BUSINESS AND TRAINING 9
A close look at contracts
By
Uwe Putlitz
A‘ contract’ is defined as a‘ written or spoken agreement intended to be enforceable by law’( SA Concise Oxford Dictionary) typically recording the critical project performance criteria of‘ cost’,‘ time’ and‘ quality’ by the Contractor, as defined by the Employer who makes payment as the works progresses.
Contracts include remedies should either party fail to meet its contractual obligations. However, where the contract is silent on an issue that the Contractor- as a building expert knows should be done- may be at risk if a defective product is delivered.
In South Africa, the Construction Industry Development Board( CIDB) recognises four standard-form contracts( SfC) to appoint Contractors and Subcontractors to undertake building and engineering work generally, and specifically, for organs of State.
These are published by:
• the International Federation of Consulting Engineers( FIDIC) and published in Switzerland, in English and French { FIDIC( Red Book) 1999 and 2017 }
• the General Conditions of Contract( GCC-2015) published by the South African Institution of Civil Engineering
• the Joint Building Contracts Committee( JBCC- 2018) representing ten local industry bodies, and
• the New Engineering Contract { NEC( Black Book)‘ 4’( 2017) and‘ 3’( 2005)} published by Telfords on behalf of the Institution of Civil Engineers in London
SAICE publishes the GCSC 2018 subcontract, aligned with GCC 2015, with comprehensive notes.
JBCC publishes the 2018 Nominated / Selected Subcontract Agreement aligned with the 2018 Principal Building Agreement which refers to Interim Completion before Practical Completion,‘ damages’ instead of‘ penalties’ and a‘ payment advice’ issued by the PCr as an acknowledgement of debt, including clause 25.14 allowing the Contractor to delay a Subcontractor’ s payment by 30 days to resolve non / late payment by the Employer.
Master Builders South Africa publishes the 2020 Domestic Subcontract Agreement( DS) nominally aligned with the 2018 JBCC Edition 6.2 Principal Building Agreement.
To quote Lloyd QC: Royal Brampton Hospital vs Hammond 7 others … 2001,“ A standard form( of contract) is supposed to be just that. It loses value if those using it, or at the tender stage those intending to use it, have to look outside it for deviations to the standard.”
If a project is so unique to warrant changes to a Standard-form Construction Contract( SfCC) and Standard-form Subcontracts( SfSC)- such changes must be clearly stated in the tender documents – and the‘ particular conditions’ { FIDIC }. When using JBCC agreements such changes must be recorded in the Contract Data – as B15 for the PBA and NSSA and B13 for the MWA.
The rationale to draft Standard-form Construction Contracts( SfCC) internationally is to reduce the need for task specific legal documents to recognise construction processes that generally follow industry best practice. The content, the obligations and possibly the shortcomings of SfCC are known and understood. Introducing additional clauses, or omitting clauses, increases the risk of claims by either party‘ missing’ important information. The international trend by publishers of SFCC is to‘ encourage dispute avoidance’.
Changes to the text of SfCC often results in contradictory wording, alters the risk allocation and liabilities of the parties affecting, among others, the work’ s and / or the design team’ s insurance cover.
To draft a project specific bespoke contract may be justified. The parties must be aware of losing
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 Standardform 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
“ If a project is so unique to warrant changes to a Standardform Construction Contract( SfCC) and Standard-form Subcontracts( SfSC)- such changes must be clearly stated in the tender documents.”
September 2025 Volume 31 I Number 07 www. plumbingafrica. co. za