The Building and Engineering Contract

When a company, or owner retains contracting services, they are entering into a binding contract with the contractor.

But, building deals generally cost thousands of pounds and can be very complicated.

Therefore, an informal agreement simply won’t cut it – a contract, however, will.

Contracts define how something should be built, by who and how much it will cost. They also set out the rights, obligations and liabilities of all parties.

Construction contracts are relevant to many different areas of construction, whether you’re a project manager overseeing a construction build or a quantity surveyor working to a budget.

English law does not require a particular form to contracts. Therefore the parties involved are free to choose the terms and ultimately the risk allocation between them.

There are many different standard forms of building contract within the construction industry, so picking the right one is crucial.

Always seek legal advice for selecting the most appropriate form.

What is a standard form of building contract?

A standard form of building contract is a form of contract containing conditions which are applicable, or can be made applicable by the use of alternatives, to a wide range of building projects.

Why a standard form?

There are several reasons why contract users in the construction industry benefit from the use of standard form contracts:

  • They aim to minimise the time and cost of negotiating contracts
  • They allocate risk in a fair and recognisable way in the industry
  • They provide familiarity for contract administrators
  • There is an established body of case law involving standard forms of building contracts which can assist in the construction and interpretation of contracts
  • They provide a benchmark and their terms can become a market-accepted position.

How to select the appropriate standard form of building contract for your project?

The parties often select a particular standard form for their project based on the familiarity of the person making the selection with that form. The selection might well be suitable, but selecting a contract on the basis of familiarity can sometimes mean that it is not really appropriate for the form of procurement and/or the nature of the project itself.

This can lead to difficulties during negotiations with the contractor and, quite probably, to heavy amendment of the standard form being required in order for it to properly reflect the nature, needs and agreed risk profile of the project.

Get appropriate legal advice

I provide expert advice in selecting the appropriate standard form for your project.

I can help you ensure that the most appropriate form is chosen, taking into account all the characteristics of the procurement route that will be followed and the type, size and nature of the project itself.

For further information or to discuss a matter, please Contact me.

What are the most commonly used standard forms?

JCT

The Joint Contracts Tribunal (JCT) produces standard forms of contract for construction, guidance notes and other standard documentation for use in the construction industry in the United Kingdom.

The JCT wide range of contracts caters for most forms of procurement, together with sub-contracts and associated documents such as warranties and bonds.

FIDIC

FIDIC stands for ‘Fédération Internationale des Ingénieurs – Conseils’ (The International Federation of Consulting Engineers). FIDIC represents the consulting engineering industry both globally and domestically and they publish standard forms of contract for civil engineering projects, which are used internationally.

The forms of contract are drafted for use on a wide range of project types. The main forms are usually referred to by the colour of their covers e.g.:

  • Yellow Book (Conditions of Contract for Plant and Design Build for Electrical and Mechanical Plant and for Building and Engineering Works, Designed by the Contractor).
  • Red Book (Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer).
  • Silver Book (Conditions of Contract for EPC/Turnkey Projects).

In 2017, FIDIC published new editions of the Red, Yellow and Silver Books.

NEC contracts

The NEC contracts are published by the Institution of Civil Engineers. The updated suite of NEC4 contracts was published in June 2017.

The contracts are designed to be flexible so that they can be used for all types of project regardless of size or discipline. They are designed to be capable of use both in the UK and abroad and for all types of procurement.

The use of them is becoming increasingly common, particularly in the public sector.

The contracts emphasise a collaborative approach and ask the parties to act in a spirit of trust and mutual cooperation.

MF/1

Originally called ‘Model Form A’, ‘MF/1’ are General Conditions of Contract for the supply and erection of electrical or mechanical plant. The contract is published by the Institution of Engineering and Technology (the ‘IET’). The most recent version of MF/1, Revision 6, was published in 2014.

MF/1 is designed for engineering projects and is suitable for mechanical plant projects ranging from electricity generation, waste incineration to automated manufacturing systems.

For further information or to discuss a matter, please Contact me.