16

BUSINESS AND TRAINING

By

Uwe Putlitz

Plumbing Africa welcomes our newest contributor , Uwe Putlitz , who will address the issues of the ‘ contract ’ and why sub-contractors must pay attention to the contents and especially when changes are made for what ever reason , these must be recorded in writing .

The building and construction industry in Southern Africa generally uses one of the four Standard-Form Contracts ( SfC ) accepted by the Construction Industry Development Board ( CIDB ) for use by State-owned companies and , of course , by all private sector employers : 1 . FIDIC ( French acronym for International Federation of Consulting Engineers ), published in Switzerland in English and in French 1999 + 2017 .

2 . GCC – General Conditions of Contract for Construction Works , published in South Africa ( GCC 2004 ) + 2015 .

3 . JBCC – The Joint Building Contracts Committee , published in South Africa ( JBCC series 2000 ) + 2018 .

4 . NEC – New Engineering Contract , published in the United Kingdom ( NEC also referred to as the Engineering and Construction Contract ECC ) 2013 + 2017 .

What is a Standard-form Contract ( SfC )? Either party may draft its own form of contract to limit some common law obligations . The choice of wording , content , risk allocation and application may be unique to a project and may contain or omit obligations typically stipulated in the industry creating uncertainty in interpretation by the user should any claims arise . Thus , SfCs have been developed in cooperation with industry representative bodies to spread risks equitably . When competently used , SfCs provide a checklist to guide the execution of a project . To quote Lord Diplock from : 1974 Modern Engineering v Gilbert-Ash , a SfC “ is an entire contract for the sale of goods and work and labour for a lump sum price payable by instalments as the goods are delivered and the work done . Decisions have to be made from time to time about such essential matters as the making of variation orders , the expenditure of provisional and prime cost sums and extension of time for the carrying out of the work under the contract ”.

What is ‘ force majeure ’? Some SfCs refer to an ‘ exceptional event ’, others to ‘ force majeure ’ ( as do some insurance policies ) as an event that neither party could have reasonably foreseen , avoided or overcome that is beyond its control .

Some definitions include events such as ‘ natural catastrophes , civil commotion or war , civil commotion ’, often followed by the wording : ‘ but not limited to ’ …

The rapid spread globally of the Covid-19 pandemic and consequent local restrictions to economic and other activities in terms of the ‘ regulations published under the Disaster Management Act , 2002 ’ and ‘ the State of Emergency Act , 1997 ’ would fall into this category . ¹

The contractor must be excused for such delay from performing his contractual obligations or , in an extreme scenario , may be completely excused from performance .

The determination of additional time to complete a project is relatively straightforward in this scenario . The difficulty arises when allocating costs incurred because of such delay . Generally , where the employer is at fault , the contractor must be compensated . In the Covid-19 scenario neither party is to blame , so should the additional costs be shared equally by the parties ?

1 “ The present lockdown will probably amount to casus fortuitus , which is an incidence of vis major , and which is defined as an exceptional or extraordinary occurrence which was not reasonably foreseeable1 . It has been held2 that plague is an incidence of casus fortuitus . In our view , the present COVID-19 outbreak is analogous , and the resultant government bans constitute vis major . “ 1 See Spolander v Ward 1940 CPD 24 2 Stockham & De Jong v Kaplansky & Co ( 1901 ) 18 SC 156 and Joe v Mahomet ( 1901 ) 11 CTR 816 Quoted from ‘ GVS - for commercial legal solutions ’ opinion for SAPOA 2020-03 24

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