Construction Contracts and Dispute Resolution

This assignment delves into the complexities of construction contracts, examining various aspects such as financial risk estimation, dispute resolution mechanisms, and relevant legal precedents. It analyzes diverse sources including academic journals, textbooks, and legal cases to provide a comprehensive understanding of the legal framework governing construction contracts and common challenges that arise during their execution.

Running head: CONSTRUCTION LAW
Construction Law
Name of the student
Name of the university
Author note

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Advice on Quantity Survey
In the case of William Lacey (Hounslow) Ltd v Davis [1957] 1 WLR 932 certain preliminary
operations had been initiated by the plaintiff in relation to the defendant. The operations were
related to rebuilding of a premise which was damaged by war. The plaintiff in return of such
preliminary services was expecting to be provided with the contract of construction by the
defendant. However after the preliminary work was completed the defendant conferred the
contract upon a third party and subsequently sold the premises without doing any rebuilding
work in it. The plaintiff in this case therefore brought a claim against the defendant for the
payment of work done by him prior to the agreement. In the given situation it was ruled by the
court that the work which was done by the plaintiff was under no contract at all as a legally
binding agreement did not come to existence. However it was provided by the code that there has
always been a contemplation for the payment of a work between the parties, Thus the plaintiff is
entitled to payment in relation to the principles of Quantum meruit (Appleman and Holmes
2016). The principles of this case provide reassurance in relation to quantity survey performed
by contractors (Keane and Caletka 2015). Through these principles it can be noted that whenever
a professional service is provided a General presumption is created that there is an intention to
pay the party for such work. In the case of H.M. Key & Partners v. MS. Gourgey and Others
(1984) I CLD-02-26 the judge ruled that there is an ordinary presumption that a professional is
not expected to perform his services for free and where there is an argument that such
professional is not entitled to any fees, a legally enforceable and unequivocal agreement should
exist that no charge would be taken by such professional. However it must be noted that where
recovery of such fees are possible to some extent without the formation of a legally binding
agreement, the absence of such contract increases the probability of litigation and disputes. It has

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been provided in the scenario that Anyway limited has performed quantity survey for SolDeb
Group as they are expected to get a contract or being the main contractor for developing a
shopping mall. However there is no agreement in relation to the payment of such quantity survey
fees between any of the parties (Mason 2016). According to the above discussion of laws it can
be provided that where there is lack of such agreements litigation and dispute may arise.
Although it can be presumed that anyway Limited would not have done the services for free and
therefore the principles of Quantum meruit would make them entitled to payment the situation
would have been very easy for the organisation if they would have incorporated such terms in a
written agreement. Therefore according to the above discuss rules the company Anyway Limited
is entitled to be paid for the quantity survey conducted by it however a written agreement would
have been more beneficial and hassle free for the organisation.
Advice on work before execution of formal contract
The party to construction contracts sometimes be under significant commercial pressure to
initiate the construction work even before a formal contract has been formed. Where the
construction work is initiated quickly it is beneficial for both the parties to the construction
project while they continue to negotiate the final terms of the contract. The process is continuous
by the parties to a document known as the letter of intention. The letter of intention is a
document which is provided by a party to the construction contract to the contractor requesting
him to initiate the construction work while the final contract is negotiated. However there might
be circumstances where the final contract may not be negotiated at all and the party's may not
come to an agreement. In such situation there can be a significant loss caused to the contractor
who has already invested money towards a construction project. However the provisions of
contract law provide some relief to the contractors in relation to the letter of intention in relation

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to a construction contract to claim any losses incurred by them. A few type of letter of intentions
are legally binding whereas the others are not therefore a contractor must be very careful before
starting any work unless a formal contract has been formed between the parties. The letter of
intention does not have any technical legal meaning and is used for the purpose of describing all
sorts of construction contracts. The letter of Intention can be a non-binding statement, an interim
contract or a final contract which would be deemed to have taken place even when there is no
formal execution. The first types of LOI are not biding at all on the parties and at the maximum
may be paid as per quantum meruit rules (Chow and Chuen 2014). This occurs when parties did
not agree on the main terms of the contract (Brook 2016). An interim contract can be legally
binding where contractual negotiations are concluded. When an interim contract incorporates
final terms it becomes legally binding even if further negotiation is due and formal contract has
not been executed (Hughes, Champion and Murdoch 2015). In situations where an intention to
get into a legally binding contract is indicated by the LOI and the contractor starts the project
based on the letter where only final execution is left the court will consider such letter as a
formal contract upon those standard terms. However it is best to avoid such situations by
executing a formal contract as it might lead to legal disputes (Gerber and Ong 2014). Thus in the
given situation where Anyway Ltd has agreed upon all terms with the employer but no formal
agreement has been executed it is probably that the letter would be interpreted by the court as a
formal contract between the parties. However as discussed above if contracts are not executed
legally than there may be legal dispute which any organization would not want. Thus Anyway
Ltd should only being work after the formal written contract have been executed in an
appropriate way with the employer.
Advice on sub-contractor

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General contractor, generally hires a sub-contractor for the purpose of carrying out specific
activities in relation to the overall project and payment are normally made for the services given
by such contractor to the project by the general contractor (Haar 2017). In construction contracts
the concept of sub-contractor is the most common. General contractors hire subcontractors for
the purpose of reducing cost or to mitigate the risk associated with the project. Therefore by
implementing such strategies the main contractor received similar or better services which would
have been provided by himself at a much lower risk. While employing a sub-contractor in the
United Kingdom usually a JCT standard form of contract has to be brought into place
(Sutherland 2016). A JCT contact generally provides the possibility to the main contractor for
subletting. It is necessary for contractors to select an appropriate JCT contract for the purpose of
employing a sub-contractor. A short form of subcontract is appropriate with respect to using
where the main contract is a JCT contract (Alwee et al. 2016). This form of contract can be used
for a work which is straight forward content and has significantly low risk involved in it. The
form of contract is very suitable in situations where the work of the main contractor and
subcontractor are carried out in sections (Manderson, Jefferies and Brewer 2017). It is also
suitable for situations where her subcontract work is done based on adjustment for variation or
through complete measurement (Brook 2016). This form of contact is not suitable where the sub
contract work all of a very technical and complex nature. The form of contract is also not
suitable where a sub-contractor has the duty of designing any part of the sub contract works. In
situations where provisions are totally back to back in relation to the primary contract are
required this form of contract is not suitable (Bănică 2016). On the other hand a standard
building subcontract is appropriate for work where the sub-contractor work is not comprised of
any designing what the situation where the primary contract is the standard building contract.

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This form of contract can also be chosen where the work of the main contractor of subcontractor
are carried out in sections. Therefore in the given situation where it has been provided that the
sub-contractor to be employed by anyway limited is to work with respect to electrical and
mechanical work standard building sub contract is appropriate. This is because the work of the
sub-contractor and the main contractor in the given situation would be divided into different
sections. In addition there is no requirement for the sub-contractor to create his own designs in
relation to the work. A written agreement with the sub-contractor would ensure that the risks are
properly mitigated and the risk of disputes and litigation is also reduced.

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References
Alwee, S.N.A.S., Hashim, H., Maisham, M., Mahat, N.A.A. and Ahmad, N., 2016. Cost-related
issues in Malaysian construction contracts. In Proceedings of the 2nd International Colloquium
of Art and Design Education Research (i-CADER 2015) (pp. 473-485). Springer, Singapore.
Appleman, J.A., Appleman, J. and Holmes, E.M., 2016. Contract Concerns: Reinsurance
Contract Formation, Validity, And Judicial Construction (Vol. 14). Appleman on Insurance Law
and Practice.
Bănică, C., 2016. Standard forms of construction contracts in Romania.
Brook, M., 2016. Estimating and tendering for construction work. Taylor & Francis.
Burr, A. ed., 2016. Delay and disruption in construction contracts. CRC Press.
c. Wilmot-Smith on Construction Contracts. Oxford University Press.
Carmichael, D.G. and Karantonis, J.P., 2015. Construction contracts with conversion capability:
a way forward. Journal of Financial Management of Property and Construction, 20(2), pp.132-
146.
Cheung, S.O., 2014. The Roles of Dispute Resolution in Construction Contracts. In Construction
Dispute Research (pp. 3-17). Springer International Publishing.
Chow, K.F. and Chan Chuen Fye, P., 2014. Building and construction law. Singapore Academy
of Law Annual Review of Singapore Cases, (2014), p.102.
Dziadosz, A., Tomczyk, A. and Kapliński, O., 2015. Financial risk estimation in construction
contracts. Procedia Engineering, 122, pp.120-128.

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Dziadosz, A., Tomczyk, A. and Kapliński, O., 2015. Financial risk estimation in construction
contracts. Procedia Engineering, 122, pp.120-128.
Gerber, P. and Ong, B.J., 2014. Best Practice in Construction Disputes.
H.M. Key & Partners v. MS. Gourgey and Others (1984) I CLD-02-26
Harper, C.M. and Molenaar, K.R., 2014. Association between construction contracts and
relational contract theory. In Construction Research Congress 2014: Construction in a Global
Network (pp. 1329-1338).
Hughes, W., Champion, R. and Murdoch, J., 2015. Construction contracts: law and
management. Routledge.
Hughes, W., Champion, R. and Murdoch, J., 2015. Construction contracts: law and
management. Routledge.
Keane, P.J. and Caletka, A.F., 2015. Delay analysis in construction contracts. John Wiley &
Sons.
Manderson, A.D., Jefferies, M.C. and Brewer, G.J., 2017. An Analysis of the Integration of
Building Information Modelling (BIM) in Standard Construction Contracts. Integrated Building
Information Modelling, p.82.
Mason, J., 2016. Construction law: From beginner to practitioner. Routledge.
Nyström, J., Nilsson, J.E. and Lind, H., 2016. Degrees of freedom and innovations in
construction contracts. Transport Policy, 47, pp.119-126.

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Patil, S.K., 2016. Determining influencing factors and predicting dispute outcome of variation
claims in Indian construction contracts (Doctoral dissertation).
Sutherland, S.P., 2016. Construction Law. Wayne L. Rev., 62, p.425.
Ter Haar, R., 2017. Remedies in construction law. Taylor & Francis.
William Lacey (Hounslow) Ltd v Davis [1957] 1 WLR 932