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Simplifying construction contract language

Posted by Simon Forsterling | 12 June 2018 | Construction & Infrastructure

Construction law has its own language and each contract is like a dialect of that language.

If you don’t communicate using the right language, let alone the dialect, there is a real chance that you won’t get your message across.

This matters because avoiding or resolving disputes is difficult.  If you use the wrong language, this can lead to misunderstandings.  Misunderstandings increase the potential for disputes and often draw out their resolution.  This will cost you.

As an example, consider the term “latent conditions”.  Sensibly, most would assume it means something like “conditions a contractor couldn’t have anticipated when they signed the contract”.  This is not always the case.

For example,  I recently encountered a document which said a “latent condition” was “in respect of sewer and stormwater trenches only, rock which can’t be excavated with a 30T excavator.”  Now that is narrow.  If the contractor had signed this contract assuming the usual meaning of the term “latent conditions” they would have been shocked when they realised the limited scope of what they could actually claim.

Again, this will cost you.

Similarly, in a payment schedule, you only get one chance to state the reasons for withholding payment.  If you want to be successful, those reasons had better be bedded in contractual entitlement.  Using defined terms when you create payment schedules, forces you to check what the contract actually says about the contested item.  This allows you to state your reasons clearly using the terms from the contract.

Often, the terms of the contract are not consistent with the specifications. Take for example a development approval, which is included as a contract specification. I guarantee the development approval places obligations on the “developer”.

Although there is a “principal” and a “contractor” in the contract, there is no party called “developer” in the contract. This means that if the development approval is added as a specification document, without some further explanation of the developer role, uncertainty will be created by this inconsistent use of terms. This is such fertile ground for dispute.

Simon Fosterling is a Group Principal and a senior member of the construction and infrastructure team. If you have any questions, contact Simon via email [email protected] or phone +61 (2) 9016 0141

This article was first published on LinkedIn

This publication is © Nexus Law Group and is for general guidance only. Legal advice should be sought before taking action in relation to any specific issues

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