Tony Bingham Rather than trying to sort out disputes when they occur, wouldn’t it be easier to just write clear and fair contracts so that rows don’t occur in the first place?
I had finished my talk to the Chartered Institute of Building at Hatfield. I had waxed enthusiastic about how good we had become – industry and lawyers alike – at managing disputes in construction contracts.
And it’s true, we really have come a long way these past 10 years – there’s a whole range of options on the supermarket shelf to sort out rows, disputes and claims. Yes, yes, I also know that we need to improve – the improving ought never to stop.
But then somebody made a quiet remark that struck home. He said: “It’s all very well to be cock-a-hoop about managing the dispute, but what’s to be done about stopping the dispute from ever starting?”
I scrambled around: “Do you mean partnering?”
“No, no,” said my inquisitor. “Partnering falls apart once someone sees the need to cover his backside or exploit the contract. Folk eventually revert to type once the dispute matures.”
What he meant was more simple than partnering. “There will be no dispute to quarrel over, if the contract is simple, fair, clear and well-known.” He was trying to describe a pie in the sky.
We have oodles of different rules in hundreds of contracts to be applied to deciding disputes. There are disputes about the rules of deciding disputes
“If there was, say, one subcontract document only and it was easy to understand and standard, then folk would know when they were banjaxed, folk would know when they were banged to rights.” Same, too, if there was simply a sale of goods, supply-only contract – one industry standard for those that buy building materials every day and a fair, simple, clear and well-known set of rules. And there’s more – a simple main build-it contract with add-ons for builders who agree to design.
The more you think of this quiet idea and recognise that construction people detest being caught up in disputes, the more attractive the notion of keeping it simple becomes. Imagine one simple system for managing change orders and variations. One simple system for extension of time, valuing interim accounts, identifying what’s to be built with which materials at one price. One simple system for identifying the programme.
Instead we have the opposite. Do you know why we have a plethora of so-called standard forms? And do you know why those forms are “adjusted” and amended? Do you know why there are hundreds of homemade subcontract forms compiled by main contractors? Do you know why there are thousands of sale and supply-only small print terms and as many different lumps of small print as there are suppliers and manufacturers? Because the lawyers have persuaded their clients that the way to avoid disputes is to compile a set of terms that will lock the other fellow in the contract out of being able to make a claim.
But it doesn’t work. Honest. The vague, complex set of rules designed to sweep up all the twists and turns of fate are almost always open to argument. It’s almost impossible to get small print to trump all quarrels. And if it doesn’t work, why not think again? Remember, the idea is to stop disputes by having simple, well-known, fair rules across the industry.
The point is that it is far more difficult to find arguments when the contract is well-known, fair and simple. And if you can’t find an argument, you don’t have a dispute.
Come and sit with me for a few days. You will soon see what makes disputes. Hours are spent (expensive hours), trying to fathom what a clause, paragraph, sentence, or word means once put into a real live event. None of that would be needed if the contract was well explained, fair and simple. Hours are spent arguing about how machinery in different documents is supposed to work – certificates, valuations, flow of money, set-off, and abatements. We even have oodles of different rules in hundreds of contracts to be applied to deciding disputes. There are disputes about the rules of deciding disputes.
It is tempting to blame the institutions and trade associations. They could help, but the real player is you. Choose. Keep going the way you are now, saying “disputes are ordinary and detestable” or try to think through how to stop them. If you, via your contract, come over as fair, decent, and straight, you might get the same attitude coming back at you.
Tony Bingham’s regular blog can be read at www.building.co.uk/blogs