Aspects of general conditions of contract which give rise to dispute

Abstract

The incidence of disputes has long frustrated effective management and completion of Construction Contracts. Very little material is available on the causes of disputes and how the respective General Conditions of Contract used in this country handle circumstances relating to these areas of dispute. Causes of dispute can be divided into two categories, namely Primary Causes and Secondary Causes. The Primary Causes are Time, Cost and Quality and the Secondary Causes are Risk. Variations and Alterations, Delays, Claims, Adverse Physical Conditions, Extensions of Time and Payment. All the secondary causes of dispute are risk related and a consideration of risk is therefore of utmost importance with regard to avoidance of disputes. To avoid disputes. risk has to be fairly allocated amongst the parties involved in the Contract. Before this can be done, however, risk first has to be identified and an attempt has to be made to reduce it. For a long time General Conditions of Contract have been used in this country which have been closely allied to British General Conditions. The General Conditions of Contract (1982) (Blue Book) is very closely allied to the I.CR General Conditions of Contract (4th edition). The latter contract was revised in 1979 and was generally considered to be more favourable toward the Contractor. It has become known as the LCE. General COnditions of Contract (5th edition). Both the General Conditions of Contract (1982) and the ESKOM General Conditions of Contract have recently been reVised, and on comparison of the clauses relating specifically to the major causes of disputes mentioned preViously, were found to be more biased in favour of the Employer and more closely allied to the C.S.R.A. General Conditions of Contract 1986, also widely used in South Africa The major reason for having drawn this conclusion is that in the case of GC C '90 and ESKOM '90, all claims have to be made in accordance with a general claims clause which involves a procedure which subjects the Contractor to unfair requirements and allocates risk unfairly on him. The General Conditions of Contract 1990 do, however, represent improvements in certain respects, namely with respect to clauses relating to Care of Works, Excepted Risks, Valuation of Variations, Monthly Payments, Time of Payments and Correction or Withholding of Certificates. No set of General Conditions can provide a completely equitable situation and each has its pros and cons. This thesis should provide an easy reference as to which are the major causes of disputes and as to how the respective General Conditions of Contract in this country handle the circumstances relating to these areas of dispute. It will also put forward recommendations on how disputes can be avoided and how certain clauses of the relevant documents can be improved.