Rural Estates Newsletter February 2023 - Flipbook - Page 10
3 – Using standard form
construction contracts
Edward Banyard-Smith
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Construction contracts are often the least considered element of any
building project on a rural estate, be that for a new bathroom block
in the caravan park, the conversion of a steading to business units, or
turning an old bothy into a holiday cottage. While contracts serve an
essential purpose in delivering design and construction on time and
on budget, negotiating them can be a time consuming and difficult
process. Construction is complex and so too are its contracts.
To streamline the process, the construction industry has developed standard form
contracts which can be purchased and used with relative speed and ease. The Joint
Contracts Tribunal (JCT) publishes a suite of standard form building contracts and
related contracts, such as collateral warranties, covering a range of scenarios and even a
complete project pack. Specialist bodies such as the Royal Institute of British Architects
(RIBA) and the Royal Institution of Chartered Surveyors (RICS), also publish standard form
contracts for appointing consultants in their respective fields.
But do standard form contracts really work?
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Why use them? Standard form contracts are almost always immediately acceptable
to the construction supply chain, without negotiation. This means they may be the
quickest way of engaging a contractor or consultant, so will often be the best option
when agreeing a contract rapidly is more important than the actual terms of that
contract. Standard form contracts should also comply with the current law (although
this is not always the case).
Why not use them? The price for expedience may be legal accuracy, as standard
form contracts cannot hope to cover every possible circumstance in the same
way as a negotiated contract. Further, their one-size-fits-all approach may not
be appropriate to the peculiarities of a project on a rural estate, such as off-grid
services. More seriously, some construction law commentators would say that
standard forms are favourable to the supply chain, against the interests of the client.
That may appear subjective, but there is in fact some objective evidence for it:
previous editions of the RIBA terms have been criticised by courts for being unfair
to consumer clients. Perhaps for this reason, lenders are often reluctant to accept
standard form contracts.
The most legally secure practice is to adopt a halfway house between standard form
contracts and fully bespoke contracts, and to appoint professional consultants using
bespoke terms and appoint the building contractor using an amended version of the
JCT contract terms. This will be the better option on more complex or valuable projects
which justify some legal spend and may be the only option on bank funded projects, or
where there is an institutional purchaser or tenant which requires particular assurances.
Most consultants and contractors will be receptive to bespoke terms where there is a
good business need, or where the bespoke documents are discussed at the outset. The
problem with them is that they can create delays because contractors and consultants
will need to consult their insurance and legal advisers to ascertain that the new terms will
not vitiate their insurance arrangements and are not unreasonable.
10
Rural Estates Newsletter
February 2023