BUILDING LAW ENCYCLOPAEDIA - Buch.de€¦ · We have described the book as a Building Law Encyclopaedia: thus it is intended that it should provide information in reasonable depth

BUILDING LAW ENCYCLOPAEDIA

David ChappellMichael CowlinMichael Dunn

A John Wiley & Sons, Ltd., Publication

BUILDING LAW ENCYCLOPAEDIA

David ChappellMichael CowlinMichael Dunn

A John Wiley & Sons, Ltd., Publication

This edition fi rst published 2009 2009 David Chappell, Michael Cowlin, Michael Dunn

Wiley-Blackwell is an imprint of John Wiley & Sons, formed by the merger of Wileys global Scientifi c, Technical and Medical business with Blackwell Publishing.

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Library of Congress Cataloging-in-Publication Data

Chappell, David (David M.) Building law encyclopaedia / David Chappell, Michael Cowlin, Michael Dunn. p. cm. Includes bibliographical references. ISBN 978-1-4051-8724-4 (hardback : alk. paper) 1. Building lawsGreat Britain. I. Cowlin, Michael. II. Dunn, Michael. III. Title. KD1140.C484 2009 343.4107869dc22 2009023691

A catalogue record for this book is available from the British Library.Set in 10 on 11 pt Times NR MT by SNP Best-set Typesetter Ltd., Hong KongPrinted in the United Kingdom1 2009

www.wiley.com/wiley-blackwell

iii

PREFACE

We offer this book as a useful tool for anyone who works in or deals with construc-tion contracts in any capacity. Thus it is intended that architects, quantity surveyors, employers, contractors and sub - contractors will fi nd it a useful and practical source of information. We hope as well that lawyers may also fi nd it useful, perhaps as a starting point to research or as information on a standard contract or term that is not familiar.

In order to keep the book to a manageable, and affordable, length we have not included direct references to engineering contracts, but hope that professionals who are involved in the engineering industry, particularly engineers, will also fi nd it helpful.

We have described the book as a Building Law Encyclopaedia : thus it is intended that it should provide information in reasonable depth on a wide and extensive number of legal terms, principles, phrases and issues that are common in the con-struction industry. In keeping with an encyclopaedia we have included a broad range of words and phrases (ordered alphabetically by word, not by letter) that we believe will be encountered in all areas of building contracts. They are mostly, although not exclusively, contractual, but we have not, in general, included Latin terms as they are better dealt with in a specialist legal dictionary. We do not suggest that we have covered all the entries that may be possible, or that the entries carry any particular weight. We do hope, however, that the entries will clarify the meanings of terms and where necessary provide suffi cient information and references for the reader to investigate a term further.

We hope that this book will be different from the numerous legal dictionaries that are available, in that it deals specifi cally with legal defi nitions and issues as they relate to building, and it provides references to cases and other authorities that will enable the reader to dig deeper. We have included a few tables and illustrations where it appeared to be helpful, but should stress that the book is not a textbook; there are numerous excellent textbooks available, and we have provided a list of such books.

In all cases the decision to include or leave out any term has been ours, and inevi-tably there will be words, phrases or terms that ought to have been included, or otherwise. We would welcome any suggestions for inclusions (or deletions) in a future edition. Where words or terms within a text have their own specifi c entry we have indicated this by including (qv) after the relevant word or term.

We have attempted to include all developments in the law at the time of publica-tion. Our biggest problem was how to deal with the proposed changes to the Housing Grants, Construction and Regeneration Act 1996, which are going to have an impact on the industry and on many of the terms included. We have decided, after much deliberation, that as the legislation has not yet been enacted, it is proper that we should ignore the proposed changes.

As far as standard contracts are concerned, we have referred to as many as we can, including some that theoretically are out of date but which are still in common use. Those referred to include the current suite of JCT contracts, SBC, IC, ICD, MW, MWD, as well as ACA, PPC 2000, GC/Works/1 and NEC. However, unfor-tunately Revision 2 to the JCT contracts was published too late for inclusion.

We are of course indebted to all those that have gone before us the authors of leading textbooks, articles and commentaries. There are also a number of people to

Preface

iv

whom we owe particular gratitude. We should particularly mention Paul Jensen FRICS FCIArb Barrister, who has kindly written a foreword, and Dr Paul Sayer of Wiley - Blackwell, our publishers and Lionel Browne, who has edited the manu-script. Jane Oldfi eld and the staff of the RIBA Information Unit have been helpful as ever, and Space Craft Architects have given valuable help. We have also been assisted by numerous colleagues, but of course we assume full responsibility for the text as published.

Extracts from standard contracts are reproduced by permission of the Joint Contracts Tribunal Ltd, the Association of Consulting Architects, Trowers & Hamlins and NEC Contracts, the respective copyright holders. The JCT suite of contracts are published by Sweet & Maxwell. The front page of the Companies Act 2006 is reproduced under the terms of Crown Copyright Policy Guidance issued by HMSO. We are grateful to RIBA Publishing for permission to reproduce the cer-tifi cate and instruction forms that are part of a suite of contract administration forms published by RIBA Publishing and available from ribabookshops.com .

Finally, as always, we thank our respective wives, Margaret, Sue and Susan, for their indulgence.

The text is correct as far as we are aware as at 30 April 2009.

David Chappell, Wakefi eld Michael Cowlin, Walker Fold

Michael Dunn, Addingham

v

FOREWORD

by Paul Jensen FRICS FCIArb Barrister

Registered Chartered Arbitrator; lecturer and examiner at the College of Estate Management; visiting lecturer at Leeds Metropolitan University; sometime director of courses of the Chartered Institute of Arbitrators

This encyclopaedia has not been written by academics. The three authors, to my personal knowledge, have all had many years experience at the cutting edge of dispute resolution and determination, and the high quality of this work therefore comes as no surprise to me. It contains a wealth of knowledge of all aspects of construction law, and of the various standard forms of construction contract; but, more than that, it refl ects the practical knowledge of its authors. Unlike many legal reference books it is very readable, and it explains the legal words, phrases and principles encountered in the construction industry in a comprehensive manner, and with all the necessary pointers to further reading and law reports.

It will be very useful for lawyers, particularly those not specialising in construction law; for claims consultants; and for all those involved in even the slightest way with construction disputes. It will be a must for the bookshelves of all construction employers, construction professionals and contracting organisations, large or small.

I have had much experience over the years of the competence, industry and integ-rity of the three authors, and it is with great pleasure that I commend them on their achievement in compiling this work, which I unhesitatingly recommend.

June 2009

vi

ABBREVIATIONS

ACA Association of Consultant Architects Form of Building Agreement 1982, Third Edition 1998 (2003 Revision)

ACA SFA/08 Association of Consultant Architects Standard Form of Agreement for the Appointment of an Architect 2008

ARB Architects Registration Board ARCUK Architects Registration Council BIFM British Institute of Facilities Management BLR Building Law Reports BPF British Property Federation BSI British Standards Institution CA - S - 07 - A RIBA Standard Conditions of Appointment CD 81 JCT Standard Form of Building Contract with

Contractor s Design 1981 CDM Regulations Construction (Design and Management) Regulations

2007 CDP contractor s designed portion CE JCT Constructing Excellence Contract CE/99 RIBA Conditions of Engagement for the Appointment

of an Architect 1999 (updated 2004) CIB Construction Industry Board CIC Construction Industry Council CIC Procedure Construction Industry Council Model Adjudication

Procedure CIMAR Construction Industry Model Arbitration Rules CIS Construction Industry Scheme CM/A JCT Construction Management Agreement CM/TC JCT Construction Management Trade Contract CPR Civil Procedure Rules CWa/P & T Contractor Collateral Warranty for a Purchaser or

Tenant DB JCT Design and Build Contract DBSub/A JCT Design and Build Sub - Contract Agreement DBSub/C JCT Design and Build Sub - Contract Conditions D - Con - 07 - A RIBA Domestic Project Agreement DOM/1 and DOM/2 Standard Form of Sub - Contract for Domestic

Sub - Contractors EDI electronic data interchange EEA European Economic Area FIDIC F d ration Internationale des Ing nieurs - Conseils GC/Works/1 General Conditions of Contract for Building and Civil

Engineering Major Works GMP guaranteed maximum price GWD Greens Weekly Digest HBC Hudsons Building and Engineering Contracts HGCR Housing Grants, Regeneration and Construction Act

1996

Abbreviations

vii

IC JCT Intermediate Building Contract ICD JCT Intermediate Building Contract with contractor s

design ICE Institution of Civil Engineers ICSub/A Intermediate Sub - contract Agreement ICSub/C Intermediate Sub - contract Conditions ICSub/D/A Intermediate Sub - contract with Sub - contractor s

Design Agreement ICSub/D/C Intermediate Sub - contract Agreement with Sub -

contractor s Design Conditions ICSub/NAM Intermediate Named Sub - contract Tender and

Agreement ICSub/NAM/C Intermediate Named Sub - contract Conditions ICW Institute of Clerks of Works IFC 84 JCT Intermediate Form of Building Contract 1984 IFC 98 JCT Intermediate Form of Building Contract 1998 IN/SC IFC 84 and 98 Domestic Sub - contract JCLI Joint Council for Landscape Industries JCT Joint Contracts Tribunal JCT 63 JCT Standard Form of Building Contract 1963 JCT 80 JCT Standard Form of Building Contract 1980 JCT 98 JCT Standard Form of Building Contract 1998 KPI key performance indicators LLP limited liability partnership MBC Management Building Contract MC 98 JCT Management Building Contract 1998 MCW/C JCT Management Works Contract Conditions MF/1 Model Form of General Conditions of Contract MP JCT Major Project Construction Contract MPSub JCT Major Project Construction Sub - contract MTC Measured Term Contract MW JCT Minor Works Building Contract MWD JCT Minor Works Building Contract with contractor s

design NEC Engineering and Construction Contract (formerly New

Engineering Contract) NHBC National House - Building Council NSC/A JCT Standard Form of Nominated Sub - contract

Articles of Agreement NSC/C JCT Standard Form of Nominated Sub - contract

Conditions PC prime cost PCC 98 JCT Prime Cost Building Contract PFI Private Finance Initiative PM project manager PPC Association of Consultant Architects Standard Form

of Project Partnering Contract (PPC 2000) qv, qqv quod vide , or quae vide indicates a term that has a

defi nition of its own

Abbreviations

viii

RIAS Royal Incorporation of Architects in Scotland RIBA Royal Institute of British Architects RICS Royal Institution of Chartered Surveyors RM Repair and Maintenance Contract (Commercial) RSAW Royal Society of Architects in Wales RSUA Royal Society of Ulster Architects SBC JCT Standard Building Contract SBCC Scottish Building Contract Committee SBC/Q JCT Standard Building Contract with Quantities SBC/AQ JCT Standard Building Contract with Approximate

Quantities SBC/XQ JCT Standard Building Contract without Quantities SBCSub/A JCT Standard Building Sub - contract Agreement SBCSub/C JCT Standard Building Sub - contract Conditions SBCSub/D/A JCT Standard Building Contract Sub - contract with

Sub - contractor s Design Agreement SBCSub/D/C JCT Standard Building Contract Sub - contract with

Sub - contractor s Design Conditions S - Con - 07 - A RIBA Standard Agreement for the Appointment of an

Architect 2007 SCWa/P & T Sub - contract or Collateral Warranty for a Purchaser or

Tenant SFA/99 RIBA Standard Form of Agreement for the Appointment

of an Architect 1999 (updated 2004) SMM7 Standard Method of Measurement of Building Works

7th Edition SS - DS - 07 RIBA Schedule of Design Services SS - RS - 07 Schedule of Role Specifi cations SW/99 RIBA Small Works Agreement TCC Technology and Construction Court UCTA Unfair Contract Terms Act 1977 WCD JCT Standard Form of Building Contract with

Contractor s Design 1998 Works Contract/2 Works Contract Conditions

1

A

Abandonment of work A phrase used in the arbitration (qv) provisions of GC/Works/1 (clause 60(2)(a)). Completion (qv), alleged completion or abandon-ment of the work marks the point at which any reference to arbitration may be made. Abandonment of the Works must entail complete stoppage of all the Works, together with a clear intention not to continue at some future date. It implies removal of all the contractor s and sub - contractors men, plant, equip-ment etc. from the site, and, depending on the circumstances, it may be con-strued as an intention to repudiate the contract. See also: GC/Works/Contracts ; Repudiation .

Abatement In relation to nuisance (qv), abatement refers to the right of the person who suffers injury or damage by reason of the nuisance to act personally to remove the cause. Care must be taken not to interfere with another party s rights. Abatement of a nuisance is not looked upon favourably by the courts, unless there is an emergency, because other remedies are available through an application to the courts. Local authorities may serve abatement notices in respect of a statutory nuisance.

In the construction industry the word is most commonly used to refer to the process of reducing a price or value: for example, a price is reduced to take account of work not properly executed, or goods supplied not in accordance with a contract, so the contract value or price is not due. It is a common law remedy for breach of warranty in respect of contracts for the sale of goods, and for work and labour. Therefore the value of any abatement (i.e. diminution in value) cannot exceed the contract value or price. Abatement can apply only to reduce the value of work or services, and therefore does not offer a remedy for, say, late completion. The remedy in that situation would be damages for breach of contract.

Abatement of price is often confused with a deduction of money or set - off (qv) or counterclaim (qv) against the price. The price or value is due, but sums (e.g. damages) are being deducted for other reasons, e.g. a breach such as late completion. There is a clear difference in law between abatement of price and set - off against a price, and although the end result in money terms may be exactly the same, there are circumstances in which one will be allowable and not the other. 1

Abeyance Technically, where a right is not presently vested with anyone, e.g. in the case of an inheritance. In this sense it has no relevance to building contracts. Generally, when something is said to be in abeyance what is meant is that it is in a state of being suspended or temporarily put aside.

Abrogate To repeal, cancel or annul. Hence abrogation refers to the annulling or repealing of a law, e.g. by means of legislation.

1 Mellows Archital Ltd v. Bell Projects Ltd ( 1997 ) 87 BLR 26 .

2

Absolute

Absolute Full, complete and unconditional. Absolute liability (sometimes known as strict liability (qv)) is where a liability is carried irrespective of the degree of care taken. No proof of negligence or fault is required. It is suffi cient only that a particular incident has occurred. This type of liability may be imposed by statute (qv). See also: Liability .

Absolute assignment The assignment (qv), or transfer, of an entire benefi t, e.g. debt (qv) or other legal right, as opposed to merely part of it, and without conditions attached.

Abstract of particulars The phrase used in GC/Works/1 to refer to the supple-ment that contains important terms and details specifi c to a contract. It lists modifi cations or supplements to the printed conditions, e.g. date for comple-tion, the amount of liquidated damages and the length of the maintenance period (qv). Details of the employer and the project manager (qqv) are listed. Two addenda make provision for setting out dates (or periods after acceptance/notifi cation of possession) as to when certain information will be available, or directions/instructions concerning sub - contract nominations will be given, to the contractor. If the contractor incurs expense following a failure to meet the specifi ed dates then it may give rise to a disruption and/or prolongation claim (qv) under clause 46.

In other forms of contract such important terms and details are set out in sections called, by way of example, an appendix (qv) or contract particulars (qv) or contract data (qv).

Abut Be in physical contact with. There must be actual contact between part of the premises and the road or other feature, which will produce some measurable frontage or common boundary.

ACA Form of Building Agreement The ACA Form of Building Agreement was fi rst published by the Association of Consulting Architects in October 1982. This was followed by a second edition in September 1984 and a third edition (the latest) in 1998 to accommodate Part II of the Housing Grants, Construction and Regeneration Act 1996 (qv). That said, there is no express provision addressing a contractor s right to suspension under s. 112 of the Act, i.e. following a failure to pay by the employer. The contractor has to rely on s. 112 of the Act. The latest amendment to the third edition is the 2003 revision. A further short amendment has been published making appropriate changes following the introduction of the Construction (Design and Management) Regulations 2007 (qv).

This form offers alternatives (e.g. extensions of time (clause 11.5)) across a number of key clauses, permitting fl exibility in the contractual arrangements and therefore the distribution of risk between the parties. An employer, in conjunction with the architect, will need to decide which of the alternatives are to apply, prior to inviting tenders.

Clause 1 sets out the contractor s basic obligation. This is to execute and complete the Works in strict accordance with the contract documents (i.e. contract drawings (qv), the time schedule (qv), either a schedule of rates

ACA Form of Building Agreement

3

and prices, specifi cation or bills of quantities (qqv)). The contractor must also comply with and adhere strictly to validly issued architect s instructions for which the contractor is entitled to payment, unless the matter is covered within the contract sum, or the instruction results from the contractor s default.

Clause 2 addresses the contract documentation, for which there are two alternatives. Alternative 1 requires the architect to issue such further informa-tion as is necessary to carry out and complete the Works in accordance with dates shown in the time schedule. Alternative 2 would be chosen when the contractor undertakes to supply some or all of the further information neces-sary to explain and amplify the contract drawings and/or necessary to execute and complete the Works. This information is submitted to the architect for comment in accordance with the time schedule. Alternative 2 would be used when the contractor takes responsibility for design.

The time schedule sets out important stages of the Works, and makes provi-sion for the listing of key dates. Where the contractor has undertaken to provide additional information, drawings, etc. the contractor warrants under clause 3.1 that:

the Works will comply with any performance specifi cation or require-ment contained in the contract documents (qv); and

the contractor will use skill, care and diligence in checking any design included in the contract documents; and

any part of the Works to be designed by the contractor will be fi t for its required purpose.

If the contractor is responsible for designing the Works or a part of the Works, clause 6.6 requires the contractor to take out and maintain professional indemnity insurance. This is in respect of the contractor s negligence or that of its sub - contractors, suppliers, etc.

Under clause 11.1, once possession of the site (or the appropriate part) is given by the employer, the contractor shall immediately begin the Works and proceed regularly and diligently (qv). This is to be done in accordance with the time schedule so that the Works are completed fi t and ready for Taking - Over by the employer by the due or extended date. There is provision for general damages as an alternative to liquidated and ascertained damages for delay, i.e. clause 11.3. In both cases the architect must have certifi ed that the Works are in delay (clause 11.2) before a deduction can be made.

Extensions of time are addressed under clause 11.5. There are two alterna-tives. Alternative 1 limits the grounds for an extension to defaults relating to the CDM Regulations and to any act, instruction, default or omission of the Employer, his servants or his agents or of the Architect on his behalf , whether authorised under the agreement or not. Alternative 2 takes a more prescriptive approach, listing the individual events, e.g. force majeure (qv) and insurance contingencies. Clause 11.7 requires a mandatory review by the architect of the contractor s entitlement to an extension of time. This is to be undertaken within a reasonable time of the taking - over of the Works.

Clause 11.8 gives the architect power to instruct acceleration or to postpone the Works. The architect s decisions are reviewable by an arbitrator or judge (depending on the option chosen to apply), or by an adjudicator. The time schedule must be revised (clause 11.9) should the contract period be extended, or following the issue of an acceleration or a postponement instruction.

ACA Form of Building Agreement

4

The contractor is responsible for its sub - contractors and suppliers (clause 9.9), although the architect s consent must be obtained prior to sub - letting any portion of the Works (clause 9.2). Provision is made at clauses 9.4 and 9.5 for a sub - contractor to be named either in the contract documents or by way of an architect s instruction issued against a provisional sum.

Under clause 5 the contractor is to ensure the proper management of the Works. The contractor is to appoint a site manager and employ only appro-priately skilled and qualifi ed people on the Works. This duty is backed up by the sanction that the architect may require the dismissal from the Works of any incompetent person (clause 8.1(b)).

The architect s authority to issue instructions is set out at clause 8. Certain instructions can be issued at any time up to completion of all the contractor s obligations, i.e. outstanding work and repairs. The valuation of instructions is addressed at clause 8.2, with the valuation procedure set out at clause 17. This requires the contractor to submit written estimates of the value of the adjust-ment and both the effect on time and the amount of any loss and/or expense directly attributable to the instruction. There is a procedure for agreeing the contractor s estimate and, if not, the architect is to value the instruction in accordance with the provisions, i.e. on a fair and reasonable basis using the schedule of rates where appropriate.

The claims clause (clause 7) is very broad. It covers any act, omission, default or negligence of the employer or the architect that disrupts the regular progress of the Works, or delays the whole or part of the Works in accordance with the dates in the time schedule. Loss or expense attributable to an architect s instruc-tion is excluded, given that it is to be addressed under clause 17. There is a procedure for the contractor to submit estimates, and should the contractor fail to do so then there is no entitlement to have the contract sum adjusted prior to the issue of the fi nal certifi cate (qv). In addition to any act or default of the employer or architect the contractor may also claim for loss and/or expense suffered as a consequence of disruption or delay caused by the CDM coordina-tor, principal contractor (if not the contractor) and any designer under the CDM Regulations following a failure to comply with their obligations under the regulations.

The scheme for certifi cates and payment requires the contractor to submit interim applications along with supporting documents. These should be submitted on either (i) the last working day of each month up to and including the month in which taking - over occurs and thereafter, as and when further amounts become due either to the contractor or to the employer (clause16.1A), or (ii) when a stage is complete (clause 16.1B) depending upon whether alternative A or B is chosen. The architect is to issue a certifi cate within 10 working days of receipt of the contractor s application. Payment of 95% of the amount stated as due must be made by the employer within a further 10 working days. Failure to pay is a ground for termination, by the contractor, under clause 20.2(a). Final payment is governed by clause 19. The contractor must submit a fi nal account with all documents, vouchers, receipts, etc. within 30 working days following the end of the maintenance period (qv), and the architect must issue the fi nal certifi cate within 30 working days of the con-tractor having completed all its contractual obligations under the agreement. No certifi cate relieves the contractor of any liability under the contract (clause 19.5).

ACA Standard Form of Agreement for the Appointment of an Architect

5

There is an optional provision for disputes to be settled by a named concili-ator (clause 25A). There are also provisions covering adjudication (qv), and either arbitration (qv) or litigation (qv). An optional provision exists making an adjudicator s decision fi nal and binding on the parties unless the dispute is referred to either arbitration or litigation within 20 working days, or such other period as the parties may insert. See also: BPF System ; PPC 2000 .

ACA Standard Form of Agreement for the Appointment of an Architect (ACA SFA/08) This form of appointment is published by the Association of Consultant Architects. It is said to be a development of the SFA series of appointments originally produced in 1992 and based on the SFA/92 version but with amendments and updates. All such standard form contracts are liable to fall foul of the Unfair Terms in Consumer Contracts Regulations 1999 (qv) where the contract is with a consumer. It is the architect s responsibility to read through the form carefully with a consumer and explain all the implications of each part.

The form, which is contained within one document, consists of: Memorandum of agreement Attestation Schedule 1: Project, site and attachments Schedule 2: Services to be performed by the Architect Schedule 3: Fees and Expenses Schedule 4: Other Appointments Schedule 5: Collateral Warranties and Third Party Rights Model letter to a commercial client Model letter to a consumer client Conditions of agreement

Among the important features of the form for the architect are the following: The client agrees to hold other consultants and the contractor, not the

architect, responsible for their work. The client must provide necessary information, and the architect is

entitled to rely on it. If the architect is involved in extra work beyond the architect s control,

additional fees on a time basis are payable. The client s rights to set off amounts against fees due to the architect

are excluded. Where a withholding notice is not given, the amount due is the amount

on the architect s account. If the architect is obliged to take legal action to recover amounts due,

the client is to indemnify the architect against all costs reasonably incurred.

Interest on late payment is to be in accordance with the Late Payment of Commercial Debts (Interest) Act 1998 with interest otherwise at 8% over Bank of England Base Rate.

The architect has the right to suspend the copyright licence in the event the client fails to pay.

The architect does not warrant that the project will be completed in accordance with the timetable or the budget.

There are exclusion clauses for asbestos and toxic mould.