BUSINESS AND TRAINING 19
Contracts : understanding each party ’ s respective rights and obligations ( Part 1 )
Contributed by
Uwe Putlitz
Uwe Putlitz continues to explore the complex world of contracts in part one of understanding rights and obligations .
All of us have or will encounter a contract in our private and / or working lives . Some may be daunted by the writing style , particularly if it follows the convoluted legal wording favoured by that profession in the past . The current international trend is to draft legal documents with simple words in short sentences , and actions listed in bullet format for easy interpretation .
A ( construction or supply of products or services ) Contract is typically defined as “ a written or spoken agreement that is intended to be enforceable by law ” comprising the agreement between the Parties , the specification and drawings of what is to be done , where and when , to be suitable for the intended purpose and the payment conditions to suit the project . Implementation must be possible and not contrary to public policy .
Oral contracts are valid but provide no proof of what was agreed , giving rise to often avoidable disputes .
Standard-form Contracts ( SfC ) have the advantage that their content is known and understood with an equitable distribution of risk in the industry as a common base to compare tenders ’ content and value .
All SfC ’ s are drafted to describe an obligation and how this is to be executed within a specified period . Failure to comply results in a notice of default to remedy , such default before it becomes a breach of contract that can be avoided , and with it the opportunity to submit a contractual claim or other response may be lost . documents , which may differ from the location of the project – and the Law of the country applicable to the project .
The Contract Administrator ( CA ) is not a party to the Contract , is described as the Engineer in FIDIC , the Employer ’ s Agent in GCC , the Principal Agent in JBCC and the Project Manager in NEC , appointed and paid by the Employer “ with full authority and obligation to act on behalf of and bind the Employer in terms of this agreement ” ( JBCC wording ). Note that when using JBCC contracts , the Principal Agent cannot decide a disagreement between the Parties as provided in the other SfC .
The Construction Industry Development Board ( CIDB ) in South Africa recognises four published SfC ’ s for use by Organs of State as the Employer of a Contractor to execute the Works ( subject to the restriction of some duties of the Contract Administrator ) designed by the Employer ’ s agents . The private sector uses the same SfC without such restrictions .
• FIDIC ( 1999 and 2027 editions ) of the ‘ Red Book ’ is used primarily in complex multi-year infrastructure projects and industrial processes ( not really a ‘ building ’ contract ).
• GCC ( 2015 edition ) is used for civil building and infrastructure projects ( not really a ‘ building ’ contract ).
• JBCC ( 2018 edition ) is used primarily for building projects ( not a civil or infrastructure contract ).
• NEC 3-2013 and NEC 4-2017 editions of the ‘ Black Book ’ is used for large , complex building and infrastructure projects ( not really an ordinary ‘ building ’ contract ).
Uwe Putlitz is a registered professional Architect and Construction Project Manager , a Fellow of the Royal Institute of Chartered Surveyors ( RICS ) and is a visiting lecturer at the School of Construction Economics and Management at the University of the Witwatersrand . Having recently retired as the Chief Executive Officer of the Joint Building Contracts Committee ( JBCC ) he specialises in the avoidance of construction disputes by way of lectures , technical articles dealing with aspects of contract administration for various industry publications arising from the use of Standard-form Contracts including the Federation Internationale des Ingenieurs-Conseils ( FIDIC ), the General Conditions of Contract ( GCC ), the JBCC or the New Engineering Contract ( NEC ) to find an acceptable settlement without resorting to legal processes , where possible . More info : info @ buildstrat . co . za
The Parties to a Contract are the Employer ( purchaser ) and the Contractor ( supplier ), or the Contractor and a Subcontractor . The Parties must :
• Be older than 18 years of age and have the authority to act on behalf of the business – in the form of a letter issued by the board of management .
• Enter a Contract voluntarily .
• State their physical addresses for delivery of legal
Part two of Contracts : understanding each party ’ s respective rights and obligations will continue in our February issue . PA
“ The current international trend is to draft legal documents with simple words in short sentences .”
January 2024 Volume 29 I Number 11 www . plumbingafrica . co . za