OVERVIEW OF CONSTRUCTION CONTRACT IN NIGERIA

OVERVIEW OF CONSTRUCTION CONTRACT IN NIGERIA

In Nigeria, the standard forms of construction contract commonly used in the construction industry include:

The FIDIC Forms.

The SFBCN, 1990.

The GCC, 2011.

The JCT standard form of contract, 2005.

The Federal Ministry of Works Contract (variant of the JCT).

Nigeria is a common law country. The legal requirements for the creation of a legally binding contract in Nigeria are offer, acceptance, consideration, intention to create legal relations and legal capacity.

Contracts generally do not require any formalities and for this reason there are no mandatory law requirements which need to be reflected in a construction contract. However, where the construction contract has to do with building over landed property, then such construction contract must be in writing, having regard to section 4 of the Statute of Frauds 1677 and section 5 of the Law Reform (Contracts) Act (No. 64), 1961, which require contracts involving lease of land or any form of interest in land to be in writing.

In Nigeria, construction contracts are always in writing because there is a need to have the terms and conditions of the contract clearly spelt out. This is due to the huge capital outlay of the project and the need to avoid controversies thereon.

Furthermore, construction contracts in Nigeria always contain a provision for adjudication or arbitration. The inclusion of an adjudication or arbitration clause in a construction contract makes it mandatory for the contract to be in writing as envisaged by the Arbitration and Conciliation Act, Cap. A18, LFN, 2004.

In Nigeria, the standard forms of construction contract commonly used in the construction industry include:

Nigeria is a common law country. The legal requirements for the creation of a legally binding contract in Nigeria are offer, acceptance, consideration, intention to create legal relations and legal capacity.

Contracts generally do not require any formalities and for this reason there are no mandatory law requirements which need to be reflected in a construction contract. However, where the construction contract has to do with building over landed property, then such construction contract must be in writing, having regard to section 4 of the Statute of Frauds 1677 and section 5 of the Law Reform (Contracts) Act (No. 64), 1961, which require contracts involving lease of land or any form of interest in land to be in writing.

In Nigeria, construction contracts are always in writing because there is a need to have the terms and conditions of the contract clearly spelt out. This is due to the huge capital outlay of the project and the need to avoid controversies thereon.

Furthermore, construction contracts in Nigeria always contain a provision for adjudication or arbitration. The inclusion of an adjudication or arbitration clause in a construction contract makes it mandatory for the contract to be in writing as envisaged by the Arbitration and Conciliation Act, Cap. A18, LFN, 200

For the work to meet the expectation of the Employer and for the Contractor to satisfactorily deliver the work, certain provisions must be included in the Contract to define the positions of the parties. This will not only enable the work to be completed within the stipulated period, it will also prevent unnecessary conflicts, waste of time and resources of the parties.

(1) Scope of Construction Work

(2) Period of Completion

(3) Contract Sum

(4) Defects Liability Period and Payment of Retention Sum

(5) Insurance Policy

(6) Dispute Resolution

The most common standard forms of construction contract in Nigeria are: the Joint Contract Tribunal (JCT) standard form of contract (without quantities), 2005 Edition; the standard form of building contract in Nigeria, 1990 (SFBCN); the International Federation of Consulting Engineers Contract (FIDIC), otherwise known as “The FIDIC conditions of contract for construction for building and engineering works designed by the employer, 1999 Edition”; the general conditions of contract for the procurement of works, 2011 (GCC); and the Federal Ministry of Works standard conditions of contract (Road works), 1999 Edition (FMOWC). The use of standard-form contracts in Nigeria has been found to be convenient, time-saving and cost-effective in the construction industry.

Construction contracts usually contain provisions for the employment of a third party as the construction manager, who is an agent of the employer. He also performs quasi-judicial decision-making functions and supervises the works. Such construction manager is bound to act impartially. In directing relations between the employer and the contractor, the construction manager’s duty as an agent of the employer is limited by the terms of the contract and he must act independently and impartially, when communicating with both of them. However, except where the provisions of the contract place limitations on the powers of the construction manager, the duty of the construction manager is absolute.

A party to a construction contract who is aggrieved with the conduct of the third party is at liberty to resort to court in the event that the third party breaches his duty to act impartially.

NB: This article is not a legal advice, and under no circumstance should you take it as such. All information provided are for general purpose only. For information, please contact chamanlawfirm@gmail.com

WRITTEN BY CHAMAN LAW FIRM TEAM

EMAIL: chamanlawfirm@gmail.com

TEL: 08065553671, 08024230080