Commercial Law for the Construction Sector

A construction solicitor provides legal advice and assistance to clients involved in construction projects. They may advise on contracts, disputes, planning and environmental regulations, health and safety, and other legal issues related to construction. They also represent clients in negotiations, mediations, arbitrations, and court proceedings.

It is crucial to have a solid contract in place that covers every aspect of the construction project you will be working on. Without one, your legal recourse will be limited or potentially compromised. Not having a formal agreement in place means that if for example a client does not pay, it is much harder to recover all you believe that you are owed or intended to charge for. A construction contract will outline everything the project will consist of and how to deal with additions, omissions and variations. A construction contract commonly includes terms that deal with:

The agreed costs or rates; Who are the parties to the project and their roles; The scope of the works; A payment schedule; Time for completion and programme; Provisions for unexpected circumstances or delays; and The rights, liabilities and obligations of all parties involved.

A professional consultant provides specialist design, advice or other services in relation to a construction project, whereas a contractor carries out the physical building word (or procures it through subcontractors). Together, the group of professional consultants engaged on a project is known as the 'professional team'.

It is beneficial to appoint at least one key professional consultant (such as an architect) at an early stage of a project as the professional consultant can guide you through the project and advise on what other professional disciplines you may need to appoint.

See our Professional Appointments page that discusses this further and how our expert construction solicitors can advise you further.

Force majeure events are certain acts, events or circumstances, defined within an agreement, which are beyond the control of the contracting parties. They may include natural disasters, the outbreak of hostilities or, in some instances, the declaration of a pandemic / epidemic.

A force majeure clause tends to excuse one or both parties from performance of the contract (normally allowing for a delay) following the occurrence of a force majeure event. Fundamentally, the purpose of a force majeure clause is to outline whether or not a party will be liable to the other for its failure to perform the obligations as a result of specific circumstances which are beyond its control. The clause may also allow for the contract to be terminated (without liability being owed) if the force majeure event continues for a specified period of time.

Construction law is a branch of law that pertains to the rights and obligations of parties involved in the construction of a physical structure or project. It includes contract negotiation, dispute resolution, and compliance with building codes and regulations. It may also include areas such as land use, zoning, environmental laws, and insurance.

Frustration of contract occurs where, for an unforeseen event, performance of a contract becomes impossible; the contract effectively comes to an end and the parties are released from their respective obligations.

While this may sound appealing to a party struggling to meet its obligations, case law has emphasized that frustration will only apply in very narrow circumstances. A contract cannot, for example, be "temporarily" frustrated. It is either frustrated or performance is delayed (potentially due to a force majeure event).

The terms of the contract may also eliminate a party's ability to rely on frustration. In some instances, the contract may include a "hell or highwater clause" - an absolute clause applied, for example, to equipment lease agreements which requires the party to pay irrespective of whether the other party's performance is frustrated.

Both NEC and JCT contracts suites of standard forms of documents for procuring works or consultancy services.

While the JCT has been described as a 'traditional' contract and for many years was seen as the standard building contract for use in England and Wales, the NEC suite has been designed for international use with a choice of governing law and language.

Each contract has an allotted person to act on behalf of the employer (a contract administrator in JCT and project manager in NEC). They both include obligations relating to time, cost and quality (although the explicit requirements are quite different).

The NEC suite does however include procedures providing for a more proactive and collaborative approach to managing the contract and requires the parties to follow these procedures.

A collateral warranty is an auxiliary document to the primary contract and is used where there is an agreement with a third party who is outside of the primary contract.

Fundamentally, a collaterally warranty is an agreement under which a professional consultant, building contractor or sub-contractor warrants to a third party (usually the funder, leaseholder or purchaser) that it has complied with its appointment or sub-contract. In essence a collateral warranty provides the third party with contractual recourse in the event of any issues relating to the work provided by the party entering the warranty.

A parent company guarantee (PCG) is a form of security provided by a parent company to a client of its subsidiary. The purpose being to protect the client in the event of default on a contract. Typically, such a default might be caused by the insolvency of the subsidiary company. A PCG will normally obligate the parent company to either step in to fulfil the obligations of the subsidiary or guarantee any potentially liabilities of the subsidiary company.