract. This clause should be included. Both the employer and the contractor have the right to terminate the contract though this is not expressly stated in the contract. A construction contract can be terminated for a cause purposes or convenience reasons. Other reasons, which may lead to the termination of a contract includes insolvency of the contractor, the parties may also bring the contract to an end by basically modifying the agreed contractual terms and conditions. Owners deficiency in fulfilling his obligation may also lead to termination of the contract among other reasons. The employer must issue a termination certificate (90.1) after which the contractor must cease work and leave the construction site (91.1) and may have the work completed by others. The amounts accruing on termination are as stated according to the reasons which dully apply (92).
Additionally, the contract has the condition for miscellaneous or provision for other unforeseen occurrences. It stipulates for instance that use of NEC Engineering and would be necessary. With reference to the contract data, payments provisions in regard to Addendum Y (UK) 2 may be considered though not allowed within a short contract. The Addendum Y (UK) 2 on the third parties rights is a state as suitable for use within the short form. Additionally, Clauses 93 to 95 on dispute resolution in the short form should be replaced by clauses93UK to 95UK, for use in the United Kingdom where the Housing Grants, Construction and Regeneration Act 1996 applies.
Where disputes arise between the employer and the contractor, their settlement should be in reference to the adjudication (93) and other forms as specified in the contract. Under the adjudication process, this requires the presence of an appointed adjudicator whose name may be given in the contract. The adjudicator has the power as indicated and based upon the relevant sections of the Housing Grants, Construction and Regeneration Act 1996 and supplemented either by the statutory Scheme for Construction Contracts, or whichever adjudication process has been named in the contract. The adjudicators decision is final and binding unless and until referred to a further tribunal. The arbitration process should be well stated in contract data.
