Contracts are a crucial component of construction law in South Africa. They establish the terms and conditions of a construction project and provide legal protections for all parties involved. Understanding the different types of contracts, key elements of a contract, and the legal remedies available in case of a breach is essential for contractors, subcontractors, and property owners.

Types of Engineering & Construction Contracts

There are several types of contracts in construction law in South Africa, including:

• Lump Sum Contracts: This type of contract involves a fixed price for the entire project. This contract is suitable for simple and straightforward construction projects, where the scope of work is well-defined.

• Cost Plus Contracts: In this type of contract, the contractor is paid for the actual cost of the work, plus a percentage for profit and overhead expenses. This contract is suitable for complex construction projects, where the scope of work is not well-defined.

• Design-Build Contracts: In this type of contract, the contractor is responsible for both the design and construction of the project. This contract is suitable for projects where the owner does not have a clear vision of the final product.

In South Africa, the following are some of the standard form construction contracts that are commonly used:

• Joint Building Contracts Committee (JBCC) Contracts: These contracts are widely used in South Africa for building and construction projects. They are drafted by a committee of representatives from various industry stakeholders, including architects, engineers, and contractors.

• General Conditions of Contract (GCC): This is a standard form contract that is used by the South African government for construction projects. It covers a wide range of construction activities, including building, civil engineering, and mechanical and electrical engineering works.

• New Engineering Contract (NEC): The NEC is a suite of standard form contracts that is widely used in South Africa and other countries. It provides a flexible framework for managing construction projects and is particularly well-suited for large and complex projects.

• FIDIC Contracts: The FIDIC suite of contracts is widely used in international construction projects, including those in South Africa. The most commonly used FIDIC contracts in South Africa are the Red Book and the Yellow Book.

• Construction Industry Development Board (CIDB) Contracts: The CIDB is a statutory body in South Africa that oversees the development and regulation of the construction industry. It has developed a set of standard form contracts that are specifically tailored to the needs of the South African construction industry.

• South African Institute of Civil Engineers (SAICE) Contracts: The SAICE has developed a suite of standard form contracts that are widely used in civil engineering projects in South Africa. These contracts are regularly updated to reflect changes in industry practice and legal requirements.

Which Contract to Use?

It is important to note that the use of standard form contracts in South Africa is not mandatory, and parties are free to negotiate and agree on their own terms and conditions. However, the use of standard form contracts can provide a level of certainty and consistency in the management of construction projects, which can be beneficial for all parties involved.

Contracts are an essential part of construction law in South Africa. They provide legal protections for all parties involved and establish the terms and conditions of a construction project. Understanding the different types of contracts, key elements of a contract, and the legal remedies available in case of a breach is crucial for all parties involved in construction projects. If you need legal advice on contracts in construction law in South Africa, seek the assistance of a qualified legal professional.

Barter McKellar has experienced Construction Attorneys who have a thorough and comprehensive understanding of the challenges faced by the engineering and construction industries. This understanding is borne out of years of experience in this industry, which includes 10 years of hands on experience (both on and off site) as in-house legal counsel in the mining, construction and engineering industry. Our Engineering & Construction Lawyers understand the practical realities and issues that businesses in this industry deal with on a daily basis and how these affect a project’s life cycle and the bottom line. If you would like to set up a consultation, contact our offices.