Construction Contracts and Dispute Resolution

Topics: Construction, General contractor, Subcontractor Pages: 9 (2980 words) Published: March 9, 2014


Construction Contracts and Dispute Resolution
Structured essay on the construction industries reliance on the standard forms of building contracts

Introduction
This report will cover a multitude of contract disputes which occur within the construction industry and how the JCT Standard Building Contract is used to aid settling contract disputes in a fair manner. It will analyse and discuss a scenario where the contract is used to settle a dispute between two parties and show how the contract shares the fault of the dispute between Contractor, Employers and cases where the fault is neutral. It will discuss the good and bad features of the contract and finally it will discuss corporate manslaughter and corporate homicide and what impact they have in the construction industry. Resolving the Contract Dispute

Failure of Payment
At week 31 of the contract, the Employer failed to pay the Contractor the sum of £350,000 for works done, which resulted in the Contractor halting work on site until said payment had been made. The Employer was unable to pay the Contractor due to a clash flow problem and was unable to resolve this situation for 4 weeks, by when the payment to the Contractor was made and work was able to continue onsite. Due to this problem the working schedule was delayed by 4 weeks. The Contractor has viewed that Employer did not comply with Clause 4.13.4 “Not later than 5 days before the final date for payment the Employer may give notice to the Contractor…” (JCT 1, 2009) as no effective notice to withhold payment was given by the Employer. A sum due under a construction contract was not paid in full by the final date for payment to the Contractor to which a notice was compiled of their intention to stop work on the grounds of non-payment and given to the Architect, which is similar to the case of C J Elvin Building Services v (1) Peter Noble (2) Alexa Noble where the Noble’s refused payment to Elvin for work done and the judgment was accordingly given for Elvin. The contractor stayed in accordance with Clause 2.29.5 “suspension by the contractor under clause 4.14 of the performance of his obligations under this contract” (JCT 2, 2009) with this knowledge the contractor also points out clause 2.24.4 “suspension by the contractor under clause 4.14 of the performance of his obligations under this Contract, provided the suspension was not frivolous or vexatious” (JCT 3, 2009) Which entitles the Contractor to 4 weeks prolongation costs. Conversely the Employer has stated that in accordance with Clause 1.14 “…by the final date for payment as required by these conditions and the failure continues for 7 days after the Contractor has given notice…the Contractor may suspend such performance until payment is made in full” (JCT 4, 2009) only 3 of the weeks are to be granted prolongation costs, for the first week of default (7 days’ notice) work on site should have continued. From this the Contractor has made the point that when the initial suspension occurred it incurred further delays by refusing to place orders for resources with long lead time. The Contractor has the right to claim for an extension of time according to clause 2.29.6 “any impediment, prevention or default, whether by act or omission, by the Employer” (JCT 5, 2009) which initials the Contractor to an extension of time for an additional week, allowing them to receive 4 weeks prolongation costs. Contractors Negligence

In week 9 the main contractor gave instructions to a subcontractor to begin erecting the steel frame work of the building on site. However 1 week into this section of the project, the Architect brought forward the problem that the steel work was being assembled from the wrong datum points, as of this all the standing steel components had to be taken down and re-assembled to the architect’s drawings. This situation took 4 weeks to rectify causing a total of 5 weeks delay onsite. The Employer observed that a lack...


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