QUESTION:
What Form of Contracts can I use in a Construction Development Project in Kenya?
ANSWER:
Development Construction Projects requires the Developer to enter into a Contract Agreement with a Contractor, for the sole aim of safeguarding investment interests, through a smooth contract administration process.
There are various forms of contracts that a Developer can choose to use in entering into a Contract with a Contractor, depending on a number of factors ranging from the scope of work, jurisdiction, as well as parties in the Contract, as outlined below:
a) Standard Contracts:
Standard Contracts are prepared by organizations for use in certain envisaged situations. Many projects in a particular geographical area are very similar in nature. In such, the conditions of contract for such typical projects are normally expected be the same. Rather than repeating the tedious task of preparing Conditions of Contract for each and every project, standard form of contracts usually come into play for expeditious execution of the contract.
Standard Form of Contracts have been developed by many organization over the years. The most standard form of Contracts used in Kenya are as follows:
- Agreement and Condition of Contract for Building Works published by the Joint Building Council (JBC).
- Public Procurement Oversight Authority Standard Bid Documents for Procurement of Works (Building And Civil Engineering Works) prepared by Public Procurement Directorate.
- The Ministry of Works Contract Agreement.
- Various FIDIC Forms of Contract
b) Special Conditions of Contract:
These are contracts specially drafted and tailored to meet specific parties’ requirements. The contracts are structured to cover particular conditions relating to a specific project.
Large organizations such as Government Ministries adopt Particular Conditions of Contract, which qualify, modify or replace certain aspects of the Standard clauses to suit the requirements of the specific projects undertaken by them. To avoid confusion and to ensure consistency, the altered clause in the Particular Conditions of Contract is cross-referenced to the original clause in the Standard Conditions of Contract. Simple modifications are made by inserting brief descriptions, definitions and figures.
c) Simple Contracts (Short-Form of Contract).
A Simple or Short Form of contract is an agreement, express or implied, which give rise to legal obligations. Generally such a contract need not have any special form. It may be in writing, or agreed orally or implied from the conduct of the parties. As long as the good or service provided is legal, any oral agreement between two parties can constitute a binding legal contract. However in most times, written contracts are preferred for either of the parties, or by statutory law within various jurisdictions and for certain types of agreement.
WRITER OF THE ARTICLE:
This Article is written by Buildafrique Consulting Group, Kenya multi-disciplinary consultancy, that offers END-TO-END DEVELOPMENT CONSULTANCY, REAL ESTATE, and PROJECT FINANCE solutions through specialized subsidiaries. Among our solutions includes:
- Feasibility Studies and Market Research.
- Project Finance and Capital Raising.
- Project Management.
- Investment Design Appraisal.
- Quantity Surveying.
- Construction Cost Consultancy.
- Physical Planning and Planning Permissions.
- Environmental Management and Impact Assessment
- Real Estate Development and Structured Investment Solutions
- Property Valuation
- Marketing and Property Sales Agency
- Property Management and Facility Management
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