Legal Practice Notes

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Taking- Over Certificate The certificate issued by the Engineer under a FIDIC form (or by the Employer under the Silver Book) confirming that the Works, or a Section, have reached the level of completion required by the contract, together with the date this milestone was met; akin to a JCT certificate of practical completion. See Practice Notes: FIDIC contracts 2017—time and FIDIC contracts (pre-2017 editions)—time. Taking off The noting of measured dimensions extracted from drawings or schedules. This is the initial step in assembling bills of quantities. Target cost contract A form of cost reimbursable contract where the contractor is paid the actual cost of delivering the works, subject to a target cost agreed by the parties at project...

ARCHIVED This Practice Note is archived and no longer maintained. The Construction case tracker presents key 2016 judgments relevant to construction lawyers, arranged with the most recent first. See also Construction law case tracker Construction case tracker—2020 [ Archived] Construction case tracker—2019 [ Archived] Construction case tracker—2018 [ Archived] Construction case tracker—2017 [ Archived] Construction case tracker—2015 [ Archived] Public procurement cases can be found in the UK public procurement case tracker and the EU public procurement case tracker. December 2016 Case | Judgment date | Summary SSE Generation Limited v Hochtief Solutions AG [2016] CSOH 177 — 21 December 2016Defects: The Scottish Court of Session ( Outer House) held that, under Option M of an NEC2 contract, the contractor was liable for defects only where it failed to exercise reasonable skill and care in meeting the works...

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Parent company guarantee ( PCG) A PCG is an agreement between a parent company and a beneficiary under which the parent promises the subsidiary’s performance owed to that beneficiary beneath a separate contract between them (for example, a building contract). If the subsidiary fails to fulfil its obligations to the beneficiary, the parent company can be obliged either to perform those obligations itself or to repay the beneficiary for losses arising from the subsidiary’s failure to perform. See subtopic: Parent company guarantees in construction projects. Partial possession Partial possession arises when the employer takes control of one or more parts of the works before the whole project reaches practical completion; for instance, letting a completed storey to a tenant while work...

This Practice Note explores frequent challenges arising from insolvency within the construction sector. It examines the implications and usefulness of adjudication as a route to recovery where insolvency may be looming, and offers practical pointers on actions to take if a party becomes insolvent. The guidance is general in nature and will not suit every construction insolvency scenario, and it should be weighed carefully against the specific facts of each case. Accordingly, this Note should be read in context and not as a one-size-fits-all solution. Introduction to the construction industry and construction procurement Construction schemes typically involve numerous contributors performing distinct functions across procurement and delivery. A non-exhaustive set of participants includes: employer—the person or organisation seeking delivery of the project and engaging professionals to perform the works. The employer may be from the public or private sector and is often referred to as ‘the...

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Key date In construction contracts, the phrase can denote a deadline for starting or finishing a specific, identifiable task or milestone. It is additionally a defined expression in NEC3/ NEC4 (see clause 11.2(9) of the NEC3 Engineering and Construction Contract ( ECC) and clause 11.2(11) of the NEC4 ECC). When adopted, the parties set it out in the Contract Data section, together with the condition that has to be satisfied by the relevant date. Key Performance Indicators ( KPIs) Benchmarks and markers by which the contractor’s performance under the contract is assessed and reported. Used chiefly as a tool to measure and to encourage improvement. Most commonly applied in partnering contracts......

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Quantity surveyor ( QS) Individual or practice appointed by the employer, otherwise a cost consultant......

What standard form framework agreements are published? There are several recognised standard form construction framework agreements: the JCT Framework Agreement ( JCT FA) the ACA Framework Alliance Contract ( ACA FAC-1) the NEC3/ NEC4 Framework Contract ( NEC FC) JCT FA The JCT FA was originally issued in 2005 as a non-binding document, aimed chiefly at private sector use. After criticism that it was unsuitable for public sector adoption (a major user of frameworks), it was updated in 2007. A further 2011 revision aligned it with the amended Housing Grants, Construction and Regeneration Act 1996 ( HGCRA 1996), and the latest version appeared in 2017, described as the 2016 edition to align with the 2016 JCT suite. JCT guidance confirms the JCT FA is intended for procuring works over a period. Call-off contracts made under the JCT FA are to be governed by the JCT form most...

What is a framework agreement? A framework agreement is a high-level umbrella arrangement entered into by a party and one or more suppliers (which may include contractors, sub-contractors, suppliers or consultants). It sets the terms that will govern an ongoing relationship under which the employer may award one or more contracts to the supplier(s) over time. In construction, such arrangements are often made between employers and multiple contractors, suppliers or consultants, and sometimes between contractors and a range of sub-contractors, suppliers or consultants. Despite the variety of relationships that can sit within a framework, for simplicity this Practice Note uses the terms ‘employer’ and ‘supplier’. Framework agreements appear in the private sector, yet they are more prevalent in the public sector, used by central government departments and bodies as well as local authorities. Although, in most instances, a framework agreement is not itself a...

Claims by contractors for time and/or money Requests from contractors seeking additional time and/or payment are commonplace on construction projects. A time claim seeks an extension of time ( Eo T) to complete the works (or achieve a contractual milestone) where a delay event has occurred, whereas a money claim typically pursues reimbursement of extra loss and/or expense incurred by the contractor due to delay or disruption to the works. Such a claim might likewise be brought by a sub-contractor under a sub-contract. These claims are usually founded on an express contractual entitlement—ie the contract specifies situations in which the contractor is entitled to time and/or money—and they are advanced and decided in accordance with the contract terms. They do not, of themselves, involve a breach of contract or require there to be a dispute between the parties, although they may ultimately give rise to...

This Practice Note explores the mechanics of construction due diligence and the ways a construction lawyer becomes involved when a client is acquiring a property, or purchasing a company holding property assets, as part of a transaction. It also highlights the principal points to address when drafting construction provisions in a sale and purchase agreement, which will vary according to the stage reached by the relevant construction works. What is construction due diligence? Where a client intends to buy a property (or properties) or to buy a company whose assets comprise properties, due diligence must be undertaken to confirm the properties are satisfactory and that good title can be secured, in each case as part of a careful and proper pre-acquisition review. If the property includes a building completed less than 12 years ago, or if significant construction activities have been undertaken at the...

This training pack offers template Power Point decks with accompanying notes for trainers delivering an introductory session on construction disputes to trainee solicitors or anyone new to the construction sector. It explores a construction disputes lawyer’s role and the typical issues that surface on projects, and outlines fundamentals of adjudication, dispute boards, proceedings in the Technology and Construction Court ( TCC), construction arbitration, and alternative dispute resolution ( ADR). The resources come in Power Point and Word formats and are entirely customisable. Use the link below to download the presentation: Contents The work of a construction ......

ARCHIVED: This Practice Note has been archived and is not maintained. This year’s annual round-up surveys notable developments from 2017 and looks ahead to 2018. It covers: new standard form construction contracts issued in 2017 case law on design, delay, payment and adjudication anticipated amendments to building regulations and fire safety laws Lexis Nexis® content updates, with highlights from the past year and what is planned over the next 12 months Reviewing 2017 Standard form construction contracts What happened? The NEC4 contracts were released on 22 June 2017, while FIDIC’s 2017 suite ( Red, Yellow and Silver Books) was launched on 5 December 2017 and published shortly afterwards. What are the practical implications? NEC4 supersedes NEC3, first published in 2005 and updated in 2013. The NEC has characterised NEC4 as an evolution rather than a revolution, with most revisions aimed at reflecting good practice and/or...

Introduction Delay analysis is undertaken by planning/programming specialists to determine the extent of delay to a project and the reasons for any movement to the completion date. This involves defining the critical path through the works and identifying delay events that fell on that path, thereby causing critical delay. Numerous methodologies exist and are typically chosen at the planning/programming analyst’s discretion. Several are endorsed by industry guidance, including the Association for the Advancement of Cost Engineering International ( AACEI) Recommended Practice 29R-03 and the 2nd Edition of the Society of Construction Law Delay and Disruption Protocol ( SCL Protocol). Specialist programming software, such as Primavera P6 or Asta Powerproject, is commonly employed to undertake a delay analysis, although, as this Practice Note explains, some techniques place greater reliance on the programmes than others. The six main delay analysis methodologies are: Impacted...

This Practice Note examines the principal features of the Contracts ( Rights of Third Parties) Act 1999 ( C( RTP) A 1999), together with the way third party rights are deployed in construction agreements and appointments. It explores the use of third party rights as a substitute for collateral warranties, the character of the entitlements actually afforded to third parties, and approaches to step-in rights in this setting in practice and drafting and related considerations. The C( RTP) A 1999 arose from the Law Commission Report: ‘ Privity of Contract: Contracts for the benefit of Third Parties’ (1996), which reviewed the doctrine of privity of contract and made recommendations for its reform. The C( RTP) A 1999 took effect in November 1999 and applies to agreements and contracts entered into on or after 11 May 2000. In a construction setting, the Act supplies an...

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z D& B See Design and build beneath. DBO See Design, build and operate beneath. Date for completion/completion date Means the date stated therein in the building contract (typically within the contract particulars/contract data) by which the contractor must finish the works—ie the point by which practical completion is to be achieved (see Practice Note: What is practical completion?). This completion date may change over the course of the project, for instance where the contractor receives an extension of time. Should the works not be completed by the completion date, the contractor is liable to the employer for liquidated damages (where the contract so provides) or, failing that, general damages for delay in completion (arising from breach of contract...

The characteristics of construction projects, their contracts and the surrounding legal framework mean that parties frequently pursue claims. This Practice Note points to the issues construction practitioners most often face, including defects, requests for extra time to finish the works (or employer claims for late completion), variations and payment. Less typical claims, which are not addressed here, can include copyright infringement, nuisance, trespass and health and safety matters... Claims against contractors and consultants Employers may bring claims against one or more members of the construction team during the project or after completion. Common allegations, outlined below, include: Defects in the works or design shortcomings Delay in completing the works Third parties may also have recourse against the construction team. For instance, if a scheme is sold following completion, purchasers or tenants may take an assignment of rights under the...

Spotting the early symptoms of client insolvency First and foremost, a consultant should stay vigilant about the client’s financial condition Pay attention to continuing rumours about the client’s position, whether reported in the press or spread by word of mouth Monitor official communications to shareholders and the stock market, for example profit warnings Identify any unexpected or uncommercial omissions from the employer’s project Remain aware of the employer’s non-payment or late payment to the contractor or other parties, on this scheme or on other schemes run by the employer If the employer suspends the scheme without sufficient explanation or a sound commercial rationale, this may indicate reluctance to fund further work Substantiate concerns by obtaining a Dun & Bradstreet search/report, which should disclose, for instance, any unsatisfied court judgments against the...

Arbitration may proceed under self-run ad hoc mechanisms or through institutional rules and processes. In real-world settings, the preference for ad hoc or institutional models shifts across sectors and turns on the character of the dispute. This Practice Note explores how institutional and ad hoc arbitration differ, with a focus on construction matters, and weighs the respective pros and cons. For broader commentary on institutional and ad hoc approaches, see Practice Note: Comparing institutional and ad hoc arbitration. What is institutional arbitration? An institutional arbitration is overseen by a recognised arbitral body and unfolds in line with that body’s prescribed procedures and rules. Typically, the parties’ contract includes an arbitration clause naming a chosen institution to act as administering authority. That designation provides administrative support and a procedural framework throughout the proceedings......

What is arbitration? Arbitration is an alternative method of resolving disputes to litigation, in which parties refer their disagreement to an arbitrator, or a panel of arbitrators, to decide the matter instead of a court. It operates by consent, meaning it applies only where the parties agree that it should. Origins in England Arbitration developed from international and local tribunals created during the Middle Ages as substitutes for the royal courts. Merchants pressed for a different forum for commercial disputes because the royal courts were slow, ill-adapted to mercantile issues, and difficult to access for those not resident in England. A key characteristic of those tribunals was the relaxation or setting aside of strict formalities in commercial matters so that justice could be delivered swiftly. The practice later obtained a statutory footing in England when Parliament enacted the first Arbitration Act in 1698. Later statutes...

Construction and O& M disputes in energy projects—case tracker This Practice Note points readers to the Construction case tracker, outlining major and pivotal rulings in construction-related disputes (including......