The JCT Standard Building Contract 2011
author of many books for the construction industry, he is Director of David Chappell Consultancy Limited, is a specialist advisor to the RIBA and RSUA and regularly acts as an adjudicator.
The JCT Standard Building Contract 2011
Part I Preliminaries
1.1 What is a contract?
Everyone is subject to the law of the country in which they live. In general, the law is divided into two parts: criminal law and civil law. If we break the criminal law, we may find ourselves having an interview with the police. There are also Acts of Parliament that make doing things or failure to do other things a criminal offence. The Health and Safety at Work Act 1974 is an example of one such Act. Most people understand that very well.
The civil law governs the way we should behave to our neighbour. We all have rights and duties to each other. They are sometimes set out in Acts of Parliament and sometimes they are derived from the judgments of the courts. Law that is found in the judgments of the courts is usually referred to as the 'common law'. These are duties and rights that are there whether we like it or not.
In general 'tort' is a civil wrong for which the person suffering the wrong is entitled to take action through the courts for compensation. It is based on the duty that everyone owes to one another. There are many wrongs that most people will recognise and that will come under the headings of 'tort'. Such things as negligence, trespass, nuisance and defamation are concepts in general use; although not always properly understood.
As well as these legislative or common law rights and duties, two people may agree additional rights and duties to each other. For example, I may agree to buy a clock from a shop for Pds. 100. I have a right to receive a clock, but a duty to pay Pds. 100 for it to the shop. The shop has a right to the Pds. 100, but a duty to supply the clock. Where there are agreed rights and duties on both sides we call it a contract. Of course there are all kinds of other things that also might have to be agreed, such as the style, make and colour of the clock and the date on which I must pay. That is why even the simplest contracts can become quite complicated.
Breach of contract
We usually say that two people have 'entered into' a contract or that a contract has been 'executed' if documents have been signed. Contracts are legally binding, which means to say that usually once the contract is agreed, neither person can say: 'I've changed my mind now' without serious consequences. If one person does something that the contract does not allow or fails to do something that the contract requires, it is referred to as a 'breach' of contract.
For example, if I only pay Pds. 95 for the clock, or if the clock is supplied in a different colour or style, or if it does not work. These are all breaches of contract. It is not always appreciated that it would also be a breach of contract if I was supplied with a better clock worth Pds. 150 when we had agreed a particular clock for Pds. 100.
The person who is not in breach is usually referred to as the 'injured party' or the 'innocent party'. The injured party is entitled to receive payment from the person in breach to make up for the breach. That is called 'damages'. The amount of money to be paid is normally calculated to put the injured party back in the same position as if the breach had not occurred. Sometimes that is easy, for example, I could be ordered by a court to pay the additional Pds. 5 together with any other costs I had caused as a result of my failure to pay the full Pds. 100 for the clock. Sometimes it is not possible, but a court tries to do what it can to rectify the situation.
If the breach of contract is particularly serious, it may be what is called 'repudiation'. That is a breach that is so serious that it shows that one of the persons wants nothing more to do with the contract. Extreme examples would be if I refused to pay anything