For a contract to exist between two parties there are three essential principles:
1. There is an Intention of the parties to create a legally binding relationship. The intention must be formal and binding between both parties otherwise the law will not enforce the promise if it was not intended to be legally binding. A moral obligation is not enforceable as an intention for a contract
2. There is a consideration for the agreement. For a contract to be enforceable there must be something offered from both parties; a one way promise is not a contract. An exchange such as a fee or sum provided by one party is exchanged for services provided by the other party is a valid consideration. Without consideration there can be no contract. A consideration must be provided by the party who wishes to enforce the contract.
3. That an ‘agreement’ is made between the parties. For an agreement to be valid there must be an offer and an acceptance. An acceptance can be by word (written or oral) or by conduct.
To reduce the risk it is preferable to have a formal written contract signed by both parties.
1.2 Explain what is meant by the term ‘Duty of Care’ and what are the implications upon the architect?
A duty of care is a legal obligation in tort law imposed on the Architect requiring they exercise a standard of reasonable care and diligence whilst carrying out professional work that could foreseeably harm others. If the architect breaches the duty of care this results in an action in negligence where they become liable in tort law.
A duty of care is also applicable in agency outside of any contractual arrangement.
It is not required that a duty of care be defined by law, however, it often develops through case law.
It is an ARB requirement that Architects adhere to the established standards of the profession and ‘exercise due skill, care and diligence,’ carrying out their work within agreed time-frames.
For a duty of care to be breached there must be three points met:
– Harm must be ‘reasonably foreseeable’ of the defendant’s conduct.
– A relationship of ‘proximity’ between the defendant and the claimant.
– It must be ‘fair, just and reasonable’ to impose liability.
1.3 With reference to the RIBA Standard Form for the Appointment of an Architect explain the purpose of the Net Contribution Clause.
The net contribution clause in the standard form of appointment of an architect limits the architects liability to the share of any loss that is the architects responsibility. The clause is there to provide a fair balance of risks between the architect and the client where the client has entered into separate contracts with other consultants. The purpose of this clause is to avoid being unfairly financially penalised for the mistakes of the other consultants. Insurance often demands for the Net contribution clause to be included so to insure the architects practice. If this clause is deleted by the client within a bespoke contract this may affect the professional indemnity insurance premium.
A net contribution clause means that where two or more parties are involved in the construction project each is liable but the liability will be limited to the amount that is determined by court.
1.4 Explain and define what is meant by a Letter of Intent. In a building construction contract, what are the circumstances under which it may be issued, what may be its objectives and what are the principal matters that it should contain?
Letter of intent is a document that sets out details of an agreement between two or more parties (e.g. An employer and the contractor) to enter into a contract before an agreement is finalised. It is often used to prevent delay at the start of a project, where an employer requires work to be commenced by a contractor before a formal contract has been agreed and signed. This can prove beneficial when there is a longer lead in time for ordering materials or to avoid lengthy delays in obtaining approvals and permissions.
A letter of intent is not a contract. It is a unilateral agreement in which one party confirms his intention to enter into a contract. A letter is no more than the expression in writing of a party’s present intention to enter into the contract at a future date. It is enforceable by the courts in respect of both the act and the remuneration however has no binding effect.For a letter of intent to exist it must contain: an instruction to act and confirmation that a sum will be paid however is insufficient to establish final contract arrangements.
1.5 What are the principal factors that determine the choice of a particular contract form and an appropriate procurement route? Clearly explain all of the issues.
The principal factors that determine the choice of an appropriate procurement route are cost, quality and time.
If time and cost are a priority, the quality will be decreased.
If time and quality are a priority, the cost will be increased.
If cost and quality are a priority, the time taken to build will be increased.
Factors such as control (Apportionment and risk and degree of Client involvement), size and value of project and complexity of project also help determine the choice for the form of contract.
Knowing the priorities of the project will determine the procurement route which fall into three main categories: traditional, design and build, or management.
With a traditional procurement route cost and quality are the priority at the expense of time; with the design and build time and cost are the priority at the expense of quality; and with management contracts, time and quality is the priority at the expense of cost.
All procurement routes have standard forms of contract. Many factors will determine which contract type to use including size, cost and complexity of project. Determining the contract type is directly related to the procurement method chosen. There are standard and non standard forms of contract although using standard forms of contract are much more straight forward as they are fair and balanced in the interests of both parties.
1.6 Clearly explain all the processes that are followed in ‘traditional’ Design and Build procurement leading to the appointment of a contractor. Clearly explain what is meant by the term ‘Novation’ in this context
The employer usually employs a single contractor as the sole point of responsibility for the design, management and delivery of the project. The contractor prepares and completes the design by subcontracting or novating the architect and design team to carry out elements of the design. The contractor then constructs the works to meet the requirements of the employer. This is suitable for most types of projects and employers where the employer requires cost certainty and fast delivery of a project, where the employer wants a single fixed price that covers design and construction and the single point of contact between the employer and contractor. The contractor takes responsibility for both the design and the construction of the project. Novation is the term used in contract law to describe the act of replacing a party with an agreement with a new party. In novated design and build, the contractor prepares and completes the design and working details by supervising subcontractors. The contractor then novates the original architect or subcontractors to carry out design elements and constructs the work to meet the requirements of the employer.
1.7 Clearly define and explain the role and obligations of the Principal Designer under the CDM protocol
Construction Design Management (CDM) is intended to protect the health and safety of people working in construction, and others who may be affected by their activities.
A principle designer is a designer who is appointed by the client to take control of the pre construction phase of any project involving more than one contractor. They influence how risks to health and safety are managed throughout the project.
The key obligations of the principle designer under the CDM protocol are to:
– Plan, manage, monitor and coordinate health and safety in the pre-construction phase
– Help and advise the client to produce the pre-construction information and provide this to designers and contractors in order for them to carry out their duties
– Work together with other consultants on the team to eliminate foreseeable health and safety risks. Where this is not possible they need to take steps to reduce or control those risks.
– Ensure that proper communication and coordination takes place
– communicate with a principle contractor informing them of any risks that need to be controlled during the construction phase.
The principle designers need to possess:
– Skills, Knowledge and Experience and Organisational Capability
– Awareness of their Client duties before starting work
– Understanding of the Principles of Prevention
– Avoiding risks through perceptive design (including risks to occupiers and others ‘in use’)
– Provide relevant information in a timely manner.