What is a standard form of contract?

Once a procurement route has been established, there is a further decision to be made – that of selecting the appropriate form of contract, which embraces the works being carried out and formalises the relationship between the client and contractor in a legal way to deliver the works within set parameters, particularly of time and cost.

The first decision to be made is whether the form of contract is to be ‘standard’ or ‘ad hoc’. Standard forms are drafted, published and controlled by interested construction bodies. The essence of a standard form of contract is one seen as being fair to contractors and clients so that both feel comfortable in using them, using clauses and conditions that are widely tried and tested.

Standard forms are drafted by professional bodies, ie Joint Contracts Tribunal (JCT), Institution of Civil Engineers for New Engineering Suite of Contracts (NEC) and FIDIC contracts (the International Federation of Consulting Engineers, but abbreviated to its French acronym), whose prime remit is to ensure a fair and equitable set of rules for all when using their published contracts. These bodies also monitor the contracts when in use and can issue, when appropriate, amendments to the contracts already in print.

By and large, JCT contracts are used on building works, NEC on building and civil engineering works, and FIDIC on international projects.

While it is possible to use specially worded contracts (ad hoc contracts) where circumstances demand, this is generally not advisable. Disputes can, and often do, arise on jobs using standard forms but the contractual machinery enables fair outcomes.

Where ad hoc contracts arise, disputes can lead to new case law which is time-consuming and fraught with difficulties and excessive legal costs. Lawyers employed to write ad hoc contracts or even amend and revise standard forms of contract often produce situations which lead to disputes.

Construction contracts set out the rules under which the construction project will be realised. These rules are contained within the contract clauses and set out the contract conditions. A standard form contains many, many pages of clauses and conditions which govern every single aspect of the construction project from when you can access the site, to how you will get paid, to payment for unforeseen work.

Your task

Identify three main standard forms that are currently in use in the construction industry and explain, in general terms, when all of these forms will be used.

How can any standard form be made to relate to a particular project?

List three items that can vary from the standard form dependent on the project in question.

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This article is from the free online course:

Procurement Strategies and Tendering

Coventry University