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First, I would like to express my gratitude with all my heart to Almighty god for giving me the
courage and the strength to complete this assignment. As far as I concern I think it is my
fortune following the course Quantity Surveyor at British College of Applied Studies. I think
BCAS is one of the institute seeks to give the best and updated knowledge in theory and
practice in the fields. This is the place where the future of all the students are lightened up.
Success behind the institution is always the result of the hard and dedicated services and of
all the personnel guiding its destinies. Behind all of this, there is always a person who guides
the institution in able manner. I would like to give my special gratitude to
Mrs. Mifaza Rizvi who was our course instructor, who was instructing us in a friendly
manner to achieve the target while fulfilling our knowledge. I want to remember my
class mates who were very co-operative while the group discussions which were another
way of gaining knowledge.
MM.Matheen
B/QS/07/13
Contents
Task 1.1 Discuss how/in what circumstances the law of tort applies to construction projects. 3
Task 1.2 Extract the legal positions of the parties in the given scenario.................................4
Task 1.3 Detail the remedies available under breach of contract............................................6
Damages in Contract Law...................................................................................................6
Duty to mitigate loss........................................................................................................... 7
Heads of damages.............................................................................................................. 8
Liquidated damages........................................................................................................... 9
Repudiation....................................................................................................................... 10
Rescission......................................................................................................................... 11
Specific performance........................................................................................................12
Task 2.1 Implied terms are significant in building contracts. Evaluate with appropriate
examples.............................................................................................................................. 14
Task 2.2 Discuss the importance and reasons for formation of standard forms of contract.. 15
Task 2.3 Identify the legal significant of BOQ in the formation of construction contracts......19
Task 3.1 Identify the ADR methods used in SRI LANKA in settling the disputes in the course
of construction process.........................................................................................................20
Task 3.2 Select Arbitration as one of the crucial methods of ADR and assess the pros and
cons of the method...............................................................................................................26
Task 4.1 Detail the legal and ethical responsibilities of the construction professionals to
develop a better contract administration...............................................................................27
Task 4.2 what do you mean by professional negligence? Discuss the consequences of
professional negligence in construction projects..................................................................28
Conclusion........................................................................................................................... 31
References........................................................................................................................... 32
Offer:
Acceptance
Intention to create a legal binding
Consideration
For the given task the Past consideration is much important to discuss. Because Ivor
Building Contractors employed saman and appu as the subcontractors to do a task,
but they were demanding additional 2500 charges for the completion of the project.
But they were accepted to do the work for 6000. In that time that was an Executory
consideration. After that they expected in last minute additional charges, the Ivor
agreed to pay. But in front of the law he was no need to pay, and also he could go for
some dispute resolution. Because he had a legal binding with subcontractors
(assumed) for the fixed price of 6000. Anyhow he was accepted. After the completion
he refused to pay the additional charge that he accepted to pay of 2500.
Here we have to see the past similar cases and about the rules with regard to consideration.
1. Consideration must not be past: Re McArdle (1951), Lampleigh v Braithwaite [1615]
2. Consideration need not to be adequate nut must be sufficient: There is no
requirement that the consideration must be market value, providing something of
value is given eg 1 given in exchange for a house would be valid. The courts are not
concerned with whether the parties have made a good or bad bargain: Chappell v
Nestle [1960]
3. Consideration must move from the promise: f a person other than the promisee is to
provide the consideration; the promisee cannot enforce the agreement: Tweddle v
Atkinson [1861]
4. An existing public duty will not amount to valid consideration: Where a party has a
public duty to act, this cannot be used as consideration for a new promise: Collins v
Godefrey (1831), unless the promisor goes beyond their duty: Glasbrook Bros v
Glamorgan County Council [1925], Ward v Byham [1956]
5. An existing contractual duty will not amount to valid consideration: If a party has an
existing contractual duty to do an act, this act can not be used as consideration for a
new promise: Stilk v Myrrick [1809], Unless the party goes beyond their existing duty:
Hartley v Ponsonby [1857], or if they confer a practical advantage: Williams v Roffey
Bros [1990], If the existing contractual duty is owed to a 3rd party this may be used
as valid consideration for a new promise:New Zealand Shipping v Satterthwaite
[1975], Scotson v Pegg [1861]
6. Part payment of a Debt: Part payment of a debt is not valid consideration for a
promise to release the debt in full: Part payment of a debt is not valid consideration
for a promise to release the debt in full: Pinnel's case 1602, Foakes v Beer (1883-84)
As I mentioned above, Re McArdle (1951) case is important to extract the scenario that has
given, in that case
Majorie McArdle carried out certain improvements and repairs on a bungalow. The bungalow
formed part of the estate of her husband's father who had died leaving the property to his
wife for life and then on trust for Marjories husband and his four siblings. After the work had
been carried out the brothers and sisters signed a document stating in consideration of you
carrying out the repairs we agree that the executors pay you 480 from the proceeds of sale.
However, the payment was never made.
Held: The promise to make payment came after the consideration had been performed
therefore the promise to make payment was not binding. Past consideration is not valid.
In the scenario Ivor also refused to pay more than 6000 to the saman and appu for
the work completion of carpentry. When saman and appu go for the litigation the
court will take the reference of Re McArdle (1951) case and it will declare that the Ivor
no need to pay. Because of the past consideration is not a valid.
But here another point can be argued, that is the saman and appu are deserving money for
their work. But An existing contractual duty will not amount to valid consideration, the Stilk v
Myrrick [1809] case also referred that based on public policy as if the claimants were already
bound to do it, then the defendant no need to pay for extra money.
And also as Hartley v Ponsonby [1857] case if the claimants had gone beyond their
existing contractual duty they have to be paid. But here no like that situation was
held.
Heads of damages
There exist various heads of damage in contract law under which an amount can be claimed
to reflect different types of loss. These include loss of bargain, reliance loss, discomfort or
disappointment, inconvenience, diminution of future prospects, speculative damages and
liquidated damages.
Reliance loss: Where it is difficult to quantify the position the claimant would have been in it
may be possible to recover expenses incurred in reliance of the contract:
Anglia Television v Reed [1971]
The claimant, Anglia Television, engaged Oliver Reed to play the leading role in a television
play. Subsequently Reed pulled out and Anglia was unable to find a replacement. They
abandoned the play but had incurred expenses amounting to 2,750.
Held: Whilst damages generally seek to put the parties in the position they would have been
in had the contract been performed, the parties may elect to claim reliance loss and recover
expenses incurred in an abortive transaction. Thus Anglia was able to recover their
expenses from the defendant.
Discomfort, disappointment: Damages to reflect discomfort and disappointment can only
be claimed where enjoyment was part of the bargain of the contract eg holidays or a meal
out or entertainment. This most commonly seen in holidays which fail to meet the standard
the holiday maker was lead to believe would be enjoyed:
Jarvis v Swan Tours [1972]
Mr Jarvis, a solicitor, booked a 15 day ski-ing holiday over the Christmas period with Swan
Tours. The brochure in which the holiday was advertised made several claims about the
provision of enjoyment relating to house parties, a friendly welcome from English speaking
hotel owner, a variety of skiruns, afternoon tea and cakes and a Yodler evening. Many of
these either did not go ahead or were not as described. Mr Jarvis brought a claim for breach
of contract based on his disappointment. At trial, the judge awarded him 30 damages on
the basis that he had only been provided with half of what he had paid for and that no
damages could be recovered for disappointment. Mr Jarvis appealed.
Held: Where a contract is entered for the specific purpose of the provision of enjoyment or
entertainment, damages may be awarded for the disappointment, distress, upset and
frustration caused by a breach of contract in failing to provide the enjoyment or
entertainment.
Jackson v Horizon Holidays [1975]
Mr Jackson booked a 28 day holiday in Ceylon for himself and his family through Horizon
Holidays. The hotel turned out to be unsatisfactory for various reasons relating to
cleanliness and provision of services. The tr ial judge made an award for the disappointment
suffered by Mr Jackson, but stated he could not take into account the disappointment
suffered by his wife and children since they were not party to the contract. Mr Jackson
appealed.
Held: Mr Jackson was able to recover for the disappointment suffered by his wife and
children. This amounts to an exception to the rule of privity of contract based on the decision
in Beswick v Beswick (1968)
Inconvenience
Where the claimant has been put to physical inconvenience rather than anger or
disappointment that the defendant has not met his contractual obligation, the court may
award a sum to reflect such inconvenience:
Bailey v Bullock [1950]
A solicitor failed to take action to recover the claimants house. As a consequence the
claimant and his wife had to move in with his in-laws for two years.
It was held that he was entitled to recover damages to reflect the inconvenience of having to
live in overcrowded circumstances.
Barry J emphasised that there is a distinction between mere annoyance or disappointment
at the failure of the other party to carry out his contractual obligation and actual physical
inconvenience and discomfort caused by the breach.
Liquidated damages
Parties to a contract may legitimately agree the amount of damages to be paid in the event
of a breach and provide for this in their contract terms. This provides certainty to each party
so that they know exactly what they are liable to pay should they be unable to perform their
obligations. Such a clause will be enforceable by the courts only in so far as it is a genuine
pre-estimate of loss. If it is a genuine pre-estimate it is known as a liquidated damages
clause. If however, the amount specified in the contract is not a genuine pre-estimate but is
aimed at deterring a breach of contract or punishing the party in breach, this is known as a
penalty clause which is not enforceable:
Repudiation
Repudiation is a remedy available for breach of contract. Repudiation involves bringing an
end to the contract. It is only available for breach of condition as oppose to breach of
warranty:
Bettini v Gye (1876)
Bettini agreed by contract to perform as an opera singer for a three month period. He
became ill and missed 6 days of rehearsals. The employer sacked him and replaced him
with another opera singer.
Held: Bettini was in breach of warranty and therefore the employer was not entitled to end
the contract. Missing the rehearsals did not go to the root of the contract.
Rescission
Rescission is an equitable remedy available at the discretion of the judge. Rescission seeks
to place the parties back in their pre-contractual position and thus represents an unraveling
of the contract. Rescission is available where a contract is voidable as a result of a vitiating
factor such as misrepresentation, undue influence or duress. The right to rescind may be lost
if the claimant affirms the contract, where a third party acquires rights in the goods, through
lapse of time or where restitutio in integrum is not possible.
Car & Universal Credit v Caldwell [1964]
Mr Caldwell sold his Jaguar car on 12th Jan to a rogue, Norris, who had paid 10 cash
deposit and left another car as security and gave a cheque for 965. The following day Mr
Caldwell went to cash the cheque and discovered it was fraudulent and the car left as
deposit turned out to be stolen. Mr Caldwell reported the incident to the police and used his
best endeavours to co-operate with the police to find Norris in order to rescind the contract of
sale. He also contacted the Automobile Association to try to locate the car. Norris had
acquired a voidable title to the car as the contract was induced by fraudulent
misrepresentation. Norris sold the car on to a third party on 15th Jan. The question for the
court was whether the actions taken by Mr Caldwell were sufficient to avoid the contract.
Held: Mr Caldwell had successfully rescinded the contract. He had taken all steps possible
to demonstrate that he no longer wished to be bound by the contract. He should not be
prejudiced by the fact that his endeavours failed to locate Norris.
purchase the lorry. On the first journey the claimant noted certain faults with the lorry and
contacted the defendant who offered to pay half the repairs. The claimant accepted this.
However, on a further journey the lorry broke down completely and the claimant wished to
rescind the contract and brought an action against the defendant for innocent
misrepresentation.
Held: By accepting the offer of payment for half the repairs when he became aware of the
defects, the defendant had lost his right to rescind as he had affirmed the contract.
Specific performance
Specific performance is an equitable remedy available at the discretion of the judge. It is an
order by the court requiring one party to perform their contractual obligation. Whilst it is often
said that contracts are made to be performed and parties should be held to their contractual
obligations, the courts are often reluctant to order a party to unwillingly perform the contract
and specific performance is only available in limited circumstances. In considering whether
to grant specific performance the courts look to whether damages would be an adequate
remedy, the type of contract and whether equity requires such an order.
1. Where damages are an inadequate remedy:
Nutbrown v Thornton (1805)
Cohen v Roche [1927]
If the claimant could adequately be compensated by an award of damages for the breach of
contract, the courts are unlikely to order specific performance.
2. Type of contract
Specific performance is most commonly ordered for contracts for the sale of land
The courts are unlikely to order specific performance for contracts for personal service.
3. Equity: Clean hands
Walters v Morgan (1861)
Lamare v Dixon (1873)
Injunctions
Injunctions are another form of an equitable remedy available only at the discretion of the
judge. There are three types:
There is an overlap between mandatory injunctions and specific performance which has
been recognised by the courts. The courts will not grant an injunction in circumstances that
would in effect be an order for specific performance where it would not generally be allowed:
Page One Records v Britton [1968]
However, this does not prevent the ordering of a prohibitory injunction which may be an
indirect way of ensuring compliance with contract:
Lumley v Wagner (1852)
The court may sever terms and only order an injunction in respect of partial obligations:
Warner Bros v Nelson [1937]
ICTAD standard forms several types .This types mainly SBD forms. This SBD forms mainly
four types.
Standard Bidding document for minor contracts ICTAD/SBD/03
o
Recommended for use on construction contracts between Rs.10 million and Rs. 150
million.
May be used for works of higher values which are not of a complex nature.
Recommended for use on construction contracts over Rs.150 million and for
contracts of a lesser value, which are of a complex nature.
Recommended to use for contracts where the contractor is responsible for the design
and construction of the works on specified approvals obtained from the employer.
The contractors followed the same order or standard. This methods easily for the
construction activities E.g. the tendering the contractors based on ICTADSBD/04
prepare the tender document. So this time all the contractors based this form of
contract. The consultant easily handling the tender document. The forms of contracts
not use every contractor different methods prepare the documents. E.g. ICTAD/SBD /
04 acceptable for performance bond bank guarantees. But not use the stander forms
some time contractors use not acceptable matters. However, many advantages to be
gained by using a standard form of contract.
Sometime contractor client facing some problems in the payment matters. This time
consultant solves this problem based on the forms of contract while this document both
parties recognized document.
Some advantages are:
The standard form is usually negotiated between the different bodies that
Make up the industry. As a result the risks are spread equitably.
Using a standard form avoids the cost and time of individually negotiated
Contracts.
Tender comparisons are made easier since the risk allocation is same for each
Tendered. Parties are assumed to understand that risk allocation and their
Prices can be accurately compared.
No cost
ii.
Least time
iii.
High confidentiality
iv.
No documentation to be maintained
v.
vi.
Disadvantage
i.
ii.
iii.
iv.
Most of the Sri Lankan small projects are solving their disputes through this
Negotiation method. Some of the Big projects also using this method, Anyhow for
large scale projects it is not a suitable method always.
2. Mediation
Both sides are brought together, often in neutral surroundings, and encouraged by a trained
mediator to settle their dispute amicably. This is often use in neighbour disputes and in
family disagreement. Some of these schemes are operated by charities such as Mediation
UK.
A mediator is appointed jointly by the parties, and will normally meet with the together and
separately in an attempt to resolve the differences. It is a non-adversarial process which
tends to forge good relationships between parties. This, in turn might then pave the way for
shorter and possible less acrimonious arbitration or litigation.
Advantage
i.
Least cost
ii.
Least time
iii.
iv.
v.
vi.
Disadvantage
i.
ii.
iii.
The
mediator
may
not
be
professional
for
the
issue
The Mediation is another famous method in sri lanka to solve the problems in construction
industry. By the Ministry of Justice of Sri Lanka has approved the mediation commission
under ACT, NO. 72 OF 1988. For more details about the Mediation commission please visit
below link:
http://www.justiceministry.gov.lk/index.php?
option=com_content&view=article&id=49&Itemid=64&lang=en
3. Conciliation
Conciliation is somewhat similar process to mediation. But the conciliator will actively
participate in the discussions between the parties offering views on the cases put forward.
There are no private meetings between the individual parties to the dispute and conciliator.
The conciliator will recommend how the dispute should be settled where the parties fail to
reach agreement. This is more informal method than mediation. No any legal background
and conciliator gives some advice.
Advantage
i.
ii.
iii.
iv.
Settlements can include elements not available at tribunal, for example references
and agreements to return property
v.
Disadvantage
i.
There is no sanction on either side for not conciliating, and it can be difficult to get
some parties to agree to conciliate
ii.
Complainants might not get an opportunity to meet with their employer face-to-face,
as most conciliation take place by telephone
iii.
In srilanka This Act may be cited as the Conciliation Boards Act, No. 10 of 1958.
Operation of this Act
(1) This Act shall be in operation in every village area and in such other areas as may be
determined by the Minister of Justice by Order published in the Gazette.
(2) This Act shall be in operation in any area determined by the Minister of Justice under
subsection (1) subject to such modifications of its provisions as may be set out in the Order
by which such determination is made.
(3) In subsection (1), the expression "village area" has the same meaning as in the Village
Councils Ordinance.
4. Adjudication
Adjudication is the legal process by which an arbiter or judge reviews evidence an
argumentation including legal reasoning set forth by opposing parties or litigants to come to
a decision which determines rights and obligations between the parties involved. Three
types of disputes are resolved through adjudication.
Advantages
i.
ii.
iii.
Least time
iv.
v.
Disadvantage
i.
Identified as a second class adjudication and not popular in terms of the long
procedures
ii.
iii.
5. Arbitration
Arbitration proper is to be distinguished from various less formal process met in construction
contract. The essentials of arbitration are that there must be a dispute, which is referred to
and independent arbitrator for decision, usually after hearing the parties and receiving any
evidence they wish to put forward. His decision is final, subject to review by the court. When
parties arbitrate; they agree to be bound by the decision of one or more impartial arbitrators.
Each side is permitted to submit documents, witnesses and other evidence. The arbitrator
renders a decision after all the evidence has been heard. There is considerable debate
about the advantages of arbitration over litigation
The arbitrator must confirm to certain minimum requirements (that the arbitrator should in
fact be unbiased and should act so as to convey this impression to the parties) of
fairness and impartiality.
He should give each party an opportunity of dealing with every relevant point.
He must take a sufficient note of the evidence and argument to enable him to determine
the issues and to deliver a reasoned award.
Expertise of the arbitrator: The decisions from Arbitration procedure tend to be more in
keeping with actual practice in the area under dispute because, arbitrator will be a
technical expertise person. In litigation, a judge lacking detailed technical knowledge
may be appointed.
It will probably narrow the scope of dispute and reduce the risk on gathering information
and synthesis the requirements for litigation.
The parties must agree upon one of the Arbitration procedure method to resolve
where disputes arise.
The decisions of Arbitration procedure methods are not legal binding except
arbitration. But in litigation which legally is binding.
The awarding may be some sort of favourable for either party in Arbitration
procedure. But in litigation court will decide based on evidence presented together
with relevant legislation.
In the arbitration process, if there is a panel of arbitration it will take more times to
hearing which can lead to delays in long cases
The parties need to pay arbitrators, medications and conciliators which add an
additional layer of the legal cost.
If agreement is not reached the process will be a waste of time, effort and expense.
The court will generally always be able to offer a sound opinion on a point of law. In
arbitration, the arbitrator may of course seek the opinion of the courts. But this could
easily overlook in which case a mistake could occur.
In arbitration, an arbitrator does not have the power to bring in to arbitration a third
party against his wishes. The courts are always able to do this.
In Sri Lanka, Arbitration also one of the famous dispute resolution method. Institute for the
Development of Commercial Law and Practice (ICLP), SRI LANKA NATIONAL
ARBITRATION CENTRE are the famous arbitration committees.
2. Litigation
All persons doing business in the jurisdiction of a court of law. Although it may be difficult for
lay persons to understand the system in place and the system may be costly, the law always
provides a mechanism to resolve a dispute.
Litigation is the process of solving the matter through the legislative courts. Litigation results
in a win or loss. Therefore one party will be happy while the other party will be unhappy
consequently often they become enemies for life. The process has lot of disadvantages in
comparison to the Arbitration because of its rigidity. Further the judge may not be able to
scrutinize the matter professionally with regard to the Construction Practices due to
inadequate knowledge of the field and thereby may take more time.
Advantage
i.
ii.
Dispute is analysed in the frame of legal aspects based on the governed law
Disadvantage
i.
ii.
Very expensive
iii.
Time taken
iv.
v.
vi.
This is the Final stage of the dispute resolution finding level. Commonly it is also
considerable method to solve the construction problems in Sri Lanka. It is suitable for small
to large scale projects.
(Presentation)
Duty of care
The contractual obligations which parties owe to each other arise by reason of the decision
to enter into the contract with another person. It is only the other party to the contract who
can complain about a breach of the contract. A duty of care arises by reason of a decision to
undertake a particular activity, for example construct a building. People who are affected by
the activity will potentially be able to complain about a breach of a duty of care. The person
complaining may also have entered into a contract or may be a stranger. The law places
limits on the categories of people who can complain about a breach of a duty of care.
As noted above, there are a wide range of duties of care which one person may owe to
another. These may include a duty to maintain a safe working place or to provide a certain
professional standard of work.
Determining if a duty of care exists first requires the consideration of whether a party owes a
duty of care to one or more categories of person defined by the courts. Some categories,
such as between an employer and employee or professional and client, are well established.
However, the courts are able to create new categories by analogy to existing categories or
by consideration of various facts and public policy.
Breach of duty of care
Once it is found that a duty exists, it will be necessary to consider what standard is required
of the person owing the duty of care. This is subjective and is determined by considering
what a reasonable person would have done in the position of the person owing the duty of
care. The test is not what a perfect person would have done.
It should be noted that the standard of care may be deemed to be higher if the person is a
professional or holds themselves out as possessing a certain level of special skill. In that
situation, the standard required would be what that type of person would be reasonably
expected to have.
Causation
Once a breach has been established, it must be shown that any loss was caused, or at least
materially contributed to, by the negligent act. It may be that there are a number of parties
who materially contributed to the loss. Accordingly, damages may be apportioned according
to each person's liability.
Finally, any award of damages may be reduced to the extent that a person themself
contributed to the loss. This is referred to as contributory negligence.
EXAMPLES
The operation of the law of negligence is best illustrated by way of examples. The following
are potential situations for a principal, contractor or architect:
CASE STUDY
Brickhill v Cooke [1984] 3 NSWLR 396
Facts
Result
The engineer's failure to identify the structural defects, which should have been
apparent on any reasonable inspection, meant that the engineer failed to perform the
inspection with the reasonable degree of competence expected of a professional
engineer.
The engineer's duty of care in relation to negligence existed alongside the engineer's
contractual obligations.
This overlap between negligence and contract will be particularly apparent where a
contract expressly or impliedly requires a professional person to use due care and
skill.
The court ultimately determined that the engineer was liable to the new owners under
the terms of their contract.
The court also recognised that the engineer could be liable to the new owners in
negligence.
Conclusion
In this assignment, there are basic construction laws included in our task. Therefore, we got
some books from out site and referred some notes from those books. In my assignment
included five tasks as given below:
Law of tort application
Judging a situation problem with the scenario
Legal significance of the documents of a contract
Nature of dispute
Select the relevant resolution method to administer the disputes
Professional Negligence
I got all knowledge about Construction Law subject. This is the good opportunity for me.
References
A.V.ATKINSON, Civil Engineering Contract Administration, 2nd Edition 1992,
Published by Hutchinso &co. P(4-14) and (96-100)
JOHN UFF, Construction Law", 5th edition 1991, London Sweet & Maxwell. P(3945), (78-115), (210-245) and (328-350)
STEPHANIES OWEN, Law For The Construction Industry2nd Edition 1997, Publish
Pearson Education Limited.P(40-63)
Available
at:
http://www.e-lawresources.co.uk/
Negligence
minter
Ellison (2008)
Available
at:
http://www.constructionlawmadeeasy.com/Negligence (Accessed: 9 November
2016).