Imagine you’re stuck on the hard shoulder with a puncture. Do you use the get-you-home tyre you have in the boot, even though it means you can’t go over 50 mph, or do you wait around for a brand new high performance racing slick tyre that can cope with the speed limit (and more)?
The answer, of course, depends on the circumstances and it’s exactly the same when choosing which construction contract to use. In these times of austerity, contracts need to be exactly the right fit for projects as, indeed, do the professional services advising on those contracts.
However, it is not always the case that the contract fits the circumstances. Unfortunately, experience shows that not all contracts fit the bill, and wrong choices are made for a variety of reasons.
Doesn’t cut the mustard
Even where projects are fairly routine, contracts still have to cater for things that are not off the peg. For example, although the Contracts (Rights of Third Parties) Act 1999 dispenses with the legal need for them, collateral warranties are often required further to a third party agreement, such as a funding or development agreement.
Some of the current standard forms of contract allow for collateral warranties by ticking a box (such as certain JCT contracts), while others (such as NEC3) require bespoke amendments by use of a Z clause. In contrast, if it is appropriate that the client obtains a parent company guarantee, a JCT contract would require amendment whereas an NEC3 contract only requires the selection of an option.
Square peg in a round hole
Have you ever reviewed a contract and concluded that it’s just not right for the job? If so, it’s likely that the deal is a complex one and the construction contract documents are intended to incorporate provisions required by a wider matrix of project documents.
The contract documents may be entirely bespoke to the project or a heavily amended standard form. On the face of it, they look the part but, half way through you see a reference to a school when the client is building a leisure centre. It may not be as blatant as this and it is only on reflection that you realise that market practice for one sector is being used inappropriately in the one you are dealing with. It is even harder still to spot something which is market practice for the sector that has been left out in error.
So far, so uncontroversial
Most construction lawyers reading this would say that they always select the right contract and throw their hands up in horror at the suggestion that they might cobble contracts together “Blue Peter style” from ones they had prepared earlier. Many would go on to say that such failings only occur where the people advising on the contracts are inexperienced or it is a task that falls outside their professional expertise altogether.
So, are there any areas where specialist construction lawyers can be accused of not getting it right?
Overkill?
For me, sometimes the contractual solution is simply over-engineered. For example, take the case of straightforward refurbishment works. A client decides to refit its existing premises before moving to new ones in a few years time. None of the works are structural and most of them will be at the end of their useful life in five years.
Does the contract really need to be executed as a deed? Assuming it’s based on a standard form, does it really need to be heavily amended?
Sometimes the get-you-home is all the client needs but they are advised to buy a high performance racing slick. It can be a tough call to make and there is a temptation to over-specify as that might be seen as less likely to attract criticism if things go wrong down the line. However, most clients are sophisticated buyers of legal services and will, when fully and properly advised, decide how they want to get where they need to be.
