Construction law can be a jungle to find your way around, due to the different types of construction assignments and the complex set of rules. There is no law to look up in, as construction law is instead dominated by standard terms that can be agreed upon but also omitted. There can be both pros and cons to using the general terms and conditions that you should be aware of.
Below we provide you with an overview of the most important elements of construction law.
Regardless of whether you enter into construction contracts with AB 18 agreed in the form of a principal/main contract, a subcontract or a contract regarding one or more specific parts of the larger construction project, with AB Consumer agreed, with ABT 18 agreed in the form of a turnkey contract, or if you are using ABR 18 as an adviser, or if you do not use these general terms and conditions, you must be aware of the advantages and disadvantages that may be associated with such options.
The legal framework of construction, including construction law, places great demands on the parties involved and on the clarity of the documents that constitute the parties’ agreement.
Every company is different, and so are construction projects – there are never two exactly alike, and each project has its challenges. Therefore, it is crucial to have precise and clear agreements, both to avoid disputes regarding each party’s rights and responsibilities and to minimize the risk of ambiguity. You can start by reading our six tips for drafting a good construction contract here.
What is construction law?
Construction law deals with the agreements entered into in a contract between a contractor and a client regarding the construction of a building or other construction work at an agreed price. Construction law is a wide-ranging area of law and deals with an incredible number of legal acts, but the area of law can be narrowed down to include agreements between the parties and how these agreements are to be regulated.
Characteristics of construction law
The construction contract is an agreement entered into between the client and one or more contractors. The contractor undertakes to provide, for a fee, a specific work result, typically either the construction, conversion or repair of a building belonging to the client.
However, contracts also include construction work, such as the construction of roads and bridges.
There are several different types of contract. The best known are specialist contract, main contract, and turnkey contract. The different types of contracts impose different degrees of responsibility on the contractor for. For example, the design and coordination of the individual sub-tasks in the overall contract. A contractor is also entitled to hand over all or part of the work to subcontractors.
Construction law is a complicated area of law. However, there is no law that explicitly aims to regulate contracts. Which is why contract law is dominated by some standard terms (agreed documents) that are adopted between the parties in the individual contract matters. The so-called “AB terms”. The AB terms have been revised several times, and the latest version is AB 18 from 2018. However, it is important to note that AB 18 is not the only standard terms that apply in construction. For example, AB Consumer also applies.
Regardless of whether you enter into construction contracts within AB 18, or whether you do not use these general terms and conditions, you must be aware of the advantages and disadvantages that may be associated with such options and de-choices.
As a result of the above, construction law places great demands on the parties involved. The clarity of the documents, which form the parties’ contractual basis, must therefore avoid complications and potential liability.
Contract law documents should therefore always be formulated so that the risk of disputes and ambiguity is minimized as much as possible. Here it can be an advantage to ally with a lawyer who specializes in construction law. The layer should be able to advise you on both opportunities and risks.
Forms of contracts
There are many different types of contracts, but they can be divided into total, main or specialist contracts, respectively. You can read more about the different types of contract below.
What is a turnkey contract?
In the case of a turnkey contract, the contractor is responsible for everything. It is thus the contractor who prepares the project material, takes over the construction management and all construction tasks. Behind the turnkey contractor will be a larger team consisting of architects, engineers and building designers. The turnkey contractor will also be able to contract with subcontractors, manage the project and the execution of the contract until it is completed.
What is the main contract?
In contrast to turnkey contracts, in the case of the main contract, the client is responsible for preparing the project material and obtaining various approvals. Likewise, the client will also be responsible for ensuring the optimal conditions for pricing and for the main contractor’s subsequent work. Contracting with various subcontractors will belong to the main contractors ‘task. But the person in question will also be responsible for contracts, the schedule, coordination, and finances. In the end, it will also be the main contractor who oversees the construction being completed on time and to the agreed quality.
What is a professional contract?
In the case of a professional contract, it is the client who is responsible for preparing the entire project material. The person in question is responsible for both supervision and management of the entire contract as well as the associated contractors. The contractors are therefore only left with their responsibility in carrying out the correct result within their professional contract.
The parties to the contract
In construction agreements, the client and the contractor have the agreement as a partner. The contractor is the craft company that performs the work. Often these craft companies specialize in large constructions (contracts). The client is the person or company who orders and pays for the execution of the construction work.
Professional advice in construction law
We advise many private and professional builders. We do also advise all types and sizes of construction companies, including type house companies, turnkey contractors, and specialist contractors, as well as professional consultants within the construction industry.
We assess and prepare construction law documents. We do also conduct a large number of construction law court and arbitration cases
It is important to get everything clarified when a construction contract is to be drawn up. It may therefore be a good idea to ally with an experienced and specialized lawyer in construction law. Call us on 70 10 13 30 or send us an inquiry via the contact form. We will then contact you as soon as possible for a non-binding conversation.