Correctly including the appropriate documents is critically important if we are to avoid any subsequent issues and disagreements.
Contract Documents usually follow a common pattern such as:
(a) Memorandum of Contract; followed by
(b) Particular Conditions; and then the
(c) General Conditions of Contract, and lastly
Unless a bespoke contract has been drafted (which will usually capture the particular and general conditions and possibly the principles of a memorandum) these are the four key documents for every contractual arrangement.
Some Contracts seek to address the issue of conflict or contradictions.
These four documents are often not sufficient in themselves and will usually be followed by one or more of the following (although it is also appreciated that some of these can be captured in the main body of the contract itself):
- Schedule A (Agreed Scope of Service (based on the Project Brief))
- Schedule B (Payment Schedules)
- Schedule C (Resources Schedules)
- Schedule E (Insurances)
- Schedule G (Guaranteed Performance Levels / Agreed KPI)
- Schedule D (Dispute Resolution Procedure mediation / arbitration)
- Schedule H (Other Documents novation assignments / warranties / performance bonds)
The ordering of the documents will normally be subject to an order of precedence, with the highest document taking precedence in the event of a conflict, ambiguity or discrepancy. If the Employer has issued an amendment during the course of the tendering process but has only inserted the amendment in Schedule H and not amended the actual contract term, arguably the original (unamended) contractual term continues in effect and either party can seek to rely on the original (unamended) provision.
Its also important to ensure that any document included within the ‘other document’ Schedule doesn’t conflict or contradict with another document within this Schedule; as all these documents are of an equal status.
Potential problems arise when deciding what documents to include as ‘other documents’. The tendency very often is to apply a bolts and braces approach and include everything, but this approach can cause real problems; there is no need to include irrelevant documents (the Letter of Award being one such example) because they are no longer relevant.
Some Contracts seek to address the issue of conflict or contradictions by placing an onus on the Contractor to draw any conflicts to the Employers attention. Whilst in theory this makes sense, what real incentive is there for the Contractor to do so; especially when doing so could place it at a material disadvantage? If, and when, a conflict or contradictions are to be referred to the Project Manager, Engineer (or any other person whom the Employer selects) a supplementary provision can be included within the contract which requires the Contractor to act on the decision immediately; with any subsequent issues being dealt with by way of a claim. Such a provision is not a fail-safe option and can give rise to a claim which in itself can result in an additional cost and/ or dispute.
The difference between contract documents and documents referenced within contractual documents is not always appreciated. If, and when documents are referenced within Contracts the Contractor is often required to have regard to these. In essence, this means that there is a need to follow the principles which they capture as opposed to its rigid application; it would serve a contractor well to record the basis upon which it has decided to apply or disregard any such requirements. The key at all times is to properly understand what it is a party is contractually required to achieve.
Ensuring clarity is key both when compiling the Contract and then when subsequently administering it.
On the other hand, if the contract documents include a document which itself includes ‘Guidance’ within its title, but however the Contractor is contractually obliged to follow it, failing to adhere to the document’s content, notwithstanding the title could give rise to a breach of contract. The basis upon which a document is included within a contract is therefore imperative; its title, secondary.
The awarding of any contract will inevitably include numerous discussions and the introduction of various concessions, be they in writing or otherwise. Ensuring clarity is critical both when compiling the Contract and then when subsequently administering it. To avoid any dispute or the introduction of further documents at a later stage, the inclusion of an ‘entire contract clause’ will ensure that only the identified and listed documents form the Contract Documents.
Faithful+Gould has extensive experience in engaging stakeholders to successfully manage the compiling and management of contracts and also contractual compliance. Whilst specialising in traditional contract administration we can also implement bespoke contracts and project control systems that can assist in the delivery, reporting and management of contracts and projects.