It is a matter of fact that in any contractual relationship,
there is bound to be some obligation between all parties. As defined by Bracton
and Thorne (1977), an obligation is a “legal bond whereby we are constrained,
whether we wish to or not, to give or do something”. In a contractual
agreement, obligations are enforced by law, holding each party liable for their
terms of agreement.
Among the sources of obligations
are express terms, terms implied by statute or potential liability under common
law. Specifically, this paper focuses on the employer’s express contractual
obligations towards the contractor in accordance to the JCT SBC 2016. Under a
construction contract, the most important obligations are monetary (Hughes, et al., 2015). Additionally, express
terms can be terms stated in the SBC or specifically stated during the tender
stage in the conditions of contract.
Generally, most implied terms are imposed in a
contract by law, unless overridden by express terms stated in a contract.
However, not all express terms take precedence over implied terms, as some
statutes ban the provision of certain express terms. This especially happens in
the event of serious injury or death, but there are numerous other examples
such as the Unfair Contract Terms Act (UCT) 1977, the Construction, Design and
Management Act (CDM) 2015 and the Housing Grants, Construction and Regeneration
Act (HGCR) 1996. For example, the CDM 2015 puts a duty of care on the client to
ensure that “construction work can be
carried out, so far as is reasonably practicable, without risks to the health
or safety of any person affected by the project”. As a result, this statute
would override an express term to excuse the client of responsibilities should
a worker get injured on site.
to that, there are plenty of possible express obligations that are imposed on
an employer. Hence, this paper will identify some of the obligations contained within
the clauses of the JCT SBC 2016.
Upon signing a contract, the
employer agrees to pay the contractor the contract sum in return for the
completed project. Using this contract (with quantities), the employer is
primarily obliged to pay the contractor based on the work and quantity
described in the bill of quantities. Should there be any variation issued, the
value of the work done will be paid out in the next interim payment. Unless the
work is to last less than 45 days, Section 109 of the HGCR 1996 requires
payment to be made in instalments in accordance to the period agreed upon as an
express term in the contract. Should such a period not be stated, the Scheme of
Construction Contracts1 requires the instalments to be made every 28
1 Scheme for Construction Contracts (England and Wales) Regulations 1998
(SI 1998 No 649) as amended by the Scheme for Construction Contracts (England
and Wales) Regulations 1998 (Amendment) (England) Regulations 2011.?
addition, once the Contract Administrator (CA) certifies a payment to be made
to the contractor, Clause 4.12 obliges the employer to pay within 14 days the
amount shown on an interim certificate. Should the employer or CA wish to pay
less or withhold amounts from the contractors, they may only do so if permitted
under Section 110 and 111 of the HGCR 1996. Under the act, the following matters
must be covered: How much and when, the final date for payment, the payment
notice, the default notice and the pay less notice2. Any of these
express terms that are not covered in the contract will by default be taken
over by the implied terms.
In the event that the employer
does not pay on time, the contractor is entitled to suspension rights. In the
case of Melville Dundas Ltd v George Wimpey UK Ltd,3 the
concept of “final date of payment” only applied to interim payments. As a
result, Section 112 of the HGCR 1996 permitted the contractor to suspend work
where he was not paid on the final date of an interim payment.
the employer is entitled to retention funds, with a percentage expressed and
agreed upon in the Contract Particulars, unless a retention bond or retention
guarantee is used, in which no retention is to be held. This can be seen from
Clause 4.10.1 and Clause 4.20. Otherwise, the default figure in the JCT SBC
2016 is 3%.
employer is required to allocate a replacement if the architect, engineer or CA
ceases to hold their pose as they are named in the tender and agreement. Under
Clause 3.5, the re-nomination must not take over 21 days. Although the
contractor is generally allowed to object on the re-nomination, he does not
have a right where the employer is a local authority and the architect, CA or
quantity surveyor (QS) is an employee of that authority (Hughes, et al., 2015).
although many of the employer’s obligations are allocated to the CA, it is the
employer’s obligation to ensure that the CA is carrying out his duties under
the contract, otherwise he is to replace him.4
for a contractor to do his work, the employer must give possession of the site
to the contractor. If he fails to do so, he could be liable to pay damages due
to a breach of contract. 5 Under Clause 2.4, the employer is
required to give possession of the whole site to the contractor, but does not
have to guarantee to give possession or access as this may be caused by a third
party at which the employer has no control over.6 Nonetheless, there
are some exceptions as the clause also states that if the work is split into
sections, the employer only needs to give the relevant sections to the
contractor. An example of this situation could be the construction of railway
tracks. If not all the land has been acquired yet, the employer could agree
with the contractor to construct certain sections first and the rest
Architecture Ltd v Halsbury Homes Ltd (2017) All ER 91.
Dundas Ltd v George Wimpey UK Ltd
(2007) UKHL 18.
Perini Corporation v Commonwealth of Australia (1969) 12 BLR
Rapid Building Group Ltd
v Ealing Family Housing Association Ltd
(1984) 29 BLR 5, CA.
LRE Engineering Services Ltd
v Otto Simon Carves Ltd (1981) 24 BLR
However, if the employer does not
provide the contractor with possession of the site as agreed on the date
specified, he will lose the right to claim liquidated damages in the event of
late completion.7 Besides that, it is worth noting that the employer
must not only give the
contractor the building area, but also sufficient
surrounding space for all construction works (MacRoberts, 2008).8
Additionally, specific provisions under Clause 2.5 entitles the employer to
defer the date of possession by up to six weeks if expressed relevantly in the
Contract Particulars. Furthermore, it is the employer’s duty to provide the
contractor with geological reports if any ground works are to be done as
implied in the Environmental Protection Act 1990.
Insurance of the
there are two stages of insurance provisions in the JCT SBC 2016. One allocates
the risk between the client and contractor in terms of loss or damage, whereas
the second imposes responsibility for insuring against those risks. As most of
these risks are expressly allocated to the contractor in the SBC, the employer
only needs to procure insurance in certain circumstances such as works done to
Under Clause 2.8.4, the employer may
not divulge or use any of the rates or prices in the contract bills, except for
the purposes of the contract (Hughes, et
Permits, licences or approvals
Under Clause 2.17.3 of this particular
contract, it is the employer’s duty to ensure that works done comply with all
statutory requirements. However, the employer is not necessarily obliged to
obtain any official permits, as this could be passed down to the contractor,
depending on the specific terms expressed in the contract.
Under Schedule 8, clause 1, parties are
required to work with each other and other project team members in a
co-operative and collaborative manner, in good faith and in a spirit of trust
and respect. For example, the employer has a duty to give possession of the
site to the contractor on time as stated in the contract, allowing work to be
finished by the completion date. 10 Nonetheless, the employer only
needs to cooperate such that the completion date is achieved and does not need
to assist should the contractor wish to complete early. 11
Holme v Guppy (1838) 3 M 387.?
8 R v Walter Cabott
Construction Ltd (1975) 21 BLR 42.
9 Gold v Patman & Fotheringham Ltd (1958) 2 All ER 497.
10 Freeman v Hensler (1900) 64 JP 260.
11 Glenlion Construction Ltd v
Guinness Trust (1987) 39 BLR 89.
general, once a contractual agreement has been made, both parties, the employer
and the contractor have contractual obligations towards each other. Under the
JCT SBC 2016, there are quite a number of express terms that can be found
within the clauses, and those not included are imposed by statutes or common
law. Nonetheless, the employer may alter these express terms but these
alterations must be made known to the contractor during the tender stage before
an agreement has been made. In addition, Chappell (2017) made a point that
although not expressly stated, the Employer’s Requirements will take precedence
over the Contractor’s Proposals. Lastly, it is important for each party to
understand their obligations in order to minimize their chances of falling into
a legal dispute.