Construction Contracts Law Of Sitting Duck Verses ScottFree

Issues with the Construction Contract Documentation

Discuss about the Construction Contracts Law of Sitting Duck verses ScottFree.

The 1996 Housing Grants, Construction and Regeneration Act 1996 defines Construction Contracts as an agreement with a person on construction operations. This includes agreements on advice on building, engineering, interior and exterior works. Corporate Raider Associates LLP (Corporate Raider) is an acquired takeover with shares from Sitting-Duck Construction Targets Limited (Sitting Duck). The company is facing a legal case featuring a failed contract in which there are engineering faults arising from one of its construction projects. One of its main obstacles lies in deficiencies within the wording of various items of its construction contract documentation. The emergence of design defects in a city center residential development involves liabilities, which it must cover. These are latent and inherent at the time of takeover hence could prove costly.

The first solution would be adjudication in order to find a clear route. This involves resolving issues in the joint contract that the two parties have without litigations. However, the stated contract has loopholes and may have left out critical binding agreements. For example, Sitting Duck wants shared responsibilities with the contracted engineers ScottFree who want exclusion because they claim that they were just on an employment task. Therefore, citing exclusion based on employment contract, in this case gives ScottFree an edge. The important liability in this respect as stated in the provision states that the liability refers to the professional skills, professional care and diligence in design elements under ScottFree Appointment.

The UK Construction industry is full of reports of incomplete construction projects and persistent imperfections in design. This report indicates that flaws arising due to poor engineering by the consulting partnerships is questionable hence a liability of the ScottFree firm. A report review by HMSO on the UK construction industry points out that the construction team must have clear design responsibilities. This calls for constant refining of principles, including the Standard JCT and ICE forms. The document designed to serve as a contract between Scott Free and Sitting Duck should have made provisions for formal conditions such as satisfactory durability as defined in the construction industry. Therefore, the residential construction needs to guarantee value for money in order to avoid creating industry scandals. Stakeholders with interests concerns over the documentation targeting whom to take liability for remedial modifications on the structure. Sitting Duck takes overall responsibility for design to the developer, funders, and occupational tenants for design, building contract and collateral warranties and contractual arrangements. The 1986 provisions for the prohibition of conditional payment points out that “A provision making payment under a construction contract conditional on the payer receiving payment from a third person is ineffective, unless that third person, or any other person payment by whom is under the contract ( directly or indirectly ) a condition of payment by that third person is insolvent”

Solutions for the Legal Case

Challenges in making adjudications in this case arise because consulting engineer’s team involved in preliminary work are ScottFree Consulting Partnership. These are behind the structural defects. Since the shares were purchased under an agreement, Corporate Raider bears no liability because he is vendor who accepted documentation ‘warts and all’ which refers to all the bad qualities inclusive. Therefore, the novation agreement involves Sitting Duck and ScottFree and its basis is on respective interests in liability, focus on novation agreement amongst project developers. The case would not favor Sitting Duck because Issues in focus include continued responsibility in the design input, and appointment agreement made with Sitting Duck rather than the project developer. The Housing Act also has provisions that are not applicable to the residential occupier contracts. As Sitting Duck seeks to have ScottFree responsible for all or some faults because of the potential costs, it needs to consider the details in novation agreement.

The agreement had limited provisional terms. Similar to a case between Homer Burges Limited and Chirex in which an adjudicator ordered Chirex to pay for liabilities despite having cited Section 105 of the Housing grant for exception , Sitting Duck had to face liability by focusing on professional skills, care and design diligence. Adjudication in this case would consider the appointment of ScottFree as the consultant. ScottFree stands as the original developer and as the employer in the construction contract. However, liabilities cater for issues accruing before and after the date of the Novation Agreement. The parties stand bound by the terms of Appointment in all respects as if the contractor (Siting Duck) has always been part of the Appointment as the original developer. From the clause, the liability of the consultant in the Appointment whether before or after the Novation Agreement date is under the contractor. The consultant only agrees to perform the Appointments as a subcontractor. ScottFree is bound to act in all respects as if he is not the contractor. He denies liability to design flaws and correction of structural flaws and suggests Alternative Dispute Resolution.

In this case, ADR is ideal for the construction industry when adjudication fails. It provides guidelines for such disputes in line with the Joint Contract Tribunal (JCT). Possible solutions under ADR include mediation and conciliation. In this case, the two parties can engage in a non-binding process with two provisions. First is the use of a conciliation that caters for all subcontracts and a contract that is fully available to Sitting Duck as the main contractor and Scott Free as the subcontractor. ADR is faster, reliable and supports JCT and the International Federation of Consulting Engineers (FIDIC). Mediation receives legislative support from a neutral party.

Alternative Dispute Resolution

Therefore, Sitting Duck would most likely lose the case in a court of law because of the complexity involved. Litigation may not be the better option for this case, but adjudication and arbitration are alternatives. The contractor was ignorant of the documentation process and negligence is not an excuse. However, there are provisions for Alternative Dispute Resolution, which has the approval of the JCT and FIDIC contracts. This makes it ideal for the case between the aggrieved parties. Missing details in the novation agreement is cause of worry because there are no binding regulations. However, Sitting Duck has an opportunity to reconcile and make things right with the client under Alternative Dispute Resolution. The right to a court proceeding stands but it is advisable to take the least costly, effective and faster procedure.

The dispute arising in the construction contract brings out gaps in the contractual documentation and the legal process. First Sitting Duck needs to amend the novation agreement by making additional protection. This will prevent future disputes is one way to solve the dispute. However, there is need to strengthen and protect the legal system, especially provisions for contracts and agreements. The construction industry faces challenges contract systems because of the complexities involved in drafting the legal provisions between the contractor and developer. The case between Shaw and Another v MFP Foundations gives an example in which the court had to make reconsiderations for the case when the defendant appealed against the 1996 Act. The following provisions are critical in a contractual Agreement.

The adjudication process needs a clear process for dispute resolution. This needs to cover present and past agreements including elements in the Housing Grants, and Construction grants. In addition, amendments to the agreement needs to incorporate business laws in the competitive industry. Among these is the multi authored contracts to cover an international standard.The inclusion of various documents is also important because it checks for any gaps left out. The JCT and FIDIC standard forms contain building contracts with procedures for arbitration, adjudication, and mediation. The construction process has expected benefits for the client and contracting team. For example, there is the right of contractor to receive payment and the right of the client to receive a satisfactory job represents party interests for effectiveness of the legal system.  

The right to a court action

Parties involved in a contract have their rights covered in the Scotts Law and United Commercial Code (UCC). Section 2 of the UCC defines a contract in terms of rights for the seller, buyer and parties involved.It has prohibitions in terms of security interests during purchase of equipment, materials and subcontracting personnel.

Conclusion

Group and personal obligations

Obligations on personal and group responsibilities in the United Commercial Code suggest modification.Legal personnel involved in the preparation of the construction documents need to consider the group obligations and personal responsibilities. A construction contract holds that the contract needs constant supervision. This includes non-personal obligations such as company obligations as covered under the Atwal v Rochester case where unexpected consequences may happen.

Modification of obligation

Some of these may feature changes in market prices, which affect contract payments, or medical conditions that may delay the construction work. The 1943 Law Reform on Frustrated Contracts allows for modifications of provisions in a contract information but with restrictions to fill in gaps.Parties involved include subcontractors, hybrid construction and prime contracts.

Client role

Maintenance of the project involves commercial interests as well as the client. The basis for

The 1943 Law Reform on Frustrated Contracts was rights and liabilities of parties involved.

Performance is important in any contract and construction law covers professionals as seen in the case featuring Advanced Technology Structures Ltd v Cray Valley Products Ltd discusses the commercial interests and appropriate legal aides for business contracts in the industry.  

Adjudication and responsibility for design

The role of adjudication in dispute resolution is to highlight the need to protect agents from liability. In the construction case example, adjudication is not an option because of the existing gaps, which complicate the gaps. NECC Parties escaping legal liability face risks hence require protection from injustices. Making legal decisions is critical in business and covers damage claims and breach of contract, as was the case between Technotrade Ltd verses Larkstore Ltd. A closer look at potential areas of conflict highlights the need to polish on priority documents for inconsistencies and discrepancies. Clauses identified need to provide specifications for impact assessment. Amendments made on the adjudication act was for reducing default case in dispute resolution. A good agreement recognizes the principles and issues of contentions to distinguish points from the underlying petitions.In a construction contract, parties have time to seek adjudication for a dispute and the adjudicator has to act in impartiality

Tripartite contract

This is the replacement of one contract with another with reference to parties’ statements. It captures litigation in different kinds of laws including environmental, public, regional statutes, and statutes and building regulations. In a case between Ruttle plant Hire Limited and The Secretary of State in Environment, food and rural affairs, the judgement involved operations from multiple stakeholders from different business elements. The parties had to deal with the agreed issues on contract as well as other contract claims. Participating teams shared commercial relations and have a team working under practical legal circumstances. Novation contracts have third party rights and obligations under letter agreements that vary from one contract to another. Sometimes a case may have two distinct relations hence the need for alternative negotiations.A comparison of agreement design from the parties shows the legal standards exercised and a description of the legal duties. Part of the clauses should highlight the duty of care and the technical documents need constant review in order to align the contractor requirements with the stipulated provisions.

Arbitration comes in during the preliminary stages of a dispute to settle the dispute. Based on substantiated claims, arbitration applies applicable disputes with reference to matters in the agreement. Arbitration also makes provisions for the reopening of failed adjudication disputes. Amendments on arbitration clauses influences the choice of dispute methods. Legal researchers point out that adjudication is popular in JCT contracts because it gives parties the liberty to resolve issues outside litigation.Documents involved when designing a contract contain an Arbitration Agreement, which is an addition to the adjudication process and is separate from the court process.

Liability

Professional consultants such as Macroberts and Blyth & Blyth Ltd develop content that reassures stakeholders of quality operations in the construction industry. With a wide variety of segments, the company caters for residential, commercial, public, and institutional constructions. The building process compiles building, architectural and engineering contracts for England and Wales. Legal issues may come from expected delays, disruptions, management issues, and design problems.

Critical Evaluation of the Adjudication and Statutory Payment Provisions of the Housing Grants, Construction and Regeneration Act 1996

Originating with Sir Michael Latham’s report the 1996 Housing Grants amendment, Adjudication stands as a form of dispute resolution used in legal cases. In the UK business, environment disputes are inevitable and may arise due to negative alliances, mistrust, failed projects and underperformance. Like other major industries, the construction sector is a success and constitutes a variety of partnerships. The management of complex projects involves multiple teams. This calls for teamwork and effective documentation processes. Adjudication is effective for large and small contracts. It involves a neutral party who stands in as an adjudicator in disputes regarding contractors, subcontractors and others.  Adjudication as a unique dispute resolution process has characteristics of both arbitration and expert determination depends on a number of factors. Contract provisions need adjudication as well as arbitration for legal justice. Adjudication may revolve around general provisions such as payments, delays, mandatory, change and circumstantial events.Supported by other dispute resolution elements like arbitration it carries provisions that call for arbitration or expert involvement.

Adjudication cases reveal gaps in contract and subcontracts.For party’s right to participate in cessation, payment, scheme consent and home repairs. Issues of non-repayment, suspended performance, and construction operations. When monitoring the success of the adjudication and statutory payments, provisions of the 1996 Act emerge with critical issues featured in its provisions, application of contracts and certified clauses. Adjudication Provisions in the construction industry support structural, technical and structural contracts. It also has segments available in its related secondary legislation such as Housing Renewal Grants, which accounts for liabilities in all construction segments.Among these is the supervision of relevant work, and the application of building regulations. There are professionals across all levels of construction including the preliminary stages of construction such as the design and preparation need.

The difference between arbitration and adjudication lies in the type of agreements between parties. Although the latter is a legal right, the agreement arbitration involves a contract form.  

Arbitration needs to make provisions for contract amendments in order to account for uncertainties as stated by the JCT simple and specialty contracts. Simple contracts include signed statements with formalities that parties to the contract make. This could over contracts made for more than 10 years. In this case, a dispute featuring subcontractors referred to adjudication within the 1996 Housing Grants provisions. The case had to make distinctions of the different operations involved in a construction contract. In cases where adjudication was unsuccessful, arbitration steps in as an alternative.  Arbitration challenges include limited power to enforce compliance, make interim changes and rights of appeal.

Having multiple remedies in law covers numerous claims under different circumstances. Finding remedies to certain claims may require both or different solutions. Contractors in the construction industry understand the provisions of the JCT form which state, “The contractor shall not without the written consent of the employer assign this contract, and shall not without the written consent of the architect…sublet any portion of the works”. The JCT standard form caters for a variety of disputes and circumstances. Having undergone numerous amendments, it features tax matters and reference points for different players. The Joint Contracts Tribunal (JCT) supports the adjudication of cases between businesses. Its standard form has clarity and familiarity that supports its use, drafting process and risk calculations. Statutory assignments have priorities and claims with reviews that make provisions of an equitable set off. Done in monetary measures, adjudication has rules that support monetary settlements. Claims and counterclaims for damages in cases lead many into debt because of the amount paid in compensation. As a result, it is advisable to apply or make petitions that suit parties involved.

The decision to choose between arbitration, arbitration and litigation also depends on the expert advice offered.

Chapter I and II of the Housing Grants provides guidance on the appointment of an administrative receiver, making wind up, sequestration of estate partnerships and individual insolvents. Additional changes cater for post legislative implementation as seen in the case of William Hare verses Shepherd Construction where the enactment of the housing grants contract forms provision became difficult.

According to the Housing Grants, Construction Regeneration Act prohibiting contractors includes “making payment under a construction contract conditional on the payer receiving payment from a third person is effective, unless that third person, or any other person payment by whom is under the contract (directly or indirectly) a condition of payment by that third person, is insolvent”

A proposal covers those making payment arrangement, the procedures involved, and decisions made during meetings. Seeking debt advice is one way in which clients can overcome legal and financial consequences. The retention of payments in the construction industry covers preliminary as well as general provisions for corporate liability.New changes made support an implementation review that incorporates transparency in the payment system. It connects affordability to adjudication in order to analyze the value of dispute in adjudication and the contract dispute. Sometimes a claim may exceed the demands on the ground the adjudicator may award excess in demand. In this case, provisions for an appeal have limitations based on the Insolvency Rules.

Acute financial and cash flow difficulties of the late 1980s and 1990s, led to the Latham report, which came about with changes on contracts effective with dates. This pioneered major shifts in the construction industry in which there was widespread partnerships for cost saving purposes. Case examples indicate new contracts with ways of making payments, invoice payments and payment notice, withholding notice, final dates, client notices, management contracts and non-payments among others. In the AG of Belize v Belize Telecom, an exchange of shares led to financial difficulties and legal complications due to the failure to make the necessary changes in irrevocable appointments. Amendments done in 2011 reflected on the construction of contracts, adjudication clauses and mode of construction contracts.

Changes to cater for Arbitration clauses incorporated NECs with arbitration, adjudication, and mediation with advantages. Changes in the 2011 amendments of the Construction Act included clarity and transparency with a payment framework with removed restrictions, clarity of payment contents and a clear accounting process for withholding novices. These changes made it possible for complex and superior contracts to thrive under the industry regulations and multiple party agreements.Statutory rights include provisions for interim and periodic payments in making payments. This allows subcontractors to make payments efficiently. Construction Act changes comprise of improved payment practices, draft constructions, and consultations within the industry. Increased financial disputes such as the 1976 Campbell verses Edwards: CA shows the courts ability to determine value in accordance to the law of contract.

In conclusion, the adjudication and statutory payment provisions of the Housing Grants, Construction and Regeneration Act 1996 has strengths and weaknesses. Although it strengthened the legal system giving it provisions for statutory payments, there are still challenges involving complex global contracts in which multiple players from different regions are parties. Multibillion-dollar construction project developments encounter dispute resolution challenges, which call for an integrated approach to adjudication and arbitration. Still, the 1996 Act serves as a model for reviews after implementation of contracts.

Legislation

Construction Contracts, Housing Grants, Construction and Regeneration Act, Chapter 53 Part II Chapter V, Stationery Office Limited, 1996 p, 60

Bankruptcy (Scotland) Act, Part 1, Section 22, 2016 https://www.legislation.gov.uk/asp/2016/21/contents

Housing Grants, Construction and Regeneration Act, Part II, p 65, 1996

Scottish Government, Construction Contracts Legislation, August 22, 2016 https://www.gov.scot/Topics/Built-Environment/Building/Building/Legislation

Uniform Commercial Code (UCC), Article 2-Sales, 2002, Part 401 https://www.law.cornell.edu/ucc/2/2-106

Law Reform, Frustrated Contracts Act 1943, C. 40 https://www.legislation.gov.uk/ukpga/Geo6/6-7/40/contents

Statutory Instruments, Housing, England and Wales, 1996 [28989] https://www.legislation.gov.uk/uksi/1996/2889/made

Case Law

Holmer Burgess Limited v Chirex (Annan) Limited, [1999] ScotCS 264

Shaw and Another v MFP Foundations and Piling Ltd: CHD 6 Jan 2010

Craig Bradshaw, Top Construction Tips, January 11 2018, https://www.scottishlegal.com/2018/01/11/blog-top-construction-contract-tips/

Advanced Technology Structures Ltd v Cray Valley Products Ltd (1992) 63 BLR 59, CA

Technotrade Ltd v Larkstore Ltd, [20060 1 WLR 2926 (CA)

Ruttle Plant Hire Ltd V Secretary of State for the Environment, Food and Rural Affairs [2004] EWHC 2152 (TCC)

Langston Group Corporation v Cardiff City Football Clube Ltd [2008] EWHC 535 9 ch. https://www.oeclaw.co.uk/images/uploads/documents/CCFCjmnt.pdf

Shaw and Another v MFP Foundations and Piling Ltd, 2010

 Total M & E Services Ltd v ABB Building Technologies Ltd (Formerly ABB Steward Ltd), [2002] EWHC 248 (TCC): 87 Con. L.R. 154

ABB Power construction Ltd v Norwest Holst Engineering Ltd, 2 T.C.L.R. 831; 77 Con. L.R; 20; (2001) 17 Const.

Geldof Metaalconstructie NV v Simon Carves Ltd [2010] EWCA Civ 667, [2011] 1 Lloyd’s Rep 517

William Hare Ltd v Shepherd Construction ltd [2009] EWHC 1603 (TCC)

Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10, [2009] 2 All ER 1127, [2009] 1 WLR 1988 at [22] https://www.lawteacher.net/cases/attorney-general-of-belize-v-belize-telecom.php

Internet Resources

Latham Michael. Constructing the Team, Industry Review of Procurement and Contractual Arrangements in the UK Construction Industry. Final Report, HMSO, July 1994

Latham, Michael, Constructing the Team, Constructing Excellence, 2015 https://constructingexcellence.org.uk/resources/constructing-the-team-the-latham-report/

RIC, The use of ADR in JCT and FIDIC building contracts 20 July 2017. https://www.rics.org/en-OCE/news/news-insight/comment/the-use-of-adr-in-jct-and-fidic-building-contracts/

Diab, George, Critical Review of Adjudication and Mediation Methods of Dispute Resolution in Terms of Time,, Costs, Effectiveness and The Overall Interests of the Parties, International Journal of Civil Construction and Estate Management, Vol 4, pp, 1-17, March 2016 https://www.eajournals.org/wp-content/uploads/Critical-Review-of-Adjudication-and-Mediation-Methods-of-Dispute-Resolution-In-Terms-Of-Time-Costs-Effectiveness-and-the-Overall-Interests-of-the-Parties.pdf

Uff, John, Construction Law, 12^th Edition, Sweet & Maxwell, London, 2017, Chapter 2, pp, 69-84

Bell, Mathew, Beyond the nutcracker: International harmonization of construction industry payment legislation, Society of Construction Law, UK, 2014, 188

Nourshad Ali Naseem, David, Finnie, The New Zealand Construction Contracts Amendment Act, 2015-For Better or Worse? Construction Economics and Building, Vol 15 (4), 2015, https://epress.lib.uts.edu.au/journals/index.php/AJCEB/article/view/4544/5133

Atkin Chambers Hudson’s Edition, Sweet & Maxwell, London

Cartwright, John; Remedies in respect of defective buildings after Linden Gardens, Construction Law Journal, 1993

Michael Rycroft, Michael and Ndekugri, Issaka, The JCT Standard Building Contract, Law and Administration, 2009, Elsevier,

Other Resources

Appointment Contract, Scott Free and Sitting Duck

Cambridge English Dictionary, Warts and All, Cambridge University Press, 2018

PIRC Consultation, 2011 Changes to Part 2 of the housing grants, construction and regeneration Act 1996, A consultation to Support a post implementation review, Department for Business, Energy & Industrial Strategy, October 2017, file:///C:/Users/BAT/Downloads/2098397_892799199_2017.10.29PIRConsultationFINAL.PDF

 [1976] 1 WLR 403, [1976] 1Campbell v Edwards: CA 1976