Do any industry bodies, organizations or associations produce standard form contracts for use within the construction and engineering sectors? Are any international forms of contract ever used? How is the form of construction contract to be used selected?
In relation to public works, there are standard form contracts enacted by the Public Procurement Office (Gabinete da Contratação Pública), but the use of such forms is not mandatory.
In addition, some private associations of the construction and engineering sector provide auxiliary standard form contracts to their members.
Usually, FIDIC forms are only used by major contractors and in international contracts.
The Presidential Decree No. 201/16 of 27 September 2016 approved the Standard Terms of Reference to Public Works Contracts.
The Australian infrastructure market is dominated by standard form contracts, which are prepared and issued by various industry bodies.
These standard forms are used by both government and the private sector, have a widely understood risk allocation and have in many cases been the subject of judicial comment.
The most commonly used standard forms are:
Some forms of contract more commonly used outside Australia are also occasionally used on Australian projects, such as:
While most standard forms are periodically updated and reissued, many of the commonly used forms are more than ten years old. As a result, they are typically amended by the insertion of special conditions in order to tailor or adjust the risk allocation, take account of legislative change or to address project-specific needs. It is now unusual for any major project to be delivered using a standard form contract which has not been extensively amended. Many large employers have their own ‘standard form’ contract which incorporates detailed special conditions to address project and risk requirements and specific commercial drivers.
Whilst some government agencies have now developed template contract forms and guidelines for delivery of alliance projects, there are no commercially available standard form contracts applicable to forms of delivery such as alliance contracting, public-private partnerships (PPP) or for hybrid forms such as ‘Early Contractor Involvement’ (ECI). These are generally prepared on a project-by-project basis. Some agencies which use these methods of procurement frequently will tend to use the same form of contract repetitively.
Most government agencies which procure infrastructure have suites of pro forma or standard contracts for use on their projects. For example, the federal Department of Defence has an extensive suite of contracts for use on the whole spectrum of defence infrastructure projects.
With the exception of FIDIC and NEC, other international forms of contract are rarely used in Australia.
Various industry bodies, private and public organizations and/or associations supporting the Belgian construction and engineering sector provide standard form contracts to their members, although the use of such forms is not mandatory. International forms of contract, such as some of the FIDIC contracts, are increasingly, although not currently commonly, used in Belgium.
The selection of the form of an engineering and/or construction contract is generally dependent upon a number of factors, which include but are not limited to:
In practice, there are no standard form contracts for use within the construction and engineering sectors that are drafted by a single industry body or association. Construction contracts are drafted in accordance with provisions of the Law on Obligations.
The use of standard form contracts on construction projects in Canada is quite common. One of the most widely used sources of standard forms is the Canadian Construction Documents Committee (CCDC). The CCDC publishes a number of different types of construction contracts that they have developed in consultation with representatives from all sectors of the construction industry. CCDC contract forms are endorsed by the Association of Consulting Engineering Companies (Canada), the Canadian Construction Association, Construction Specifications Canada and the Royal Architectural Institute of Canada (RAIC).
In addition to the contracts published by the CCDC, certain professional organizations in Canada produce their own industry specific standard forms. The RAIC, for example, publishes a standard form contract between consultants and architects and a standard form between architect and client, among other standard forms. Certain provincial bodies produce their own standard forms, and various international standard forms may also be adopted in Canada.
The two most commonly used standard form construction agreements are FIDIC's Conditions of Contract for Construction (the New Red Book) and China's Standard Form of Construction Contract. The selection of the contract often depends on the nationality of the parties. Generally, local contractors prefer to use China's Standard Form of Construction Contract as it is more concise. However foreign developers are generally more familiar with FIDIC's Red Book.
There is no national body or organization which produces standard form contracts for the construction and engineering sector. However, the General Practice (Usages) in Construction which were adopted in 1977 are still applicable as customary law source. The form of contract depends also on whether it is concluded with a public body (where specific regulation on either public procurement or public-private partnerships applies) or between private persons, where often the FIDIC model agreement is used.
Industry forms of agreement are expressly permitted by section 1751 of the Civil Code and the following forms of contract are used:
The Council of Czech Construction Companies operates under the auspices of the Ministry of Industry and Trade. It was created by an association of construction businesses in the Czech Republic, ČKAIT, and the union of very small, small and medium-sized employers in construction)
In 2007, the Ministry for Regional Developmentissued general commercial conditions for building works.
In Denmark, the use of standard form building contracts goes back more than 100 years.
There are four standard form building contracts that are used in Denmark:
These standard form building contracts are updated versions of the formerly used AB 92, ABT 93 and ABR 89 documents, which were drafted in accordance with the recommendations made by a Committee set up by the Danish Ministry of Housing with a cross section of representatives from the construction industry.
International forms of contract (such as FIDIC) are used in Denmark, however, primarily within the off-shore/energy sector and/or large-scale infrastructure projects.
Various industry bodies, private and public organisations and/or associations supporting the French construction and engineering sector provide standard form contracts to their members, although the use of such forms is not mandatory. International forms of contract, such as some of the FIDIC contracts, are increasingly although not currently commonly used in France.
The selection of the form of an engineering and/or construction contract is generally dependent upon a number of factors, which include but are not limited to: the timeframe of the project; the expected costs and extent of unexpected costs: whether or not the project is private or public in nature.
The Construction Contract Procedures (VOB) were developed by the German Procurement Committee for Construction Works (formerly the German Procurement Committee for Public Works Contracts). Due to the fact that the general law on contracts for work and services contained in the Civil Code is only of limited suitability in equally satisfying the interests of the contractor and the principal in construction law, the VOB was put in place. It is regarded as a useful instrument for properly reconciling the interests of the parties to a construction contract (principal and contractor).
The VOB consists of three parts:
Provisions released by FIDIC (the International Federation of Consulting Engineers) have limited relevance for construction contracts in Germany since the VOB/B has been shown to be a useful instrument. Public authorities are obliged to use the VOB/B in construction contracts they enter into. However, in contracts for engineering, procurement and construction services and in relation to projects in foreign countries FIDIC is widely used by German contractors.
Institutional standard forms are issued by public and local authorities and sanctioned by the construction institutions.
Examples include the:
No Hungarian standard form contracts exist. In recent years, FIDIC and FIDIC-based construction contracts have become more common and are now quite widely used, especially for construction works awarded through a tender and/or public procurement.
The form of construction contract to be used is based on the parties’ agreement. However, in certain cases, such as public procurement-based construction projects, the use of a standard form contract may be required by the employer.
The Royal Institute of Architects in Ireland (in conjunction with the Construction Industry Federation and the Society of Chartered Surveyors) produce the most commonly used forms of building contract, known as the “RIAI forms of contract”.
The subcontract form is published by the Construction Industry Federation and the Subcontractors and Specialists Association.
Engineers Ireland (in conjunction with the Association of Consulting Engineers of Ireland) produce the most commonly used forms of engineering contract, which are known as IEI forms of contract.
Government forms of contract (GCCC, formerly GDLA) are now generally used for government construction projects, or contracts entered into by public bodies.
On larger project work, international forms of contract are occasionally used and amended, including FIDIC, NEC and JCT.
The form of construction contract used depends on:
For larger construction projects, contracting entities often use standard amended forms, drafted and negotiated either by in-house lawyers or external counsel.
Typically, the party procuring the work (ie the land owner or land developer) selects the form of the contract.
There are no construction organizations which typically produce standard forms of contracts for construction projects. However, International Federation of Consulting Engineers (Fédération Internationale Des Ingénieurs-Conseils) (FIDIC) standard forms are used for projects in Italy.
Two standard forms of construction contract are recognized.
This standard form contract is usually used by parties intending to undertake civil construction works. A D&B contract is a construction project system where a single entity acts as both designer and builder.
Under this structure the design and the construction are contracted to different entities. In addition, in the following activities the construction itself is divided between different entities:
A disadvantage of this structure is than no single entity assumes all of the construction risk.
Yes. There are standard contract forms for private works prepared by a Japanese joint association of contractors etc. (‘Contractors Association’). Although the use of such forms is not mandatory, in most cases, these forms are, sometimes with several amendments, used by the parties when entering into a construction or engineering contract. For public works, there are also commonly used standard contract forms which are prepared by the MLIT. It is not common to use any international contract form for constructions in Japan.
In general, Dutch construction law does not require that contracts are standardized. General conditions are often declared applicable to the contracts. These general conditions are often uniform or standardized.
The relationship between client and contractor are often made subject to the following general conditions:
The relationship between client and architect or structural engineer is often subject to the following general conditions:
Standard form contracts are often used in the construction industry in Nigeria. The forms may be amended depending on the requirements of individual projects but the choice of the particular standard form contract depends on the size, complexity and nature of the project.
The standard form contracts used in the Nigerian Construction Industry includes the following:
Several organizations, representing both contractors and clients, co-operate to develop general contract terms which are incorporated in the industry standard documents.
International standard documents, including FIDIC, are seldom used.
In Poland industry bodies, organisations or associations don’t produce standard form contracts for use within the construction and engineering sectors. Generally, construction contracts are created by the parties’ negotiations and no standard forms are used.
With reference to international forms of contract (such as FIDIC) such forms are sometimes used in investments with high capital expenditure and involving foreign parties. Otherwise, international forms of contracts are rarely used in Poland.
In relation to public works, the public sector is required to use a standard form contract which accords with the provisions of the Public Contracts Code. In relation to private works, the parties have to use a standard form contract which accords with the provisions of the Civil Code and, in addition, with the Public Contracts Code in relation to specific matters (eg price, additional works, etc). FIDIC forms are only used by major contractors or on international contracts.
In Romania there are no standard contracts provided by the law which must be used in the construction and engineering sectors, however, international forms are often used. FIDIC contracts are the most frequently used:
The provisions of the Commercial Code concerning contracts for work are mostly of a non-mandatory nature so parties are free to contract. On the basis of experience, construction companies have evolved their own standard form contracts that they tend to rely on.
International forms of contract prepared by FIDIC are becoming increasingly relevant in Slovakia, although they have not been adopted in statute. The ideas of FIDIC are being promoted by an interest association of legal entities called the Slovak Association of Consulting Engineers.
There is no standard form of contract in Spain for construction projects.
International forms of agreement, such as FIDIC contracts, are still rarely used in Spain, and then mainly in projects where they are a requirement when international financing is involved.
An association called the Construction Contracts Committee (Byggandets Kontraktskommitté) prescribes three main standard form contracts:
International forms of contract, such as FIDIC, are rarely used in Sweden.
For public procurement, the standard agreement pursuant to the Rule of the Office of Prime Minister on Procurement B.E. 2535(1992) generally applies to any construction contract made with governmental bodies. In the scheme of public procurement, the contractor would usually not be allowed to change or adjust the significant terms and conditions of the standard agreement. In cases where the changes in material terms and conditions under the standard agreement are necessary, an approval from the Office of the Attorney General is required.
With respect to a private scheme, although standard agreements have been produced by various organizations, parties may enter into construction contracts pursuant to standard agreements or otherwise. The parties’ intentions govern the duties and liabilities between the contracting parties which are subsequently reflected in the terms and conditions of the construction contract.
The most popular standard forms of construction contract are from FIDIC, the French-based International Federal of Consulting Engineers. Consultancy contracts tend to be bespoke forms. Abu Dhabi’s Procurement Law provides that where government departments are procuring construction and/or engineering services, standard forms issued by the government, based on FIDIC contracts, are to be used.
There is no local standard suite of construction contracts that are used in Dubai. Generally, the Dubai construction market has used an amended FIDIC style of contracts however JCT and other forms of bespoke contracts are used, depending on the size and nature of the deal. It is important to note that in contracting with Local Government Departments in Dubai, Law No. 6 of 1997 concerning contracts of Government Departments in the Emirate of Dubai applies. Certain provisions about who can contract with the government departments, specific tendering requirements and performance bond stipulations are all provided for under the law.
In the UK, the use of standard form building contracts goes back more than one hundred years. Initial collaboration between the Royal Institute of British Architects (RIBA) and the then federation of construction employers led to the first standard form building contract. These bodies subsequently formed the Joint Contracts Tribunal (JCT) which is now the main UK body that produces standard form contracts, guidance notes and other documentation for use in the construction industry.
The main rival to the JCT family of contracts is the New Engineering Contract (NEC) and its suite of Engineering and Construction Contracts (ECC) which has been endorsed by the UK Government and is now being used more in government contracting.
The main professional bodies that govern the activities of construction consultants also produce contracts for the appointment of their members to provide design and/or consultancy services:
International forms of contract (such as FIDIC) are rarely used in the UK.
In the UK, the use of standard form building contracts goes back more than one hundred years. Initial collaboration between the Royal Institute of British Architects (RIBA) and the then federation of construction employers led to the first standard form building contract. These bodies subsequently formed the Joint Contracts Tribunal (JCT) which is now the main UK body that produces standard form contracts, guidance notes and other documentation for use in the construction industry. In Scotland, the Scottish Building Contracts Committee (SBCC) adapts and publishes Scots law compliant versions of the JCT suite of contracts. The latest edition of these contracts was published in 2016.
The main rival to the JCT/SBCC family of contracts is the New Engineering Contract (NEC) and its suite of Engineering and Construction Contracts (ECC) published by the Institution of Civil Engineers. This has been endorsed by the UK and Scottish governments and is now being widely used in government contracting. The latest edition of these contracts (NEC4) was published in June 2017.
The main professional bodies that govern the activities of construction consultants also produce contracts for the appointment of their members to provide design and/or consultancy services, namely:
International forms of contract (such as FIDIC) are also used in the UK, typically in the infrastructure and energy sectors. The latest edition of the FIDIC contracts was published in 2017 (although modified 1999 versions are more widely used in the UK, as the 2017 versions are less popular with developers and funders).
The Ministry of Development of Communities and Territories of Ukraine (was renamed from the Ministry of Regional Development and Construction of Ukraine in August 2019) as well as the Cabinet of Ministers of Ukraine are the main bodies which produce standard form contracts for use in the construction and engineering sectors. The Standard Contractor's Agreement in Capital Construction approved by the Order of the Ministry of Construction, Architecture and Housing of Ukraine No. 3, dated 27 October 2005, is the main standard form of construction contract recommended for use in construction matters. Generally, the parties are free to choose any other form of contract provided it contains all the mandatory provisions envisaged by the law.
International contracts, such as FIDIC contracts, may be used in Ukraine subject to adaptation to mandatory Ukrainian legislative requirements. Due to this fact, FIDIC contracts are rarely used in Ukraine (except for public infrastructure projects financed by international financial institutions). At the end of 2016, the Cabinet of Ministers of Ukraine adopted Decree No. 1065, which determined the status of the engineer in course of construction of public roads, which simplified adaptation of FIDIC contracts to Ukrainian law. According to the above Decree, the engineer performs its functions with regard to terms and conditions of the relevant FIDIC contract.
The form of construction contract to use for a specific project can be selected in a multitude of ways. An architect, engineer, or contractor preparing a proposal for an owner may present the owner with a form document to consider. In those cases, the owner then may ask its lawyer to review and revise the document as appropriate. A proactive owner, however, may prepare a form of contract, preferably before the owner seeks bids, and then include that contract with a request for proposals. Owners that construct projects regularly may have their own original manuscript forms of contract, rather than relying on published forms.
Standard forms of contract are published and sold in the US by organizations associated with the construction industry. Among the most popular are the following:
AIA documents are by the American Institute of Architects. The AIA forms of agreement are the most widely used and the most heavily critiqued in the United States. Prepared by a professional association for architects, some perceive that the AIA forms allocate risk in favour of the architect and to the detriment of the owner. As a result, the AIA forms are generally modified by the parties before execution. The AIA provides a multitude of form contracts, however, they are most often used for general building and not heavy construction.
EJCDC documents are by a group comprised of the American Council of Engineering Companies, the National Society of Professional Engineers/Professional Engineers in Private Practice, and the American Society of Civil Engineers-Construction Institute. The EJCDC documents are most often used by construction projects driven by professional engineering, frequently called ‘horizontal’ projects.
ConsensusDOCS were created by a group comprised principally of general contractors and subcontractor groups, although they have been endorsed by some other groups. The ConsensusDOCS appeared in 2007 and purport to represent a consensus by all of the parties to a construction project, including those concerned with the allocation of risk in the AIA documents. ConsensusDOCS promote themselves as the successor to the Associated General Contractors of America documents.
FIDIC document are by the Fédération Internationale Des Ingénieurs-Conseils. Although well-known internationally, FIDIC forms of contract are rarely used in the United States.
The Construction Industry Federation of Zimbabwe (CIFoZ) is the construction industry association and it has established the National Joint Practice Committee (NJPC) Standard Contracts 2000. These contracts are based on FIDIC Contracts and have been approved by FIDIC.