In the case scenario, Artless Enterprises Ltd1(‘Artless’), a property developer appoints2Pig’s Ear Edifices LLP3(‘Pig’s Ear’) as the main Contractor for the construction of a modest studenthalls of residence in Nottingham, England, under an un-amended 2016 JCTStandard Building Contract, with quantities (JCT SBC/Q 2016). Subsequent to obtaining planning permission, Pig’s Earcompleted the site clearance and early work on the foundations. The progress4of works are good, however, major discrepancies and divergences are discoveredin a number of key aspects when Pig’s Ear are given the project drawings. Theproject was managed by Artless without any supervision of the works carried outby Pig’s Ear and later, serious defects appear from the constructionworks. 1. IssuesHere, the numerous issues between Artless and Pig’sEar are listed below. In the project, Artless failed to appoint an architector contract administrator to monitor the works, do not supervise theconstruction works, are late in issuing relevant construction drawings to Pig’sEar and issued faulty roof truss design drawings to Pig’s Ear.
Derick Idle, themanaging partner of Pig’s Ear, is worried that the roof trusses specified withinthe design documents provided by Artless may not only be inadequate, butpotentially (and positively) dangerous. It is not clear if the works werecompleted on time, however, prior to the completion date, the managing directorof Artless, discovers that the narrow exterior disabled ramp to a staircase andfire escape to an external gable wall installed by Pig’s Ear are defective,both of which were not built in conformity to the contract documentation. To evaluate the contractual and legalresponsibilities of Artless and Pig’s Ear, it is necessary to understand theobligations of the parties under the JCT 2016 suite and compliance to various provisionsof legislation. 2. RulesThe primary Employer’s duties under the contract are toco-operate5and provide payment to the Contractor. The obligations under the JCT SBC/Q 2016suite are to give possession6of the site (clause 2.4), to administer the site (to make appointments ofcontract administrator (clause 3.
5.1), to comply with construction design andmanagement regulation7,not to interfere with certifying powers of architect and to issue instructions toContractor (clause 2.12.1). A Contractor has an obligation to perform works in agood8and workmanlike manner (clause 2.
1) using the skill and care9expected of a builder with ordinary competence. The clause specifies that theworks are to be carried out in compliance with (a) contract documents (b)construction phase plan and (c) statutory requirements10.The clause 2.15 requires the Contractor to give notice to the Employer in theevent that the Contractor discovers any error, omission or inadequacy or anydiscrepancy between any of the contract documents. In limited circumstances,the Contractor’s obligations may extend to a duty to warn the Employer inrelation to defects11discovered in the design drawings provided to the Contractor. The Construction(Design And Management) Regulations 201512(CDM 2015) imposes general duties for the parties which are broadly categorizedas (i) appointments of professionals (ii) cooperating with each other (iii)reporting dangerous conditions and (iv) provide clear instructions.
Under clause 2.12.1 of JCT SBC/Q 2016, the architectis required to issue any further details which are necessary to either explainthe contract drawings or allow the Contractor to carry out the works inaccordance with the contract. Once the Contractor has applied in writing to thearchitect for relevant information or instruction, the architect must providethis within a reasonable timescale. If the architect fails to provide therequired information and instructions within a reasonable timescale, it mightconstitute a relevant event13under JCT SBC/Q 2016.
The clause 3.18 states that, where work is not inaccordance with the contract, the architect can require that it is made good atthe Contactor’s cost (in terms of time and money). A breach of contract will occur when one party to thecontract fails to perform on or more of his/her contractual obligations.
Theparty pursuing the breach of contract must identify the terms (either expressor implied) of the contract that are not being complied with. In the event of abreach of contract, the court may either award damages for the loss14or allow the innocent party to terminate the contract. It is important to notethat the breach itself does not terminate the contract.
Thecontract comes to an end when obligations have been satisfactorily performed bythe parties and for it to be satisfactory, the performance must be precise andexact15. Inthis context, a construction defect is defined as a defect in the design,workmanship, and/or materials used on a project that results in a failure of a componentpart of a building and causes damage to person or property. The building defects inconstruction mostly relate to faulty material16, workmanship or design17 which may result infinancial loss18to a party associated with the project. The JCT 2016 suite has provisions where acts oromission by either party (failure to perform obligations or building defects) willconstitute a relevant delay event. The relevant events under Employer’s obligation relate todeferment of site possession, suspension of contract works or failure toprovide instructions. A legal remedy might not necessarily require the party toperform an obligation precisely in the terms undertaken but rather will giveinnocent party the right to rescind the contract or monetary compensation.
1 Artless Enterprises Ltd is the Employer for whose benefit the works are carried out.2 A contract is part of law of ‘obligations’, which may be defined asthe agreements between the two parties, which creates, for those two parties,legally binding rights and obligations. The basic formula in contract is thatthere must be an offer followed by unconditional acceptance, which is how theagreement is reached. 3 Pig’s Ear Edifices LLPis the Contractor who is required to execute the contract works. 4 Contractor has an implied obligation under the contract to carryout works in an orderly manner. 5 The Employer should do nothing that will impede the Contractor inperforming its obligations under the contract and (thereby) from executing theworks in a regular and diligent manner. See LondonBorough of Merton v. Stanley Hugh Leach Ltd.
, (1985) 32 B.L.R. 51.6 R v.
Walter CabottConstruction Ltd. (1975) 21 B.L.R 42 and T & R Duncanson v. The Scottish CountyInvestment Co. Ltd. 1915 S.C.
1106 and Ductform Ventilation (Fife) Ltd. v.Andrews–Weatherfoil Ltd. 1995 SLT 88. 7 Clause 3.23 of JCT SBC/Q 2016 ensures that the Employer’s obligationsunder the CDM Regulations are given contractual effect; so that a relevantbreach of the CDM Regulations would constitute a breach of contract,8 The obligation iscontinuous throughout the construction process – it does not simply arise on completion of theworks, Surrey Heath Borough Council v.Lovell ConstructionLtd.
and Another (1988) 42 B.L.R.
25.9 The ‘due and proper completion of the work’ does not involve anyabsolute or quasi-absolute obligation, but requires the contractor …to adoptthe usual recognised standards and practice in the trade which a carefulcontractorwould employ in carrying through the contract to its completion’,refer to dicta of Lord President Clyde in the case of Morrison’s Associated Companies Ltd. v. James Rome & Sons Ltd. 1964S.C. 160.
10 It imposes an obligation on the Contractor to comply with any ruleor order made under any statute or directive having the force of law whichaffects the Works or performance of any obligations under the Contract.11 In Chesham Properties vBucknall (1996), it was considered by the court whether project managers,architects, engineers and quantity surveyors had a general duty to Employer towarn about actual or potential deficiencies. The obligations were decided wasbased on terms of engagement which demonstrated the importance of express terms12 A statutory regulationin United Kingdom which deals with responsibilities of the Employer andContractor. 13 A relevant event is defined as any impediment, prevention or default,whether by act or omission, by the Employer, which will entitle the Contractorto time and cost, Clause 2.29.7 of JCT SBC/Q 2016.14 Photo Production v Securicor1980 AC 87.
15 Union Eagle Ltd v GoldenAchievement Ltd 1997 AC 5.16 William Cory & Son v WingateInvestments (1980) 17 BLR 109.17 The Co-operative InsuranceSociety Limited v Henry Boot Scotland Limited 2002 EWHC 1270.18 The normal measure of damages for defective work is the cost of reinstatementtaken at the time when the defect was discovered (East Ham Corporation v Bernard Sunley 1966 3 ALL ER 619).
The awardof damages is based on compensatory principle, the purpose of which is to putthe claimant back in to the same financial position a he would have been in butfor the breach.