Standard Forms of Contracts in Construction Benefits

regulation Forms of Contracts in body structure BenefitsThe richness of Using Standard Forms of Contracts in look IndustryAccording to the 1996 portrayal of UK law locution bewilder has been positiond as an agreement in writing or evidenced in writing, under which a troupe carries out grammatical reflexion operations, arrange for others to carry out spin operations or/and provide labor for carrying out of saying operations (Zaghloul Hartman, 2003). The contract forms establish the healthy relationship surrounded by the parties, in ground of rights, bargain and duties and regulate the commercial message relationship surrounded by the parties (Robinson Lavers, 1996). There atomic number 18 devil main classifications of contracts, namely trite and non standard contracts (Murdoch Hughes, 2007).In the recent times, the commercial activities associated with the wind diligence ar highly complex and the standard forms of contracts fuck off integrated into the da y-to-day transactions of most agreements (Bunni, 1997). It is not compulsory to physical exertion standard contracts in the construction industry however it has become the third estate practice in procuring contractors, consultants or architects. There have been numerous recommendations by authors and researchers to adopt standard forms of contracts in the construction business. According to Banwell Report (1964), the construction industry should formulate and spend a single standard-form contract for its wide projects. The Latham Report (1990s) also supported the concept as recommended the Engineering and Construction Contract to be adopted as universal standard construction contracts. The procedure of standard form of contract for all type of construction projects is not realistic, but for similar type of project has been seen to be indeed is very beneficial (Murdoch Hughes, 2007).The purpose of standardising contract forms is mainly to specify the nous variables concernin g the construction processes and activities (Clegg, 1992). For example, it so happens in most projects that actual work make by the contractor differs from as specified in the contract. And these alterations be a major source of m whatever conflicts and disputes (Othman, 1997). In such cases, standard forms break off arrangements as to how to manage these variations.Standard forms of contract are mostly produce by an authoritative body of the industry, recognised by all the parties tortuous, outlining the terms and conditions which sets the parameters for the proceeding of the work. In the correct spirit of standardization, these forms are not subjected to any duologue and amendments and are suitable for wide lay out of similar projects and flora. The sign set of standard forms was formulated by the government department of UK for works in the public sector. Inspired by their concept, many other nonrecreational bodies also devised their versions of standard forms (Bunni, 1 997 Ismail, n.d.). Among variant standard forms of construction contracts are trash 7 (Institute of Civil Engineers), NEC 3 (New Engineering Contract), JCT (Joint Contract Tribunal), FIDIC (International compact of Consulting Engineers), AIA (American Institute of Architects), EJDC (Engineers Joint Contracts Documents Committee), etc. (Murdoch Hughes, 2007).There are several advantages associated with the use of standard forms of construction contracts. Basically, standard forms originate from different sectors of construction industry for various reasons (Murdoch Hughes, 2007). They have been devised as an output of a process of negotiation between various sectors of the industry hence, they represent a compromise between the interest groups of the industry (Murdoch Hughes, 2000). Also, as numbers of interest groups are involved and considered in the formulation of standard contracts, there is better accident of reasonable and balanced risk allocation among the parties invo lved (Murdoch Hughes, 2007).The prime reason that inclines construction personnel to adopt standard form of contracts is familiarity. The major advantage of utilise a standard contractual form is that by repetitive use of the document one becomes familiar with its content, and hence is conscious of both(prenominal) its strengths and drawbacks (Broome Hayes, 1997). The contractual complexities associated with any type of contract are often rather normal to understand. The use of standard contractual documents aids in familiarising the various contractual clauses and provisions to the users (Murdoch Hughes, 2007). This familiarity with the content and clauses of the contract leads to lesser number of disputes and misunderstandings. The possibility of redundancy is also removed (Broome Hayes, 1997). In addition, the repetitive use of these forms leads to maturation of experience bank and result in increased efficiency (Bunni, 1997). power is another important factor which gener ates from being similar with the contract and is well-situated to the involved parties. In the scenario when a disputed project is taken to court, the standard contracts enable the lawyers to advice their clients regarding the probable result of the case, as judges are enclose to follow the previous decisions (Broome Hayes, 1997).Standard forms of contracts have been reported and observed to service the conduct of trade (Murdoch Hughes, 2000). Another factor which attracts personnel towards standard contracts is that it reduces the concentre on specific contractual terms during the bargaining process (Murdoch Hughes, 2007). These forms are helpful in cut down the cost linked to tendering and contract administration. This is turnaround to the amended forms of contracted which require the clients and tenderers to seek additional legal advice and the fortune of the disputes resulting from unfamiliar terms also increase (OGC, n.d.). These forms lead to saving in time as drawin g up of contracts from scratch is a tiresome task (Ismail, n.d.).Standardisation of the contract forms provides basic legal frameworks which recognise the rights, obligations and duties of the parties and highlights the mountain chain of the powers and duties of the contract administrator (Nayagam Pathmavathy, 2005). Furthermore, standardisation of contracts leads to higher degree of certainty and paleness during tendering process. They become the basis of comparison and evaluation and familiarity with the content makes it convenient and scurrying in pricing as well (Bunni, 1997 Ismail, n.d.).As aforementioned, there are various institutions which have developed standard forms of contract. One of the most employ and popular set of standard forms of contract have been developed by International Federation of Consulting Engineers (FIDIC). These forms have been in use for international construction projects ever since their formulation in 1957. The FIDIC contracts provide a compre hensive enactment which can be applied with ease in any legal system. The input has been provided from both engineers with experience of many engineering projects and lawyers with wide array of experience drafting construction contracts. The acquaintance with these contracts has offered the construction industry benefits in both tendering and project management. The contracts offer balanced and clearly defined risks between the contracting parties. FIDIC believes that it only a fair and balanced contract which is in the lasting best interest of all concerned. The contracts account for all accomplishable and probable risk factors as well as clearly define the role of all involved parties. These aspects of the contract facilitate in reducing the number of unwarranted disputes and litigations (Thomas, Glover Hughes, 2006 Wade, 2005).FIDIC and other similar standard forms of contract are favourable to the construction industry as they facilitate the saving of both time and cost two success criteria for any type of construction projects. With the exception of few entirely unique projects, construction projects often part their main characteristics and these standard forms are devised considering the same.ReferenceBroome, J.C. Hayes, R.W., 1997, A comparison of the limpidity of traditional construction contracts and of the New Engineering Contract, International journal of swan Management, Vol. 15, No. 4, pp. 255-261Clegg, R.S., 1992, Contracts cause conflicts, In Construction Conflict Management and law of closure, 25-27 September, UMIST, pp 128-144Ismail, Z., n.d., Standard Forms of Construction Contracts, Lecture on Construction Law, on hand(predicate) at http//www.scribd.com/doc/10109497/Lect-2-Standard-Forms, accessed 11/02/2010Nayagam, K. Pathmavathy, N., 2005, Drafting Construction Contracts, Legal Insight, Issue 2, page 5-7Murdoch, H. Hughes, W., 2007, Construction Contracts, Edition 3, Routledge, pg 101-117Murdoch, H. Hughes, W., 2000, Construct ion Contracts Law and Management, Edition 3, Spon PressOffice of governance Commerce, n.d., Procurement and Contract Strategies, Achieving Excellence in Construction Procurement Guide, available at http//www.ogc.gov.uk/documents/CP0066AEGuide6.pdf, accessed 10/02/2010Othman, N., 1997, Management of variations in construction contracts, In A. Thorpe (ed.) Proceedingsofthe13th annual Association of Researchers in Construction Management (ARCOM), 15-17 September, Kings College, CambridgeRobinson, N.M. Lavers, A.P. 1996, Construction Law in Singapore and Malaysia, 2nd Edition, ButterworthsThomas, C., Glover, J. Hughes, S., 2006, Understanding the new FIDIC red book a clause-by-clause commentary, Sweet MaxwellWade, C., 2005, The FIDIC Contract Forms and the New MDB Contract, International Construction Contracts and the Resolution of DisputesICC-FIDIC Conference Paris 2005Zaghloul, R. Hartman, F., 2003, Construction contract the cost of mistrust, International Journal of Project Man agement, Vol. 21, pp 419-424