How To Create Contract Legal Relations
In construction management, before any project is started, there are two legal implications one should look out for. Legal advice will be necessary to obtain powers to purchase land, gain access, alter public rights of way, abstract water, discharge waste, gain planning approval, and meet environmental and other objections. A number of outside bodies may have to be consulted on these matters. Again, to form a contract, one party must make an offer to another party. If the second party accepts the offer, next is to exchange consideration to make the contract legally binding. The legal implications consequent on brokering a contract depend on the contract policies.
Contracts contain legal provisions which is very pertinent both parties define clearly for better understanding. Depending on the complexity of a contract with the help of independent counsel you can negotiate more agreeable terms that will better allocate risks, diminish the likelihood of litigation, and equally spread financial burdens.
The purpose of this article is to look at the various important provisions that will affect civil engineering construction process necessitating that both parties have an understanding prior to signing the contract documents. Some of these high points are:
1.Scope of work:
In project management, scope is described as ‘The totality of outputs, outcomes and benefits and the work requikred to produce them. It provides the parties with a clear description of the work that is to be performed.
It is worthy of note that this provision describes duties and responsibilities of both parties signing the contract. It highlights the work that is going to be undertaken by the contractor and how that work is to be completed including other functions and responsibilities of the contractor. Furthermore, it may describe how client and contractor will handle unforeseen events; what quality of work and completeness is expected; and how the commercial building design documents are going to be handled and interpreted.
Usually problems arising from noncompliance with the scope provisions of the work on the part of either of the parties in the contract will lead to resolution by litigation. This could lead to unnecessary delay of the completion of the project due to court engagements. Therefore, necessary steps should be taken in the planning stage to ensure such possibilities don’t arise. This could be done by specifying details about apportionment of risk between parties, quality assurance by the contracting firm, defining dispute resolution methods that would be adopted in event of any disputes.
2. Funding provision:
All construction services necessary for the completion of a specific project are usually analyzed down to constituent work packages with cost schedules attached with them. A group of these work packages make up a milestone. Since this provision assigns a line item value for each of the identified items of work, the contractor will periodically certify what amount of work has been completed in accordance with this provision. It’s by this certification, that the completed milestone is paid for so that the work can progress. This certificate shall contain but not limited to:
- the work packages that have been fulfilled
- their percentage completion; and
- the item value for that percentage of completion.
It is important to note that this provision details how the contractor will assess the completeness of a milestone. Additionally, counsels to both parties can agree to include as part of the provision a method by which disputes over completion of milestones and payment for them can be handled without resorting to litigation.
3. Project Plan Alteration :
All projects prior to construction requires a planned design. However, most times adjustments could be applied to the already adopted design necessitating an as-built drawing at the end of the project. Some of these changes could come from the contractor while others from the client.
The provision prescribes the procedures that the contractor may take in order to notify you of any changes to the original project, budget, and/or schedule that the builder or contractor will need to adjust as a result of the changed building plans. It further includes the method by which the client can notify the contractor of any changes to the original specifications giving him time to reassess the costs that will be incurred as a result of the changed building plan.
4. Time Schedule- Delay provision:
Every project is characterized be uniqueness and it’s time bound. Since all projects are time bound, this provision typically insures that builders and contractors will be compensated for compensable events that delayed work on the project. These compensable events are commonly referred to as “force majeure” and “Acts of God” events. These are events seen to be beyond the control of the client or contractor.
The reason for this is to ensure that there is a monetary value attached with every single act of delay such that each of the parties involved could act responsively to the demands of the job.
5. Protection Against third party Indemnification:
In case of damage done to property of third parties in the process of construction, plan is made to decide who takes responsibility for such eventualities. In essence, this provision accounts for third-party claims that might come up during the course of the the job and is meant to keep you insured from liability for these claims.