Construction contracts: Global branding

One can look at globalization as an inherently bad thing. The argument for this is often made by citing the example of city centres around the world and how they are all beginning to look the same, adorned by signs advertising global brands. The complaint is that it is becoming much harder to find a quirky coffee shop or a boutique hotel bursting with character, and such outlets are being driven out of business. My own experience is that, while there are fine examples of each, there are countless others that really do not fit the bill and this only becomes apparent after you have paid.

What has this to do with the construction industry in the UK and globally? To start with, it is worth mentioning that UK construction has a great brand internationally, as does English law, and both are as recognisable as the iconic brands we tend to associate with globalization. While most people will think of construction itself as an export, what about construction contracts - is there an innovative opportunity here?

Before getting carried away with this, it is important to consider what clients and customers want from contracts. Of course, there may be some who want quirky and boutique but the reality is that, when dealing with business as usual transactions, clients want consistency wherever they do business. This is particularly the case for large corporations that have a footprint across the globe. They actually find it difficult to accept that each country has a bespoke way of approaching construction contracts that cannot be changed. On the other hand, construction industries around the world have worked, in some cases for nearly a century, on the basis of national contracts. The JCT has had its 80th birthday and the New Engineering Contract has already clocked up two decades.

Keeping language simple and concise has many benefits, not least of which is that contracts may need translation and the cost of doing that is directly related to the length of the legal drafting

Is it possible to blend together the national and international? Let’s consider the road blocks. Most of us like to stay in our comfort zone - in a curious way, that same feeling of comfort is why we are both reassured by seeing a global brand in another country but resistant to putting down our local brand at home.

Much can be said about how different forms of construction contract are so fundamentally different, that they simply will not be understood or accepted in different markets. I have never bought into this theory - I have yet to encounter a construction contract anywhere that does not deal with time, price and quality. The concepts of liability caps, indemnities and copyright are universally recognised and there is pretty much an international market position for each of them. While the legal systems of different countries may lead them to operate differently from country to country, it is not often that a given concept cannot be implemented to some degree in a particular country. Take the idea of a limitation period - we’re used to seeing 12 years in the UK where contracts are executed as deeds. In some countries the limitation period has to be more than 12 years, in others it cannot be. however, I am not aware of any country that does not allow a limitation period to operate at all.

In practically every country, the convention of construction contract drafting is to start from a published set of general conditions that are then changed by a set of amendments (or particular conditions). What tends to happen at this point is that the amendments attempt to turn the underlying contract into something else – usually to make it the same as the form of contract with which the drafter is most used to dealing.

However, it is possible to take a different path at this point and adapt the contract to meet the client’s requirements, rather than using legal drafting to create a comfort zone. What does this mean in practice? Clear language is key as, while many global contracts will be drafted, negotiated and executed in English, English may well be the second language of one or both sides to the contract. Never has it been more important for contract drafters to steer clear of legalese and avoid the temptation to add words at the expense of communicating clearly. My favourite example of this has long been using “in the event that” when “if” does exactly the same job.

Keeping language simple and concise has many other benefits, not least of which is that contracts may need translation (for legal or commercial reasons) and the cost of doing that is directly related to the length of the legal drafting.

As far as I’m concerned, we all benefit from keeping it simple.

Michael Conroy Harris is a construction specialist at Eversheds