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Legalese: Avoid signing up to prohibitive terms in framework agreements

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It is sensible to establish the nature and number of third parties who might be expecting warranties or third-party rights, says Mark Klimt

Despite the clampdown on public spending, the government is seeking a radical increase in construction of new homes - at its lowest level since the 1920s.

Talk is still of global recession but a crucial difference between the situations in the UK and the United States is that here there remains a chronic shortage of housing, whereas in the US there is a surplus of property. That has meant property has (largely) held its value in the UK and the fact that the need for new homes is not going to disappear may also provide a key route out of the present national economic vice. To follow it, however, will need the meshing of some tried and tested solutions, with the best that recent technology has to offer.

After World War II the urgent need for house rebuilding was met in large measure by pre-fabs. They were cheap, quick and basically successful, but the asbestos roofs, for example, which commonly featured would be outlawed today. Also, much more is expected of our buildings in the 21 century and ever more complex services systems need to be accommodated. The challenge is to find an inexpensive new generation of pre-fab units that can be assembled quickly on site to provide buildings that can perform to a sophisticated level and keep within the myriad procurement rules, mainly emanating from the European Union. In this, the industry is assisted by CAD and in particular the use of systems such as BIM which enable the project to be constructed (virtually) off-site and problems to be addressed before the ‘kits’ are brought to site.

Housing associations are now the largest employers of construction teams for affordable housing. As their sphere of influence grows, they also often get involved in private sector schemes and anyway frequently behave like a developer. Whether, though, involved in the private sector or in social housing projects, there are certain universal characteristics of such housing projects that are likely to increase their prospect of success.

Housing associations will, for example, frequently issue framework agreements to prequalifying consultant practices with whom they have established a good working relationship. An architect signing up to such an arrangement will obviously want to be satisfied that the terms required of it are reasonable and are within its insurance policy.

Key to that, therefore, will be to avoid signing up to prohibitive terms such as absolute obligations that may be outside the architect’s influence. It will obviously be important for constructions of this nature to achieve NHBC or equivalent certification but this will also be dependent on matters other than within the control of the architect so the architect should not assume sole responsibility for this, nor should it assume responsibility for achieving higher standards than those compatible with the contracted services.

It is also sensible for the architect to establish the nature and number of third parties who might be expecting warranties or acknowledged third party rights from it; projects of this kind involve multiple occupancy and the architect will not want to be obliged to enter into warranties with numerous individual domestic tenants.

If a co-operative and interactive process is being promoted then the architect is also entitled to hold out for a net contributions clause (limiting its responsibility for joint loss to the part that it caused) on the basis that each member of the carefully selected team should stand by its own work.

So, traditional ‘sensible’ contracts to implement systems which have their roots in post-war Britain, but updated with the latest available technology. What can go wrong?

Mark Klimt is a partner at law firm DWF Fishburns

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