Contract

30 January 2020

Build UK Guidance to Support a New Normal in Contractual Practice

Build UK has issued new guidance designed to help the construction industry implement the Build UK recommendation on contract terms published last year.

A New Normal in Contractual Practice provides a more detailed rationale for why the six contract terms identified in the recommendation are problematic and should be avoided.

It is widely recognised that current contractual practices can actively inhibit collaboration, create inefficiencies, and result in risk being passed down the supply chain. The Build UK recommendation, which was developed with the support of legal counsel to ensure compliance with competition law, seeks to form a new common ground between clients and the supply chain, with the focus on managing these risks rather than passing them on. It has been met with support from across the sector, including endorsement by the Construction Leadership Council, with Co-Chairman Andy Mitchell saying it is ‘a first step towards fairer and more responsible contractual practices’.

The newly-released guide will now help all parties to implement the recommendation. For each of the following terms in the recommendation, there is context explaining the relevant term, the reasons why it should be avoided, and recommendations on how to more effectively manage the underlying issues:

• Fitness for purpose
• Unquantifiable risks
• ‘Specified Perils’
• Breach of contract
• Uncapped liabilities
• Performance securities.

Former Build UK Chairman Mark Castle, who has championed the development of the recommendation, said:

“This new guidance is a huge step forward. By helping all of us to understand the dynamics underlying these six terms, the rationale for avoiding them, and how exactly we can solve the challenges in a more collaborative way, it can help to create a ‘new normal’ in contractual practice. Ultimately, by avoiding these terms, the industry can spend less time negotiating contracts, reduce the incidence of disputes, and become more sustainable in terms of productivity, innovation and profitability.”

The recommendation is non-binding and Build UK members are free to negotiate their own contractual terms with their clients.