Finance & Law

Finance & Law

Part A - Q2

When and why is it legally and practically advantageous to write construction contracts down? Are there any circumstances where there are disadvantages to writing a contract down? Illustrate your answer by reference to appropriate case law and legislation.

Answer

We are currently living in a dynamic world where the rules and regulations are constantly changing. This shows that the only thing which is constant in this environment is change. To balance our work with the basic need of time we have to closely look towards the well being of our society. In order to save ourselves from future problems we must write down all the transactions (McInnis, 2001). We must sign different agreements and contracts so that we can save our self from future problems. Same is the case with construction contracts. It is highly advisable that all the construction contracts must be written. Here arises a question that why is it advantageous? What are the legal and practical advantages which are associated with writing of contracts? But before going towards the advantages of writing construction contracts we must understand what construction contracts are?

Construction contract is a specialized contract which is a sub-class of contract law; it gives safety to all the parties that are involved in the process of construction. In the projects related to construction there are many parties involved directly or indirectly (Uher & Loosemore, 2003). Construction contract not only protects the rights of all the parties (Architects, lenders, Contractors, Sub-Contractors, and Engineers) but also define their responsibilities. Any lapse in performance by any of the party can cause delay in the completion of the project and it can also become a source for new expenses (Winch, 2010).

Legally it is mandatory for the parties to enter into a contract before starting a construction work. The advantage which lies to the parties involves the dispute settlement. In case if any of the party into contract is unable to fulfill its duty then it can be held liable for damages and suit can be filed against it (Bramble & Callahan, 2000). If we talk about practical advantages then it helps all the parties to identify their duties and responsibilities and if any of the party deviates from its work it can be guided through written agreement. It helps the parties to keep a track of their duties and performance which results in quality work (Bower, 2003).

Conclusion

From the above discussion it can be said that the writing of construction contract is in the favor of all the parties to the contract (Eggleston, 2009). It not only provides the basic guidelines on behalf of which we can figure out the rights and responsibilities of the parties but it can also help the judiciary and court to make a fair decision if any breach of contract is made. If we move away from the legality, than we can find it a guide towards the achievement of final goal. It also helps to improve the quality of the ...