Analysis Of Contract Discrepancies And Legal And Contractual Position Of Artless

Making specific reference to the JCT Standard Building Contract with Quantities 2016, analyse in detail the practical action, and the
procedural steps, that Pig’s Ear ought to be taking in connection with the discrepancies and divergences noted in the contract documentation. Also analyse the legal and contractual position attending Artless’s apparent failure to appoint an architect or professional contract administrator.   

In the given case, the issue is regarding the steps/actions/procedurals which Pig’s Ear Edifice LLP (Pig’s Ear) is ought to take for the divergences and discrepancies in the contract documentation, presented by Artless Enterprises Ltd. (Artless) for the construction and the contractual and legal position of Artless in relation to its failure to appoint a professional architect or contract administrator.

According to the JCT Standard Building Contract with Quantities 2016, vide clause-2.15, it clearly states that when there is any divergences or discrepancies in – 1) contract drawings 2) Contract Bills 3) any instruction or conditions issued by the architect/contract administrator 4) any documents or drawings issued by the architect/contract administrator 5) other contractor design documents or if there is any error, omission, inadequacy or departure, mentioned in clause- 2.14, then it is the duty of the contractor to immediately issue a notice to the contract administrator/architect and the contract administrator/architect shall give instructions accordingly in such cases. On the other hand according to where the employer fails to appoint a professional architect or contract administrator, it is the responsibility of the employer for any problem that occurs. Contractually and legally the employer becomes responsible for a mistake on his part as it is a duty of the employer to appoint a professional contract administrator/architect. 

In the given case, Artless Enterprises ltd, a construction company, decides to expand its business by building prestigious projects. Hence, it decides to build a student’s hall residence for the students studying in Nottingham and also with a vision that one of the universities in Nottingham will buy it in future. Artless, therefore, appointed Pig’s Ear Edifice LLP, Builders, for the construction of the hall. Both companies were in experienced in this type of project. After the foundation and basic structural construction was done, Pig’s Ear found out that the contract documents, mainly the drawing, that Artless provided, were erroneous. In this case it becomes the duty of pig’s Ear to inform the contractual administrator or the architect of the contract drawing immediately and rectifications should be made by the architect accordingly, because the provisions of the JCT Standard Building Contract with Quantities 2016 edition states so in such situations and Pig’s Ear works in accordance with the JCT Standard Building Contract with Quantities 2016 edition. On the other hand, Pig’s Ear’s managing partner was in doubt whether Artless appointed a professional architect/contract administrator after he saw the errors. In this case the liability for any mistake, based on the drawings of the architect, falls on the Employer of the architect, that is, Artless as according to the JCT Standard Building Contract with Quantities 2016 edition, it is the duty of the employer to appoint a professional architect/contract administrator. Legally, Artless is legal responsibility for anything wrong and contractually, both the contracts, that is, between Artless and the architect and Artless and Pig’s Ear will get affected. The architect is contractually liable to provide the assigned work to Artless with expected professional skills and is responsible for any work below such expected level. On the other hand, Artless is liable to provide with proper documents to Pig’s Ear and it is also its duty to ensure that the documents are made by using proper professional skills. Hence, both the contracts will get affected.

Relevant Rule

Conclusion:

Therefore, from the above discussion it can be concluded that Pig’s Ear is has an obligation to inform about the errors in the contract drawing according to the JCT Standard Building Contract with Quantities 2016 edition and Artless will become both legally and contractually liable for not appointing a professional architect/contract administrator. It is so because there are two contracts existing, that is between Artless and the architect/contract administrator and between Artless and Pig’s Ear. Therefore, as to the legal and contractual status of Artless is in one hand it is entitled to a claim for erroneous work from the architect and Artless is liable for the erroneous designs provided to Pig’s Ear on the other hand.  

In the given case, the issue is whether there are any actions or procedurals or steps, which Pig’s Ear could take for warning Artless for the inadequate and potentially dangerous roof trusses given in the construction deigns provided by Artless to Pig’s Ear along with the contract document for construction of the student’s hall residence.

According to the JCT Standard Building Contract 2016 edition and according to the common law of Construction, it is the duty of a contractor to inform the employer, if he finds any errors in the documents. If the contract documents provided by the employer are erroneous, then it does not make the contract invalid and the errors must be rectified accordingly. But the contractor is not entitled for any additional sum of money for such rectification. The liability or the obligations of the contractor does not end once the construction is handed over to the employer. After the construction is over, the employer hands a certificate of completion to the contractor. However, the liability of the contractor still remains for a certain period, in which, if any defect in the construction is found, the contractor is liable to rectify it without any additional money. The period in which this has to be done is known as the rectification period.     

In this case, the managing partner of Pig’s Ear found that Artless provided a design for a roof tussle in the contract documents, which was erroneous. The design was made in such a way by the architect that it would turn out to be potentially dangerous and inadequate in the future. According to the construction law and the common law there is a step which Pig’s Ear must take in this regard. Pig’s Ear, being the contractor must take necessary actions to inform the employer, that is, Artless about the potentially dangerous and inadequate design of the roof tussle, provide by Artless. According to the common law of construction, it is mandatory for the contractor to inform the employer about any erroneous documents provided by the employer to the contractor. Not only the common law, but the JCT Standard Building Contract 2016 edition vide clause- 2.14 states the same and in addition states that if any error or inadequacy is found in any design provided by the employer, and the contractor is not responsible for verification under clause – 2.13.2, then if the error is not dealt with to the extent in accordance with the requirements of the employer, the employer’s requirements shall be altered or modified. The JCT, 2016 also states that the error or inadequacy in a contract document will not vitiate the contract and it shall be rectified accordingly, without any additional payment to the contractor for such rectification.

Application

Conclusion:

Therefore, in this case and according to the above discussion, it is clear that Pig’s Ear should take a step for the inadequate and erroneous design of the roof tussle. It should inform Artless about such error and inadequacy and warn artless as the JCT Standard Building Contract, 2016 edition and the common law of construction states so. But Pig’s ear cannot cancel the contract but needs to rectify the error and inadequacy after informing Artless about it and for such rectification, Pig’s Ear cannot charge any additional payment of sum, as the both the common law and the JCT, 2016 prohibits it.   

In the given case, the issue is whether the employer, that is, Artless is competent to take any action or step during the rectification period of Pig’s Ear to put right the disabled ramp and the fire escape, which it failed to construct in accordance with the designs provided to build it.

According to the JCT Standard Building Contract, 2016 edition, when there has been an error or defect made by the contractor, in the constructions, it is the duty of the contractor to inform the employer about such errors and inadequate construction. The time period of rectification is called the rectification period and it is generally between 6 to 12 months. The employer needs to inform the contractor about the defects with in this period and the defects must be rectified without any additional money. Not only JCT Standard Building Contract states so, but also the common law states the same. The JCT Standards also states clearly that after the work is completed, a certificate of completion is issued and after such certification, if any defects are discovered, then it must be rectified within the rectification period, which begins after the certification, when any defects are found. The certificate of completion is usually issued before the commencement of the rectification period. In case there is any defect found before the date of completion or the commencement of the rectification period, then the defects must be rectified by the contractor immediately and in such cases the certificate of completion can be withheld until the defects are rectified.

In the given case, Artless provided Pig’s Ear with all the contract documents, including the contract designs. All the important designs for construction were provided including the designs for the roof trusses, which was potentially dangerous and inadequate. That is, it was erroneous in the provided design and it was the fault of the architect who had designed it. Apart from this, designs for an exterior ramp and a fire escape, was provided by Artless. The exterior ramp which Pig’s ear had built was terrifyingly vertiginous and narrow. The ramp was a disabled one, as the ramp was built till the halfway up a stairway, leaving five UN ramped stairs soaring above the end of the ramp. The local people soon started to refer the disabled ramp as K2. There was also a design provided by Artless to Pig’s Ear to build a fire escape stairway which was built by Pig’s Ear erroneously. The fire escape stairway was built in such a way that ends in mid-air, halfway up an external gable wall in the supposedly completed halls of residence. The fire escape ends at a landing suspended several meters up the gable wall with no stairs to connect the landing to the ground. This erroneous construction was focused on by the media and the images of the site went viral on the internet. It was stated by the director of Artless that the designs provided to Pig’s Ear for the construction of the fire escape and the ramp was not erroneous and was very much workable, viable and complete and the way Pig’s Ear had built it was not in accordance with the contract designs, given along with the other contract documents. In this case, as the provisions of JCT Standard building Contract will apply. As the law says that when the contractor makes an erroneous construction, the contractor is liable for such errors and it is the duty of the employer to send a notice to the contractor for rectification of such errors made without any additional cost. In this case, the employer, that is, Artless, after discovering the defects in construction, must send a notice of the same to Pig’s Ear and ask them to rectify the errors. This notice must be sent immediately after the defects are discovered. Artless must send a notice for reconstruction. Pig’s Ear is bound to make such rectification by reconstruction and they are not entitled to get any additional payment for such reconstruction. If such rectification is refused or any additional payment for rectification is asked by Pig’s Ear then Artless has the right to sue Pig’s Ear for breach of contract and in this case Artless can withhold the certificate of completion as well, as the defects were discovered before the date of completion.

Conclusion

Conclusion:

Therefore, from the above discussion it is clear that the JCT Standard Building Contract, 2016 Edition and the common law states the similar rules for construction law regarding the steps the employer should take or the duties of the employer in case any erroneous construction by the contractor. Therefore, in accordance with the law, Artless, being the employer must send a notice to Pig’s Ear within the specified time provided by the law and Pig’s Ear is responsible for the rectification of the erroneous construction. In the given case as the design provide by Artless was not erroneous and the construction made by Pig’s Ear was not in accordance with the designs provided, Pig’s Ear is liable for the error and the action that Artless should take up, is to send a proper notice of rectification to Pig’s Ear, withhold the certificate of completion as the defects were discovered before the date of completion and can take legal actions in case Pig’s Ear refuses to rectify.    

The JCT Standard Building Contract with Quantities, 2016 Edition sets the standards of building contracts and deals in details with the rules and regulations that govern the building contracts. It includes the various types of building contracts. It includes the functions of Contractors, Employers, Sub-Contractors, principal designers, contract administrators, quantity and their duties and obligations. The JCT also gives a detailed set of rules regarding the contract sum and its payments under different circumstances. In a construction contract many disputes can arise anytime. The JCT, therefore includes provisions for solving these disputes by using different legal solutions like arbitration, adjudication and legal proceedings. As the JCT focuses on the aspects of the building contracts, it attracts and includes certain provisions of the Contract Law as well. Similar to the Contract law under the common law, the JCT, 2016 also includes and mandates that the basic requirements of contract in case of building contracts in the same way. Apart from these, the JCT also provides various rules regarding matters like supply of materials and documents, third party rights, rules for errors, discrepancies and divergences, termination of contract by employers and contractors, payment related rules and calculations, provisions related to injury, damage and insurance and also about the dispute settlement methods to solve the disputes of building contracts.

The JCT mainly stresses on the rights and obligations of the employer and the contractors. According to JCT, there are different types of building contracts and the payment obligation of the employer is based on the type of building contract the employer and the contractor enters into. The types of building contracts on which the payments of the employers vary are- Firstly, the Lump sum contract, in which the employer pays a big sum of money to the contractor after the completion of the work and no cost break down is required in this method. Secondly, in the Lump sum and scheduled contract the employer has to make the payment after the completion of the work but in this case cost break down is required. Thirdly, in case of a cost plus fixed free contract the employer has to pay the contractor a certain amount which is over and above the documented cost and such amount shall be fixed and agreed amount. Fourthly, in cost plus percentage of cost contracts, the employer has to pay more than 100 percent of the documented cost but it requires a detailed accounting of the expenses. Therefore, the amount of sum to be paid by the employer to the contractor depends on the above mentioned types of building contracts. Lastly, there is another type of building contract that is known as a special contract. Special contracts can be classified into- Firstly, Turn-key contract, in which a contractor completes his work and hands it over to the employer or the client in full operational form and the employer or the client just needs to “turn” a “key” to bring the work in motion. Secondly, Negotiated contract, is another special contract in which the employer directly negotiates with the contractor on an agreed sum of money without any bidding process. It is also known as a negotiated agreement. Thirdly, there is the package contract in which the contractor, designs, finances, specify, commission and construct the project entirely. Fourthly, there is the continuing contract which is attributed with periodic performances and the performance is divided in different units over a particular time period. Lastly, running contract is another special contract, in which an approximate quantity of stores is supplied at a specified price during a certain period. These special contracts also affect the payment which is to be paid by the employer to the contractor. The JCT, by its clause, 25 provides for extension of the date of completion of the contract. In cases of most of the contracts, the time period for its completion is usually extended. The extension takes place on the occurrence of certain situations, which the JCT provides. It can happen that a contractor may fail to finish his work with in the stipulated time, which may be provided in the contract due to certain uncontrollable circumstances for which the employer can claim liquidated damages from the contractor. The JCT states that for an extension of time period in case of failure of the contractor to finish the work within the stipulated time, the contractor needs to give a notice to the employer for such extension, within a specified time and in accordance with the provisions of JCT. This clause protects the contractor form compensation. On the other hand, this clause also helps the employer by allowing the employer to get his work done by the contractor within the extended time and if the contractor fails after such extension of time, the employer becomes entitled to claim liquidated damages from the contractor. Hence, the extension clause affects both the employer and the contractor. There are different situations in which the time can be extended. Firstly, if the contractor can prove that due to the fault of the employer the project was not completed on time, the extension clause will apply. Secondly, a contract is subjected to various variations and changes. Due to these changes, the work of the contractor may increase and the contractor is entitled to get a time extension. Thirdly, there are different types of payment clauses in a construction contract based on various calculations and this also determines the time stipulation for completion of a contract. In case of failure by the contractor within the specified time, the time clause comes into play and during such time extensions, the employer can hold back a certain percentage of the payment until the project has been completed by the contractor. Fourthly, different construction contracts have different pre-determined value for damages. However, as the courts have the right to adjust the compensation value equal to the actual loss, the contractor is impliedly granted the extension of time if the delay in work is not the reason of the actual loss to the employer. Fifthly, there are various other small reasons, for which the extension time can be given, subject to the decisions of the court under each situation. These are the various conditions and circumstances that affect the time extension clause under the JCT Standard Building Contract, 2016 Edition, which affects a construction contract. The FIDIC also another set of building contract rules. FIDC is a acronym of a French name – Federation Internationale Des Ingenieurs- Conseils. The FIDIC contains various aspects of the construction contracts. It includes various factors such as change in the amount of extra or additional work and also its nature, causes for delay in work completion, employer and contractor rights and obli9gations and also the remedies in case of dispute. However, throwing light to the time period extension aspect of a construction contract, the FIDIC includes many more reasons and conditions for the time period extension in a construction contract as compared to the JCT Standard Building Contract, 2016 Edition. The FIDIC includes conditions like in cases of delay due to inaccurate plot reference levels, delays due to sudden shortage in materials or manpower or uncertain emergencies or government actions, delay due to actions of authorities, provided that the employer has been diligent from his side. Apart from these the FIDIC also includes rules relating to the employers right to prevention of contractors to conduct completion test, modifications in costs and also the employer’s risk consequences. Regarding the time extension, the FIDIC further states various other grounds for time extensions, other than situations which gives rise to time extensions for irresponsible or wrong work. However, both the JCT Standard Building Contract, 2016 Edition and the FIDIC standards for construction contracts, both states that in order to claim an extension of the time period in a construction contract a contractor needs to give a written notice, in accordance with the lawful procedures and within the specified time for giving such notice to the employer. Apart from the JCT Standard Building Contract, 2016 Edition and the FIDIC, there are many other standard rules for construction contracts. Each of them states various clauses in their own ways. Few matches with all others and few contradict. This sometimes may give rise to which of the standard rules are to be followed in a specific type of construction contract. In this situation, it would be of great use if an International Standard set of rules is made, in which the rules for construction contracts will include a clubbed version of all the different provisions, provided in different construction rules. This must be mandatory in all countries and must be applicable for all types of construction and building contracts. Apart from this, there are various gaps in the construction law which sometimes lead to slow contract performance. As the time extension period or rectification period does not involve any extra payment by the employer, the contractors, in such circumstances perform the correctional works and extended work in a very slow and careless way. This often leads to work done with lack of professional skills. During such situations if a certain small amount is paid to the contractor by the employer, it will encourage and motivate the contractors to do their work during the extension or rectification periods by using all their professional skills, leading to a better quality of projects. These few changes in the contract law will definitely lead to a stronger and a better set of rules for governing the construction law in the future.

Therefore, from the above discussion it is clear that there are various international standards which set certain rules for the construction laws all over the globe. The discussion also states various aspects of construction law like the employer contractor relationship, their rights and obligations, the payment obligations of the employer, various types of construction contracts, the obligations of contractors during rectification period and the also the provisions relating to time period extension for completion of work, various conditions and grounds which attract time period extension, the procedure to get time period extensions and also the remedies available in case of any dispute in any construction law. The above discussion concludes by drawing a comparison between the JCT Standard Building Contract, 2016 Edition and the FIDIC standards of construction contracts by discussion the various provisions and finally, states some recommendations to make the construction law more firm and  better.  

References:

Adriaanse, Mr John. Construction contract law. Palgrave Macmillan, 2016.

Atkinson, Andrew R., and Christopher J. Wright. "Containing the Cost of Complex Adjudications." Journal of Legal Affairs and Dispute Resolution in Engineering and Construction 7.1 (2014): A4514002.

Brook, Martin. Estimating and tendering for construction work. Taylor & Francis, 2016.

Bunni, Nael G. The FIDIC forms of contract. John Wiley & Sons, 2013.

Burr, Andrew, ed. Delay and disruption in construction contracts. CRC Press, 2016.

Chappell, David. Understanding JCT standard building contracts. Routledge, 2017.

Chern, Cyril. The Law of Construction Disputes. CRC Press, 2016.

De Marco, Alberto, and Timur Narbaev. "Earned value-based performance monitoring of facility construction projects." Journal of facilities Management 11.1 (2013): 69-80.

Dorey, Sean P., Josef Oehmen, and Ricardo Valerdi. Enhancing cost realism through risk-driven contracting: Designing incentive fees based on probabilistic cost estimates. DEFENSE ACQUISITION UNIV FT BELVOIR VA, 2012.

Hamid, ABDUL RAHIM ABDUL, D. M. C. Botiti, and SAEED REZA Mohandes. "Managing the Delayed Completion on Construction Project." Journal of Advanced Research in Business and Management Studies 1.1 (2015): 14-24.

Harris, Frank, and Ronald McCaffer. Modern construction management. John Wiley & Sons, 2013.

Hetland, P. W. "Exploring the value of project complexity—beyond lump sum contracting." Managing Risks in Projects(2013): 149.

Hughes, Will, Ronan Champion, and John Murdoch. Construction contracts: law and management. Routledge, 2015.

Llewellyn, Karl N. The common law tradition: Deciding appeals. Vol. 16. Quid Pro Books, 2016.

Meng, Xianhai, and Brendan Gallagher. "The impact of incentive mechanisms on project performance." International Journal of Project Management 30.3 (2012): 352-362.

Ndekugri, Issaka E. "Late disputes and the NEC3 Engineering and Construction Contract." Proceedings of the ICE-Management, Procurement and Law (2016).

Ndekugri, Issaka, and Michael Rycroft. The JCT 05 Standard Building Contract. Routledge, 2012.

Nowotarski, Piotr, and Jerzy Paslawski. "Barriers in running construction SME–case study on introduction of agile methodology to electrical subcontractor." Procedia Engineering 122 (2015): 47-56.

Parikh, D. M. "Understanding of claims-causes procedures and presentation-in FIDIC construction contracts." Journal of the Indian Roads Congress. Vol. 73. 2012.

Potts, Keith, and Nii Ankrah. Construction cost management: learning from case studies. Routledge, 2014.

Thomas, Reginald William, and Mark Wright. Construction contract claims. Palgrave Macmillan, 2016.

Turner, Dennis F. Design and build contract practice. Routledge, 2014.

Wen, Zhen, and Qi Lan Zhou. "Some Suggestions for China Construction Project Investment Control Present Situation Based on FIDIC Contract." Applied Mechanics and Materials. Vol. 209. Trans Tech Publications, 2012.