EG7036 Business Procurement and Contractual Practice Sample

Introduction

Standard form of contracts in UK are the contracts which states non-negotiated provisions and they are the pre-drafted form of contracts which can be accepted or avoided at the will of the second party. The report advices the procurement methods according to the case mentioned and will also help with the appropriate type of contract in the construction law with adequate justification. During the construction phase, the tort is the common civil wrong which is most likely to happen, so the torts happening during the contraction phase is also stated with the case laws with the defenses (Abduh, et.al., 2022). The provisions handling the delays from the employer’s and the contractor’s end is explained in the project with the case laws. The report will also state the Alternative Dispute Resolution methods for solving the issues and also stating the case laws for the same. The principles of NEC contract will also be stated below and the contribution of the benchmark case to the tort of negligence will also be elaborated.

Main Body

Question 1:

In the construction industry these types of contracts are reduced in writing. According to Housing Grants, construction and Regeneration Act 1996 in section 104, a construction contract is an agreement with a person who is willing to go ahead with the construction work by asking the other party to arrange the resources for the construction operation and providing the labour. Architectural, design or surveying work’s agreements to help the party with the consultancy in construction related fields also falls under construction contract mentioned under Construction Law, 1999. Generally negotiation is done during entering into contract but to increase the efficiency standard forms of contract were introduced. Procurement is an important part in this industry, which means acquiring the goods and services for the construction to accomplish the project assigned. As a Senior Commercial Manager and Legal Advisor I will advice Management Contracting as the most appropriate method of procurement among all of them. In the mentioned case, Jim Akis Khan wants to build a house in South East London and says that he is busy and not an expert in construction but will be happy to lay a hand or put a reasonable amount of involvement and is focused more towards the interior (Bao, et.al., 2019). So the above mentioned procurement method says that the project includes the client, consultant, the contractor and some of the specialized contractors will also be a part of the project by considering the need of good interior. Construction work will be managed by the other party including consultant, contractor and the specialized contractor, finance and the operation work will be carried out by the client.

There are different types of contract which are generally either of fixed-price or time-materials or cost- reimbursable. The process of procurement helps to find the right contractor and the supplier of goods and services. There are three types of contract and they are fixed-price contract, Time and material contract and the cost- reimbursable contract (Begbey, 2019). The fixed-price contract is signed when the task is assigned to the party to complete the construction work. It is commonly known as the lump sum contract. The vendor is assigned the task to accomplish it within the specific time and the price, while bearing all the risks unless there is a change of plan. The contact sounds to be beneficial as the terms and the prices are fixed. The next type which is time-material contract says that the customer agrees to pay the time, the materials for the project to the vendor and bears all the reasonable expenses, it can be more like when the customers fixes time and the price. For example if the project is valued for 1 million then any cost which adds over it will be bear by the vendor. The last type, cost-reimbursable contract expresses that customer reimburses all the costs for the project which is incurred by the vendor. The client also pays a fee for the vendor’s profit. The types of contract which can be adopted in the project can be Time-material contract or cost-reimbursable contract.

The above discussed contracts can be used in the projects as per the needs of the client. The client is busy and is not an expertise in the construction work but wants reasonable involvement in the project, so according to the situation time-material contract in an appropriate option when the customer is hiring consultants for the project, and can get involved sufficiently in the project by helping the vendor with the material of his own choice and quality. The next contract can be cost-reimbursable, as the client wants good interior which means that the changes can even take place at the last moment due to the involvement of the customer in accordance with the needs. In both the contracts the client is paying reasonable involvement by providing time and material in the first case and the change of the plan in the second (Birkby, 2019). In the last contract there is a scope of change which will allow the client to interfere and make the things happen according to him by reimbursing the amount incurred by the vendor.

Question 2:

Due to the improper management of the project or infringing the obligations which were listed before the contract formation eventually resulting in a civil wrong or torts. The improper management of the project during the construction phase, which causes loss to the client and falls under tort are Negligence, Negligent misrepresentation and Constructive fraud. The most common claim under construction defect is negligence where the allegation for the builder expresses the breach of duty of reasonable care and violation of some statutory obligations. For example the vital role of the builder was to make sure the quality of the project was up to the mark and if the level is not met then the responsible party will have to face the consequences. If any injury takes place due to the quality of the project and the other party suffers any loss, the other party can file a law suit for the same (Ceil, 2019). The other tort which is negligent misrepresentation says that the claims against defect in designs will fall under this topic. Under Restatement of Torts 552, the claim is for the pecuniary loss caused to the customer by reasonable reliance upon the information and if the vendor fails to exercise the same in attaining the complete information. It is exhibited that if the responsible party faces failure to attain exclusive knowledge about the project and leads to any defect resulting into misrepresentation therefore which addressed to a tort. The loss suffered can be claimed by the client. The last listed tort is constructive fraud which says that the defendant can be liable to a plaintiff for the fraud if the following elements are included such as intentional false misrepresentation in reference to the material fact on which the other party relied and which resulted into damage. As the result of misrepresentation the contractor suffers harm due to the reliance on the misrepresented facts in the performance of the contract hence giving it a rise due to the violation of fiduciary duties. For example if the client misrepresents the facts and do not discloses the conditions at the construction site which may lead to the defect in the project such as cracks or moisture in the walls. The defence which can be used for the negligence can be that the vendor can bring the claims under economic loss doctrine or gist of the action doctrine. The case law under this tort is Howard v. Redden, 107 A. 509, 511 (Conn. 1919) where the defendant neglected to determine the conditions and needs of the plaintiff, finally resulting into negligence while accomplishing the project (Greyvenstein, 2019). The defences for the negligent misrepresentation is contributory negligence, assumption of risk, comparative negligence where it represents that the plaintiff was aware about the reasonable risk and still managed to enter into the contract, hence was not compelled by the defendant to do so. The case law here is Bilt-Rite Contractors v. Architectural Studios, 866 A.2d 270 (Pa. 2005). The defence for the last tort constructive fraud is that there was no special relationship between the parties or the plaintiff did not suffer any loss. The case law which explains it well is Acchione & Canuso v. Commonwealth, 501 Pa. 337, 343-44 (1983).

Question3:

The provisions for the delay must be free from any ambiguity or any vagueness and should be classified in a proper ways whether it may be from employer’s or contractor’s end. The main types of delays are Critical and Non-critical, Excusable and Non-excusable and Compensable and Non-compensable. Under Construction Law these delays are mentioned while exhibiting when these delay claims apply and its notification period to apply. The Critical delay is the one which affects time of project completion and can-not be rectified, it just needs some time to get back on track (Gul, 2021). Non-critical will affect certain activities but will not affect the date of project completion. Excusable delay is the one which allows the contractor an extension of time or compensation, for example events such as natural disaster or act of god. On the other hand the Non-excusable delay is the one which says that the contractor was exclusively responsible for the extension of the project’s duration which may be due to the improper planning of the activities. Compensable delays are the ones which includes all excusable extension of time to complete the project. It is interpreted that any delay which is ‘excusable’ will generally help the contractor with the claim for time extension, compensation or both. On the contrary, Non- excusable are the ones where the responsible person is solely at fault and can-not ask for the claim. The delays caused from the employer’s end are like delay in handing over the site, appointing consultant, drawing’s approval, supply of materials, funds not sufficient (Moreland, et.al., 2020).The delay from the contractors end can be like delay in mobilisation, establishment of plant and machinery, assigning sub-contractors, disputes of labour and more time consumption to get approval. In the contracts listed above such as Fixed-contract, if employer is taking more time to assign the work then the contractor can ask for time extension on the other hand if there is a delay in work from employer’s end then the types of delay will be taken under consideration. If the delay is Critical then there is no option other than the extension of time or the same hand if it is non-critical then there is no need to extend the time to complete the project as the activities in the project were the affecting one. In the excusable delay the contractor can ask for time extension and compensation as the delay is caused due to the act of god but on the same hand the contractor is solely responsible for the delay which comes under non-excusable contract. The last delay says that if the contractor’s act is covered under excusable delay then it will be covered under compensable delay (Heidemann, 2018). Construction projects often get delayed, whether due to employer’s, contractor’s or third party’s fault. The obligations of the contractor in respect with the completion of work on time under construction law depend upon express provisions. There should be enough time for the completion of the project, the time should be reasonable to get the project accomplished and the term “reasonable time” is interpreted in the case law where its principles are laid out, Pantland Hick v Raymond & Reid. Under construction law, these contracts provide provisions for the payment of liquidated damages. In English law, the enforceability of any liquidated damages is concerned with the number of principles including the rule in context to “penalty clause” where this clause says that the liquidated damages can be recovered by setting a level which expresses estimated loss caused to the employer (Infantino, et.al., 2019). Under clause 8.4 of FIDIC Silver book it is stated that the contractor can claim for extension of time in accordance with Sub-Clause 20.1 for the purpose of work delayed under certain clauses in accordance to the Sub-Clause 10. It can be due to reasons such as variations, a cause of delay mentioned above giving rise to the extension of time and delay by the employer’s other contractor over site. In English law it is stated that in order to claim for extensions where two or more event contributed to the delay is known as the “concurrent delay”. The situation gets completely different if both the events are from employer’s end or an event from contractor’s end (Saseendran, et.al., 2020). The whole situation is completely explained in City Inn v Shepherd Construction. The extension of time or money can only be asked by the contractor when the delay is excusable and should not be responsible for the same.

Question4:

• Multi-tier Dispute Resolution Mechanism stipulated in JCT SBC/Q 2016 says that the mechanism is also well knows as ADR which means Alternate Dispute Resolution which means that if there arises an issue between the parties they can opt for the option where they can get their dispute solved without filing a law suit against each other through different methods such as negotiations, mediation, conciliation, arbitration (Infantino, et.al., 2019). These methods to solve the disputes between the parties is designed in such a way where both the party’s statement is considered and brought in the eyes of the authorized party who helps to solve the issue between both of them. If the other methods fail at the initial stage then arbitration is considered as the final tier to resolve the issue. Let us discuss the methods under the mechanism which are used to avoid any imposition of compulsory obligation or in simple words we can say that without the method of litigation (Kagoya, 2019). The methods are listed under:

• Negotiation: The word itself states that the method is a clause where both the parties reach to a probable decision without the use of third party through mutual negotiations. It is of non-binding in nature where the decisions through this method are directly made eventually resulting to the final decision.
• Mediation: This method says that, with the use of third party the issue can be resolved. The skilled expertise should be hired to get the issue resolved. This act requires consent of both the parties and involves voluntary agreement for the resolution. It is at the wish of parties to accept the solution or not. It is of binding nature at the wish of both the parties. Mediator is the third party who is hired for the solution of the dispute.
• Arbitration: It is the private method to handle the dispute and find an appropriate solution. It is the final decision which is of binding nature over the parties. Unlike Judges, arbitrators are hired to get the issue resolved (Kaufman, 2019). The decision by them is irreversible of nature where the parties gets bound with the decision and has to work accordingly.

• The New Engineering Contract (NEC) is a system which is organised by UK Institution of Civil Engineers, guiding the drafts of documents on civil engineering, construction, procurement and maintenance projects for the purpose of accomplishing the project which is assigned to the responsible party (Laughlin, et.al., 2019). Under it, the responsibilities are legally defined with the duties of the employer and the contractor in the work information. The principles of it are follows:

• Clarity between the roles of individuals.
• Develops mutual trust and co-operations.
• This program is considered important.
• Good management is promoted
• Recognises risk and finds a way to handle it all.
• Management of the resources are taken care of.
• Meeting the deadlines plays a vital role.

• Donoghue and Stevenson is a very important case which pays huge contribution to the

tort of negligence. The tort of negligence is briefly with the help of the landmark case which is Donoghue and Stevenson, establishing the principle of duty of care and established the foundation for the above mentioned tort (Martalas, 2018). Regardless of no contractual relationship it is established that the duty of care could still arise. The issues determined in the following case are that in the absence of a contractual relationship between the parties, could it still give a rise to the duty of care between Stevenson and Donoghue. In this case the plaintiff was out with one of her friend and ordered Scotsman Ice-cream float made of ginger beer. While pouring the ginger beer a decomposed snail was discovered, the sight of which made her ill. It was held that the plaintiff argued that the plaintiff owed a duty of care towards his customer who used to consume his ginger beer (Miller, et.al., 2020). They should have an effective system to clean the bottles and keep the snails away from it. The defendant denied having snails in his ginger beer bottles and argued that the plaintiff’s health issues were the result of her own bad medical condition. Later on the facts were stated and it was proved that the bad health condition of the plaintiff was due to the product of the defendant. The House of Lords held the case in favour of the Plaintiff, therefore the decision made in the case resulted into the benchmark case. According to Lord Atkin, this case was an important case due to the decision made concerning the public health. The ethics or moral rule that requires love towards their neighbours or the rule expresses to love their neighbour and take care of them. This case states that the duty of care is owed towards a person who will be affected by one’s actions. The person one owes towards is neighbour and an action can be brought where the injury is caused to the person, regardless of contractual relationship between them.

Conclusion:

There ends the essay by including every points which contributed to the writing such as advising the procurement methods as a legal advisor and mentioning the types of contract during the constructional phase and ended the first question by exhibiting the adequate justification for the advise provided. The torts committed due to the construction defect with the case laws are also explained in the report with the respective defences of each. The report also includes some provisions for handling the delays caused due to the employer and contractor as well with the appropriate case laws. The report concluded the topic by explaining the multi-tier dispute resolution mechanisms with appropriate case law, stated the principles of NEC contracts and elaborated the contribution of the benchmark case to the tort of negligence.

References:

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