LAW6CON Construction Law: Employer Rights, Obligations & Resolution

This report delves into the intricacies of construction law, specifically addressing the rights and obligations of employers and contractors within the framework of UK law. It examines the circumstances under which an employer, such as Florence in the provided scenario, can legally withhold payments from a contractor (Sun and Moon Construction) due to substandard work, referencing relevant case law like Matthew Harding v Paice & Anr [2015] EWHC 661 (TCC) and Galliford Try Building Ltd v Estura Ltd 2015] EWHC 412 (TCC). The report emphasizes the importance of written contracts and proper notification for withholding payments, and further explores alternative dispute resolution methods like mediation and arbitration, contrasting their approaches and benefits in resolving construction-related disputes. The document concludes by highlighting the role of neutral third parties and the confidential nature of these resolution processes.

Running head: CONSTRUCTION LAW
Construction Law
Name of the Student
Name of the University
Author Note

CONSTRUCTION LAW
Part 1
Construction Law has evolved as an area of law dealing with disputes that arises in
relation to the construction of buildings and other similar fields. It has been developed by
bundling the laws relating to commercial law, contract law, planning law, tort law and
employment law. This branch of law includes issues like negligence, contract, guarantees,
claims and other similar areas of laws relating to construction (Manderson, Jefferies and
Brewer 2015).
An employer, who has undertaken a project relating to construction of building, requires
several individuals to be involved for the purpose of providing him with services, advice and
supply of raw materials. This would require the employer to employ several individuals to
carry out these functions. The employer needs to effect such employment by way of
contractual agreements.
In a contract, which is legally binding, there must be a consideration for the parties to the
contract that needs to be passed between each of them. According to the law of contracts, in
case a contract has been effected by way of an offer being accepted, the terms that have been
agreed upon by the parties to the contract cannot be altered. The alteration of the same may
be effected if the parties to that contract expressly extend their consent to such an alteration.
However, effect of such an alteration will be the formation of a new contract and the
dissolution of the old one.
In the field of Construction, the developer employs contractors to carry out a construction
project. However, there are certain instances where the contractors delivers a project, which
lacks the standard of quality that has been expected in that given situation. In this context, the
question that arises is that whether the developer has the right to withhold money for such a

CONSTRUCTION LAW
substandard quality of work. However, there are certain specified circumstances where the
developer is justified in withholding money form such a contractor. On the delivery of a
substandard form of work, the developer may withhold the payment that needs to be made to
the contractor but a under the limited situations that has been sanctioned by law. The
employer must make sure that such a withholding of payment is legal and legitimate. In case
such a withholding of payment is not legitimate, the developer has a liability to make the
payment. The same can be explained with the case of Matthew Harding v Paice & Anr [2015]
EWHC 661 (TCC).
The contracts that are entered into, for the purpose of construction, are required to be made in
a written form. The written contracts must include the terms of the contract that binds the
parties to the contract. In case a dispute arises between the employer and the contractor
regarding such withholding of money, the employer must establish the legitimacy of
withholding before the court. In most of the states in the United Kingdom, the commercial
contracts needs to be written, the verbal agreements are not binding upon the parties. The
verbal agreements in commercial contracts is not considered to be valid. In case, the
employer has resolved to withhold payment from a contractor, for an inefficient service that
has been provided by the contractor, the employer needs to effect such a withholding by
providing a written contract to the contractor. In case the employer fails to furnish a written
instrument effecting such withholding of payment, the employer might be imposed with an
additional penalty that needs to be paid to the contractor whose payments have been stopped.
The same has been contended in the case of Galliford Try Building Ltd v Estura Ltd 2015]
EWHC 412 (TCC).
In case the contractor has carried out a work in an inefficient manner, which was not
expected in the situation, the employer has the right to withhold payment relating to that part
of the work that has been carried out inefficiently. The payment for the part that has been

CONSTRUCTION LAW
carried out in an efficient manner cannot be withheld by the employer. The rule for
withholding payment is applicable to the situation where the inefficiency has been committed
by the fault of the contractor. In case, the substandard work of the contractor is the result of
the fault of a third party or the employer himself then the employer does not have the right to
withhold the payment. In such a situation, the contractor may bring a suit against the
employer claiming full amount that employer owe him owing to this contract. The contractor
may also claim for a penalty for such a withholding of payment without the fault of the
contractor. The same has evolved with the case of Henia Investments Inc v Beck Interiors Ltd
[2015] EWHC 2433 (TCC).
The employer is also justified in withholding payment where the performance of the contract
has been delayed by the contractor. The contract must contain the time-frame and the penalty
for the delay in such time frame. However, all these penalties and withholding of payment are
to be effected in case the reason for such a delay or substandard work is the fault of the
contractor himself. The same has been made evident in the case of Caledonian Modular Ltd v
Mar City Developments Ltd [2015] EWHC 1855 (TCC).
In the present situation, Florence is the developer who has employed the Sun and Moon
Construction as a contractor for working on a large business park. The contractor so
employed has carried on their work and forwarded an application to Florence requesting for
the payment of the same. However, the payment application was denied and the reason that
has been provided by the employer for the same was the substandard quality of work that has
been provided by the contractor. The issue that arises from this situation is the fact that
whether there exists any rights and obligations for both Florence and Sun and Moon under
the contract regarding the Employer withholding monies due and an analysis of those rights
and obligations.

CONSTRUCTION LAW
The contract between Florence and the Sun and Moon Construction is a construction
contract and the same will lead to the assumption that the contract is a written one as verbal
agreements are not binding in case of commercial contracts. Therefore, the contract in this
case is a valid one and the same binds both the parties to the contract to perform their
contractual obligations.
In this case, the consideration for Florence was the carrying out of the construction work
and the consideration for Sun and Moon Construction is the payment of money that will be
payable by Florence. The construction work has been carried out by Sun and Moon
Construction but Florence has failed to make payment for the same. On application
forwarded by the contractor the employer has denied the payment. The reason that the
employer has provided for such a withholding of payment was the work performed by the
contractor to be substandard.
In such a case, the contractor has the right to bring a proceeding against the employer
claiming the payment. Florence has a right to deny the payment contending the work carried
out by the contractor to be substandard and not up to the expectations. This ground for
withholding the payment will be available to Florence but for availing the same, Florence
needs to prove the work to be substandard or inefficiently done before the court. The proving
of the same is mandatory for withholding payment. However, the Florence has the right to
withhold the payment to the extent to which the work has not been done or the work has been
done in an efficient manner. Florence is under an obligation to make the payment of that part
of the contract that has been efficiently done by the Sun and Moon Construction. In case of
effecting such a withholding of payment, Florence is under an obligation to provide a written
instrument containing the notice of the reason for which the withholding has been effected.
The same can be illustrated with the case of ISG Construction Ltd v Seevic College [2014]
EWHC 4007 (TCC).

CONSTRUCTION LAW
The contractor in this case, namely the Sun and Moon Construction may bring a suit
against Florence for his denial to make payment for the work that has been done by him. The
contractor may claim for the payment that he is entitled to under the quantum of work that
has been performed by him or the part of the work that has been performed efficiently. In
case the withholding of payment is not justified, the contractor also has the right to claim
penalties from the employer.
Part 2
Disputes that are unsolvable by negotiations needs to be solved by resorting to the
techniques involving the dispute resolution. There are mainly three kinds of dispute
resolution methods that are available to the disputing parties. These dispute resolution
techniques are namely, mediation, arbitration and litigation (Gul, S., 2016).
The mediation is a form of dispute resolution that involves the intervention of a third party
who is neutral about the dispute to intervene in the matter and resolve the dispute by the
process of mediating. The third party strives to arrive at an agreement for both the parties
after examining the situation thoroughly (Roberts 2016). The main objective of the mediator
is not to force a solution but to arrive at a recommendation that has consideration for both the
sides of the dispute. This form of dispute resolution aids the disputing parties to channelize
their grievances and exploring all the sides to the dispute in order to arrive at a decision that
will best satisfy both the parties to the dispute (Ali 2018). The process of mediation is
somewhat a non-binding kind of a technique of dispute resolution. However, as the parties to
the dispute arrive at a decision in this case with the help of a bargaining of the terms among
themselves and a mediating process by the neutral third party, the chances of the compliance
of the decision arrived at will remain higher. The process of mediation provides the parties to

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the same with an opportunity to fabricate a solution that is unique to the situation and has
been arrived at by the joint consent of both the parties (Blake, Browne and Sime 2016).
The neutral third party who is involved in the process of mediation is a professional. The
third party to the mediation is a professional who has the proper training and skills relating to
the legal, economic and technical area involved in the process. The role of a third party in a
mediation process is to evaluate both the sides of the dispute, explore all the solutions that are
relevant to the situation and then arrive at a decision that will best serve the situation. This
process of dispute resolution provides a chance to both the parties to the dispute to indulge in
the process of the resolution. This process ensures the confidentiality of the situation being an
informal process (Cortés, P. ed., 2016).
Another form of alternative dispute resolution that is available to an individual in case a
decision cannot be arrived upon by the individual by negotiation, is the process of
Arbitration. In the process of arbitration, a third party who is neutral to the situation, acts as
the judge and upon him is vested the responsibility of resolving the dispute that has been
proposed to be resolved. This technique of dispute resolution involves a structure similar to
the structure of the litigation. In the process of arbitration, the parties to the arbitration may
apply to the arbitrator to resolve the dispute that has been incurred in a particular situation.
The arbitrator is a third party who are independent, private and qualified to address such
situations. The disputing parties to the arbitration applies to such an arbitrator who will
provide both the parties to the dispute to present their contention about the dispute. The
arbitrator so appointed requires to address the arguments presented by both the sides of the
dispute and arrive at a decision that will satisfy the situation. While arriving at the solution to
the dispute the arbitrator needs to ask for the evidences that both the parties are based their
case upon. The examination of the same needs to be carried out by the arbitrator and then
arrive at a decision that will bind the disputing parties to the arbitration. The parties involved

CONSTRUCTION LAW
in an arbitration does not have the opportunity to indulge in a negotiation. Once the arbitrator
has been appointed the parties loses their right to negotiate. They are required to submit their
contentions and the evidences upon which their decision has been based upon to the
arbitrator. However, there is a scope of virtual negotiation that can be effected by the parties
among themselves but the presence of the arbitrator in such a negotiation along with the
lawyers of both the parties is necessary (Creutzfeldt and Bradford 2016).
The decision that is delivered by the arbitrator has an element of confidentiality. The
decision thus delivered cannot be appealed and is binding upon the parties to the arbitration.
The process of arbitration is a less expensive one and unlike litigation it provides for speedy
remedy to the aggrieved persons. However, the parties involved in the process the of
arbitration may pursue the court in case the decision arrived upon by the arbitrator fails to
cater their grievances (Menkel-Meadow 2017).
Another kind of process that involves dispute resolution is the process of litigation.
Litigation is somewhat a formal process of dispute resolution that involves the parties to the
dispute to appear before the court in order to address their grievances (Jamal 2015). The court
allows parties to the dispute to indulge into a process of contest. In this process of dispute
resolution, the parties are provided with the opportunity of contesting their sides to the
dispute. The judge striving to resolve the case has the power of calling upon the witnesses
and collecting evidences relating to the dispute. The judge who is deciding upon the case is
conferred with an ample amount of power to decide upon the same. The decision arrived at
by the court will be binding upon the parties to the dispute and the parties does not have the
opportunity to ignore the same. They are bound by the decision that has been delivered by the
court and does not has the option of repudiating the same (Lee, Yiu and Cheung 2016).

CONSTRUCTION LAW
However, the process of litigation is more expensive than the other two of the process of
dispute resolution. It is a slower process of dispute resolution as the courts trying the cases
are, generally, overburdened with such cases. The dispute when contested in a court loses its
confidentiality (Cortés, 2015).
In the present situation, the withholding of payment by Florence form the Sun and Moon
Construction owing to the reason of their performing of a substandard kind of work. In this
case this is a business dealing and the both the contractor and the employer have an urgency
regarding the dissolution of the dispute as the contractor has already spend a considerable
amount of money on the project. The employer also has a urgency in getting the project
properly done. In such circumstances, the best process of dispute resolution that will properly
cater to the needs of the situation is the mediation. This is because of the speedy remedy that
the parties may avail in pursuance of this method of dispute resolution. The reputation of a
business will be at stake if the dispute has been made public which will cause a considerable
amount of damage for both the parties to the dispute. Hence, mediation will be the best
process of dispute resolution to cater this situation.

CONSTRUCTION LAW
References
ISG Construction Ltd v Seevic College [2014] EWHC 4007 (TCC)
Matthew Harding v Paice & Anr [2015] EWHC 661 (TCC)
Galliford Try Building Ltd v Estura Ltd 2015] EWHC 412 (TCC)
Caledonian Modular Ltd v Mar City Developments Ltd [2015] EWHC 1855 (TCC)
Henia Investments Inc v Beck Interiors Ltd [2015] EWHC 2433 (TCC)
Manderson, A., Jefferies, M. and Brewer, G., 2015. Building information modelling and
standardised construction contracts: a content analysis of the GC21 contract. Construction
Economics and Building, 15(3), p.72.
Gul, S., 2016. Alternative Dispute Resolution: A Legal Perspective. In Handbook of
Research on Effective Communication, Leadership, and Conflict Resolution (pp. 126-143).
IGI Global.
Blake, S.H., Browne, J. and Sime, S., 2016. A practical approach to alternative dispute
resolution. Oxford University Press.
Cortés, P. ed., 2016. The new regulatory framework for consumer dispute resolution. Oxford
University Press.
Creutzfeldt, N. and Bradford, B., 2016. Dispute resolution outside of courts: procedural
justice and decision acceptance among users of ombuds services in the UK. Law & Society
Review, 50(4), pp.985-1016.
Menkel-Meadow, C., 2017. Dispute processing and conflict resolution: theory, practice and
policy. Routledge.

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Lee, C.K., Yiu, T.W. and Cheung, S.O., 2016. Selection and use of alternative dispute
resolution (ADR) in construction projects—Past and future research. International Journal of
Project Management, 34(3), pp.494-507.
Cortés, P., 2015. The Brave New World of Consumer Redress in the European Union and the
United Kingdom. Disp. Resol. Mag., 22, p.41.
Ali, S.F., 2018. Mediation in the UK courts: Efficiency, Confidence and Perceptions of
Justice. In Court Mediation Reform. Edward Elgar Publishing.
Roberts, M., 2016. Mediation in family disputes: principles of practice. Routledge.
Jamal, A.A., 2015. ADR and Islamic law: the cases of the UK and Singapore.