The simplest definition of a contract is ‘A promise enforceable by law’. A slightly more elaborate definition is ‘An agreement between two or more parties in which each party binds himself to do or forbear to do some act and each acquires the right to what the other promises’. Under common law, however, the promise has to be accompanied by ‘consideration’ which, in simple terms, means financial reward but it could also be any legally acceptable act agreed upon. Since it is between one party and at least one other and since the contract is made with the mutual agreement of the parties, it is necessary to have ‘an offer’ and ‘an acceptance’. If the contract or the promise is not performed, the remedy can be either the specific or actual performance of what was actually promised, or a financial compensation of one sort or another.12 The enforcement of a contract is one of the most important sections of the legal system.
In any democratic society, the freedom of the individual to contract has been deemed the supreme facet of freedom since the beginning of social intercourse. The extensive growth of commercial activities in the nineteenth and twentieth centuries produced some abuse of this freedom, necessitating intervention by the State in the form of legislation to prevent monopoly and its harmful effects on society. This intervention, however, has not always been by way of legislation. In some cases, it has been initiated by specific groups of people interested in preserving the concept of fair play in a certain commercial activity. Others have done the
same to prevent one-sided agreement in which the strong might impose their will on the weak. The result was the Standard Form of Contract consisting of a standardised set of conditions presented in an already printed form best suited to the particular use for which it was envisaged. In construction contracts, where the obligations and responsibilities of the contracting parties can be extremely complex but to a large extent remain unchanged from one project to another, the Standard Form was developed by the relevant professional institutions in order to help make the contracts fair, just and equitable. This development was extremely suitable for the tendering system usually adopted in construction contracts as it ensured a common basis for the comparison and evaluation of tenders.
In Europe, and more particularly in the United Kingdom and in Ireland, such forms were produced as early as the nineteenth century. The RIBA Form, which is used for building work contracts, was issued under the aegis of the Royal Institute of British Architects some time towards the end of the nineteenth century and that was followed by the RIAI Articles of Agreement and Schedule of Conditions of Building Contract, issued by the Royal Institute of the Architects of Ireland. In civil engineering works, the ICE form was first issued by the Institution of Civil Engineers in the United Kingdom in 1945. In civil engineering, various forms which were in use in the English language prior to the Second World War by different employers were fused, in England, into an agreed standard document. This was achieved in December 1945 by the Institution of Civil Engineers and the Federation of Civil Engineering Contractors. The document thereafter was known as the ICE Conditions of Contract. In January 1950, it was revised and issued with the added agreement of the Association of Consulting Engineers, UK. Five further revisions were made, the last of these in September 1999: the
document which is in use at present is the seventh edition. To the credit of those responsible for drafting the ICE document, many professional institutions all over the world based their conditions of contract on its text and made only minor amendments to accommodate differences in matters of law and nomenclature. Amongst
these forms are two which will be referred to later in detail due to the relevance of their insurance clauses. These are the IEI Form and FIDIC’s Red Book. The first is issued jointly by the Institution of Engineers of Ireland, the Association of Consulting Engineers of Ireland and the Civil Engineering Contractors Association and is in its 4th edition since 1995. The second document, dating back to 1987, is also in its 4th edition and is prepared by the International Federation of Consulting Engineers (FIDIC). Revisions were implemented in the ICE, IEI and FIDIC Conditions of Contract as a result of demand from one or more of the constituent organisations or from the construction industry. This demand was in response either to a need or to a legal decision given by a court of law in deciding a case based on one of the conditions of the document in question.
Originally, these documents were drafted in precise, legal language, which would be expected to remain unequivocal even when subjected to detailed and hostile scrutiny by astute legal minds. However, as revisions were incorporated, the language became more and more complicated and inscrutable. In certain cases, the number of words in each sentence grew to a level beyond the understanding of the average reader. As can be seen from Figure 1.2, drawn for the 3rd edition of FIDIC’s Red Book, Conditions of Contract (International) for Works of Civil Engineering Construction, published in 1977, the number of words was at a level in excess of what a reasonably intelligent person is expected to readily
In any democratic society, the freedom of the individual to contract has been deemed the supreme facet of freedom since the beginning of social intercourse. The extensive growth of commercial activities in the nineteenth and twentieth centuries produced some abuse of this freedom, necessitating intervention by the State in the form of legislation to prevent monopoly and its harmful effects on society. This intervention, however, has not always been by way of legislation. In some cases, it has been initiated by specific groups of people interested in preserving the concept of fair play in a certain commercial activity. Others have done the
same to prevent one-sided agreement in which the strong might impose their will on the weak. The result was the Standard Form of Contract consisting of a standardised set of conditions presented in an already printed form best suited to the particular use for which it was envisaged. In construction contracts, where the obligations and responsibilities of the contracting parties can be extremely complex but to a large extent remain unchanged from one project to another, the Standard Form was developed by the relevant professional institutions in order to help make the contracts fair, just and equitable. This development was extremely suitable for the tendering system usually adopted in construction contracts as it ensured a common basis for the comparison and evaluation of tenders.
In Europe, and more particularly in the United Kingdom and in Ireland, such forms were produced as early as the nineteenth century. The RIBA Form, which is used for building work contracts, was issued under the aegis of the Royal Institute of British Architects some time towards the end of the nineteenth century and that was followed by the RIAI Articles of Agreement and Schedule of Conditions of Building Contract, issued by the Royal Institute of the Architects of Ireland. In civil engineering works, the ICE form was first issued by the Institution of Civil Engineers in the United Kingdom in 1945. In civil engineering, various forms which were in use in the English language prior to the Second World War by different employers were fused, in England, into an agreed standard document. This was achieved in December 1945 by the Institution of Civil Engineers and the Federation of Civil Engineering Contractors. The document thereafter was known as the ICE Conditions of Contract. In January 1950, it was revised and issued with the added agreement of the Association of Consulting Engineers, UK. Five further revisions were made, the last of these in September 1999: the
document which is in use at present is the seventh edition. To the credit of those responsible for drafting the ICE document, many professional institutions all over the world based their conditions of contract on its text and made only minor amendments to accommodate differences in matters of law and nomenclature. Amongst
these forms are two which will be referred to later in detail due to the relevance of their insurance clauses. These are the IEI Form and FIDIC’s Red Book. The first is issued jointly by the Institution of Engineers of Ireland, the Association of Consulting Engineers of Ireland and the Civil Engineering Contractors Association and is in its 4th edition since 1995. The second document, dating back to 1987, is also in its 4th edition and is prepared by the International Federation of Consulting Engineers (FIDIC). Revisions were implemented in the ICE, IEI and FIDIC Conditions of Contract as a result of demand from one or more of the constituent organisations or from the construction industry. This demand was in response either to a need or to a legal decision given by a court of law in deciding a case based on one of the conditions of the document in question.
Originally, these documents were drafted in precise, legal language, which would be expected to remain unequivocal even when subjected to detailed and hostile scrutiny by astute legal minds. However, as revisions were incorporated, the language became more and more complicated and inscrutable. In certain cases, the number of words in each sentence grew to a level beyond the understanding of the average reader. As can be seen from Figure 1.2, drawn for the 3rd edition of FIDIC’s Red Book, Conditions of Contract (International) for Works of Civil Engineering Construction, published in 1977, the number of words was at a level in excess of what a reasonably intelligent person is expected to readily
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