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Legal insights & industry updates

| 3 minutes read

Why do lawyers amend standard form construction and engineering contracts?

Contrary to widely held belief among contractors and other professionals, this is not so we can make life as difficult as possible for everyone!  

Industry standard forms are almost all produced "by committee" and involve compromises being made among the different interest groups involved in their production. Lawyers are subject to professional duties to act in the best interests of their clients. This requires us to recognise and act upon the opportunity presented by the competitive tension created in a tender situation. Contractors tendering for works will accept changes to standard form, meaning we have an opportunity to address some of the drafting that is "employer unfriendly". Many years experience of negotiating construction and engineering contracts has made me mindful of the consequences of making those amendments. The "schedule of amendments" must be proportionate and, in proposing it, we must not go so far as to put off prospective tenderers or to run the risk of significantly increasing pricing.

There are, however, some changes we are compelled to be make.  

In some cases this involves amending standard form clauses that are so heavily weighted in favour of that contractor that we consider them to be commercially unacceptable to the employer. A good example of this from my recent projects is clause 44 in MF/1 (rev 6), which sets out exceptionally wide limitations on the Contractor's liability. In other cases, amendments are made not so as to favour the employer over the contractor, but rather to clarify standard form provisions where it is difficult to predict how a court or other tribunal will interpret obligations of the parties under the standard form drafting. This situation arose recently when I was advising on projects being procured under the newly published nec 4 Facilities Management Contract. The standard form provides for clients securing additional services or works via Service Orders (clause 19) and Project Orders (where Option Clause X27 is selected). Minimal drafting is provided to explain how services/works provided under either of these types of order are to be valued and paid for. 

The standard form drafting is also difficult to reconcile against the main valuation and payment provisions in particular where the client selects Option C. Consequently, the Z clauses I proposed for inclusion with the tender documents clarify the payment obligations for service and project orders by tying them in with the main payment clauses, which will hopefully make the contract easier to operate for all parties when it goes live. The intentionally "simplified" drafting adopted in nec standard forms is commendable, but recent case law (Fraserburgh Harbour Commissioners v McLaughlin & Harvey Limited) suggests there is a risk courts may not always interpret provisions in the manner intended, meaning "legal clarification Z clauses" of the nature described above may become more necessary in future projects.

Another reason for "tampering" with standard forms is that construction and engineering contracts are rarely entered into in isolation. The employer will typically also be signing up to a number of funding and other agreements relating to the project for which the works are required, including development or joint venture agreements. The other funding and project agreements will almost always include design and construction related obligations with which the employer is required to comply. As such other agreements are not prepared by specialist construction and engineering lawyers, the drafting for design and construction obligations included in them is not aligned with that appearing in standard form contracts. As a consequence, we sometimes have to consider introducing changes to standard forms that will ensure the employer complies with design and construction related obligations included in third party contracts by entering into the construction or engineering contract with the contractor. My preference would always be for the third party agreements to adopt drafting for design and construction obligations that is better aligned with standard form, but this is very difficult to achieve in practice.          

Hopefully if the reasons behind legal intervention in relation to standard form contracting is better understood, the processes behind agreeing those dreaded schedules of amendment and Z clauses can become more straightforward.    

Lawyers sometimes have to amend standard form contracts and there usually are very good reasons behind the changes.


construction and engineering, procurement, infrastructure and projects, newengineeringcontracts