Commercial Construction Contract Issues Assignment Sample

Construction Law

Contract and Construction Law

Construction contract agreements are the ones which have a specified date when the project may start and end, by the owner and the contractor.[1]The most important provision that needs to be present in such a contract is-

1. Performance Duties Provision-

Means that a contract should have a detailed provision explaining about the project and that how is it to be done, the duties and responsibilities of the contractor, how is he going to disseminate. Further, it includes how the contractor is going to face unforeseen circumstances like the inclement weather conditions. 

The issue here is that the provision remains incomplete. The provision does not elaborate on the consequences for the incomplete work or any disputes that might crop up with the staff of the contractor and that of the owner of the project etc.

The only way to prevent this is that the owner counsel reviews the contract diligently and have a detailed analysis of the contract that whether the common issues like design documents and specifications, express warranties by the contractor, dispute resolution systems, in case if any, are all mentioned in the contract.

In North Midland Building (NMB) Ltd v Cyden Homes (CH) Ltd[2], CH employed NMB to design a house for them. The parties agreed to an amendment clause which stated that 'any delay caused by a Relevant Event which is concurrent with another delay for which the Contractor is responsible shall not be taken into account.’ However, NMB tried to strike out the clause as per prevention principle which says that one party cannot compel the other where the other party has been prevented from abiding by that condition. The court of appeal held that NMB contention is just a façade as they were not able to complete their work on time. Hence CH was liable for the liquidated damages. 

2. Securing Parties’ Performance Provision-

Means a credit relationship between the owner and the contractor. It generally incorporates the post-payment and performance bonds which are made by the owner to ensure the performance of the contract by the contractor.

The issue here is when the contractor reaches a credit limit and then stops the work until the payment gets released by the owner. Another, some contracts do not mention this credit limit and the contractor tends to exceed that and perform the work. Later, then they coerce the owner to release the payment of the extra work being done.

To curb this, the council must negotiate the terms of the agreements before. Second, the owner must state it clearly when can the credit limits be altered to save themselves from the extra work’s payment.[3]

Tort and Construction Law

1. Negligence-

It can be termed as a breach of a legal duty to care which resulted in damages. The agenda of a legal duty is based on the principle of 'proximity and foreseeability.’[4] For example, if a builder of defective premises invited his staff to work there, he shall be liable for negligence for their injuries. As held in Anns v London Merton Burough,[5]a builder owes a duty of care to his people that they do not suffer any injuries due to his lack of judgement. Like in Junior Brooks v Vetichi,[6] the house of lords held that the owner can plea remedy from the negligence of the sub-contractor. Damage on the floor was direct and something that could be foreseen.

To curb this, the contractor must ensure that his people are working in a habitable environment and all reasonable precautions are metered. 

2. Nuisance

Construction sites are supposed to have a lot of it. However, in Andreae v. Selfridge & Co. Limited,[7]it is said that if the constructors take reasonable precautions while demolition or constructing a building, like noise, dust etc then they can be exempted from this tortuous liability.

To curb this, the contractors can either inform the neighbour of their work, work at reasonable times probably in a day, etc.

References for Commercial Construction Contract Issues

Juan Rodriguez, 'Learn the 7 basics of the construction contract.' (2019). <https://www.thebalancesmb.com/construction-contract-basics-844490#:~:text=A%20construction%20contract%20agreement%20is,is%20providing%20the%20requested%20service.> 

Jimerson Birr, ‘Commercial construction contract issues.’ (2017). <https://www.jimersonfirm.com/blog/2017/03/common-commercial-construction-contract-issues-part-i/>

Donoughe v Stevenson (1932) AC 562 (HL)

Anns v London Merton Burough (1978) AC 728

Junior Brooks v Vetichi (1983) (HL)

Andreae v. Selfridge & Co. Limited (1958)

North Midland Building (NMB) Ltd v Cyden Homes (CH) Ltd (2018) EWCA Civ 1744

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