Contractual Procedures - Essay Example

To begin with the definition, Lord Diplock in the case of Modern Engineering Ltd v. Gilbert-Ash [1974] AC 689 717B (Chris Turner 2002) defines a construction contract as the whole agreement for sale of goods and work for a prize payable in cash or installment as goods get delivered and work done. This implies that the implementation of a construction contract takes place in a continual process, also, Section 104(1) of the HGCRA 96 defines a construction contract as including all construction operations, arrangements for construction operations by others under a made subcontract and provision of own labour or that of others for the purposes of doing construction operations.

Standard forms get used for making construction contracts. Traditional contracts occur on the employer entering into a contract with an architect or engineer to make the design. The contracted architect or engineer supervises the construction of the design while acting as the agent of the employer. Thereafter, the employer enters into another contract with the contactor to build the design. Then the contractor employs subcontractors and suppliers to supply goods and services. (New engineering Contracts (NEC).

The relationship between the parties brings in the doctrine of privity of contracts (Chris Turner 2002). Privity of contracts provides that the contract does not bind third parties. The diagram below illustrates the whole scenario and the relations between the parties. The diagram above shows that the employer makes two independent contracts, one with the architect and another with the contractor. Then the contractor makes a contractor with the suppliers while the architect has an implied contract with the contractor and suppliers, to supervise them.

The supplier remains a third party to the employer and so not answerable to him. Both the contractor and supplier remains a third party to the contractor. The situation