Legal Issues in Construction Management
Legal Issues in Construction Management
Legal Issues in Construction Management
CONSTRUCTION
MANAGEMENT
GILBERT R. HUFANA
Reality Check
In the construction
management world,
potential legal issues
and pitfalls are part
of day- to-day
operations.
Common Issues Encountered…
(1) non-compliance with
minimum standards set forth
by law for design and
construction of civil structures
(2) breach of contractual
relations between contractors,
owners, and subcontractor;
and between contractors and
labor.
POLICE POWER
The state has the duty to
protect the country and its
population from threats to
the public health and safety.
Fire safety in
buildings,
structures &
facilities
PD 856: Sanitation Code of the PH
• Promotion and preservation
of the health of the people
• Raise the health standards of
individuals and communities
Employer
or client
Contractor
Rights & Obligations of Employers/Clients
RIGHTS OBLIGATIONS
To inspect the works or any portion thereof To pay the contract price
To require the correction of defects due to To provide the contractor access to and
faulty materials, equipment, or workmanship possession of the site, to enable the contractor
that may appear within a certain period upon to perform the construction works
completion of the works
To stop the works or any portion thereof, if the To provide pertinent information regarding
contractor fails to complete or correct the the site that may be needed by the contractor
same, and to carry out or correct the work by in connection with the construction works
itself or through other contractors
To obtain title and ownership over all To obtain relevant government permits and
completed works, and over all materials, licenses needed for the project
equipment, tools, and supplies for which
payment has been made under the contract
To request variations, in accordance with the To obtain and maintain the relevant insurance
contract coverages required under the contract
Rights of the Contractor
• To receive the contract price
• To be given access to and possession of the site, to
enable the contractor to perform the constructions
works
• To receive pertinent information regarding the site
that may be needed by the contractor in connection
with the construction works
• To receive an extension of time, where applicable, in
accordance with the terms of the contract
Obligations of the Contractor
• To perform and complete the works within the
timelines provided in the contract
• To perform the works using materials, goods, equipment
and methods of constructions of the quality and standards
required under the contract
• To provide and pay for all labor, materials, equipment,
tools, construction equipment, and all machinery,
transportation, and other facilities and services necessary
for the proper execution and completion of the works
• To ensure security and safety at the site
Obligations of the Contractor
• To obtain relevant government permits and
licenses needed for the project
• To warrant that the works conform with the requirements
of the applicable law, the contract and other requirements of
the employer, and are free from hidden defects, imperfections
or faults
• To rectify or remedy any defect or deficiency during the
construction period or within a period of time thereafter
• To comply with all relevant labor laws applying to its
employees
Subcontractors
• Construction contracts may or may not allow the contractor
to subcontract the whole or a portion of the works, or may
require the contractor to obtain the employer’s consent prior
to such subcontracting.
• If subcontracting is allowed, it is generally the contractor
that remains liable to the employer for all the acts of its
subcontractors, including any negligent, willful or reckless
acts or omissions on the part of any subcontractor.
• It is also the contractor, and not the employer, that is typically
responsible for the proper and timely payment of all
subcontractors.
Construction Contracts content…
• Scope of the works
• program of works;
• terms of reference;
• drawings (including supplementary
details and shop drawings) and
specifications prepared by the architect
and/or other relevant consultants; and
• project schedules and milestones
• Variations
• Design
• Construction
• Site Access
Construction Contracts content…
• Permits
• Completion, takeover & Delivery
• Defects & Defects Liability Period
• Price
• Payment
• Planning
• Delays
• Liability
• Arbitration Clause
Defects &
Defects
Liability
Period
• The construction contract usually provides for a defects
liability period – usually one year counted from
Substantial or Final Completion.
• In the absence of any contractual stipulation, the defects
liability period under the Civil Code (Article 1723)
applies – 15 years from completion date.
The Contractor is responsible
for defects
• In the event that defects are discovered during the
defects liability period, the employer may require
that the defects be remedied at the sole cost of the
contractor.
• If the contractor fails to remedy the defects, the
employer may (i) remedy the defects or request
another party to do so, and (ii) claim from the
warranty security or retention an amount to defray
the costs for such rectification.
Who is liable for the collapse of the structure?
DESIGNER CONTRACTOR
by reason of a defect in those on account of defects in the
plans and specifications construction or the use of
materials of inferior quality
furnished by the contractor
Breach of
the aggrieved/injured
party may choose
between 2 remedies