Construction Law of Handyman Ltd - Essay Example

?Section A This section of the study will examine the case of Handyman Ltd which is in a contract with Innocent Limited. The two entities signed a contract with the appropriate documentation. However, it appears that Innocent has noticed a number of issues with: 1. Inferior materials used on the exterior of the building 2. Wrong materials used in the reception area floor 3. Defective doors discovered by Innocent's architects and 4. Dampness in the ceiling discovered during the rectification period This section will examine these issues in three main parts. The first will deal with actions Innocent can take in relation to the inferior materials under contract law and industry statute. The second section deals with standards to be used by Innocent’s architects to call for changes and review. Finally, this section will deal with the dampness problem that was discovered after the contract was rectified. Question (A) In this section, the position of Innocent in relation to their architects's findings are examined in relation to the principles of contract law, breach of contract and the common law doctrine of temporary disconformity. Rules The terms of a contract can be express by incorporation by the terms of reference or implied by relevant legal rues. Exclusion clauses cannot be applied in cases of negligence and major activities that are not done in good faith1. In this broad and general framework, the HGCRA states that the construction contract requires a contractor to build to specification2. The Joint Contracts Tribunal (JCT) although is not statutory has a composition made up of various professional associations which set standards in the building industry. Traditionally a building's structures and diagrams are to be drawn by an architect and supervised by the same architect throughout the construction process3. The architect is not part of the contract but engaged by a party, usually the sponsor or employer in a separate contract. The architect is an independent party and an agent of the employer who must operate ethically and independently4. Express terms in contracts become conditions and when they are not followed and honoured, it can lead to an action for a breach of contract5. Quality standards and quality specifications in a building contract become a form of conditions which must be adhered to. Failure to adhere to these expressly agreed standards leads to a potential breach of contract. In English Common Law, a breach of implied or express term can authorise the aggrieved party to sue for a breach of collateral contract under tort or sue for quantum meruit for a breach of statutory duty6. Temporary disconformity could be fully reward if the contractor makes a timely request to change the parts in order to remedy an issue that is capable of being corrected7. In Surrey V Lovell8, it was held that new destruction that damages a property during the various construction stages creates different circumstances9. Rather, in a situation where a builder quickly moves to rectify the situation, an action for a breach of contract will not stand as long as the temporary disconformity is fixed in a timely manner. Application The JCT Design and Building Contract 2011 Edition gives Innocent the right to get the inferior materials fixed. All they need is to get their architects to provide a report and they can demand the modification of the materials by Handyman. Handyman has an option of fixing the defective parts and other aspects. If they are able to do it in a timely manner, they can claim temporary disconformity and prevent further actions. But if they refuse, Innocent can take the action further and sue for a breach of contract since the materials used clearly do not conform with the agreed materials and level of quality that is specified in the contract. Conclusion Innocent has the right to sue for a breach of contract. This is because the fundamental specifications that invoked the contract have not been followed to specification. Hence, they can move to get Handyman to fix it. If Handyman fixes it, they can prevent further action through the principle of temporary disconformity. If they fail, Innocent can move for further action for breach of contract. Question (B) This section examine the fundamental rules and cases that are relevant to cases where the architect asks for the replacement of work that has been done. To this end, the section will examine the rules and legal interpretation framework that is applicable in the event of their request for a modification and replacement of existing materials used by Handyman. Basically, the contractor has a legal obligation to execute everything in a construction contract in accordance to the architect's drawings and provide all the materials required in the contract10. This means a contractor like Handyman has an obligation to do everything in the construction project in accordance with the drawings of Handyman. This will involve the identification of the various requirements and fundamental aspects and elements of the contract and all the technical drawings. Also, materials must be in conformity with the drawings and propositions that were put forward. This forms the basic framework within which a contract can be executed. In case of defective work, there are numerous rules and regulations that are put forward by the JCT SBU/Q 2011. Section 3.18.1 reaffirms that where materials or goods are not in conformity with the contract, the architect or contract administrator may instruct the removal from the site, of such works, materials or goods. In some cases, the architect may allow some defective or inappropriate materials to remain on the premises but this is subject to the employer's agreement and in consultation with the contractor. The architect's confirmation for the removal of items on the premises need to be in writing. And the specific materials and standards are also stated in Section 2.38.1 of the JCT rules. Any action that is to be taken against a contractor for defective works and inappropriate materials will be interpreted in relation to the architect or the contract administrator's reports. These reports provide information about the extent to which the contract has been processed and how well the various stages and components of the work has proceeded. In cases where the certification is not right, the builder or employer will have to take action in court by demanding changes. In legal interpretation, compliance to architect's orders and/or architects' actions and its appropriateness is taken into account. The architect is to act as the first point of call and try to resolve issues and deal with problems. It is only when the architect's attempts fail to yield results that an extreme action by a sponsor or employer can be allowed by a JCT tribunal. Examples of such cases include action for a breach of contract and repudiation of a construction contract. These are extreme and before any tribunal can grant it, they will need evidence of the reports of the architect and the actions taken by the architect to resolve the issue at hand. In the case of Innocent, the reports of the architect and the architect's effort to get Handyman to do the right thing and comply with the contract will be considered by a tribunal. The effort of the architect to get Handyman to remove the defective products and walls will be taken into account before an action for a breach of contract by Innocent can be upheld. Question (C) A final certification of merit is to be issued at the competition of work in a company before final lumpsum and amounts due in respect of delays and other factors are computed. This certificate is authorized by the architects. Usually, the duration of the issue of this final certificate is 3 to 6 months. Clause 4.5 of the JCT SBC 10 of 2011 allows for the adjustment of contract sum by architect and loss imputation on the contractor if there is an issue due to the contract's fault and failures. Thus, at this period in question, there is a rectification period and point. This means that the certification will give the architect the right to make recommendations on the calculation of the final remuneration the contractors need to take in relation to what was actually done and its actual implication. In the case of Handyman, if the dampness problem was not resolved throughout the contractual process, Innocent's architects can either ask for Handyman to handle those issues before the final contract and the final full amount is paid. This is because they have a legal obligation to certify and authorize payment on the basis of actual work done. Thus, in that case, they can require Handyman to make changes. If there is no room for changes due to the rectification of the contract period, the other option is to deduct the amounts representative of the dampness from the final and total payment due to Handyman. This will go towards the modification and improvement of the existing system and could be used to create another contract with a different contractor to fix the issue. This will be within the legal scope of the contract between Innocent and the architects and the JCT rules will support such an act since it is done within the scope of work architects are contracted to do. Section B This section of the research examines an important aspect of Scot Law in relation to building contracts and its implication to the wider body of JCT contract rules and regulations. To this end, a leading case of Morris V James Rome 1964 is examined. The examination will include the identification of the general framework of rules and regulations that relates to the law. The analysis will go further to examine the evolution of the law, its applications to similar cases and the relationship with JCT contract laws and regulations. Basic Rule Where a contractor is engaged to carry out a specified work, the contractor has the obligation to carry out and complete that work according to specification11. This is because a building contract in all nations including Scotland falls under the broad framework and jurisdiction of the law of contract. Hence, a Scottish building contract requires the contractor to operate in a way and manner that is consistent with the designs and terms of the contract. There is a general obligation for a contract to carry out a building contract in a “good and workman-like manner”12. Like most professional jargons, a “good and workman-like manner” is not clearly defined in statute. It implies that work must be done in a manner and standard that takes into account all the relevant skills and care that is expected of a person in that level. In other words, a building contractor that is hired to complete a particular task will have to perform it to the standard and quality expected of a builder of ordinary competence similar in the industry. Thus, based on the level of science and technology in the field and era, a builder will have to ensure that he uses all the best resources and competencies to carry out the job. This way, all basic expectations and basic requirements will be fully met and adhered to. A builder will therefore have to do well and put in enough effort to meet all necessary requirements. Due care and due diligence is a major feature of construction contracts and a contractor must make reasonable effort to meet all these requirements and expectations. A contractor must adopt the methods amounting to normal practice in the industry at a given point in time13. Scope of Work and Extent of Effort It has been established that the scope of work must be within the reasonable limit that is expected of a given project or activity. However, there is a question of the level of exceptions a contractor must make where there is an unusual or extraordinary risk in a given contract. To what extent should the contractor vary his effort? And what is the limit of objective and subjective modifications that the contractor must put into account? Morrison V James Rome14 In the case, there was a delict brought forward by the claimants who asserted that the builder was negligent because he failed to appreciate the risks of the circumstances at hand. They therefore sued for damages on the grounds that the contractor failed to notice important things that they should have detected as part of their effort as contractors who were of a good standing. Lord Cameron stated that a builder was of the same position as a doctor. This is because the builder and medical doctor had professional qualifications that were subjected to standards of prescribed practice which had existed for hundreds of years. Hence, a builder will have to be sensitive to these rules and operate according to the rules in building. Failure to do that will amount to negligence. Lord Cameron also stated that the methods and practices could change due to modifications in professional opinions and the advancement in scientific knowledge. Thus, a builder will have the obligation of detecting the relevant rules and standards of practice relating to a given activity at any point in time and operate within them. The extended ruling of Lord Cameron stated that: "As in every trade or profession, not every member of it possesses or is expected to possess the same level of skill or competence. There must be a certain standard of competence, however, and a certain standard of care displayed in its exercise. What is the measure of the standard in each case must be judged against the practice ruling in the particular trade at the particular time. I think also that, where different opinions as to method may reasonably be held by persons equally skilled in the particular trade or craft, selection of one which has in fact led to certain injurious consequences in preference to another which might have led to a different result is not necessarily proof of negligence, merely because of the occurrence of these injurious consequences, unless these consequences were within the realm of the reasonably foreseeable as certain or likely to ensue. On the other hand, error of judgment, however honestly arrived at, does not necessarily exculpate from liability for its consequences if they are injurious."15 There is therefore a standard of competence that every contractor and every builder will be subjected to. And this level of competency is based on numerous relevant rules and regulations that guide and leads the operations of a given industry. According to the basic Hedley Byrne16 principle which has implications for Scottish Law, when a person holds himself or herself out for a given activity as a professional and is being paid for it and that individual hiring him is relying on the advice or work of a professional, that professional will be held to the standard of competency in the industry in question. However, where a professional selects options that leads to injuries to the users of the product they produce, then they are liable. This is because they gave their professional services negligently and hence, have to take responsibility for the consequences of those actions if they turn out to cause injury to other people. This established that actions in delict can be brought against a professional builder or contractor if it can be proven that the individual was negligent. This means that professional builders have the obligation of being careful to ensure that they provide their services in a way and manner that provides the best interest of their customers and also prevent the use of options and materials that will lead to injuries or the reckless application of standards. However, in order to determine negligence, there is the need for reasonableness and foreseeability to be invoked. This is because holding professional contractors responsible for negligence without much effort and much proof of being truly negligent will open the floodgates for imputing remote and unfounded tort claims. Thus, in the case of Morrison V James Rome, the point of contention was whether the builders were responsible for providing compensation for a collapsed building or not. The defendant argued that they used all the relevant rules, regulations and standards of practice at the time of the building project. Hence, the event of a future collapse was not reasonably foreseeable at that time. This is because they complied with all rules, regulations and scientific principles. And they did nothing outside the norms. Hence they acted within a given framework of standard practices. The court held that the defendants were not negligent. This is because they proved that they acted within the reasonable limits and they took reasonable steps to build a building that was going to stand through all circumstances and situations that were aware to them at the time of building. Exceptions However, in other cases, there were degrees of negligence that was found against the defendants. In Wright V BTC17, the Court of Appeal ruled on a case where a a contractor worked on a chimney at a point of a house when the street was not cleared. However, a road was constructed later and someone got injured due to the chimney. The contractor argued that the road was not cleared and it was not reasonably foreseeable that people will be using that point at that pace. The Court of Appeal did not accept the defence of the contractor. This because he had a liability to ensure that the chimney was fixed in a way and manner that it would not fall off. That was his primary obligation. Thus, failure to do so amounted to negligence. Foreseeability of the volume of usage of the area below the chimney had no impact on the quality of the materials and workmanship the contractor should have put into the building. The contractor was therefore found to have been negligent. JCT Standard Building Contract with Quantities 2011 Professional ethics and standards evolve to accommodate changes in the external environment within which they operate. The JCT Standard Business Contract with Quantities (SBC) has also evolved to integrate some of these requirements as a mandatory part of building and honouring professional codes and ethics. Article 1 of the SBC states that a contractor must carry out work according to the contract drawings. This means that the contractor comes under some degree of checks and balances to ensure that they operate according to rules and regulations in the industry. Article 1 requires the architect to analyse the contractor's proposal and analyse the documents for risk. This provides an industry standard for checks and balances to ensure that the contractor or builder carries out his activities according to dominant standards and expectations. Other elements of due diligence is presented in Clause 5.2.3 and 5.3.4 which requires the contractor to analyse the drawings and other structures in the building. Where there are issues, he must identify it. Clause 3.10 also allows the architect to examine the building and issue changes to the system where necessary and required. This means that the SBC prevents the situation of having to leave the work of drawing everything and building the entire building in the hands of only the contractor. There are checks and balances by the architect which requires that contract documents, construction phase plans and statutory requirements are supervised and monitored by the architect. Also the architect has a major requirement to ensure that all relevant statutes are observed and the architect does work in the right way and manner. This prevents the work from going outside the normal scope and allows a contractor to remain adherent to important rules and regulations. Clause 2.3.3 requires that the contractor must gain approval for the quality of the materials they use. The clause also requires the architect's approval for the standard of workmanship. This must be within the reasonable framework for the operation of the contract and the attainment of results. This will ensure that there is a reasonable satisfaction of the best interest of the builder. In general sense, the JCT SBC require the contractor to comply with instructions of the architect. Clause 3.10 states that where the best interest of the employer or sponsor is not being met, the architect must issue instructions to the contractor. This will ensure that reasonableness is attained and foreseeable issues are dealt with during the construction process. The main end is that negligence is eliminated significantly from the building process and the entire activities. Where there are discrepancies,Clause 2.15 requires the contractor to give notice of discrepancies in writing. This will get the contractor to become more responsible and identify matters that are relevant for solutions to be found to them. Without that, a building might not meet its requirements and expectations. Conclusion The ruling of Morrison V James Rome is based on the premise that a builder or contractor has a standard of care that he must attain. This include the relevant rules and regulations as well as a conscious effort to avoid accidents and injures. Where a contractor blatantly disregard this, that contractor can be held liable for negligence and he can be sued for compensation. The JCT rules provide a system of simplifying these rules in such a way that an architect or contract administrator can be appointed independently by the sponsor who will supervise the entire building process and come up with instructions. This ensures that the building process is compliant with all due diligence rules and regulations as well as all other laws and relevant rulings that have an effect on the entire building process. Endnotes Books Barnett Kevin. Defective Construction. London: Wiley, 2012 Chappell David. Understanding JCT Standard Building Contracts. London: Taylor and Francis. 2012. Firmston, Michael. Building Contract Casebook. London: Wiley, 2012 MacRoberts, Joh. MacRoberts on Scottish Building Contracts. London: Wiley. 2012. Uff John. Construction Law 11th Edn. London: Sweet and Maxwell. 2013 Cases Beaufort Development Ltd. V Gilbert Assets NI Ltd and Another [1998] ALL ER 778 Brunswick Construction Ltd V Nowlan and Others [1974] 21 BLR 27 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 Morrison’s Associated Companies Ltd. v. James Rome & Sons Ltd. 1964 S.C. 160 P & M Kaye Ltd V Hosier and Dickinson Ltd [1972] Surrey Health Borough Council V Lovell Construction Ltd [1988] Wright V British Transport Commission [1962] COA Statutes Housing Grants, Construction and Regulation Act 1996 Unfair Contract Terms Act 1977 Read More