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Building Contracts - Essay Example
'A contract is a legally enforceable agreement giving rise to obligations for the parties involved. The law of contract determines which agreements are enforceable and regulates those agreements, providing remedies if contractual obligations (undertakings or promises) are broken.' Koffman Macdonald 1
Although a contract maybe written or oral, the former is overwhelmingly more popular due to its comparative permanence strength and verifiability.
Relationships in any project are defined by a series of contacts between the owner, the consultants, contractors, sub-contractors and vendors. There are other legally binding documents that may take the form of MoUs (Memorandum of Understanding), agreements or LoIs (Letter of Intent), used between the owners and others contributing through goods or services during and after the project.
In a civil engineering and construction scenario, a contract between the client and any contractor implies stage-wise payment against a defined series of chronologically spaced deliverables from the client where the process as well as the product meets contractually defined standards.
Each of these contract sub-types have different advantages and have a different degree of risk exposure to the client and the contractor. It is in the interest of the project for the correct type of contract to be formulized in order to avoid the 3 reasons for failure of contract discharge.
We shall discuss below each type of contract, the problems faced during the execution of such a contract and methods by which these problems can be dealt with so as to mini ...