I must admit I hadn’t realised how popular Billy Joel’s late 1970s hit “Just the Way You Are” still is amongst the construction profession, on the subject of contracts. Clearly once a song wins a Grammy its message remains valid for all time. Despite that misunderstanding, I have always been acutely aware that nobody likes lawyers “over-lawyering” situations and making them more complicated than strictly necessary. That said, is change always a bad thing? Is it really the case that the industry standard contracts (JCT, NEC, ICE etc) are all perfect “just the way they are”?
Clearly I will argue that they are not. One of the key reasons is that a construction contract (particularly as most that we deal with are for six, or more usually seven figure sums) is not a slogan baseball cap – one size does not fit all. Each project is unique: be that because of location, funding arrangements, landlord/tenant interests, whether the priority is time/cost/quality, or because of the known unknowns (at risk of getting all Newt Gingrich on you, readers!).
What amazes me is when tender documents are issued and contractors are asked to price on the basis of a certain form of contract, but no schedule of amendments is issued. The contractor, quite reasonably, has no choice but to price against the un-amended contract (which, frankly, isn’t ideal for them either). Post-tender award, lawyers get instructed and, having made a promise to give our employer clients sensible, quality legal advice, we start to discuss the schedule of amendments. When there isn’t one, we want to draft one. Not to be a pain, not to fee-create, not to “screw” the contractor, but to make sure that the contract works for this project (and for all parties involved). Any lawyer knows that the main aim of the parties is to sign the contract, put it in a drawer, ignore it for 6 or 12 years and then shred it. (Such a thought warms the cockles of our hearts). By the same token, anyone in construction knows that it would be lovely if things never went wrong, but that when they do, the first thing you need to do is check the contract. Sure, the solution might ultimately be one that is commercially negotiated, but unless the parties understand the bottom contractual line if things went to full blown dispute, any attempt at commercial negotiation is meaningless.
The strangest thing is that some people in the industry seem to think that all contractors hate amendments to contracts and will refuse to sign up to any whatsoever. They think that if we even ask, projects will be delayed or prices will go up. The truth is that reasonable amendments, if justified because of the nature of the employer/project/funder will be accepted by reasonable contractors. However, such acceptance is easier to come by if contractors are given the opportunity to consider these amendments at tender stage.
We are forever saying to clients that the sooner we are involved in a project, the better things will be. We understand that some cynics will disagree. However, if you want the benefit of legal advice on a project, it will help all parties to get things off to a good start, if you get things right at tender stage, and avoid springing any surprises on your build team.
Maybe, just sometimes, the relevant song isn’t by Billy Joel, but it’s Michael Jackson’s classic, Man in the Mirror (more my era anyway to be honest).
You can download the newsletter as a PDF, here.
These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.