MacRoberts on Scottish Construction Contracts

Foreword by the Rt Hon Lord Hope of Craighead KT xiii Preface xv 1 Construction Contracts in General 1 1.1 Introduction 1 1.2 Definition of a construction contract 1 1.3 Parties involved in a construction project 5 1.4 Types of construction contract 15 1.5 The SBCC forms of building contract 23 1.6 The NEC3 forms of contract 25 1.7 Building Information Modelling (BIM) 27 1.8 Soft Landings 29 2 Procurement 32 2.1 Introduction 32 2.2 The EU public procurement regime and EU economic and legal principles 33 2.3 Beyond the EU 35 2.4 Conditions for application of the procurement rules 36 2.5 Who must comply with the Regulations? 36 2.6 Treatment of a proposed contract as a works contract, supply contract or a services contract 37 2.7 What are the relevant financial thresholds? 40 2.8 Is there an applicable exclusion? 41 2.9 Types of procurement procedure 42 2.10 The open procedure 42 2.11 The restricted procedure 43 2.12 The negotiated procedure with advertisement 46 2.13 The competitive dialogue procedure 49 2.14 Awarding the contract 53 2.15 The Alcatel mandatory standstill period 54 2.16 The use of framework agreements in public procurement 56 2.17 Remedies against contracting authorities (bidder grievances and complaints) 57 2.18 Awarding low-value contracts fairly 61 2.19 Forthcoming changes in the Procurement law landscape 62 3 Entering into a Construction Contract 64 3.1 Introduction 64 3.2 Essentials of written and oral contracts 64 3.3 Capacity to contract 71 3.4 Implied terms 73 3.5 Letters of intent 78 3.6 Incorporation of terms by reference to another document 80 3.7 Contract interpretation 83 3.8 Signing a building contract 84 4 Employers' Obligations 87 4.1 Introduction 87 4.2 Possession of the site 88 4.3 Administration 92 4.4 Information and instructions 95 4.5 Variations 97 4.6 Other obligations 102 5 Contractors' Obligations 103 5.1 Introduction 103 5.2 Completing the works 103 5.3 The quality of the work 118 5.4 Defective work 128 5.5 Progress of the works 131 5.6 Insurance and indemnity 138 5.7 The Joint Fire Code 139 5.8 Health and safety 140 6 Time 141 6.1 Introduction 141 6.2 Commencement of the works 141 6.3 Time of the essence 142 6.4 Progress of the works 142 6.5 Adjustment of the Completion Date and extension of time for completion 143 6.6 Partial possession, sectional completion and acceleration 152 6.7 Completion of the works 153 6.8 Damages for late completion 154 6.9 Liquidated damages 155 6.10 The SBC/DB 158 6.11 The NEC3 159 7 Certification 168 7.1 Introduction 168 7.2 Formal requirements of certificates 168 7.3 Interim certificates 171 7.4 Final certificates 176 7.5 Other certificates 180 7.6 Roles and duties of certifiers 183 8 Payment 188 8.1 Contractual payment 188 8.2 Adjustment of the contract price 206 8.3 Loss and expense 215 8.4 Quantum meruit 220 8.5 Quantum lucratus 222 8.6 Contractual retention 224 8.7 Project bank accounts (PBA) 227 9 Ending a Construction Contract 229 9.1 Introduction 229 9.2 Frustration and impossibility 229 9.3 Force majeure 232 9.4 Termination 233 9.5 Repudiation and rescission 242 9.6 Death and illness 243 9.7 Illegality 244 9.8 Insolvency 245 9.9 Prescription 248 10 Remedies 254 10.1 Introduction 254 10.2 Rescission 255 10.3 Specific implement 256 10.4 Damages for breach of contract 257 10.5 Finance charges 261 10.6 Interest 263 10.7 Interdict 267 10.8 Withholding payment 267 10.9 Suspending performance 269 10.10 Delictual claims 271 11 Sub-contractors and Suppliers 275 11.1 Introduction 275 11.2 SBCC Standard Sub-Contracts 275 11.3 NEC3 Standard Sub-Contracts 276 11.4 Nominated and domestic sub-contractors 276 11.5 Named and specialist Sub-Contractors 277 11.6 Direct payments to sub-contractors 279 11.7 Privity of contract 280 11.8 Relationship between main and sub-contracts 282 11.9 Restrictions on sub-contracting 283 11.10 Main contractor's discount 284 11.11 Suppliers 285 11.12 Retention of title clauses 285 11.13 Supply of goods by sub-contractors 287 11.14 Adequate mechanism for payment 288 12 Assignation, Delegation and Novation 290 12.1 Introduction 290 12.2 Common law 291 12.3 Effect of assignation upon claims 292 12.4 Delectus personae 294 12.5 Assignation under the SBC and the SBC/DB 294 12.6 Assignation under the NEC3 295 12.7 Delegation 295 12.8 Novation 296 13 Rights forThird Parties 300 13.1 General 300 13.2 Collateral warranties 300 13.3 Typical clauses 303 13.4 Effects of the 1996 Act on collateral warranties 310 13.5 Third party rights schedule 311 13.6 Assignation 313 14 Insurance 314 14.1 Insurance: General principles 314 14.2 Insurance under the SBC and the SBC/DB 318 14.3 Insurance under the NEC3 323 14.4 Professional indemnity insurance 325 14.5 Latent defects insurance 327 14.6 Project insurance 327 15 Litigation 329 15.1 Introduction 329 15.2 The litigation process 329 16 Adjudication 338 16.1 Introduction 338 16.2 The scope of Part II of the 1996 Act, as amended by the 2009 Act 338 16.3 The notice of adjudication 340 16.4 Appointment of the adjudicator 341 16.5 The referral notice 342 16.6 Conduct of the adjudication 342 16.7 The decision 347 16.8 Adjudicator's fees and costs/expenses of the parties 348 16.9 Liability of the adjudicator 351 16.10 Enforcement proceedings 351 16.11 Proceedings following adjudication 373 16.12 Human rights 373 16.13 Adjudication in PPP contracts 375 17 Arbitration 377 17.1 Introduction 377 17.2 The Arbitration (Scotland) Act 2010 380 18 Other Forms of Dispute Resolution 396 18.1 Mediation 396 18.2 Settlement agreements 408 18.3 Expert determination 414 18.4 Early neutral evaluation 418 18.5 Senior management review 419 18.6 Dispute boards 422 19 Tax 426 19.1 Value Added Tax (VAT) 426 19.2 The Construction Industry Scheme 433 20 Health and Safety 437 20.1 Introduction 437 20.2 Common law 437 20.3 Health and Safety atWork etc. Act 1974 438 20.4 The Construction (Design and Management) Regulations 2007 444 20.5 The SBC and the SBC/DB provisions 455 20.6 The NEC3 provisions 456 21 RegulatoryMatters: Competition in Construction 457 21.1 Competition law in the UK: Introduction 457 21.2 Competition law: Overview 457 21.3 Penalties 458 21.4 The Chapter I prohibition 459 21.5 The Roofing and English Construction cases 462 21.6 The cartel offence 464 21.7 Leniency 465 21.8 The Chapter II prohibition 466 21.9 Summary 467 22 RegulatoryMatters: The Bribery Act 2010 468 22.1 Compliance:The Bribery Act 2010 468 22.2 The Bribery Act 2010: The offences 469 22.3 The Bribery Act 2010: The defence 474 22.4 Facilitation payments 477 22.5 Consequences of offences under the Bribery Act 478 22.6 Prosecution under the Bribery Act 482 22.7 Construction industry risk profile 482 22.8 The SBC, the SBC/DB, the NEC3 and the Bribery Act 484 23 Guarantees and Bonds 486 23.1 Guarantees 486 23.2 Bonds 491 Tables of Cases 497 Table of Statutes 522 Table of Statutory Instruments 529 Table of References 538 Index 547