CMS800003 Construction Law-Technical Materials For the Claim

It’s very common for participants in construction to enter into a contract. It may be a Subcontractor and General Contractor, Builder and Architect or the Owner and the Contractor. Also, construction contracts are often prone to amendments to suit the demands of the work, so the parties at one time may agree to add, change or remove some terms. With that, modifications may occur at the site where writing would not be available, and that will undoubtedly lead to oral amendments. At the same time, the changes can be made in the office where the parties will end up with a written agreement. All the same, this paper will examine the dispute arising from a contract between a builder and architect, and it'll see whether the oral amendments made to the contract forms part of the main contract.

Part A (1) Formation of a Contract

The main issue here is a question of the formation of a contract and its amendment. In the first place, this paper recognizes that there was a written contract between Agro Builders and Ego Architects. A valid contract constitutes five main elements, but considering this scenario; the paper will deal with the elements of an agreement which makes it an enforceable contract. For one, to make a valid agreement, the offeror starts with giving the offeree an offer. And in this case, Agro Builder started with offering Ego architects an offer to prepare the architectural drawings. After an offer has been made to the offeree, the offeree should reply with an acceptance after evaluating its consideration. The offeree’s acceptance should also conform to the offeror's terms and conditions. So with this case, Ego architects accepted the offer, with the consideration of the payments, and it also accepted the terms which included payment for drawings on a 3-stage basis.

After the offeree has accepted the offer, the law recognizes that both parties create a contract, and each of them can start performing as per their terms. In this case, Ego Architect was to start working on the drawing. There are two types of terms in a contract; these are implied or impress terms. Impress terms are those defined either orally or in writing. Implied terms are those terms that the contract does not mention, but they will nonetheless be a part of the contract. For example, the contract can impressively have a term requiring the architect's drawings to correspond with the project. Where the contract doesn't have s

Under some circumstances, the parties may decide not to discharge the whole agreement, but change some of the terms to suit the performance. If both parties willingly modify the terms, the old contract and its terms become non-existence, and the parties perform according to the terms of the new contract. Cases of modification of contract or waiver of the strict reliance on defective drawings are very common in constructions. I most cases, the principal amends the contract or refuses to use the drawings. So when Agro Builders and Ego Architect agreed to modify the contract, they were both bound by the new terms, and no one could go back to the old agreement.

Part A (2) Effects Of A Verbal Contract On The Previously Written Contract

In plain sight, the parties had agreed in writing, but later when defect with the drawings arose, they agreed orally to use the ‘new’ drawings. The question in law is whether an oral contract can vary a written contract. Of course yes; parties to written contracts can decide to modify it through subsequent oral agreements or their conduct. Since an oral contract is enforceable in law, even oral changes are applicable in law. Agro Builders agreed orally that they should vary the written agreement to accommodate the new drawings. Therefore, this agreement is valid as the written one, and both parties hada duty to act fairly and in good faith is a general rule in any construction contract. Also, when they agreed to the new terms by varying the old contract, the earlier contract ceased to apply. 

Furthermore, when Agro Builders used the drawings of Ego Architect, it already demonstrated that it accepted the new drawings. “An oral agreement is permitted to vary a written contract only if it is collateral in form, does not contradict express or implied conditions of the written contract, and consists of terms which the parties could not reasonably have been expected to include in the written contract.”

Also, oral variations can also alter a contract which contains clauses shielding it from oral modifications. An example of a recent decision with case illustrating this principle can be found in a ruling of the court of appeal in Globe Motors Inc v TRW Lucas Varity Electric Steering Ltd. In this case, the Court of Appeal reversed the High Court's ruling after finding that the High Court decision didn’t look at the wording of the agreement. The Court of Appeal found no weight on a clause in a written agreement that dismissed any amendment made orally to the written contract. Similarly, Agro Builders should recognize that even though the amendments were informal; they had the same effects as a formal agreement. The only thing that weighs here is whether both parties consented to the modification. Furthermore, since Agro relied on the drawing in constructing the facility, its conduct demonstrated that it treated the varying drawings valid. Similar decision was held in RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH. 

The Supreme Court concluded that as far as the parties had executed their obligations, that meant that they had accepted the terms of their contract despite that they never signed it. To clarify, the court said that their conducts demonstrated that they treated the unsigned contract as though it was signed. So, Agro Building handled the varying drawings as though they were perfect. And it was supposed to perform as it had guaranteed that it will perform. Also in Agro is obliged to pay Ego since Ego has already acted in reliance to its promises. Adrew Chew explained this as, “A party acting on reliance upon an assurances, representation, undertakings, or conduct of another party in relation to a contract, that promising party would be estopped from benefiting from such a misrepresentation.

Part A (3A) Legal Principles Applicable and the Hierarchy of Contract Documentation

In most of the constructions, the subject of the hierarchy of documents usually causes problems. The predicaments arise from the enormous volume of these papers that are included in the contract. Also, the more they are, the higher the chances of discrepancies in their contents. The main problem arises when a dispute come and to resolve the conflict, the provisions of one these documents must predominate. 

Markedly, ad hoc projects hold several of these contract documents. All of these papers are arranged in a hierarchical order and their layout simply denotes the order in which the documents should be consulted in case of a dispute. In most cases, the hierarchy usually starts with the contract document. Specification document follows second, the drawings follows third, and lastly, the bills of quantities or scheduled rates follow. 

To cater for the future problems with the documents, it’s very common that contracts with several documents contain wording and clauses designating how to handle a conflict resulting from the stipulations of different documents. The most common practice is whereby the provisions of the contract enumerate the order of hierarchy of papers. For instance, the parties can include a clause stating that where there is an inconsistency or conflict in the documents, the special terms and conditions or amendments within the contract will overrule all other documents. 

In addition to the provisions specified in the contract for handling the ambiguities, there are also other principles of common law that parties can apply. For example, common law states that discrepancy can be solved by interpretation of the document in the reasonable man's perspective having all the background knowledge as available to the parties. Another principle in common law provides that parties can reach out to a solution by reasonable analyzing the ambiguities. Additionally, the parties can solve the conflict by referring to the consideration of the contract as a whole. Lastly, parties can dismiss any literal meaning if it’s the one leading to absurd result, and such methods can be applied to solve the conflict. 

Part A (3B)legal Effect of stamping the specifications “approved” on any future contractual position

In a construction where there are three parties, the Design professional, the owner, and the contractor, the designer professional owes more duties to the parties than anyone else. The designer owes both contractual duties and the legal profession. Plus, it owes legal professional to the contractor. In most of the contracts, the supervising authority is vested on the design. This power gives the Architect a professional control that also vests in liability to the architect in all of the negligence from the interpretation of the building documents and specifications. The liability does not only fall within the architect's drawings but also even from other consultations that the owner receives from outside consultants. For example, the engineer was found liable for damages for not informing the owner of the mistakes of the contractors In this case, the court held that since architect had stamped the documents, it implied that the architect accepted an obligation to review the plans. Generally, the architects assume all the responsibilities after sealing the drawings and plans.

Furthermore, the architect's overall authority doesn’t bestow them the power to shift the burden to the owner. For example, an architect may without agreeing with the owner change the terms or place additional weight or responsibility on the contractor or to the owner by modifying contractual terms. In such cases, the court will always rule that the architects don’t have such powers and will award damages accordingly. Basically, the architects have the duty apply all their skills, ability, and reasonable judgment to the work after they stamp the specifications.

Basically, the architects have the duty apply all their skills, ability, and reasonable judgment to the work after they stamp the specifications.

Normally, project plans together with specifications work together to define the contract provisions. The drawings graphically exhibit the work to be assembled and constitute dimensions, location, and organization of materials, components, and systems. For specifications, they hold technical data concerning construction materials, systems and equipment designated on the drawings concerning quality, performance characteristics, and expected results.

Part A (3C) Formulated Procedures for Avoiding Amendment Problems In the course of Construction

Basically, the architects have the duty apply all their skills, ability, and reasonable judgment to the work after they stamp the specifications. Essentially, the architects have the duty apply all their skills, ability, and reasonable judgment to the work after they stamp the specifications.

Normally, project plans together with specifications work together to define the contract provisions. The drawings graphically exhibit the work to be assembled and constitute dimensions, location, and organization of materials, components, and systems. For specifications, they hold technical data concerning construction materials, systems and equipment designated on the drawings concerning quality, performance characteristics, and expected results. Another thing that can avoid changes is the sudden field status. In most cases, these conditions are a result of complications when the design fails to include all the existing conditions at first.

Of all the causes of changes, a primary cause is an abrupt need to modify the plan and or modify specifications. In most of the times, this occurs when the architects make an error in reading or when the architects are unable to understand all the requirements as stipulated in the contract document. Generally, this problem comes during the preparation of shop drawing. Simply, if plans don’t succeed on the paper, they must cause problems in the field. There are different ways of avoiding this error in the construction. For one, the architects and the engineer can visit the site to carry out a feasibility check on the plans before the work starts. Another thing they can do is reviewing the designs with other members of the construction management group, or having the plans studied by different construction expert to ascertain that they are workable in the field.

In concern for expert determination is a method where the disputing parties call the help of a third perty to analyze and determine the matter. It’s one of the ADR methods called arbitration. In most of the cases, expert agreement helps in solving technical matters as the expert has special knowledge on the subject matter. Parties in a construction projects may involve an expert in a technical dispute to determine the value of the work completed assess its quality and make determinations. Also, an expert may also be called to give a judgment on the money owed to the contractor where there was time extension. In most cases, parties may also have a clause stating that technical disputes would be referred to an expert.

Part B (4A) Substantiating Claim of Incomplete Specifications

1. Technical Materials For the Claim

If Agro builders want to commence court proceeding over incomplete specifications, it’s good to know that the proof of evidence determines a successful case. In that concern, the party with most reliable documentation will receive a tremendous gain. However, it’s sometimes hard to establish a real claim without great documentary proof. First of all, Agro’s attorney would require looking at the correspondence files so that he/she can see how the task unfolded chronologically. Within these files, a contract document should be available. Another thing that should be from the correspondence files is the bid document including all the costs that Ego expected. Also, Agro would need to prepare is the daily reports that held equipment of writing if any. This would help in determining the progress and costs.

After providing the daily reports, it’s also worth proving payroll Records or delivery Receipts if any. Next, it's requisition; it will typically demonstrate the section of work accomplished at certain times. Furthermore, it would be good to provide the schedules to show what Agro had really planned as the project's program. If photographs can be available, it’s good to provide them to the attorney too.

1. Expert Witness Assessment

Judges look at different factors in accepting the assistance of an expert witness. First and foremost, a trial judge will consider whether it’s possible to test the technicality of the witness. This is to say; a judge will consider whether a certain technique contains highly realistic errors or possible rate of mistakes and whether there are principles applicable for controlling such technical errors. Also, in claims trials, expert evidence is usually acceptable if it will support the judge or jury in figuring out the problem. However, while offering the evidence, the general rule is that the evidence must be grounded on a satisfactory foundation. Additionally, the court will not accept expert testimony if it finds that the evidence is speculative, and if it concludes that the expert relied on assumptions that had unsatisfactory factual grounds. In other instances, the expert evidence is excluded when an expert failed to reflect on all variables comportment on the practical facts.

1. Problems and Risks in Using Expert Witnesses

Even though expert witness is useful in the trial, it also carries some risks and problems. For instance, an expert can involve him/herself to the project to the extent of developing a personal attachment to the fact of the disputes. If this happens, it then compromises such expert’s reliability since it makes them biased. Also, the two roles of both expert and witness yield a certain level of difficulties when the attorney is trying to discover the facts for a trial following federal rules of evidence. 

Part B (4b) Requirement for a Claim Under the Building Industry Security of payment Act (Victoria).

People enter into contracts under building and construction sector, and due to different circumstances, disputes emerge over compensation. The 'Building and Construction Industry Security of Payment Act (SOP)' helps secure any person's payments as far as they worked in a construction job, or if they were involved in supplying associated goods and services within a construction field. However, for a claim to succeed in this act, it must conform to some of the rules set forth in the law. In particular, each payment claim must be served to the respondent bearing the earliest date that the claim can be served the reference date. Plus, it should contain the latest date that the claim can be served.

A payment claim covers the claimant's amount that should be paid by the reference date, and this amount is calculated as put forth in the contract document. If the contract is silent on the amount, the claimant can the value the work performed or goods and services that have been delivered. The act prescribes different types of dates. These are the periodic progress payment, final payment or a single payment. The act allows the contract to specify the reference date plus the latest date. When it comes to a periodic progress, the most recent date should be more than three months after the reference date. Also, a periodic progress payment allows the duration of not less than three months and one day when serving a payment claim. After making an application for a final payment, there should be no further claims.

In making periodic progress claims, there is an exception for only those contracts providing for a single payment. Other contracts allow periodic claims as the contract runs. Also, the contract can set dates for making such claims. If no such provision, the claim can be made after 20 business days from the date the work commenced. For a final payment claim, the act allows the contract to prescribe the dates for making a claim. If no date, then the contract should provide for a final certificate, with the earliest date being the date following the final claim.

A single or one-off time payment claim is contained under progress payment. Probably, this can be in the cases where the contract only specifies a small amount of construction work or delivery, and the payments are to be issued at very short duration. Also, it includes instances where the claimant should receive the payments before work the job is carried out. All this information is available for public use at the building and Construction Industry Security of Payment Act 2002.

Conclusion

It's possible for parties to a construction work to adhere and work within the principles of the law to avoid disputes. In particular, parties to a construction contract can work within the terms and conditions set by contract to avoid disputes that may arise. If that happens, the building industry can evolve, and everyone will see honest engineers, contractors, subcontractors, owner, e.t.c. In fact, such a thing would create a construction doctrine that could occupy a vital part in the entire building sector. This paper has analyzed what constituents an enforceable contract, and it has also touched on things that an engineer should do to avoid changes or amendments to a contract. More so, the paper has also looked at the effects of stamping specifications and the provisions of the building industry acts. Also, the paper recognized some of the key things that people within a construction sector should practice.

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