Index of Content

Hong Kong's New Form of Building Contract : 20 Issues to be Aware Of

    General Matters

  1. A new and overriding duty on the parties to act "reasonably and expeditiously" when administering the contract.
  2. Provisions aimed at curtailing multi-tiered sub-contracting.
  3. A requirement for bonds from both the main contractor and nominated sub-contractors.

  4. Programming/Extensions of Time

  5. Enhanced provisions dealing with the production and use of a Master Programme.
  6. Interest payable upon the refunding of liquidated damages.
  7. A significant increase in the grounds for granting extensions of time.

  8. Variations

  9. Express power to issue Variations up to date of the Defects Rectification Certificate.
  10. Variations are now defined as either changes to the work ill the manner in which it is executed.
  11. Contractor has a reasonable right to object to variations concerning the manner in which the work is undertaken.
  12. Contractor can question the power of the Architect and also seek clarification of whether an instruction is a Variation.
  13. Valuation rules now restrict changes to "conditions" as physical and not financial.
  14. Variations can now factor in the effect of a substantial change in quantity although the Contract does not state what aspects of the rate can be altered.
  15. The three traditional "rules" of valuation are narrowly defined. There is no longer a test of reasonableness regarding whether or not the rates can be used. The quantity surveyor is obliged only to consider physical circumstances of character, conditions and quantity of work.
  16. The Contract refers to valuation by "fair rates" and also a "fair valuation", suggesting there is a distinction. It may be the case that fair rates can be derived from the Contract Bills whereas a fair valuation can be from extrinsic means.
  17. The consequential effect of a Variation on other work can now be valued.

  18. Loss and Expense

  19. Loss and expense (and disturbance) arising from variations is expressly excluded from the "value" of Variations; now a "cost" item.
  20. Loss and expense qualifying events are substantially increased.
  21. The definition of loss and expense does not state whether or not it includes profit.
  22. Strict notice and reporting requirements for claims for additional payment. Failure to comply with either may result in claim being waived.
  23. All claims for extra payment are to be resolved quickly, generally within 60 days of notifying.

Heller Ehrman
September 2005

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