Contributed by Uwe Putlitz
Uwe Putlitz continues to explore the complex world of contracts in part one of understanding rights and obligations.
 Uwe Putlitz |
| Uwe Putlitz is a registered professional Architect and Construction Project Manager, a Fellow of the Royal Institute of Chartered Surveyors (RICS) and is a visiting lecturer at the School of Construction Economics and Management at the University of the Witwatersrand. Having recently retired as the Chief Executive Officer of the Joint Building Contracts Committee (JBCC) he specialises in the avoidance of construction disputes by way of lectures, technical articles dealing with aspects of contract administration for various industry publications arising from the use of Standard-form Contracts including the Federation Internationale des Ingenieurs-Conseils (FIDIC), the General Conditions of Contract (GCC), the JBCC or the New Engineering Contract (NEC) to find an acceptable settlement without resorting to legal processes, where possible.
More info: info@buildstrat.co.za |
All of us have or will encounter a contract in our private and/or working lives. Some may be daunted by the writing style, particularly if it follows the convoluted legal wording favoured by that profession in the past. The current international trend is to draft legal documents with simple words in short sentences, and actions listed in bullet format for easy interpretation.
A (construction or supply of products or services) Contract is typically defined as “a written or spoken agreement that is intended to be enforceable by law” comprising the agreement between the Parties, the specification and drawings of what is to be done, where and when, to be suitable for the intended purpose and the payment conditions to suit the project. Implementation must be possible and not contrary to public policy.
Oral contracts are valid but provide no proof of what was agreed, giving rise to often avoidable disputes.
Standard-form Contracts (SfC) have the advantage that their content is known and understood with an equitable distribution of risk in the industry as a common base to compare tenders’ content and value. All SfC’s are drafted to describe an obligation and how this is to be executed within a specified period. Failure to comply results in a notice of default to remedy, such default before it becomes a breach of contract that can be avoided, and with it the opportunity to submit a contractual claim or other response may be lost.
The Parties to a Contract are the Employer (purchaser) and the Contractor (supplier), or the Contractor and a Subcontractor. The Parties must:
- Be older than 18 years of age and have the authority to act on behalf of the business – in the form of a letter issued by the board of
- Enter a Contract
- State their physical addresses for delivery of legal documents, which may differ from the location of the project – and the Law of the country applicable to the project.
The Contract Administrator (CA) is not a party to the Contract, is described as the Engineer in FIDIC, the Employer’s Agent in GCC, the Principal Agent in JBCC and the Project Manager in NEC, appointed and paid by the Employer “with full authority and obligation to act on behalf of and bind the Employer in terms of this agreement” (JBCC wording). Note that when using JBCC contracts, the Principal Agent cannot decide a disagreement between the Parties as provided in the other SfC.
The Construction Industry Development Board (CIDB) in South Africa recognises four published SfC’s for use by Organs of State as the Employer of a Contractor to execute the Works (subject to the restriction of some duties of the Contract Administrator) designed by the Employer’s agents. The private sector uses the same SfC without such restrictions.
- FIDIC(1999 and 2027 editions) of the ‘Red Book’ is used primarily in complex multi-year infrastructure projects and industrial processes (not really a ‘building’ contract).
- GCC(2015 edition) is used for civil building and infrastructure projects (not really a ‘building’ contract).
- JBCC(2018 edition) is used primarily for building projects (not a civil or infrastructure contract).
- NEC3-2013 and NEC 4-2017 editions of the ‘Black Book’ is used for large, complex building and infrastructure projects (not really an ordinary ‘building’ contract).
Part two of Contracts: understanding each party’s respective rights and obligations will continue in our February issue.
