In any contract there are a number of implications resulting from that contract. In construction a contract tends to deal with a number of specific aspects such as:
- contractual conditions,
- tendering arrangements,
- main contract implications,
- forms and agreements,
- intentions of parties,
- commencement and completion,
- control of the works,
- payments, insurance, determination
How these are dealt with will depend on the type of contract that has been adopted though a good source of information relating to the contractual procedures and their implications can be found in the Ashworth book listed below and you should familiarise yourself with this and the areas that are pertinent.
Standard forms of Contract
The building industry has a number of standard forms of contract which are used to simplify the contractual process. The other advantages of using standard forms are:
- It saves time and money to use a contract which is available rather than prepare one for each job
- The contract is fair to all parties
- People become familiar with the document.
The most common are the Joint Contracts Tribunal (JCT) though others are available depending on the type of work and the country the work is being carried out. These are prepared by the representatives of professional institutions such as RICS, RIBA. The main types refer to the type of employer and the form of pricing. Eg
- Private with Quantities
- Private with Approximate Quantities
- Private without Quantities
- With Contractors Design
- Local Authorities with Quantities
- Local Authorities with Approximate Quantities
- Local Authorities without Quantities
There are also specific contracts such as:
- Form of Agreement for Minor Works
- The intermediate Form of Building Contract - used on less complicated work
- Prime Cost Contract - used where prior estimating is not practicable, contractor is paid for the cost incurred plus a fixed or percentage fee.
- The Management Contract - used where the contractor manages the work.
Other contracts are available from the other Institutes i.e. Civil Engineers.
A guide to the standard forms of contract can be found at the link below.
New Engineering Contract (NEC)
In addition a contract which is often used for services contracts is the New Engineering Contract (NEC).
The New Engineering Contract, or NEC Engineering and Construction Contract is a formalized system created by the Institution of Civil Engineers that guides the drafting of documents on civil engineering and construction projects for the purpose of obtaining tenders, awarding and administering contracts. As such they legally define the responsibilities and duties of Employers (who commission work) and Contractors (who carry out work) in the Works Information.
The NEC is an integrated set of contract documents that are designed to provide Clients and their suppliers with project-focused outcomes. It aims to ensure the achievement of Client's objectives for the projects in relation to quality, performance, cost and time. There are six options for the NEC, theses are:
- Option A: Priced contract with activity schedule
- Option B: Priced contract with bill of quantities
- Option C: Target contract with activity schedule
- Option D: Target contract with bill of quantities
- Option E: Cost-reimbursable contract
- Option F: Management contract
These options offer a framework for tender and contract clauses that differ primarily in regard to the mechanisms by which the contractor is reimbursed and motivated to control costs.The core clauses (of the main option listed above) are used in conjunction with the secondary options and the additional conditions of contract.
The clauses of these options can be adapted for low risk projects and subcontractors by using:
- The Engineering and Construction Short Contract
- The Engineering and Construction Subcontract Contract
More information can be found from the Document ‘What is the NEC’ or from the ‘Questions on NEC’ linked to below.
Assignment and Subletting
Assignment is the transferring the interests of one party to another. Neither the employer nor the contractor may assign any part of the contract without the written consent of the other party.
Subletting occurs where the contractor enters into a subcontract with another party to carryout work whilst still maintaining the existing relationship with the employer in all respects.
The contractor cannot subcontract any part of the work without the written consent of the architect or contract administrator. The employment of the subcontractor is automatically terminated upon the determination of the main contract.
A subcontractor is effectively treated the same as if they were the main contractor, which would mean that materials or goods of a subcontractor could not be removed from site once they were brought on without written permission.