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Communicating correctly in construction contracts - when has the employer to send the communication itself?

Scotland
01.12.2012
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Question

If a public authority is the employer in a building contract, are there any circumstances in which they should send a communication under the contract themselves rather than relying upon the project architect/engineer/manager to do it for them?

Answer

Yes. The contract will almost certainly differentiate between communications which are to be sent by the employer and those which are to be sent by the project architect/engineer/manager. Check your contract and do precisely what it says. Failure to do so can have serious consequences as the following example shows.



An example of what can happen if an employer does not do what the contract says…

In the recent case of Walter Lilly & Co Ltd v Mackay (2012)"full bloodied conflict" EWHC 1773 (TCC) Justice Akenhead dealt with the problems which arose between Mr Mackay and his contractors when it was argued by the contractors that the contract notice provisions had not been complied with. This was just one of many issues between the parties in what the judge described as a .



Mr Mackay needed his project to start on site quickly. The contract was a JCT Design and Build with a Contractors Designed Portion (CDP). Normally the areas of work which are to form part of the CDP are specified in the contract, however, a decision on this issue had not been finalised at the time the contract was entered into. The Specification therefore referred to works which "may be designed by the contractor""the construction of certain works as notified by the Employer to the Contractor in writing". The CDP was amended to say that it included .



A fundamental issue in the dispute became whether or not the contractor had design responsibility for many of the alleged defective items of work and therefore liability. There was correspondence between the architect and the contractor about the design of the disputed items but no clear notification by the employer NOemployer itself to the contractor that the contractor was to assume design responsibility for these items. What did this mean? Had design responsibility been devolved to the contractor? Justice Akenhead decided . He said that the bespoke term within the contract required the to notify the Contractor. A notice from the architect would not suffice.



Why?

Justice Akenhead's reasons were:

everybody involved in the project, particularly the architect and other professional consultants as well as the contractor, needs to know who has the ultimate design responsibility for any given work. The notification must therefore be clear and unambiguous;
if the contractor has design responsibility then the architect knows to call for design documentation for approval. If the architect or other of the employer's professionals retains responsibility, the contractor knows from whom to call for information;
only once design responsibility is clearly allocated can the different parties protect themselves by securing appropriate warranties or other protection from, for example, sub-contractors.

Advice

1. When sending a communication, check your contract carefully:
Who has to send it?
Who has it to be sent to?
In what form has it to be sent?
When has it to be sent?
What information must it contain?

2.

 Notice clauses within contracts, particularly those which have serious consequences, tend to be interpreted strictly by the courts.
3. Allocate design responsibility at the outset or make very clear provision for how the notification of design responsibility should be made and by whom. The consequences of failure to agree design responsibility are serious and therefore the process for notification should be clear and unambiguous.
4.
 If you want to give another person authority to issue a communication on your behalf, then make this absolutely clear in the contract. For example, an architect could, if given the authority, then write to the contractor saying, "On behalf of the employer, I hereby notify you that you are to have design responsibility for the CCTV work".

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