Contractual Hand Book

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Licensed copy from CIS: edmundn, BAM Nuttall Limited, 29/06/2012, Uncontrolled Copy.

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CONTRACTUAL HANDBOOKLicensed copy from CIS: edmundn, BAM Nuttall Limited, 29/06/2012, Uncontrolled Copy.for

Steelwork Contractorsand

Other Specialist Contractors

Edited by

Roger Button, Partner,Eversheds

With thanks to Lindy Patterson Partner, MacRoberts For Chapter 23

BCSAThe British Constructional Steelwork Association Ltd.

EVERSHEDSBusiness Lawyers in Europe

Eversheds

THE BRITISH CONSTRUCTIONAL STEELWORK ASSOCIATION LTDBCSA

Licensed copy from CIS: edmundn, BAM Nuttall Limited, 29/06/2012, Uncontrolled Copy.

BCSA is the national organisation for the Constructional Steelwork Industry; its Member companies undertake the design, and erection of steelwork for all forms of construction in building and civil engineering. Associate Members are those principal companies involved in the purchase, design or supply of components, materials, services etc., related to the industry. The principal objectives of the Association are to promote the use of structural steel-work; to assist specifiers and clients; to ensure the capabilities and activities of the industry are widely understood and to provide members with professional services in technical, commercial, contractual and quality assurance matters. The Associations aim is to influence the trading environment in which member companies have to operate, in order to improve their profitability. A current list of members and a list of current publications and further membership details can be obtained from: The British Constructional Steelwork Association Ltd. Apart from any fair dealing for the purposes of research or private study or criticism or review, as permitted under the Copyright Design and Patents Act 1988, this publication may not be reproduced, stored or transmitted in any form by any means without the prior permission of the publishers or in the case of reprographic reproduction only in accordance with the terms of the licences issued by the UK Copyright Licensing Agency, or in accordance with the terms of licences issued by the appropriate Reproduction Rights Organisation outside the UK. Enquiries concerning reproduction outside the terms stated here should be sent to the publishers, The British Constructional Steelwork Association Ltd. At the address given below. Although care has been taken to ensure, to the best of our knowledge, that all data and information contained herein are accurate to the extent that they relate to either matters of fact or accepted practice or matters of opinion at the time of publication. The British Constructional Steelwork Association Limited, the authors and the reviewers assume no responsibility for any errors in or misinterpretations of such data and/or information of any loss or damage arising from or related to their use. The British Constructional Steelwork Association Ltd., 4, Whitehall Court, Westminster, London SWlA 2ES Telephone: +44 (0) 20 7839 8566 Fax: +44 (0) 20 7979 1634 postroom@steelconstruction.org E-mail: Website: www.steelconstruction.org

Publication Number 32/01 Third Edition May 2001 ISBN 0-85073-035-X British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. The British Constructional Steelwork Association Ltd. Printed by The Chameleon Press Limited

CONTENTSForeword ........................................................................................................................ Overleaf

Licensed copy from CIS: edmundn, BAM Nuttall Limited, 29/06/2012, Uncontrolled Copy.

Chapter 1 ................................................................................................ Formation of Contracts Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 ..................................................................................................... Classes of Contract ....................................................................................... Standard Forms of Contract ................................................................................................... Tendering Procedures ........................................................................................... Onerous Contract Clauses ..................................................................................................................... Certificates

Chapter 7 ................................................................................................... Payment and Set-Off Chapter 8 .................................................................................................................. Fluctuations Chapter 9 ....................................................................................................................... Variations Chapter 10 ........................................................................... Extensions of Time and Completion Chapter 11 ............................................................................................................ Costs of Delay Chapter 12 ............................................................................................................................Claims Chapter 13 ....................................................................................................... Defects of Liability Chapter 14 ....................................................................................................... Design of Liability Chapter 15 ............................................................................ Supply of Goods and Misrepresentation Chapter 16 .........................................................................................................Limitation Periods Chapter 17 ....................................................................................................................... Insurance Chapter 18 .................................................................................................. Bonds and Guarantees Chapter 19 ................................................................................ Disputes and Legal Proceedings Chapter 20 .................................................................................... Insolvency of Main Contractor Chapter 21 .... JCT Standard Form of Contract with Contract with Contractors Design 1998 Edition Chapter 22 ......................................................................................... Scottish Forms of Contract Chapter 23 ................................................................................................................... Nomination Chapter 24 ......................................................................................................... Competition Law Chapter 25 .................................................................................................................... Check List Appendix A ................................................................................ Amendments to Standard Forms

FOREWORD to the third editionLicensed copy from CIS: edmundn, BAM Nuttall Limited, 29/06/2012, Uncontrolled Copy.The BCSA Contractual Handbook has been comprehensively re-worked to reflect the torrent of changes that have affected construction over the years since the second edition was produced. As might have been anticipated, there have been considerable developments in case law since the last edition which have affected the position of steelwork and other specialist contractors. More surprising has been the impact of statute notably the Housing Grants Construction and Regeneration Act 1996 which contains one of the few pieces of legislation specifically designed for the construction industry. The Commercial Debts (Interest) Act 1998, the Contracts (Rights of Third Parties) Act 1999, the Competition Act 1998 and the Human Rights Act 1998 will no doubt all make their mark in time. Thanks are due to Roger Button and Ray White of Eversheds who produced this edition, and to Lindy Patterson of MacRoberts for contributing Chapter 23, Scottish Forms of Contract. The law is up to date as at 1 January 2001, although later changes have been incorporated where possible.

M. Rich of Middle Temple, Barrister MSc FCIArb BCSA

CHAPTER 1

FORMATION OF CONTRACTSLicensed copy from CIS: edmundn, BAM Nuttall Limited, 29/06/2012, Uncontrolled Copy.A contract is an agreement between two parties which is legally enforceable.

Elements of a Binding ContractThere are five essential elements which must exist to form a binding contract.

1. IntentAll parties must intend to create a legally binding obligation between them.

2. CapacityAll of the parties to a contract should be capable of entering into a legally enforceable relationship. Incorporated bodies, partnerships and individuals (provided they are not infants or insane) all have capacity to enter into a contract. If one or more parties lack the capacity to enter into a contract, it may not be enforceable.

3. AgreementAgreement is the fundamental characteristic of a contract. In order to decide whether an agreement exists, the Courts will consider the relationship between the parties objectively and look, amongst other things, to see if there has been an offer by one party and an unconditional acceptance of that offer by the other.

4. Reasonable Certainty of TermsThe terms of the contract must be reasonably certain. It is not necessary to have resolved every detail, but there must be general agreement, and the parties must intend to create a binding agreement despite any details which remain to be a