Building contracts

Building contracts normally comprise three components:

1. The building contract defines the obligations, rights and responsibilities of the principal and the contractor. Various standard-form contracts are available, published by bodies including the Institute, the MBA, Standards Australia, the Property Council of Australia and the HIA.
2. Specifications and schedules – the specifications describe in writing the workmanship and materials, and the manner in which certain work is to be undertaken. The schedules further list and prescribe aspects of the work to be carried out, and items to be supplied and installed under the contract.
3. The drawings are prepared to visually describe the works and the details. The drawings provide the graphical representation of the design intent from the original layout through to construction details.

Contract selection

Selecting the right building contract can be critical to the successful completion of a project. Contracts should be selected having considered a number of criteria including:

• the size and complexity of the project
• specific needs of the project
• state legislation (ie whether standard special conditions are needed and available or incorporated).

Contract selection should be discussed with the client prior to tender so conditions can be included in the tender. Architects should be familiar with the range of contracts to ensure that they are able to select the most appropriate contract for each particular project.

Sometimes, the contract is selected simply because the architect is familiar with its provisions or is comfortable using it, but familiarity and comfort won't overcome the inherent difficulties that can arise if the contract is inappropriate for the project.

Some pro-forma building contracts published by builders' groups are not designed to be administered by an architect.

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Other documents

In addition to the contract documents, other documents may include:

• addenda issued during the tendering period
• letters and other correspondence regarding negotiations that occurred following the closing of tenders
• the completed tender form
• the completed schedules
• letters of acceptance
• any other documents that alter the scope or extent of work identified in the tender documents
• construction program (if applicable)
• bills of quantity (where they form part of the contract) – these include: schedules of monetary sums, schedules generally and technical specifications.

Often it will be obvious whether or not a document other than the printed standard form is part of the contract. If a document is other than one listed above, it may be obvious from its face whether it is part of the contract or not. For example, it may be endorsed to that effect and signed by the parties or it may be clearly incorporated by reference, eg the signed documents may refer to a particular published cost-adjustment formula or a particular published standard.

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Considerations

Where there have been negotiations over terms, matters that have been the subject of letters and discussions will usually be mentioned in the written contract and therefore in view of the subsequent expression of agreement, the former documentation lapses. Ideally this should always be the case, but there may be situations where all the agreed terms are not encapsulated in one neat written document.

In deciding whether such earlier agreements still apply, a court will look at the documentation as a whole, and consider the following questions:

• Was the proposal accepted unamended?
• Was the same subject matter dealt with in a different way in the final document?
• Was the agreement made at or before the time that the terms of the contract were finalised? If it was afterwards, the alleged term may be deemed to be an amendment to the contract and therefore it would have to be supported by fresh evidence.

It will not always be easy to determine whether a document or a spoken assurance is part of the contract. In such circumstances the architect should remember that the provision of legal advice concerning the contract is not part of the architect's role, and pursuant to the conditions of engagement, the client is obliged to provide 'specialised counselling' not normally provided by architects. The architect should ask the client to seek legal advice in this situation.

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Contract conditions

Prevention is better than cure. All contract conditions should be consolidated and clearly expressed in clearly identified contract documents, which should include only the results of any negotiations, not superseded proposals or offers.

The practice of including additional documents may increase the possibility of confusion and conflict between documents and lead to disputed claims for additions at a later stage. It is preferable for the base drawings, specifications and, as necessary, the contract agreement, to be amended to reflect any changes agreed between the parties post-tender but pre-signing of the contract.

Some contracts require a bill of quantities to form part of the set of contract documents and the form of contract may require the bill of quantities to be priced. This will require a time interval after the acceptance of any offer to enable the contractor to complete and return the priced bill of quantities. In such cases the time available to the successful tenderer must be clearly stated in the tender conditions.

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