By Dr. Chandana Jayalath
Termination occurs when the employer instructs a contractor to permanently stop the performance of work and leave the site. Construction contracts specify each party’s rights, obligations, and remedies for termination. Termination on construction projects often results in claims and disputes; therefore, the decision to proceed with this option should not be taken lightly. …
By Dr. Chandana Jayalath
Delays are inherent in construction. If they can not be avoided, then they ought to be either mitigated or absorbed within the contract. A Contractor may be delayed by the effects of a change in the work or an event that was simply beyond his control, then the entity responsible for overseeing the contract, that is Employer, may be obligated to adjust the contract. All depends on the circumstances where the contract forbids or provides for. …
At long last, specialists have agreed upon two model contracts for international joint ventures. Legal experts from a Geneva law firm who provided the initial drafts describe their features. For several decades, companies’ legal departments secretly developed their own tailor-made joint venture contracts. They couldn’t do otherwise: no international model existed and no one dared to propose one in view of the diversity of legal cultures and practices.
A joint venture is a classic type of strategic alliance between two or more companies. It can be long or short term, It seemed that no model could suit all these needs and reconcile lawyers from diverse backgrounds. Yet the demand for international models was pressing. …
By Dr. Chandana Jayalath
The term good faith, bona fide in Latin, is used in many areas of the law but has special significance in law related to construction. It is expected that the parties to a contract will act in good faith and fair deal at all times. To meet this test, it is honesty that comes first in the conduct of the transactions in achieving a reasonable commercial standard of fair dealing in the trade. These standards are usually set out in form of specifications taken for granted in the industry. Accordingly, good faith incorporates both subjective elements by requiring honesty and objective elements by requiring adherence to standards. Although good faith and fair deal go together, it is bad faith, more easily recognizable so that a party may contest in a lawsuit when only a bad faith prevails. According to Lord Justice Bingham, good faith is in essence a principle of fair and open dealing where the parties should not deceive each other. …
Good Faith and Fair Dealing; What Does It Really Mean in Construction Contracts?Read More »
By Dr. Chandana Jayalath
Disputes occur when parties fail to address conflicts of their interests as they often attempt to find solutions within the bounds of the contract where the rights and obligations are typically set out. Forgetting the fact that contracts are not ‘water proofed’, parties tend to limit their scope of thinking within the hard bound copies. The reality is that contracts do not operate in a vacuum. A contract that caters to all eventualities is indeed rare, so that parties will have to turn to another side, willingly or unwillingly, for a settlement. This is why negotiation has become a day to day phenomenon. …
Why is Amicable Settlement a Part of Contractual Machinery?Read More »
By Dr. Chandana Jayalath
Sub letting reduces dependency on directly employed labour. It results non-wage cost of employment such as redundancy payment and offsets the risk associated with the responsibility by transferring them. Sub letting is necessary when to employ specialists of proven reliability and repute to face technical complexity involved in a project. There are two distinctly different modes of sub letting that everyone is known to; domestic and nominated. …
By: Dr. Chandana Jayalath
Losses can be recovered under two limbs namely the losses arise naturally, according to the usual course of things, as the result of the breach (first limb); or the losses that were contemplated by the parties, at the time the parties made the contract, as being the probable result of the breach (second limb). Consequential loss in construction contracts is equated with the second limb, as they are often be specified clearly in writing, such as payments to consultants during penalty period. …
By Sachin Kerur and George Varma
The UAE construction sector is a continually developing market with complex transactions becoming increasingly prevalent. The evolution of the construction sector has highlighted the need for more robust construction contracts that deal with all the relevant risk issues for a project. …
Standard Form Construction Contracts – Friend or Foe?Read More »
By Sachin Kerur and William Marshall
In Part 1 of this two part subcontracting series, we detailed some tips and traps with respect to subcontracting, and considered the criticality of successful subcontractor performance to the timely and on budget delivery of projects. In Part 2 below, we examine the risks of pro-forma subcontracts and back-to-back drafting and briefly touch on the benefits of bespoke drafted subcontracts. …
By Sachin Kerur and William Marshall
Since Adam Smith first set his mind to the efficiency of the pin factory in 1776, specialisation and division of labour has underpinned industrial development. The construction industry has embraced specialisation and division of labour to such a degree that almost every construction project, no matter how large or small, is delivered in practice by a large number of separate parties, each with a narrow field of expertise and each with a commercial and practical imperative to maximise the efficiency within their field of expertise. …
By Patrick Bourke and Adam Vause
The most recent draft of the much anticipated UAE Federal Law in respect of Arbitration (the Draft Law) was released on 16 February 2012. The Draft Law represents the UAE’s proposed updating of its legislation in order to, among other goals, comply with its accession to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) in 2006. Although the Federal Arbitration Law remains pending, this latest release demonstrates a positive step towards such a law coming into force and its contents should be considered when drafting arbitration clauses where the dispute could involve the UAE. …
Latest Draft of UAE Federal Arbitration Law ReleasedRead More »
The parties’ dispute concerned the extent of the coverage of this alternative design for demolition and hoarding works. The letter of award for the subcontract stated that it was to be a lump sum fixed price contract and back-to-back with the main contract. Brington maintained that Cheerise was responsible for the design as this was a back-to-back contract. …
Rights and Obligations under Back-to-Back ContractsRead More »
