Demolition Works: Some Contractual Issues

The legal issues arising out of the contractual provisions for

demolition works are not quite as simple as might first be

apparent. First, the form of contract needs to be chosen: two

principal proprietary forms of contract are available, as

follows:-

NFDC: National Federation of Demolition

Contractors Form of Direct Contract 2000 is demolition-specific and

designed to cover all aspects of demolition works (rather than

standard construction works), but unsurprisingly is fairly

demolition contractor 'friendly' (in respect of risk

allocation);

JCT: though the JCT Minor Works Construction

Contract 2007 does not cater specifically for demolition

activities, it is relatively straightforward and less biased (than

the NFDC form) towards the contractor.

A prudent employer will probably wish to amend one or other of

these contract forms either to make them less contractor

'friendly' and/or to make them demolition industry

specific.

However, where demolition works are being carried out prior to

main building works under a more complex transaction (such as an

NHS LIFT, BSF or PFI project), which involves a wider range of

interested parties (including perhaps a local authority or NHS

primary care trust), more complex contractual arrangements may be

necessary or at least unavoidable. In such circumstances the

demolition arrangements are typically structured in one of two

ways:-

back-to-back contracts: under a head-contract

with the public authority, the private sector partner (SPV)

undertakes to carry out the demolition works, but simultaneously

enters into a contract on broadly identical terms to flow-down its

obligations to a specialist demolition contractor. Such 'back

to back' arrangements are designed to ensure that: (a) the SPV

can flow-up appropriate obligations (such as payment for the works

and undertakings not to put the SPV in breach of its obligations

under the demolition contract) to the public authority; and (b) the

public authority can flow-down appropriate obligations (such as

covenants relating to the use of the land) to the SPV.

Derogations from the market norm allocations of risks and

obligations would need to be negotiated on a project-specific

basis. The risk of insolvency or other default by the demolition

contractor is likely to be of particular interest to the other

parties;

licence for works: alternatively, the public

authority might grant to the SPV a licence to carry out the

demolition works, authorising the SPV to enter into...