The Construction Leadership Council (CLC) has raised concerns about clients in construction amending industry-approved forms of contract to introduce terms that are “onerous and/or difficult to insure”.
The CLC believes this “ongoing practice” makes contracts unviable, reduces competition, increases risk and leads to unnecessary legal costs required to review legal liabilities as a result of the amendments.
The industry body advises that construction clients use instead standard form building and engineering and professional services agreements issued by contract-producing bodies without amendments, except when project-specific risks and relationships require it.
A simpler approach
The CLC said that a simpler approach to contractual liabilities and a clarification of roles and responsibilities, particularly around fire safety design, would help meet the recommendations of the final Grenfell Inquiry report.
It may also protect contractors and consultants from having to pay more than their “fair share” in the event of a professional indemnity claim involving a contractor or consultant that has gone into administration or has inadequate professional indemnity insurance (PII) cover.
Many PII policies only cover claims for contractual liabilities to the extent that those liabilities would exist in the absence of the contract.
The CLC’s PII working group has identified that standard form contract terms are often amended to include liabilities and obligations that are disproportionately onerous for the nature of the work and the contracting party and its subcontractors. They also don’t fall within the scope of the contracting party’s PII cover.
