Construction Contract Disputes and Liability

The assignment analyzes a complex construction contract dispute between two companies, Acme and Rock-Bottom. The situation involves a failed project plagued by persistent problems, leading to payment disagreements and potential breaches of contract. The analysis explores the relevant legal frameworks, including JCT building standards and principles of contractual liability, to assess the respective positions of both parties.

LEGAL PROBLEM

Table of Contents
INTRODUCTION....................................................................................................................................................3
TASK 1.....................................................................................................................................................................3
Task 2.......................................................................................................................................................................9
CONCLUSION .....................................................................................................................................................11
REFERENCES.......................................................................................................................................................13

INTRODUCTION
The below case study is based upon contractual legal issues, in that
one company sue on another company. Contracts are the legal
agreements by which one company is dealing with another arty in order to
fulfil all rules and regulations. Building contracts are refers those in which
contracts and agreements are based upon infrastructure. It is an legal
document that is enforced by law and legal considerations and it is law of
obligations in legal power of the civil law content (Sancaktutar and et. al.,
2012). Building Contract is concern with the right and duties that are
arises from acceptance. It is effected when two or more parties are come
together in order to signing a valid document and the main aim of building
law is to collect all unnecessary money on behalf of another party. It arise
when the dealing delay on day by day and conflicts and argues are grow
between both of parties.
TASK 1
What provisions under JCT standard building quality act, 2016 and contractual between both
parties
Contracts are legal or void agreement between two parties. Ealing
with contracts are the part of running a business organisation and it
involves the relationship between two parties. They can be verbal or may
be written, that depends on companies responsibilities. Such kind of
contracts are made for buying and selling finance or selling real estate
agreements, but that are must be in writing (Hansen, 2011). Written
contracts involves standard form of agreement or a conforming letter, and
verbal agreements rely on the good believe of all parties and it can be
difficult to prove them. The essential elements of a contract are as
follows :-
a offer
a acceptance

a intention to create a legal relationship
a consideration
 A offer and acceptance :- a contract can be formed among the
two parties, in that one is offered and another can accept on the
mutual understanding. It s also called a meeting of minds. An offer
is defined as the statement of offeror's willingness that should be
bound with certain conditions and legislation. If another party
cannot acceptance in the terms of offer, it is not vary but a
counteroffer and therefore simultaneously a rejection of the original
offer (Rossi, Wright and Anderson, 2013). Contract are may be
bilateral or unilateral. A bilateral contact is an agreement in that
both parties are engaged to makes a promise or set of promises
with each other. Unilateral contracts are those, whom are made by
one party and another does not promise anything. In that case, it is
not compulsory that both sided accept the offer. In that situation
contract must be void and there is no relation between sided both
parties. In definite circumstances, an implied contract must be
created when conditions and situations are changes and both
parties have reached on agreement.
 A intention to create a legal relationship and a consideration
:- In commercial agreements, it is pre assumed that parties are
intend to be legally conjugate unless they expressly state the
opposite side as in heads of agreements. In Rock & bottom, which
makes agreement with Acme limited, this not kind of commercial
agreement but its a statement of intention of the parties (Shaokun,
2012). Cause both wants to earn profit, in order to dealing with each
other.
With the given scenario, it has been refers that Rock bottom is the
small business organisation and it contract with Acme construction limited
, in order to built a small office development that ia situated in north-west
of

England. Both parties are agreed on an contract under JCT standard
building contract with quantities 2016. When the project is start it is
engaged with many problems for example :- the company refuses Acme
access ton the site on the schedule start date, an dafter that it was again
refuse due to some natural reasons ie. Climate . The contract was delay
on unavoidable legal problems or some natural problems. And the Acme
realize that the another side party is contentiously delaying the project.
After two months Rock bottom was again starts the contract but due to
some natural reasons, again the contract was delayed. During this initial
two months period, Acme incurs many things like:- labour cost and
employment cost. Acme also has to extend and continue paying for short-
lived financial. After six months when the project is confirmed to be start
Acme incurs additional cost in obtaining professional advice about where
it stands in relation to loss and expenses incurred to date. Rock bottom
eventually complete its acquisition of the site but after few days of taking
possession acme force to work back due to some weather problems. Now,
Acme has claimed on Rock Bottom that who is responsible for these
financial cost. Both parties are not ready to pay individually. Through this
case we could say that any work which has suffered any lose due to the
natural calamities no parties will be responsible for this as it is due to the
natural disaster which cannot be cancelled out. But the delay which has
happened in that case the owner of the place is responsible for all the
payments which he has to give to the contractor. As he was defaulter and
his actions has lead to that circumstances.
JCT Standards Building Contract with Quantities 2016:-
The above mentioned act , it describes about the building contract
that involves all the infrastructure and construction work. The JCT
Standard Building Contract is planned for complexed or large construction
projects where explained contract provisions are required (Sinha and
Jastreboff, 2013). These contract are appropriate for projects processed
via the conventional or traditional method.

Features of projects using the Standard Building Contract:-
 The employer is answerable for the designing, and this is generally
provides to the contractor by the designing team or the
architecture. Both are working working on the behalf of the
employer . Still, Standard Building Contracts , also have another
provision for a ‘Contractor’s Designed Portion’, in that if the elective
contractor is to be obligated for the design of particular part of the
work.
 Depends on the type of Standard Building Contract used, the
employer will need to supplies specifications and drawings, works
schedules or bills of measures to specify the quality or quantity of
work at tough stage.
 These kind of Contracts are normally administrate either by the
contractor head, architect or a quantity surveyor.
 Works are easily carried out in sections.
There are some legal legislation and regulations that are made under JCT
standard building act 2016. Such are as:-
 Incorporating and updating provisions from the JCT Public Sector
Supplement relating to Fair Payment, transparency and BIM into JCT
Contracts
 CDM Regulations 2015
 Reflect the Public Contracts Regulations 2015
 Changes in respect of payment , designed to reflect Fair Payment
principles and to simplify and consolidate the payment provisions
 Provisions for the grant of Performance Bonds and Parent Company
guarantees•An extension of (Works) Insurance Option C
 Minor updates and clarification of the intellectual property
provisions•Incorporate (where appropriate) the provisions of the JCT
2012 Named Specialist Update
 JCT Standard Building Contract with Quantities 2016

The standard building contract may be used in some areas, such are as:-
 The employer must have to supplies designings and bills of
construction to specify the quantity and quality of work.
 The payment and price composition of the agreement is based upon
a lump sum in order to monthly interim payments.
 Sub-Contractors can be nominated with written approval of the
architect/contract head or chosen from a list of three names.
 Provisions involves for cooperative working, advance payment,
sustainability, collateral warranties, bonds third party rights and
named specialists
 Pre-Construction Services Agreement (General Contractor) (PCSA)
and Pre-Construction Services Agreement (Specialist) (PCSA/SP) can
be used with this contract.
 This contract can be used with the Framework Agreement (FA).
 It can be for both private and public sector projects.
As per the JCT provision, Rock-Bottom is able to come under legally
and contractually in a position. It is a contract between two parties, and
company is liable for paying Acme limited. The situation is under income
and expenses loss in order to make one or more applications and to
secure all those necessary adjustments and and extensions to the
originally scheduled date for completions of the works (Weitzdörfer,
2014). The head of income and expenses act, Rock and Bottom is liable to
pay to the Acme limited, because it is come under this situation.
The above scenario it has been mentioned that both sided parties
are not liable , but due to the agreement Rock-Bottom is suspect able to
pay Aces, because it is not the responsibility of Acme that he fulfils all
those damages and wastage. In income and expenses head it is clearly
describes that if two parties are in contract then both are equally
responsible for any damages or wastages. In that above scenario, Rock-
Bottom and Acme, both are binding in a valid contract, the building
standard contract is related with infrastructure and construction work, so

that companies have to eventually completes its acquisition of the site an
d the infrastructure works is going to be commenced (Denvir, Balmer and
Pleasence, 2011). So that is has been cleared that Acme is legally and
contractually in that position where is will be receivable in terms of all
wastages or damages. For that company have to legally responsible and if
it is not payable to another party, then the contract will be seemed as void
contract. These provisions are came under general contract standard
building act, in that it has been clearly mention that needs covering
standard position in most purchasing contracts, such as payment terms
and delivery , breach-of-contract and official remedies.
Rock Bottom Enterprises and Acme Construction.
In the contract given by Rock Bottom Enterprises to the Acme
Construction to built a small office in the Northwest of England various
problem arsed between the two companies. After analysing the scenario
of the case it could be seen that Rock Bottom is liable for the situation.
According to the heads of loss and expense construction contracts
provides the contractor to claim the direct or any expense if the progress
of the work is being affected or impacted by certain matter for which the
client is responsible and these terms include the following conditions:-
 If he fails in giving the contractor the possession of the site.
 Failure to give the contractor access to and from the site.
 If he delays in receiving instructions.
 Opening up works or testing works that then prove to have carried
out in accordance with the contract.
 Dissimilarities in the contract documents.
 Disturbance caused by the works being carried out by the client.
 Failure of the client in providing the goods and material.
 Instructions relating to differences and expenditure of provisional
sums.

 Inaccurate forecasting of works described by approximate
quantities.
 Issues or disputes related to Clean Development Mechanism.
Claims may include the costs resulting from the disturbance of the
works or from the delays of the works. From the above conditions we
could compare the situation which came in between the two parties and
could make out conclusion. In the first and second conditions we see that
the failure of the party to give its contractor access to the site will make
the party culprit. Rock Bottom also failed to give Acme Construction
access to the site on the proposed date. Acme construction should issue
notice to of a claim as soon as it becomes aware that the regular progress
of the work is affected materially. Rock Bottom blames that the delay for
finalizing the site was facing due to legal problem but in reality they were
waiting for the right time at which they could take that area this was
exposed by the mail. So it can be said that the company doesn't acquire
that building site at that time. Through this delay made Acme to suffer to
the expenses like labour cost, so through the conditions any delay in
receiving instructions or dissimilarities in the contracts documents make
Rock Bottom liable. Due to the rains after start of work the water gathered
at the sites and in order to drain the water various machines were used
this comes in the instructions relating to differences and expenditure of
provisional sums. Those all the above we could say that Rock bottom is
legally bond with the Acme construction and should pay fro the losses and
expenses. Certain case law can be taken in the account where JCT
standard building contract with quantities 2016 are there. Le Petit Fort is
private family residence located on the beach of St Ouen's Bay in Jersey.
This property also faced the same dispute in which the old building made
was given for restoration purpose as the work started after the few days
because of the workers carelessness a part of the building collapsed so
the owner asked the contractor about the money which will be needed to
repair that area but the contratctor rejected the purposal and said that it

was not due to the carelessness it was because the building was old and
someone in the night had damaged it. This case was moved to the court
but before any hearing both the parties tried to solve that case outside
the court through arbitration.
Task 2
Deko Scotland Limited vs Edinburgh Royal Joint Venture and Other,
says that a construction was referred to the mediator. The defendants
were considered as the participants in a joint venture set up to design and
construct the new Edinburgh Royal Infirmary and Medical School. Deko
was a sub- contractor and is a glass industry in Scotland, Edinburgh Royal
infirmary joint venture was founded in 1998 and it has business of
construction of non residential buildings. James Drummond Young or Lord
Drummond Young is a judge of the Supreme Courts of Scotland, he gave
his comments or the decision on the Deko Scotland Limited vs Edinburgh
Royal Joint Venture and Other case. This case was on construction
disputes and contractual termination that suspended money obligations
will be constructed so that they are consistent with the purpose of the
company. The court said that the contract was a construction contract and
Scots law applied. Lord Drummond Young commented that , among other
things, that adjudication 'possesses the critical features of arbitration and
is therefore a form of arbitration.' Arbitration is basically technique for the
resolution of disputes outside the courts (Tyler, 2010). The parties dispute
refer it to arbitration by one or more persons and agree to be bound by
the arbitration decision. A third party sees or evaluate in the case and
gives out the decision that is legally binding on both the sides. Normally it
is used for the resolution of commercial problems and disputes.
Attribution agreement should be in written document and it can be in the
form of telegram, fax and email. Other than this any written document
prepared or made by a lawyer or any organization requested by the

parties. The middle will try to find a common area where both the parties
mutually agree and move to compromise. Arbitration is not same as
judicial proceedings but in some cases like in this case court proceeding
can be termed as arbitrations, expert advice, a negotiation buy the third
party comes in this category. Parties try to settle the disputes through
arbitration technique because it has various advantages over judicial
proceedings. This is a fast or quick technique which does not take much
time as compare to the legal proceeding which takes abundance of time
to resolve. As every coin as two sides so this technique also have some
disadvantages also. In this method after the decision certain complication
can also arise because as the not much regal aspects are not involved in
it. Arbitration agreement can be divided into two types, that are
agreement which provide that if any problem or conflicts arises it will be
resolved by arbitration. These can be normal contracts but they may
contain any arbitration laws. There might be some agreement which are
signed after a conflict arisen which makes parties believe that disputes
will be resolved by the arbitration. In recent times importance of the
arbitration has increased before its hard to solve all the commercial
disputes in courts so in order to solve the disputes pre planned agreement
is signed which consists of terms and condition and says that if certain
problem arises there will be people who will be responsible and will do the
recovery through paying the payment. In binding arbitration, the decision
of the arbitrator is considered final and whereas in a non binding
arbitration, arbitrator decided the rights of the disputing parties, such as
decision is not binding on them. Mediation is also a dispute resolution
process similar to arbitration. In this also conflicts or disputes are solved
by the mediator. But in this the it is not compulsory that the decision of
the mediator is final as the parties if don't agree or are not satisfied could
approach to higher court. The chances of the divorce cases are less in the
commercial cases and more in the family and divorce cases. The decision
of the mediator is only considered as advisory opinion. Alternative dispute

resolution also called as ADR is a dispute resolution processes and
techniques that act as a means for disagreeing the parties to come to an
agreement short of the litigation. ADR saves money and speeds the
settlement. This results into creative solutions, longer lasting outcomes,
greater satisfaction, improved relationships. Arbitration is part of the ADR
and other forms like Mediation, Case Conferencing and collaborative
family law are also comes in this ADR processes. Expert Determination is
a dispute resolution process in which an independent expert in the subject
matter of the dispute is appointed by the parties to resolve the matter.
We totally agree with the comments of Lord Drummond Young which said
that any loss incurred from the natural calamities the part who is giving
the project will not be liable for any payment. Because he is not
responsible for the disaster. But arbitration can be done in which both the
parties could come come together and decide a common decision where
both can agree. Adjudication does not possess any elements of the expert
determination as its hearing is done in the court and the judge response
or give decision on the case not any mediator.
CONCLUSION
From the above mentioned report it has been concluded that legal
problems and ethics are faced by every orgainsation. In order to solve
them company have to made some valid contracts and agreements, so
that it can easily reduces all those damages and wastages issues. In that
above case study both parties are ready to work together, but due to
some causes they don't want be lie in any contract so that contract is
going to be void. The company rock-bottom is liable to pay to acme ,
because it invests some temporary finance in that projects. But the
project is continuously faced some dogged issues and problems from the
starting. After that first company refuse to start the site, that is effected
the scheduled date of acme. JCT building standard is accomplishing
between two or more employers and that kind of Contracts are normally

administrate either by the contractor head, architect or a quantity
surveyor. In that works are easily carried out in sections. The situation is
arises when two parties are come together, in order to liability of payment
and prices that are on damages and wastages.
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