Construction Law: Contractual Issues in Mega-bank Case Study

This report examines a construction law case involving Mega-bank Ltd. and Pure Build Solution Ltd. The case focuses on the formation of a valid contract for the construction of a bank branch. The report analyzes the essential elements of a contract, including offer, acceptance, and consideration, and identifies potential legal issues arising from the parties' interactions. It highlights the significance of a valid agreement, the implications of using an outdated tender, and the consequences of delays and lack of acceptance. The analysis emphasizes the importance of adhering to contract law principles to avoid legal liabilities and ensure the successful completion of construction projects. The report concludes that no valid contract was formed due to the absence of acceptance and reliance on an old tender, recommending the bank seek another construction company to avoid potential legal complications.

Construction Law

Table of Contents
INTRODUCTION...........................................................................................................................3
QUESTION......................................................................................................................................3
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Contract has taken as one of the important measure in all the industry in whatsoever field
they are connected to. A contract is a way in which any business organisation or company may
possess a chance to sign a deal or to do a deal with any other business organisation. (Llewellyn,
2016.)A contract has been made while making because it shall include all clauses and conditions
according to which a deal may be made and actions of the party may be judge. The following
project will discuss a case which have occurred in between two parties. The focus shall be made
on making a contract and what are the legal formalities which is to be taken into glance while
making a contract with respect to any field. The aim of briefing this project is detailing all the
aspect regarding making up of a contract and what shall be legal remedies regarding it. The main
focus shall be on construction law and how contract has been prevailed in it.
QUESTION.
Construction is a major key principle of development. Any country who wants to
inculcate development in it must know that development of infrastructure is must. If several
infrastructure has been made prevailing with new facilities then new sort of changes will come.
In order to protect construction of such beautiful and high profile buildings a new and special
kind of law has been implemented by government that is construction law. (Mason, Stephenson,
2015.)It is the branch of law which always deal with the building of any new state or
construction if any kind of building. Construction law is basically a mixture of contract law,
commercial law, planning law, employment law and tort. Provisions which have been mentioned
in all these acts shall also prevailed by construction law as it is a different law but made with all
small parts of major laws. The law related to construction shall cover wide range of legal issues
include interest of the party, the contract made between party, any act of negligence done by
party, bonds and bondings, security interest construction claims and other consultancy contract.
All the participant who has been engaged in any kind of contract related to construction shall get
effected by construction law.(Chen, Duan, 2014.) The provision and limitation which have been
mentioned in law will be prevailed over an individual or any group which create an interest of
entering into construction bases contract. Construction law made upon general legal principle
and methodologies and incorporates the regulatory framework. In UK there is an active society
on construction law since 1983 which shall look over all aspects related to construction law. The

present case which have been mentioned is purely based upon contract done in construction law.
Contract is very important task to do in any industries. While making up of a contract it is very
essential for a company dealing with any kind of profile to consider all important steps. It is
paramount while forming a contract to include all the essential elements in order to promote
effectiveness of contract.(Luhmann, Albrow, 2013.) If any any of the element has been missing
while making up of a contract then such agreement will not be entitled as a valid contract and
therefore no legal; remedies could be incurred against it. A valid contract shall always raise legal
obligation on the parties who are signing a contract by which they have a pressure or
responsibility to fulfil duty arise due to contract. When such duties shall not be fulfilled then it
will raise legal liability on party. In the present case, the facts state clearly about construction of
a building which is of Mega-bank Ltd. The design and construction of Megabank Ltd. Branch ,
has to be constructed over Hercules street, London. The company has contracted an organisation
who are expertise in constructing buildings known as Pure Build Solution Ltd. Bank has refereed
to a tender which has been mentioned by construction company on 28th June 2009 regarding
construction of branch.(McKendrick, 2014.)After looking towards tender made by construction
company our company has shown an interest to make a contract to Pure Build Solution. But
before making any kind of contract with company it is very important to establish a valid
agreement between the party and for making a valid agreement all the essential elements are to
be included to form a agreement. Mam it can be clearly seen from the above letter that a contract
is likely to take place between both the companies regarding construction and such contract shall
be valid in nature. For the formation of a valid contract certain elements are to be included such
as Offer. We had made an offer to Pure Build company by asking them to build a branch of our
bank. Offer is first and foremost step to be taken while making of a contract. When an offer has
not been made the it is impossible to create an interest in a contract. We have even put
consideration and condition of a lawful object regarding construction of a branch. But one of the
fault we made while giving an intention for the formation of a contract is that we have
considered a tender of previous year. We all know that tender change every year or every month
that is why we cannot refer to any old tender. (Horner, 2013.)It will mould the terms and
conditions to be made in a contract regarding the construction of building. If any termination has
been done with regard to making up of a contract then t will loose its validity that is such
contract will not be considered as valid in the eyes of law. A valid contract is made upon a

particular consideration with acceptance and in this offer no mail of acceptance has been
received by our company. When formation of a valid contract has been done then offer made by
one party will be accepted by another party and in this scenario no acceptance has been received
on their party by which it makes quite clear that Pure Build company are not intending to create
any form of interest in making up of a contract with our company of constructing a branch. And
for getting into a contract(Suhrke, 2015.) it is very important that both the parties between whom
a contract has been made shall possess or create an interest so that such contract will be enforced
by party legally. It has further mentioned by our company that the construction work has been
behind schedule and request them to work immediately but in this formation of contract no
acceptance has been received on their part. It can be clearly seen that there is no formation of a
valid contract between both the parties. For the formation of a valid contract, the necessary
elements to be taken care which has been guided under contract law are:-
Offer-n it is very important for the formation of a valid contract that an offer shall be made by
one party to another. It is very important while entering into a contract that one party must show
its interest towards other on a specific act by making an offer.(Baifeng, 2015.)
Acceptance- when the offer has been made on the part of one party then it is very necessary that
other party to whom an offer has been made must accept it. Without any kind of acceptance by
other party, a valid contract shall not be formed. An acceptance to an offer it a way of showing
interest in entering into a contract by one party. Without acceptance it cannot be concluded that
the other party is equally interested in entering into a valid contract. And for the formation of a
valid contract it is very much important t that an interest has to be created on the party of both
the parties.
Consideration- while forming any kind of contract it is very important to make a consideration. It
can be explained as exchange of value of one object in place of another. Consideration must be
both illegally sufficient and bargained for by the receiving party.
Lawful Object- when a contract has been made, the party must ensure that a lawful object shall
be made on lawful object.(Hui, Wenhui, 2013.)When the object will not be lawful in nature then
no legal remedies shall be attained on the following contract as well as such contract shall not be
considered as valid. So it is important that a lawful consideration is to be included in the making
of a contract.

Agreement- when all the essential elements have been included then an agreement is to be made
between the parties. Such agreement shall include a valid intention of entering into a contract as
well as formation of a agreement will include legal obligation on parties. A legal obligation is
referred to legal duty of either of the party which will arise if no condition of contract will be
followed or there is breach of any kind of element.(Hutchinson, Jackson, 2015)
Hence these are some of the essential elements which has to be taken into consideration while
making up of any kind of contract. As we can see above that there are some important essential
elements for the formation of contract which has been guided by contract law and in this deal we
have not formed any kind of contract yet. No further approval has been received on the behalf of
other party besides that the consideration on which we are intended to make a contract is based
on tender of 2009. it may appear that various other tender will may be updated by company with
regard to construction. No agreement has been formed too between the parties by which it make
very clear that the other party has not creating any form of interest in making of a contract. It will
be a better option for us and our company too to choose any other company for constructing a
branch as they will revert back with quotation. And this company has already been late in doping
the work plus they have not revert back on the following mail to show an interest regarding
construction. (Hui, 2015.)If we work with the same company and sign a deal on the construction
of our new bank branch then it may arise a possibility that some of the legal issue may strike our
company by which legal complication will also arise. It may further appear that if any breach or
alteration occur in the contract then it may give rise to legal liability on company itself which is
an important subject matter and we do not want to put our company into any kind of
complication. If the work has been carried out by our company with respect to this letter then
there shall be possibility of arising some legal issues. Any legal issues in a contract arise when a
contract has not been formed valid and for the formation of a valid contract all the essential
elements are to be included. Besides that legal issue may arise when there will be breach in a
contract and such breach will only take place if either of the term has not been fulfilled by the
party. (Cheung, 2014)In this letter a particular deadline has been mentioned for the completion of
work. It has further mentioned that work is already behind the schedule which makes a
possibility that in upcoming time construction company will not be able to finish its construction
work on time and if it has not been finished on time then terms and conditions of contract will be
breached by which legal issue may arise. A legal liability will fall on to the construction

company. Along with that, work will be stopped and construction will not be finished on time. If
the any breach has been occurred on the part of pure Build Ltd. When we form a contract with
them for constructing a building then first and foremost to be taken by us is to determine that on
what basis and on what account such breach has been done. Is breach valid in nature. If any
heavy damages has been occurred with the breach of that contract then it is the duty of either of
the party to fulfil those damages by providing compensation as damages will occur in terms of
heavy loss. (Vermeer, 2015.)Damages could be delayed in the due date of completion of
construction. Or the construction has not be completed on the rate which has been decided or
negotiated by parties. Construction law is very important aspect of law which will cover all the
necessary contract being made by the party on account of construction and if any breach has
been occurred while the party has made the contract on construction then compensation will be
given on the basis of construction law and in the way it has been explained. If any of the legal
obligation or legal liability has been arise in the contract related to construction then such legal
liabilities shall be referred by the operation and application of construction law. There are
various cases which has been occurred on the behalf of construction law, will depict that a
contract formation in a valid format is very important and such breach in such contract will result
into legal liability and legal obligation for an example: SSE Generation Ltd v Hoctief Solutions,
in this case it was held that contract required the contractor to take out a joint names insurance
policy to cover all the risk which may arise due to the signing of a contract related to
construction of a building. (Yang, 2013.)The judge in this case was agreed with SEE's position
that there is no irrebuttable presumption that the parties have no liability to one another simply
because a joint name insurance policy is in place. There was no express term in the contract
addressing the issue, and the inclusion of some other contractual terms, such as indemnity
provision and the cap of total liability, which would only be relevant if the parties could make
claim against each other, suggested the parties did not intend for liability to be displaced by the
insurance policy. In case of Scottish Power UK Plc v BP Exploration Operating Co Ltd, a
number of important aspects arise which has been in the context of exclusion clause and
limitation and their interpretation in the contract. (Hui, 2013.)The case is a useful reminder of the
range of interpretations often available to the courts when considering contractual limitation
clauses and therefore the importance of considering how best it is to provide certain clauses.

Hence, it can be concluded from the above discussion that no valid contract has been formed
between the parties. It is important, when a deal has been made with Pure Build regarding
construction of a new branch then it is necessary to consider or top form a valid contract which is
not formed here and to take care of the legal obligation which may arise from it.(Glenn, 2014)
CONCLUSION
The following project has covered one of the important aspect of law that is construction
law. The project has discussed a vital situation of the company where thy are in the urge of
making a contract with a company who are construction their branch. The project has a detailed
description of how a Valid contract has been made regarding construction and what shall be the
consequences if any breach occur and how they shall be addressed.