Commercial Contracts Guidance 

17 August 2018

Dear Members
 
Events in the past 18 months with the failure of major construction companies in New Zealand has highlighted a poor understanding of contracts and how special conditions affect their risk.
 
The Registered Master Builders Association through the Vertical Construction Leaders Group and the Commercial Working Group earlier this year engaged Hazelton Law to develop guidance for contractors entering into contracts. 
 
The guidelines were officially launched at Constructive 2018 on Thursday 16 August.  You can access the guidance here. 
 
The guidance serves as a useful reminder for members to fully understand their obligations when signing a contract. Some useful advice for members is as follows:
 
1.         Be familiar with the standard forms in use and the concepts that they employ.  Be prepared to use the contract in your favour.  It is surprising how many Contractors are uncertain of the obligations and rights contained in standard forms.
 
2.        Other than reading the contract, a Contractor always needs to understand why it is being asked to sign something that is a change to the standard form?  For who’s benefit is this?  What risk attaches to the amendment?  Can and should that risk be priced?
 
3.         As a matter of course, collect, generate and communicate information so that a Contractor can justify its entitlements (whether time, money or something else) as the Contract requires.

4.         Be aware of the standard of work that a Contractor is required to achieve.  
 
5.         Understanding the role of third party Contract Administrators.
 
We believe the guidance note will be of value to members who want to understand how special conditions can affect the extend of the risk and liability. We appreciate that even with the best efforts it still can be difficult to ascertain the full extent of your obligations. Accordingly, we recommend that if members are ever in doubt to seek professional legal advice. The guidance is not a substitute for legal advice.
 
If members do have any queries, please contact Matthew Aileone Policy and Advocacy Manager matthew.aileone@masterbuilder.org.nz