In the law on construction, contracts are in standard form. Their negotiation, conclusion and performance are similar to any other general contract under common law and the law of contract. The essentials of a valid and legally enforceable contract have to exist for the construction contract to have the legal force. In contracts for construction, the parties prefer alternative dispute resolution mechanisms specifically arbitration as the method to solve any contractual dispute that arises in the course of performance of the construction contract. The contract document therefore contains a dispute resolution clause providing for reference to arbitration of any dispute that arises during the performance of the contract (Adriaanse, 2016, p. 31). The proposals made in this paper shall majorly be included in the main contract document and where possible, in a facilitating or enabling contract.
The contract document will make reference to the facilitating or ancillary contracts entered into especially for the performance of specialized works such as removal of asbestos, relocation of staff and equipment and the relocation of IT services. There should be a provision in the main contract that makes reference to the facilitating contracts and provides for their incorporation into the main contract by way of reference.
Since the construction works will be performed on a building that is in occupation, the current occupants would have to be relocated together with their equipment and tools of trade to other work stations in the buildings not subject to construction works or in circumstances where the existing structures does not the capacity to accommodate all the staff and their equipment, temporary structures can be used to accommodate some staff. The relocation should be done way before the commencement of the construction works so that there is no compromise on the security of either the staff or their equipment.
Weighing the two options on relocation of staff and their equipment, temporary structures are not preferable as they offer threat to the security of the equipment especially on non-working days. The period of performance of the contract could drag for longer periods than that which was anticipated and as a result, temporary structures cannot be used for such considerable longer periods of time. But in situations where the existing structures lack the capacity to accommodate all equipment and staff, a make shift temporary structure can be used to store equipment that are not used in the day to day operations and their security has to be guaranteed to avoid loss through theft or destruction by extreme weather conditions (Atiya, 2009, p. 15).
The 2016 JCT at section 6 has for instance provided for insurance of any damage or injury resulting from the construction works. Clause 6.2 gives the responsibility to the contractor for any liability such as injury, loss and any expense of any form and magnitude that occurs in the course of construction works and affects any structure or equipment especially where the causation of such misfortunate originated directly from the negligence of either party in the employment of the contractor (Bresnen & Marshall, 2000, p.21).
Where injury, damage or loss results from the negligence of any person in the employment of the contractor, the employer has the right to seek indemnity from the contractor. Under clause 6.3 of JCT, any loss or damage occasioned on existing structures and equipment is adequately addressed. The indemnity clause is express and enforceable unless the parties agree otherwise by inserting an exemption clause when indemnity is not available. The contractor, in circumstances where an exemption clause exists, he will not be liable to indemnify the employer even if the loss, damage or injury results directly from the negligence of any employee of the contractor or a breach of a contractual obligation.
In order to escape incurring any form of liability, any contractor in a contract for building and construction should take out insurance against liability arising directly from the performance of the construction contract. Under clause 6.4, provisions are made requiring for the insurance of contractors to avoid any personal liability related to the performance of the contract. The contractor is required to take and maintain the insurance policy but in the name of the employer as required additionally by clause 6.5.1 and clause 6.1.5 (Hardcastle et al., 2005, p. 32).
The existing structures and equipment should be maintained and kept safely that may occasion the termination or repudiation of the construction contract by either party and to prevent any form of loss or destruction. The loss that activates the parties’ rights to terminate the contract has to be very material. Under clause 6.14 of JCT, there are laid down grounds and process of undertaking such termination where parties have the right to issue and give the other a period of up to 28 days’ notice of their intention to cause termination of the contract due to damage that is material in the circumstances occasioned to existing structures or equipment. No party has the option of repairing or reinstating the damaged equipment or structure.
In the case of Hersent Offshore SA and Amsterdamse Ballast Beton-Waterbouw BV v. Burmah Oil Tankers Ltd (1978), the court had to consider the question of giving notice of the intention to terminate. It was held by the court that where notice is given after completion of works cannot be interpreted to have been given in the course of or prior to the start of the performance of the works (Brooker & Lavers, 2007, p. 27).
The contract document should therefore be very exhaustive; each party should be given clear duties and responsibilities to spread the risk of loss or damage and to easily hold certain individuals responsible for the loss or damage that occurs. Incorporating such comprehensive provisions in the contract document would ensure that the liability on the contractor is greatly minimized. Relocation of staff and equipment should form part of the main contract where the contractor will be appointed very early to carry out the relocation before the main works commences (Bubshait & Almohawis, 2004, p. 38).
Information Technology and electrical services are sensitive to the operations of every organization. In relocating them, additional care should be taken to avoid occasioning any form of loss. The contractor should therefore engage persons with experience and experts on matters IT and electrical services to prevent loss, damage or delays and to minimize expenses. The contract document should therefore be very exhaustive; each party should be given clear duties and responsibilities to spread the risk of loss or damage and to easily hold certain individuals responsible for the loss or damage that occurs. Incorporating such comprehensive provisions in the contract document would ensure that the liability on the contractor is greatly minimized (Col & Singh, 2003, p 9).
It is common practice for contracting parties to incorporate into the contractual document an exemption clause to specify liability of either party and any limitation thereof in case of any damage or loss. The duty of the contractor to insure the whole contract in the name of the employer should also be reduced into writing and included in the contract document to cover any damage or unnecessary expenses in the performance of the contract.
The process of relocation of staff and equipment is generally expensive and if not handled with a lot of caution; may cause unprecedented delays in the construction works. In order to avoid instances of delays, the process of relocation should not be pegged on the wishes of either party to the contract since the whole procedure is temporary and the relocated staff and equipment would eventually be returned at the conclusion of the construction works. On the other hand, relocation of staff and equipment can be included in a separate contract ancillary to the main contract but under the supervision of the contractor. The contractor would therefore begin works after the relocation has been done by other people. Having another contract specifically on the relocation of staff and equipment can be faster compared to when the duty to relocate staff is left to the contractor and included in the main contract (Brunner & O’Connor, 2002, p.35).
It is possible for a building to be accessed in stages. This is normally done in organizations that are service providers and the provision of services is required to be done uninterrupted. The project being done in a learning institution, services have to be provided and offered continuously. This would require the building under construction to be occupied in stages, say, when the first floors are complete, certain staff can move in the completed floors and continue working from there as the construction works continues in the other floors. It is the responsibility of the employer to obtain authority in form of consent for staged access of the building occasionally as the construction works progresses. The plans will therefore be required to be split into sections or factions and each faction to be treated as an independent and separate project. Such arrangement would allow a floor in the subject building to be prioritized and completed in the first instance to allow occupation before embarking on the other floors (Chan, 2004, p. 12).
Staged access is provided for under clause 2.3.3 of JCT 2016. There is a further requirement for notice to be issued and permission granted to that effect. In drafting the contract, a clause that makes provision for staged access in the contract document. The clause should specifically provide for the requirements and the mode of access. There are a myriad of consents required for staged access to be granted which might be prohibitive as they are always required to be taken out at every stage of the construction works (Treitel, 2003, p. 41).
But in certain construction contracts, staged access of the subject building is inevitable. This is because the campus has to continue offering services to the students. In Mistry v Thakor (2005) EWCA Civ. 953, Mistry had himself hit and injured by a falling cladding from an adjacent building while walking along some public way. The court held that the manager of the property had been negligent since he failed to warn of the existence of the nature of the dangerous panels. There should be a lot of precaution in ensuring that the students and staff having access to the building are not exposed to any form of danger as to injury posed by the building under construction (Friedman, 2011, p. 18).
In relocating staff and equipment, the IT service and connections will have to be switched to serve the temporary structures and the existing structures. Since the campus depends heavily on the IT services, the contract should provide for the most effective manner and timing when the IT services can be switched off without affecting the operations and delivery of services in the campus. Ordinarily, the switch over should be undertaken when the students are in recess so that the magnitude of disruption should not be huge and enormous.
A switch over of the IT services is also likely to lead to loss of data and other information not properly stored in the computer systems. In order to prevent any data loss, the contract should make provision for contracting an expert in Information Technology systems to assist with the backing up of data and other important information stored on the computers to avoid any form of loss or destruction of data. The terms of service of such IT expert should be included in the contract document (Gruneberg et al., 2007, p. 18)
There are perils that are common in construction sites. Fire is one of those perils likely to occur during construction. The contract should take care of any eventuality and provide for mechanisms to be adopted to avoid or to fight any fire outbreak. The risk of fire in a construction site should be borne by both the contractor and the subcontractor. At clause 6.18, contracts are required to incorporate provisions that comply with the code on joint fire as well as any amendments made to the code from time to time during the contract period. Any breaches of the requirements under the code including those measures to be taken in case of an outbreak of fire are contained in clause 6.19 of JCT 2016 (Clough &Sears, 2004, p 112).
Outbreak of fire can also be mitigated through insurance policies. Fire or general policy should be taken to mitigate or compensate parties for any loss caused by fire. A provision in the contract should be made to cover this. Fire outbreak due to negligence of any party should be borne by the said party. A provision to that effect should be specifically contained in the contract document. In Six Continents Retail Ltd v Carford Catering Ltd (2003), the court adjudicated on a fire dispute where the defendants were contractors contracted do undertake installation of kitchen equipment. A fire broke out after the restaurant was reopened. It was held that the defendants had a duty to mitigate and prevent outbreak of fires and had to bear the responsibility of the damage occasioned by the fire (Hinze, 2000, p. 16).
Safety is a very important consideration that needs to be taken into account during construction. It is the contractor that should ensure that the site is safe by taking safety precautions including health. The safety measures should be taken to prevent and avoid any accidents that are prone in construction sites. Accidents can be avoided or minimized through adoption of proper and safer working conditions and processes (Fenn & Gameson, 2003, p. 43).
Safety can be reinforced by fencing off the site of construction to prevent access by unauthorized persons such as students studying in the campus. In addition to ensuring safety, any person seeking to access the construction site must have a special authority and or clearance issued after such person gives a valid reason why he/she should access the construction site. Taking precautionary measures would reduce and minimize any instances of accidents at the construction site.
In Mistry v Thakor (2005) EWCA Civ. 953, Mistry had himself hit and injured by a falling cladding from an adjacent building while walking along some public way. The court held that the manager of the property had been negligent since he failed to warn of the existence of the nature of the dangerous panels. It is therefore in the province of the contractor to work in a manner that ensures safety of both the workers and the members of the public and to avoid actions for injury caused as a result of accidents that could be avoided (Freyer et al., 2004, p. 51).
The contractors owe a duty of care both to the people in his employment as well as to the members of the public to prevent unnecessary accidents that may occur and injure persons who are not even involved in the construction works. To ensure that the site is safe, there should be a provision in the contract document authorizing the contractor to engage persons to act as safety supervisors to be responsible for the safety of the persons engaged in the construction works. The safety supervisors would then take full responsibility for any injury or accident occurring at the construction site.
Engaging a safety supervisor can be prohibitive due to the costs involved but it is a necessary evil because failure to engage them would be more costly especially where an accident occurs and the injured party institutes a claim in court; the damages that are payable might be very enormous and expensive. A different contract can be entered into to engage a safety supervisor, providing for his rights, responsibilities and the extent of liability for any form of negligence while carrying out his duties under the facilitating contract. The JCT 2016 also has provisions that provide for safety and other precautionary measures on health of persons engaged in the construction works as well as third parties and the general members of the public (Marsh, 2004, p. 29).
Under schedule 8.2 of the 2016 JCT, contracting parties are required to create and maintain an environment that ensures the highest standard of health and safety of all persons in the employment of the contractor. In Alfred McAlpine Construction Ltd (2001) 1 AC 518, the dispute involved a contractor who had been engaged in the construction of some storey building hosting offices and car park. The defendants desired to reduce the costs of construction and to achieve that, they made their associate company to be the main contractor of the building. The plaintiffs negotiated and entered into the contract which was of a warranty. The courts held that it was not possible for the contractor to institute and maintain a suit for breach of contract on behalf of the associate company since the contractor was a stranger to the agreement between the contracting parties (Fuller & Braucher, 2014, p 74).
Asbestos had been used for a long time in the construction industry. However, its use, manufacture or importation was banned by Toxic Substances Control Act since it poses health hazards when used in buildings. The genesis of its hazardous nature manifested itself upon being damaged and thus causing a lot of health hazards to occupants of a building where asbestos had been used in the construction works. When damaged, it releases its fibers to the air which poses great health challenges more so when a building is being demolished (Gaafar & Perry, 2009, p 63).
When a building is under demolition, the Occupational Safety and Health Commission have the duty to recommend best way to remove asbestos so as to minimize the effects of asbestos on the health of individuals employed in the construction site and to the general members of the public. Safety is achieved through the use of filters, enclosures and ventilation systems. In negotiating the terms of the contract for construction, there should be an express provision that outlines some best practices in the removal of asbestos and how to handle them at the time of disposal.
While delays are likely to be occasioned by the removal of asbestos, it is important that health is prioritized at the expense of the completion period. In Education 4 Ayrshire Ltd v. South Ayrshire Council (2009), the dispute arose from the failure of the contractor to notify the employer that the construction works could not be completed on time due to some technical hitches. This is because the attention of the contractor was drawn about the existence of additional asbestos that needed to be removed. It was held by the court that the contractor has an obligation to issue notice to the employer of the impending delay and give the correct estimate of the time required to complete the removal of asbestos and the supposed completion period of the contract (Jervis & Levin, 2008, p. 61).
Asbestos is very dangerous and therefore, its removal should be undertaken by a specialist. A separate contract document providing for the engagement of a licensed specialist will be entered into between the university and the specialist to help is the safe removal of the asbestos. This is a contract ancillary to the main contract and the contractor shall not be a party to this facilitating contract. Though he is not a party, the contractor will be required to supervise the removal of the asbestos to ensure that health and safety of persons working in the site is not jeopardized.
The new 2016 JCT has incorporated changes that were not available in the 2011 version of the JCT. For instance, there have been changes in the insurance, payments and the performance of security. All the changes have been discussed in details in the forthcoming paragraphs; the most significant and notable change is on the parent company guarantees and performance bonds. Under clause 7.3, the contractor has an obligation in providing a company guarantee and/or a performance bonds at the time of execution of the contract. Where it is stated clearly in the contract document the wording of the contract gives allowance on the date of completion that is optional. The contractor should also issue a notice of completion to the employer including all the completion documents. There is no specific criterion to be adopted by the insurance company on the type of bond to accept (McKendrick, 2017, p 17).
Another important change in the 2016 JCT is third party rights. Under clause 7.4, third parties have rights that should be provided by the subcontractor. The subcontractor is charged with the duty of ensuring that third party rights are available by way of warranties and any other method available. This did not exist under the JCT 2011. In the 2016 JCT, parties are therefore required to incorporate and include in their contract documentation the Construction (Design Management) Regulations when negotiating and entering into the contract for building and construction (Lando 7 Beale, 2000, p. 88).
The 2016 JCT has also included a provision that speaks to the insurance of the already existing structures when the performance of the contract for building and construction begins to be performed. Parties are free the employ the use of say for instance the C.1 Replacement Schedule which enables them to use varied arrangements to provide for the insurance by employers and contractors enabling them to comprehensively cover all the varied risks that often exist in contracts for building and construction. These alternative arrangements should be incorporated into the contract document. In the 2016 JCT, there is also a recognized manner and style through which parties are required to draft the agreements for the provision of insurance services (Wood & Ellis, 2005, p. 325).
There have also been differences introduced in the 2016 JCT on matters payment. There is a requirement that payments especially those payable for rectification services be payable on a monthly basis; a change from the initial two months period that was applicable under the 2011 JCT. under clause 4.20, there is a well laid down process that enables fast and prompt processing of payments that is completed within a period of twenty eight (28) days of losses or any form of expenses incurred during the period of construction works. In the 2016 JCT, there are no longer options for fluctuations. There is now a provision required to be incorporated into the contract that provides for different formula applicable in the contract for construction. An example of such formula is the cost adjustment method. Final and interim payments and shorter time periods of 14 days now applies to interim as well as final payments that are applicable in building and construction contracts (Hughes et al., 2015, p 79).
Under clause 1.10, consents and approvals should not be unnecessarily delayed only in those circumstances that are specifically stated in clause 7.1. Clause 2.38.3 requires copyright assignment to the owner during the performance of the contract for building and construction. The license for copyright is possible of being reassigned to other parties including tenants and any persons who are actively engaged in the building and construction works (Kagioglou et al., 2001, p. 87).
There have also been changes on the supplement by the public sector and the regulations on Public Contracts. Under clause 8.6, a contract can be terminated by either party in situations where a substantial modification of the contract has taken place; where in ordinary circumstances would warrant new procurement to be undertaken (Kotz, 2017, p 66).
In this contract therefore, the parties cannot use the 2011 JCT due to the numerous and substantial amendments that have been done to it over the years. Parties are encouraged to make use of the new and comprehensive provisions of the 2016 JCT which has a myriad of rights and responsibilities. The 2016 JCT is also drafted well, understandable, flexible and user friendly as compared to the 2011 one (Poage, 2000, p. 127).
Conclusion
In conclusion therefore, a contract for construction and building needs to have all the essential elements required in any other form of contract. There should also exist provisions for the time period within which the performance of each party’s obligations should be completed. There should also be expressly stated in the contract document those act that are considered to constitute breach of contract and the attendant remedies for such breach as well be contained in the contract.
Such provisions would minimize delays and ensures that contract performance is completed within reasonable time applicable in contracts for building and construction. Parties should also expressly provide and incorporate a provision for resolution of disputes that arise from time to time during the course of performance of the contract. Arbitration is the most preferred by employers and contractors as well to apply to their contract in case a dispute arises between the parties. A clause providing for arbitration should therefore be expressly included in the contract.
References
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