What Parties to Long-Term Project contracts need to know about disputes (and avoiding them)

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Parties to a construction project can face different type of disputes and below are some key examples:

  • Non-payment – this can relate to pay less or payment notices etc;
  • Extension of time – this can relate to service of appropriate notices notifying the Employer in relation to delay;
  • Repudiation of contract – this can arise from suspension of work or incorrectly terminating the contract; and
  • Termination of contract – this can be a dispute about the validity of terminating the contract.

Common causes of disputes

In long term contracts, construction risks remain a key concern in many regions, which often leads to high value disputes and negative impacts on project timelines.

There are many common causes of disputes during the construction phase and below are some examples:

  • Parties failing to understand and/or comply with contractual obligations;
  • Failure to administer the contract properly;
  • Failure to serve the appropriate notices under the contract;
  • Change in scope;
  • Issues with design;
  • Access to site;
  • Workmanship deficiencies;
  • Payment issues;
  • Weather conditions; and
  • Covid-19, etc.

So, how do you avoid disputes?

Here are some practical tactics:

  • Ensure that you have a well drafted contract in place. If you have no idea what a well drafted contract should look like or perhaps you are confused or unsure about certain provisions, you should consult a construction solicitor. This will save you from making mistakes and avoid future disputes;
  • Be proactive from the start of the project; and
  • Push for early engagement with all project stakeholders and deal with issues as they arise.

Below is an example where you can implement the above tactics:

Provisional sums

Usually, problems occur in relation to provisional sums due to uncertainty as to who takes the risk of time and price. For example, confusion over allowance for preliminaries, programmes, overheads and profit, etc. To avoid this type of problem, clear contract drafting is key. You should look at and amend standard clauses, such as clauses in relation to instructions, variations and any other clauses that relate to provisional sum work.

Long-term project contracts were discussed in our webinar on 25 March 2021 with Gordon Nardell QC, Twenty Essex and Sue Kim, HKA.  Click here to view the webinar and detailed notes.

How can Barton Legal help?

At Barton Legal we have extensive experience in all the standard contract forms, including JCT as well as NEC, IChemE, and FIDIC.

We believe that an increased understanding of contractual terms and the roles and responsibilities of all parties ensures a successful conclusion to a project, which is why we always use plain English and ensure you understand and can apply the terms of your contract.

Our aim is to reduce legal gobbledegook and increase collaboration between parties to increase the prospects of completing your project on time and on budget

We place great emphasis in the early stages of the contract on understanding and preparing thoroughly, in order to avoid costly disputes later.

If you have any queries regarding any of these contracts or any form of construction dispute, please do not hesitate to get in touch by email construction@bartonlegal.com  or call our office on 0113 202 9550.