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ARTICLES OF AGREEMENT
Suitability
A lumpsum contract is more suitable for works for which contractors have prior construction
experience.
This experience enables the contractors to submit a more realistic bid.
This type of contract is not suitable for difficult foundations, excavations of uncertain character, and
projects susceptible to unpredictable hazards and variations.
Merits
i. The owner can decide whether to start or shelve the project knowing the total lumpsum price quoted
by different contractors.
ii. The contractor can earn more profit by in-depth planning and effective management site.
Demerits
i. Before the contract is awarded, the project has to be studied thoroughly and the complete contract
documents has to be prepared in advance.
ii. In this type of contract, unforeseen details of work are not specified in the contract document. Many
additional items 4 may have to be undertaken as the work progresses, giving opportunity to the
contractor for claiming higher rates of the extra items not included in the contract agreement.
ITEM RATE / UNIT RATE CONTRACT
Suitability
The item rate contract is most commonly used for all types of engineering works financed by public or
government bodies. This type of contract is suitable for works which can be split into various items and
quantities under each item can be estimated with accuracy.
Merits
i. In this type of contract, there is no need for detailed drawings at the time of allotting contract as in
the case of lumpsum contract. The detailed drawings can be prepared after the contract is awarded.
ii. Changes in drawings and quantities of individual items can be made as per requirement within agreed
limits.
iii. The payment to the contractor is made on the actual work done by his at the agreed rates.
Demerits
i. The total cost of work can only be known upon completion. As such, the owner may incur financial
difficulty if the final cost increases substantially.
ii. Additional staff is required to take detailed measurements of work done for releasing payments to
the contractor.
iii. iii. The Scope for additional saving with the use of interior quality materials may prompt the
contractor to use such materials in the work.
ARBITRATION
Arbitration is a popular form of alternative dispute
resolution that is used by many individuals and businesses to
resolve disagreements in place of pursuing a lawsuit.
Arbitration is a method of adjudication of dispute(s) / difference(s)
between the parties by non-judicial process wherein
arbitrator(s)/umpire(s) is appointed by the parties themselves
under a contract whereby the parties agree for adjudication of
such dispute(s)/difference(s) by way of arbitration proceedings
The hearing is informal and the parties mutually select the arbitrator.
The arbitrator is retained to decide how to settle the dispute and the decision is final and binding
on the parties.
Arbitration is more cost efficient and quicker than litigation but it is the arbitrator, not the parties,
who renders the terms and conditions of the dispute resolution
NECESSITY AND ADVANTAGES OF ARBITRATION ACT
Shrinking boundaries, free trade & international commerce have become global necessities.
Competition often leads to conflicts between entrepreneurs resulting in commercial disputes.
Growing strength and role of india in the global economy
Increasing FDI and other forms of collaboration and increasing disputes between indian and
foreign parties
Quick redressal to commercial disputes through private arbitration.
Settlement of dispute in an expeditious, convenient, inexpensive and private manner so that
they do not become the subject of future litigation between the parties.
Advantages Of Arbitration,
The parties are often encouraged to participate in the resolution process.
Negotiating within the framework of a cooperative process may well lead to a mutually beneficial
solution to a disagreement.
Some other perceived benefits of arbitration are as follows:
Arbitration is typically cheaper than traditional litigation.
An arbitration case can also be resolved more quickly than a lawsuit.
Arbitration hearings can be scheduled to meet the needs of busy participants, including
evenings and weekends.
Litigation in a public court of law is subject to the limitations of a rigid court calendar.
Unlike traditional litigation, complex legal procedures and rules of evidence are not
available in an arbitration case.
Procedures such as discovery and depositions are often used to delay legal proceedings in a
court of law.
An arbitration case provides more privacy than litigation.
Arbitration participants can agree to keep the final resolution and sensitive information
completely private.
Disadvantages Of Arbitration
The final decision of an arbitrator is difficult to overturn.
It may not even be possible to seek redress in a court of law.
The extensive budget and legal staff of a major corporation may prove to be a significant disadvantage for the
average consumer.
Many consumers are only made aware of a mandatory arbitration provision toward the end of the buying
process.
Lengthy contracts are complex and difficult to comprehend.
Arbitration services actively market their services to major vendors of consumer products and services.
For this reason, the selection and allegiance of an arbitrator may lack objectivity.
Though the arbitration process offers more privacy than litigation, arbitration may also impose a corresponding
lack of transparency.
Since arbitration proceedings are private and seldom reviewed in court, the possibility of bias is enhanced.
The cost of arbitration has risen dramatically in recent years.
In particular, the cost of initiating a lawsuit is much less than pursuing an arbitration claim.
Arbitration fees, especially if a panel of arbitrators is involved, can be quite extensive.
Consumers should carefully weigh the pros and cons of arbitration before signing any contract that mandates
arbitration in the event of a dispute.
Informed consumers may prefer to shop around rather than agree to a binding arbitration requirement. Watch
out for unexpected changes to existing consumer contracts.
The addition of mandatory arbitration is usually hidden in the fine print.
Types of ARBITRATORS
I. SOLE ARBITRATOR ,
ARBITRATOR TYPES
II. JOINT ARBITRATORS
/ARBITRAL TRIBUNAL
PARTY - A
III. PRESIDING ARBITRATOR
1. SOLE ARBITRATOR
PARTY - B
UMPIRE / CHAIRMAN
PARTY - A
ARBITRATOR 1 JOINT ARBITRATORS /
2.
ARBITRATOR 2 ARBITRAL TRIBUNAL
PARTY - B
.
.
.
PARTY - A ARBITRATOR - A
3. PRESIDING ARBITRATOR
PARTY - B ARBITRATOR - B
The appointment of Sole Arbitrator Or Three Arbitrators shall be made in the following manner:
APPOINTMENT OF ARBITRATOR
Any person can be appointed as an arbitrator.
Generally impartial and independent persons .
Parties are free to determine the number of arbitrators
Number shall not be an even number.
C As, engineers, retired judges, advocates and other professionals are preferred
The arbitrator shall disclose in writing to the parties anything that may give rise to justifiable
doubts about his independence or impartiality.
The Indian law does not lay down any specific qualifications for arbitrators.
Every person who is of age and of sound mind can be appointed as an arbitrator
To be an arbitrator, no formal qualification has been prescribed in the act. Even nationality is also
no bar.
Parties have been given full authority to determine the qualification of the arbitrator.
Section 11 (1) of the act says that a person of any nationality may be an arbitrator, unless
otherwise agreed by the parties. It is the parties who have to determine the qualification of the
arbitrator keeping in mind the nature of the dispute(s)/difference(s) that has arisen or may arise
between them.
Parties may agree upon the qualification at very initial stage when they enter into an arbitration
contract/clause or after dispute(s)/difference(s) arose if earlier has not been agreed.
It will be beneficial for the parties themselves to determine the qualification otherwise decision
of the arbitrator i.e. arbitral award may be set aside where the adjudication of such dispute(s) /
difference(s) requires a person having a technical knowledge.
TERMINATION OF ARBITRATOR
Circumstances exist that give rise to justifiable doubts as to his independence or impartiality
ARBITRATION AWARD
COST OF ARBITRATION
Fees and expenses of arbitrators and witnesses, legal fees and expenses, administration fees of
the institution supervising the arbitration and other expenses.
Tribunal can decide the cost and share of each party.
If parties refuse to pay the costs, the arbitral tribunal may refuse to deliver its award; thus any
party can approach court.
The court will ask for deposit from the parties and on such deposit, the award will be delivered
by the tribunal. Then court will decide the costs of arbitration and shall pay the same to
arbitrators. Balance, if any, will be refunded to the party.
ARBITRATION CLAUSE IN CONTRACT AGREEMENT
Example
Any dispute or difference arising out of or in connection with this contract shall be determined
by the appointment of a single arbitrator to be agreed between the parties, or failing
agreement within fourteen days, after either party has given to the other a written request to
concur in the appointment of an arbitrator, by an arbitrator to be appointed by the president or
a vice president of the chartered institute of arbitrators
ROLE OF ARCHITECT in case with Referral to the Architect
In making the decision, the architect must be fair and should obtain the complete views of both
sides before making the decision.
The decision must be based on the actual provisions of the contract documents, not what the
architect wishes were in the documents.
Sometimes the claim will be based on an alleged error or omission of the architect. This will be
the litmus test of the fairness capacity of the architect.
All of the architects decision-making procedures should be in writing.
In the event that either or both of the parties are dissatisfied with the decision, or the
procedure, higher authorities (arbitrators) will undoubtedly review, and possibly overturn, the
architects decision.
In the event the decision is considered fair and is acceptable to the parties, this resolves the
claim and forestalls continuation of the procedure leading to mediation and arbitration.
The parties acceptance of the architects decision is usually the most economical way to end
the controversy.
Continuation through mediation and arbitration will undoubtedly entail considerable additional
time and significant legal expense.
The result, weeks or months later, might be the same as the architects initial decision.
ROLE OF ARCHITECT in case with Referral to the Architect (conti)
Architect's Decision-Making Procedure
Architects Immediate Actions
1. (Ask the claimant to submit additional supporting data or ask the other party to submit a
response with supporting data.
2. Reject the claim in whole or in part.
3. Suggest a compromise.
4. Advise the parties that the architect is unable to resolve the claim. This would be the
case if the architect feels there is insufficient information to evaluate the merits of the
claim, or if the architect concludes that it would be inappropriate to decide the claim.
5. This latter determination would be in the architects sole discretion
Architects Investigation
The architect should seek whatever relevant information is available from the parties, and
should consult with experts if necessary.
It may be necessary for the architect to seek the owners authorization for the expense of
retaining such experts.
ROLE OF ARCHITECT in case with Referral to the Architect (conti)