Standard form of contracts seen as creating “unwarranted complexity”
Construction disputes are tipped to rise in the near-term, according to law firm Russell McVeagh.
In a survey of the construction industry, the law firm found that 61% of respondents believe construction disputes will continue to increase over the next two years.
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“Respondents identified a number of anticipated causes of disputes, particularly for the next year or so, with poor quality documentation the most likely cause of dispute identified,” the firm said in its survey report. “The perception of unfair risk allocation in construction contracts continued to be of concern for many contractor respondents, who identified it as a key cause of construction disputes.”
Issues with the standard form contracts in use in the industry, and the complications caused by the use of multiple tailored or “bespoke” contractual clauses, were also seen as creating “unwarranted complexity and increasing the risk of parties not understanding what they were agreeing to.”
“With the high costs of construction projects, which are also expected to continue increasing, coupled with more disputes, we encourage all industry participants to pay close attention to areas such as risk allocation and contractual terms to ensure there is clarity from all parties at the outset of a project,” said Polly Pope, a partner in the litigation/restructuring & insolvency practice of Russell McVeagh. “The more construction sector participants arm themselves with knowledge of risk points and how to resolve issues when they do happen, the better prepared the sector will be for facing the challenges that lie ahead.”
