A contract is important as it binds the parties involved on the agreed terms; hence there should be a compensation for breaching the contract to the other party by breaching party. There are various provisions provided in the JCT which varies from insurance cover, payment options, to the security provisions. A contract is essential when a business transaction takes place especially when the goods involved are of huge value. It acts as a guide as it binds the buyer and seller to their words to ensure that everyone fulfills their duties (under clauses 32, 34 and 36). In case of a legal dispute, the contract can be used in the court of law as proof by both the parties along with the terms of transactions.
Breach of the contract results in losses to either of the party involved in the contract. Construction contracts should adequately be drawn up with all the terms and conditions as there are many aspects and parties involved. Also, a contract may extend for prolonged than it had been expected, hence if no contract is signed by any one party, the other party may feel disgruntled. Construction work brings together much technical personnel, and some contracts or parts of it may be outsourced to lower construction cost and ensure quality.
The breach of the contract should be solved using avenues such as negotiation or arbitration to save time and to resume the work to be completed soon. The contractor may not have anticipated the pre-commencement delay; hence, new terms should be renegotiated to both parties against losses and damages (reference clause 2.28.3).
The joint contracts tribunal provides provisions in the public sector that relate to transparency and fair payment. The JCT also provide provisions for the granting of company guarantees from the parent company and performance bonds. An extension of the clause that provides for optional provisions includes third party rights from sub-contractors as collateral warranties (clause 2.14). They are adjustments to the JCT such as provisions for Construction (Management and design) Regulations. Also an amendment to the insurance provisions for existing structures and works to make them flexible. A simplifying and revision of section four payment provisions include:
They are three major changes to the payment system.
There are various methods to resolve a conflict. These methods include arbitration, litigation, and negotiation. Arbitration seeks to resolve the dispute out of the court where a referee hears the parties involved, and both the parties need to get agree beforehand to accept outcomes of the arbitration process. The arbiter should be neutral and not be biased on either side to ensure after the conflict is resolved it does not leave any party feeling disgruntled. Arbitration is practical, fast and cost-effective as a quick solution is provided and the solution does not favor either of the parties involved in the dispute (clause 4.23). Arbitration is meant to help with an amicable solution rather than only benefit one party. It’s essential to consider the other person’s feelings and concerns while arbitrating.
While negotiating, I would propose a middle ground and try to see things from other person’s point of view. Both parties need to give some to get some from the arbitration and need to suggest creative ways for both parties to achieve a solution. This information is important as it will assist to arrive at a solution where it’s a win-win situation for both parties. It understands the essence of keeping calm and holding one’s ground while negotiating to ensure one party does not get the advantage over other. I prefer mutual bargaining as it’s an interactive problem-solving exercise and it depends on open communication, mutual respect and trust and in this, negotiators focus on fulfilling the mutual interests of both the parties (under clause 4.25).
An integrative negotiation process refers to a win-win situation for both parties involved in the negotiation. It is also referred to as interested based bargaining where both parties work together to solve a dispute by addressing each other’s interests. Interests include concerns, needs, and fears and desires which is important to both parties involved. It seeks to combine both sides in the most appropriate manner that can enlarge the pie and integration occurs only when there are multiple issues involved. This is because both parties must give and take so that they come up with an amicable solution to solve the issues (reference clause 2.28.6.4).
Litigation is where the courts are approached to settle disputes. In a litigation process, the defendant and prosecution side present the evidence in front of the court where a judge decides and give the judgment which needs to be agreed by both the parties. It’s useful in conflict resolution and it is the most commonly used method (clause 4.25).
Warranty for the goods. Warranty is meant to protect the buyer for a period of time under which the said goods can be returned as per the contrary to the contract. The validity of the contract and termination procedure should be laid out in the contract. The contract should indicate when it comes into force and for how long contractual liabilities are discharged. This would ensure should the quantity surveyor find that the roofing tiles were of poor quality then the manufacturer compensates the employer under clause 2.4.
The quality of the goods should be assured in the contract and who is responsible when the goods sold are found to be of the low quality. Other miscellaneous terms such as the stipulation that the buyer shall not assign the contract to a third party without informing the employer. The risk of damage or loss of the goods shall pass over the buyer than the seller transfers the goods to the buyer (clause 2.9).
Also, proper communication is necessary to ensure that no misunderstanding occurs while the contract is signed and carried out. Communication covers many aspects as it addresses the cost of the contract and ensures the terms of the contract which are agreed by both the parties. Other factors to be considered are quality assessment where the organization’s analyses if the vendors can deliver as per the agreed terms and conditions. Also, competitive bidding is crucial to the process. It covers cost-saving, financial stability, and transaction cost and project profit. Upon assessment, the quantity surveyor found the brickwork poorly done as the roofing tiles had been kept in a place where the roof was leaking (clause 2.12).
Negotiation and consultation are also important factors in the process of outsourcing and subcontracting. It offers the vendor and organization a chance to iron out issues that they may have with the contract and begin work on an environment where they can deal with the issues as they arise under clause 2.12.
Mutual adjustments occur if the negotiating parties can find a middle ground to negotiate from. If both sides can see things from each other’s viewpoints, they can mutually agree. Both have to be willing to give and compromise on some matters raised by each party. This is only plausible if both view arbitration as a solution to their problem as it tries to arrive at a win-win solution. The arbiters have to be understanding and try to find an outcome that’s beneficial to all. Mutual adjustment plays a significant role in finding a solution that both negotiating parties can agree upon (clause 4.23). It brings the opposing parties together by making them see the situation from each other’s viewpoint.
It goes hand in hand to choosing your decider. Casting is critical because post-award recourse is limited. At the outset, consider potential points of conflict and the issues in your dispute. Finding an arbitrator who can run a proceeding and deliver sound rulings on the process and the merits since the downside of procedural flexibility is the potential for procedural laxity. Where there are more than one arbitrator persuasiveness and cooperativeness are also important attributes.
Institutional arbitration rules should be specified as they provide a procedural framework guide and are incorporated into the contract for reference, is the best practice. The tribunal is forced to create procedural rules from scratch or choose from existing regulations to adopt, in the absence of rules there is no institution to step in if there is a failure to make an appointment or challenge which probably means the parties will most likely have to go to court for relief of the commercial dispute under clause 2.4.
The breaching party takes responsibility for breaching the contract terms and assume responsibility for any financial losses incurred. In this case, the contractor has the right to ask for an extension of the stand down period and £15,000 compensation per week for the inconvenience. The contractor had men at the construction site, and work can just come to a halt hence should be compensated and the extension period requested granted (clause 2.20).
In some cases, the most suitable solution for a breach of contract terms and conditions is to correct the violation by forcing the breaching party to complete the terms agreed. The contractor should be forced to complete the work since for the employer to put another contractor on site would be expensive and part of the work is already paid (reference clause 2.27).
Rescission allows the non-breaching party to be released from performance obligations permanently.
At times, it is challenging to determine how much a breach of contract damaged a person. The contractor can’t complete the contract on the terms and conditions than the employer is liable to compensate for the damages to the other party. The air conditioning units should be valued at their interim value, and since they had not been delivered by the manufacturer, then the employer should not pay for them. The roofing tiles are located on site, and it’s the contractor’s fault that they were stored in a leaking condition, hence, the brickwork will be considered poor (reference clause 2.29).
The issue of time scales towards the issue of the certificate can be discussed between the employer and contractor for reaching a middle ground. An Interim Payment Certificate is released after five days after the Due Date, with the Payment date which will be further nine days as per the main contract, nineteen days later in the sub-contractor sixteen days later in the sub-contract. Regarding termination of the contract, the contractor should compensate the employer as the contractor moved to a new site without completing the work (clause 2.28.4). The employer should not have terminated the contract even though the contractor was non-responsive, hence, the two should discuss how much each should compensate to the other.
The contractor violated the contract by moving to a new site and did not respond nor provided any assurances to the employer for completing the contract. The contractor should have completed the contract within the agreed period as per the contract to avoid termination of the contract by the employer. The contractor fails on his part as the number of operatives on site dwindle which shows the kind of games that the employer had to put up with, hence, the contractor will be held liable (clause 2.28.3).
In summary, there are solutions to breach of contract, and the contract could still be completed in time without inflating the initial estimated cost. Contracts are meant to protect parties involved from a loss and to ensure construction work is completed as per the agreed terms and conditions. At times, this is not possible as some factors before the commencement of the contract cannot be factored, thus, the contract may need to be relooked.
The joint contracts tribunal; standards building contract 2016 edition.
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