DB LECTURE 6

PART 1 : CONTRACTS

1. Why should Architects be concerned with the Building Contract?

#1
• How is a Contractor’s obligations to build the development in accordance with the
Architect’s design intent actually established?
1. The Contract establishes rights and obligations, which the parties subject themselves to by agreement.
• How does the Architect have ‘power’ / ‘authority’ to protect the Employer’s
interests involving the realisation of a wonderful architectural design?
2. The Architect is often appointed to ‘administer’ the contract and is bestowed powers and duties .

#2
• As 'contract administrator' with bestowed powers, the Architect assumes a
position of 'leadership'
... setting the tone/culture of the project,
... establishing ethical standards,
... applying professional competence and technical know-how in the design &
supervision of the Works (c.f. Articles 3, 4 & 5 wrt Architect, QS & Consultants ...
'design' and 'supervision' roles).
• Which also gives the Architect status in the wider construction industry.
#3
• Professional competency in contract administration is a significant part of
'architectural services'
... business opportunity.
... (c.f. SIA Scope Matrix: Design, QP, CA, PA/DM)

2. Contracts
a. In a contract between two parties, there is an agreement in
consideration of mutual exchange of things of value (e.g. a
transaction)...
b. • ... both parties mutually executing or refraining from doing
something, where that conduct results in something of
detrimental value to the executor or beneficial value to the
other party.
c. • For example: one party makes a promise to the other for
‘performance’ (e.g. payment in “$”) ... in return for:
‘performance’ or promise of ‘performance’ (e.g. to construct
the building).
d. Both parties have ‘rights’ and ‘obligations’ (e.g. duties) under
the terms of a contract ...
i. ... expressed or implied,
ii. ... stipulated or as reasonably determined.
iii. • For example:
_expressed (mentioned) terms specifying materials
_implied (non-mentioned) terms for SOPA applicability
_Implied (non-mentioned) terms by custom
 _implied (non-mentioned) terms by the court (eg prevention)
_stipulated timeframes for payment
_reasonable timeframes for responding to RFIs
e. “Unilateral” Contract:
i. A contract in which only one party makes an express promise, or undertakes
a performance without first securing a reciprocal agreement from the other
party.
ii. In a unilateral, or one-sided, contract, one party, known as the offeror, makes
a promise in exchange for an act (or abstention/refrenation from acting) by
another party, known as the offeree. If the offeree acts on the offeror's
promise, the offeror is legally obligated to fulfil the contract, but an offeree
cannot be forced to act (or not act), because no return promise has been
made to the offeror. After an offeree has performed, only one enforceable
promise exists, that of the offeror.
iii. E.g. Lost dog poster w reward.
f. “Bilateral” Contract ...
i. An agreement formed by an exchange of a promise in which the promise of
one party is consideration supporting the promise of the other party.
ii. eg the Buyer promises to pay the Vendor if the Vendor promises to give an ice
cream, OR vice versa!
iii. ‘Building / Construction Contracts’ are a mode of bilateral contract: ... the
promise of construction of a building in consideration of a promise for
payment.

3. The ‘formation’ (or making) of a contract requires 4 elements’ :

1. • Offer ] Assent*
2. • Acceptance ]
3. • Consideration
4. • Intention for legal binding
*- ‘formation’ of a contract is underpinned by a requirement for mutual assent – a
meeting of the minds (as to what the agreement is and involves) .... usually
satisfied by offer + acceptance]

a. • Offer (or Proposal)

i. (ie to ‘perform’ an obligation of executing or refraining from that you
are not already obliged to do under law, e.g. to construct a building
development, in return for $.
ii. • WHAT? : as described (eg design / specification of a particular
‘type’ and ‘quality’)
iii. • WHEN? : within ‘time’ as stipulated or inferred (or otherwise implied
as ‘reasonable’ time)
b. • Acceptance
i. (ie concludes an agreement by accepting the offer – but must ‘mirror’
the offer without any change in the terms of the offer – else it
becomes a counter-offer!)
c. Offer & Acceptance ... the agreed terms ...
i. • Eg Employers 'rights' (thus Contractor’s ‘obligations’) might involve:
• The realised/built design (ie the building)
• Quality of construction
• On time
• Within an agreed price
ii. • Eg Employer's 'obligations' (thus ‘Contractor’s rights) might involve:
• Provide full & unobstructed possession of Site
• Make (progressive) payments
• Supply information on the design
• (avoid 'prevention')
 d. • Consideration
i. ... is the cause, motive, or benefit that induces one to enter into a
contract.
ii. ... the mutual benefit or exchange of something of legally recognized
‘value’ -- the legal detriment ... to do something or refrain from doing
something, that the party was not previously legally obligated to do
or refrain from doing...
iii. ... it could consist of either some benefit received by the promisor, or
some detriment to the promise.)
iv. Point of Note: Consideration is two-ways, thus a promise contained in an agreement is
not enforceable unless it is supported by consideration or it is made in a written
document made under seal (eg a ‘deed’ – a legally enforceable promise, an obligation, to
give something, but without receiving anything in return).
v. Consideration is the 'price' of ... the performance itself (to execute
or refrain) or ... the promise of such performance. Note: If one party's
promise does not actually bind him to some performance (to execute
or refrain), it is an illusory promise, and there is no enforceable
contract.
e. • Intention for the agreement to be legally binding
i. (intention to create legal relations – to be able to legally enforce
rights, such as to sue for damages or specific performance)

4. • Formed / made / exists –vs– void* / nullity (if not done properly,
depends on these situations and agreements when it was made.)
a. • Capacity to Contract (eg age, state of mind)
b. • Certainty or Completeness of Terms
c. • Illegality or contra to Public Policy
d. • some Mistakes (fundamental, by both parties)
*eg “void ab initio” = deemed: the contract never existed from the start!
In practical terms, "void" ("null" – never existed) is usually used in contra-distinction to "voidable"
(existed, but rolled back 'as if' it did not exist, and thus unenforceable), the principal difference being
that an action which is 'voidable' remains valid until it is avoided ... it is not ' void ab initio'.

Often a defence when being sued for breach of contract ... asserting that there has never really been a contract !

5. Validity –vs– invalid / avoidable / rescindable

a. Contract exists, but is not valid ... thus unenforceable / set-aside Rescinded (cut off & rolled back
'as if' the contract did not exist) -- still acknowledges that there is a contract, but invalid contract
– diff from VOID which does not acknowledge that the contract exists at all.
b. • some Mistakes / Misunderstandings
i. Compare with the contract basis of a ‘meeting of the minds’ to come to a
mutual understanding / agreement.
c. Misrepresentation **
• A contract which is induced by a misrepresentation may be set aside, and may give rise to an
action for damages. A misrepresentation occurs when one party to a contract makes a false
statement of fact to the other contracting party which induces the latter to enter into the
contract.
[See: http://www.singaporelaw.sg/sglaw/laws-ofsingapore/commercial-law/chapter-8]
• mis- [or 'false'] representation can be 'innocent' or 'fraudulent' misrepresentation. Both modes
may lead to rescission of contract, but not necessarily to damages (eg see Redgrave v Hurd).
d. • Duress or Undue Influence or Unconscionable Conduct

Often a defence when being sued for breach of contract ... asserting that there is no valid contract !

But the aggrieved party must activate the rescission by opting to rescind and promise or execute return of all benefits obtained under the
contract to the other party, then can sue for restoration to the condition that the parties were in prior to the contract formation.

6. • Discharge ... the ending of the Contract

(If not deemed void ab initio or voided by rescission) ...
 - by Performance (completion)
- by Termination (premature ending) (Repudiatory Anticipatory Breach)
- by Termination (Actual Breach)
- by Termination (Frustration e.g. impossibility)
- by Termination (Agreement – Consent)
- by Termination (Agreement – Terms e.g. by notice)
- by Termination (Agreement – Terms e.g. by expiry/lapse)
- by Termination (Conditions precedent or subsequent)

7. • Operating –v– Inoperative (exist =/=function)

a. • Subject to expressed ‘conditions’ before it takes effect (before it is 'turned
–on'). / have not started @ the date.

8. Summary: The life of a contract:

1. [
C O
N T
R A
C T

IS 'MADE'] (material date of acceptance of offer)

2. [CONTRACTOR'S 'EMPLOYMENT' (IE SUPPLY OF GOODS/SERVICES) BEGINS] (automatically, unless

otherwise stated)
... pre-Works preparatory activities, eg Programme, Make-up of Prices, PB, Prelims, etc ...
... extension/revision of "Contractual Commencement Date", if any ...

===========================================================

3. ['WORKS' COMMENCE] (on "Contractual Commencement Date")

<<<Take "Possession" of Work Site>>>
... "Contract Period" + "Delays" & "EOT" - in which "Works" are carried out.

4. ['WORKS' COMPLETE] (ie upon date certified in 'substantial' "Completion Certificate" or "Certificate of
Re-Entry")

------------------------------------------------------------------

5. [MAINTENANCE / DEFECTS LIABILITY STARTS]

("Maintenance / Defects Liability Period" commences automatically upon completion)
... (note: includes initially Employer's own "set-up" activities {insured as a construction site}) ...
<<<"Handover" or "Re-Entry" = Give up "Possession" of Work Site>>>
("Maintenance / Defects Liability Period" ends)
... residual rectification of defects until all dealt with ...

6. [MAINTENANCE / DEFECTS LIABILITY ENDS]

(ie upon date certified in "Maintenance Certificate")
 ============================================

7. [CONTRACTOR'S 'EMPLOYMENT' (IE SUPPLY OF GOODS/SERVICES) ENDS]

(automatically, unless otherwise determined OR terminated)
... Works finished by another contractor (if 'termination' Contractor's employment applied) ...
... final performance obligations (eg final payment with LD/set-offs etc) ..

8. ['DISCHARGE' OF CONTRACT BY FULL PERFORMANCE]

– if not prematurely discharged by 'termination'.

9. Contracts (or particular terms) can be –

• expressed (verbal: spoken/oral &/or in writing)
• i.e. terms were communicated in the 'offer' and considered when 'accepting'.
• implied
• implied contracts (or terms in a contract) are by either;
• (i) implication of the law (Courts or Statute) – either applied in the absence of an
expressed contract / term that is necessary for the contract to work or as a
mandatory (eg statutory) application.
• (ii) implied in fact (eg conduct of the parties)
• expressed: orally —or— purely in writing !
• If the contract is purely spoken, it can be hard to enforce without evidence of what terms
were agreed (such as a reliable witness, conduct, written records, or other evidence).
_Hence most building contracts are in writing (incl. drawings) – to avoid doubt, misunderstandings and
conflicts/disputes.
• Some contracts may need to be in writing (eg for real estate, to mitigate against fraud)
• The "parol evidence rule" requires that testimony of terms discussed in negotiating the
contract cannot alter the meaning of terms determined from a formal written contract
document—but would not preclude recognition of terms 'missing' from the document*.
_Hence some contracts have "whole-" or "entire-contract" clauses .
Priority & precedence of written evidence > oral etc.

10. A written Contract usually comprises:

• The Parties [see in SIA form: “Articles”]
• Recitals [see in SIA form: “Articles”]
• Execution (e.g. signed) [see in SIA form: “Articles”]
• Terms of Contract [see in SIA form: “Conditions”]
• Schedule [see in SIA form: “Appendix”]

11. Considerations in drafting a contract:

• Contractual Freedom – for parties to agree to terms (is the usual policy / approach of the Courts). **
• Case law and statutes need only inform us on how to draft a contract - ie ‘construction’ of the
contract (reflecting the parties contemplations at the point of making the contract) - so as to accept
or avoid needing to impose an “implied term” in the absence of an expressed contractual provision (eg
for 'business efficacy').
• To allocate commercial risk and reflect commercial policy
• The machinery of the contract – the procedures and provisions that need to be administered – the
agreed terms on ‘how’ to go about performing obligations.

Drafted “Terms" of contract

(i) stipulate 'how' to execute the Contract,
(ii) prevent 'implied' terms (by Courts / Law), --filling in the gaps
(iii) allow changes/variations ...
to appreciate the standard forms of the contract -> sometimes need
supplementary terms and requirements.
ELSE: "A" in consideration of "B", need only be:
(a) within reasonable time (ie justifiable timeframe)
(b) in a reasonable manner (ie safe & proper method)
(c) to a reasonable quality (eg “workman-like” standard)
NOT as ‘stipulated’ or ‘specified’ !
... deal with arising 'changes' and 'risks' (in design requirements, in site conditions &
environment & surroundings, laws & authorities, economic & industry conditions, etc) ....
• (eg progress/interim payment v single/one-off/full-&-final payment)
• (eg extension of time)
• (eg unilateral orders to vary/change the work scope, quantity/extent, quality, type, methods, use, etc)
• (eg independent certifier)
• (eg agreement of dispute resolution mode).

** Note on CONTRACTUAL FREEDOM

“Given their basic attachment to contractual freedom, the courts are reluctant to
override express terms for contracting parties.” [Wikipedia]
• Contracts are instruments of party autonomy – in the sense of freedom of contract, or self-
arrangement of legal relations by individuals according to their respective will.
• Parties are ‘free’ to agree to terms – however commercially ‘unfair’ or ‘imbalanced’ they may turn out
to be.
• The Courts will not generally save a party from hardships of contractual obligations – parties must
‘keep their promise’... so negotiate / bargain wisely !
• Only specific contract types might be allowed by the Courts for implying of terms in law to protect a
vulnerable party;
• although much of this common law is now covered by statute,
eg: ‘Consumers’ may get some protection under statute from ‘unfair’ terms in standard form consumer
contracts (ie where they have little bargaining power to overcome imbalances in rights & obligations,
such as exclusions of liabilities)
– but this does not generally extend to cover deals between business entities.

• Contracts involve allocation of 'risk'

• (e.g. risk of weather delaying works, or risk of underground conditions affecting time &
cost)
• Note: the higher the 'risk' / uncertainty faced by the Contractor, the higher the price
usually is (or he pulls out of the bargaining altogether).
• The allocation of risk becomes a commercial decision.

12. Standard forms of Contract:

Eg standard forms of building contract:
• SIA
• PSSCOC
• JCT, FIDIC, NEC, etc
• Note: standard terms for use by businesses differ from standard form contracts (sometimes referred
to as an adhesion contract or boilerplate contract) presented to a ‘consumer’ (an individual person) on
a standard form on a "take it or leave it" basis, and give the consumer no ability to negotiate because
of their unequal bargaining position.

13. Standard forms of Building Contract

(available for use in the industry, but not mandatory)
Some benefits:
• Establishes familiarity of terms (thus confidence and efficiencies) in the industry
• Often published by a ‘neutral’ party (eg SIA), so can balance ‘advantages’ and
‘risks’ – without bias – for sensible commercial/industrial practices and economic
health.
• Availability and experience/competence of Contract Drafting resources &
knowledge base
• Manageable review / updating processes
eg to verify; (i) comprehensiveness; (ii) administrability and usability; (iii) addresses legal and business environment
& needs

Modes of Procurement (different forms of contract for different modes)

For example:
• ‘Build-only’ mode #
• D&B (Design & Build / Construct)
• DBO (Design-Build-Operate)
• PPP / PFI (Public-Private Partnership)(DBFO)
• Partnering / Alliances
# Note: Architect is engaged by the Employer (Developer), either: (i) directly [preferred] (ii) under a
Lead Consultant (as a sub-consultant, despite »Arch Act obligations to do/direct on Archi design/drawings
»Architect acting as Contract Administrator)
// Architects typically only "administer" the building contract between the developer and builder, as an independent certifier, under the
'traditional' mode of procurement.

Notes on Design & Build contracts:

• Architect is employed by Contractor, not the Developer (although could be ‘novated’).
• Architect must deal with professional/ethical issues: design in best interests of the Developer, but
also in best interests (eg cost & time & performance) of the employer-Developer.
• Architect is (usually) not Contract Administrator, as that is usually an Employer’s Rep (eg PM, or QS),
(but sometimes is asked to give professional (QP) endorsement/certification of bone fide payment
amounts, so Developer can draw-down funds from a financial institution).
• SIA D&B Contract – a different approach.
• Often the prelim design is done for the D&B Contract’s tender: ie Consultant Designers purely
engaged by the Contractor.
• If ‘novated’ mode, the Consultants do the design (say up to DC level) under engagement of the
Developer, for the D&B tender purposes, then develop the design after being novated to the
Contractor. (???)
• Other variants where QS and Architect are retained by the Developer, and only C&S and MEP are
under Contractor.
BUT, for Architect as ‘Contract Administrator’ we are looking primarily at ‘traditional’
modes of building contracts.

Where do Contracts ‘fit’ in the scheme of a Building Project?

• Project inception ... eg see PMI
• Engage Consultants [if ‘traditional mode}, Arch, C&S, M&E, QS, etc.
• Design Brief
• Sketches, Concept Designs
• Schematic & DC (eg URA submissions)
• Developed & BP (eg BCA submissions)
• Tender Documentation
• (eg drawings: working drawings, schedules, samples, models, etc)
• (eg specifications: specs, prelims, bills, etc)
• Tender Addenda/Corrigenda
• AWARD OF CONTRACT (LOA) ... Contract Administration starts!
• Contract Documents (usually ‘converted’ from the final Tender set)
• Variations (changes/amendments/revisions to the Contract Documents)
• COMPLETION (related to TOP, Handover, Set-up & Move-in, etc)
• DEFECTS RECTIFICATION & FINAL PAYMENT ACCOUNTS
PART 1A : LETTER OF ACCEPTANCE
1. What is a Letter of Acceptance?
• An instrument that expresses or records in writing the acceptance of an offer to
form a contract.
• Sometimes referred to as a "Letter of Award" (of the building contract).
• Not to be confused with a 'Letter of Intent' (which is not an 'acceptance'! of the offer)
(sometimes LOI is intended to form a preliminary contract for advanced works; otherwise it
just serves as advanced notice to get the offer-maker ready to be awarded the contract
and start working asap).
• An LOA is typically the culmination of a tendering exercise ... getting an 'offer' from
builders for the Developer to 'accept' (hence forming a contract).
• Open v Closed* Tenders
• *Shortlisting (Preferred, Pre-qualification, Balloting, etc)
• Competitive v Negotiated Tenders
• Tender Documents and Addenda & Corrigenda
• Tender Queries and Replies to
• Tender Briefing, Site Showround
• Tender Period and extensions
• Mode of tender submission (tender box, electronic, etc)
• Opening Tender Submissions
• Tender Questionnaires and Interviews
• Tender Evaluation and Tender Report (recommendation)
• LOA

Typically, the 'Contract Documents' consist of:

• LOA
• Tenderer's tender submission/offer
• Tenderer's Price (& terms)
• Tender Documents [usually provided under ITT]
• 'Front-end Docs' (eg Conditions of Contract, Works Pricing Bills, Preliminaries Pricing Bills) and
• Drawings and Specifications (which define the scope of the Works)

2. What is the form and content of an LOA?

1. FORMALITIES ...
(1) Date (once advised by the Employer and more than 14d before commencement to allow for programme {Cl. 4} and
make-up of prices {Cl. 5})*.
(2) To: XYZ Construction Pte Ltd [& 'address'--as to be stated in the Articles]
(3) Cc: Employer and Consultants; From: Architect
(4) Description of project (building & other works) & location as to be stated in the Articles (to avoid any
misunderstanding).?

2. OFFER & ACCEPTANCE ...

(5) "As instructed" by Employer (not “I”)(not 'accepting the offer' ourselves as a party of the contract, even if acting
as an agent of the Employer and not doing the accepting as an agent 'for & on behalf of' the Employer)(+ state the
source of our 'authorisation' to announce the acceptance) ... we "notify" the successful tenderer of the Employer's
acceptance:
(6) ... Employer [of 'address'--as to be stated in the Articles] has accepted your tender offer [date/reference] at
[Contract Sum].
(7) ... *(with clarification as to how and when the 'acceptance' is given; through this LOA or only recorded in this
LOA--to ascertain when the contract was made).
(8) Your offer is deemed to incorporate and comply with the requirements of the tender documents under the
invitation to tender and any addenda/corrigenda thereto (without deviations, exclusions or qualifications).
(9) Affirmation that this LOA creates a legally binding contract between the parties (but may mention that formal
Contract documents may be subsequently executed, including signing of the Articles).

3. CONFIRMATION OF TERMS ...

(10) The Contract Commencement Date shall be [give for all phases and allowing for 14d before commencement to
allow for programme {Cl. 4} and make-up of prices {Cl. 5}].
(11) ... and the corresponding contract/phase period(s) and date(s) for completion can be stated.
(12) List of Contract Documents (including the tender documents, addenda/corrigenda, tender offer submission(s) and
this LOA) – but maybe not the 'replies to tender queries'.
(13) State the Employer's Representative, Architect and Quantity Surveyor (practice + person) and Consultants,
especially if not included in the tender documents [as to be stated in the Articles]

4. OPTIONAL: DIRECTIONS ...

(9) Direction: for Contractor to confirm his 'Contractor's Representative' [to be named in the Articles]. Reminder: on
14d before commencement for submission of programme {Cl. 4} and make-up of prices {Cl. 5}).
(10) Reminder: to obtain Insurance [and Performance Bond, if applicable] (and restate any supplementary terms
prohibiting work to proceed until insurance is in place; without cost or time implication).
(11) [Other arrangements, e.g.: Kick-off Meeting; Permits to Work (BCA, MOM, etc); Site Possession Arrangements;
Site Utilisation Plan; Contractor's Personnel Organisation Chart; Schedules of Rates; Long Lead Time Procurements;
etc].

NOTES:
(A) Do not 'change' terms (from tender documents) or the LOA will become a counter-offer! (So, no need for
Contractor to 'agree' to the terms of the LOA, simply to 'acknowledge receipt' of the LOA--i.e. the 'acceptance' must
be communicated).
(B) It is assumed that the blanks in the 'Articles' and 'Appendix' to the Conditions in the standard for SIA building
contract are filled in for the tender documents, so only the above-mentioned 'Confirmation of Terms' are needed for
the LOA to complete the necessary & essential contract terms.
PART 2: THE SIA FORM OF BUILDING CONTRACT
Building Contracts by SIA:
The Singapore Institute of Architects has currently published the following forms
of building contract:
• Articles and Conditions of Building Contract– With Quantities (fka Measurement)contract
• Articles and Conditions of Building Contract– Without Quantities(fka Lump Sum)contract
• Conditions of Sub-Contract to use in conjunction with the Main Contract
• Articles and Conditions of Building Contract for Minor Works

Other Singapore Institute of Architects publications relating to their forms

of building contract:
• [D&B form]
• ['International' versions]

• Specimen Forms and Certificates for use in conjunction with the Main Contract Conditions
• Guidance Notes on Articles and Conditions of Building Contract

Differences between various forms of SIA contracts:

1. Lump Sum (w/o Quantities) contract:
“… the price is a fixed price not subject to measurement or recalculation should
the actual quantities of work and materials differ from any estimates available at
the time of contracting …” [Art. 2]
ie Contractor takes the risk on estimating the quantity of work and materials,
typically as determined from the drawings and specifications.

2. Measurement (with Quantities) contract:

“… is a contract using Bills of Quantities and is subject to measurement and
recalculation of the price … should the as-built quantities of work and materials
differ from those stated in the Bills of Quantities … [Art. 2]
ie the Contractor’s tender price is based on the quantities stated in the BQ,
typically estimated by the QS.

Lump Sum & Measurement forms of contract:

.... Note that there is distinction between :
1. Lump Sum (ie fixed price, irrespective of difference in as-built
quantities)
2. Adjustable price (by payment based on remeasurement of as-built
quantities).
3. Variations (ie the increase / decrease in Contract Sum on the
value/price of changes)
4. Adjustable price (based on ‘Fluctuation’ of market price rates)

3. Sub-Contract:
Whereas a Main Contract (the Lump Sum and Measurement contracts in this case)
is a contract between the Employer and the Contractor, the Sub-Contract is a
contract between the Contractor and a Sub-Contractor.
The SIA form of Sub-Contract is intended for use in conjunction with the Main
Contract under which the Sub-Contractor is nominated or designated by the
Architect (on behalf of the Employer).

When would you use Lump Sum, and when would you use Measurement?
Some considerations:
• Lump Sum doesn’t require BQ so may be faster*(but diff schs of thought from CLoke) to prepare
tender documents.
• Lump Sum does not require actual measurement of as built quantities by the QS, so may have
advantages in regard to time and resources to administer claims for payment.
• As distinct to BQ, in Lump Sum the Contractor assumes the risk of estimating quantities, but may
factor in ‘risk pricing.’
• Lump Sum (if without ‘fluctuation’ of prices) gives a ‘fixed’ price which may be required by
Developer’s financial institutions

The make-up of the SIA forms of Main

Building Contracts:
• Articles
sets out information about the
contract:
• The Parties (Employer and Contractor)
• The Works (ie description of the development)
• The Contract Administrator (Architect, assisted by QS & Consultants)
• Type of Contract (Lump Sum w/o Qty or Measurement w. Qty)
• Contract Documents
• Interpretation
• Assigns
• Applicable Law
• Appropriate Forum
• [Execution – by seal &/or signature]
• Conditions
» Appendix
The Appendix sets out project-specific
particulars in regard to the standard
Conditions.
PART 3: ORDERS
'Orders' by the Architect:
The Guidance Notes indicate the importance of ‘orders’ :
“power of certification by the Architect, in particular that of interim payment, is very importantly
supplemented by his powers to give orders…”
The Contractor must comply with all written directions and instructions [ie orders] given by the
Architect in relation to the Contractor’s primary contractual obligation to “at all times carry out, bring
to completion, and maintain the Works in accordance with all the requirements of the Contract …”
This is where Architects get power to safeguard the project's design intents & purposes!

1. Authority for architects to command over the contractors (but not unlimited power – only in
relation to the Contractor’s primary contractual obligations…”
2. Power to Certify things
3. Powers to give orders (that the contractor must comply to)

What are the modes of ‘order’ that an Architect is empowered to

make upon the Contractor?
Clause 1: All orders of the Architect shall be expressed to be either
directions or instructions
(types of order differ in the contracts)

principal matters for directions:

• to secure Contractor’s compliance with contract obligation;
(@contractor, I order you to do XYZ…)
» permanent work
» temporary work
» method of working
• to secure reasonably safe and proper methods of working and temporary
works
• to vary the works as a consequence of defective work or other faults
• to vary the permanent or temporary works at the request of the
Contractor (due to difficulties or to avoid excessive costs) *
• to suspend / postpone work and carry out investigations (relating to
defective work or other faults)
• to alter or vary a previous direction
*Note:
1. Contractor bears the risk of construction conditions (eg of site)
2. Employer bears the risk of executing payment (eg the bank used)
... ie the risk of 'difficulty' and 'expense' is borne by the party performing
... unless relieved of such risk through expressed provision of contract.
... eg EOT grounds relieve the liability for delay (on certain grounds, eg adverse weather)
... eg PSSCOC has provision for 'adverse physical ground conditions'.
... hence Cl. 1(3)(c) in SIA-BC: to 'vary' the design to avoid excessive costs.

Guidance Notes advise :

“Broadly speaking a “direction” will be appropriate where what is required
is due compliance with the original contract intention, or …
(a) Securing safe methods of working …
(b) Assisting the Contractor at his request to overcome difficulty …
(c) Dealing with problems caused by defective works or breach of contract
...”

principal matters for instructions:

• to vary the permanent work / temporary work – a variation = to the
contractor’s obligations.
• to vary the temporary works or method of working where the Contractor
would be entitled to use different
• to suspend / postpone work and carry out investigations (where not
relating to defective work or other faults)
• to carry out works or supply materials by NSC/S or DSC/S under a PC
Sum / Item.
• to carry out works or supply materials by the Contractor or NSC/S or
DSC/S under a Contingency or Provisional Sum / Item.
• to alter / vary a previous instruction

Guidance Notes advise :

“… these are the principal situations in which ‘directions’ or ‘instructions’
are likely to be given, but there are many more detailed provisions in the
Contract … and the matters referred to in these sub-clauses are not,
therefore, exclusive.”

What is the difference between ‘Instruction’ and ‘Direction?’

Clause 1 provides that a ‘direction’ shall mean:
• An order
• Compliance with which will not entitle the Contractor to additional
payment or compensation or an increase in the Contract Sum,
• May, in some cases, result in a decrease in the Contract Sum.
(eg Cl. 27(3) ‘Allowance for Defect’)
(eg Cl. 11(3) 'Reduction of Value')
(eg Cl. 12(1) 'Power to Sanction')

Clause 1 provides that an ‘instruction’ shall mean:

• An order
• Compliance with which will mainly entitle the Contractor to additional
payment or compensation or an increase in the Contract Sum,
• May, in some cases, result in a decrease in the Contract Sum (e.g. for
'omissions').

Guidance Notes advise:

“’Directions’ are … given a possible downward, but no possible upward,
effect on the Contract Sum...
On the other hand while an ‘Instruction’ may involve a reduction…, it’s
legal basis … means that in principle it may in an appropriate case result
in an addition …”

Guidance Notes advise:

“the use of the words “direction” in the written order is a clear contractual
signal or early notice by the Architect that no claim will be permitted,
whereas the use of the word “instruction” will mean that no further
procedural action need be taken by the Contractor [ie in reserving rights
to additional payment].

A "Direction" will be used to secure compliance with the Contract and to regularise
unauthorised changes.

But consider that the PSSCOC & SIA MWC do not have 'directions' (only
'instructions' that can cover the purposes of SIA-A&CBC 'directions'):
(hence, if using these contracts, should add on if there should be scope for
additional payment or not)
PSSCOC Sn 19.1 provides that: "The term "variation" … shall exclude any instruction (which would otherwise be a
variation) which has arisen due to or is necessitated by or is intended to cure any default of or breach of contract by
the Contractor." SIA MWC has no "directions" per se, only types of instructions.

How to give an order?

Wrongful order
Note: Clause 1 provides that the Contractor may be entitled to
‘compensation’ if the Architect gives an Instruction or Direction without
power or justification to do so.
• Additional Payment / Compensation
• Maybe EOT (where appropriate)

Can I give verbal (oral) Directions and Instructions?

YES; Clause 1 provides that any direction or instruction given verbally
(orally) by Architect or Clerk of Works shall be deemed to have been given
in writing if;
• the contractor confirms the direction or instruction in writing within
14days, and the Architect does not dissent or withdraw the direction /
instruction.
• The Architect confirms the instruction / direction in writing.

Note: Clause 1 also provides that the Contractor need not comply with:
• Verbal (oral) directions and instructions (not confirmed in writing) by
either Architect or Clerk of Works,
• Other orders or requests not expressed to be instructions or directions

What is not an ‘order?’

Clause 1(2) differentiates an ‘order’ from ...
...“suggestions,
... recommendations, or
... agreements with proposals made by the Contractor.”

What if I call the order the wrong thing?

Clause 1 does require that all orders by the Architect “shall be expressed
by him to be either “instructions” or “directions.”
However, Clause 1 provides that:
• “The choice by the Architect of the expression “direction” or
“instruction” shall not bind either the Contractor or the Employer before
an arbitrator or the Courts…”
• except if within 28 days of an order expressed as a direction the
Contractor hasn’t disputed it’s classification, the Contractor is deemed to
have undertaken to comply without an increase in the Contract Sum or
additional payment or compensation.

How can orders be given?

What is a normal ‘practice’ for giving orders?
1. Give an ‘oral’ order.
2. Record it in writing.
Is whatsapp, sms, messager, etc “in writing”?
May not be recognised as ‘in writing’ by Courts, but can serve as evidence
[eg similar to an ‘audio recording’ of spoken words].
Is email “in writing”? – Yes - subject to specific terms.

What is a normal ‘practice’ for giving orders?

Employers usually want to ‘approve’ orders if they will have (i) design; (ii)
cost; (iii) time or (iv) ethical consequences, eg “RAOV” or “RVO”
Often the ‘formal’ order is not issued until RAOV is approved … (“request
for approval to ask for a order of variation” – because variations often
have cost & time implications.)
… thus Contractor often agrees to proceed first at own risk on likelihood
of approval …
… and usually on basis of an informal order ‘orally’ or by email.
But it must be remembered that:
- ‘email’ is a valid order in writing … … It just needs to be “expressed” as
an ‘instruction’ or ‘direction’ (eg “... you are instructed to …”)
Contractors often try to argue that there is no order given until it is presented in a ‘formal’
order (eg using the SIA specimen formats) … but this is often just to angle for EOT!
A practice of ‘formal’ orders (instructions) [eg dedicated format, such as
the SIA specimens]
is often practiced to :
1. Signify the approved status of an RAOV
2. Give each instruction a S/N for tracking and accounts purposes.
3. Consolidate all documents / drawings and references involved in the
order / variation.
Such ‘formal’ orders (instructions) usually are:
1. Written records of oral orders, or
2. Regularisation of informal written orders (eg emails).
Note that the effective date of the order is still the date it was actually given (whether orally or by
email). … See Cl. 1(1): “Any direction or instruction given verbally (orally) shall be deemed to have
been given in writing, and have retrospective effect from the date of the verbal direction or instruction
[subject to confirmation in writing]”.

How should an Architect write an order? (in tutorial)

• Title/Classification of Order (eg expressed as "Instruction")
• Ref. No. (S/N) and Date of Issuance (in writing)
• Addressee / recipient (ie the Contractor)
• Project Ref., Contract Ref., Phase/Stage Ref. + Heading (subject)
• Contract Sub-Clause pursuant to which the Architect has authority/power to issue/express the order.
• Contract Sub-Clause in accordance with which the order is made (ie substance of the order).
• Content: Context/background, material/substantive/effective date (eg date on which order was given
verbally) + the order's particulars (who, what, where, when, (why), as applicable) + cross-reference to
corresponding attachments / revised Contract Documents (eg drawings and specifications).
• Notes (eg conditions, caveats/exclusions, records, etc).
• Name & Signature of Architect
• cc to Employer & PM, QS & Consultants and Clerk-of-Works.

• Be clear/unambiguous (eg use plain simple language) and to the point/succinct although thorough (ie
give the full picture and avoid doubt/misunderstandings).
• Be factual and objective (not emotive) – portray your fairness and impartiality.
• It is good to record the Employer's 'approval' for a variation to be ordered with extra cost (if there is
no formal corresponding RAOV process).
• Some Architects indicate whether EOT is applicable or not.
• Remember that PSSCOC and SIA-MWC only have 'instructions' (and no 'directions') so it may be good
to indicate in the order whether there is any cost implication intended.
• An instruction for variation will be reflected in the financial accounts/payments, thus: Orders for
Variations should be clear on what is 'omitted' from, and what is 'added' to, the Contract (eg "to
provide 'A' in lieu of 'B'"), including clarity of extent & location, specification, etc
– through description &/or by reference to (revised) plans / other Contract Documents.
... and don’t forget to account for ‘aborted’ works already done, including dealing with materials
already ordered, (if applicable).
• Variations often comprise 'design changes' – eg; … you [Contractor] are instructed to provide 600 x 600
x 20mm thk granite slab flooring (to Architect's selection) in the master bedroom, in lieu of the timber strip
flooring specified in the original Contract Documents, in the layout shown in revised drawing No.123 (Rev-01)
…
• Orders should 'echo' the provisions of Contract, eg copy or paraphrase the wording of the Conditions
…
• This is necessary especially for the PSSCOC where there are no standard 'specimen' formats of
orders and certificates, but
• SIA forms of contract do have corresponding standard 'specimen' formats for orders and certificates
which can be used as a basis.
• REMEMBER ... the Conditions do not state that the Order (Instruction/Direction) must be in any
particular ‘Format’ ... • ... ie, the SIA Specimens are for reference only, and are not mandatory!
• Orders must be in writing, either:
• Given in writing (in the first instance)
• Confirmed in writing, if given Orally in the first instance
• ‘In writing’ can be in Format (eg per SIA specimens), by email message, by letter (irrespective of
mode of sending—email or fileshare attachment, by post, by hand, by dispatch, etc).
• Also see SIA MWC: “Architect’s Instruction” for matters with cost and time implication, c.f.
“Architect’s written instruction” to eg secure compliance with contract (maybe just as emails).

What if the Contractor does not obey an Architect’s order?

Clause 1(6) provides that;
• The Architect may give written notice to the Contractor to comply with a
direction or an instruction.
• If the Contractor doesn’t comply within 7d, the Employer may engage
another contractor
• And upon the Architect’s certificate deduct theextra cost (of other
contractor’s work)
PART 4: VARIATIONS
Why are “variations” important?
Variations are a contractual mechanism to allow ‘changes’ to the Contract!
Contracts are essentially “A” for “B” ... so a change to “A” for “B+1” is essentially a
different contract! ... and would also be subject to mutual assent (both parties’ agreement).
Changes can only be made ‘within’ the Contract, and unilaterally (by one party) if the
Contract itself already has terms (agreement) to that effect.
... and such ‘variation’ terms usually address ‘consideration’ (ie payment) for the changed work, as
well as fairness &/or risk allocation (eg extra time to complete the work).

Why are “variations” necessary?

Variations are necessary to deal with situations that arise during the contract, e.g.:
• Changes in Design, Site Organisation, Method of Work, Phasing, etc ... (these conditions may be
forced upon the proj.. hence, you need the mechanism to make changes to the contract.)
• required by the Developer
• required to address discovered site conditions, regulatory authority requirements, materials
market conditions, etc.
• required to resolve any discrepancy, ambiguity, vagueness and missing terms in the Contract
Docs.
... i.e. as NECESSARY for the Works to be brought to a full and proper completion ... to
meet the object/purpose of the Contract (ie to realise the building/development).

What is a “variation?”
Clause 12(2) defines variation as: “…any change in the original contract
intention [or descriptions] …”
Note: PSSCOC similarly provides that:
Sn 19.1: "The term "variation" shall mean any change in the original Contract intention as deduced
from the Contract as a whole describing or defining the Works to be carried out and shall include ...
any changes ... which may be designed to alter the use to which the Works will be put …"

Clause 12(2) provides that variations “in particular shall include:”

• changes to work, materials or goods (including of NSC/S and DSC/S)
» addition,
» omission,
» demolition / removal,
» substitution,
» changes in type / standard / quality
• changes ordered in temporary works or methods of working
• postponement of works
• includes where change is designed to alter the ultimate use to which the Works will be
put. (even if the design is no changed.. (?))

What are “contract intentions”?

Cl. 12(2) states that contract intentions/ descriptions are “to be deduced
from the Contract Documents as a whole…”
Where Contract Documents are …
Refer to Articles:
• Articles & Conditions (incl Appendix)
• Contract Drawings & Specifications
• Priced SOR or BQ
• Other letters or documents (eg ITT, LOA, etc)

Clause 14 provides that:

where discrepancy or divergence be discovered in or between any of the
Contract Documents as to the precise extent or nature of the work a direction
or instruction may be given [by the Architect] as to the work in fact required
by the Architect.
A direction (ie w/o cost implication) would be given if the Architect’s requirement accords with the
contract intention (as interpreted from reading the Contract Documents as a whole).
An instruction (ie a variation with cost implication) would be given if the Architect’s requirement
differs from the contract intention.

‘Change’ in the contract intention / descriptions (ie a Variation)

- can be by:
(a) An ‘order’ of the Architect to do so, or
(b) As otherwise 'authorised' by the Architect (per Cl. 12(1), or
(c) A ‘sanctioning’ by the Architect of an unordered or unauthorised variation by
the Contractor, or
(d) A 'deemed order' (eg in compliance with statutory law, pursuant to Cl. 7).
Note: Only the Architect, as contract administrator, can issue orders (instructions/directions) for ‘variations’—NOT
the Employer! (and Employers sometimes need to be reminded not to communicate directly with the Contractor!)

Note:
In PSSCOC, there is only S.O. “Instructions”.
In SIA MWC, there is “Architect’s written instructions” and “Architect’s Instructions”.
Neither have “Directions” per se, but orders with such content are given in
writings/instructions.
“Direction” is unique to the SIA A&CBC forms.
One must read the terms of the Form of Contract in question to determine the means by
which variations can be ordered!

How much should a variation cost?

• Clause 12 provides that variations shall be valued by measurement or
calculation by the Quantity Surveyor
• Clause 12 also provides that variations shall be valued as closely as
possible on the basis of the Contractor’s prices ie measured quantities x
cost rates
Clause 12 provides ‘rules’ for valuation, in order of applicability:
a) For same work type: valued at the same prices [or rates] as in the
BQ / SOR
b) For similar, but not exact, work type: valued at the prices [or
rates] extrapolated from the BQ / SOR
c) (a) or (b) but deviates from BQ / SOR prices due to the quantity,
sequence of ordering, location, postponement, etc changing due to
the variation works being carried out at a different time
d) fair valuation by the QS where allowances under (C) are not
practicable based on Contractor’s prices
e) if cannot (a) to (d) then, subject to submission of vouchers,
‘daywork rates’ or ‘prevailing’ [market] prices;
» at rates allowed for under Contract, otherwise;
» at prime cost + 15% (for tools & equipment, prelims,
supervision, profit and overheads)
Also refer to Clause 5:
Sub-clause 5(1) provides that to “facilitate the valuation of variations …
the Contractor … shall submit ... a breakdown of his prices [in the BQ /
SOR].”
And “indicate the proportionate amounts ... attributable to labour, goods
or materials, plant, and overheads..."

The Rates applied to a variation would typically involve:

• Priced work items
i.e. materials &/or goods, labour, equipment/tools & direct resources
• Priced preliminary items
i.e. Site resources and overheads

Also note Clause 13:

Prices are "inclusive of all work, materials and expenditure, whether
permanent or temporary, which will be indispensably necessary …"

Sub-Clause 5(2) provides that “In the case of preliminary items of

expenditure ... the Contractor shall when tendering indicate by an
appropriate key letter”:
‘Q’ = items requiring adjustment based on the quantities of work carried
out,
‘T’ = items requiring adjustment based on the time required to carried out
the work,
‘F’ = items of fixed character

Examples of 'preliminary items of expenditure' (ie Site resources, overheads, etc):

‘Q’ – eg insurance premium to cover increased value of the Works (by
contractor)
‘T’ u) eg general Site set-up / facility such as temporary power & water,
security, Site Office, etc, if it needs to be retained on Site longer to
facilitate additional work
‘T’ (with or w/o EOT, work specific, eg increased duration of rental of
particular machinery, etc).
‘F’- eg pre-condition survey (generally only needs to be done once)

PSSCOC has similar provisions:

• Variations are valued in accordance with the rules in Section 20; principally that “Rates
for the Works as set out in the Contract shall determine the valuation ….”
• Where "Rates" means those in the Schedule of Rates or the rates and prices contained in
Bills of Quantities, whichever is applicable…”

Note: Cl. 12 provides for obvious accidental error in rates or prices

quoted by the Contractor resulting in a grossly excessive or inadequate
rate or price. The QS may “apply a reasonable rate or price in line with
the Contractor’s general rates or prices…”
[BUT be careful: Tenderers may often ‘strategise’ their pricing,
anticipating likely omissions or additions in quantity]

Notes on ‘assumed risk’ vs variation

• Unless otherwise provided for in contract and/or expressed qualifications /
exclusions or assumptions by the Contractor in his tendered offer;
• in an absolute contract the Contractor would generally, in law, be held responsible
(ie be deemed to have accepted the risk) for the conditions and circumstances in
which the contract is carried out (eg adverse physical site conditions), irrespective of
whether adverse conditions and circumstances are actually anticipated or not,
• ie deemed included in the promise to provide a building at a given price, without
compensation and EOT for any ‘difficulties’ encountered that could be reasonably
anticipated (ie not 'highly unusual').

For Example: Adverse Physical Site Conditions:

• PSSCOC: By expressed provision of Contract: Contractor (contractor relieved from
this risk) may become entitled to additional cost and/or EOT if the Contractor
encounters adverse physical conditions (other than weather conditions or effects due
to weather conditions on the Site) in the course of carrying out sub-surface works,
which adverse physical conditions could not have been reasonably foreseen by an
experienced contractor .
• In the SIA forms of contract there is no provision for compensation or EOT for
adverse physical site conditions other than Cl. 1(1)(b)(iii) allowing the Architect to
issue a Direction to vary the works to assist the Contractor in overcoming difficulties
&/or excessive costs … … hence the Contractor is deemed to have accepted the
risk.

How are variations paid / accounted for?

Clause 12 provides that the value of variations:
• “shall be added or deducted from the Contract Sum”
• “shall be payable to the Contractor on interim [payment] certificates”
Note: SOP Act requires that Contractors are paid for work done, and that
they should be paid progressively - ie inclusive of variation works carried
out.

Payment for variation works shall become due if:

• the variation has been ordered in writing by the Architect
• the variation is not in regard to the matters set out in Cl.1(1)(b) –
Directions – for which the Contractor is not entitled to additional
payment
• no additional payment where variation is due to Contractor’s fault /
defects etc.