How to deal with conflicts in contract documents

A Claims Class student recently contacted me for some advice regarding conflicts in contract documents. The Engineer always instructed the Contractor to go by the most stringent of the conflicting documents. The student asked if this was the correct approach. This is often the default position of engineers or contract administrators. I disagree with such an approach, so I thought that it would make a useful blog topic.

The first place to try and resolve conflicts in documents is the contract. This will enable you to see if there is an order of priority of documents included. If, for example, the specification is deemed to be a higher priority than the drawings, then we should generally follow the specification. However, this is a simplistic approach and is not always appropriate. Let’s look at a few examples.

Contract documents should be regarded as being mutually complimentary. But, there are two categories of problems that may arise when interpreting the contract documents. First, there may be inconsistencies and conflicts that occur within a document or between documents. Second, there may be omissions in the documents where the subject matter is covered either inadequately or not at all.

Conflicts in Contract Documents 

Sometimes we have conflicts in the same document or set of documents. One contract clause may say one thing and another something else. Furthermore, the specification may contain contradictory information in different places. In this case, we must adopt the accepted interpretation that the specific should control the general. This approach assumes that the general applies unless specifically contradicted. Here, it is a matter of a clause that goes right to the point versus one that generally discusses a particular circumstance or requirement.

Inconsistencies in Contract Documents

Drawings are sometimes created inconsistently. When this happens, the more detailed drawing should usually prevail over the general drawing. Similarly, a large scale drawing will take precedence over one drawn at a smaller scale. If the drawings are of equal detail, the most current of the two drawings should usually take precedence. The trade for which the drawing is prepared should also be considered. For example, plumbing details indicated on the plumbing drawings should prevail over deviations from or omissions of that work in drawings made for other trades. It is not uncommon for the drawings to indicate one thing, and the specifications, another. This may be dealt with in the contract by stating the order of precedence.

Omissions from Documents

No set of contract documents has ever been 'complete', and it is unlikely that one ever will be. The law typically requires that the documents be ‘reasonably complete'. They should also be competently done as is the norm for the profession. Therefore, omissions must be judged against that standard.

The first place to look for something omitted from either the drawings or the specifications is elsewhere in the contract documents. Thus, apparent omissions from the drawings may be covered by text in the specifications, and omissions or ambiguities in the specifications may be covered by details in the drawings. This is consistent with the viewpoint that the contract documents are complementary.

One additional point that may be important in individual cases is that the courts will tend to construe an ambiguous provision against the party who was responsible for drafting it. Thus, if the Contractor’s interpretation of a drawing or a part of the agreement or specification is reasonable, the Contractor’s interpretation may prevail over the Employer’s (as the party who caused the item to be drafted). This is based on the rationale that the party who drafted the item could have had it any way it wanted and if it did not draft a clear provision or produce a clear drawing, the other party should not be made to suffer unreasonably.

Dealing with Omissions

One of the ways that courts deal with omissions in documents is to infer that certain terms are included, though not explicitly stated. The attitude of courts (and their willingness to do this) has varied among jurisdictions and according to the types of documents involved. Courts are usually quite willing to find certain terms implicit in construction contract documents. However, express terms and conditions will preclude a court from inferring different terms and conditions.

Another method that the courts use to fill in gaps in the contract documents is to find implicit terms and conditions according to custom and usage in the industry. This could cover many items. It might even be used to decide which of the parties was responsible for a particular contractual event. Thus, who bore the risk of that event occurring or not occurring, as the case may be.

Conclusion

It is therefore important for the Engineer to examine all the documents before deciding on conflicts and omissions in the contract documents. They should also judge each case on its own merits.

If you need any help with any of the issues discussed, you can sign-up to one of our courses here.

 


interim claims

10 Things Construction Gets Wrong When it Comes to Claims

Inadequately expressed claims are one of the leading causes of time-consuming and costly disputes. Avoid common mistakes to ensure acceptance of claims.

In this post, we set out ten common reasons that claims end up as disputes and offer best practice tips so you can ensure you do better. Take a look at the following, have you fallen foul of them? Are you constantly looking out for them so you can avoid them?

Common Mistakes

  1. Contractors wait until the end of the project to submit claims, instead of submitting claims when entitled to, as the project progresses.
  2. Contractors include several delay events into a single consolidated claim instead of preparing separate claims for each delay event.
  3. Contractors do not give notices of claim within contractual timeframes, and notices do not contain necessary information.
  4. Claims do not contain an adequate examination of cause, effect, and entitlement to justify the claim.
  5. Claims are not adequately substantiated to prove that the claim is just.
  6. Engineers and contract administrators do not follow their contractual obligations to respond to claims and attempt to reach agreement.
  7. Both claims and responses to claims are poorly expressed, so the recipient has difficulty in understanding the claimant or respondent’s positions.
  8. Delay analyses to demonstrate extensions of time are not performed following good practice.
  9. Cost claims are poorly demonstrated and substantiated.
  10. Those tasked with preparing and responding to claims are inadequately trained and qualified.

Whilst very common mistakes, these are all avoidable. They are all things you can keep an eye out for and minimise or even eliminate to ensure project success.

If you would like to learn how to submit successful claims and achieve quick resolution on projects, take a look at our e-courses.


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Change Can Be Uncomfortable....But it's Inevitable

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Justice - Avoiding Disputes and Claims

How To Avoid Disputes From the Outset

Hewitt Decipher Partnership recently presented a webinar on international arbitration. Panel members included a barrister, an arbitrator and a solicitor. They were joined by HDP employees who provide expert advice to legal professionals working on construction disputes. The aim was to look at how to avoid claims.

Whilst these professionals earn fees from disputes, the overwhelming consensus was that the best way to deal with disputes is to not have them in the first place.

So, what can we do to avoid disputes right from the start of the project?

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The Difference Between A Claim to the Engineer & A Claim in Arbitration?

A student recently asked, "is there any difference between a claim submitted to the Engineer and one submitted for arbitration?" My response was along the lines of “Yes, there frequently is, but there shouldn’t be”.

The Scenario:

Let me explain why by describing a very frequent scenario related to claims.

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Claims class student online training

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Construction and Contract News 2019

We are looking ahead to 2020 and back on the past year. What has changed and what should we be looking out for in the world of construction contract and claims? We take a look in this round-up of construction and contract news from around the world…

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Construction contract FIDIC 2017 notice of claim

How to Ensure you Avoid Costly and Time-Consuming Disputes on your Projects

We all want to avoid disputes on our construction projects. But it seems we fail to learn from lessons of the past. ARCADIS have just published their annual Global Construction Disputes Report 2019. It makes interesting, but, not altogether surprising reading.

This year, the top three reasons for disputes are:

  1. Owner/Contractor/Subcontractor failing to understand and/or comply with its contractual obligations;
  2. Errors and/or omissions in the contract document;
  3. Failure to properly administer the contract.

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A blog subscriber recently asked for some advice on the setting up and organisation of a Dispute Adjudication Board (DAB). They specifically wanted to know what to do if one of the parties is trying to frustrate the procedure by refusing to agree to the appointment of the DAB. The following advice is relates to the FIDIC contracts. However, it may be equally applied to other forms of contract that have dispute board provisions.

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Inadequately Expressed Claims: the second most frequent reason for disputes

ARCADIS have recently published their Global Construction Dispute Report 2018 and unsurprisingly “Poorly drafted or incomplete/unsubstantiated claims” is reported as the second most frequent reason for disputes. This annual report has consistently ranked the same reason highly for several years, so it seems that the industry is not learning the fact that the onus is on the claimant to properly prove his case and that failure to do so will be costly and time-consuming.Read more