Abstract
This chapter examines the way in which the idea of “collaboration” or cooperation can be facilitated by a standard form contract which has “collaboration” as its explicit goal. This is done by contrasting the approach of that contract with another standard form contract which does not have an explicitly “collaborative” approach. This examination is put in its wider context within construction law and the surrounding commercial context in order to identify lessons for the way in which legal frameworks can promote and capture ideas of collaborative working.
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Notes
- 1.
House of Commons Briefing Paper Construction Industry: Statistics and Policy Number 01432, 6 October 2015 See p. 3.
- 2.
This is discussed in more detail below.
- 3.
See for example, Bell (2016).
- 4.
See Oosterhuis in this volume.
- 5.
See D’Alvia in this volume and Christie (2017) for a discussion in the specific issues arising in standard form construction contracts.
- 6.
[2017] EWHC 319 (TCC).
- 7.
Ibid at para. 124.
- 8.
Although these inform the overall approach.
- 9.
The two leading textbooks on Construction Law, namely Hudson on Building and Engineering Contracts (13th Ed. Sweet and Maxwell) and Keating on Construction Contracts (10th Ed. Sweet and Maxwell) are both the work of leading construction chambers, Keating Chambers and Atkin Chambers: rather than academics. The leading textbook on construction adjudication is written by Sir Peter Coulson, a judge of the Technology and Construction Court. Professor John Uff is a practicing barrister and leading expert in this field as well as the author of a leading student textbook, Construction Law. There are others.
- 10.
The precise allocation of risk (especially for the design) is something which can be dealt with through a number of different routes of procurement.
- 11.
Work has been done in the USA and Canada on work to measure the impact of change on construction contracts. For a survey on the position in English law see Miller and Cohen (2002).
- 12.
The distinction is explained briefly in the introduction to Fischer (2013), pp. 211–212.
- 13.
See for example, the Construction (Design and Management) Regulations 2015.
- 14.
As defined in s. 104 of the Housing Grants, Construction and Regeneration Act 1996 (as amended)—it encompasses most things which would be conventionally understood as construction work.
- 15.
S. 108 Housing Grants, Construction and Regeneration Act 1996 (as amended).
- 16.
Uff (1993).
- 17.
- 18.
For example, on Crossrail, various joint venture companies have been awarded contracts for different sections of the tunnelling works. An example close to home for the present writer is the Aberdeen Western Peripheral Route (or Bypass)—one of the longest road’s currently under construction in the UK is being constructed by a joint venture of the large construction companies of Balfour Beatty, Carillion and Morrison Construction: https://www.transport.gov.scot/projects/aberdeen-western-peripheral-route-balmedie-to-tipperty/aberdeen-western-peripheral-route-balmedie-to-tipperty/#.
- 19.
It is interesting that in the fourth edition of the NEC contracts—its “partnering” option is going to be explicitly called “collaboration”.
- 20.
There is an interesting discussion of the legal content of partnering arrangements in PD Begg (2003).
- 21.
The effectiveness of this is discussed by Mosey (2010).
- 22.
Both of which are relevant to collaboration as will be seen below.
- 23.
This theme runs through the Latham report. (Sir Michael Latham Constructing the Team: Joint Review of Procurement and Contractual Arrangements in the UK Construction Industry HMSO 1994).
- 24.
Appendix 1 of Latham Report at p. 113.
- 25.
The Foreword to Latham Report calls for Team-Work and “Win Win Solutions” or, as Sir Michael prefers the attitude of Lewis Carroll’s Dodo: “All will win prizes” (see p. v of the Report).
- 26.
See NBS National Construction Contracts and Law Survey 2015 at p. 14.
- 27.
von Bar and Clive (2009) (Outline edition) at p. 230 (Book III 1:-104).
- 28.
von Bar and Clive (2009) at. Book IV Part C Chapter 3, pp. 1707–1711.
- 29.
Proposal for a Regulation on a Common European Sales Law, COM(2011) 635 final, available at: http://eur-lex.europa.eu/LexUriServ/Lex UriServ.do?uri=COM:2011:0635:FIN:en:PD at p/29 (preamble para. 31 and article 2.
- 30.
Article 6 of the Unidroit Principles of International Commercial Contracts.
- 31.
Lando and Beale (2000) Available at: https://www.trans-lex.org/936000/_/duty-to-notify-to-cooperate/.
- 32.
von Bar and Clive (2009) at. Book IV Part C Chapter 3, pp. 1707–1711.
- 33.
Ibid.
- 34.
Ramsey and Furst (2016) at para. 3-063.
- 35.
von Bar and Clive (2009), pp. 1707–1711.
- 36.
Clause 10.1 of the NEC 3—see below.
- 37.
Costain Limited v Tarmac Holdings Ltd [2017] EWHC 319 (TCC) at paras. 123 and 124 (and see Sanderson (2017) for a comment on this case).
- 38.
The present author has examined another aspect of this—namely the use of a clause requiring the parties to cooperate in a spirit of mutual trust and cooperation in Christie (2017).
- 39.
NEC Users Group Newsletter No. 84 April 2017.
- 40.
Dr Martin Barnes, Preface Engineering and Construction Contract, NEC 3 April 2013.
- 41.
Latham Report, para. 5.19 at p. 39.
- 42.
NBS Survey n. 26 at p. 14.
- 43.
Indeed, it was introduced at least partly as a result of the recommendations of Latham (see point 4 of para. 5.20 of the Latham Report).
- 44.
Clause 10.1 of the NEC Engineering and Construction Contract 3rd Edition, 2013 edition.
- 45.
See case studies on the NEC website https://www.neccontract.com/Case-Studies for details.
- 46.
See, for example, the “Special Hong Kong Issue” of the NEC Users Group Newsletter, Issue 68 September 2014. There is an interesting discussion to have in the future about the way in which the cultural ideas which a particular form of contract takes with it can influence or be influenced in a different legal culture from its “home” jurisdiction (i.e. the one in which the contract was drafted).
- 47.
The first edition of the JCT Suite of contracts was issued in 1931 (although it was not known as the “JCT” until 1997 – http://corporate.jctltd.co.uk/about-us/our-history/. The first edition of the New Engineering Contract was 1993.
- 48.
See discussion on the interpretation of this clause in Christie (2017).
- 49.
- 50.
Ibid.
- 51.
The NBS Survey at n. 26 suggests that the JCT contract was used “most often” in 2015 by 39% of organisations surveyed; down from 60% in 2011.
- 52.
Without wishing to labour the NBS Survey, 50% of respondents said that extensions of time were a main issue in dispute in the previous 12 months—and it is suggested that this is a form of change caught by what is discussed here. A further 42% said that “Valuation of Variations” was the main issues in dispute. These are not mutually exclusive categories See p. 24 of the NBS Survey.
- 53.
See “£253m legal battle over Wembley delays”, The Guardian newspaper 16 March 2008.
- 54.
Final whistle for £253m Wembley row, Building Magazine 25 June 2010. Jeffrey Brown (2012) draws a contrast between this project and the London 2012 which although not without some disputes, is generally thought to have been delivered successfully. The London 2012 Olympics did, of course, use the NEC 3 suite of contracts.
- 55.
Previously the main road had had to close when a plane landed on the Rock.
- 56.
Obrascon Huarte Lain SA v Her Majesty’s Attorney General for Gibraltar [2014] EWHC 1028 (TCC) appealed at [2015] EWCA Civ 712.
- 57.
For example, the payment provisions in each contract follow a similar pattern as a result of the requirements of s. 109–113 of the Housing Grants, Construction and Regeneration 1996 (as amended).
- 58.
See e.g. Gould (2008), p. 291.
- 59.
A pithy tweet from the NBS/Bond Dickinson “Which contract” conference, 7 October 2014.
- 60.
See the JCT “About our contracts page” at n. 24. This is not to say that the NEC does not deal with risk allocation; it does—but in terms of the founding approach, there is a distinction.
- 61.
A point emphasised by Robert Gerrard, NEC 3 Users Group Secretary, in a talk given at Robert Gordon University, Aberdeen on 6 April 2016.
- 62.
- 63.
See e.g. Akenhead J in Atkins Ltd v Secretary of State for Transport [2013] EWHC 139 at para. [9].
- 64.
A point reaffirmed and explained by Buckley (2016), p. 17.
- 65.
Para. 1 of Schedule 8 of the JCT 2011 Standard Form of Building Contract.
- 66.
See discussion in my article Christie (2017).
- 67.
Eighth recital of the contract particulars of the JCT SBC 2011 with quantities, page 7. It should be said that it is an “opt out” system and that the NEC 3 contract can, of course, be amended to remove clause 10.1 but the difference in emphasis is important here as it speaks to the overall style.
- 68.
See Christie (2017), pp. 101–102.
- 69.
Described in Clause 16.1 as “a matter which could increase the total of the prices, delay completion, delay meeting a Key Date or impair the performance of the works in use”.
- 70.
Clause 16.3 NEC 3.
- 71.
Information flow is a recognised requirement in collaboration by contractors in the NBS Survey at p. 15 (81% of respondents agree that collaboration enables information sharing). The linked idea of “good faith” is often paired with “honesty” in the literature.
- 72.
see Gould (2008), p. 311 (“Put simply, wholesale amendments to the standard form through the use of Z clauses should normally be resisted.”).
- 73.
The issue who bears the risk of cost and delay which arise from theses changes can be dramatically different, hence (although under a different form of contract) the debate about the foreseeability of ground conditions in the Obrascon case (see n. 56 above).
- 74.
This independent role is discussed in the case of Sutcliffe v Thakrah [1974] AC 727.
- 75.
The extent to which this role has to be impartial was discussed in Costain Ltd v Bechtel Ltd [2005] EWHC 10108 (TCC).
- 76.
See clause 4.23 JCT SBC 2011.
- 77.
Clause 2.28.5 JCT SBC 2011.
- 78.
The potential for an omission to lead to lower profit margins can mean that the ability to instruct a variation which omits work has to be expressly provided for see discussion in Ramsey and Furst (2016) at paras. 4-055 and 4.056.
- 79.
Footnote 53 on p. 63 of the JCT SBC 2011.
- 80.
Clause 5.2.1 JCT SBC.
- 81.
Clause 5.3 JCT SBC.
- 82.
Under clause 5.3 JCT SBC 2011 at p. 64.
- 83.
The position is complex but well summarised in Ndekugri and Rycroft (2002). Although this deals with the 1998 Edition of the contract, the position is broadly the same under subsequent editions of the JCT contract.
- 84.
See Costain v Bechtel [2005] EWHC 1018.
- 85.
Clause 61.6.
- 86.
Clause 65.2.
- 87.
Clause 61.1.
- 88.
Clause 62.1.
- 89.
Clause 62.3.
- 90.
Clause 62.5.
- 91.
Clause 65.1.
- 92.
Ndekugri and Rycroft (2002), p. 333.
- 93.
- 94.
Champion (2008).
- 95.
Champion (2008), p. 216.
- 96.
Champion (2008), p. 219.
- 97.
See discussion by Ennis (2016), p. 312.
- 98.
One reason which might be suggested for the need to increase ‘formal’ collaboration could be a perceived breakdown in the confidence of the in the independence of the A/CA.
- 99.
Ibid at p. 313.
- 100.
Ibid.
- 101.
Rosher (2015) sets out a number of loopholes at pp. 319–322.
- 102.
Gould (2008) cautions against this at p. 311.
- 103.
By way of example of the Early Warning Notice mechanism in clause 16, the parties are obliged to cooperate to work out what should be done. This cooperation is to occur at a meeting—but there is no specification as to when the meeting will be or what consequences arise if the meeting does not happen. In clause 62, discussed above, if the Project Manager does not seek further quotations—there is no particular consequence. (There are consequences where a quotation is instructed but no more—but that require the threshold to be crossed first).
- 104.
Champion (2008), p. 215.
- 105.
Book IV. Part C Services – D p1708. – It is noted that the “may” in this sentence is doing a lot of work in justifying the up front expense for greater efficiency in the future. It might perhaps be the source of further quantitative assessment.
- 106.
This psychological contract is recognised as a tool for performance management—rather than creating obligations (although there is scope for a cross over). The way in which the legal contract interacts with the psychological contract is, however, interesting.
- 107.
There is relevant discussion on some of these issues in Collins (2016).
- 108.
Bell (2016), p. 6.
- 109.
Leggatt (2016) at para 26.
- 110.
Ibid.
- 111.
- 112.
von Bar and Clive (2009).
- 113.
von Bar and Clive (2009) Principle 22 at p. 47.
- 114.
Ibid.
- 115.
Ibid.
- 116.
Ibid.
- 117.
“Separating the people from the problem” which is described as one of the five key things to do when attempting a negotiation, see Fisher and Ury (1991), p. 37.
- 118.
Bell (2016), p. 5.
- 119.
- 120.
Leggatt (2016) especially at paras. 27 to 43. Leggatt J also referred to relational contracting in his judgement on implying terms of good faith into certain contracts in the case of Yam Seng Pte Ltd v International Trade Corp Ltd. [2013] EWHC 111 (QB) at para. 142.
- 121.
MacNeill (2000).
- 122.
Ibid at 897.
- 123.
MacNeill (1978). In this article, MacNeill suggests a variety of responses which American contract law had to resolving this difficulty (see pp. 865–873) some of which have feature in the NEC 3—especially the discussion around agreements to agree at pp. 870–873—but the promotion of communication suggested in the change mechanism seems to go beyond this.
- 124.
McInnis (2003).
- 125.
McInnis [2003] ICLR 128 at 130.
- 126.
Ibid.
- 127.
Admittedly in an article which has putting the NEC 3 into a relational contract at its focus.
- 128.
- 129.
See e.g. Yam Seng Pte Limited v International Trade Corporation [2013] EWHC 111 (QB) at para.124.
- 130.
Globe Motors, Inc &Ors v TRW Lucas Varity Electric Steering Ltd [2016] EWCA Civ 396.
- 131.
Para. 75.
- 132.
Para. 76.
- 133.
Para. 67.
- 134.
[2017] UKSC 24.
- 135.
To some extent that this runs counter to the dichotomy expressed by MacNeill between a context led interpretation of relational contracts and the more classical interpretation of “as-if discrete” contracts.
- 136.
[2017] UKSC 24 at para. 13.
- 137.
MacNeill (1978), p. 901.
- 138.
Ibid at p. 884.
- 139.
Barnettt (1992).
- 140.
Ibid p. 33.
- 141.
Middlemiss (2011), p. 32.
- 142.
CIPD Factsheet (2016).
- 143.
Middlemiss (2011), pp. 38–44.
- 144.
The link between this issue and the wider issues around the legal interpretation of contracts within the context of the “factual matrix” is worth further reflection.
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Christie, D. (2018). Capturing Collaboration in Construction Contracts in Their Commercial Context. In: Heidemann, M., Lee, J. (eds) The Future of the Commercial Contract in Scholarship and Law Reform. Springer, Cham. https://doi.org/10.1007/978-3-319-95969-6_10
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