NEC Contract: A Comprehensive Guide to Dispute Resolution

The assignment content discusses the importance of achieving an amicable resolution of disputes before initiating a formal dispute resolution process. The NEC contract provides for the setup of a board to avoid disputes, with nominated representatives from both parties. This board aims to manage probable risks and provide recommendations in case of a dispute. While the recommendations are not binding on the parties, they can still initiate legal actions against each other. The content also explores the historical background of pre-arbitral settlement methods, including the use of engineers for dispute resolution, which was later replaced by the dispute board. Additionally, it touches upon the development of Dispute Review Boards and Dispute Adjudication Boards, highlighting their role in resolving disputes.

Table of Contents
Solution -1......................................................................................................................1
Solution -2......................................................................................................................2
Solution -3......................................................................................................................3
Solution -4......................................................................................................................5
Solution -5......................................................................................................................7
References......................................................................................................................9
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Solution -1
There are many circumstances where there exits infringement of rights of other
person. The right so infringed may be either statutory right or it may be contractual
right. The breach of contractual right entitles a person to initiate legal action under law
of contract. On the other hand the breach of statutory right entitles a person to initiate
legal action under common. The common law provides that when there is right there
is remedy. The common law provisions are based on the rule of equity and the remedy
is available even if there is no legal provision for remedy under any law. (Anon
(2019).
The law relating to tort deals with breach of statutory right and consequences thereof.
It is important to note that the law of tot has no applicability in case of criminal breach
or contractual breach of right. (Anon (2019).
The tort is common law remedy available against the civil wrong. The liability under
tort law arises in case if plaintiff proves following before the court in satisfactory
manner namely:
1. The defendant owes duty of care towards plaintiff. The defendant must have
responsivity to maintain utmost care towards plaintiff.
2. There exits breach of duty of care on the part of plaintiff. Defendant was
negligent in his act or has not honored minimum standard of care required to be
maintained.
3. The breach of duty has caused harm to plaintiff.
4. The plaintiff has to establish nexus between the negligence of the part of
defendant and injury cased to him. This test is even known as but for test.
The concept of but for test is most important in case if damages to plaintiff is caused
by the negligence of defendant. The plaintiff is under obligation to prove direct nexus
between damages caused to him and act of negligence of defendant. In case plaintiff
fail to prove so, defendant cannot be held liable. (Anon (2019).
The liability of tort is vicarious in nature. The employer can be held liable for the
wrong committed by his employee. However in case where the principle employer has
employed independent contractor, generally he cannot be held liable for the wrong
committed by person employed by independent contractor. The liability of principle
employer arises only if:
1. The wrong committed by employee or independent contractor is authorized by
or with the consent of principle employee.
2. The principle employer is in position to foresee the danger arising out of act
and had failed to warn or to take reasonable steps.
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Application:
In the given case the labour working on the site gets injured due to foreseen
negligence of the parties. In this regard the following points should be noted.
1. The initial contract to demolish the house was given to architect, surveyor and
demolition contractor. The decision not to demolish old garage was joint
decision. The work was done by them and they have left site. This makes it
clear that they owe no duty of care towards employee employed by building
contractor.
2. As the labor is employed by building contractor; he owes duty of care towards
them. He was under obligation to ensure safety of his worker.
3. The building contractor has instructed his labor to use the garage. It was the
duty of contractor to ensure that the property he is instructing to use is in good
condition, which was not done in this case. This makes it very clear that the
building contractor was negligent.
4. As the garage was old and rest of the property was destroyed, it can be said that
the probable danger can be foreseen.
5. The owner of land cannot be held liable as she has appointed independent
contractor. Moreover the she has not allowed decision not to demolish old
garage. Hence it can be said that she has not consented the act that has caused
injury.
Conclusion:
After analysing the case fact and legal provision, it can be concluded that only
building contractor can be held liable under tort laws for the injury caused to labour.
Solution -2
The construction project needs to be executed with utmost care. This is because the
poorly managed project may cause various legal consequences. The poorly managed
contract may make defaulter liable under the law of contract for breach of contractual
term. It also many time creates liability under common law i.e. tort law. The tort is
civil long and creates liability when defendant breaches statutory rights of plaintiff.
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The tort can be either against property or person. The poorly managed construction
contract attracts following tortious liability.
It may attract liability for negligence. It is important to note that the defendant owes
duty of care towards plaintiff. There are many stakeholders associated with the
execution of project. The project stakeholder includes general public, client and labour
working for execution of project. In case if the project is poorly managed it may cause
physical injuries to the body of labour, client or public. This may be considered as
breach of duty of care. It is because the executor of project has to ensure that the
project will be executed in the most appropriate manner. In case of any negligence on
his part, he can be held liable. It may even cause damage to the property of other
person. To make contractor liable plaintiff has to establish that contractor owes duty
of care towards him, he was negligent and that has caused injury to him. At this
juncture it is important to note that the contractor always owes duty of care towards
stakeholders. The poorly managed contract will immediately indicate negligence on
the part of contractor. Hence he can immediately be held liable for tort of negligence.
Another tortious liability that may rise from poorly managed contract is tortious
liability of nuisance. The complainant may sue contractor for the public nuisance. This
suit can be filed when nuisance affects large number of public. The poorly managed
project will many times result into high level of dust emission, noise pollution or
release of chemical in the air or water. This may affect the health and mental peace of
general public at large. This negligence can make contractor liable under trot law for
public nuisance.
Solution -3
In Contraction industry both human capital and the technology are used in equal
proportion, previously when the technology was not invested at the high tech level or
the where the high tech technology were not available, the human capital were used at
the work place, corporately higher than the technology. During those days it was
highly required to formulate a contractual relation between the constrictor and
employee working at work place. The contract specifies the rights, duties, obligation
and other aspects of the contractor, sub-contractor and of employer. It was the time
where the requirement for execution of contract was introduced but the format and
nature of contract was vary from one contractor to another and as a result of which
confusion and contradiction between the contracts were there. The mutual
understanding executed between the parties gives a birth to the legal terminology and
as a result of which many confusion, contradiction and misunderstand was there. In
short the contractual relation had created many legal issues, and these had given an
obligation among the parties, many confusion, contradiction and issue was there. All
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those issues and contradiction was length and time consuming in nature, ultimately the
requirement for the stander format and need of stander contract was created. It was
required that such stander contract shall be executed between the employer and
employees in construction industry. The said stander form of contract was the key
document to resolve the issue between the employer and employee working in the
construction industry. The stander form of contract helps in the avoiding the legal
issues, as well as it has also help in saving the time and money of the peoples involved
In the transection, The standard form of construction contract harmonizes legal issues,
rights and obligation. (Refurbishment Project | what is a JCT contract? (2019).
The above situation had given a birth to the Joint contract tribunal, the tribunal is an
independent body which oversee the function of various parties involved in the
transection, the Joint tribunal contract was established in the year of 1930 by the body
call royal institute of British Architecture, and the National Federation of Building
Trades Employers. The body was specifically constructed to introduce a uniform
stander construction contract. The tribunal has identified the difference types of
contract, and introduced a uniform slandered construction contract. The various types
of construction contract are popularly used in the construction industry.
The JCT is responsible for introduction and implication various form for the JCT
contract, they are also responsible for administration of various activities and finally it
is disputed resolving body.
The stander binding contracts are suitable and applied for the following entities
A) A large works designed which was designed by or on behalf of the employer
where the detailed contract provisioned are essential and the employer is in
provided the contractor with drawing
B) Where the bill of quantities, which defined the quantity and quality of works
C) Where the contract administrator and quantity surveyor are to administer the
conditions
The said stander binding contract can be used in following circumstance
A) Where the contractor is supposed to formulate the described part of work
B) Where the works are to be carried out in the sections
C) Where both the private and the local authority are employed.
There are three significant change in the payment regime,
A) A common valuation date
B) A Payment frequency change
C) And finally the debt recovery mechanism
The 2016 suit introduced the concepts of common valuation date, which applies
throughout the construction whole chain, which ultimately improve the speed of the
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contractor and subcontractor, payment. Where previous payment system was time
consuming in numbers of ways specifically where the transection moved from the one
person to another one. (Singapore Court of Appeal decision on the enforceability of
“Interim Awards”. (2019).
Section -4 of JCT, regarding payment to the employees,
The payment to all employees are made in fair and flexible manner, the faire payment
consisting a provision for the interim payments, the intertie payment consisting of due
date and the due date fall between the date final payment and the actual date as fixed
by the contractor.
Joint Contract tribunal has updated a stander building contract terms. Wright Hassall
legal director Stuart Thwaites picks out key changes.
As such no major change were introduced in CDM regulation after 2015, the site
waste management plans regulation are now been deleted from Article -6, as these
regulatory aspects were revoked during 2013, and as a result of which Article -8 is
treated as a updated version of construction industry model arbitration rules.
Multi-tiered dispute resolution clause is popularly known by its different name such as
escalation, multi-step or ADR-first clauses. Which allows the various parties to agree
that in case where the disputed occurred between than they such parties shall follow
the specified process and steps to resolve the issues. Further the method and process
to resolve the disputed are differently implied to the various parties engaged or
associated in the dispute settlement process. The MTDRCs is recognise as commonly
accepted method of dispute resolution in commercial contracts. Rules consisting in
clause has mainly two forms, such as Pre-arbitration clauses, and secondly Post
arbitrage clause. The pre arbitrage clause consisting an aspects regarding the
resolving a disputes without the intervention are judicial authority, such process are
something like resolving the disputed without the intervention arbitrage authority.
While in second case the initiation with the adjudicating authority are taken, out of
the two the first one is most suitable and cost effective method to resolve the disputed
specifically in case where the disputed between the parties are remote and it will not
be advisable to go with the judicial authority to resolved the disputed. Further the out
of court judicial dispute resolution would be most suitable when we are looking such
facts from the points of cost and time saving points of view. (Singapore Court of
Appeal decision on the enforceability of “Interim Awards”. (2019).
Solution -4
The NEC is standard form of contract developed by ICE with the objective to ensure
smooth management of contract and its effective execution. It generally defines the
roles and responsibility of employer and contract of the project. This standard form of
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contract provides for core clauses, optional clauses and clause for dispute resolution.
NEC is also known for its various optional clauses under one umbrella. (Anon (2019).
The core clauses in the NEC contract are those clauses which are standard in nature
and applicable to every contract. The core clause includes followings:
1. General clause which includes definition of term and basic aspect of the
contract.
2. Time clause which provides for estimated time for completion of project
including starting, completion, key dates and other related aspect.
3. Responsibility clause in the contract provides for main responsibility of
contractor on provision of work, subcontracting, design layout and related
aspect. It also requires contractor to submit quality management plan.
4. Testing clause of the contract also provides for manner of defect detection and
correction including manner of notifying defects.
5. The payment clause of the contract provides for manner for determination of
consideration, payment terms, time of payment.
6. The compensation clause provides for definition of event which creates
compensation liability, time and manner of payment of compensation to other
party.
7. The risk clause provides for risk of employer and contractor arising out of the
contract and requirement to take insurance.
8. Termination clause of the contract provides for grounds for termination of
contract, manner of termination and obligation of parties on account of
termination. The termination can also be on the ground of bribery or
corruption.
9. The transfer clause in the contract provides for right of party to assign their
respective right.
10. The confidentiality clause in the contract also provides for obligation of parties
to maintain secrecy of project information.
There are many optional clauses in NEC-4, which allows user to choose options
suitable to their requirement along with core clause. It includes mainly two types of
option clauses namely main option and secondary options.
The dispute resolution mechanism provided in the NEC contract is more flexible in
nature. It provides parties under dispute to nominate senior representative who tries to
achieve amicable resolution of dispute before initiating formal dispute resolution
process. The contract provides set up of board for avoidance of dispute. The parties to
the contract will nominate their representatives on the board. The members of the
board try to manage probable risk of dispute. The board also provides its
recommendations in case of dispute. It is important to note that the recommendations
issued by the board are not binding to the parties to the dispute. (Anon (2019).
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Thus, the recommendations issued are suggestive in nature only and parties to the
dispute have option to initiate legal actions against each other.
The NEC contract provides clear role of parties to the transaction and their respective
duties and obligations. It provides for almost all areas associated with the performance
of the contract. The clear provisions in the contract, duly assigned duties and
responsibilities, compensation, termination clauses of the contract makes allocation of
work very easy. The dispute resolution process also helps in early stage dispute
resolution. Hence it promotes the cooperation and collaboration between parties to the
contract.
Solution -5
Historical background
Pre-arbitrage settlement of the disputes by the engineers
Initially when the FIDIC Published its first international standard form of the
construction contract for the civil engineering work through Red book during 1957,
the said book was based on the conditions of contract of the English institution of civil
engineers which specifically highlight the term and basic conditions. The FIDIC red
books consist pre-arbitral resolution dispute method for the engineers.
Under the Pre-arbitral settlement, initially the matter are refers to the engineer for
settlement and later on when the dispute are not resolved it is transfer or refer to the
dispute resolving body such as arbitrage authority.
When the Pre-arbitral settlement of disputes which was initiated by engineer is
declined, the reason for decline
A) As the employee are hired and they are paid by the engineer, hence the
engineer is under the commercial pressure create a situation for the engineer to
behavior impartially
B) The Contractor many clime or create a question over engineers behavior and or
conduct as the designing and or administration of work creates a disputes on
conflict of interest
Ultimately, the creditability of engineer were lost and this situation were replaced by
the dispute board.
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What is dispute board?
The board consisting an independent persons out site the contract, the members of the
board will remain at the place of duration, the board consisting 1 to 3 persons.
They work independently but the approval was made by the parties, the members of
the board are provided with the contract documents, and other project and related
documents which ultimately makes them familiar with the real situation. (Anon
(2019).
The dispute board visit the work place, identify and analysis the situation and finally
make a required suggestion and recommendation. Here the recommendation so made
are biding to the parties and it would be final decision for the interested parties.
Development of Dispute review board
The reformation made by the dispute board will be binding to the parties, however
such matter are review and at dispute review board, the development of Dispute
review board was initiated from 1975 and it was continues till 1996, when the Asian
Development Bank and EBRD adopt DRB approach, the review board take an
overview of all aspects and take a final decision based on the prevailing circumstance
and the facts and evidence available with them.
The Dispute adjudication board
The board make a binding decision rather than just a recommendation as made by the
previous body and parties. During 1987 to 1993 the specified types of dispute
adjudication board was constitution and it was performed well for the project of Anglo
– franc channel projects. Finally during the year of 2005, the World Bank and other
multi-lateral development bank has adopted DAB, which approaches in their
slandered form. - (harmonized edition of FIDIC “Red Book”).
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References
Anon (2019). Retrieved from
https://journalsonline.academypublishing.org.sg/Journals/Singapore-Academy-of-
Law-Journal/e-Archive/ctl/eFirstSALPDFJournalView/mid/495/ArticleId/1125/
Citation/JournalsOnlinePDF
Refurbishment Project | what is a JCT contract? (2019). Retrieved from
https://renovationinsurancebrokers.co.uk/knowledge-base/jct-contracts/what-is-a-
jct-contract/
Singapore Court of Appeal decision on the enforceability of “Interim Awards”.
(2019). Retrieved from https://hsfnotes.com/arbitration/2015/06/26/singapore-
court-of-appeal-decision-on-the-enforceability-of-interim-awards/
Singapore Court of Appeal upholds obligation to promptly comply with dispute
adjudication board decisions | Lex ology. (2019). Retrieved from
https://www.lexology.com/library/detail.aspx?g=f46eca42-90f9-4fd4-852a-
7c7b00229163
Anon (2019). Jctltd.co.uk. Retrieved 8 April 2019, from
https://www.jctltd.co.uk/docs/Deciding-on-the-appropriate-JCT-contract-2016.pdf
Anon (2019). Lexisnexis.com. Retrieved 8 April 2019, from
https://www.lexisnexis.com/uk/lexispsl/construction/synopsis/93690:96249/
Issues-in-construction-contracts/Delay-and-disruption?wa_origin=gnb
JCT Standard Building Contract with Quantities 2016: (SBC/Q) | RIBA Bookshops.
(2019). Ribabookshops.com. Retrieved 8 April 2019, from
https://www.ribabookshops.com/item/jct-standard-building-contract-with-
quantities-2016-sbcq/88383/
MULTI-TIERED DISPUTE RESOLUTION CLAUSES AND THEIR
ENFORCEABILITY IN INDIA. (2019). THE INDIAN JOURNAL OF LAW AND
PUBLIC POLICY. Retrieved 8 April 2019, from http://ijlpp.com/multi-tiered-
dispute-resolution-clauses-and-their-enforceability-in-india/
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