The Construction Leadership Council (CLC) has published a statement on the ongoing practice within the construction sector, of industry-approved forms of contract being amended by clients and their solicitors to introduce terms that are onerous and/or difficult to insure. It is the view of the CLC, that standard form building and engineering contracts and professional services contracts issued by contract-producing bodies, should be used by clients with no amendments, except where necessary in the context of project-specific risks and relationships. The CLC believes that onerous amendments make contracts unviable, reduce competition, increase risk and lead to unnecessary legal costs required to review legal liabilities created by the amendments.
Christopher Jones ACG, Director of Legal, underwriting and Claims at the IUA, commented: “As members of the CLC Professional Indemnity Insurance Committee, we were pleased to contribute to the CLC Statement. Insurance is priced on the assumption that risk is effectively shared and managed through the supply chain by competent individuals against a common and shared understanding of risk and how it should be managed. This is primarily based on the adoption of standard forms of contract that clearly detail and apportion risk in line with agreed industry norms. We recommend that contracts should only be amended where deemed beneficial and necessary in the specific circumstances, are done with consultation with your insurers at the earliest stage and with the full knowledge that all parties in the contractual chain understand the risks being transferred, are competent to manage them and have appropriate cover in place.”
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