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Using Standard Building Contracts part 1
By arlene | March 2, 2008
A building contract is an agreement between two parties. The one party, usually referred to as the contractor, agrees to erect a building. The other party, usually referred to as the employer (Afr. bouheer), agrees to pay for the building. In theory, quite simple—in practice, often a frustrating exercise. The two contracting parties are the leading actors. Various supporting roles depend on the size of building and are played by the architect, quantity surveyor, sub-contractors, and sometimes a project manager.
1. Model agreements
The nature of the building industry lends itself to a business practice wherein model agreements, sometimes also referred to as standard contracts, are used extensively. The reason is that in the building industry, most offers to build are submitted in accordance with a competitive tender system. When a tender is submitted on the basis of a model agreement, the contractor has the advantage of previous experience. The tender is submitted according to a known and tested business risk and does not have to make provision for unforeseen eventualities. The advantage to the employer is that model agreements keep tender prices low and the employer is in a position to compare like with like.
These model agreements are usually compiled by an organization involved in or related to the building industry. In the domestic market, the following model agreements are freely available:
- Everyman’s Building Contract—obtainable from the Association of Quantity Surveyors.
- Home Building Contract—obtainable from the National Association of Home Builders.
- BIFSA Form of Contract for Minor Works and Dwelling Houses—obtainable from the various Master Builders Associations (MBA) or Building Industries Associations (BIA).
- An introduction to the JBCC building agreement
In the commercial market and in the upper end of the domestic market, the old well-known Agreement and Schedule of Conditions of Building Contract, sometimes also referred to as the White Form, has now been replaced by the Joint Building Contracts Committee (JBCC) Principal Agreement obtainable from the Institute of Architects, the Association of Quantity Surveyors and the various Master Builders Associations (MBA) or Building Industries Associations (BIA).
2. Warning
A word of warning is appropriate here. There are some in the market, both employers and contractors, who make use of their own “in-house” building agreements. There is nothing wrong with that, but, when they use their own “in-house” agreements and refer to these as one of the model agreements, be careful! It is not uncommon to find “in-house” agreements with logos from well- known organizations such as BIFSA and the National Association of Home Builders printed onto them, but these do not conform to the agreements of those organizations. The danger is two-fold. Firstly, the innocent party to the agreement may be under the impression that there is no need to scrutinise the agreement because he/she is well acquainted with it. Secondly, the innocent party is left with the impression that the other party is a member of the organization whose logo is printed on the documents—this may not be so. Should a dispute arise in such circumstances, the organizations concerned may not be able to help, if called upon to do so.Be sure to read every agreement carefully!
3. Terms and conditions
The terms and conditions of the model building agreements all differ from one another. It is therefore an impossible task to discuss all the model agreements under one umbrella. For the purpose of this article, the features of the new JBCC Principal Agreement will be discussed. The reason being that on the one hand, the JBCC Principal Agreement is new and relatively unknown to the public at large, while on the other hand, this agreement is fast becoming the trend setter within the building industry and most new contracts are concluded in terms thereof.
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Topics: Commercial, Contract, Form, Market |
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