Framework agreements allow commercial parties to set down their commercial aims and objectives without working out detailed terms or using lawyers, and before designs and contractual procedures have been finalised.
They can also allow parties to create a more formal and detailed contract covering long-term arrangements on pre-agreed terms for future work. David Mosey rightly highlights the fact that the NEC and JCT have not achieved a full and detailed set of terms and conditions, by way of a formal term contract, in their recently published framework agreements (30 September).
However, to suggest that all framework agreements need to be “bankable” is to narrow their focus to such an extent that they will be of greatly diminished value. On the contrary, they can assist commercial parties in setting out what they intend to achieve – a roadmap, if not a fully functional contract structure.
Although I share David’s view that there is often little to be gained by adopting non-binding agreements (especially when the courts are more than capable of finding a way of considering a non-binding agreement in a way which can influence and affect interpretation of formal terms), the JCT and NEC should be congratulated on giving the construction and engineering industries the ability to pull an agreement ‘off the shelf’ to set out what they intend to achieve.
I anticipate that David would agree that, in the event that either of the recently published agreements were adopted, further work may then need to be done to cement legal and commercial relationships, in particular to comply with the EU Consolidated Directive, if required. Accordingly, if the NEC or JCT think they have published the panacea of all framework arrangements, they are probably misleading themselves. In particular, items in the JCT FA, such as David highlights, which can create tensions between the FA itself and the JCT building contract ‘beneath’ it are unhelpful to the industry that the JCT is intending to serve. Nevertheless, whilst the JCT may not welcome such a suggestion, such discrepancies can be addressed by amendment of the standard form building contract adopted.
Overall, the NEC and JCT forms should be welcomed. They do what a framework agreement is supposed to: they begin a relationship, agree how to work together and simply create, as the name suggests, a framework within which more detailed terms and conditions, specifications and actions will follow. All the industry needs to do is to take note of lawyers’ health warnings, be aware of commercial and legal risks – and sincerely want to work constructively.
Iain Murdoch, Construction & Engineering Associate, Taylor Wessing