Business Procurement and Contractual Practice: Types of Contracts, Breach of Contract, and Tort of Negligence

This essay covers the concept of contract and its types along with its breach. It also covers various modes of contract in the context of the construction industry. The essay also includes an important aspect of SBC/Q. It further explains the doctrine of privity and the tort of negligence. Additionally, it covers procurement and its types, including traditional method, design and build, joint venture or partnering, private financing, and management contracting.

BUSINESS
PROCUREMENT AND
CONTRACTUAL
PRACTICE

Table of Contents
INTRODUCTION...........................................................................................................................3
QUESTION 1...................................................................................................................................3
Task-1..........................................................................................................................................3
Task-2..........................................................................................................................................4
QUESTION 2...................................................................................................................................5
Task-A)........................................................................................................................................5
Task-B)........................................................................................................................................6
QUESTION 3...................................................................................................................................6
Task-1..........................................................................................................................................6
Task-2..........................................................................................................................................8
QUESTION 4...................................................................................................................................8
Task-A)........................................................................................................................................8
Task-B)........................................................................................................................................9
Task-C)......................................................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Contract refers to an agreement which includes an agreement under which rights and
obligations of both the parties are involved and which is enforceable by law1. Contract lead to
create obligation between the parties and make the completion of work. There are various types
of contract with specific terms and condition and without condition too but still enforceable by
law. A non-compliance of terms and condition by either parties may lead to breach of contract
and the suffered party would be liable to receive compensation in the percentage of damage
caused to it. This essay will discuss the concept of contract and its types along with its breach.
Likewise, various mode of contract in the context of construction industry is also included in this
contract. An important aspect of SBC/Q is also a part of this essay.
QUESTION 1
Task-1
As per the present case of ACC and ECD, an order is made by ACC towards the ECD for
4 Medway 2 sidelight pre hung UPVC doors @ £650 per door and a cheque of £2600 is being
send by it. However, with the absence of 4 doors ECD send two Medway 2 sidelight and two
Medway 1 sidelight pre hung UPVC doors along with a balance amount of cheque of £360
stating that a discount is being given and the cost of £450 was charged for single slide door
instead of £500. Here alteration if the order is being made by the ECD because of the absence of
doors and unable to make the fulfilment of contract. Thus it can be right to said that with the
absence of doors the contract was unable to complete and in compensatory to this a discount is
being given by ECD to ACC. This was completely right with respect to ECD.
However, on a critical note it can be said that it was not adequate with regard to the
contracting party or the suffered party. This means that before making alteration in the contract
no prior permission was taken from the ACC. This has lead to the occurrence of damages to
ACC because no consent is being taken from it. Since, without the consent no contract would be
formed so it is completely lead to a breach of contract.
1 Chalkidis, Ilias, Ion Androutsopoulos, and Achilleas Michos. "Extracting contract
elements." In Proceedings of the 16th edition of the International Conference on
Articial Intelligence and Law, pp. 19-28. 2017.

Thus, is clearly refers to a breach of contract as a type of breach of condition in which
there is occurrence of material breach under which the contract will be breached due to the non-
compliance of condition. Since, as per the contract act, the breach of contract occurs when the
party to contract fails to perform its obligation in regard to contract or make behave in such a
manner that shows intention not to make performance of contract and when it becomes
impossible to perform the contract because of the act of defaulting party2. This would lead to
raise an obligation with regard to the suffered party to be born of damages which is being cause
due to non-performance of contract3. And in the current case the breach is clearly visible because
ACC has made alteration in contract without consent and the contract itself not being possible to
perform because of non-availability of material. This is a clear non meeting of condition and
termed as beach due to condition and material breach which is termed as serious breach rather
than involvement of little consequences.
This can also be referred with case law of Arce 1127 Ltd (In Liquidation) v De Montfort
Fine Art Ltd (2011) under which there is an occurrence of breach of material condition occur but
not counted as repudiatory which allows termination4. As under this case the judgement said that
although breach occur with the non fulfilment of condition but not to be counted as repudiatory
and will only allows damages to De Montfort which will be equal to the percentage of loss.
Material breach can also be understood from another case law of Gallaher International
Ltd v Tlais Enterprises Ltd (Rev 1) (2008). As per this case it was again seen that although
breach of contract occurs when a loss is being caused to Mr Tlais due to non supplying of
cigarettes order from Gallaher. However, again this would not be counted as repudiatory contract
because under which termination would be allowed because a compensatory period of 30 days
were given. This is counted as material breach of contract.
2 Ganglmair, Bernhard. "Efficient material breach of contract." The Journal of Law,
Economics, and Organization 33, no. 3 (2017): 507-540.
3 Hillman, Robert A. "More Contract Lore." Tul. L. Rev. 94 (2019): 903.
4 A clearer picture of entitlement to damages flowing from repudiatory breach?., 2021.
[Online]. Available through <https://www.inhouselawyer.co.uk/legal-briefing/a-clearer-
picture-of-entitlement-to-damages-flowing-from-repudiatory-breach/>

Thus, from the above case laws it can be interpreted that in case of ACC and ECD breach
of contract occur but it is a nature of material breach under which damages of loss will be
incurred to ACC but termination of contract would not be allowed because it is not a case of
repudiatory.
Task-2
Yes it is a breach of contract as per the contract act or English contract law. As the
contract was performed form the side of ECD but without the consent of ACC with regard to
making alteration in terms and conditions. In addition, of this the contract was also not being
performed as per the agreement. Hence, it is a breach of contract as material breach and in this
case ACC would be fully liable to receive the damages in percentage of loss. However, being a
material breach ACC is having a right to receive compensation of damages but it is not having a
right to make termination of contract because material breach are serious breach but are not
repudiatory and allows the termination of contract. This means that ACC is having a right to get
reimbursement of damages that is being caused with the non performance of contract as per
order towards the ECD.
QUESTION 2
Task-A)
Specific performance:
As per the English contract law refers to the performance of specific act as per the
contract. This is like equitable remedy under the law of contract. However, it is being applicable
in case of land law otherwise damages in the form of compensation would be allowed and
given5. This is not applicable in case of personal service contract. This act is permissible and
applicable in case of land law which is also supported from a case law of Airport Industrial GP
Ltd & another v Heathrow Airport Ltd & another [2015] EWHC 3753 (Ch) in which the court
makes an order of specific performance of contract with regard to building of parking. As under
this case it was agreed that the leaseholder of the property would need to build parking for the
5 Lister, Matthew J. "Contract, Treaty, and Sovereignty." (2019).

use of claimants with a specified date of completion6. But without taking step with the passing of
time the claimants made a complaint to court. And as per the court it was ordered that the
leaseholder need to make specific performance of contract with the involvement of taking of
certain steps.
Thus, from this case law it can be interpreted that this remedy is available only in case of land
laws otherwise damages would be allowed to be given.
Doctrine of privity:
As per this doctrine the only participating party are allowed to make sue towards each
other which are in contract and no other third party are allowed to make any sue with regard to
the contract irrespective of the fact that it is benefited from it7. This can be understood with the
case law of Tweddle v Atkinson under which it was agreed between John Tweddle and William
Guy to make a payment of sum of £100 and £200 to Tweddle's son William who was in
engagement with Miss Guy. Guydied before making its sum to be paid. At this time William
Tweddle sued Mr Atkinson who was an executor of William Guy. When this case go to court
then it was being ordered from the court that no case would be sued because by the third party
although it was made for its benefit. This is because the doctoring of privity said that sue can't be
made from third part of contract.
Task-B)
Tort of negligence refers to breach of contract under which one person breaches its duty
of care and as a result of that the other person is being affected in terms of occurrence of loss and
damage8. However, with respect to the case of Caparo industries plc and Dickman the tort of
negligence with a different perspective. This is because under this case as when Caparo
industries is making purchase of shares and raising its shareholding in Fidelity plc on the basis of
6 AIRPORT INDUSTRIAL GP LTD V HEATHROW AIRPORT LTD & ANOR., 2021.
[Online]. Available through
<https://www.casemine.com/judgement/uk/5a8ff74060d03e7f57eaa6f4>
7 Gordon, Emily. "The doctrine of privity in negligence, 1842-1932." PhD diss.,
University of Cambridge, 2021.
8 Rahman, Mohammad Habibur. "Legal History Revisited: Development of Contract and
Tort Laws until early 20th Century." (2021).

the analysis of the financial statements showing bad situation of Fidelity plc, and then making
suing the auditors who prepare the financial report of the company depicting the negligence with
respect to preparation of accounts is completely emerged as an exception to tort of negligence
when the judgement come. This is because as per the judgement the auditor is not having any
legal liability with respect to decision-making of investor and outsiders. Its responsibility as per
companies act was the auditing and checking of financial statements and accounts while
suggesting decision-making is not come under the liability of auditor. This means that the case of
Caparo against the auditor as negligence was wrong.
However, it would be counted as wrong to certain extent because with the analysis and
trust over the auditor's report decision is being taken by Caparo which has lead the company to
make occurrence of loss which is clearly covered under the tort of negligence. But since it was
the case of auditor and decision was made accordingly along with the consideration of
companies act so the auditor was not held liable.
QUESTION 3
Task-1
Procurement:
It refers to the act by which the business or any construction company obtain goods and
services from the external sources either by opening tenders or any other mode in order to
perform their business operation9. This is an important aspect with regard to every construction
company because it enables them adequate materials and products by which they can make
perform their business operation.
Types:
Traditional method:
Under this method the responsibility of contractor is limited only up to the building. This
means that the interior and other designing work will be carried out by the consultant and
engineer. This is a best method for the construction company because it limits their work up-to
the building along with save their time and cost. However, on a critical note this method is
9 Dixit, Vijaya. "Risk assessment of different sourcing contract scenarios in project procurement." International
Journal of Construction Management (2020): 1-13.

counted as non-appropriate from client perspective because it will enable them incomplete work.
This method limits the grabbing of big and specific client.
Design and build:
Under this method all the responsibility including designing and building is of contractor.
This means every work is to be done by the contractor and the client will get best project. It also
involves early finishing of work with low price fluctuation10. However, on a contrary note it is a
time-consuming mode because designing is a challenging task as per the client's expectations.
Likewise, making of any change in design is also a challenging and difficult task.
Joint venture or partnering:
Here the entire work is being performed in partnership within two contractor. This would
lead to easy completion of work along with sharing of risk and rewards11. This will lead to the
establishment of good working environment along with development of team. This is best for the
new contractor. However, on the other hand it may also lead to raise cruises in terms of risk
sharing if there is a lack of agreement and contract.
Private financing:
Under this all the funds and financial arrangement, completion of project would be done
from contractor side. This means contractor would perform every work. This is usually done in
government project. However on a critical note this kind of project lack professional efficacy
because it is made on the client side.
Management contracting:
Under this form of contracting there is an additional inculcation of specialized contractor
who will perform the work with specialization in regard to the project. Here finance and
10 Kereri, James Ogechi. "A comparison of project party relationships in design-bid-build
and design-build delivery methods." International Journal of Architecture, Engineering
and Construction 6, no. 4 (2017): 26-32.
11 Forcada, Nuria, Marta Gangolells, Miquel Casals, and Marcel Macarulla. "Factors
affecting rework costs in construction." Journal of Construction Engineering and
Management 143, no. 8 (2017): 04017032.

operation are carried out by client12. This method enables the contractor to exploit a business
opportunity without placing its physical asset at risk.
From the above method the best recommended method as per the case would be
Management contracting because it will enable the JD Ltd which is a new company to the
construction market. Since, it is a new company and putting its assets at risk in performance of
project would not be appropriate and it may lead to the occurrence of loss. Likewise, availability
and presence of specialized contractor would lead to assist the JD Ltd to make better
performance of its project. Also, with the presence of specialized contractor the work load would
also be reduced for JD Ltd along with enhancement of its efficiency.
Task-2
Design and build contract:
This is one of the most standard and best form of contract which is used in the
construction project. As per this contract every responsibility right from making design till
performing construction as per design lies in the hand of contractor. Here the interest of client is
only in the output and the responsibility of delivering the contract lies in the hand of contractor13.
This is the best mode of contract from the contractor view point because it can make reduction of
cost with the previously used designs. Likewise, they use easy-to-construct and standards while
performing the work. In the same way client is also benefited because it will get the final
outcome without making too much involvement. For this reason only this mode of contract
would be counted as best.
However, on the other hand the client will may get disappointed because they will lose
control in terms of making changes in the designs. Also, they came across in such situation under
which they make payment for those which they have no control and opinion.
12 Procurement methods in Construction Industry., 2021. [Online]. Available through
<https://basiccivilengineering.com/2016/10/procurement-methods-construction-
industry.html>
13 DESIGN & BUILD CONTRACTS., 2021. [Online]. Available through
<https://theconstructor.org/construction/const-management/design-build-contracts/
6365/#:~:text=Design%20and%20build%20contract%20is,contracts%20lies%20with
%20the%20contractor.>

But on an overall aspect this mode is the best method with terms of easy flexibility, cost
saving, full control over the project from the perspective of constructor. Similarly, client will get
the best output without any worry. Thus, this mode of contract is counted as best with regard to
construction project.
QUESTION 4
Task-A)
As per Standard Building Contract With Qualities (SBC/Q), the price and payment
structure will be made on lump sum or interim payment on monthly basis. This means that as per
SBC/Q the contract sum including the third party insurance and employer's liability will be based
on the rates of wages and other expenses which will be paid by contractor in respect of:
 Workpeople which are employed by the constructor for making the production of goods
and products
 Workpeople which are engaged on workplace or adjacent to site.
In addition, of this it is also to be noted that the payment obligation would be different
under different cases like:
In case of occurrence of loss due to delay which may because from the side of employer
or contractor then the payment obligation would be lied in terms of borne of associated loss by
contractor and all loss by employer14.
This also means that if the mistake would be done by the contractor side then payment
would be borne by contractor and if it is from the side of employer then it will be borne by
employer.
In addition, of this it would be noted that contractor is having two major obligations
including the completion of design with regard to work and make complete the construction as
per the contract of work. Likewise, being employed by employer so occurrence of any damage or
the later completion would be borne by the employer. This means that indirectly employer is
again having all the obligation with regard to the completion of work and the borne of all the
damages.
14 Aliakbarlou, Sadegh, Suzanne Wilkinson, and Seosamh B. Costello. "Rethinking client
value within construction contracting services." International Journal of Managing
Projects in Business (2018).

Task-B)
In case of New Engineering Contract the project manager plays an important role because
as under this contract the client is having a very low knowledge and idea about the working of
contract so it gives every responsibility to project manager in terms of handling the project and
taking big decision15. PM plays the role of facilitator for making application of contract
conditions.
Compensation event are those under which the cost with regard to client with respect of
carrying out the work would be affected. Here also PM plays an important role in terms of
instructing the contractor with respect to occurrence of compensation event and raising of prices.
This means that it need to give early instruction for changing quotation. This means that
the project manager perform the role of giving early direction and instruction along with making
prediction of such event. This would lead to act as safeguard with respect to compensation event
along with saving cost towards the client.
Task-C)
Adjudication and mediation:
Adjudication refers to finding alternative solution with respect to the dispute under which
one part will win and other will lose16. However, under mediation, a solution with respect to
dispute would be found out in such a manner that both the parties will agreed17.
Likewise, it is to be noted that adjudication will lead to quicker decision, flexibility, low
cost consumption but with the same side it is not cost free along with an involvement of rough
judgement.
However, in case of mediation there is an involvement of low cost, time, willingness and
negotiation but absence of law enforcement.
15 Meng, Xianhai, and Paul Boyd. "The role of the project manager in relationship management." International
Journal of Project Management 35, no. 5 (2017): 717-728.
16 Jiménez, Felipe. "A Formalist Theory of Contract Law Adjudication." Utah L.
Rev. (2020): 1121.
17 Estreder, Yolanda, Inés Tomás, Maria José Chambel, and José Ramos. "Psychological contract and attitudinal
outcomes: multilevel mediation model." Personnel Review (2019

Express and implied terms of contract:
Express contract are said to be one under which all the terms and condition of the
contract are spelled out either in written or in oral mode18. Whereas in case of implied contract
the terms and conditions of the contract are analysed with the actions of the concerned parties19.
In case of express contract as all the terms and conditions of the contract are expressed so
it involves the consent of all the parties while in case of implied contract there is no need of any
consent because the conditions are already implied and the concerned parties need to obliged
that.
CONCLUSION
From the above essay it can be concluded that contract and its conditions are need to be
complied by its concerned parties. Likewise, it is also understood that with the non-compliance
of fulfilling its respected conditions will lead to its breach and the suffered party will be borne
damages. Apart from damages there are some other modes including specific performance and
doctrine of privity is also understood in the essay. In the same way this essay also summarize
various types of contract that would be applicable in case of construction company along with
the aspect of Standard Building Contract With Qualities.
18 Mitchell, Catherine. "Remedies and Reality in the Law of Contract." In Research
Handbook on Remedies in Private Law. Edward Elgar Publishing, 2019.
19 Austen-Baker, Richard. Implied terms in English contract law. Edward Elgar
Publishing, 2017.

REFERENCES
Books and journals
Chalkidis, Ilias, Ion Androutsopoulos, and Achilleas Michos. "Extracting contract elements."
In Proceedings of the 16th edition of the International Conference on Articial
Intelligence and Law, pp. 19-28. 2017.
Ganglmair, Bernhard. "Efficient material breach of contract." The Journal of Law, Economics,
and Organization 33, no. 3 (2017): 507-540.
Hillman, Robert A. "More Contract Lore." Tul. L. Rev. 94 (2019): 903.
Lister, Matthew J. "Contract, Treaty, and Sovereignty." (2019).
Gordon, Emily. "The doctrine of privity in negligence, 1842-1932." PhD diss., University of
Cambridge, 2021.
Rahman, Mohammad Habibur. "Legal History Revisited: Development of Contract and Tort
Laws until early 20th Century." (2021).
Dixit, Vijaya. "Risk assessment of different sourcing contract scenarios in project
procurement." International Journal of Construction Management (2020): 1-13.
Kereri, James Ogechi. "A comparison of project party relationships in design-bid-build and
design-build delivery methods." International Journal of Architecture, Engineering and
Construction 6, no. 4 (2017): 26-32.
Forcada, Nuria, Marta Gangolells, Miquel Casals, and Marcel Macarulla. "Factors affecting
rework costs in construction." Journal of Construction Engineering and
Management 143, no. 8 (2017): 04017032.
Aliakbarlou, Sadegh, Suzanne Wilkinson, and Seosamh B. Costello. "Rethinking client value
within construction contracting services." International Journal of Managing Projects
in Business (2018).
Meng, Xianhai, and Paul Boyd. "The role of the project manager in relationship
management." International Journal of Project Management 35, no. 5 (2017): 717-728.
Jiménez, Felipe. "A Formalist Theory of Contract Law Adjudication." Utah L. Rev. (2020):
1121.
Estreder, Yolanda, Inés Tomás, Maria José Chambel, and José Ramos. "Psychological contract
and attitudinal outcomes: multilevel mediation model." Personnel Review (2019).
Mitchell, Catherine. "Remedies and Reality in the Law of Contract." In Research Handbook on
Remedies in Private Law. Edward Elgar Publishing, 2019.
Austen-Baker, Richard. Implied terms in English contract law. Edward Elgar Publishing, 2017.
Online references
DESIGN & BUILD CONTRACTS., 2021. [Online]. Available through
<https://theconstructor.org/construction/const-management/design-build-contracts/
6365/#:~:text=Design%20and%20build%20contract%20is,contracts%20lies%20with
%20the%20contractor.>
1

Procurement methods in Construction Industry., 2021. [Online]. Available through
<https://basiccivilengineering.com/2016/10/procurement-methods-construction-
industry.html>
A clearer picture of entitlement to damages flowing from repudiatory breach?., 2021. [Online].
Available through <https://www.inhouselawyer.co.uk/legal-briefing/a-clearer-picture-
of-entitlement-to-damages-flowing-from-repudiatory-breach/>
AIRPORT INDUSTRIAL GP LTD V HEATHROW AIRPORT LTD & ANOR., 2021. [Online].
Available through
<https://www.casemine.com/judgement/uk/5a8ff74060d03e7f57eaa6f4>
2