Legal Practice Notes

This Practice Note examines the most common route to enforcing an adjudication decision—issuing a Part 7 claim with an application for summary judgment in the TCC, as set out in section 9 of the TCC Guide. It also addresses the scope to secure enforcement by seeking a mandatory injunction, in appropriate cases, and the impact of a clause conferring foreign jurisdiction on adjudication enforcement proceedings. Although a Part 7 claim is the usual, and preferred, route to enforce an adjudicator’s decision, there are some infrequently used alternative avenues available. Parties may make an application to the TCC for declaratory relief under CPR Part 8 where a significant dispute of fact is improbable and no money judgment is pursued—see Practice Note: Adjudication and Part 8 proceedings. In certain cases it might be feasible to rely on insolvency proceedings to secure compliance with an...

Disputes frequently arise on construction projects over the level of care a contractor or consultant must exercise in relation to design. Typically, the contractor or consultant will seek to avoid taking on a 'fitness for purpose' duty for the design, whether stated expressly or arising by implication. This Practice Note considers what the so‑called 'fitness for purpose' obligation involves, who is bound by it and who is not, where it originates, and why contractors and consultants prefer not to accept it. It also sets out example clauses and evaluates whether a contractor should agree to them. The precise volume of design carried out under a contract or appointment can fluctuate, yet the standard applied to that design remains consistent across the board. Where does the fitness for purpose obligation come from? The fitness for purpose obligation stems from legislation on product liability and the...

FIDIC Yellow Book 2017, reprinted 2022 with amendments FIDIC released the second editions of the Red, Yellow and Silver Books in December 2017. Three years on, in December 2022, it issued reprints. The 2022 reprint of the Yellow Book should be cited as ‘ The Conditions of Contract for Electrical & Mechanical Plant and for Building and for Engineering Works, Designed by the Contractor Second Edition 2017, reprinted 2022 with amendments’, and it also carries the original ISBN. The amendments comprise: the errata published in December 2018 (see News Analysis: Errata to FIDIC 2017 contracts published) the further errata released in June 2019, and additional errata together with new amendments made in November 2022 (stated to take effect from 1 January 2023), which FIDIC characterises as ‘improvements & clarifications in response to industry feedback and to support the increased use of 2017...

This Practice Note considers exclusion and limitation of liability in business-to-business ( B2B) contracts. This Practice Note offers guidance on the common law and statutory controls that govern exclusion and limitation of liability clauses (also described as limitation of liability clauses, limitation clauses, exclusion of liability clauses, exclusion clauses and exemption clauses), including the Unfair Contract Terms Act 1977 ( UCTA 1977) and the Misrepresentation Act 1967 ( MA 1967). It identifies which provisions amount to exemption clauses and sets out three central matters to address when drafting them or assessing them in a dispute: incorporation construction statutory controls It also outlines the courts’ treatment of attempts to exclude or restrict liability for certain breaches (eg fundamental breach) and for different heads of loss (eg direct loss, indirect and consequential loss, loss of profits, loss of use and loss of data). It notes common...

EPC (engineering, procurement and construction) arrangements are often conceived as turnkey deals—the contractor delivers the facility and the employer simply turns the key to a fully completed plant. The employer’s objective in such agreements is to shift virtually all project risks to its EPC contractor, with the price reflecting that allocation. In practice, the works are delivered complete, most risks are allocated to the contractor, and the price is set to reflect this. However, the contractor may still advance claims under turnkey terms in defined situations. This Practice Note examines what claims EPC contractors might bring, the steps for initiating a claim or resolving a dispute about one, and the key issues to address when negotiating the contract in light of these potential claims. Possible claims EPC contracts are typically drafted so that the bulk of risk sits with the contractor. There are solid...

This Practice Note examines the Engineer’s role under the FIDIC Red and Yellow Books 2017. For further detail on these forms, please see the Practice Notes: FIDIC contracts—introduction to the Red Book 2017 and FIDIC contracts—introduction to the Yellow Book 2017. The FIDIC Silver Book 2017 features an ‘ Employer’s Representative’ rather than an Engineer and is outside the scope of this Practice Note (see Practice Note: FIDIC contracts—introduction to the Silver Book 2017). For guidance on the Engineer’s function under the FIDIC Red and Yellow Books 1999 and the FIDIC Pink Book 2010, consult Practice Note: FIDIC contracts (pre-2017 editions)—the role of the Engineer. Who is the Engineer? Under Sub- Clause 1.1.35, the Engineer is the person named in the Contract Data and appointed by the Employer to act as Engineer for the purposes of the Contract, including any successor appointed pursuant to Sub- Clause 3.6 [...

This Practice Note examines Employer termination under the 2017 FIDIC Red, Yellow and Silver Books. It does not cover any right to terminate at law. In addition, the Contract’s governing law may influence how certain clauses operate. For further detail on Employer termination in the pre‑2017 Red, Yellow and Silver Books, refer to Practice Note: FIDIC contracts (pre‑2017 editions)—termination by the Employer. Who can terminate? Both the Employer and the Contractor may bring the Contract to an end. Clause 15 prescribes the Employer’s process, while Clause 16 sets out the Contractor’s. The Employer may additionally terminate under Sub‑ Clause 11.4 [ Failure to Remedy Defects], and either Party may terminate under Sub‑ Clause 18.5 [ Optional Termination] and Sub‑ Clause 18.6 [ Release from Performance under the Law]. For termination by the Contractor, see Practice Note: FIDIC contracts...

This Practice Note explores equivalent project relief ( EPR) in PFI and PF2 schemes, outlining the purpose of these provisions, the composition of an EPR clause and key cases. EPR clauses usually provide that a sub-contractor may claim compensation, an extension of time ( EOT) or relief from termination under the sub-contract only to the extent that Project Co has secured the equivalent remedy under the Project Agreement; in short, Project Co bears no greater liability to the sub-contractor than the Authority bears to Project Co. Note that in the 2018 Budget (delivered on 29 October 2018), the government announced it would stop using PFI or PF2 for new projects (see News Analysis: Budget 2018—what does it mean for infrastructure and housebuilding?). However, existing PFI and PF2 projects continue to run. What is equivalent project relief? To understand what equivalent project relief means, it is...

Within the suite of papers required to arrange funding for a development or construction scheme, the facility agreement sits as the core instrument and is regarded as the principal document. It spells out the terms and conditions on which a lender is willing to finance the scheme and participate in the project. Its provisions address every element of the funding package, and are not confined to construction-specific matters but extend across the entire arrangement. Banking and finance solicitors will prepare and negotiate the finance clauses, while construction specialists review the construction terms, acting for the lender or the borrower as required. For guidance on the overall structure and layout of a facility agreement, see Practice Note: Structure of a facility agreement for construction projects. In this Practice Note, ‘borrower’ denotes the party taking the loan, that is, the entity borrowing the money....

How design is addressed under the NEC ECC Some families of construction contracts provide distinct, dedicated forms to be used where the contractor assumes responsibility for both designing and building the works—the JCT suite, for instance, and by way of example, includes the widely recognised JCT Design and Build form. By contrast, the NEC3/ NEC4 suites adopt a notably different approach and omit a standalone design-and-build contract. NEC4 did add the Design Build and Operate ( DBO) contract; however, as its title implies, that form is expressly intended for situations where the employer wants the contractor not only to design and construct but also to operate/maintain an asset for a period. The NEC Engineering and Construction Contract ( ECC) is deliberately crafted to be suitable whether the Contractor has no design role, takes on the entire design, or assumes...

On construction projects, flaws commonly emerge within the works. Under the majority of building contracts, the contractor must return to site to make good any defects that arise or are identified within a set period after practical completion of the works, and to do so on site. In the industry, this window is usually called the defects liability period ( DLP), though JCT contracts call it the rectification period, NEC uses the term defects date, and FIDIC refers to the defects notification period. What is a defect? As the DLP deals with remedying ‘defects’, it is important to consider the scope of that term and to understand what it is taken to cover. ‘ Defect’ is not a technical term of art and there is no single ‘standard’ definition of what amounts to a defect in building works. In general terms, however, a defect is work that does not...

Contractors’ claims for loss and expense arising from disruption to the progress of the works rank among the most argued and sensitive topics in construction law, frequently sparking disputes between employer and contractor. This Practice Note sets out the fundamentals of loss and expense claims and considers how they are addressed under the JCT, NEC and FIDIC forms. For a comparison of the detailed provisions in each of these forms, see Practice Note: Comparison between JCT, NEC and FIDIC time and money events. For a checklist of the principal issues to assess in relation to a contractor’s claim for reimbursement of loss and expense and/or an extension of time, see also Practice Note: Time and money claims. What is loss and expense? Loss and expense is the expression commonly used (particularly in the JCT contracts) to denote the additional costs a contractor incurs because the...

For any dispute resolution lawyer scrutinising a contract during a dispute, two central questions arise: what does the contract signify? what rights and obligations do the parties hold under it? This Practice Note explains the five interpretative principles the courts employ to address those questions, first articulated by Lord Hoffmann in 1998 in the leading case Investors Compensation Scheme v West Bromwich Building Society ( ICS), with additional guidance from later Supreme Court authorities: Rainy Sky v Kookmin (2011), Arnold v Britton (2015) and Wood v Capita (2017), as outlined further below. Read this alongside Practice Note: Contract interpretation—rules of contract interpretation. Depending on the forum in which your case is heard, you should also consider any extra requirements—see below: Court specific guidance. ICS v West Bromwich Building Society— Lord Hoffman's guiding principles In 1998, in Investors Compensation Scheme v West Bromwich Building Society, Lord...

Introductory guide to construction law This starter guide to construction law is intended for trainee solicitors and anyone new to construction as a practice area. It concentrates on the core principles that govern construction law and projects, and signposts numerous links to Lexis+® UK Construction material offering fuller coverage of the subjects discussed. New starters will also find the Overviews within each topic on Lexis Construction+® UK useful. If a point sits outside this brief guide, head back to the Construction+® UK homepage to explore more content, or use Lexis Ask to put a question to the team. For those handling disputes, see also Practice Note: Construction disputes—new starter guide. Topics covered What do construction lawyers do? Parties to a construction project Project structure (procurement) Pricing Timeline of a construction project Is there any specific...

Delay analysis Delay analysis is a specialist technique used by programming/planning experts to pinpoint delay and its cause(s) in relation to a project’s works completion date. In turn, this enables responsibility under the contract, and liability for the delay, to be determined. Software tools are routinely employed within delay analysis. This Practice Note outlines the principal delay analysis methodologies in common use, together with the key terms that accompany them. It adopts the framework set out in the second edition of the Society of Construction Law Delay and Disruption Protocol ( SCL Protocol), guidance section 11. For further details on the SCL Protocol, see Practice Note: Delay and disruption in construction projects— The Society of Construction Law Delay and Disruption Protocol. Owing to their highly technical character, none of the delay analysis methods lends itself to a simple or brief...

On construction schemes, it is routine for the contractor, principal sub‑contractors and consultants (together called warrantors in this Practice Note) to issue collateral warranties to a range of parties, including funders and purchasers (termed beneficiaries in this Practice Note). See Practice Note: What are collateral warranties? Collateral warranties establish a direct contractual relationship between the beneficiary and the warrantor. Without that link, a beneficiary would have no basis to pursue the warrantor if it fails to properly discharge duties under the building contract, sub‑contract or professional appointment, as applicable. Typically, a collateral warranty includes an undertaking mirroring obligations in the underlying agreement, and also addresses issues such as copyright licences, assignment, professional indemnity insurance, and, in some instances, a clause granting step‑in rights. This Practice Note sets out what step‑in rights involve, identifies which parties in a construction project are commonly given such rights, and...

The second edition of the Pre- Action Protocol for Construction and Engineering Disputes (the Protocol) also introduces a formal mechanism allowing the parties to appoint a ‘protocol referee’ to direct how the Protocol should be conducted or to resolve allegations of non-compliance with it. The Protocol Referee Procedure ( PRP) was devised and issued jointly by the Technology and Construction Solicitors’ Association ( Te CSA) and the Technology and Construction Bar Association ( TECBAR). A copy of the PRP is available here: The referee’s decision is binding upon the parties for the Protocol process—see The decision of the referee below. Until a decision is issued by the referee, however, the PRP does not affect the Protocol process; the time limits continue to run in accordance with the Protocol ( PRP para 1.6). How does a party start the...

This Practice Note describes the nature of a Referral Notice (often called a ‘ Referral’) and outlines the material it ought to include. It further offers pragmatic guidance on preparing a robust Referral Notice, and examines the timing for service together with the ramifications of missing the service deadline. For a Precedent Referral Notice, refer to: Referral Notice for an adjudication. It explains what the document should contain and how best to present it in practice to achieve effective drafting. What is the Referral Notice? After a Notice of Adjudication is issued and an adjudicator has been appointed, the dispute must be formally put before the adjudicator. The Referral Notice is the written referral of the dispute to the adjudicator, intended to present the referring party’s case with clarity and brevity. In effect, it combines the party’s pleadings, evidence, and submissions in a single...

A concession is a form of public private partnership ( PPP) A concession constitutes a type of public–private partnership. It is a long-term contractual arrangement between a government (or another public sector body) and a private sector operator that has been granted the concession. See Practice Note: Forms of Public Private Partnerships. For the purposes of this note, references to “public authority” include contracting authorities and utilities within the meaning of the relevant procurement legislation. Under a concession agreement, the state grants a private entity—the concessionaire—exclusive rights to create an asset and to run and maintain it for the agreed concession term. At times, a concession relates only to the operation and maintenance of an existing asset, though it is frequently for delivering a new asset, followed by its operation and upkeep. Alternatively, it may encompass both new and existing assets. The duration of a...

’ No greater liability’ provisions frequently appear in collateral warranties (and third party rights memoranda). They are intended to ensure the warrantor’s exposure under the warranty mirrors, and does not exceed, that assumed in the original contract. Yet the wording of such provisions is often contested and, on occasion, gives rise to outcomes the parties did not intend. Poorly balanced formulations may, therefore, distort the allocation of risk that the parties thought they had agreed from the outset or envisaged. Collateral warranties—general principles Commercial practice generally accepts that when a party grants a warranty collateral to an underlying agreement, it should not assume obligations or duties under that warranty that are broader or endure longer than those owed under the original agreement. Indeed, professional indemnity policies commonly withhold cover for collateral warranty claims where the liability stems from obligations more burdensome than those in the...