ARB Registration (Architects Registration Board) Construction Law and Contract Administration Syllabus

Compare the roles/terminology of NEC4 and JCT for the person who administers the contract.

JCT uses an 'Architect/Contract Administrator' (or Employer's Agent under DB) who certifies and acts impartially in certain functions. NEC4 uses a 'Project Manager' (managing the contract for the employer) and a 'Supervisor' (checking quality/defects). NEC emphasises proactive management; JCT emphasises certification and impartial determination of certain matters.

What are the principal risks of using a bespoke contract or heavily amending a standard form?

Loss of tested/well-understood standard wording, internal inconsistency and ambiguity (clauses conflicting), unintended shifting of risk, invalidating standard-form case-law interpretations, schedule-of-amendments errors, potential unenforceability (e.g. against the Construction Act), and increased cost and dispute likelihood.

What is the role of the Contract Administrator (CA) under a JCT traditional contract?

The CA administers the building contract on the employer's behalf: issuing instructions, certifying payments, certifying practical completion and making good of defects, granting extensions of time, and valuing variations. In certain certifying/decision-making functions the CA must act fairly and impartially between the parties, not merely as the employer's agent.

How does the Employer's Agent's role differ from that of the Contract Administrator?

The Employer's Agent (used under Design & Build) acts purely as the employer's agent/representative — there is generally no duty to act impartially between the parties as the contractor carries the design. The CA (traditional procurement) must exercise certain functions, such as certification, fairly and impartially.

What is an interim certificate and what is its purpose?

An interim certificate is a certificate issued by the CA/architect during the works stating the amount due to the contractor at that valuation date (typically monthly), enabling stage/progress payments. It supports cash flow and is based on the value of work properly executed plus materials, less retention and previous payments.

What is the certificate of Practical Completion (PC) and what key consequences flow from it?

PC certifies that the works are practically complete (substantially finished, fit for occupation/use, only minor de minimis items outstanding). Consequences: release of half the retention, the end of the contractor's liability for liquidated damages, the start of the defects liability/rectification period, passing of risk/insurance responsibility to the employer, and the start of certain limitation periods.

What is a Final Certificate and what is its effect under JCT?

The Final Certificate is issued after the rectification period and resolution of accounts; it certifies the final adjusted contract sum and the final balance due. Under JCT it can have conclusive evidential effect (e.g. that work to the CA's approval is satisfactory and that the contract sum is correct), subject to any dispute proceedings commenced within a defined period (e.g. 28 days).

What does an interim valuation typically include and exclude?

Includes: the value of work properly executed, the value of materials/goods on site (and sometimes off-site if listed/vested), and adjustments for variations and loss and expense. Deducts: retention and amounts previously certified. It generally excludes defective work and work not yet executed.

Under the Construction Act, what is a 'payment notice' and a 'pay less notice'?

A payment notice (issued by the payer or specified person, typically within 5 days of the due date) states the sum the payer considers due (the 'notified sum'). A pay less notice must be given before the final date for payment if the payer intends to pay less than the notified sum, specifying the amount and the basis. Failure to issue a valid pay less notice means the notified sum becomes payable in full.

What is the 'notified sum' and what happens if no payment/pay-less notice is served?

The notified sum is the amount stated in a payment notice (or the payee's default payment notice). If no payment notice and no valid pay less notice are served, the notified sum becomes the amount the payer must pay by the final date for payment — giving rise to a 'smash and grab' adjudication if unpaid.

What is retention in a construction contract and how is it typically released?

Retention is a percentage (commonly 3–5%) of each interim payment withheld by the employer as security against defects and non-completion. Typically half is released at Practical Completion and the remaining half at the end of the defects/rectification period once making good is certified.

What is a variation (or change) in a construction contract?

A variation is an authorised alteration to the scope, design, quality, quantity or conditions of the works (addition, omission or substitution), or changes to access, working hours or sequence. It must usually be instructed in writing by the CA/PM and is valued under the contract's valuation rules, adjusting the contract sum and possibly time.

How are variations valued under a traditional JCT contract (the valuation rules/hierarchy)?

Using the Valuation Rules: (1) at contract/bill rates where work is of similar character and conditions; (2) at adjusted/pro-rata rates where character is similar but conditions differ or quantity changes significantly; (3) at fair rates and prices where work is not of similar character; and (4) on a daywork basis where it cannot properly be measured/valued otherwise.

What is a CA Instruction (Architect's/Contract Administrator's Instruction) and must the contractor comply?

A written instruction issued by the CA under express contract powers (e.g. to vary the works, postpone, open up, or remedy defects). The contractor must generally comply with valid instructions; if they fail to comply within a specified notice period, the employer may engage others to carry out the work and deduct the cost. Only instructions empowered by the contract are valid.

What is an Extension of Time (EOT), and why is it important to the employer as well as the contractor?

An EOT extends the contractual completion date when delay is caused by a 'Relevant Event' (e.g. variations, exceptionally adverse weather, employer default). It protects the contractor from liquidated damages for non-culpable delay and, crucially, protects the employer's right to levy liquidated damages by keeping the completion date certain and avoiding 'time at large'.

What does 'time at large' mean and how does it arise?

Time at large means there is no fixed completion date, so the contractor's obligation becomes to complete within a 'reasonable time'. It can arise where the employer causes delay (act of prevention) and there is no effective EOT mechanism to extend the date. The employer then loses the right to levy liquidated damages and can only claim general (unliquidated) damages for late completion.

What is 'loss and expense' and how does it differ from an extension of time?

Loss and expense is direct loss and/or expense the contractor incurs because the regular progress of the works has been materially affected by 'Relevant Matters' (employer-side causes), for which there is no other reimbursement (e.g. prolongation, disruption, head-office overheads). An EOT addresses time (relief from LDs); loss and expense addresses money. They are assessed separately, though often arise from the same event.

What are liquidated damages (LDs) and what makes a LD clause enforceable?

LDs are a pre-agreed, fixed sum payable by the contractor for each period (e.g. per week) of culpable delay to completion, recovered without proving actual loss. To be enforceable the sum must be a genuine pre-estimate of likely loss / protect a legitimate interest and not be a 'penalty' (Cavendish v Makdessi / Dunlop). If unenforceable as a penalty, the employer is left to prove general damages.

What is the defects liability / rectification period?

A fixed period after Practical Completion (commonly 6 or 12 months) during which the contractor is obliged to return and make good defects that appear, due to materials/workmanship not in accordance with the contract. The CA issues a schedule of defects, and on completion issues a Certificate of Making Good, triggering release of the remaining retention.

What is 'snagging' and how does it relate to practical completion and the defects period?

Snagging is the process of identifying and listing minor outstanding/defective items (the 'snag list') as the works approach completion. Minor de minimis snags may remain at Practical Completion, but patent defects identified during the rectification period are formally scheduled by the CA for the contractor to make good.

Distinguish patent defects from latent defects.

Patent defects are apparent/discoverable on reasonable inspection at completion (and are dealt with via the rectification period). Latent defects are hidden and only become apparent later (e.g. years after completion); they are pursued through breach of contract/negligence claims, subject to limitation periods, and are often covered by collateral warranties or latent defects insurance.

Compare negotiation, mediation and conciliation as forms of ADR.

Negotiation: parties resolve the dispute directly, without a third party. Mediation: a neutral third party facilitates the parties reaching their own settlement but does not give a decision or opinion. Conciliation: similar to mediation but the conciliator takes a more active/evaluative role and may recommend a (non-binding) settlement or opinion. All three are consensual and non-binding unless a settlement agreement is signed.

What are the key advantages of Alternative Dispute Resolution (ADR) over litigation?

Generally faster, cheaper, private/confidential, less adversarial (preserving commercial relationships), flexible, and capable of producing creative/commercial outcomes. Most ADR is consensual, so unlike adjudication or litigation it requires the parties' cooperation.

What is adjudication under the Housing Grants, Construction and Regeneration Act 1996 (the Construction Act)?

A fast statutory dispute-resolution process available 'at any time' to any party to a construction contract. An adjudicator is appointed and must reach a decision within 28 days of referral (extendable to 42 days with the referring party's consent, or longer by agreement). The decision is binding on an interim basis and enforceable, until finally determined by litigation, arbitration or agreement ('pay now, argue later').

What is the typical timetable for an adjudication under the Construction Act?

A notice of adjudication starts the process; the adjudicator is appointed (typically within 7 days) and the dispute is referred; the adjudicator must decide within 28 days of the referral, extendable by up to 14 days (to 42) with the referring party's consent, or further by agreement of both parties.

What does 'temporarily binding' mean for an adjudicator's decision?

The decision must be complied with immediately and is enforceable (usually by summary judgment in the courts), but it is only binding until the dispute is 'finally determined' by litigation, arbitration or agreement. A dissatisfied party can re-litigate/re-arbitrate the same dispute afresh — hence 'pay now, argue later'.

Compare arbitration and litigation as final dispute-resolution routes.

Arbitration is a private, consensual process (requires an arbitration agreement) under the Arbitration Act 1996, with a chosen arbitrator/expert, confidential, flexible procedure, and an award enforceable internationally (New York Convention) with limited appeal rights. Litigation is public, conducted in the courts (TCC for construction), binding, allows appeals, and does not require prior agreement, but is generally slower, more costly and not confidential.

Which court division typically hears construction disputes in England, and what governs arbitration?

The Technology and Construction Court (TCC), a specialist part of the High Court (King's Bench Division), hears construction litigation and adjudication enforcement. Arbitration is governed by the Arbitration Act 1996 and requires a written arbitration agreement between the parties.

What is Professional Indemnity Insurance (PII) and why must architects carry it?

PII covers an architect's legal liability to third parties for claims arising from professional negligence (errors, omissions, breach of duty) in the provision of professional services, including defence costs. The ARB Code and RIBA require adequate PII cover; it protects clients' ability to recover and protects the practice's solvency.

On what basis is PII written, and what is the practical implication of that basis?

PII is written on a 'claims made' basis: the policy in force when the claim is made (notified) responds, not the policy in force when the work was done or the negligent act occurred. The practical implication is that cover must be maintained continuously, including 'run-off' cover after a practice ceases, to remain protected against latent-defect claims arising years later.

How can an architect/consultant lawfully limit their liability in an appointment?

Through express contract provisions: a financial cap on liability (e.g. linked to PII cover or fee level), a net contribution clause (limiting liability to the architect's fair share where others are also responsible), time limits, and exclusion of certain heads of loss. Limitations must be reasonable under the Unfair Contract Terms Act 1977 and cannot exclude liability for death/personal injury caused by negligence.

What is a 'net contribution clause' and why do consultants seek one?

A net contribution clause limits a consultant's liability to the amount that would be 'just and equitable' for that consultant to pay, assuming all other responsible parties have paid their fair share — i.e. it apportions liability rather than leaving the consultant jointly and severally liable for the whole loss. Consultants seek it to avoid bearing 100% of a loss where an insolvent or absent co-defendant was also at fault.

What is a collateral warranty and why is it used?

A collateral warranty is a contract that creates a direct contractual link between a consultant/contractor and a third party (e.g. a funder, purchaser or tenant) who was not party to the original building/appointment contract. It is used because, under privity of contract, those third parties otherwise have no direct contractual claim; the warranty gives them a route to recover for defects/negligence (overcoming the restriction on recovering pure economic loss in tort).

How does the Contracts (Rights of Third Parties) Act 1999 provide an alternative to collateral warranties?

The Act allows a contract to expressly confer enforceable benefits on identified third parties, so a named beneficiary (e.g. a future tenant or purchaser) can enforce the relevant terms directly without a separate collateral warranty. Construction contracts can use a schedule of third-party rights instead of, or alongside, collateral warranties; many standard forms allow either mechanism to be selected.

What is the doctrine of privity of contract and why does it matter in construction projects?

Privity of contract means that only the parties to a contract can sue or be sued under it; a third party generally acquires no rights or obligations. It matters because funders, purchasers and tenants are not parties to the building contract or consultants' appointments, so they need collateral warranties or third-party rights (under the 1999 Act) to obtain a direct claim for defects.

What is the difference between a Relevant Event and a Relevant Matter under JCT?

A Relevant Event is a cause of delay that entitles the contractor to an extension of time (relief from liquidated damages) — e.g. variations, exceptionally adverse weather, force majeure. A Relevant Matter is a cause that entitles the contractor to loss and expense (money) — e.g. employer-side disruption, late information. Some events (e.g. variations) are both.

What is the difference between liquidated damages and unliquidated (general) damages for delay?

Liquidated damages are pre-agreed in the contract at a fixed rate per period of delay and recovered without proving actual loss. Unliquidated (general) damages are not pre-agreed; the employer must prove the actual loss suffered. If the LD clause is void as a penalty or 'time becomes at large', the employer falls back on unliquidated damages, which require proof of loss.

What does the term 'consideration' require, and what is the rule about past consideration?

Consideration is the price of a promise — something of value moving from the promisee (a benefit to one party or a detriment to the other). It must be sufficient but need not be adequate (no need for market value), and past consideration (something already done before the promise) is generally not good consideration.

What is the difference between an offer and an 'invitation to treat' in contract formation?

An offer is a definite statement of terms which, once accepted, forms a binding contract. An invitation to treat is merely an invitation to others to make offers or to negotiate (e.g. an advertisement, a tender invitation, goods on display). In construction, a tender invitation is usually an invitation to treat and the contractor's tender is the offer.

In professional negligence, what must a claimant additionally show beyond a breach of the Bolam standard?

Causation and loss: that the architect's breach actually caused (factual 'but for' causation) recoverable, reasonably foreseeable damage, and that the loss is not too remote. A breach of duty without resulting loss caused by that breach does not give rise to a successful negligence claim.