How to build a firm base for work

Apr 8 2008 by Sue Scott, Evening Gazette

CONSTRUCTION contracts are all about defining the rules under which any project is created.

They allocate the risk and responsibility for its constituent parts - for the design, ensuring the building is built on time, the building is in the right place with the right materials for the right price.

In negotiating any contract, parties endeavour to define their responsibilities and allocate risk or, more particularly, re-allocate risk.

The perception is that building contracts are complicated things which, to the untrained eye, they most certainly are. Without due care and attention they can be full of nasty little surprises and create unwanted liabilities.

Essentially in any contracting situation the key is to be aware of the pitfalls, to read the contract in detail and to try and avoid taking on risks over and above that which you and your project can bear.

In any contract negotiation the ultimate aim of both parties is to have as little risk as possible and as much certainty as possible for the best price possible.

In any situation there will be commercial decisions to be taken in order to balance these three objectives.

If you are presented with a set of contract documents the most important thing to do at the outset is read them - not just once quickly but thoroughly and methodically.

Back in the 1930s the construction industry was introduced to the concept of standard form contracts, the first being the JCT Building Contract published in 1931.

We now have a complete library of standard forms covering every single type of project and design team appointment.

Often the danger lies when the parties use standard form contracts. Parties may think they know what they contain but unless the wording is read carefully it may come back to bite at a later date.

If you are a developer/employer, be aware that the industry standard forms are drafted to favour the contractor or consultant.

If you are a contractor or a consultant and are using a standard form take care if it has not been amended at all by your client.

What areas should employers and contractors look out for? There are many areas of concern but the four which crop up most frequently are design liability, time, money and ground conditions. We will examine these in greater detail next time.

Andrea Gardner is a partner specialising in construction law at Blackett Hart & Pratt LLP Solicitors in Darlington. For more information, contact her on 01325 466794.