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To save time in drafting contracts
Drafting contracts from scratch for each new project would involve a great deal of repetition
and unnecessary time. The process would also incur large legal fees in drafting and
negotiating terms.
By using pre-prepared standard forms of contract, the time spent in drafting contracts is largely
eliminated and costs are therefore reduced.
As a check-list of items to be agreed
For each new project, a large number of items and procedures have to be agreed. These may
include design liability, insurance, possession of the site, liquidated damages, payment
provisions, and so on.
When drafting a contract from scratch it can be easy to overlook a potential scenario or a
particular issue within a procedure. This can then cause uncertainty and might result in a
dispute. The resolution of such disputes is likely to involve implied terms, which are by their
very nature uncertain (see Non-standard bespoke forms of contract for more information).
Standard forms of contract go a long way towards avoiding this problem by setting out
provisions for all the major issues that need to be agreed. Even if these procedures are altered
for a particular project, their initial presence serves to draw the parties' attention to them and
set a benchmark against which any changes can be judged.
To provide a benchmark for negotiating terms
It would take an enormous amount of time to try to agree each term of a contract for each new
project. Without standard contracts to act as a benchmark, each party would approach the
negotiations from the perspective of his or her own self-interest. Standard forms of contract are
generally recognised as incorporating standard practice.
In the absence of such a benchmark, an employer drafting a contract from scratch might
unwittingly draft it so biased in favour of his or her own interests as to be unacceptable to
contractors, or acceptable only at a very high price. Alternatively, clients accepting a
contractor's standard terms and conditions could expose themselves to the opposite problem
of prejudicing their interests in favour of those of the contractor.
Standard forms of contract (even those prepared by a single body) usually aim for a
reasonably fair allocation of risk and duties. By using this as a starting point, any amendments
can be rapidly and efficiently appraised by the parties. This also means that ready-prepared
solutions are available for terms which the parties view as being of less importance, allowing
them to focus on the more significant issues.
To benefit from previous judicial decisions on the interpretation
of contract terms
In a dispute situation, it is common for the parties to disagree as to the meaning of a certain
provision - for example, whether or not failure to satisfy a requirement to provide a notice
deprives the contractor of a right that he or she would otherwise have had.
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One advantage of having lots of projects procured under similar terms is that a body of
knowledge is developed in respect of common problems. This may comprise textbooks,
articles, seminars or judicial decisions, and can help the parties to resolve uncertainties as to
contract administration.
To record procedure and law in a form understandable to
technically qualified managers
The law relating to a project as a whole may exist in many different forms and many different
sources. In the UK, for example, there are contract terms, statutory law and common law. To
expect a project manager to understand and keep up-to-date with these sources of law without
a full legal training is unreasonable and unnecessary.
Standard forms of contract often contain a large number of provisions that would be implied
into the contract in any event. However, their inclusion as express terms helps to improve
certainty in respect of the application of certain provisions, and assists in bringing together the
diverse sources of law for the benefit of those administering the contract.
Standard forms of contract are also usually updated on a regular basis to reflect changes in
the source law and so can be relied upon as reflecting current law.
To benefit from familiarity with the terms of the contract by all
those involved in the administration of the contract
Perhaps one of the greatest advantages of using standard forms of contract is that of
familiarity. Both the project manager for the employer and the project manager for the
contractor will be familiar with most of the popular standard forms of contract, will have
administered similar contracts previously, will understand the procedures and will have
developed systems around these procedures. This familiarity improves efficiency and helps to
overcome one of the largest sources of construction dispute - namely, one or both parties
failing to comply with the contractual procedures thereby creating uncertainty as to the
consequence of such non-compliance.
The most widely used standard forms in construction and engineering are:
- JCT (available from RICS Books);
- ICE (available from RICS Books);
- ECC (available from RICS Books);
- IChemE;
- GC/Works (available from RICS Books);
- PPC 2000 (The ACA Standard Form of Contract for Project Partnering);
- PFI/PPP Treasury Standard Documentation (available through the PFI network);
- MF/1.
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