Construction Contracts: Law and Management, Third Edition

[Pages:783]Construction Contracts

This is a fully revised edition of the UK's leading textbook on the law governing construction contracts and the management and administration of those contracts. Although the legal principles involved are an aspect of general contract law, the practical and commercial complexities of the construction industry have increasingly made this a specialist area.

This new edition is up to date with recent cases and developments in the law as it stands at July 2000. It takes full account of the effects of the Housing Grants, Construction and Regeneration Act 1996, the Arbitration Act 1996, the Contracts (Rights of Third Parties) Act 1999 and the changes in the legal system brought about by the Woolf reforms. The coverage of financial protection, particularly bonds and guarantees, the Construction (Design and Management) Regulations, construction insurance, and tendering controls has been extended and amplified. All of the common standard-form contracts have been revised in recent years and the text takes account of these changes. In particular, more use is made of the New Engineering Contract and the GC/Works family of contracts, especially where these contain specific differences from JCT 98, IFC 98 and ICE 7.

Rather than providing a commentary on standard-form contracts, the approach is to' introduce the general principles that underlie contracts in construction, illustrating them by reference to the most important standard forms currently in use and to the practical issues arising in construction cases. Practitioners -- consultants, builders, clients and lawyers -- will find this an extremely useful reference work, providing indepth explanations for all of the features found in contemporary construction contracts, with reasons. It is a key text for construction undergraduates and postgraduates as well as for those taking the RIBA Part III' and CIOB Part II examinations.

Both authors are at the University of Reading ? John Murdoch in the Department of Law and Will Hughes in the Department of Construction Management & Engineering.

Construction Contracts

Law and Management

Third Edition

John Murdoch and Will Hughes

First published 1992 by E & F N Spon Second edition published 1998

Third edition published 2000 by Spon Press 11 New Fetter Lane, London EC4P 4EE

Simultaneously published in the USA and Canada by Spon Press 29 West 35th Street, New York, NY 10001

This edition published in the Taylor & Francis e-Library, 2001.

Spon Press is an imprint of the Taylor & Francis Group

? 1992, 1996, 2000 John Murdoch and Will Hughes

All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

The publisher makes no representation, express or implied, with regard to the accuracy of the information contained in this book and cannot accept any legal responsibility or liability for any errors or omissions that may be made.

British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library

Library of Congress Cataloging in Publication Data

Murdoch, J.R.

Construction contracts: law and management / John Murdoch and Will Hughes.?3rd ed.

p. cm.

Includes bibliographical references and index.

ISBN 0-419-26170-2 (hbk : alk. paper) ? ISBN 0-419-25310-6 (pbk : alk. paper)

1. Construction contracts?Great Britain. I. Hughes, Will, PhD. II. Title.

KD1641 .M87 2000

343.41'078624?dc21

00-058781

ISBN 0-419-26170-2 (hbk) ISBN 0-419-25310-6 (pbk) ISBN 0-203-18498-X Master e-book ISBN ISBN 0-203-18507-2 (Glassbook Format)

Contents

Contents

v

Introduction

ix

Cases

xi

Statutes

xxiii

Glossary

xxv

1 UK construction industry context

1

1.1 The nature of the industry

1

1.2 The nature of professionalism in construction

5

1.3 The nature of projects

7

1.4 Procurement methods

9

2 Roles and relationships

11

2.1 Common problems

11

2.2 Consultant roles

15

2.3 Professional services agreements

15

2.4 Architect

17

2.5 Typical conditions in professional services agreements

18

2.6 Integrated documentation

23

3 General contracting

25

3.1 Background

25

3.2 Use of general contracting

27

3.3 Basic characteristics

32

3.4 Risk in general contracting

36

3.5 Standardized approaches to general contracting

40

4 Design and build

41

4.1 Background

41

4.2 Features of design and build contracts

42

4.3 Use of the JCT design build form (CD 98)

46

4.4 Characteristics of CD 81

50

4.5 Risk in design and build

53

4.6 Approaches to design and build

55

vi CONTENTS

5 Management contracting

57

5.1 Background

57

5.2 Use of management contracting

59

5.3 Contents of MC 98

61

5.4 Risk in management contracting

65

5.5 Approaches to management contracting

69

6 Construction management

71

6.1 Background

71

6.2 Use of construction management contracts

72

6.3 Contents of construction management contracts

75

6.4 Allocation of risk in construction management

79

6.5 Approaches to construction management

81

7 Procurement and contract choice

83

7.1 Types of risk in construction contracts

83

7.2 Dealing with risk

84

7.3 Allocating risk through methods of payment

87

7.4 Selecting procurement methods

88

7.5 Contract choice

95

8 Tendering and contract formation

109

8.1 The meaning of construction contracts

109

8.2 The formation of contracts by agreement

110

8.3 Contracts made by tender

119

9 Liability in contract and tort

131

9.1 Express terms

131

9.2 Exemption clauses

139

9.3 Incorporation by reference

141

9.4 Implied terms

142

9.5 Liability in tort for negligence

145

10 Contractor's obligations

147

10.1 Standard of work

147

10.2 Statutory obligations

150

10.3 Co-ordination and management

152

10.4 Transfer of materials

155

11 Employer's obligations

159

11.1 Implied obligations

159

11.2 Employer's obligations under JCT 98

162

11.3 Responsibility for the contract administrator

163

11.4 Responsibility for site conditions

164

11.5 Health and safety

166

12 Responsibility for design 12.1 Design management 12.2 Design duties in law 12.3 Legal responsibility for design

13 Time 13.1 Commencement 13.2 Progress 13.3 Completion 13.4 Contractor's obligations after completion 13.5 Extensions of time

14 Payment 14.1 Employer's obligation to pay 14.2 The contract sum 14.3 Variations 14.4 Fluctuations 14.5 Retention money

15 Contractors' claims for loss and expense 15.1 Contract claims and damages 15.2 Grounds for contractual claims 15.3 Claims procedures 15.4 Quantification of claims

16 Insurance and bonds 16.1 Insurance 16.2 Bonds and guarantees

17 Role of the contract administrator 17.1 Contract administrator as the employer's agent 17.2 Contract administrator as independent adjudicator

18 Health and safety obligations 18.1 Objectives of the CDM regulations 18.2 Application of the CDM regulations 18.3 Obligations of the parties 18.4 Sanctions

19 Sub-contracts 19.1 Reasons for the prevalence of sub-contracting 19.2 The legal basis of sub-contracting 19.3 The contractual chain 19.4 Domestic sub-contracts 19.5 Defaults of sub-contractors 19.6 Rights of sub-contractors

CONTENTS vii

167 167 168 173

179 179 180 181 184 186

197 197 199 200 207 208

211 211 212 215 217

223 223 230

237 237 246

253 253 255 255 258

259 259 260 262 263 265 268

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