Building contracts are usually a collection of documents that together, set out your obligations as the Contractor. Unfortunately, it is not uncommon for them to contain conflicting information. This article sets out what can happen and how to deal with it in a way that will protect your business.
The Tender and Contract Documents
What these conflicts are named depends on the actual contract, but they can be known as ambiguities, inconsistencies, discrepancies, and divergences. If you are tendering or about to enter into a building contract you will no doubt receive a collection of documents that are likely to include as a minimum, the actual conditions of contract (typically JCT or NEC), contract particulars, usually a schedule of amendments to a standard form, drawings, specifications and other document including preambles (an explanation of another document intended to help with its interpretation), preliminaries (descriptions of a project allowing cost assessment for items that do not form part of works packages) and other reports, guidelines etc.
Priority of documents and the courts
It is common for construction contacts to include clauses that set out the priority of the documents if there is any ambiguity between. However, in dealing with such disputes, courts tend not to hold that contracts are inconsistent, but generally seek an interpretation which avoids or reconciles the conflict. In effect, they will try and read all the documents to make sense of them in context and how it expresses the parties’ commercial intentions. Only where there is a clear and irreconcilable discrepancy that the priority clause should be resorted to. It is a clause of last resort, not first resort.
With the above in mind, you would be best placed to carefully read all of the documents issued at tender stage and identify and such conflicts dealing with them prior to becoming “baked” into the contract. Dealing with them during the contract can have greater implications for all parties involved that may include client expectations not being met, performance issues, programme delays and the cost of resolving any legal dispute, should it get that far.
“Contra Proferentem”
In most cases, the unamended standard forms honour the “contra proferentem” rule that the creator of the issue bears the responsibility and cost of the remedy. This would seem to be a reasonable position as the documents have been put together by a team of experts in their disciplines over a period of time (that might be years). This process will have been led by someone acting on the client’s behalf who would be responsible for co-ordinating the process and avoiding conflicts. The contractor then must dissect, read, understand and price the requirements set out in the tender documents often in only a few weeks.
Is it fair?
Where it gets difficult, is that it is commonplace for the tender documents (and what would become the contract documents) to be issued with amendments and requirements that make it the responsibility of the contractor to not only look for, but also find any discrepancies. Furthermore, where they are not identified, the contractor will bear the cost of any remedy (and deemed to have included for the most onerous of the conflicting requirements). Whilst this obviously seems “unfair” it is common so beware and as a contractor (in the business of contracting) you will be deemed an expert.
Conclusion
It would be wise to ensure that you do undertake a thorough review of all tender and contract documents to check for any conflicts and how it is proposed that any such conflicts are dealt with.
If you do not have the in-house resource in terms of time availability or experience to do this, it would be wise to engage the services of someone that can do this for you. Any cost in doing this will be a wise investment and could easily become insignificant compared to the cost of not addressing such issues and the consequences becoming apparent later.
At VOLOCO we can and do provide such a service, so please feel free to make contact if this is something you would like help with.
