As Andrew has correctly noted, make sure that your Client knows exactly what he has paid for. And if it does come to a dispute, the courts may not support the Client’s view on the basis that the Contract contains an unreasonable and unrealistic business term.
Back to understanding the risk. Unfortunately clever clients like to put these types of clauses in and then expect to rely on them to cover every situation. Thankfully they cant.
Approach is simple - assess what you think it means and TELL the client EXACTLY what you interpret this as and have priced on. Give the client oppertunity to comment and ammend your price accordingly.
If it ever came to a dispute the interpretation of the clause by the courts would be what a reasonable person given the information in his possession at the time would think (or should have thought). The courts would not expect you to be a clairvoyant - unlike your client.
It is very likely that your client will try to hide behind a condition such as this to cover his own short comings and mistakes but if he uses it to be unreasonable then he will have a surprise coming to him later if it ends up in dispute at arbitration or court.
Even where English is the first language some contracts are difficult enough to understand.
As you quite rightly say, construction is about the management of risk, couldnt agree more. Im not saying that every construction professional should become a lawyer, far from it, but a better understanding of the very basic principles of law that apply and a much better understanding of how contracts apportion risk - most importantly to who, would help this industry alot.
The people who this applies to most, are those involved in tendering but site teams need certainly an appreciation as well in order to administer the contract correctly when it gets going.
I think that there is a lot of truth in what Andrew and Clive both say in their posts below.
In my experience of international contracts and projects, which are in the English language but are administered on both sides by Parties in which English is a second (or even third) language, then there is immense possibilities of claims arising through lack of understanding of each Parties’ obligations and responsibilities. In such circumstances, it is easy for Parties to simply misunderstand what their obligations (and risks) may be.
By the same token – and particularly in certain parts of the world – some English-language Contracts are worded in a complicated way such that someone whose first language is not English, may well genuinely misinterpret the true meaning of parts of the Contract. Such Contracts may be considered to be unreasonable in their drafting, but depending upon the jurisdiction, the Contractor may not always be protected by the ‘contra proferentem’ rule.
However, the construction business is really all about accepting and managing specified risks, and claims management and avoidance is part of that process.
I don’t think that it has anything to do with law, but has more to do with the Parties’ understanding and interpretation of commercial and business terms that, in some circumstances, are confusing, conflicting and unreasonable.
You are right in what you have said except for your thoughts that contracts may be unfair in some way. (assuming the parties signed them of their own free will)
With the exception of small companies etc which probably do not have the in house expertise (although theres nothing stopping them from getting it externally - and they should) it is no arguement to say that the terms your company signed up to arent what was expected or are unfair. Your company had a chance to read and assess the terms before signing them and therefore you have to accept them as what your company signed up for and were happy to do so. If your company dont like them or didnt understand them then it YOUR companies fault, no one elses.
Which brings me back to the ignorance of the law and contract conditions - it is often the case that what a company thought it was signing up to, is in reality not the same as what they have signed up for. It is also the case that often the this is how we did it before and how we will do it this time assuption creeps in so no one considers that different conditions of contract apply. Then everyone gets a shock when they realise you cant do it the way we did it last time. Panic, thats not what we priced, how do we claim some extra money to get us over this, etc - the stories only to familiar - but whos to really to blame?
Hence my point, it is often a lack of understanding or mis-understanding of the risks being taken that leads to a dispute. ie caused by igorance of the law and or conditions of contract.
You will always find the cases where the CA tries alegedly clever tactics not to pay the contractor whats he due or the contractor trying to claw back money on dubious grounds, the CA is trying to cover up his companies shortcomings or vice versa, etc, the list is endless.
You will more often find the case where the parties are witholding or due money for reasons they believe to be totally justifable and correct - unfortunately the reasons are not and the parties just havent understood the contract or obligations placed on them. This is probably the biggest cause of disputes, ie, the mis-administration of the contract by one or both parties.
So back to my original point - if BOTH parties understood the law and conditions of contract (and therefore risks)better from day 1 and administered the contract correctly - as it should be and the conditions intended it be, there would be a substantial reduction in disputes and claims.
It would not eliminate claims, I somehow think that will never happen due to reasons you pointed out and many more, but it would go some way in reducung them.
Interesting too read some comments regarding the law, only have one comment to make:
If everyone knew abit more about the law and administered the contracts properly in accordance with the law and conditions of contract (and not what you think they mean) there would be alot less claims.
More often than not, it is the ignorance of the law and the meaning of the conditions of contract that produce the disputes that leads to the claims in the first place.
I think not only for the claims we need to deal with the law. Think about the procurement paperwork and scheduling. A few years back I needed to deal with the law of the sending, the receiving and the transporting countries to make a more or less reliable procurement schedule. A lot of EPC planner underestimate the importance of this. We can share a few "law" knowledge in a separate topic.
Just being pedantic again, so please forgive me, but contractual issues ARE legal issues - they are one and the same defined by contract law. A contract is a legally binding agreement and anything arrising from it is a legal issue.
That said, I agree with Stuart that it is unlikely that any law firm will give thier time free to help. If youre interested in knowing more then why not find out for yourself? Plenty of good books out there to go and buy or borrow from a libary. One piece of advice though, alittle knowledge is dangerous so read around a subject from a few sources to get a better picture on any peticular issue.
The two points that you raise – undue influence and submission of a recovery schedule – remain contractual rather than legal issues.
Many of us are familiar with Clients in the construction business who take too pro-active a role in the Contractor’s affairs. Many contracts address this, while in others it is an implied term. I am a little unclear as to what you mean by ‘…the law of undue influence’.
The resolution of undue influence exerted by such a Client is a contractual issue in the first instance, and can often lead to an excusable delay or disruptive event, which is again resolved at the contractual level.
Similarly with the submission of a recovery schedule. This is also a contractual rather than a legal issue. The request by a Client for a Recovery Schedule implies to me that such a schedule is required because the Contractor is late due to his own defaults. Since the Contractor has an over-riding obligation to execute and complete the Works by the due completion date, the fact that the Recovery Schedule is in truth inadequate, does not alter the Contractor’s responsibility for completing on time.
We are all so familiar with the practice of submitting Project Schedules (whether recovery or otherwise) and having them criticised and scrutinised by our Clients. These schedules will always be based on our belief that they are workable and attainable, but if they are proved not to be, then I suggest that it is stretching the imagination in describing them as ‘fraudulent’ (which in any event is almost impossible to prove!).
To my mind, there is a difference between a schedule that later proves to be unrealistic, perhaps based on incorrect assumptions, and one that is incompetent. If the scheduler’s assumptions are shown to be fair and reasonable, then his resultant work product may be competent but erroneous.
If it is demonstrated that his assumptions were stupid and wholly unreasonable, resulting in a crap schedule that clearly was useless, I would kick his arse out the door, but it would hardly be a criminal offence!
I agree with you. Maybe, lawyers will be insulted to share their time and knowledge with such basic contract law. Of course their will be no money involve. The idea is more on free sharing of idea that is the hallmark of PP forum.
In PP forum, we have a lot of expert sharing their ideas and time without pay and sometimes subject to ridicule. Why are we doing this? For fame, I don’t think so, to get a lot of statistics in PP, I don’t think so. For the love of planning, it could be, maybe?
The lawyer I have is mind (or construction law firm) will have the same thinking as why we planners got involve in this forum in the first place. But he is more involved in guiding us with the salient features of basic contract law applicable to the thread.
One basic contract law that is common in construction is the law of “Undue Influence”. But who is capable of committing undue influence, the client, the main contractor, the sub-contractor, etc. How will the court look at a party to the contract as capable to exercising “Undue Influence”.
A simple case is about “recovery schedule”. Let say the client require the main contractor to submit a recovery schedule to finish the project within a particular date. The contractor project manager instructed the planning engineer to prepare recovery schedule. Upon sincere evaluation, it is not realistic to attain the said date, but still a recovery schedule was submitted. Can the client claim damage to the contractor due to fraud by submitting an unrealistic recovery schedule. Can the project manager terminate the employment of the planning engineer due to breach of trust or fraud by submitting an unrealistic scheduled.
Or is it high time for us planners to be honest and have that immeasurable courage (cojones) to tell the other party to stop bullying and the recovery schedule is not realistic and to submit an unrealistic schedule is tantamount to fraud.
All of us in one way or the other got contract with other parties. Employment contract, marriage contract, business contract, service contract, etc. If we are aware of the basic contract law then there is big possibility for us to act responsibly in our contractual obligation, client, contractor, sub-contractor, workers, etc.
Interesting thread, but – at the risk of upsetting the lawyers reading this – I think it is a bad idea to have a link to a construction law firm, or to have a referral thereto, in this forum. Even international law firms cannot match the hands-on and relevant experience of this PP Forum.
This forum is essentially – but admittedly, not exclusively – for technocrats, where we can share our experiences, ideas, problems and their solutions. This forum contains an absolute treasure trove of contractual information based on hard, site-driven factual experience. If you have a particular contractual problem – no matter how apparently insurmountable – someone here will have had a similar experience!
Lawyers have their place, but not as a source of first reference. Remember, we deal in contractual matters, and only after we have exhausted all contractual and managerial solutions, should we then turn to lawyers, but only as a last resort.
Now, as for claims consultants, well, that is totally different…..;-)
I agree with you and Bill. On the other hand the basic contract laws are usually refer to the "mother country". For example, commonwealth countries generally refer to English Laws while former American Colonies refer to American Laws, or CIS countries refer to Russian Law (maybe), or former Spanish Colonies refer to Spanish Law or maybe Francophine countries refer to French Law, etc.
A lot of Multinational Companies also prefer to have their contract written "that the Law of their country would apply" as per Bill which I agreed and experienced.
What I really have in mind is that when we discussed threads from CONTRACT CLAIMS AND ASSESSMENT, if only we can cite the basic contract law that is the basis of our atgument or ideas then it will help us in our professional work, or to others who are not yet familiar with basic contract law or in our personal life.
Yes Bill is right in saying that each country has its own arbitration laws and act which are implemented on their own disputes so better to consult local Contract Law firm for their resolution.
Yes, this can be done, opinion may be rendered by Law Firm on your dipsutes as per your local law or act as this is being done in this forum
RE: Link with Construction Law Firm
Have to admit, have taken jobs without doing the due dilligence, listed below. And twas me dat paid the price.
Dont sign contracts any more, just in case.
RE: Link with Construction Law Firm
Darrell do you want the job or not
Oscar
RE: Link with Construction Law Firm
Folks,
Have probably lost the main thread of this discussion, so correct any in-accuracies.
Perhaps if we consider the following:-
Ask yourselves:-
i)Would you sign a contract that had onerous or unreasonable clauses in it?
ii)Would you sign a contract that was not fair and reasonable, or at least in your favour?
iii)Would you sign a contract without reading it or understanding it?
iv)Would you sign a contract on the basis of a promise or verbal intention for more of the same?
A Contract is a Contract is a Contract, until one of the parties disputes it. This is what both parties have signed up to and agreed to on paper.
Reagrds,
Darrell
RE: Link with Construction Law Firm
STUART
Agree but so often the future prospect determines the current issue
If only we were able to work on todays problems rather than tommorrows prospects
Oscar
RE: Link with Construction Law Firm
Oscar,
Get your crystal balls out!!
As Andrew has correctly noted, make sure that your Client knows exactly what he has paid for. And if it does come to a dispute, the courts may not support the Client’s view on the basis that the Contract contains an unreasonable and unrealistic business term.
Cheers,
Stuart
www.rosmartin.com
RE: Link with Construction Law Firm
I would tend to agree with you
The test of a reasonably competant contractor will be interesting to watch
However what has the industry come to????
RE: Link with Construction Law Firm
Oscar
Clairvoyant!
Back to understanding the risk. Unfortunately clever clients like to put these types of clauses in and then expect to rely on them to cover every situation. Thankfully they cant.
Approach is simple - assess what you think it means and TELL the client EXACTLY what you interpret this as and have priced on. Give the client oppertunity to comment and ammend your price accordingly.
If it ever came to a dispute the interpretation of the clause by the courts would be what a reasonable person given the information in his possession at the time would think (or should have thought). The courts would not expect you to be a clairvoyant - unlike your client.
It is very likely that your client will try to hide behind a condition such as this to cover his own short comings and mistakes but if he uses it to be unreasonable then he will have a surprise coming to him later if it ends up in dispute at arbitration or court.
RE: Link with Construction Law Firm
Heres one for Mr Ness/Flowerdew
Contract says contractor will allow for design development even for items he has no design responsibility for
recipe for claims or appointment of clairvoyant
any thoughts
Oscar
RE: Link with Construction Law Firm
Stuart,
Even where English is the first language some contracts are difficult enough to understand.
As you quite rightly say, construction is about the management of risk, couldnt agree more. Im not saying that every construction professional should become a lawyer, far from it, but a better understanding of the very basic principles of law that apply and a much better understanding of how contracts apportion risk - most importantly to who, would help this industry alot.
The people who this applies to most, are those involved in tendering but site teams need certainly an appreciation as well in order to administer the contract correctly when it gets going.
RE: Link with Construction Law Firm
I think that there is a lot of truth in what Andrew and Clive both say in their posts below.
In my experience of international contracts and projects, which are in the English language but are administered on both sides by Parties in which English is a second (or even third) language, then there is immense possibilities of claims arising through lack of understanding of each Parties’ obligations and responsibilities. In such circumstances, it is easy for Parties to simply misunderstand what their obligations (and risks) may be.
By the same token – and particularly in certain parts of the world – some English-language Contracts are worded in a complicated way such that someone whose first language is not English, may well genuinely misinterpret the true meaning of parts of the Contract. Such Contracts may be considered to be unreasonable in their drafting, but depending upon the jurisdiction, the Contractor may not always be protected by the ‘contra proferentem’ rule.
However, the construction business is really all about accepting and managing specified risks, and claims management and avoidance is part of that process.
I don’t think that it has anything to do with law, but has more to do with the Parties’ understanding and interpretation of commercial and business terms that, in some circumstances, are confusing, conflicting and unreasonable.
Cheers,
Stuart
www.rosmartin.com
RE: Link with Construction Law Firm
Clive,
You are right in what you have said except for your thoughts that contracts may be unfair in some way. (assuming the parties signed them of their own free will)
With the exception of small companies etc which probably do not have the in house expertise (although theres nothing stopping them from getting it externally - and they should) it is no arguement to say that the terms your company signed up to arent what was expected or are unfair. Your company had a chance to read and assess the terms before signing them and therefore you have to accept them as what your company signed up for and were happy to do so. If your company dont like them or didnt understand them then it YOUR companies fault, no one elses.
Which brings me back to the ignorance of the law and contract conditions - it is often the case that what a company thought it was signing up to, is in reality not the same as what they have signed up for. It is also the case that often the this is how we did it before and how we will do it this time assuption creeps in so no one considers that different conditions of contract apply. Then everyone gets a shock when they realise you cant do it the way we did it last time. Panic, thats not what we priced, how do we claim some extra money to get us over this, etc - the stories only to familiar - but whos to really to blame?
Hence my point, it is often a lack of understanding or mis-understanding of the risks being taken that leads to a dispute. ie caused by igorance of the law and or conditions of contract.
You will always find the cases where the CA tries alegedly clever tactics not to pay the contractor whats he due or the contractor trying to claw back money on dubious grounds, the CA is trying to cover up his companies shortcomings or vice versa, etc, the list is endless.
You will more often find the case where the parties are witholding or due money for reasons they believe to be totally justifable and correct - unfortunately the reasons are not and the parties just havent understood the contract or obligations placed on them. This is probably the biggest cause of disputes, ie, the mis-administration of the contract by one or both parties.
So back to my original point - if BOTH parties understood the law and conditions of contract (and therefore risks)better from day 1 and administered the contract correctly - as it should be and the conditions intended it be, there would be a substantial reduction in disputes and claims.
It would not eliminate claims, I somehow think that will never happen due to reasons you pointed out and many more, but it would go some way in reducung them.
RE: Link with Construction Law Firm
Interesting too read some comments regarding the law, only have one comment to make:
If everyone knew abit more about the law and administered the contracts properly in accordance with the law and conditions of contract (and not what you think they mean) there would be alot less claims.
More often than not, it is the ignorance of the law and the meaning of the conditions of contract that produce the disputes that leads to the claims in the first place.
RE: Link with Construction Law Firm
Not a handbag but with black coat also
RE: Link with Construction Law Firm
my god a handbag
RE: Link with Construction Law Firm
Now now den Oscar.
RE: Link with Construction Law Firm
I think Charlie would make a very good lawyer
he has a really good knowledge of the basics
RE: Link with Construction Law Firm
Folks,
Do ye really want to be getting into all that legal stuff? The industry employs others to do all that sort of thing.
By all means try and understand what ye can about the contract conditions on a specific job, and try to comply.
Mind you if one were to become a construction legal specialist and having had planning as a background, no doubt this would probably help.
The Law thought is a minefield, even for the legal profession.
All the best.
Darrell
RE: Link with Construction Law Firm
Hi all,
I think not only for the claims we need to deal with the law. Think about the procurement paperwork and scheduling. A few years back I needed to deal with the law of the sending, the receiving and the transporting countries to make a more or less reliable procurement schedule. A lot of EPC planner underestimate the importance of this. We can share a few "law" knowledge in a separate topic.
Regards
Katalin
RE: Link with Construction Law Firm
Hi Andrew,
I always remember that " little knowledge is dangerous" .
I did saw a lot of catastrophe in running or management of construction project by people with little knowledge on how to do their job.
Im still interested to start a thread "link with claim specialist". What do you think?
Charlie
RE: Link with Construction Law Firm
Hi all,
Just being pedantic again, so please forgive me, but contractual issues ARE legal issues - they are one and the same defined by contract law. A contract is a legally binding agreement and anything arrising from it is a legal issue.
That said, I agree with Stuart that it is unlikely that any law firm will give thier time free to help. If youre interested in knowing more then why not find out for yourself? Plenty of good books out there to go and buy or borrow from a libary. One piece of advice though, alittle knowledge is dangerous so read around a subject from a few sources to get a better picture on any peticular issue.
RE: Link with Construction Law Firm
Hi Joseph
No need to open new thread such as Construction Claim Consulatnts.
"Contracts, Claims & Claims Assessment" is already sufficient to address contractual and legal issues.
RE: Link with Construction Law Firm
Hi Joseph
No need to open new thread such as Construction Claim Consulatnts.
"Contracts, Claims & Claims Assessment" is already sufficient to address contractual and legal issues.
RE: Link with Construction Law Firm
Hello Stuart,
I thank you for your clarification. I think it is not necessary to link with Construction Law Firm.
And, I agree that we are dealing with contractual issues, e.g., claims, extension of time, etc.
How about a new thread: Link with Construction Claims Consultant. Do you think this will violate the forum rules.
Ill try to initiate this thread next week.
Cheers,
Charlie
RE: Link with Construction Law Firm
Charlie,
The two points that you raise – undue influence and submission of a recovery schedule – remain contractual rather than legal issues.
Many of us are familiar with Clients in the construction business who take too pro-active a role in the Contractor’s affairs. Many contracts address this, while in others it is an implied term. I am a little unclear as to what you mean by ‘…the law of undue influence’.
The resolution of undue influence exerted by such a Client is a contractual issue in the first instance, and can often lead to an excusable delay or disruptive event, which is again resolved at the contractual level.
Similarly with the submission of a recovery schedule. This is also a contractual rather than a legal issue. The request by a Client for a Recovery Schedule implies to me that such a schedule is required because the Contractor is late due to his own defaults. Since the Contractor has an over-riding obligation to execute and complete the Works by the due completion date, the fact that the Recovery Schedule is in truth inadequate, does not alter the Contractor’s responsibility for completing on time.
We are all so familiar with the practice of submitting Project Schedules (whether recovery or otherwise) and having them criticised and scrutinised by our Clients. These schedules will always be based on our belief that they are workable and attainable, but if they are proved not to be, then I suggest that it is stretching the imagination in describing them as ‘fraudulent’ (which in any event is almost impossible to prove!).
To my mind, there is a difference between a schedule that later proves to be unrealistic, perhaps based on incorrect assumptions, and one that is incompetent. If the scheduler’s assumptions are shown to be fair and reasonable, then his resultant work product may be competent but erroneous.
If it is demonstrated that his assumptions were stupid and wholly unreasonable, resulting in a crap schedule that clearly was useless, I would kick his arse out the door, but it would hardly be a criminal offence!
Cheers,
Stuart
www.rosmartin.com
RE: Link with Construction Law Firm
Hello Stuart,
I agree with you. Maybe, lawyers will be insulted to share their time and knowledge with such basic contract law. Of course their will be no money involve. The idea is more on free sharing of idea that is the hallmark of PP forum.
In PP forum, we have a lot of expert sharing their ideas and time without pay and sometimes subject to ridicule. Why are we doing this? For fame, I don’t think so, to get a lot of statistics in PP, I don’t think so. For the love of planning, it could be, maybe?
The lawyer I have is mind (or construction law firm) will have the same thinking as why we planners got involve in this forum in the first place. But he is more involved in guiding us with the salient features of basic contract law applicable to the thread.
One basic contract law that is common in construction is the law of “Undue Influence”. But who is capable of committing undue influence, the client, the main contractor, the sub-contractor, etc. How will the court look at a party to the contract as capable to exercising “Undue Influence”.
A simple case is about “recovery schedule”. Let say the client require the main contractor to submit a recovery schedule to finish the project within a particular date. The contractor project manager instructed the planning engineer to prepare recovery schedule. Upon sincere evaluation, it is not realistic to attain the said date, but still a recovery schedule was submitted. Can the client claim damage to the contractor due to fraud by submitting an unrealistic recovery schedule. Can the project manager terminate the employment of the planning engineer due to breach of trust or fraud by submitting an unrealistic scheduled.
Or is it high time for us planners to be honest and have that immeasurable courage (cojones) to tell the other party to stop bullying and the recovery schedule is not realistic and to submit an unrealistic schedule is tantamount to fraud.
All of us in one way or the other got contract with other parties. Employment contract, marriage contract, business contract, service contract, etc. If we are aware of the basic contract law then there is big possibility for us to act responsibly in our contractual obligation, client, contractor, sub-contractor, workers, etc.
RE: Link with Construction Law Firm
Charlie,
Interesting thread, but – at the risk of upsetting the lawyers reading this – I think it is a bad idea to have a link to a construction law firm, or to have a referral thereto, in this forum. Even international law firms cannot match the hands-on and relevant experience of this PP Forum.
This forum is essentially – but admittedly, not exclusively – for technocrats, where we can share our experiences, ideas, problems and their solutions. This forum contains an absolute treasure trove of contractual information based on hard, site-driven factual experience. If you have a particular contractual problem – no matter how apparently insurmountable – someone here will have had a similar experience!
Lawyers have their place, but not as a source of first reference. Remember, we deal in contractual matters, and only after we have exhausted all contractual and managerial solutions, should we then turn to lawyers, but only as a last resort.
Now, as for claims consultants, well, that is totally different…..;-)
Cheers,
Stuart
www.rosmartin.com
RE: Link with Construction Law Firm
Hello Shazad,
I agree with you and Bill. On the other hand the basic contract laws are usually refer to the "mother country". For example, commonwealth countries generally refer to English Laws while former American Colonies refer to American Laws, or CIS countries refer to Russian Law (maybe), or former Spanish Colonies refer to Spanish Law or maybe Francophine countries refer to French Law, etc.
A lot of Multinational Companies also prefer to have their contract written "that the Law of their country would apply" as per Bill which I agreed and experienced.
What I really have in mind is that when we discussed threads from CONTRACT CLAIMS AND ASSESSMENT, if only we can cite the basic contract law that is the basis of our atgument or ideas then it will help us in our professional work, or to others who are not yet familiar with basic contract law or in our personal life.
RE: Link with Construction Law Firm
Yes Bill is right in saying that each country has its own arbitration laws and act which are implemented on their own disputes so better to consult local Contract Law firm for their resolution.
Yes, this can be done, opinion may be rendered by Law Firm on your dipsutes as per your local law or act as this is being done in this forum
RE: Link with Construction Law Firm
Hello Bill,
I know its an uphill climb to make this a reality.
This is the purpose of the main thread to find a way to improve planning planet at the same time it will improve us PP members.
Our human capacity to make things possible is immeasureable.
Thanks for your advice.
Cheers,
Charlie