We Need Get Better Contracts

According to Chris Scott, the latest survey results indicate that the industry still has a lot of work to do if we want to avoid more disputes.

The 2013 NBS National Construction and Law Survey is now available, and it reveals that nearly half of those polled had experienced an increase in disputes in the previous year. Apparently, 81 percent of these disagreements arose between the client and the main contractor, with the assessment of delay, extension of time, and contract variations cited as the primary sources of contention.

According to the survey, the use of industry-standard contracts is not increasing. Less than half of respondents used collaborative contracting methods, and even those who did used them only 10% of the time.

I have to call some of this into question. The news that disputes are on the rise contradicts my observations of the construction industry in the North West of England, where I am told that TCC Judges have less work and arbitrators have little or no work, with many not having seen an arbitration in years.

It is commonly stated that if a tool is simple to use, it will be used frequently. Contracts are the same way. They are underutilised because industry standard documents are difficult to obtain, require extensive reading, and, when used, require the same volume of paper in amendments.

The industry has strived to produce a simple contract that gets the job done on time and on budget. However, this goal has been hampered by wordy and partisan drafting or amendments. The industry has been pushing for collaboration, but this appears to be impossible to achieve due to the procurement routes that have been imposed on the public sector – and the way the contracts in use are tainted.

JCT promotes collaborative contracts, and NEC claims it offers a successful partnering and collaborative suite of documents. They are also based on declarations that the parties act “in good faith,” “in a spirit of mutual trust and cooperation,” or “with trust and respect.”

So, why are there still disagreements? I believe this is due to the fact that these declarations are mostly for show and are rarely enforced by the courts.

It is often said that if a tool is simple to use it is frequently employed. It is the same with contracts. They are not used enough because the industry standard documents are not readily available, are heavy reading, and when used, have attached the same volume of paper in amendments.

A simple contract aimed at getting the job done on time and on target is what the industry has strived to produce. But this aim has been obstructed by wordy and tendentious drafting or amendments. The industry has been driving towards collaboration, but this seems to be impossible to achieve because of the procurement routes that have been forced upon the public sector – and because of how the contracts in use are adulterated.

JCT does promote collaborative contracts, and NEC suggests it provides a successful partnering and collaborative suite of documents. They are also predicated on declarations that the parties act ‘in good faith’, in ‘a spirit of mutual trust and co-operation’ or ‘trust and respect’.

So why are we still seeing disputes? I believe it’s because these declarations are so much window dressing and in the main are not enforced by the courts.

RELATED ARTICLE:
Water Source Heat Pump

I don’t believe NEC, as it is currently used, is truly collaborative – and I don’t believe the industry does either. We could still wait and see if the advertised benefits are real or fictitious as people become more familiar and comfortable with them. However, if the rise in disputes is any indication, they are not currently yielding the desired results.

While I advocate for the use of written communication, documented collaboration can only go so far. A document cannot compel parties to cooperate and, in fact, will fail if the agreement contains provisions that allow one party to subjugate the other. True collaboration takes time and requires early input from everyone in the supply chain. There would be fewer changes and delays if all parties engaged early, provided constructive input, and relayed it to the draughtsman.

There would be fewer real disputes – or, at the very least, fewer disputes that could not be resolved through mediation – if changes in requirements were properly provided for, risk and reward were fairly addressed, and appropriate dispute resolution methods were tailored to the complexity of the issues.

The best we can hope for in the real world is that contracts continue to evolve. This begins with everyone insisting on written agreements and employers soliciting early input from all employees.

Last Updated on December 28, 2021

Indra-Gupta

Author: Indra Gupta

Indra is an in-house writer with a love of Newcastle United and all things sustainable.

Scroll to Top