Construction Law in South Africa – Introduction Price and Obligation Arrangements
In any construction project, there is an arrangement between one party and another. It is imperative to use the right contract for a particular work arrangement. To this end, it makes sense to have attorneys that understand construction law in South Africa draft or, at the very least, review the contract to ensure that it meets the legal requirements. The main types of contract price arrangements are briefly discussed below.
The Contractor Is Commissioned to Complete Specific Work
With this type of arrangement, the contractor is hired to complete the construction project according to the design and specifications of the employer. Under construction law in South Africa, the contractor carries the lowest risk in the arrangement. In this type of arrangement, the price can be adapted because the design is not yet complete at the time of the commencement of work.
The Contractor Is Responsible for the Design and Completion of Work
Here, the contractor carries more risk than when commissioned to complete work designed by the employer. With this type of arrangement, the price is normally fixed and payable in a lump sum for the design and completion of the construction project. However, a limited range of price adjustments can apply for events that the contractor cannot control.
The Contractor Is Responsible for the Design, Procurement, Material Sourcing, Engineering, and Construction
Under construction law in South Africa, this type of contract arrangement means that the contractor carries the most risk in the employer-contractor arrangement, and it is the most expensive price arrangement. The contractor is held responsible for the entire project. The price is normally fixed with some adjustments allowed, but fewer than with other construction price arrangements. With the higher risk for the contractor, the price is also higher, therefore making it the most expensive type of arrangement.
Attorneys who are experienced in construction law in South Africa can help clients to choose the most appropriate contracts for their particular work arrangements. In deciding which contract to use, clients need to consider factors such as the ones discussed below.
Which Rights?
Where the client decides to make use of a non-standard contract (one that is customised for their purpose), it is important to consider the rights that each of the parties has. One has to ask which entitlements can one party have against the other.
What Are the Responsibilities?
Responsibilities refer to the obligations of the party that is entitled to specific rights. What must the party do or not do in return for their rights?
What Are the Risks?
The risks refer to what can happen or fail to happen that may cause more liability for one or both parties in the arrangement. The contract stipulates which risks are carried by each of the parties, which ones are shared, and which ones are transferred from one party to the other in terms of the construction contract.
The Contractor’s Rights and Responsibilities
Contractors and sub-contractors can also have the contracts drafted instead of making use of the commissioning client’s contracts. To this end, we highly recommend that you make use of the services offered by our team in terms of construction law in South Africa.
The contractor has the right to be paid on time and according to the terms of the contract, and should have the right to charge interest on late payments. In addition, the contractor should be able to claim an extension to the deadline for work according to terms specified in the agreement. The site of work must be accessible to the contractor, in order to ensure that work can commence and finish on the agreed-upon time, as stipulated in the agreement.
The contractor normally has the right to cancel the agreement if there is a major breach by the employer, and also has the right to appoint sub-contractors.
From the above information, it is clear that agreements for construction work in South Africa should meet specific requirements. Such agreements are complex and best drafted by attorneys who are experienced in matters of construction and contract law.
Call us on 011 234 2125 for legal assistance in setting up, reviewing, and disputing construction contracts in South Africa.
Disclaimer: This article is for information purposes only and does not constitute legal advice. You are advised to consult with us before using/relying on this information. The information is relevant to the date of publishing – March 2019.
