Relationship difficulties

Emperor Kang-hsi of China would not have agreed with our own Lord Woolf about “Access to Justice”. He believed the Chinese to be so litigious by nature that an efficient legal system would encourage law suits to an undesirable degree. His solution? Keep the courts corrupt and inefficient so the citizens would settle their disputes by other means.

We have chosen a different path. The new procedural rules for the civil courts cut through the undergrowth of procedural law and make access to the courts possible for those without deep pockets. Lawyers’ games are frowned on. Up-front honesty is the priority. Statements of truth will be signed by clients, not lawyers. “Consumers” will surely benefit. But how will the hard-nosed commercial community be affected? Will the game of suing each other in a spirit of mutual trust and co-operation initiate a new dawn of fair dealing in the world of disputes? We see a similar process at work in the real world, where partnering (which is to do with behaviour and attitudes, as opposed to contracts) is being developed within, and in spite of, a legal culture of complex and claims-oriented contracts. Just as the courts are moving away from adversarial litigation in favour of an approach that subordinates all its procedural powers to the “overriding objective” of dispensing justice – so there is a desire to downgrade the small print among the construction community.

Lawyers have urged caution on the writers of new contracts. Partnering charters, it is said, are best kept away from the contract documentation. Each occupies its separate territory, the contract conditions being the “hard” legal framework, the charter representing the “soft” aspirations of the participants; both are of importance, but only the contract conditions are to be consulted if the parties end up in court.

In the Cardiff Bay case referred to by Tony Bingham (14 May), these two worlds came close to colliding.

  The issue before the judge – was there or was there not a contract in force and binding on the parties in the absence of a signed contract? – was hardly novel territory.

The novelty was that the judge had to rule on that issue against the background of a partnering charter that the parties had (undeniably) signed up to.

The contractor claimed that its representative negotiating the contract terms had no authority to conclude the contract at the crucial meeting. But, reasoned the judge, had that been the case, his superior would surely have told the client at the time. A few days before, the partnering charter had been signed at a seminar, where the parties had resolved to “promote an environment of trust, integrity, honesty and openness”.

• A partnering agreement is not contractual, but it affects contracts

• How it does this is still unclear

• It is possible that partnering may be used to evade strict contractual terms

  Although not legally binding, the charter was designed to set the standards by which the parties were to conduct themselves, and the judge considered its terms in reaching his decision that a contract had been formed.

  The judge was here interpreting the parties' behaviour in the light of their own “overriding objective” of open dealing.

  So, what are the implications for the partnering charters of the future? Will contracting parties want to have the hard legal obligations read in the light of the soft charter aspirations? How will a court react to a situation where a contractor fails to comply with a strict obligation to give contemporaneous notices of delay but still expects extensions of time and loss and expense to be awarded? Or take the situation contemplated by the judge in the Cardiff Bay case itself: the plaintiff had reservations about the programme, which was very tight, but put it forward “within the partnering ethos”. This, it was thought, “would naturally have led to a sympathetic approach to questions of extensions of time”, whether for Relevant Events as defined in the JCT conditions “or for other reasons beyond its immediate control, such as being let down by a supplier or subcontractor”.

  Being let down by a supplier or subcontractor is, of course, unlikely to be a ground for an extension of time under JCT conditions. What would happen if those expectations of the contractor met with an unsympathetic response? The most obvious scenario in which these latent conflicts could surface is where one party seeks to bring the contract to an end.

If a contractor serves a notice determining the contract because of a prolonged suspension of work on site that was the fault of neither party, would the court uphold it as complying with the contract conditions, or strike it down as inconsistent with a spirit of trust, integrity, honesty and openness? Parties engaged in partnering should be prepared to give the courts a clear signal as to the significance of the charter in the context of the contract. One approach would be to disregard it when interpreting the parties’ legal obligations. At the other extreme, the court would be invited to have it in mind when interpreting the contract conditions, much in the way the judge did in Cardiff Bay.