Last edited 03 Dec 2020

Contractual rights in the construction industry


[edit] Introduction

The classic 19th-century definition of a contract is 'a promise or set of promises which the law will enforce' (ref. Pollock, Principles of Contract 13th edition). That is, there is reciprocity of undertaking passing between the promisor and the promisee. In a contract, rights and obligations are created by the acts of agreement between the parties to the contract.

Contractual rights are therefore those rights that are guaranteed under a contract and which are legally-enforceable.

Typically, contracts may cover the exchange of goods, services, money and other subject matter.

In employment law, contractual rights are rights enjoyed by employees as a result of having entered into a contract of employment (or agreement), whether written or verbal, with an employer. Typically, this may include rights to payment of salary, holiday entitlement, lunch breaks, notice of employment termination and so on.

A breach of contract occurs if the rights of one party under a contract are breached by any of the other parties; the wronged party then has the legal right to compensation which may include damages and cancellation. For more information see: Breach of contract.

Parties may also enjoy contractual rights that are not expressed in a contract. These ‘implied terms’ may:

  • Be too obvious to need to be stated;
  • Constitute common, well-known and well-practised elements within the industry concerned;
  • Be necessary for the successful operation of contract and
  • By their behaviour, the parties to the employment contract are deemed to have accepted implied terms.

For more information see: Implied terms.

[edit] Construction

In construction, a typical contract may be between the client (employer) and the contractor who agree to the construction, repair, modification, renovation or demolition of something for an agreed price, to agreed standards and to an agreed timescale. Generally, the client will have a contractual right to receive delivery of the object in question (eg, a building) according to the contract, while the contractor has the right to be paid for that delivery. Either party may take legal action if their contractual rights are breached.

[edit] Rights and obligations

Contractual rights give rise to contractual obligations. If the client, as above, has a contractual right to be provided with an agreed object/building then the contractor has an obligation to provide it according to the terms of the contract. Similarly, the client will be obliged to pay the contractor upon delivery of the agreed object/building according to the terms of the contract.

For more information see: Contractual obligation.

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