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    . oe atone MARTYN il ce 5 ae Contents INTRODUCTION ACKNOWLEDGEMENTS CHAPTER 1 FORMATION OF A CONTRACT 11 Definition af Contact 42 asenal Requirements of Contact 43 déferand Acceptance 4A Consideration and Contracts Under Seal 415 Contractual Capacity 16 —Genuinenoss of Consent 17 Foumota Contact, Le Legality of Object CHAPTER 2 TERMS OF A CONTRACT 21 xpress Teens 22 Clamiffalon of Express Terms 23 Implied Tens BA Exclusion and Limitation of Liability 25. Vaviaton of Contact Terms 26 Interpretation of Content Terms CHAPTER 3 DISCHARGE OF A CONTRACT St Performance 32 Agreement 83. Frteatlon 13 a B iu a 1% s a a 2 CHAPTER 4 Beene CHAPTER 5 Beeene CHAPTER 6 (CHAPTER 7 7a 73 is os 76 (CHAPTER 8 a a as [REMEDIES FOR BREACH OF CONTRACT 24 Damages ‘SpestiePerformance Injection estason ‘Osinta Mera Tiation of Action BRRROPE STANDARD FORMS OF CONTRACT a s Reasons for Use ofa Standard Form ‘ ‘Standard Norms of Building Contact in Hong Kong, Formaliaton of Standard Form Contract ‘Anendments ta Standard Form ‘resedence of Standand Form Contract Documents issrepancies and Errors n Contact Documents qageee ‘CONTRACTUAL RELATIONSHIPS 3 ‘Contractual Parties t the Mala Contact Sub-Contscos and Supplies ‘Nos-Contrataal Partie fo Ure Man Contract & Bee ‘CONTRACTUAL ARRANGEMENTS 4 lamp Sum Contracts ‘Msarement Contracts ‘Cont Reimbursement Contras ‘eignand bid, and Tueaey comnes {Conpaison of Risk ald Operate Teeter (BOT) 3 seeses TENDERING PROCEDURES 3 (Open Competitive Tendering ‘Solctive Competitive Tendering [Neputsted Tendering see CHAPTER 9 oa CHAPTER 10 CHAPTER 13 m Bs POSSESSION AND COMPLETION Date for Completion Ray Completion Sedlonal Completion Ligudated and Ascertained Damages INSURANCE AND SURETY BOND ‘allding Contact Inrarancoe Indemnity an Insrance CTausst Suuty Bond ‘Types of Bond INSTRUCTIONS AND VARIATIONS Wiiten Instructions Oral Itrastion ‘lak of Works Divections {Classes Which Empower Instructions Valatons ‘Measarement and Valuation of Vesistions Prosata Rates, TakValuation Provisional and Puime Cost Sans CERTIFICATES AND PAYMENTS Intern Centifeatea {etn Valualone Retention Coreate of Practtal Completion Cetifete of Making Good Defects Pil Account CONTRACTOR'S CLAIMS Fluctuations Deay Tension of Tine (Claims for Direct Loss andlor Expense (Get Cline aro & vase § RESESIRTE rr 103 1 108 116 19 12 comes q | : ‘CHAPTER 14 DETERMINATION OF EMPLOYMENT 14 f] 341. Detemtetion by Baployer ne | 342 Detwminaon by Man Contaor ” I CHAPTER 15 RESOLUTION OF DISPUTES 120 i 381 Adbitatien 1m {I 1382 Advantages and isndventages of Abitaion iB 383 Attentfe Dupute alton ADI) Fd S84 Stngts and Weakneme of ADR Z 335 ADR TecniquesBuamised and Compared ie 386 MICE Ania Setlement Clause 10 APPENDICES 142 tt ‘Appendix 1 INTERIM CERTIFICATE 12 ul ‘Appendic? — INTERIN VALUATION te ‘Apress CARTIPICATE OF PRACTICAL COMPLETION ia : ‘Aprenic — GERTIICATE OF MAKING GOOD DEFECTS is i ores | oa ‘ ! ‘Spends HAL CERTIOTeATE i Aprons? THEWAGEINDEX is {I ‘Agpendic’® — FLUCTUSTION CALCULATIONS: 10 cxossany siotiogRarity INDEX Cha pter Formation of a Contract Much ofthe law of conta patiularly concerning the formstion of contrat has been derive from ease theares of law that has evolved o result of decisions handed down by the coutsoFer the year; but should be remembered that the estab lishment of precedents isnt purely hatorical, its a continuing proces, These decisions sre subsequently adoptedas the rules tobe followed, nother word, they establioh pret fedents, Due fo the speca relationship that exists between Hong Kong end the United Kingdom, Hong Kong aw closely follows that ofthe English pete of aw whic why decisions handed down by courts in England, aa well those in Hong Kong, often esta lish precedents which re ollowed in Hong Kong. Aa court eases ae refered t theough- ‘ut this book, by way of example o show where precedents have been establishes t ‘is important tobe aare of terminology Ta partes ina case. All cout cases waa Set 1.1 Definition of a Contract ‘contre may be defined “ tod or toe ng ohh (foal ce iwc bing contac asf on ape ener ‘which thebulder, commonly refered to asthe contractor undertakes for read to ‘carry out ullding work forthe building owner, commonly fcfevred tos either the let or emplge, ets blr and conta nd eto empyema poeay be intechnge ‘Si Howes tough roa he on cpr oc Gn ws op ne ‘Sao weds content wih esd infec on 1.2 Essential Requirements of a Contract ‘The cea rene wich tbe pcetna Yd cotta flo i apatites an agroement betwen the pate (4013 oe ral), UDG CONTRACT PROCEDURES IV HONG OMG Ronen eb ot pce ota der eo il for deta. + TR pr ert stan hg apt © contract sad in sme con hai iit (Ge 1. for deta) + Genin ofcoet nin mst ne elated, 21 for dt ) and | om of anc - cata yp of contin aged be made in y\ pautcler fn e 17 for deta) a ‘iby tat mt ot eo eg pn 18 “coat esttute of legal effect thats they are not contracts and age’ 5 ‘ents of sind donot confer gal ight on the pts those which maybe made vol the stance ofone fhe en For exam conract which enduced by ud, con beaded bye Pury decived sre i ly chica ae oe Talore eens State hy Offer - ssn te om Jcaramaeeorin oa a eT ‘rhowt qualification or anendment bythe other party Known a im aor tocar passengers to their destin {nade one parclne person oF tothe worl at lage ] Therelsnoreutemen at the wor flr mite wed td pf a. ll Har bears Sone cher word such sg, ‘or Even onder, sich ee ene eget medina i fae ea nee Ne ene | QI aa ine fr accpance wile wen te tine hn wiicet eecginen tastine pected ville MUNN The court wl decide what io Un wat oir 1 cn TF, ise ua ter ll pBeagenhe pin I Gee ‘ofeoumier offer aol of awd whe Me Wang Sel hi a to Me Ma for $300 Ma ject utes $7300. Mr ene ee ect Jet tT rerio fm fer i the tee fy Regan Feeton nfo eet units actu boy ce | Intsion Tot ‘An invitation to teat san invitation to negotiate Tt san nication ofthe ines ‘long which an offer isto be made, The person making the inwitation to eat doce rot intend toe legaly 0 this cannot be turned Into contre. ‘a definite distinction. amples of lataton to ret are follows: i + Display of goods forsale ata fixed price ina shop window or ona shelf ofa self ‘ intent not to perform, before ine for performance ardives or exeratinary brah ~ fire to fal abigntions during the execution ofthe In both cases the injured perty may cue immedintely the breach becomes sppat ex ven nthe caseof antpatory beach ile not neteeary to wt unl ne for evfonante has pasod in order take ogalation, A clas for breach of contect ‘ay bemade forthe whole contrac or of pat only. eaten ey oun te gig SA grsaitaerearaae ees Spaceman aeemaay pers Seo | Chapter | Remedies for Breach of Contract ‘There area nuaber of remedies availabe tothe injure pasty upon the orurrence of breach of contract These renedin are damages, pec performance injunction, recon, [ha qusntum send Difeent semedica willbe approprinte depending upon the ere Sands ofthe beach and the requirements of tho injred party. 4.1 Damages Damages is «remedy for breach of contzact which consists of court awarding 1 finaneal payment a compeneation for los weslting fom a breach. The aim of disbnges fo put thelnjured party tn zeme financial postion athe would have ‘been inf the const had been propery performed. Damages are not ava = = punihuen ofthe bretc, merely compensition fr the financial los the injured purty has incurred, Thete are to types of demages: luted damages and Enliquiated damages 7+ igudated damages 94 Uigsidated and acealned Damage) ‘Thess are damages speed Ss concoct an amount of money payable as pension shed thee be a bench, Te wort lulled meats thatthe ‘ripe to pay tone ss compensation for a reach hs been saline, For { EX in te mrt of bung contact, tre atc to he fect that ‘Rou the contentr fo compete the works during the speci contract puto the emplcyer Se ened tobe pid anageeed sum of money by the ESatacar ss compeeaton The employer eed ony prove tat ese has een ¢ french oder to automately day he um ‘Liguidated damages ate pre-determined by the patics themselves and shoul bea genuine pre-stinate ofposble oss The court normally awards the emount liquidated daioges so agieed. Sometimes, however se amount of damages [Baya on breach snot merely an agreed and oaronablecompenstion, but i Eiein th nature of apentiy Wheres minor beach occur and a heavy payment toto be made by way of compensation, there Ss abvlously injustice. Certain principles have been laid dawnin the giving of elie, where the sun speciiod Fstoen nerd ine contoc a frightens to ensuro performance The out lL heating the apes ofthe paty in Breach yl hase its decision on the following principles + The sum agreed mast be treated a a penalty if tis extravagant and ‘oveasonablein amount, by comparison with the greatest oes hata follow nom a breach of the contact "+ Where the payment ofa emaller sum is secured by a larger sum, the Itc s spinal. + Wren a single lump sum is payable by way of compensation, on the caren ene oc moe orall af severe ever sine Which ay case Serous and others not so nevons damage, teresa presumplen tat the ‘incr na polly ‘The rele! afforded by the court where a penalty is found to exit, isto excuse payment of that amount The court has the power to substitute its own aweed of ‘Gamages, computed on the basis of compensation forte loss sustained, On the ‘other hand where am ageood um sin the mtate of lguldateddamagen no great ‘sum wil be awanded By the court, even ifitis proved thatthe consequences of breach have been more serious than foreseen, -# Unliuidated damages ‘These se damages not specified in a contest, nd should here be claim fora ‘breach, it willbe up tothe court o decide not only whether abreschhes ocurred, but alo on the assessment of damages. The word wnlgudofed means that there Jnno agreement in plnciple spay compensation, The plant wil have to est, prove hata breachf contracts occured, and then provide evidence to support {he value of dhe elim, 2 Specific Performance Speci ptformance is an order made bythe cour o fore the partyin breach o perform ther obligations under the contract Ie willenly be warded it fir and that damages ate inadequate Ito a Aiseretioacy emedy and ls not awarded a of right tis uvally used in contracts {or the sab of land a each plot of andi amiqaey susie, 4.3 Injunction ‘An injuncioni an onder made bythe cout to stop person or party fom doing «| ‘certain acl complained of It is granted only where iis just and equitable to do so, Having regard to all the dzeurstances ofthe case and ira iscctionay fem. I ‘5 commonly wsed.n ots, such ss where the oviner of property wiser fo rstain “anoter fom continual uespass, ort top uneaaonable nose Ijunetionmayaleobe granted to enforce a negative slplaion in a contract, where damages would not bean adequate remedy For example ina conte! for peronal 3 NDS COWTRACY PROCEDURES HONG FONG services, where bind himself not wo work fr any person other then B, this nega- tive stipelation may b> enfored by injunction. 4,4 Rescission [Resclsion ea emady whic e generally sed n cases where one ofthe partis to ‘contrat has bean misled, ana ao ocuts mally in eaoce of feudulont or gl ‘entmisepresentation Resclsson gives the misled party the option of avoiding ot fccepting the contract The nae pssty may either obtninan order fom te court for rescsion,o: he en rescind withottapitance ofthe court, by informing the ‘other party tat hea sepaisting the contact. Normally racstion mat becom ‘munisated to the oer party, fn wil be elfen all seasonable step ate {ken to communicate eolasion, even this not posible [Resclasion requle that the pats chal be restored to their original positions at ‘ough thre had been no contact tat a giving back anda taking back: hiss not possible, resseion wil not be given. However, where exact restittion cannot ‘bem ute posse to substantially restore the pate other original post ‘ory restitution can b made together with a financial adjustment For eae, ‘where a contract for te sale of property has ben induced by fraud, the purchases ‘may with to recind the contract, yet hat carried out some minor improvement, ‘Restitution ean be made by retuming the property tothe orginal one, and re ‘rnin the purchase mona to the purchaser, song wilh a fnanil adjushent 0 take aczount ofthe inprovennent. S 4.5 Quantum Mervit “The term quantum ment fr wee in various eens, The proper meaning s when fhore is no contrat betwen the pares but i the cincumetances ofthe case the Ine imposes a dt, sid to arise in guas-contrect (gus! meaning a Cit were & ‘contract o pay a taznale sn for goods receved or fr the benefit of serves ‘endered Ils alo somelimes used, looely, when there isa contrac Assessment of « Reasonable Sum “The cout ave laid down no ras limiting the way in which» reagonable sum i ‘obo assess. However, useful evidence in any peticular ease may include ‘+ Negotiations ast rice. ‘+ Caleuations based on the net cot of labour and materals used plus @ eum for overheads and prot REMEDIES FOR BREACH OF CONTRACT + Measurment of work done and materiale supplied. + Opinions of qualited experts inthe fed of buléing, suchas quantity surveyor, Dulin surveyors, and extimators, Quantum Merit Claims ‘Iaims for reasonable sun may aise for the follwing reasons 1 Where no price ts fled the eantactor does work under a contract expres or implied, and no price ‘xed by the contrac, he iene fo be pad a reasonable pum for his about ‘and materials plied 1 contract or an exprose agreement to be paid a ‘easanaole sim fr the whole work, completion may be made condition Deore paymert However in the absence of ear yords, the contactor is entitled from. [ine to tine fo detand payment on account ofthe value of work he has dane. 1 Helle negotiations Wovork ie carted out while negotitions as to the terms of the contract are _proesilng, but agzeament never reached upon escetial term, the contractor elle fo be pad a eatonable sum forthe work arsed out + Prevention of completion by employer fynonafl sos bythe employer prevent completion, the contractor can clam a igumtunraea payment. or exantple theres an implied duty upan the employer ‘give contactoran oppartnitytoremet defers breach of which nouns to prevention Ieee ere by nerd or ipledngmenen 5 onto cat pov, by nese rip anew contract 1 ‘ey forthe work done heshaysexover the money forthe work hebas completed Fltebasie ofthat new conc. Sach acontact may be Infered fom seeptance by the employer ofthe work done, ith te ful Laovrledge ofthe ature to complet. However, tis dificult. to prove willing ecoptance, nd the onasof proof will be onthe contractor, + Waiceroya condition ‘Hisalways open toa prt twalve a conditon whichis ingertedforhis bene. ‘Tur canals even i sve pestormance was condition of the contact the employe by oerupying the Bllding and wing cera temo of funiture which ‘he cou avoid using, may well waive the ene performance condition. ‘Work extide the contract ‘Wheres ea contract for pected work but the contacter does work outside the contact a th employer’ quent the eonteactor is otitied to Be paid @ ‘eaonuble num for the nditional work Ia the case of Parkinson 2 Commissioners 1 ors (1950), the contacto agreed usdara vavid conracto cary outcetain 2 il . i aici cai srt bentmy th Conmltien ect pl pb baa estos | Ee eee eerie es Suineticemsiatareetcuitecrneerse nanan Srp uid ee oy pa ke Comrie sakes : ete ob tte enor er oey o i eee cae ek eee male xed prof i 4.6 Limitation of Action } Jes apc ofthe ht here shoul ran end oh sight gation, The ‘ato py als | + Defoe shoul be pte ag ci ingade ot er og ! Fest tng hy my ha it evens sated Booed * Defendants should be ina position to know tha after a given time, anIncdent which might haveled to a lim againt them finaly cowed tn oer word if y legal procsdings actos long delayed, the defendants thou be allowed to male } ‘reasonable conclasien thatthe pala have waived their aims, *+ Plains shouldbe encouraged not to delay in asserting hee legal rights, and to institute proceedings a soon as posable | i Limitation Ordinance tg Ring Ut Opt Hot ee i So res es errr i ee cores ( Ses hee cee Soren rete meete ees ias Sheen eee mom oe oS i Pelee lt epee erret eae diterg peeing : Rehr ee ore i Sa ees ee ae ll Sale ee ps ee oe eta SoS ee rere i ee So or Saee i Se pa pene Sores bee ere Sete a Sa {should be noted that there are exceptions to the ordinary limitation peciods in i ‘oti contact and tot In costeacr poetpanemeat ofthe lnitation petod lo poy . vided fr in nss of deliberate concealment of acts limitation period not to begin lanl discovery of concealment), hile infor actions fr personal ijutes cr death ‘uel bagi within thre years, latent Defecis in Buildings ‘A latent defect ina bulding isan existing but concealed defect which may not { ‘manifest elf for a considerable period of time (offen years) ater it came into | trstence. As already mentioned, for bullding contract the Kalatlon peed in fespect of defective watk begins fo 1un ftom theme when the contactor ie in breach ofhis expres or implied obligation undar the contact hb will normally i ‘be fom the te thatthe cetfiate of practical completion isigued, Ils worth epeating dat the euse of sion does nt acer fom the time when damage oc ss or the defects covered. However, i Intent delet i discovered fer the { texptation of tho limlttion period, there may beacause of ston against the cone 4 luactor under the tort of negligence, which completely independent ofthe con- ttc. Tt in Construction \ | Tories di wrong independent fon tees nm ach of gel ty ‘owed to persons generally. Most of the Iw of tort is to be found in case law. The : Cah wh my ied he precedent when ety of ee might ane | ‘St wa cn f Doogie Snr 0 Inte emanate of tigate anh ne iy ce tesco cae Stgeara elf nding alin thee om whi heated Jn cation to construction the House of Lords decison in Murphy, Brenton Dist Canc (190 estas ab a genual le hat eau baler owen ] daly of ere within the principe of Donoghue person aly to aller nary be | cause fh negligence tense sone only with daage tear of py {a jy to persone ox other rope (oot the bling ef which gave ts to «hej caused by latent deects-~ pure exmomic lo anot recover. Inthe | Murphy eve M Murphy discovered cack coed by 2 fy foundation, which ‘wereattulable tothe religent passingof plana by thelocal ator nates of et opal he cold hus Sefetive howe ata pic lower tan woud { ‘eve safer without the defects andatepte io secover he cota os mn 5 {hele ewthorty The House of Lords ule in favour of Desa Standard Forms of Contract eg ct ery nes yee tpn on bea na shure eee eet eae cis . SASS Bel res reteiandooenng aiden : ee ed eerie yi ah ate beg oreo nee treemiceet areas (5 Deira mee eee eet aa agen Secrets Sere else hee ee et ce cee Sor afancrse 5.1 Reasons for Use of a Standard Form ‘+ The parties tothe contrat become familar with, and therefore gain a greater tunderstanding of the document ough the practice of using it fr exch ‘The parties to the contract are cleanly made aware of tle dutice, obligations Gand fights as they aval writen in one wel efernced document. Th terms ‘forred ty claus name and number, + Using standard document avoids the waste of time that would result fom ie having to individually drat the many terme neveisry for each new contract. de Inthe event of disputes, standard forms of balding contact providea means of fetdeaent without he need to veer themattero cour of lav. An abitration ‘precment clause athe document allows the pave to refer ther disputes to the decision ofan atatator ‘Ther re onthe oer han some arguments agains the use of standard form of building contac: ‘+ Because the tna age written wing legal ergo (meaning legal teminology and phrasing) the patho to the contrat night ot understand the full oncogenes bf the various clauses, and thelr inte-elationshp to each other | + sandra ont ores oe een wight ends pte frit | ‘uo at yd not ake to can el he poe of ec ee | + Yipes ferent HL Sno, neg hth chs Secon eye ae 5.2 Standard Forms of Building Contract in Hong Keng | Private Sect Foms of iain Conkoct oe ll ad es eee esis eS eet eee ea eared | alter Wet lanl) Me Hg Kong ae of Ache? eile ee eae ea ae eu ‘Surveyor (Hong Kong Branch) publication is the 1986 Eaton. | ( oncom Biles see eee HEISE Sr cera es | ee ee eed ee en eee ice ence ee ee [ ] ‘Tender and Agreement. Part 2 Conditions of Particular Application with Guidelines for a eos ese ra ek ae {toca te noted ht he Ge Oni ae inked ih Codon of etic pion ea po oft some oily dei oat ic perulafbenot be india Ste) by coreponting eee nanber ‘As these conditions ae designed primal or use on intrmatlonal contacts, t Isimportany to be aware that dhe English Version Is conldared by FIDIC a the | ‘official and authentic text for the puspose of translation. [IDIC is waely used in Hong Kong where many large construction projets 1) ‘employ evaseas contractors, partculary Japanese, theseby making the contact i {internation by nature r 1 sete simatt forme | Cent em, wach a the Hong Kong and Kowloon Wharf Company, the U ng ‘and the Housing Authority each prodico ively for use on thelr own project, a fl nom comes ocr NHN i Public Sector Forms of Main Contract +m Government of Hong Kong General Conditions of Contra or Busing Works, 1980 ait, a Kong General Conditions of Contra fr Ci Engineering Work, 1890 Baton. seem ‘Gooemimen of Hong Kong General Condtions of Contras for Eetrica nd Meanie Engineering ork, 190 Elton es tf erent of ng Kg Corl Condon f Cont fh Apt Ce ep Diforences Between Private Secor nd Public Sector Standard Foms of ‘Main Contract The publeetor wipe co standard fos ued HongKong industry ae very sills in nature and content. However, ther ae e nner of ‘essential diferences which should bs appreciate, thes re: Pere eies, eee eee aaa ae lier tories thn arte days OF mes +The private sector standard ‘must be made withn fourtens days of presentation rather thm of oe. : ne forms, to reduce the possibilty nde disputes, +The publicsetor standard for + Asa way of combating poeibe corruption, thee ea puvvisi inthe public ctor standard forms forthe employer #9 end the mala contractor's employment bre sc cere yoann obtaining or ee +A : tor conteacte proves an optional to arbitration ase mean of eslving disputes F + | Ds iecriente Tera ae Dierancas aveon Hh Wa sits and Wao anti Edions Sonal erie emeoeet Most stanfard forms of main contract used in Hong Kong's building induste, I whether ite public or privat sector, will produce a with quater edition and & 1 Dithu! gute edtion. Where bills of quansties have not been produced and it isthe intention ofthe parties to nse a specication anda schedule of ats In its place, the ithout quantities edition ofthe standard form wil be used. ll ‘The without quantities edition dfers fom the wih quetiteseition inthe fllow- ingrespec| i + aie oat units th polo fre enc a he ‘tanya sd yh ae ps I + The spfaton takes the place of the ills of quantitios as a contact document. es Bl ce + Provision is made inthe without quantities edition for the main contactor to 1 lv the srhitecta shea orate immediately afer the contrat has ben signed i Standard Fores of Sub-Contact ‘Most standard forms of main contrac (private sector and puble sco) willhave a y lJ ‘heath hen ag ie Sued Fo ts ones sees [rue hebben le Sr Poo Ba oe (fr ng Kng Sic ine an pet ES Pec ll joc ma as or nae ene eee ‘Set rl ry agg Cran ain Se omic gp Edn neg ras eet | Warranty Contact (see 6.2 Sub-Contractors and Suppliers) Standard fas of waranty contract are alo available where the employer chooses {o ener inna sully sgrrmeyt witha nominated sub-contncten Ile an op i} tonal contac and ie subsidinry (meaning secondsry) #9 the contact between the J main contactor and nominated wub-contactor, | = 5.3 Formalisation of a Standard Form Contract However, iis usual practice to qualify the acceptance ofa tent w 1 sujet to conic, which has the ee of ot binding either pty legal ! Standart form of contract document has bee sgned by both pari thermore, fn employer may withdrew his invitation to tere al enya and if he does the eee aaa eae te | eta yar a Pen oe sept eee ar eet ce eee ee | ee, of both presto he orc th empiyera he al ora Sree ang me eee ae ny are nr ie aeateeae eee [ ri lies yee ere Se ee Te eae eee ad ste at peer eae J ] articles of agreement is reserved for this purpose. Detail peceliar to each individual contract are writen in sehedule format in the 1 appends of he Standard Form Therefore it is necessary to complete the appendix | ‘afore sigalg, so that each party ie fly aware ofthe terme relating fo te inde vidual contac. 5.4 Amendments to Standard Form | Atos ot dried a andar orm fein nh dng one torn an tee hay cies whch ie eee eee ace ea pea eae ‘eadiocemmdatnie necng fora peal orp’ 1 standard form ie amended in any vy, could lead to probleme which may lve ise to depute for theflloring reasons 1+ The party making the amendatant may wea wording tht ie vague and/or fl ambiguons + The partis may not appreciate the fll legal consequences ofthe amendment, | «due fo the interolatonsip of the causes. ‘Thare may be disagreements over the amendment which may lea to ane of the parte refusng tig the contract, + The various copies of the standard form document used in one contractmay not conmspond with each other, or ananendient tobe effective, contractors must ist be notified in the tener ing documents. The amendment shouldbe madeby altering the relevant clause or clauses snd producing a new typed copy. The partes should then sgn o nial teach alteration fo show they have read and understood each amendment. A short tis justo cross out and amend the orginal cause orclanees by hand. Howes, {his may give sae to greater uncertain Ite also important to ene that the amendments made in al the copies of the standard form document. jonts ontrack incorporates ll ra combination ofthe following documents + Contract drsoinge fl fie cnn mt RUHR on 0 re tbesasa contr an ttn pict he prope ed I + Cont ils ois of quaites) l ‘Once incorporated into the const the Seen cy erates neers = epee op ere | Seen aie cee eee ee ee il Conte bil therfore ul the following fenton . cman he war be completed for the contract sum in | ferns ofbothquaniy ad gual + | + Prva ameans of nope ncssryepecieton frat a 1 pat of contac document + Standard form of contract ‘The HK Slandesd Berm comprite of thee baie pars namely, + Artes of agreement — miss signed by both parts to maketh contrac, U degly binding * Tem ft cont tht ot hight natn poten in t ‘helo of rumbered clases oe SS: I IDO CONTRACT PROCEDURES NOE KONG I. ‘Appendix — this summarises detail pauline to exch individual contact in fi Scheduled form, giving information such as dates of possession and ‘completion rate of lguldated damages and the defects lability period i © saadand it oko earermee | ‘Thestandard meGod of measurement ted in Hong Kon, both nthe private nds Hog ang Stand el yarn of Bin oy : ‘id ain Mee Frey I +e pal, iterate eel eee cee eee and subsequently submited, bu also any qualifying lettors whlch may have ‘eompanied the mcoesfal ender it + Monthly sttistica bulletins I “Those ulti o which actuation payments ae base are plished by the ens nd States Deparment fhe Geverement of Hon Kr i team be seen that there ae qulte afew document that goto make up a building ele etter ie See aaa ee era a ere peeled po pe ee Soy oe ne eer ee seas ener 1 Ce aa ea era ocument. Bie, owe he Sundar Frm Cae 2s thatthe cada int sian ard Form will ake precedence over the contract ill Therefore special conditions 8° . ‘weiten in the prelrinaries ofthe contract bills will have no effect f the Standard sth f eminence din ’ «Mean a BOG Le satpro ca i eset ste tyr ear on j Spee Ty ll he wl tng Senet ecnes Cie fried {Geoton (the Main Contractor agreed to build e number of houses with phased completion dates win inthe cantract ils, However the only completion date | ‘writen in the Standard Form was the date forthe final set of houses, lesson f ‘waslate completing th first et and the employer broughtan action fr damages {Gleson defended citing Clas 12 whic state that conditonsin the Sanda 1 "orm wil take prestdence over apeca conditions. Th cout held that he phazod | ‘completion dates written i the contracts had no effec the only date to have 1 ‘ay lect vae ei competion date iten inthe appendix ofthe Stndged Term, CRAY | Ww FORMS OF CONTRACT Its common practic in Hong Kong to delete Clause 2. Thal o ensure that ets writen nthe contac bile wll Most sgt of interpreting the precedence of conflicting contrat documents can be resolved by the partes themselves. or example, whare the contract drawings eon fic with the contract bill, wil be the drawings tat take precedence, The easea, forthaie that the dering reproduced fet the bills are prepared from the rao ings In situations where the partis cannot resolve an interpretation dispute between thomvelves, they should forte dispute to an arbitatr, or Inthe ease of public fectoy contacts a mediator i the fist instance 5.6 Discrepancies and Errors in Contract Documents Discrepancies Discrepancies between conteet documents maybe discovered both before and af fer the contract hasbeen signe. The procedure tobe followed i ferent in each + Precontract period If contractor finds any discrepancy between the drawings and the bile of ‘quantities before entering the contract (Cats during the tendering perlod), he ‘heald immediatly inform the ache in writing The asctct should Un ‘make the neceseary amendment as coon as posible, and in wong inform tho ‘ortacorconcemed, together with the other tenderer, of the amendment. + Pon-contract period te conteatar Ends any diseepancy between the contract drawing and the ‘ovat hills after th contract has been signed, he should immediatly give the {eitet writen notice, The architect should then issue an instruct io correct ‘hediscepancy which would then be adjusted inthe fina account Errors ‘ero in the contact ill ae ually the felt ofither the main contractor's quan- Ay surveys o th czmployer'squanlty surveyor. 1+ Main contractor's quetity sureyor's erore = An errr in pricing an ten inthe bills of quantities, ~ An asithimeticl ero 8 fhe err is dlacovered before the contract hasbeen signed (where aceptance {a aubject to contret then it may be corrected without affecting the contract ‘oalf However if tecorrecton has the effect of neeasing the contract um to 8 {et luc iso longer acceptable, the employer may reject the offer and nat Mesa withthe frmaliantion ofthe contact Itho error isnt discovered until he the contrct hat been signed, then the exor cannot be corrected (wnless ‘if the consent ofthe employe) as to do so would have the effet of changing {he contact sun, which hab already been agreed pon. + Employer's quantity survey's erors orn with tandasd Method of Measurement “The procedure the main contactor should follow fan errors been found before the Contact hasbeen iged, is exactly the same as previously dlacussed fox dix ‘Rtpancien However, th lation after the contract hasbeen signed is somewhat ‘Biferne The main contactor should give written notice ofthe eer to th em- ‘lover's quonltysurveyon who would hen treat the correction aba vaeaton. Chapter Contractual Relationships ‘When the HK Standard Form is used, the man contrat is between the emplayer and the ‘main contractor However, various other conteactutl elatonships ave establiched nt a ion tthe on in contract, q gaNdalory contract are en inated sub-contractor, and optional contracts may be entered into between ‘he main contacter and domestic sub-contzactors, “vo cont oie odin etal vith pe tec il ei hy Stn om, 6.1 Contractual Parties to the Main Contract ‘Tho parties fo the maln contract, when using the HK Standard Roem, ioe The slabs partes ee ca ‘Main Contractors Obligations baer ae ge complete the works, a shown {nthe contact deavngs and deseribed by the contract il, t the reasonable satifation ofthe architec Alle werk shown inthe contact drawings and described by ot refered ton ‘other contact documents must be completed in every texpsct Nothing may be ‘aed or emitted except issued onan acitetsnatruction under Clase 4), ‘The main cnicactor’s obligation only comes to an end on the isu of the Certcte# Patil Completion priced under Clause 15 —_—S_ ——y, Inder, that to protec, the employer against ~ Fees and charges legally demandable by Goverment Ondine, regulation F orbjelawof any statutory undestakes ~ Claims, proceedings, cost, fnfringentnt of patent cghts Claims ang fer injury to persons or property caused by or connected swith the wl ~ Damage a the works itself damages and expenses arising from the = Damage t property owned by third parties such as adjoining occupies, ~ Personal injury to workmen neighbours ar passer-by ~ Damage by fr, storm, Nooding ete, ifthe proposed building is entcely more * deteatamablsce trio cetera te ree Cee OF SS ere rere ‘Qpreettersetmn tore Employer's Obligatons employers under an obigtionto pay theman contactor for work cared out. Thasmay omeas one lump sum wien he wrk ls practaly complete or tu singe payments, or move frequcrty by monty tsa eis gery {hedutyof tesuantty surveyor ate competed work whichis the ceed ‘bythe acitec which in tm pal by te employer employer must pve the man contactor possesion fhe sen onder that the man contacts nay ary ut the ort. Faire todos il make the ‘contact impossible to perform it wil n effect, be prevention of peformancs ‘nd may feusoate the contrac I eis ine vine complete the works, specifying the start-onsite date (possession) and te finish ‘te (completo, tumplojer is under an obliga supervise and irc fe main cetractor during the progress an completion ofthe contract A ‘quantity surveyor must also bo appointed to advise on costs end eanry out ‘alaations, tnsenton scaring ta mts Th on the employers botal in theform of fears inerctions, IT ae a pen works tobe alered or amended, he must ee the architec, The architect would sn tum fellow thecomect procedure by issu an architect's instruction. If there ‘s any financial plication, the contract sum should be adjusted accor. Ifthe main contmetor or the employer fail to carryout their required duties, they wil be in Beach of contact. Ifthe employer fundamentally breaches the contact during performance, for example, non-payment, the main contactor ‘may abandon the works and seck damages. However ifthe breach is not fundamental to the contract the man contractor mas continue wih the wo and then suo for damages over and above the contact sum 6.2 Sub-Contractors and Suppliers Where the employeror the main contestor stapatof the works they aze sui 'o ‘para sue Contracts (9 the main cot services of subcontractors and supplier Assignment or Sub-Leting ‘Under Clause 17 su>clause 2), both the employer and the main contractor ms subst prt ofthe wrk with the wit fhe othex However, boul bhenoted that theres diference bet Under sub- 20 (I) nalthar the employer or the ee Domestic Sub-Contracters and Suppliers ‘These are chosen by fe main contactor, with the written consent ofthe architect, (ot necessary for supplies under the HK Standard Form), to carry ott a certain part of te works or foupply goods. The architect may object to the use of pr {oular domestic sulscontactr ony ie has good reasons for doing 9. Apart fromhis ght to object and otherwite to peovide water consent, the agcitet has ‘othing tod with a domestic sub-contractor, Responeibiliies “The main contrac or gous supplied by a domestic supplier as well ws for super pent should be reerbored that if he main contactors response ble for stbltting the employer wil sill be entitled to have the contract com- pleted under the same tern of time and price I tse main contacto, when tender {tg bases his prices an those contained Sn sub-quotations, he does so at his wn risk. Any disputes which arise between the main contractor and a domestic tub-contactor or supplier mist be sted between thom. Neither the employer for the architect have any night orslgation to Interfere Nominated Sub-Contrastors and Suppliors ‘These ton behalf ofthe employer, earry ont lly of speciliet nature, or to wspply certain rs + Subcontract ‘The mun contracr is requlted under the terms ofthe HK Standard Form to ‘erin a separa bub-cotract wit inde: Cause 27 Aconeaetofsle mint be entere eto with anominated supplier Under Clause 28. However, the main contractor has tho right to object toa particule nominated rub-coneacor or nominated supplier, provided tht he Fas good retgone fr doing to. n sucha cage the architect will consider the nate ofthe objection ard decide whether ooekan alternative «9 Movion and ine Con Sun) a ri af etn eat vom inde fore ‘purpose of lang he arelic to chow asub-contactor or supplier to alr Ent apecitc parte the work, oo eupply particular goods. This is provided for under Clue 1(), Clause 27 and Clause 28 ofthe HK Standard Form, al ‘conmacruas RELATIONS tender documents are then sent out to the various sub-conteactors or supplies ‘ishing tender for nomination. When the tenders ze recelved, the architect ‘wll choot a sub-contactor or supplier and, by using an atc’ instruction (Chanse 2, will instruct dhe main contactor to enter int a staat frm of sub-contract with each nominated subvoonfractor (Clause 27a) and 8 coutrct fea wih each nominaod supplier (Clause 218). Conzequenty only the main contracto-has a coneactial relationship with any nominated wib-conractor oF ny nominated supplier, and threforo all ineteuetions and payments mrt De made though him. ‘made 16 the main contactor by way o ‘Withinjorien days of eciving payment fom the employer, dhe main contractor must pay the nominated sub-contractor or nominated supple, vibe mace hal sean de oy Aedacting the val ofthe prime coat um concerned and then adding he actual mounts paid Rosponsibilitios “Thoamployeris under an ligation, under the fxm of the HK Standasd orm, to “Tiss sometimes ferred to asa wateanty agreement. It is en optional contest (aot required under the HK Standard Form) often formed betivom the employer sand anoinirated sub-contractor or a nominated supplies order to crete on ‘actual relationship brwen thom that would oterwie not exist. Both the ore ployer and the nominated sub-contractor or nominated euppller benefit rom such ‘optional contract under which each ofthe partis agree tothe following terms ‘the nominated sub-contzactor or nominated supplier with vniten of the value of the werk or goods supplied, as shown in interim. oe nominated supplier direct, the man raat Obligations andertaken bya nominated sub-contractor ornomiaated sppler der st warranty contrac + to proce witht design wah and onering of materi +o euply fron aesondanve with the contrac progeamme + Bla aoe fran dit ooo xe sun a altar etmnaten. ‘One particular point not made clea inthe HK Standard Form isthe poston ofthe ‘employer and mala contractor, when a nominated sub-contractor ot» nominated ‘pple fils to cimplet the work o to supply the goods as requted, and the ‘question of esominaton ation I i the duty ofthe sthitect ost the duty of themain contact to se-nominate anew sub-contractor or supplicr? Inthe care of NW. Metroplten Hospital Board 2. TA.Bckron Li (1970),one of he romineted oub-conractors wa unable to complete the contrat do iguiation. ‘The main contador then requested the architect to iss fresh instructions, ‘enomiaating a suscessor to complete the outstanding work, the cost of which Ihappened tobe higher. The employe cmtande that the main contractor Was To ‘sponsible fr competing the work ecauee the sub-contract was with themain con- ttsctor,and any diffrence n cost wat the main contractors zesponsbility. leas Inlay the cour that sth echitec’s duty toe-nominatoa successor. The main onftacor must net find a sucesso, o does would Intinge the srcitec’s ght of ‘nomination Therefore, th employee was ablged to pay the adltionel cost ofthe ‘ew nominsted sub-contractor 6.3 Non-Contractual Parties to the Main Contract 1 alwuld bw appiclated that the ache, quantity surveyor end consultant tngincers involved in the design and supervision of the works ar nt parties to {herman contact when sig the BK Standard Fon. Each has their ow contact fof employment wih the employer, usually using a standard form lsued by the “propriate professional inetittion, Often such conditions of engagement se out fee scales, I ahould further be noted that the clerk of works and the fovmaninchage, act at episntativs ofthe employe and man contactor i a ‘Asnone of the aforementioned ave partis to the main contrac, they cannot alls, r Inany waythe tem af tho contac itself. They do, however, have certain obliga tions a cass in the following fl —_ ‘The arches required by he employe o design, advise, supervise constuc- ; tin, and cry payenents Gusto the sain contscior He ake wil ct a8 an Yor the ployer under tera of engagement why from te legal vow | pea eee Enel mast end roe [ ee ee aero te Gem Wa dhe ta eccrine f + Dag Fa sae eee ere gece ee eee eee eal) aes + Drawings ‘The achect is eqired to supply rulficient drawings and information, within a reasonable time, for the exceton ofthe works + cont amet ed tems dg en cp wnt | (oes + Superson { “The architect must supervise and inspect sulficlently to ensure that materals and workmanship conform withthe contactual regurements. + Payments ‘Thecachitcts required to catify payments tothe main contractor, without frau snd withcomplete impartiality, wth regan othe emg ofthe contrac. He owes 1 duty of cae to the employer ana may be lable for damages if negligent in {I issuing crtificates, { Sexes eae a cee ee eer EC , Bee rr eg rel | eco aetna eres pee peered sk Ea see eae Be ee ‘ See eae anaes | Ses “ iy i ll Aconsultant engineer nceves the proposed design drawings of the building project {com he architec ane rm the ses the spect ft buling whee e '

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