The Construction Leadership Council (CLC) has voiced significant concerns about modifications to standard contracts by clients.
- Such changes are described as burdensome and potentially problematic for contractors’ insurance coverage.
- The CLC’s Professional Indemnity Insurance (PII) working group issued a stern warning about unnecessary amendments.
- Amendments often impose excessive liabilities on contractors, exceeding the scope of their PII coverage.
- Clients are urged to adopt a sensible approach, using unamended templates to clarify roles and responsibilities.
The Construction Leadership Council (CLC) has publicly expressed its apprehensions regarding clients who modify standard contracts, describing such amendments as excessively burdensome. These changes are reported to pose significant challenges to contractors’ insurance coverage, potentially leading to situations where contractors face severe financial consequences.
The CLC’s Professional Indemnity Insurance (PII) working group has advised against unnecessarily altering standard contract terms. They emphasise the potential risks of exposing contractors to Professional Indemnity Insurance (PII) coverage gaps, which could leave contractors vulnerable to claims not covered by their insurance, leading to financial instability.
Standard contracts are increasingly being modified to include onerous liabilities and obligations, often disproportionate to the nature of the work involved. Such amendments fall outside the scope of contractors’ existing PII cover, which raises the risk of claims for losses and damages not being covered by insurance, exposing contractors to potentially ruinous financial liabilities.
In their statement, the CLC pointed out that these burdensome amendments render contracts unfeasible, restrict competition, elevate risks, and inflate legal costs as contractors attempt to navigate the complex legal liabilities introduced by these changes. This situation, as noted, is not beneficial for any involved party.
Additionally, these amendments contradict the recommendations from the Grenfell Tower Inquiry phase two report, which advocates for clear delineation of responsibilities in fire safety design. The CLC suggests that maintaining the original, unamended contract templates with explicit clarity regarding roles and responsibilities could mitigate such issues.
The working group highlighted the necessity for clients and their legal advisors to begin with unamended contract templates. Clients should bear the explicit responsibility of explaining any amendments that are necessary for particular projects, with any changes clearly outlined.
Samantha Peat, the chair of the working group, advocated for a balanced approach that would alleviate risk distribution while enhancing clarity for both project teams and PII providers. Such an approach supports ongoing efforts to reinforce accountability and competence, aligning with the Building Safety Act’s mandate for improved information management.
The CLC’s recommendations aim to foster a more sustainable contracting environment by discouraging unnecessary contract amendments.
