Contract Law in Construction: Offer, Acceptance, and NEC Analysis

This essay provides a comprehensive overview of contract law principles within the context of construction projects. It begins by analyzing the legal concepts of offer and acceptance, with a specific focus on the postal rule and its applicability to modern communication methods like fax. The essay examines relevant case law, such as Adams v Lindsell and Entores Ltd v Miles Far East Corporation, to illustrate the nuances of contract formation. Furthermore, the essay delves into the New Engineering Contract (NEC), a widely used contract form in the UK civil engineering sector. It highlights the advantages of NEC, including its clear and uncomplicated terms, emphasis on mutual approach, and provisions for risk allocation and dispute resolution. The essay concludes by emphasizing the importance of good management skills in drafting contracts to mitigate potential disputes and ensure project success. Desklib offers a wealth of similar resources for students.

Running head: CONTRACT LAW IN CONSTRUCTION
Contract Law
Name of the Student
Name of the University
Author Note

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Answer to question 1:
The present case law is based on the principle of offer and acceptance. Offer and
acceptance are the popular legal term in the case of contract law (Stone 2014). When one party
makes certain proposals to other with an intention to create legal relationship with him, it is
termed as offer. If the other party accepts the offer, contract is made in between them. In general,
an offer can be accepted through direct communication. This rule has been established through
the case of Cities Service Oil Co., v. National Shawmut Bank, 172 N.E.2d 104. However, there
are certain exceptions to this rule are present. One of the most common exceptions is the postal
rule (Sasso 2016). According to this rule, if an offer has been made to a person and that person
gives his consent over the issue by letter, the offer will be regarded as accepted as soon as he will
post the letter (Bayern 2015). It has been stated by the court that the acceptance rule will prevail
even if the letter address has been disturbed (Poole, Devenney and Shaw-Mellors 2017). The
postal rule has been confirmed by the court in the case of Adams v Lindsell (1818) 1 B & Ald
681. Further it has been observed in the case of Henthorn v Fraser [1892] 2 Ch 27 that if the
parties to a contract has been mentioned about the communicating method of acceptance, the
acceptance will be made when the party will post his consent. The court of appeal in case of
Entores Ltd v Miles Far East Corporation [1955] EWCA Civ 3 has been observed that the
postal rule is not applied in case of instantaneous communication like telex; rather the rule will
be applied in case of message sending machines. Therefore, it can be stated that postal rule will
apply in case of fax. According to the general rule, an acceptance to an offer is said to be made
when the offer maker will receive the acceptance.

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It has also been stated by the postal rule that the process of acceptance is not maintained
in cases of fax transaction. It has been observed in postal rule that acceptance can be held as the
person post the letter of consent. It is not important whether the opposite party received the
acceptance or not. However, in the case of fax, the other party should have to receive the
acceptance. In case of any adverse situation, the acceptance will not create any binding
agreement between the parties.
According to the “mailbox rule”, contract through fax can be established when the offer
maker will receive the fax. In the present case, it has been observed that the Benmark Steel Ltd
has made an offer to Lands End Limited and certain conditions regarding the acceptance have
been mentioned in this case (Bayern 2016). However, it has been observed that Lands End has
accepted the offer and sent a fax within the stipulated period to the Benmark. The fax was
delivered from the machine of Lands End. However, the fax machine of Benmark was troubled
and the company could not receive the acceptance. According to the provisions mentioned in the
Entores Ltd, contract through the fax can only be accepted when the offer maker will receive the
response. In this case, Benmark could not receive the acceptance and therefore, it can be stated
that no binding contract has been made in this case.
Answer to question 2:
In United Kingdom, there are certain forms of contract that are used in the civil
engineering and construction projects. New Engineering Contract (NEC) is one of them (Chan
2014). This type of contract has been made by the Institute of Civil Engineers and provides
certain guidelines regarding the conveyance of construction-oriented projects. The main
intention of this contract is to get tenders or award contracts. The relationship between the two

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contracting parties is well maintained by this contract. Further, the use of this contract is not
limited up to the constructional circumstances. This contract can be used in different commercial
situations.
However, there are certain positive aspects present regarding the usage of this contract
over other forms of contract. it is a fact that the terms mentioned in the contract are quite
uncomplicated (Marsh 2017). Further, the terms that are being used in the contract are quite
liberal in nature. The terms are constructed with the fit for purpose methods and are used to do
commercial arrangements. The provisions regarding the risk allocation and financial and
technical strength of the project have also been discussed under these types of contract. the
contract has been drafted clearly and the phrases used in the contract are simple so that everyone
can understand the facts of the draft and the roles and responsibilities of the parties are
constructed chronologically. The contract has been drafted with an intention to make all the
people follow the rules contained in it. The compensation provisions in case of breaching any
rules have also been mentioned in this contract. a good management skill is required to draft
such contract so that all the probable future dispute can be resolved in between the parties.
New Engineering Contract promotes the idea on mutual approach and is very popular in
the countries like United Kingdom (Al-Shammari 2017). It postulates the principle of good faith
while making any contract with the parties. The rules mentioned in the contract are unswerving
with the governmental regulation. Such contract offers more elasticity and malleability to the
contracting parties and all the subjective terminologies are avoided during the drafting of the
contract. All these characters have positioned this contract in the list of choices of the people. All
the parties can understand all the requirements made in the contract and if any issue has been
cropped up in between the parties that can be addressed and mitigated in a quick manner. In

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certain circumstances, it can be seen that the contractors to a projects are asked to bear the
responsibility for the unforeseen difficulties. Due to all these reasons, the New Engineering
Contracts are positioned in a good place.

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Reference:
Al-Shammari, M.A., 2017. USING THE NEW ENGINEERING CONTRACTS (NEC3) TO
CONSIDER AND EVALUATE THE LEGAL LIABILITIES ARISING FROM
CONTRACTUAL FAILURES: A CASE STUDY RESEARCH. Journal of Engineering and
Sustainable Development Vol, 21(03).
Bayern, S., 2015. Offer and Acceptance in Modern Contract Law: A Needles Concept. Cal. L.
Rev., 103, p.67.
Bayern, S., 2016. Offer and Acceptance in Modern Contract Law. California Law Review, 103.
Chan, W.F., 2014. A Study Into Adoption of New Engineering Contract (NEC) Effectively to
Reduce Dispute in Hong Kong Construction Project (Doctoral dissertation, City University of
Hong Kong).
Marsh, P., 2017. Contracting for engineering and construction projects. Routledge.
Poole, J., Devenney, J. and Shaw-Mellors, A., 2017. Contract law concentrate: law revision and
study guide. Oxford University Press.
Sasso, L., 2016. Certain comparative notes on electronic contract formation. Право. Журнал
Высшей школы экономики, (1).
Stone, R., 2014. Offer and Acceptance. In Q&A Contract Law(pp. 23-46). Routledge.

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