Construction Law

Construction law
Introduction, an overview of
International and Ethiopian
Construction laws and the
Practice of CL in Ethiopia
Introduction to the Construction Industry
• Character tics of the Construction Industry

• The term ‘ construction’ include any works
involving building, repairing, erecting and
demolition of any house, roads, highways,
factories, bridges,…
• Construction has significant effect on
economy and the society as whole
• What is construction law?

• Is a branch of law that deals with matters
relating to building construction and related
fields.
• It is a combinations of contract laws, insurance
laws, employment law, tort law, securities,
environmental laws, tendering….
• The nature of construction industry involves:-

liability due to building collapse arising from
negligence or nature,
• Security payments, insurance, performance
security,
• Environmental issues,
• dispute resolution,
• labor issues ( safety, healthy and related …)
Introduction
• Construction law primarily deals with
contract law and encompasses alls aspects
the legal process, from the initial bidding on
the project, to the negotiation and the
formation and effects of contracts.
• However, differently from ordinary contract,
it involves more than two parties (the
employer and contractor, the architect and
contractor, owner and sub-contractor, …)
Introduction
• Main Parties
• All construction works are carried out for the
benefit of a client
• The client is the employer who buys the
construction work
• The contractor is the builder who carries out
the construction works for the benefit of the
employer.
Introduction
• The construction contract requires the
collaboration of services from different
professionals
• The architect owes the employer a
professional duty of care under their
contractual relationship ( to lay out the plan
and specifications as expected by the
employer and monitor the operations of the
constructions works)
Introduction
• The engineer whose owes a professional
duty of care to the employer, will carry out
all the engineering works as required by the
contract.
• In some cases ( for large construction), the
employer engage consultants who would
involve supervision work in the areas of his
expertise.
Introduction
• A project manager whose role is limited to
organize the work
• Sub-contractors who would carry out all the
works subcontracted by the employer.
• Sureties who are responsible for holding cash
( they either assure the performance of the
work on behalf of the contractor or guarantee
the payment on the behalf of the employer)
…..
Introduction
Definition of construction contract
• Keating provides a simplistic definition for
construction contract.
• He says “ any contract where one person
agrees for valuable consideration to carry out
building or engineering works for another”
Introduction
• Article 2610 of the Civil Code of Ethiopia
defines construction contract as:-
• “ a contract of work and labor is a contract
whereby one party, the contractor, undertakes
to produce a given result, under his own
responsibility, in consideration of
remuneration that the other party, the client,
undertakes to pay him”
Introduction
• Article 2876 elaborates as a contract whereby
one parties undertakes to deliver to the other
party a house, a flat or another building which
does not yet exist, is a contract of work and
labor relating to immovable.
Introduction
• Construction contract are basically a set of
documents containing the express terms and
agreement.
• Mainly, it would made between employer and
the contractor ( main contract) and also other
parties involved in a construction such as the
architects, engineers, sub-contractors,
quantity surveyors, consultants and other
professionals.
Introduction
• There are many types of contractual
documents in the construction industry.
• Among these are the articles of agreement,
conditions, architect’s plans and drawings,
specifications and other documents.
• Article of agreement or the agreement will
contain planning of a project, righties and
duties of parties.
Introduction
• Conditions of the contract will contain elaboration
of the express legal terms and conditions which will
govern the contractual relationship between parties.
• Architecture's plans and drawing are the most
important set of documents as the main purpose of
these documents are to enable the price of the
works to be computed.
• Plans are the lay out of a construction project in
graphical manner which would be built on a
particular site.
Introduction
• Drawings are documents which will give a view of
the different part of the project.
• Bill of quantities are a set of bills which quantifies
all the works of the project in detail.
• To make the bills of quantities contractually binding,
it has to be expressed by the parties in the articles
of agreement.
• Specifications are less strict in nature in the sense
they don’t have a standard method to be drafted in
the construction industry.
Introduction
• It would be sufficient if the specification
clearly describe the work to be executed and
the required materials and goods to be
supplied. See also Art. 3021 and 3022 of C C
The parties should discuss and negotiate
over all the terms and conditions of the
contract ( see offer and acceptance, object of
contract)
Introduction
Types of Construction contract
1. Lump sum contract:- the employer agrees to pay
a specific lump sum of money up on completion
of the work.
 The final cost is already decided and it is up to
the contractor to get the job with in their budget.
A lump sum contract does not impose any
requirement for the contractor to provide a
breakdown of the costs associated with the work
Introduction
• The employer makes one payment at the end
of the work.
• The completion of work is determined by
measuring the work done and valuing it in
accordance with the contract.
2. Cost-plus profit contracts: the cost actually
expended plus profit( fixed or calculated as a
percentage on the cost)
Introduction
• In unit price method, the parties agree on a
rate for the unit construction, and the total
price to be paid will depend on the number
of constructions units to be used.
Introduction
• Term contract ( for specified period for eg. For
a year):- the contractor undertakes for a term
to carry out such work as may be required of
him by the employer.
• Payment will generally be made by the
application of an agreed schedule of rates for
the work called for.
• Eg. An annual contract for the maintenance
of roads
Introduction
 Civil Construction Laws Vs Government Construction
Laws
• based on employer
• Civil construction refers a private individual employer
• involves a separate sets of rights and obligations in
the construction contracts
• The government construction contract administered
by the separate administrative contracts law and
government procurement laws
Introduction
• The public expenditure should be
transparent, the officials must be
accountable to the general public to
overcome corruption ( Art. 12 of the FDRE
Constitution)
• The determining Procedures of Public
Procurement and Establishing its Supervisory
Agency Proclamation No. 430/2005
Introduction
Basic principles of procurement process:-
Transparency
Fairness
Market competitiveness
Non-discrimination
Efficiency
Economy, and
Effectiveness….
Introduction
 Procurement methods to be complied with:-
 The open bidding
 the restricted bidding ( if there is limited suppliers)
 The request for proposal ( expression of interest for
consultancy work of intellectual nature)
 the request for quotation (pro forma)
 Two-stage bidding
 The direct procurement
 The micro Procurement..
 Exception:- defense contract
Introduction
Independent contractor Vs workers

• The term ‘worker’ is interchangeably used
with ‘employee’.
• The major differences between a worker and
independent contractor are: insurance and
welfare benefits, tax payment; vicarious
liability; safety, terms of contract; and
employment protection rights.
Introduction
1. Employees are entitled to benefit sick payment,
industrial injury benefit, and other benefits like pension.
• For this purpose, the contributions can be deducted
from employer or employee.
• Independent contractor, on the hand, is not entitled to
such types of benefits.
2. The employer is also under duty to deduct tax from the
worker’s wage.
• In the case of independent contractor, it is his own
responsibility to pay tax out of his income.
Introduction
3. Furthermore, employers are traditionally liable and
pay compensations to the victim for the fault
attributed to employee in the course of
employment.
• Since an independent contractor is not working
under supervision of any one, there is no such
principle that averts the tort liability from
independent contractor to other party
4. Employers are required to ensure the safety of
workers.
Introduction
5. The independent contractor employs
workmen to assist him in carrying out his
contractual obligations or subcontract
portions of the work
Introduction
 Impacts of Construction Industry to a given
Economy
• Construction is a major industry throughout
the world and accounting for a sizable
proportion of economy.
• It plays a powerful role in economic growth;
produce structures that add productivity and
quality of life; crates job opportunity .
Introduction
• Construction influences investment; thus it can
be regarded as a major component of
investment.
• It stimulate economic growth.
• The provision of capital infrastructure has an
important impact on economic growth which
again creates job opportunities.
• Construction is an important part of the
development and modernization process.
2. An overview of International and
Ethiopian Construction laws
A. Building Code
 Building code is a set of rules that specify the
minimum standards for constructed objects
such as building and non building structures.
 The main purpose of building codes are to
protect public health, safety and general
welfare.
An overview of international and
• B codes are generally intended to be applied
by architects, engineers, constructors and
regulators but also used for various purposes
by safety inspectors, environmental scientist,
insurance companies, …
• Building codes have a long history. The earliest
known written building code is included in the
Code of Hammurabi which dates back 1772
BC.
Some points from H Code.
• If a builder build a house for some one, and
does not construct it properly, and the house
which he built falls in and kills its owner, then
that builder shall be put to death.
• If it kills the son of the owner, the son of that
builder shall be put to death.
• If it kills a slave of the owner, then he shall pay
slave for slave to the owner of the house.
Modern Era
• In England, after the great fire of London in 1966
which had been able to spread so rapidly through
the densely built timber housing of the city, the
Rebuilding of London Act was passed in the same
year.
• The Act regulated the building of the city, required
housing to have some fire resistance capacity and
authorized the City of London Corporations to
reopen and widen roads.
• The Laws of the Indies were passed in the
1960s by the Spanish Crown to regulate the
urban Planning for colonies throughout
Span’s world wide imperial possessions.
• In France , in 1852-70, the height of great
blocks of apartments were limited by law.
Scope of BC:
• The purposes of building codes are to provide
minimum standards for safety, health, and
general welfare including structural integrity,
mechanical integrity ( including sanitation,
water supply, light, and ventilation), means of
egress (out let), fire prevention and control,
and energy conservation
Legal status of BC
• It becomes law when formally enacted by the
authority.
• The local authorities over see that the building
codes are maintained
• Thus, a person before entering into a
construction contract, has to undertake a
preparatory works like soil test, site survey,
building permit and so on.
2. An overview of international and
B. An International Construction Contract
• Known as FIDC, ( “Fe’de’ration Internationale
des Inge’niurs Counseils” ( it is the
combination of two professional associations-
International Federation of Consulting
Engineers and International Federation of
Housing and Public works ), established in
Lausanna, Switzerland, in 1913.
• First edition published in 1957
International and Ethiopian Construction
laws
• The federation prepares the rules of the world
technical consultancy and publishes them.
• FIDIC Standard Forms of Contract have gained an
international acceptance in 1971, when the
document was approved and ratified by the
“International Federation of Asian and Western
Pacific Contractors’ Associations’ and “ Associated
Generala Contractors of America” and “Inter-
American Federation of the Construction
Industry”.
laws
• The first edition of the FIDIC contracts has
been amended over the time as result of
experiences brought by the applications, the
new editions have been published
• In 1999, FIDIC has published the 5th edition of
the Conditions of Contracts for Construction
Works.
• Consist four model of conditions of contract
laws
1. Conditions of Contract for Construction:
also known as the :Red Book”, identifies the
basic principles of procurement and
construction contract.
• In this Condition of Contract, the Project of
the Work is prepared by the employer or
made it prepared, execution of construction
work by the contractor.
laws
2. Conditions of Contract for Plant and Design-Build:
also known as “Yellow Book”, has been prepared
for use design and construction or installation to
be made by the contractor in the construction and
engineering work.
3. Conditions of Contract for Engineering Purchase
Construction (EPC)/ Turnkey, also known as “ Silver
Book”, is recommended for works to be performed
turnkey projects such as power plants, factories or
water treatment work.
laws
4. Short Form of Contract, also known as “
Green Book”, provides for a different
regulations rather than previous conditions.
These four conditions of contract books can
be categorized in to two parts: general
principles ( General Administrative Conditions
of Contract) and special conditions ( Special
Administrative Conditions of Contract).
laws
Objectives of conditions of contract
• To allocate risks fairly between the
contractor and the employer ( controllable
and uncontrollable risks).
• To determine the parties rights, duties,
responsibilities in advance
laws
Frequently Applied General Administrative
Conditions of Contract Clauses
1. Inspection and Acceptance:- acceptance of the
completed work or the latter phase of the work
has great important for payment or partial
payments
2. Sub-contracting :- the contractor may
subcontract some parts of the works with in the
prior written consent of the engineer, where
provided by the contract
laws
• In the event of subcontracting, the employer
shall pay directly the subcontractors.
• Who shall bear the risk in the subcontract?
• the contractor shall be responsible for the
subcontractor’s default, negligence
3. Legal status of the Engineer:- In the legal
sense, the engineer may be considered as an
agent of the employer.
laws
• As a technical expert, the engineer gives
decision, opinion or consent, express his
satisfaction, determine value.
• For this, the engineer shall exercise his discretion
impartiality with the terms the contract
• Unless otherwise expressly provided by the
contract, the employer shall appoint the engineer.
• The engineer has a contractual relationship with
the employer.
laws
4. Price adjustment:- in the construction contract
( since it is a long contract), different pricing
methods could be used.
• These are:-lump-sum method, cost plus profit
method and unit price method.
• Lump sum method is widely used for providing
accuracy in price mechanism; it does not involve
price adjustment; hence it can disrupt the
balance interests between the and the contractor
laws
• Cost plus profit method requires submission of the
invoices from the contractor to the employer since a
specific amount of profit will be added to the total cost.
In this method, an element of certainty is lacking. Many
financial institutions do not prefer this pricing methods.
• In unit price method, the parties agree on a rate for the
unit construction, and the total price to be paid will
depend on the number of constructions units to be
used.
laws
• Unit price can be calculated on material basis
such as the amount of cement used for a
concrete mold or on the basis labor such as
working time for a specific job. This pricing
method is not suitable for all types of
construction contracts and long-term contracts.
• FIDIC include a detailed mechanism for price
adjustment for predictable and unpredictable
events.
laws
• For predictable events ( eg. Diesel, labour
force, cement..) an index basket is used.
• For unpredictable events a hardship clause
should be added to the contract.
5. Security:- the contractor’s commonly submit
to the employer a performance security from
a bank, insurance company or other guaranty.
laws
• The purpose of this security is to avoid any
damage to the employer in the case of failure of
contractor in performance of contractual
obligations.
• Performance security, in some cases, may be
supplied with a security of reimbursement ( if
the employer has made advance payments and
if the employer has concern that the contractor
would not perform the conditions of contract).
laws
• Some times also to guarantee the future
financial demands of the employer against
the contractor, the employer may demand a
payment security from a bank
6. Retention of the Contractor’s money as a
guarantee
• The contractor’s certain amount money is
usually retained against the risk of non-
compliance of work on time.
laws
• Accordingly, the employer is entitled to retain
5 or 10% of the total contract price for a
certain period ( 6 or 12 months).
• The guarantee may be extended over an
adequate anticipated period of time.
7. Exchange Clauses:- when payment made in
different foreign exchange.
laws
8. Insurance and Compensation:-the contractor
shall insure the workmen and against the
third party risks
9. Dispute settlement:-during a construction
contract disputes may arise between the
parties for the following reasons.
 incomplete contract documentations
 Improper tender styles
laws
• Unreasonable risk burden on one of parties
• Bankruptcy of one of the parties
• Insufficient architectural and engineering drawings
or designs
10. Liquidated Damages for Delay and Premium
Clauses:-if the contractor fails to comply with the
time for completion work, then the contractor shall
pay the employer the relevant sum for such default
and not as a penalty for every day or part of a day
laws
11. The relations between General Contractors
and other contractors: if there is a general
contractor and his sub-contractors, the
general contractor shall be responsible for the
work.
laws
The legal Status of FIDIC:
 Has no binding effect ( advisory)
 However, in the case of public financing,
International organizations which provide a
credit, initially require the FIDIC conditions of
contract to be followed, particularly FIDIC
procurement procedures and opening to
international competition)
laws
C. The World Banks Standard Bidding
Documents ( SBDW)
• In 1985, the World Bank produced bidding
documents for the procurement of
construction works which partly or wholly
funded by it.
• These documents were promoted to
standard bidding documents by the Bank in
Jan 1995.
laws
• For this the civil engineering construction
work must be more than $ 10million.
• The SBDW included a set of condition
contract, which was based on the Fourth
Edition of the Red Book, hence the use of
“Red Book” has been escalated considerably
by the developing countries.
D. The Ethiopian Construction laws in general
• Currently, construction is one of the sectors
leading the way towards modernization and
industrialization in Ethiopia.
• There are a number of construction laws
scattered in different proclamations including
the Civil Code Ethiopia, Ministry of Works and
Urban Development Guidelines,..
• BATCoDA ( Building and Transport Construction
Design Authority) Standard Conditions of Consulting
Services for Design and Supervision of Construction
Works (Jan,1990)
• The FIDIC ( Red Book) Conditions of Contract for
Works of Civil engineering
• The Standard Bidding Document for the
Procurement of Works, issued by the Public
Procurement Agency ( under MoEFED) ( PPA , Jan.
2006). ( Proc. No. 430/97)
The MoWUD ( 1994) Standard Conditions of
Contract
• It is widely practiced for the government
construction contracts.
• Adopts (with minor modifications) the FIDIC
Red Book ( 1987).
Before contractors, architects and engineers
undertake any construction work, they need to
be licensed and registered.
Purpose of registration
• Proc. No. 686/2010 Art. 6/1
• Trade activity requires government supervision.
• To know who is doing business for the purpose
of taxation & so on
Purpose of licensing
• The purpose of licensing is to ensure
necessary capacity of the applicant
• The capacity may depend on ownership of
relevant equipment, number of staff, besides
skill
Categories of contractors ( under the guideline)
1. General contractors ( undertakes a variety of
construction works such as building, roads, railways,
bridges…)
2. Building contractors ( undertakes building construction
and related works).
3. Road Constructors ( undertakes road construction and
other related works)
4. Specialized contractors ( undertakes specialized work like
electro mechanical installation, sanitary installation, …
Criteria for categorization
• the categorization is based on grades
• 10 grades
• The grades of General contractors, Building
contractors and Road contractors are based
on construction cost besides experience,
qualifications as well as technical staff
qualification ( Technical manager)
• Eg. Grade one construction cost of Birr above
20,000,000, Grade ten 100,000
• For specialized contractors grade 5, up to
5,000,000, grade 10 up to 100,000
• Once a contractor fulfills the above mentioned
criteria and pays the registration fee, he is
expected to submit a record of past performance
and audited statement of accounts along with the
number, type, and capacity of the equipments he
intends to use.
• The registration committee examines the
financial, experience and staff and other
resources of the applicants before giving
decision on the application for registration.
• The decision of the committee is subjected to
the approval of the Minister of WUD.
• Contractors may apply for grade and category
change only once in a fiscal year.
• Once a contractor is registered, such registration shall be
valid for a period of one calendar year beginning from the
registration ( due to renewal).
• If the renewal year has lapsed, the contractor has option
of having the registration renewed with in three years of
the expiry date up on the payment of arrears plus a fifty
percent of the renewal fee for which the period with in
which the registration has not been renewed.
• Any registration that has not renewed with in three
years of its expiry date shall be deemed to be cancelled
automatically
Architect and engineers may be registered as
professional architect and engineers, graduate
architects and associate engineers aides and
associate engineering aides.
 Consulting architects and engineers .. May
be registered in the same way .
III. The Practice of Contracting in general
and in Ethiopia ( The formation and
Effects of Construction Contract)
Formation of contract
• A contract is an agreement between two or
more parties that is intended to be legally
binding (Cont v.s crime).
 Art. 1675 of the ECC defines contract as: “ an
agreement whereby two or more persons as
between themselves create, (vary, or
extinguish) obligation of proprietary nature
Formation of contract
• It an agreement in which each party promise
to other.
• However, all agreements are such as domestic
agreements are not contract
 Elements for the formation of contract

1. Capacity
2. Consent ( offer and acceptance)
3. Legality and morality
4. Formality required by law
1. Contractual capacity :- a party must
understand the effect of their act
 Minors and judicially interdicted ( insane
person) can not enter into a contract.
 Legally interdicted person ( imprisoned
person ) also prohibited
 Senile person
 What if a minor enters into a contract despite
2. Consent
• The first requisite of a contract is an
agreement (consisting of an offer and
acceptance… negotiation)
• The offer or who makes an offer, and the
offeree who accepts the offer.
• Offer can be made in writing, orally, or sign or
conduct, depending on the contract
Offer Vs Mere declaration of intention(an
invitation to treat or request for offer )
• Differently from mere declaration of intention,
offer has a binding effect.
• Auction : - in an auction, the auctioneer's call for
bids is an invitation, a request for offers.
• The bids made by person at the auction are offers.
• Tenders:- where goods are advertised for sale

by tender, the statement is not an offer, but
invitation to sell,
• Display of goods:- the display of goods with
price in a shop or supermarket is not an offer
but an invitation for customers to make an offer.
 The letter of intent does not create any contract.
It is simply an expression of intention to enter in
to a contract at some time in the future.
Posting up price list:- will not amount to an offer.

Public promise of reward: if a person uses public
media and promises a reward for the
performance of certain act indicated in the
notice is considered as an offer.
• The government of USA announced that ‘ who
so ever reports the whereabouts of Bin Laden
shall be rewarded by one million Dollar’
• Revocation:- the offer may be revoked by the
offer or at any time until it is accepted.
• However, the revocation of the offer must be
communicated to the offeree.
• Once an offeree has commenced the
performance, the offer or may not revoke the
offer.
Lapse of time: where an offer is stated to be open
for a specific length of time, then the offer
automatically terminates when that time limit
expires.
 Where there is no express time limit, an offer is
normally open only for a reasonable time.
 Failure of a condition: an offer may be made
subject to condition. If the condition is not
satisfied, the offer is not capable of being accepted.
Acceptance
 An unqualified assent to the terms of the
offer ( An acceptance of the terms of an offer
with out further qualifications)
 To make a binding contract the acceptance
must exactly match the offer.
 Counter-offer
 In his reply to an offer, if the offeree introduces a
new terms or varies of the offer, then that reply
cannot amount to an acceptance.
 Instead, the reply is treated as a “counter-offer”
which the original offeror is free to accept or reject.
 Conditional acceptance:- if the offeree puts a
condition in the acceptance, then it will not binding.
Communication of Acceptance:-
• Generally, acceptance can be made orally, in
writing, or by conduct
• Until and unless the acceptance is so
communicated, no contract comes to existence.
• The offeror cannot impose a contract on the
offeree against his wishes by deeming that his
silence should amount to an acceptance.
Exceptions to the communications

1. Duty to accept: when the offeree is a monopoly
supplier of goods or services.
• If the offeree does not want to bound by the offer,
he has to notify with reasonable time.
2. Pre-existing contractual relation. X is the supplier
of construction material to contractor Y. Y agreed
to construct a dwelling house for Z. If Y kept silent
despite X’s offer to supply such material..
 Effect of Acceptance
Acceptance :- once an offer has been accepted, a
binding contract is made.
Rejection:- if the offeree rejects the offer that is
the end of it. Eg. The defendant made the
highest bid for the plaintiff’s goods at an auction
sale, but he withdrew his bid before the fall of
the auctioneer's hammer. It was held that the
defendant was not bound to purchase the goods.
 Defect in consent ( Art. 1696-1710)
 The consent of parties must be free from
mistake ( fundamental), fraud, duress
( coercion, referential fear)
2. legality: the object of contract must be lawful
and not contrary to public morals
 The object shall be sufficiently defined , must
be possible
 In a construction contract, matters such as the
scope of work, price and the time for
completion shall be sufficiently defined.
5. Forms
• Generally there is freedom of form
• Contracts required by law to be made in writing
 Contract relating to immovable
 contract that made for long duration ( contract of
guarantee, contract of insurance, security contract,…
 Contract with public administration
 When parties decide the form of contract to be in
writing
 Subsidiary contract
• Constriction industry generally involve
complex arrangements with in many
procedures.
• As a result the contractual terms will
invariably all be set down in writing.
• Failure to follow formal requirement render
the contract a mere draft
Effects of Elements of contract
• The non fulfillment of the element of contracts
render the contract either void or voidable.
• Void contract does not have any legal effects
from the beginning ( void abinitio).
• Non fulfillment of object and form render the
contract void.
• Voidable contract produce effect until
invalidation ( unless the party whose consent
was vitiated or incapable invalidates)
• It is caused by defect in consent or incapacity
• Its future effects also can be cured either by
party or by law
 Reinstatement of party: -the party who made
payment receive such payment back
Effect of contract
• “Pacta sunt servanda” :-the parties are bound
by their agreement; becomes a law ( Art. 1971
of CC).
• It creates rights and duties between parties
• If any party breaches the conditions of
contract or refuse to carry on with works; the
other party seeks remedy.
Effect of contract
Remedies:-
1. Forced performance
2. Cancellation
3. Damage (compensation)
Effect of contract
Notice as a pre-requisite for invoking
remedies
• The victim shall put the other party in default
by giving him a notice on due date by fixing a
period of time with in which he accepts
performance.
• Generally, no formal requirement for notice
Effect of contract
When notice is not necessary:-
The obligation is to refrain from certain acts
 when an obligation to be performed only with
a fixed period
When the debtor declared in writing that he
would not perform his obligation
 when it is agreed that notice shall not be
required
Effect of contract
1. Forced performance:-
 The creditor’s special interest, and
 Without affecting of the debtor’s personal
liberty
2. Cancellation
 Judicial
 Unilateral (when it is agreed, lapse of fixed
period in the default notice, when
performance becomes impossible)
Effect of contract
3. damage(compensation)
Effects of construction contract
The contractors obligation:-

1. Safety and quality of the work
 Provided under express and implied terms of
the contract.
 Express terms are the terms agreed by the
parties to the contract.
2. The contractor must construct the building
works with reasonable care and skill
Effect of contract
3. The materials used by the contractor must
correspond with their description, be of
satisfactory quality and be fit for any
particular purpose made known to the
contractors by the building owner.
4. The contractor must warn the building
owner of any dangerous defects in the design
of the building works which come to his ( the
contractor’s) attention
Effect of contract
 Employer’s Remedies in the event of defect
1. Award of damage ( putting the employer in
his previous position had the contract would
not have been made).
2. If the parties have agreed a liquidated
damage ( i.e. a fixed sum), such sum shall be
paid as a damage
3. The contractor may raise his own defense
Effect of contract
Builder’s Liability to third party
 Where the defect in building causes death or
personal injury or damage to property other
than the defective building itself, the builder
will be liable
Effect of contract
Liability of subcontractors
1. Traditionally, subcontractors are employed by
the main contractor to carry out specialist
functions; hence there is no contract between
employer and subcontractor.
2. If a subcontractor provides the employer with a
direct warranty that he will use reasonable care
and skill in the design and construction of the
subcontracts work, he will be liable to employer.
Effect of contract
Liability of Architects and Engineers
1. The design of the construction works is the
responsibility of the architect. In the case of
engineering works, the design function will
generally be carried out by an engineer.
2. The role of quantity surveyor is to provide
measurements and quantities and to value
the work carried out at the different stages of
a construction project
Effect of contract
4. The express duties of the architect or

engineer and quantity surveyor will generally
be set out in the relevant standard form of
agreement, and to carry out these duties
with reasonable and skill.
Effect of contract
5. The architect or engineer, besides to his design
duties, he is responsible to supervise the building or
engineering works.
 As agent of the employer sees that the works are
built in accordance with the design.
 Certify the completion of each stage of the project.
 May act as arbitrator or adjudicator in the resolution
of dispute
Effect of contract
• If they breach their duty, they are liable both
contractually and in tort.
• They are liable for personal injury suffered by
third parties as result of a defect in the design,
but not for defects in the building itself.
Effect of contract
 Liability of Surveyors
 A surveyor may be employed to carry out
either a structural survey, or valuation survey .
 A survey’s principal obligation is to his client.
 He is required to carry out his duties under the
contract with his client with reasonable care
and skill.
 A surveyor owes a duty of care in tort to his
client.
Effect of contract
• A survey owes a duty of care in tort to a third
party in the event of negligence (eg
overvaluation.)
• The standard of care and skill is that of the
ordinary competent professional
• A mere error of professional judgment will not
necessarily amount negligence.
VI. Settlement of Disputes
• Dispute could either happen during the
beginning stage or after completion.
• It may due to the work delayed, shortage of
goods, …
• after completion the employer may say that
the works done are not as what was expected

Construction Law

Uploaded by

Copyright:

Available Formats

Construction Law

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Construction Law

Uploaded by

Copyright:

Available Formats

Construction law

• Character tics of the Construction Industry

• What is construction law?

• The nature of construction industry involves:-

Independent contractor Vs workers

 Elements for the formation of contract

• Tenders:- where goods are advertised for sale

Posting up price list:- will not amount to an offer.

Exceptions to the communications

The contractors obligation:-

4. The express duties of the architect or

You might also like