What is novated design

Due to the specific nature of novation agreements, if you are entering one, we suggest that you take some legal advice. They can be tricky after all! Please visit the SRA website for details of the professional conduct rules which Gateley Legal must comply with.

The Technology and Construction Court has passed down judgement on the enforceability of liquidated damages clauses in the absence of contractual apportionment for ….

To avoid these situations, during the tender phase, contractors should insist that all copies of the consultant agreements are provided from the outset. Contractors should seek legal review of these agreements in detail and only accept warranties under the building contract which are consistent with those under the consultant agreement.

Often, the principal will not yet have entered the consultant agreement with the consultant when it invites a contractor to tender. We recommend that contractors have a template consultant agreement that is suitable to engage most consultants and consistent with terms it would generally accept under a building contract. If a novice principal does not yet have the consultants formally engaged, you could offer up your template agreement, which will provide you with better protection than most standard consultancy agreements.

As a contractor, it is ideal for this wording to remain in the novation deed as it can be used to argue that all risk of pre-novation design is assumed by the principal.

There is a potential inconsistency between the above provision and clause 2. Under clause 2. If you are not confident in managing this design risk, we recommend the following amendment to clause 9. In the absence of this amendment, the contractor arguably inherits all risks associated with any weaknesses of the original design during the post-novation phase, with no relief for additional time or cost for unforeseen changes.

Accordingly, contractors must make appropriate inquiries during the tendering phase to allow in terms of both time and cost for any re-design work that may be necessary to:. Based on our experience, the practical ways to minimise exposure to the risk of design errors are:.

The AS unamended novation deed is unclear about the amounts owing to the consultant in connection with design work before novation. Clause 1 of the proforma deed simply states:. The plain meaning of these words suggest that they apply to moneys which have become due to the consultant under the contract but may not apply to moneys for work carried out by the consultant under the original contract which have yet to fall due. The novation procurement process and the risk allocation for the system will be analysed.

A case study on a recently completed project using the novation contract system is also included in the paper. Hong Kong China. See Practice Note: Assignment in construction contracts.

Novation amounts to the extinguishing of the original contract and the substitution of a new contract under which the same acts and obligations are to be performed, but by different parties. In general terms, the effect is that the outgoing party is released from all future liabilities under the contract. The express consent of all parties to the original contract, and of the incoming party, is required for a novation to be effective: a novation, therefore, tends to take the form of a tripartite agreement.

Parties generally enter into a formal written agreement, although there is no prescribed form which such agreement must take. If not executed as a deed, consideration must be provided if the instrument effecting the novation is to be enforceable.

For examples, see Precedents:. Deed of novation of a consultant—employer to contractor. Deed of novation of a contractor—employer to second employer. Also see: Novation in construction projects—checklist , which sets out provisions addressed in a novation agreement to help review, draft and negotiate novation agreements.

See Precedents:.