Construction Contract Signed - What Next For An Owner?


Driving a construction contract to signature can sometimes feel like reaching the finishing line of a very long, uphill race. The tender process for the contract may have included a pre-qualification stage or a multi-tiered tender review, protracted dialogue with one or more tenderers to reach a preferred bidders stage, and then a lengthy negotiation to finalise the contract-drafting.

Owners might be forgiven for preferring to take a hands-off approach to their construction contract, simply stepping away until such time as they need to take over the project for operational purposes.

Unfortunately this approach can land an owner in hot water. He may risk, by his own actions or inactions, decreasing (or even eradicating) any rights of claim he may have under his construction contract or, worse, trigger claims from his contractor. It really is crucial for owners to read their contract, understand their obligations, and comply with them in every respect.

It is not possible here to discuss the full range of obligations that an owner would need to comply with under his construction contract - in any event many such obligations will be particular to the drafting of the contract itself. However, we know that an owner will face a typical range of major obligations.

I Just Follow the Contract, right?

Owners may be interested to know that the obligations they have under a contract are not just those expressly contained in the contract itself. Contractual terms may be broadly split into express contractual obligations and obligations which are imposed upon the parties by implication at law. Owners need to be fully aware of these unsaid or unwritten obligations.

Let us Cooperate and not Hinder

The 'prevention principle' is an implied term under English law, to the effect that neither party may do anything to hinder the other from performing the contract. Or from another perspective, no party is able to take advantage of his own wrongdoing. Beware the overbearing owner who is hit with a whole host of claims on completion of the works for having hampered the contractor's progress through his own excessive involvement.

Owners may also face the argument that they have a positive obligation to do anything that may be necessary to enable the contractor to perform his own duties. This is effectively an obligation to cooperate, albeit a limited one in English law: "to the extent that it is necessary to make the contract workable"1, so that such an obligation might be a 'best...

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