Guide to Facilities Management Contracts

Table of Contents:
Foreword 4 1. Introduction 5 2. Contract Formation and Tendering 6 2.1 Formation of a Contract 6 2.2 Tendering 6 Panel: Recovery of Tender Costs 6 2.3 Is There a Binding Contract? 7 2.4 Letters of Intent 7 3. Services and Specifications 9 Panel: Variation of Contract Beyond Original Scope 9 4. Contract Duration 11 5. Facilities Management Contractor's Obligations 12 5.1 Absolute or Reasonable Skill and Care Obligations? 12 5.2 Compliance With Client's Instructions 13 5.3 Supply of Goods and Materials 13 5.4 Compliance With Statutory Requirements 14 5.5 Health and Safety 15 Panel: The Construction (Design and Management) Regulations 1994 15 5.6 Client's Requirements Relating to the Site 16 5.7 Implied Contractual Terms 16 Panel: Implication of Terms 17 6. Limitations on Liability 18 6.1 Recovery of Loss at Common Law 18 6.2 Common Methods of Limiting Liability 18 Panel: Exclusion Clause Drafting 19 7. Insurance and Indemnities 20 7.1 Insurance 20 7.2 Indemnities 21 8. Payment 22 8.1 Lump Sum Payment Option 22 8.2 Cost Plus Payment Option 22 8.3 Payment by Rates and Prices 23 8.4 Additional Payment for Additional Services 23 8.5 Price Adjustment Dependent on Performance 23 Panel: Right to Claim Damages and/or an Abatement 25 8.6 Mechanics of Payment 25 9. Assignment and Sub-Contracting 27 9.1 By the Facilities Management Contractor 27 9.2 By the Client 27 10. TUPE and Transfer Activities 29 10.1 When Does TUPE Apply? 29 10.2 Effect of TUPE 30 10.3 To Whom Does TUPE Apply? 30 10.4 TUPE Provisions and Facilities Management Contracts 31 10.5 Future Developments 31 11. Termination 32 11.1 At Common Law 32 11.2 For Insolvency or Force Majeure 32 11.3 For Breach 32 11.4 For Convenience 32 11.5 Consequences of Termination 32 12. Dispute Resolution 33 12.1 Informal Dispute Resolution Procedures and Mediation 33 12.2 Arbitration 33 12.3 Litigation 33 13. The Housing Grants, Construction & Regeneration Act 1996 35 13.1 The Effect of the Act 35 13.2 What is a "Construction Contract" Under the Act? 35 13.3 Application of the Act to Facilities Management Contracts 35 Panel: The Scheme for Construction Contracts 36 13.4 Act Compliant Provisions in Facilities Management Contracts 37 14. Private Finance Initiative/Public Private Partnership Facilities Management Contracts 38 15. Standard Forms of Facilities Management Contract 39 About the Author 40 Acknowledgement 40