Construction Contractual Dispute - Report Example

PROFESSIONAL REPORT ON A CONSTRUCTION CONTRACTUAL DISPUTE Executive Summary This report provides advice to our client who has been given a misleading set of information that was used to draft a construction contract under the JBC SBC 2011. This is due to the negligence of the contractor and our client has to avoid responsibility for a breach of contract by failing to meet the defined deadline. The study uses various concepts and ideas in construction contract laws that provide important information and guidelines on how to deal with such issues. It is identified that the JBC 2011 requires our client to act by notifying the architect or contract manager of the issue and conflict and ask them to investigate it. After investigation, they will have to come up with a new deadline which must be communicated to the project owner and the contractor in order to adjust the deadline without having to impose any obligations to our client. Introduction In this report, our firm examines the case of a client who is going through a legal dispute with a contractor and sponsor. As Quantity Surveyors, our firm will have to examine the legal issues relating to the client’s legal dispute and come up with recommendations or an advice that will enable the client to resolve the issues and attain the best results possible. This study will examine the fundamental legal issues and critique relevant legal provisions relevant to the case at hand. From there, the relevant rules will be applied to the case and a logical advice will be presented to the client. Fundamental Legal Issue Based on the facts, our client is a construction firm that has entered a JCT SBC 2011 standard contract form to convert an existing building from a store in Portsmouth to a computer-controlled warehouse. A fundamental aspect of the contract is to ensure that the had to be buried in 1,000 mm of iron or steel otherwise the guidance system was going to malfunction. This is a fundamental requirement for the success of the project. The project was estimated to be completed in 32 weeks and prior to that, the contractor certified that there were no issues with iron or steel in the surface of the floors our client was to work on. However, at the commencement of the project, it was identified that there were indeed a lot of steel and metal in the floor and this was to delay the project for another 4 weeks. The issues are: 1. The implication of this mistake on the construction contract; 2. The obligations of the parties under JCT rules and regulations; 3. How the dispute can be managed in order to ensure that the four-week delay can be ameliorated whilst the project continues. Legal Rules: Relevant Construction Laws At the most basic level, a contract is “a contract is a legally binding agreement made between two or more people who intend it to have a legal effect and for which the law will provide a remedy in the case of a breach or failure to deliver a term of the contract” (Ryan, 2013, p. 3). A contract involves the presentation of terms by two parties and this involves the offer and acceptance of considerations from both parties before a contract can be formed and discharged. Where one party fails to discharge his part of the culture, there is a frustration or breach of contract and this gives rise to claims for damages. A construction contract is defined as “any contract where one person [this includes a corporation] agrees for valuable consideration to carry out construction works which may include building or engineering work for another” (Loots & Charrett, 2009, p. 23). Construction work includes construction, alteration, repair, restoration, maintenance, extension, demolition or dismantling of building structures (Loots & Charrett, 2009). Construction contracts are often completed by standard-forms of contracts that are used as the fundamental framework through which a given contract is to be designed and interpreted. In this particular situation, the relevant set of rules is the JCT SBC 2011, which provide the framework for creating a tailor-made set of terms that defines the obligations of both parties of the contract. The JCT SBC 2011 provides information about how cases relating to delays and definition of events that must warrant legitimate extensions in projects. Clause 25 of the JCT SBC 2011 states that there could be extension of contract times if the demands for the extension are consistent with Clauses 2.27 and 2.28 of the JCT SBC 2011. Clause 2.27 of the JCT states that a contractor has to give notice where it is apparent and clear that they can reasonably foresee an event that will cause the completion date to change in any way or form (Alciatore & Histand, 2012). Clause 2.18 requires the contractor to give a notice at least 12 weeks before the event occurs. Clause 2.28 on the other hand provides an obligation to the contractors to fix a new completion date when it is apparent and clear that a contract is going to delay. This comes with the definition of the concept of “Relevant Event”. This is an event that genuinely causes a need to inevitably change the construction completion date and time due to circumstances that compel such changes to occur to the deadline. In the case of Walter Lilly and Co Ltd V Giles Patrick Cyril MacKay and DMW Developments Ltd, the issue under contention was how to assess a relevant event and define an approach to dealing with issues ( Walter Lilly & Company Limited v Giles Patrick Cyril Mackay and DMW Developments Ltd, 2012). In this case, both parties had acquired expert evidence that stated that the delay was caused by the other party. In this case, the court had to conduct a factual analysis of what caused the delay and evaluate them in order to determine the sequence for these delays (Potts & Ankrah, 2014). This is done by assessing the facts and providing a conclusion of whether there was a genuine case for a delay or not. Through this, the parties could define the extent of the delay and state how the case and its related issues could be dealt with. The assessment and extension must be done by the architect or contract administrator who will objectively evaluate and analyze the circumstances and grant the extension (Clause 2.18.6.2). Once an extension is granted, the project’s timeline changes significantly and there is the need to modify the process in order to ensure that the construction term are met as expected and as required. Case Analysis From the facts of our case, our client has entered a contract that was based on a 32-week timeline. The default position is that our client has entered a legal contract under the JCT and they will have to discharge it as and how it is written out in the JCT SBC 2011. However, based on the facts on the ground, there is a seemingly legitimate situation that gives our client a genuine case to demand an extension. This is because the contract was based on falsified and untrue information that was either recklessly or negligently made. This is because the contractor did not take reasonable care enough to evaluate and analyse the appropriateness of the floor to host the project at hand. Rather, misleading assumptions were made to the effect that everything on the floor is genuinely right and appropriate. This turned out to be false and as such, there is the right for our client to raise this issue in order to avoid taking liability for the failure to meet the deadline as it obvious appears. Thus, at the earliest sign of a delay occurring, our client needs to raise an issue by writing to the architects or the contract administrators and notify them of this issue (Clause 2.27). The architect or contract administrators will have to examine this claim and assess whether it is logical or not. If it is found to be logical, the architect will have to work with the contractors to define a new set of terms and circumstances in order to find a new way of dealing with this situation and also provide important directions and guidance for the definition of a new deadline. The new process will also include the identification of a new timeline and a new system that will be done through an objective review of information and data. This will provide a new extension for the completion of the project. Based on the facts, it can be argued that the fault was from the contractor. Hence, the liability for the extension will have to be presented to the contractor and the contractor must take responsibility for it in full. Recommendations From the facts of the case, our advice to the client as Quantity Surveyors is that there was a mistake and the cause of the mistake has to do with misleading information that was given by the contractor rather than our client. Hence, the client is not liable for any damages in this situation. However, they have obligations to raise the issue under Clause 2.27 of the JCT SBC 2011. This will require that our client raises the issue the moment there is an anticipatory breach observed. Based on these circumstances, we will advice our client to raise this issue by writing to the architect or the contract manager. After this, there is the obligation for our client to submit all the evidence that shows that the contractor made mistakes. This could include expert evidence and once it is forward to the architect or contract manager, they have an obligation to inform the contractor and get the contractor to accept responsibility for the failures and issues. With this, there will be the impetus for the architect or the contract manager to define a new deadline system that can be used as a means for defining the end of the project. This is done by the acceptance of the situation as a “Relevant Event” as per Clause 2.28 of the JCT SBC 2011. Finally, the dispute must be managed by the identification of a new timeline that will be most appropriate for the parties. In this situation, it appears that the architect or the contract manager will have to fix the four-week delay into the mainstream set of activities in the existing deadline. This will culminate in the identification of a system and process for the analysis and completion of the project according to a new schedule that will take into cognisance the new arrangements and the new deadline. In conclusion, our client will have to act on the evidence of the anticipatory breach and raise the fact that there is going to be a delay with the architect or the contract manager. This will culminate in a series of acts that will be carried out to adjust the deadline and make sure that the four-week excess time that is imperative now will be integrated into the system and provide a process through which the work can be done according to new standards and expectations. Bibliography Walter Lilly & Company Limited v Giles Patrick Cyril Mackay and DMW Developments Ltd (2012) EWHC 1773 (TCC). Alciatore, D. G. & Histand, M. B., 2012. Introduction to Mechatronics and Measurement Systems. 2nd ed. London: McGraw Hill. Loots, P. & Charrett, D., 2009. Practical Guide to Engineering and Construction Contracts. London: CCH Wolters Kluwer. Potts, K. & Ankrah, N., 2014. Construction Cost Management: Learning from Case Analysis. 3rd ed. London: Routledge. Ryan, D., 2013. Essential Principles of Contract and Sales Law. 3rd ed. London: iUniverse Press. Read More