ICE manual of construction law

550 Pages·2011·8.423 MB·English

by  Sir V. Ramsey, A. Minogue, J. Baster, M.P. OReilly

ICE manual of
construction law
Copyright © ICE Publishing, all rights reserved.
Copyright © ICE Publishing, all rights reserved.
ICE manual of
construction law
Edited by
Sir Vivian Ramsey
Technology and Construction Court, London, UK
Ann Minogue
Ashurst LLP, London, UK
Jenny Baster
Arup, London, UK
Michael P. O’Reilly
Adie O’Reilly LLP, Lincoln, UK
ice | manuals
Copyright © ICE Publishing, all rights reserved.
Published by Thomas Telford Limited, 40 Marsh Wall, London E14 9TP, UK
www.thomastelford.com
Distributors for Thomas Telford books are
USA: Publishers, Storage and Shipping Corp., 46 Development Road, Fitchburg, MA 01420
Australia: DA Books and Journals, 648 Whitehorse Road, Mitcham 3132, Victoria
First published 2011
ISBN: 978-0-7277-4087-8
Future titles in the ICE Manuals series from Thomas Telford Limited
ICE manual of geotechnical engineering
ICE manual of highway design and management
ICE manual of structural design
Currently available in the ICE Manual series from Thomas Telford Limited
ICE manual of bridge engineering – second edition. 978-0-7277-3452-5
ICE manual of construction materials – two volume set. 978-0-7277-3597-3
ICE manual of health and safety in construction. 978-0-7277-4056-4
www.icemanuals.com
A catalogue record for this book is available from the British Library
© Institution of Civil Engineers 2011
Excluding the text of chapter 2 © John Scriven and Mark O’Neill 2011; the text, fi gures
and tables of chapters 20 and 21 contributed by Donald Lamont Crown Copyright 2011;
the text of chapter 25 © Daniel Atkinson 2011.
All rights, including translation, reserved Except as permitted by the Copyright, Designs and
Patents Act 1988, no part of this publication may be reproduced, stored in a retrieval
system or transmitted in any form or by any means, electronic, mechanical, photocopying
or otherwise, without the prior written permission of the Publisher, Thomas Telford Ltd,
40 Marsh Wall London E14 9TP, UK.
This book is published on the understanding that the authors are solely responsible for the
statements made and opinions expressed in it and that its publication does not necessarily
imply that such statements and/or opinions are or refl ect the views or opinions of the
publishers. While every effort has been made to ensure that the statements made and the
opinions expressed in this publication provide a safe and accurate guide, no liability or
responsibility can be accepted in this respect by the authors or publishers.
The authors and the publisher have made every reasonable effort to locate, contact and
acknowledge copyright owners. The publisher wishes to be informed by copyright
owners who are not properly identifi ed and acknowledged in this publication so that we
may make necessary corrections.
Typeset by Newgen Imaging Sytems Pvt. Ltd., Chennai, India
Printed and bound in Great Britain by Latimer Trend & Company Ltd, Plymouth
Copyright © ICE Publishing, all rights reserved.
Contents
Preface ix 4.4 Design and technical documentation 55
4.5 Compliance monitoring 58
4.6 Service commencement 60
List of contributors xi
4.7 Direct agreements and collateral warranties 62
4.8 Part II of the Housing Grants, Construction and
Introduction xiii Regeneration Act 1996 (HGA) 63
4.9 Dispute resolution 64
SECTION 1: Legal issues arising during the course References 65
of the construction project
Section editor: Ann Minogue Chapter 5: Facilities management contracts 67
I. Griffi ths
Chapter 1: The planning system 3 5.1 Introduction 67
M. P. O’Reilly 5.2 Services and service levels 69
5.3 Contract term and exit strategy 72
1.1 Introduction 3
5.4 Other key FM issues: cost, change and comparables 74
1.2 Development 5
5.5 Facilities management manuals 77
1.3 Application for planning permission: nationally signifi cant
References 78
infrastructure projects 6
1.4 Applications for planning permission: other projects 7
1.5 Determination of the planning application 8 Chapter 6: Procurement route 79
1.6 Conditions and obligations 10 S. Carey and M. Tomlin
1.7 The duration of planning permission 10
6.1 Introduction 79
1.8 Planning appeals 11
6.2 Traditional contracting 79
1.9 Enforcement 12
6.3 Design and build 83
1.10 Environmental issues in relation to planning 14
6.4 Two-stage tendering 87
1.11 Protecting heritage 15
6.5 Management procurement 88
1.12 Trees and hedges 18
6.6 Partnering 92
References 18
References 93
Chapter 2: Financing the project 21
Chapter 7: The construction contract 95
J. Scriven and M. O’Neill
M. P. O’Reilly
2.1 Types of project fi nance 21
7.1 Introduction 95
2.2 Range of fi nancing options 22
7.2 The construction contract in context 95
2.3 The funders’ requirements 23
7.3 The construction contract: principles 97
2.4 Institutional funding structures 27
7.4 Tendering practice: general 98
2.5 Bank fi nancing 28
7.5 Documents forming part of the construction contract 99
2.6 Bond fi nancing 29
7.6 The Engineering and Construction Contract, 3rd Edition (NEC3) 100
References 30
References 102
Chapter 3: Public sector projects 31
D. Marks and C. Fellowes Chapter 8: Tender process 103
A. Minogue and N. Beedle
3.1 Introduction 31
3.2 Why should public sector projects be different? 31 8.1 Introduction 103
3.3 What constitutes the public sector? 32 8.2 Tendering construction contracts 105
3.4 Substantive procurement rules 33 8.3 Tendering consultant contracts 107
3.5 Some problem areas in the application of procurement law 41 8.4 Subcontract tendering 110
References 44 8.5 Tendering guidelines 111
8.6 Public sector tendering 116
8.7 The risk in tendering 116
Chapter 4: Public-private sector partnerships 47
8.8 PFI/PPP/DBFO contracts 117
N. Downing and M. Ramphul
8.9 Turning tenders into contracts 118
4.1 Introduction 47 8.10 Tender abuses 123
4.2 Risk transfer 50 8.11 Freedom of Information Act 2000 126
4.3 Contractual matrix 53 References 126
ICE manual of construction law © 2011 All rights reserved www.icemanuals.com v
Copyright © ICE Publishing, all rights reserved.
ice | manuals Contents
Chapter 9: Construction insurance 129 15.3 Collateral agreements/contracts? 234
D. Hayhow 15.4 The Contracts (Rights of Third Parties) Act 1999 235
15.5 Standard terms of collateral warranties 237
9.1 General insurance 129
15.6 Fitness for purpose 237
9.2 Types of insurance 133
15.7 Assignment 238
9.3 Construction insurance provisions under traditional building
15.8 Net contribution clauses 239
contracts and civil engineering contracts 137
15.9 No greater liability 240
9.4 Professional indemnity insurance (PI) 138
15.10 Is a collateral warranty a construction contract under the
9.5 Latent defects insurance 139
Construction Act 1996? 240
References 141
References 240
Chapter 10: Bonds, parent company guarantees
and other security 143 Chapter 16: Professional indemnity insurance 243
F. O’Farrell QC S. Bamforth and J. Moore
10.1 Introduction 143 16.1 Introduction 243
10.2 Suretyship 143 16.2 Professional indemnity insurance 243
10.3 Guarantees 143 16.3 Claims 247
10.4 Bonds 147 16.4 Extensions 249
10.5 Types of guarantees/bonds in construction projects 152 16.5 Captives 250
References 153 16.6 Project insurance 250
16.7 Disclosure requirements 250
16.8 Working overseas 250
SECTION 2: Operational issues in an engineering practice
References 250
Section editor: Jenny Baster
Chapter 11: Ways of operating 157 Chapter 17: Employment law 253
W. Wastie, L. Baker, A. Crawshaw and N. Glover J. Exten-Wright
11.1 Sole practices 157 17.1 Contract of employment or contract for services? 253
11.2 Partnership 160 17.2 Defi ning a contract of employment 259
11.3 Companies 165 17.3 Taxation of subsistence and travel allowances in the UK 263
11.4 European Economic Interest Groupings (EEIGs) 174 17.4 Wrongful and unfair dismissal 264
11.5 Summary 175 17.5 TUPE transfers 268
References 175 17.6 Working time regulations 271
17.7 Collective consultation and industrial relations 273
17.8 Legislation update: recent and forthcoming legislation 274
Chapter 12: Joint ventures 177
References 274
P. Henty
12.1 I ntroduction 177
12.2 R easons for establishing a joint venture 178 Chapter 18: Intellectual property 277
12.3 C hallenges of a joint venture 179 S. Barker, with I. Rogers
12.4 P rincipal considerations in establishing a joint venture to tender 180
18.1 Trade marks 277
12.5 D ocumenting the joint venture 183
18.2 Copyright 279
12.6 T ypes of legal structure 185
18.3 Registered designs and unregistered design rights 280
12.7 E mployment law issues 189
18.4 Patents 283
12.8 C ompetition aspects 189
18.5 Law of confi dentiality 284
12.9 I ssues related to bribery and corruption 191
18.6 Digital media and the internet 285
12.10 Partnering and alliancing: is this the same as a joint venture? 192
References 286
12.11 Conclusions 193
Acknowledgement 194
References 194 SECTION 3: General law
Section editor: Sir Vivian Ramsey
Chapter 13: International offi ces 197
R. Abigail
Chapter 19: The law of contract 289
13.1 Introduction 197
P. Clarke and M. Bowdery QC
13.2 Strategic considerations 197
13.3 The local presence 199 19.1 Why bother? 289
13.4 Business risk and mitigation 201 19.2 Making a contract 291
13.5 Tax considerations 204 19.3 Offer and acceptance 291
References 210 19.4 Consideration 293
19.5 Construction of a contract 293
19.6 Terminating or determining a contract 298
Chapter 14: The consulting engineer’s appointment 211
19.7 Disputes and remedies 300
C. Marsden and R. Barnes
References 301
14.1 Form of appointment 211
14.2 Key issues that arise in appointment documents 212
14.3 Working for a design and construct contractor 225 Chapter 20: Construction health and safety I: enforcement,
14.4 Framework agreements 227 HSW Act and management duties 303
14.5 Standard forms 227 D. Lamont and M. Appleby
References 229
20.1 The regulatory agencies 303
20.2 Enforcement 304
Chapter 15: Collateral warranties 231
20.3 The Health and Safety at Work Etc. Act 1974 315
H. Lal
20.4 Management duties 319
15.1 What is a collateral warranty? 231 20.5 Management obligations – construction and engineering projects 323
15.2 Commonly used warranties 232 References 325
vi www.icemanuals.com ICE manual of construction law © 2011 All rights reserved
Copyright © ICE Publishing, all rights reserved.
Contents ice | manuals
Chapter 21: Construction health and safety II: industry 26.4 Pre-action protocol for construction and engineering disputes 452
and hazard specifi c regulations, work equipment 26.5 Commencement of proceedings 452
and workplace safety 329 26.6 Claim form and statements of case 453
26.7 Evidence 454
D. Lamont and M. Appleby
26.8 Disclosure and inspection 454
21.1 C onstruction-orientated legislation 329 26.9 Costs 455
21.2 H azard-specifi c regulations: use of equipment 331 26.10 Enforcement 455
21.3 S upply of work equipment and materials 340 26.11 Appeals 456
21.4 G eneral workplace safety requirements 342 26.12 Pre-trial: checklists and review 456
References 344 26.13 The trial 457
26.14 IT and the Courts 457
Chapter 22: Insolvency in construction 347 References 457
R. Davis and A. Cull
22.1 Informal insolvency 347 Chapter 27: Arbitration 459
22.2 Formal insolvency 348 V. Ramsey and J. Critchlow
22.3 Insolvency set-off 353 27.1 Introduction 459
22.4 Insolvency claims 354 27.2 Commencing an arbitration 460
22.5 Termination of contracts 356 27.3 The arbitration process 461
22.6 Security for performance 359 27.4 Preparation of factual evidence 462
22.7 Security for payment 360 27.5 Presentation of the case to the arbitrator 463
References 361 27.6 The arbitrator’s award 463
27.7 Particular powers of arbitrators 465
Chapter 23: Law of tort 365 27.8 Particular problems 465
G. Chapman, E. Jones and T. Asquith 27.9 The international dimension 466
References 467
23.1 Introduction 365
23.2 Negligence 365
23.3 Nuisance 378 Chapter 28: Adjudication 469
23.4 Rylands v. Fletcher 384 A. Hughes and I. Wright
23.5 Breach of statutory duty 385
28.1 Introduction 469
23.6 Occupiers’ liability 386
28.2 The origins and development of adjudication in the UK 470
23.7 Defective Premises Act 1972 388
28.3 The statutory right to adjudication 471
23.8 Trespass 388
28.4 Statutory payment provisions in the HGCRA 1996 481
References 389
28.5 The scheme for construction contracts 484
28.6 Adjudication provisions in standard form contracts 490
Chapter 24: Environmental issues 393 28.7 Costs and fees 491
A. Hughes and T. Dymond 28.8 Enforcement of adjudication decisions and the role of the courts 492
28.9 The courts and management of adjudication 494
24.1 Introduction 393
References 495
24.2 Sources and enforcement of environmental law 393
24.3 Waste management 394
24.4 Water pollution 398 Chapter 29: Alternative dispute resolution 499
24.5 Contaminated land 399 I. Wright
24.6 Air pollution 404
29.1 Introduction 499
24.7 Noise 405
29.2 Negotiated settlements 500
24.8 Asbestos 406
29.3 Mediation 500
24.9 Nature conservation 406
29.4 Conciliation 503
24.10 Environmental permitting 407
29.5 Mini- trial 503
24.11 Environmental liability 407
29.6 Dispute boards 504
24.12 Civil sanctions 407
29.7 Early neutral evaluation 505
24.13 Environmental management systems 408
29.8 Expert determination 505
24.14 Sustainable construction, climate change and energy effi ciency 408
29.9 Mediation–arbitration 506
References 410
29.10 ‘Staged’ dispute resolution provisions 506
29.11 Amicable settlement 510
SECTION 4: Construction disputes 29.12 Court settlement process 510
Section editor: Michael P. O’Reilly 29.13 The court’s approach to ADR 510
29.14 The ICC ADR rules 515
29.15 Advantages and disadvantages of ADR 515
Chapter 25: Administration of claims 415
29.16 Selecting an appropriate ADR process for
D. Atkinson
construction disputes 517
25.1 Legal basis of claims 415 29.17 Limitation periods and contractual time limits 517
25.2 Claims for extension of time 420 References 518
25.3 Liquidated damages 435
25.4 Claims for site conditions 437
25.5 Financial claims 439 Table of Statutes and Statutory Instruments
25.6 Delay and disruption – fi nancial claims 443 and Table of European Legislation 521
25.7 Management of claims 448
References 449
Table of cases 525
Chapter 26: Litigation for the construction industry 451
Index 535
R. Joyce
26.1 Introduction 451
26.2 Litigation infrastructure 451
26.3 Pre-action conduct and protocols 451
ICE manual of construction law © 2011 All rights reserved www.icemanuals.com vii
Copyright © ICE Publishing, all rights reserved.
Copyright © ICE Publishing, all rights reserved.
Preface
Many texts on the market focus on the purely legal aspects of construction law – they are books on law for
lawyers. ICE manual of construction law is different: our focus is to consider the practical and commercial
implications of case law and legislation. This book is written primarily for those without a legal background;
that is, for the construction industry and the professionals who work in it and with it.
Previously published as the annual ICE construction law handbook, ICE manual of construction law has been
thoroughly revised and extended to become the latest addition to ICE’s successful manual series. The ICE manuals
series provides construction professionals with core knowledge in key areas within civil engineering; across the
series each volume is split into easily digestible chapters, available in print, and online at www.icemanuals.com.
ICE manual of construction law covers the range of legal issues most commonly encountered on a construction
project. The topics are split across four sections and are presented in the order they would usually arise in the
course of a typical project: from planning, fi nance and procurement, through operational issues and general law,
to the administration of claims and dispute resolution. The result is an essential reference for all construction
professionals seeking to increase their understanding of the legal principles behind their practice and a valuable
tool to help assess when expert advice is required.
For this fi rst edition of ICE manual of construction law we have had the pleasure of working with many of the
same construction law handbook contributors, as well as several new contributors. All are acknowledged experts
in their fi elds and we would like to thank them for their commitment and hard work in creating this authoritative
and reliable text.
We hope that you will fi nd this manual a valuable reference in your work. We are always keen to receive feedback
and welcome suggestions for the next edition. Please address any comments to the publisher, who will forward
them on to us.
Sir Vivian Ramsey, Technology and Construction Court, London
Ann Minogue, Ashurst LLP, London
Jenny Baster, Arup, London
Michael O’Reilly, Adie O’Reilly LLP, Lincoln
ICE manual of construction law © 2011 All rights reserved www.icemanuals.com ix
Copyright © ICE Publishing, all rights reserved.
Copyright © ICE Publishing, all rights reserved.