Nature Of Construction Contracts Assignment Sample

Introduction of Nature Of Construction Contracts

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The construction contract is between two parties in a legal way that is based on conditions and policies recorded in the documents. The two parties are the contractors and the property owners. The main issue that revolves around the construction contacts is the financial problem that the owner does not expect to give before the completion of the construction project. The completion of the work in a construction contract is based on the performance of the workers that take months or sometimes years to complete the definite project. This takes too much time due to the unavailability of funds or the slow performance of workers for the work to complete. There is a certain limitations in contract agreements regarding the construction work such as foreseeability, the certainty of damages, election of remedies, mitigation of damages, power of avoidance and agreement of the parties. According to the limitation act of 1963, the action for breach of contract is brought within three years from the breach date. The construction contracts contain various terms, clauses, and conditions that may have a different interpretation of understanding the terms that lead to ambiguity. Construction contracts sometimes consider as standardized jurisdiction that leads to differences in practices, requirements and enforcements.

Aims and Objectives

• To understand the different types of construction contracts and their nature.
• To understand the basic principles of valid contracts and application of procurement to a construction asset.
• To develop a basic understanding of construction contract similarities and differences with the ordinary sales contract.

Background

Ordinary contract means taking an operational contract in any business firm that has specifications and clarification between the trade creditors and the contractors. The general description of the construction contract are details of the construction project work, special and general conditions of agreement, features and tie limits of the project work, penalties and payments for delivery delays and others. The construction project in the contract is of different types such as commercial, agricultural, residential, and institutional or any category of the civil department. The formation of contracts consists of acceptance, offer, consideration, and a mutual intent between both parties. the different types of construction contracts types are design-build contracts, Incentive construction contracts, Lump sum contracts, Unit Price contracts, cost plus contracts, guaranteed maximum price contracts, time and material contracts, and integrated project delivery contracts. The report highlights the different types of construction contracts and legal obligations n of the party in the construction process. There are different elements of the construction work such as contract formation, contract scope and specifications, payment terms, performance and delays. Changes and variations, dispute resolution, Insurance and Indemnity, and last is termination. The principles that form the contract laws inconstruction are intention, agreement, consideration, genuine consent legality and capacity.

Analysis and synthesis of the task

Different issues arise related to the construction contract and o proper understanding and research of the project has been done. The different construction laws documented in the literature safeguard the interest of the people and the stakeholders. Construction lien law is the law that depicts the claims of the contractors, subcontractors and suppliers for the work and the materials that they are not paid by the owners[1]. The contractors in the case study can claim the government for not getting enough money for the resources that put the project exceeds beyond a time limit f completion. Public procurement law is the law for public works that involve government and the contracting party.

This law includes bidding requirements,regulations related to public construction contracts, and public contract award procedures. Occupational health and safety laws are regulations that govern workplace safety and health in the construction industry. These laws set forth requirements for employers and contractors to provide a safe working environment, comply with safety standards and protect workers from hazards on construction sites. The sites where the construction process is developed obey the laws and follow all the legal procedures for the safety of the workers on the site. The key attributes in the construction process include planning or design, followed by pre-construction, construction, procurement and post-construction. Planning or designing involves the outline of the dimension of the building including the spaces and the rooms and other parts of a building. Second is the schematic design that depicts the space through a sketch with the help of materials, colours and textures. Third is a contract document that feature the final drawing that has been analysed.

Different contractors do the bidding in this design phase. The second is the pre-construction phase that commences after the completion of the bidding round that includes the following identities as the contract manager, project manager, superintendent, field engineer and manager related to health and safety. The project team must prepare the construction site before the work commences and deals with all the issues related to environment and soil testing. The procurement phase involves ordering, purchasing and renting all the materials that are needed for the project by the project team and must ensure to have sufficient tools and services to complete the project within the period. The fourth stage is the construction phase, which involves the great role of contractors and subcontractors to deliver the work according to the planning done by the engineers in the planning stage. The major challenge of this construction phase is mismanaging scheduling that happens because one construction team waits for another construction team to complete the part of the project. The post-construction stage involves the demobilization of the project, the return of rental equipment and the project site is clean up. The construction laws have a time frame that the project work needs to complete. However, due to the low availability of workers and the limited resources the work does not comply with the construction project.

Ordinary contract laws are traditional contract laws that are obsolete and unworthy and are the feature of the unsystematic study. Construction contract involves construction, renovations, repairs, and alteration additions whereas ordinary law also includes similar elements including the cost and quality of labour and the materials. The different types of construction laws that are documented are joint contract tribunals, an association of consultant architects, and an institute of civil engineering[2]. The joint contract tribunal has six versions that mainly include local and private versions of authority. This contract helps to deliver a construction project accurately by assigning the task to all the different stakeholders concerned in the project. ACA or association of architectural contracts includes flexible contracts with the industry. ACA is used most commonly by architectures that are expansive and creative projects.

The principles of ICE include pricing the job according to the structure, responsibility for designing is the sole responsibility of civil engineers, compensation for the work is not allowed against the benefit of life for the engineers, and according to law, and all disputes are managed by the engineers. Sales contracts and construction contracts are examined by the civil and common-law system in a joint meeting between International sales and commercial sales transactions and International Construction contracts. According to the German civil code, sales contracts are discrete, isolated transactions, whereas construction contracts are complex and feature long-term contracts. The sales contract has a definite object and price whereas the construction contracts have flexible objects and prices. The rate may vary in construction contracts depending on the availability of resources, the cost of labour and the time it takes to complete the project. Construction law defines cooperative construction whereas the sales contract has the effect of doing discrete transactions. The disputes that arise in the sales contract are solved after the performance of the contract whereas the constructional contract involves problem-solving and decision-making tools during the construction process.

The complicity of management during the development process is solved in the case of a construction law project. Both parties affect every stage of judicial consideration by the rights and obligations affected by building contracts and sales contracts. There are lots of differences and similarities between the different laws that help the project to be complete by adhering to the laws and regulations set by the jurisdiction. The case that has been studied had set construction contract laws but due to poor performance, the project could not be completed in time and now the claims of the contractors against the non-payment of materials cannot be resolved. The lateness in completing the project also happened because of rainy days, and unforeseen situations that led to de-growth of the project work.Construction contracts should outline the process for making changes or variations to the scope of work, including procedures for obtaining written approvals, pricing changes, and documenting changes to the contract[3]. Different disputes arise during the construction of the project and that leads to dispute resolution mechanisms such as litigation, arbitration and mediation.

Construction contracts may include provisions for termination, such as termination for convenience or termination for cause, which outline the circumstances under which a party may terminate the contract and the consequences of termination. The legal document of the construction work does not maintain the standard of the construction law which leads to differences in practices, legal requirements and enforcement[4]. This lack of standardization can create challenges for parties operating in different jurisdictions or working on multi-jurisdictional projects. Construction contracts may not always provide adequate protection for small or disadvantaged parties, such as subcontractors, suppliers, or owners with limited bargaining power. This can result in unequal bargaining positions and may leave these parties vulnerable to unfair contract terms or abusive practices. Construction projects are subject to various local regulations, permitting requirements, and zoning laws that may impact the construction contract.

Conclusion and recommendation

Construction law provides a framework for the industry to regulate legal matters between the organization owners and the contractors. Various laws have been discussed for providing a better solution for both parties to complete the project ethically. The period is an important concern in the constructional law project that delivers the completion of work in real-time, however, due to any unforeseeable circumstances such as rains, low availability of labour, improper designing of the project or any other general conditions may lead the project to take lots of time to complete. The case study takes the constructional contract than the ordinary contract as the project was a very large and long-term project. The owner does not have to take the load of the workers, unlike ordinary sales contract work. The regulations and rules under the jurisdiction of the conduction law are perfect and applicable to the modern industry than the ordinary law project. This law is made to be specific about the materials and supplies of the materials between both parties and it sets a specific value, goods, services, and performance of the jobs. The recommendation is that the period for the allotted work needs to increase so that the legal laws comply with the mis-happenings during the construction project[5]. The construction laws provide a region to the stakeholders for fair, balanced and timely payment based on the performance of the work that keeps the interest of both the contractors and the owners. The contract agreement also has a termination policy for both parties until both feel that the work done as per the standards of the contracts[6]. This contract under commercial law protects the retention of the money and aids in a cost-effective legislation process for the disputes of the common people. The execution phase of the contract commences after the signature from both parties in a legal format and ends the contract after the completion of the project. The CDM regulations confine two main laws during the construction of the project work and that is the construction phase plan and healthy and safe life. The principles of UK law include agreement followed by contractual intention and the last is a consideration. Contractual laws are also known as civil laws as it is prosecute between individuals in a legislative format. The construction law needs to engage both parties before staring any big project as it provides better services and always adheres to the jurisdiction.

References

• “About” (HeinOnlineMarch 8, 2021) <https://heinonline.org/HOL/LandingPage?handle=hein.journals%2Fibl16&div=84&id=&page=> accessed April 20, 2023
• Ahmadisheykhsarmast, S. and Sonmez, R., 2020. A smart contract system for security of payment of construction contracts.Automation in construction,120, p.103401.
• McNamara, A.J. and Sepasgozar, S.M., 2020. Developing a theoretical framework for intelligent contract acceptance.Construction innovation.
• Di Giuda, G.M., Pattini, G., Seghezzi, E., Schievano, M. and Paleari, F., 2020. The construction contract execution through the integration of blockchain technology.Digital transformation of the design, construction and management processes of the built environment, pp.27-36.
• Luo, H., Das, M., Wang, J. and Cheng, J.C., 2019. Construction payment automation through smart contract-based blockchain framework. InISARC. Proceedings of the International Symposium on Automation and Robotics in Construction(Vol. 36, pp. 1254-1260). IAARC Publications.
• Yap, J.B.H., Lee, K.Y., Rose, T. and Skitmore, M., 2022. Corruption in the Malaysian construction industry: investigating effects, causes, and preventive measures.International Journal of Construction Management,22(8), pp.1525-1536.
• [1] Ahmadisheykhsarmast, S. and Sonmez, R., 2020. A smart contract system for security of payment of construction contracts.Automation in construction,120, p.103401.
• [2] Luo, H., Das, M., Wang, J. and Cheng, J.C., 2019. Construction payment automation through smart contract-based blockchain framework. InISARC. Proceedings of the International Symposium on Automation and Robotics in Construction(Vol. 36, pp. 1254-1260). IAARC Publications.
• [3] Di Giuda, G.M., Pattini, G., Seghezzi, E., Schievano, M. and Paleari, F., 2020. The construction contract execution through the integration of blockchain technology.Digital transformation of the design, construction and management processes of the built environment, pp.27-36.
• [4] Yap, J.B.H., Lee, K.Y., Rose, T. and Skitmore, M., 2022. Corruption in the Malaysian construction industry: investigating effects, causes, and preventive measures.International Journal of Construction Management,22(8), pp.1525-1536.
• [5] McNamara, A.J. and Sepasgozar, S.M., 2020. Developing a theoretical framework for intelligent contract acceptance.Construction innovation.
• [6] “About” (HeinOnlineMarch 8, 2021) <https://heinonline.org/HOL/LandingPage?handle=hein.journals%2Fibl16&div=84&id=&page=> accessed April 20, 2023