Development Seminar Series

Transcription

1 Development Seminar Series Thinking ahead drafting and negotiating contracts to avoid disputes Dan Young and Nicholas Ng 5 August 2014 Allens is an independent partnership operating in alliance w ith Linklaters LLP. 1

2 Avoiding Disputes - Overview 1. Contract Models 2. Structuring Contract Documents 3. Drafting Contracts 4. Administering Contracts 5. Dispute Resolution 2

3 Avoiding Disputes Contract Models Choosing the right delivery model the case for alliancing o o no disputes shared risk / retained risk the case for softer risk allocations o project circumstances (eg. construction management) the benefits of a single point of responsibility (eg. design and construct contracts) conflicting roles for contractors (eg. designer as contract administrator) 3

4 Avoiding Disputes Structuring Contract Documents Tender process issues time to understand risk fair opportunity to price and program sharpening the pencil for risk Leaving the tender behind a clean and complete contract document document the tender outcomes in the contract (eg. the price in industry standard forms) 4

5 Avoiding Disputes Structuring Contract Documents (cont.) Defining the role of various documents part of contract principal supplied information pricing reference documents Risks of multiple phase contracts how are they supposed to work? redocumenting the deal when agreed sometime after the contract date 5

6 Avoiding Disputes Drafting Contracts What is effective risk allocation? effective tough planning, identification, allocation time, cost, quality issues The perils of standard contracts Remember rights outside of contract (eg. negligence) 6

7 Avoiding Disputes Drafting Contracts (cont.) Completing the contractual risk allocation journey Example Define the Risk Death or injury to people arising from works Obligations to Manage Risk Safety plans, safety obligations, WH&S responsibilities Allocation of Risk Mechanism Primary price / time concessions warranties / indemnities / liquidated damages obligations to reinstate Secondary insurance obligations Indemnity to owner Public liability insurance obligations Limitations on Liability Available insurance or what should have been available insurance 7

8 Avoiding Disputes Administering Contracts 3 simple rules Know the contract Know the project Be ready 8

9 Know the contract Every contract is (at least subtly) different vital to read and understand the contract Particularly the case for AS-based contracts often very heavily amended Use appropriate tools to help you do this Contract administration manuals prepared by lawyers / consultants Software-based management tools but make sure they re customised to suit the contract Software bring-up / reminder systems to make sure contractual dates are met (can be as simple as an Outlook / Google Calendar) Insist upon compliance with the contract 9

10 Know the project Keep accurate, detailed and well-organised records Includes site diaries, photographs, s, telephone conversation file notes If a dispute arises they will be needed instantly Have clear lines of internal communication to ensure issues are escalated early Try to maintain a good working relationship with the contractor and collect information obtained from all levels of the organisation Often potential disputes are flagged by on-site staff before management formally submits 10

11 Be ready Know how to identify a payment claim under the Building and Construction Industry Payments Act 2004 (Qld) Look for a reference to the Act s name on an invoice / payment claim often hidden in the footer or similar Discourage contractors from submitting claims under the Act unless there is a genuine dispute Very short timeframes apply to responding to these claims (usually 10 Business Days, subject to recent reforms) Start preparing for a dispute before it arises look for early warning signs (eg deterioration of relationship, increase in variation / EOT claims, stonewalling) Always comply with contractual processes and insist the contractor does the same 11

12 Avoiding Disputes Dispute Resolution 12

13 Key Considerations Cost and Time efficiency Formality Interim vs Final Flexibility Binding vs Non-Binding Supervised Control Legislated Expertise of neutral party Confidentiality 13

14 Avoiding Disputes Dispute Resolution DRBs / DABs Benefits Pitfalls Informal Promotes open communication between the parties Encourages mutual problemsolving environment Cost effective Prompt dispute resolution Preserves positive work relationships Not binding (usually) Establishment costs 14

15 Allens is an independent partnership operating in alliance w ith Linklaters LLP. 15