Practical Law

As the employer and contractor on a construction and engineering project get ever closer to concluding negotiations and signing their building contract, they are often settling technical details of design or specification. Typically, they do so by e-mails, or perhaps minuted meetings. Should those emails or minutes form part of the final contract?

The documents included in a building contract can be voluminous. In particular, the works may be described in numerous technical drawings, each of which is large and expensive to reproduce. Can parties save time and money by inserting electronic copies into a building contract, perhaps saved onto a CD-ROM?

…and does it matter? Question: the employer on our construction project wants to start fitting out one part of a project before the rest is finished. Should it just take partial possession of that part when the time comes or should it provide for sectional completion from the start?

My client, a sub-contractor, is working under an oral construction contract and wants to get paid. I know that the Scheme for Construction Contracts 1998 applies, but reading the Scheme by itself leaves me with unanswered questions about the payment process. What am I missing?

Some forms of contract include a priority of documents clause, others do without them. So what is the correct approach? Should your building contract, sub-contract or professional appointment include a priority of documents clause? Does the recent TCC decision in RWE Npower Renewables v J N Bentley have anything to add?

This month’s Ask the team considers what statutory rights, if any, a supplier (be that a professional consultant, a building contractor, sub-contractor or materials supplier) may have to improve their cashflow, if they agreed a long payment cycle that they now regret.

This month’s Ask the team considers what a development management agreement (or development project management agreement) is and whether it is caught by the Housing Grants, Construction and Regeneration Act 1996 (Construction Act 1996).

This month’s Ask the team considers the relevance of the Construction (Design and Management) Regulations 2007 (CDM 2007) to offshore wind farms.

This month’s Ask the team considers the viability of a claim for pure economic loss based on complex structure theory.

A subscriber recently asked whether a contractor under a JCT contract can claim an extension of time after the contract administrator has issued a certificate of practical completion.

What happens if the adjoining owner’s property is damaged when the building owner carries out his works, but the damage isn’t discovered until much later, after the building owner’s works have been completed? In this scenario, let us assume that in 2009, the building owner gave the relevant party wall notices and a party wall … Continue reading Ask the team: what if damage is discovered after party wall work is completed? →

We recently received a number of queries about parties’ rights and obligations relating to a snagging list. While all the queries related to JCT forms of contract, in practice the term “snagging list” is used in a variety of situations and can mean different things to different people. For example, a straw poll of PLC editors revealed … Continue reading Ask the team: what is a snagging list and how should it be used? →

A subscriber recently asked whether, if the employer under a building contract paid its contract administrator a percentage of the contract sum, that might affect the professional consultant’s duty to act independently and impartially. This Ask the team considers some of the practical and legal questions involved, and suggests ways of avoiding the issue.

A subscriber recently asked us what was meant by the “net basis” (as opposed to the “gross basis”) for calculating an extension of time due to a contractor under a construction or engineering contract. This is just one part of the issues that surround concurrent delay in construction contracts and this post uses a simple … Continue reading Ask the team: what is the net basis approach for extensions of time? →

Subscribers have recently asked two related questions about starting an adjudication: What should the referring party do if it thinks it will miss the deadline for serving the referral notice? Can a referring party start an adjudication, then stop and start the process over again? Does this also apply to the responding party?

The answer to our subscriber’s question depends on the precise circumstances. This blog post considers the situation on a commercial property development, where works are ongoing and collateral warranties have been provided to a landlord, funder or tenant.

Work to a privately owned residential property can range from a large, complex project to simple, cheap works. While the underlying issues are often similar to those on other construction projects, the forms of contract can be very different.

Almost everyone has heard of the considerate constractor schemes, but what are they, what areas do they cover and why do they matter?

A professional consultant or design and build contractor’s duty of care is usually expressed as requiring it to exercise “reasonable skill and care” or “all reasonable skill and care”. Does the “all” add anything and, if so, what?

A lien is a right that entitles a party to hold on to assets in its possession pending payment of a debt owed to it. Specifically for architects (and other professionals), if the architect has prepared plans, it may hold those plans pending payment by its client. In England and Wales it is relatively rare … Continue reading Ask the team: what is an architect’s lien and when can I use one? →

An employer, such as a property developer, may need to involve a contractor in a project before it is ready to sign a building contract. This is sometimes generically known as early contractor involvement (ECI), and can take place on a formal or informal basis. Two common types of agreement between an employer and a … Continue reading Ask the team: what’s the difference between a letter of intent and a PCSA? →

Building Information Modelling (BIM) has been around in the US for a while; now it is coming to the UK. What is it and why does it matter?

By now, most construction practitioners will be aware that Part II of the Construction Act 1996 has been amended by Part 8 of the LDEDC Act 2009. Among the many changes, this has introduced the pay less notice (in place of the withholding notice). Therefore, the two key notices under the Construction Act 1996 (as amended) are: … Continue reading Ask the team: can I combine a payment notice and a pay less notice into one notice? →

Clause 60(10) of the Infrastructure Conditions of Contract (ICC Conditions) retains withholding notice provisions despite the Construction Act 1996 (as amended) replacing withholding notices with pay less notices. Does this mean that the contract fails to comply with new statutory regime?

What happens if a construction contract fails to comply with the adjudication requirements of the Construction Act 1996 (as amended)? In particular, what if a Tolent clause offends the Construction Act 1996 (as amended)? Will the Scheme for Construction Contracts 1998’s adjudication provisions replace all the contractual adjudication provisions?

…where should I start? If you are a construction lawyer or a commercial manager who needs to understand how the changes to Part II of the Housing Grants, Construction and Regeneration Act 1996 (Construction Act 1996, also known as the HGCRA 1996) will affect construction contracts, this Ask the team gives you the basics, based on PLC Construction’s materials. In particular, we suggest … Continue reading Ask the team: I’m training my team on the changes to the Construction Act 1996… →

This Ask the team considers some of the practical issues that arise where a solvent employer agrees that the administrators of a contractor may novate the building contract from the original contractor (now in administration) to a replacement contractor.

Construction and engineering practitioners often summarise the NEC3 Engineering and Construction Contract’s (ECC) position on float with the words, “the contractor owns the float”. This is a useful maxim, but conceals a hidden trap.

A professional consultant often produces important documents relating to a project, many of which are subject to copyright, such as architects’ plans or engineering schematics. This is valuable material, which clients derive obvious benefits from. Accordingly, the parties to a professional appointment usually negotiate specific provisions relating to copyright material; but what happens if the parties fail to … Continue reading Ask the team: is there an implied right to revoke a copyright licence? →

Retentions seem to have been around since time immemorial. For their supporters, they are easy to administer and represent a sensible lever over contractors and sub-contractors, encouraging them to fix defects (or providing a fund to pay for the fix if they can’t or won’t remedy a defect themselves). However, the opponents of retentions are increasingly vocal. So, why … Continue reading Ask the team: can I do without a retention? →

What happens if your design and build contractor goes bust, but hasn’t paid its professional consultants? In particular, what happens if those consultants then contact you to claim that you can’t use their designs and documents, because you don’t have a valid copyright licence to do so? This situation may be particularly painful if, before the main … Continue reading Ask the team: the contractor has gone bust, do I need to pay his design consultants? →

What are Eurocodes? The Eurocodes are a flexible, pan-European set of standards for use in structural design. They are divided into ten areas, the first two of which act as the common foundation for the detail that follows:

Do I have a dispute under my construction contract? A dispute is the bedrock of adjudication. Without a dispute, a party has no right to start an adjudication. As section 108 of the Construction Act 1996 tells us: “A party to a construction contract has the right to refer a dispute [or difference] arising under the … Continue reading Ask the team: what is a dispute in adjudication? →

There’s no getting away from the fact that the changes to Part II of the Housing Grants, Construction and Regeneration Act 1996 (Construction Act 1996), to be made by Part 8 of the Local Democracy, Economic Development and Construction Act 2009 (LDEDC Act 2009), are important. However, while some things will change, many things will stay the … Continue reading Ask the team: should I worry about the changes to the Construction Act? →

With the long term rise of design and build contracting, some commentators in the insurance industry also point to an increase in cases where a design and build insurer refuses cover in the event of a claim. This clearly affects the contractor, but employers need to be careful too, as the absence of insurance coverage … Continue reading Ask the team: how can I ensure my contractor complies with its design and build insurance? →

Why would I want to use CPR Part 8 in adjudication? While I know that the Technology and Construction Court (TCC) has supported its use, doesn’t it just take extra time and cost more money?

I have a client whose next-door neighbour is happy with my client’s proposed works to his property, but my client knows from past experience that the Party Wall etc. Act 1996 (PWA 1996) may affect him. Because my client and the neighbour agree what will be done, how it will be done and when it … Continue reading Ask the team: can an agreement bypass the Party Wall etc. Act 1996? →

…what should I do? Unfortunately, if you have simply entered into a bad bargain, the law does not automatically step in to help you.  However, all may not be lost…

If a high net worth individual wants to carry out work to their house, or even intends to build a new house, what form of building contract might you recommend for their works?

If the parties to a building contract get to the point where one (or even both) of them wants to terminate the contract then, usually, something has gone very wrong. Each individual construction or engineering contract has its own requirements for termination, so this Ask the team assumes that: The parties have agreed and signed … Continue reading Ask the team: how do I terminate a JCT contract? →

Provisional sums are a mystery to many construction and engineering lawyers, often thought of as the domain of quantity surveyors, rather than legal advisers. In fact, a building contract’s treatment of provisional sums can have a profound impact on the overall cost and speed of a project.

“I have heard that there is a new crane register coming into force. I have a crane erected on a construction site. What do I need to do?” The tower crane register The Health and Safety Executive’s (HSE) new tower crane register comes into force on 6 April 2010. It is being introduced by the Notification of Conventional … Continue reading Ask the team: I’ve heard there is a new crane register. What do I need to do? →

Pool Re was (and still is) one of the most significant developments in British insurance in the last twenty years, but why is it important to the construction industry? What is Pool Re? Pool Reinsurance Company Ltd (Pool Re) is a mutual reinsurance company. It provides reinsurance on a direct basis (that is, without broker … Continue reading Ask the team: what is Pool Re and why is it relevant to construction projects? →

Contractors need to look carefully at extension of time and loss and expense clauses to see if snow and freezing temperatures entitle them to more time and money. Adverse weather conditions (again) Last year, in January and February 2009, parts of the UK suffered from heavy rainfall and flooding. At that time, we looked at … Continue reading Ask the team: it’s snowing, so do I get an extension of time? →

PLC Construction recently received an enquiry asking whether a contract administrator owes a contractor a common law duty of care. This question is particularly relevant in the current economic crisis. More and more contractors are faced with an insolvent employer and are asking whether they can recover their losses from third parties, such as a … Continue reading Ask the Team: Does a contract administrator owe a duty of care to a contractor? →

PLC Construction recently received an enquiry about an employer’s ability to deduct liquidated and ascertained damages (LADs) for delay under a demand issued after the contractor had gone into administration. Could the employer set-off its demand for LADs under the Insolvency Rules?

The question What do you do if a professional consultant (such as an architect) changes its status, for example, if it converts from a partnership to a limited liability partnership (LLP), after its formal appointment, but before it is asked to provide collateral warranties? Who do you ask to provide the warranty, the old entity … Continue reading Ask the Team: What happens when a warrantor converts from a partnership to an LLP? →

We received a query from a subscriber asking what the Joint Fire Code was and whether we had more information on it.

PLC Construction has introduced a new regular feature: “Ask the Team”. This will be based on questions you have asked. We edit the questions and answers, where appropriate, to maintain anonymity. Our first Ask the Team suggests an answer to the question “who is a building owner under the Party Walls etc Act 1996?”