Management in trouble

Article Abstract:

A ruling by the UK Court of Appeal indicates that management contractors have been wrong to assume that the provisions of the JCT standard form of management contract protect them from having to compensate the employer in cases where a defaulting works contractor becomes insolvent. It was held that clause 3.21 is not worded in such a way as to exempt management contractors from being liable for breach of their own obligations under the management contract. This clause only applies where there is a breach by a works contractor of a works contract and where there is no other breach by the management contractor of the management contract.

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Management problem

Article Abstract:

It is becoming clear that the liabilities and responsibilities of the management contractor are not as limited as had been widely assumed. This has been demonstrated in the case Copthorne Hotel (Newcastle) Ltd v Arup Associates and Others, in which the court ruled on the limitations and restrictions contained in clause 3.21 of the JCT Standard Form of Management Contract. The ruling indicates that management contractors using this standard form may be found liable for breaches by works contractors of the works contracts if defaults have been caused by their own failure to supervise effectively.

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Crouch end

Article Abstract:

The UK House of Lords has overruled the Court of Appeal's decision in Northern Regional Health Authority v Derek Crouch Construction, which stated that the courts did not have the power to review any decision, opinion or certificate of an engineer or architect under the standard building and engineering forms of contract. This now means that in the context of the standard forms, a court can do anything an arbitrator can do. Courts will have all the necessary powers to resolve disputes between parties to a building or engineering contract.

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