Partnering as a Contractual Relationship - Case Study Example

Construction Law Partnering, as a contractual relationship should be considered at an early stage in the project cycle and some form of business relationship strategy needs to be included in the overarching Procurement Strategy. First part of the answer will be discuss regarding this subjects, second part of the answer evaluate the four implied terms and finally, the Contracts (Rights of Third Parties) Act 1999. Order#: 154497 Deadline: 2007-03-09 16:11 Pages: 8 Style: APA Language Style: English UK Part 1: Answer: In order to answer this question it is necessary to have a clear knowledge about partnering. For to answer the second part of the question, the co-operative principles of partnering, partnering arrangement and at last it will be critically discuss that to be successful a partnering arrangement does not require the contract between the parties to contain provisions that align with the co-operative principles of partnering. Partnering 1 means a relationship of open communication and close cooperation that involves both Government and Contractor personnel working together for the purpose of establishing a mutually beneficial, proactive, cooperative environment, alliances to contractual partnerships within which to achieve contract objectives and resolve issues and implementing actions as required. Partnering, as I define it, is the process of two or more entities coming together for the purpose of creating synergistic solutions to their mutual challenges. The Construction industry including both private and public sector clients, main contractors, consultants and specialists. The collective spend of the client members runs into billions of pounds and it constitutes the most influential pan-industry body in the construction industry. The building of a Partnering relationship is not straightforward and it is essential that sufficient time and resource is allocated in order to achieve the desired result. Effective relationships are the bedrock of Partnering and the Project culture needs to be one of full openness, honesty and trust in all dealings between the parties. Baird Textile v Marks & Spencer 2 should dispel the notion that simply relying on a long term relationship of collaboration (over 30 years) will obviate the need for some form of contractual arrangement. The contract has been drafted as a purchase Order with separate Collaborate Construction terms. The former is only six pages long with additional appendices and is completed to fit the requirements of the particular project. In order to achieve a successful Partnering relationship all parties need to adopt a far greater degree of collaboration than would be found in conventional contracting. Partnering requires commitment throughout the business units and its suppliers and is not an easy option. Proactive attitudes and contributions will be required on Partnering from Project Initiation in order to obtain improved performance and shared benefits. The collaboration construction terms comprise some 18 pages and should not change, although some of the provisions may not apply, depending upon how the purchase Order has been completed. The contract is unique in that it can be used for the appointment of both consultants and contractors as a subcontract for appointment of sub consultants or subcontractors. There are already a growing body of evidence that lawyers are providing a different role from that of traditional 'legal technicians' and 'dispute adviser' in favour of movements towards 'assisting the delivery of successful projects'. Lawyers can genuinely 'add value' by explaining how a collaborative relationship can work within a supportive contraction framework. One simple step forward is for lawyers to at least explain the proposed form of construction contract (be it a partnering contract or otherwise) to the project team who will work under or in conjection with it. It is assumed that all parties fully understand what their legal obligations are and how their contract is indented to fit in with the contractual agreements between the other parties. Now is the time to discuss about Cooperative Principles. Seven Cooperative Principles: Voluntary and Open Membership: Cooperatives are voluntary organizations, open to all people able to use its services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination. Democratic Member Control: Cooperatives are democratic organizations controlled by their members - one member, one vote - who actively participate in setting policies and making decisions. Members' Economic Participation: Members contribute equally to, and democratically control, the capital of the cooperative 3. This benefits members in proportion to the transactions with the cooperative rather than on the capital invested. Autonomy and Independence: Cooperatives are autonomous, self-help organizations controlled by their members. If the co-op enters into agreements with other organizations or raises capital from external sources, it is done so based on terms that ensure democratic control by the members and maintains the cooperative autonomy. Education, Training and Information: Cooperatives provide education and training for members, elected representatives, managers and employees so they can contribute effectively to the development of their cooperative. Members also inform the general public about the nature and benefits of cooperatives. Cooperation among Cooperatives: Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures. Concern for Community: While focusing on member needs, cooperatives work for the sustainable development of communities through policies accepted by the members. So it is possible to reach a conclusion that to be successful a partnering arrangement does not require the contract between the parties to contain provisions that align with the co-operative principles of partnering. Part 2: Answer: For a contract to be valid, both parties must indicate that they agree to its terms. This is accomplished when one party submits an offer that the other accepts within a reasonable time or a stipulated period. The terms are not expressed by the parties but added to the contract. Terms may be implied in a contract in the following three ways. i) By custom or usage: British Carne Hire Corporation Ltd v Ipswich Plant Carne Hire 4. ii) Implication by the courts: this can be done by three ways. a) On the basis of presumed intention: It must be so obvious that 'if goes without saying.' This is known as obvious bystander test, Shirlaw v Southern Foundries Co 5 and b) It is necessary to give business efficacy to the contract The Moorcock 6 Necessary and reasonable implication into particular type of contract. iii) Statutory implications: certain terms are implied by statute. There is a custom of a trade or locality, which is certain. First the parties' negotiations may be extensive. If any of the promises and statements made during several months of negotiation are to be treated as part of the concluded contract. Secondly, the general rule is that there is no particular form demanded for contracts, which can run the gamut from a deed specialty or writing to a purely oral contract7. If the contract is embodied in a deed or wholly in writing might other evidence be adduced to establish oral statements as terms or is the writing a final manifestation of intent. Thirdly apart from the express terms upon which the parties have agreed, there may be implied terms derived from a variety of sources, which dictate the content of the contract. In a contract for the sale of goods, for example the minimum standards of quality are prescribed by ss 13 and 14 of the sale of Goods Act 1979. Fourthly, the contract may contain exclusion clauses by virtue of which one party seeks to exclude or restrict a liability which he would other wise owe to the other. Legislation increasingly dictates that implied in contracts thereby seeking to maintain minimum standards of performance. Even statutory intervention can be linked with the parties' intentions and classical theories of contract it the legislation codifies the common law- such a tenuous connection is becoming increasingly unrealistic, particularly in those situations where such implied obligations cannot be excluded. The sale of Goods Act 1979, ss 13 and 14 and the Unfair contract Terms Act 1977, ss 6 and 12 which restrict the exclusion of the implied terms contained in ss. 13 and 14. It is clear; therefore that legislation may impose a paradigm contract by way of implied terms. A court may be required to imply a terms into a contract if the parties have specified only the rudimentary obligations or a disagreement ensues from which it is apparent that the parties have not provided for the contingency at issue. There are two broad categories of implied term. First those implied terms where the courts attempt to implement the unexpressed intention of the parties. Here there is on question of imposing a solution or attempting to make the contract more reasonable. Instead the implication must be necessary and not inconsistent with the express terms of the contract. Notorious reasonable and lawful, Hutton v Warren 8, Les Affreteurs Reun is society Anonyme v Walford 9 The second broad category is more upon the notion that in certain relationships and contract the law seeks to impose a model or standardized set of terms as a form of regulation -this approach resembling more closely an implication of reasonable, rather than necessary, terms (Liverpool City Council v Irwin)10, Shell UK Ltd v Lostock Garage Ltd 11 and the views expressed therein regarding such implied terms). It is apparent that the central issue throughout implied terms is the extent to which interventionism in contract is appropriate when freedom of contract is still the philosophical notion underpinning the law of contract. Part 4: Answer: To evaluate the question it is necessary to discuss about Privity Rule. The privity rule consists of two parts, (a) That a contract between A and B, cannot impose on obligation on C without C's consent, i. e., C cannot be sued. Taddy v Sterious (b) That a contract between A and B cannot confer rights or benefit on C. C therefore cannot enforce this in his favor according to Tweddle v Atkinson. Before Tweddle v Atkinson 12 there were some cases, which suggested that a third party can enforce a term of the contract in his favour but Tweddle changed the scenario and subsequently got strong judicial support in many HL cases, like Dunlop Tyre Com Ad v Selfridge Co Ltd 13 Midland Silicons Ltd 14 etc. Denning LJ made several attempts to allow a 3rd party the right to sue. The house of lands itself chiticised then the existing rule in many subsequent cases. However the general rule remained until the enactment of the 1999 Act. Need for reform: Though it is desirable to maintain the first rule of privity, a stranger to a contract should not normally hove contractual obligations forces upon him on her, without his her consent, the second rule has beer widely criticised, i, e., a third party cannot enforce a term of the contrail paced numerous criticisms. This criticism has come from academies, law reform bodies and the judiciary. Finally, as a result of the law commission's recommendations, parliament passed the contracts (rights of third parties) Act 1999. Effect of the 1999 Act: the Act left the first rule of privity completely untouched its central purpose is to enable a third party to acquire rights under a contract if the parties to the contract so intended. According to s. 1(1) (a), C 15 can enforce a term of the contract if the contract expressly provides that he may. If the contract contains such a provision, there is on further requirement. According to s. 1(1) (a), C may enforce a term of the contract if the term purports to confer a benefit on him, but his right to do so under this section is subject to subsection 1(2), by which C has on such right, "if on a propel construction of the contract it appears that A and B did not intend the term to be enforced by C." So, if C can bring himself within s. 1(1) (a) or s. 1(1)(b), he can enforce a term of the contract between A and B in his favour. If the judgement goes in his favour, there will be available to him any remedy that would have been available to him in an action for breach of contract if he had been a party to the contract s. 1 (5). There are many other provisions in the Act, which need on discussion while answering this question. But all of them are concerned with the rights of third parties as a whole. Now, if a third party cannot bring himself within the provisions of this Act he can rely on the established exceptions of the privity rule. This is why; the previous rule and its exceptions are still in force today and not beer abolished. When a 3rd party falls both within the Act and the exception, he can have a choice. From the above discussion if can be concluded that the new Act is only concerned with the half part of the privity rule, the rule that a third party cannot be sued is left intact. The act only dials with the right sue of the 3rd party 16. But, second rule has not been abolished. The rule and its, exceptions all remain. The Act only creates a large and wide ranging exception to it. Though the Act practically made the scope of the second rule very narrow, it still exist there. Reference: 1) Robert B. Ansley, Thomas J. Kelleher & Anthony D. Lehman Construction Law: A Practical Guide for the Construction Professional (2nd Edition) 17 2) Construction Contracts: Law and Management - by Will Hughes, J. R. Murdoch 18 Read More