ABC 3105- Construction Law

Preamble

A Construction Project Manager is required to be knowledgeable in law for him/her to be able to

manage projects effectively

While the aim of this course is to develop the student’s understanding of the Law and legal practice
related to the Construction Industry, the basic assumption is that all students have a basic
understanding of law and its different branches.

Imagine being commissioned by a Blue Chip organization that decides to develop its own office
facility outside the CBD, or develops for sale or rent or both. What challenges do you think you will
face as a Project Manager?

 Identify a parcel of land – that land might be in a residential zone…hence restrictions in as

far as use of the land and restrictive plot ratios and coverage – hence law concerning land,
process and procedure for obtaining change of use, etc
 Developer to form SPV to handle the project – hence company law
 Purchase of land – hence conveyancy
 Appointing professionals and contractors – hence law of contract, procurement law,
procurement strategies etc
 Design of building – tort, alternative dispute resolution (ADR) in case of conflict between
professionals and client
 Actual construction – contract, tort, labour law (workman’s compensation, minimum wage
etc), ADR incase of conflict etc
 Completion and disposal of property – conveyancy, company law, tort, etc

Aim

To develop the student’s understanding of the law and legal practice related to
the construction industry.

Objectives
On completion of the course, a student should: -
1. Outline the laws governing construction projects, construction sites and
constructed facilities;
2. Describe the principles of the laws of tort and contract, and their relevance
to various players in the construction industry;
3. Differentiate between various standard forms of contract used in
construction contracts;
5. Describe alternative dispute resolution methods;
6. Apply the principals and provisions of construction law to avoidance and
resolution of disputes in construction projects.
Learning outcomes

- Write reports and advice for clients/senior management

- Participate in group discussions
- Think critically through argument and peer debate
- Exercise of initiative and personal responsibility
- Decision making in complex and unpredictable situations

Content
1. Law of tort
2. Law of contract
3. Standard forms of Contract
4. Land law, Conveyancy
5. Company law
6. Alterative dispute resolution methods
7. Labour law

The Nature of Law

Law can be described as a collection of rules of human conduct prescribed by human beings for the
obedience of human beings. The laws of any country are said to be to some extent an expression of
the morality of that country. Rules of law should aim to achieve justice. The function of the courts is
to administer justice according to the law.

There is private law and public law. Public law consists of those fields of law in which the state has
an interest and includes Constitutional law, Administrative Law and Criminal Law. Constitutional Law
consists of those rules which regulate the relationship between the different organs of state.
Administrative law is the law relating to public administration. Criminal Law consists of wrongs
committed against the State. The penal code of Kenya contains the bulk of these wrongs and
consists among other offences against the person, offences against property and offences against
the security of the State. The principal objective of criminal law may be seen to be to deter and to
punish.

Private Law is that part of the law which is primarily concerned with the rights and duties of persons
towards persons. It embraces the law of tort, law contract, law of property and law of succession.
Therefore, this course will mainly deal with private law in so far as it relates to construction.

It is also important to have a basic understanding of the sources of law of Kenya since private law is
grounded in the different sources of law of Kenya. They are:

1. The Constitution of Kenya

2. The Legislation which includes:

i) Acts of the Parliament of Kenya

ii) Specific Acts of the Parliament of the UK cited in the schedule to the Judicature Act and the Law of
contract Act.
iii) One Act of Parliament of India
iv) English statutes of general application in force in England on 12 th August 1897

3. Subsidiary legislation
4. The substance of the common law, the doctrines of equity and the Statutes of general
application in force in England on the 12 th Aug 1897. It should be borne in mind that these
only apply “so far only as the circumstances of Kenya and its inhabitants permit and subject
to such qualifications as those circumstances may render necessary.

5. African customary law

6. In a limited way, Islamic law.
7. Hindu Customs

(It is important to note that with the new constitution, many changes are going to occur especially as
regards Land Law)

Learning Strategy to be adopted

Students shall be assigned a topic each to research on and will be required to prepare notes and
present to their colleagues using powerpoint slides. The presentations will be carried out within
1.5hrs and the remaining 1.5hrs will be for discussions. The presentations will account for 5 marks of
the continuous assessment tests.

There will be one CAT and one assignment. The CAT, Assignment and presentation will be an average
of 30 Marks. The final exam will be out of 70 Marks.

Overview of the Content topics

1. Law of Tort

A tort is a civil wrong which gives rise to an action at common law for unliquidated damages. The
rules of the law of tort determine when one party can be compensated for the behaviour of another.
The right of action in tort springs from the breach of a duty which a person owes to another person
in general.
The general areas to be covered should include but not limited to: general defences, capacity to sue,
vicarious liability, specific torts mainly Trespass, Nuisance, Negligence, Occupier’s liability, Remedies,
Apportionment of liability etc

2. Law of Contract

The law of contract is a set of rules governing the relationship, content and validity of an agreement
between two or more persons (individuals, companies or other institution) regarding the sale of
goods, provision of services or exchange of interests or ownership. While this is a wide definition it
does not cover the full ambit of situations in which contract law will apply. The reason for this is due
to the vast number of examples in which contracts can arise in everyday life. Contract law has been
more formally defined as a promise or set of promises which the law will enforce. Another definition
and a somewhat competing view, is that a contract is an agreement giving rise to obligations which
are enforced or recognized by law.

The general areas to be covered should include:

-Types of contract, essentials of a valid contract, terms of contract, forms of contract, conditions of
contract, contract discharge, remedies. Damages; quantum meruit, specific performances.
-Commercial Law: General principles of purchase and sale of goods
- Law of Agency

3. Standard forms of contract

Standard forms of contract have been a feature of the construction law landscape for a very long
time. A noted early example is the section dealing with construction procurement included in the so-
called “Code of Hammurabi”, dating from Babylon in about 1760 BCE. Those provisions include the
following, straightforward (yet, somewhat onerous!) stipulations as to the consequences of poor
workmanship.

229 If a builder build a house for someone, and does not construct it properly, and the
house which he built fall in and kill its owner, then that builder shall be put to death.

233 If a builder build a house for someone, even though he has not yet completed it; if then
the walls seem toppling, the builder must then make the walls solid from his own means.

Topic to be covered should include definition, advantages, disadvantages, common provisions and
components of standard contracts, choosing a contact, specific contracts including JBC, FIDIC and
MOPW contract and KABCEC

4. Land Law

Land Law, known also as the “law of real property” is a branch of private law .It can be considered as
a division of the wider law of property, deriving its special nature from the unique characteristics of
its subject matter, land. To cover Legal concept of land, classification of rights and interests in land ie
Estates, Encumbrances and servitudes, qualifications to freedom of use, abuse and disposition, rights
of tenants and land lords Land law and conveyancing, extent and meaning of land and intrusions
upon it, easements, restrictive covenants, Survey or property to be purchased, business tenancies,
estoppels, sectional property Act, etc.
5. Company Law

The nature of a company, incorporation, significance of incorporation, effects of incorporation,

duties of directors, financing of a company and company meetings. Company law in relation to
BORAQS, Cap 525, ethics and intellectual property

6. Dispute resolution

Lord Denning is quoted as saying that:

Cash flow is the life-blood of the construction industry. It might be added
that when the circulation is impeded by clots the consequence is
thrombosis…one of the greatest threats to cash flow is the incidence of
disputes. Resolving them by litigation is frequently lengthy and expensive.
Arbitration in the construction context is often as bad or worse.

This topic should cover aspects of building dispute resolution including litigation, arbitration,
mediation or conciliation, negotiation, adjudication and ombudsman

7. Labor law

Construction, especially in Kenya, is labor intensive. For this reason, it is paramount that a
construction project manager is knowledgeable on labor laws. Problems with labor can certainly
impact on the success of a project and therefore, matters to do with making adequate provisions
and ensuring that the rights of laborers are covered is vital. This topic should cover issues to do with
minimum wages, workman’s compensations, unions, Occupational health and safety, and Industrial
relations, Basic principles of individual employment contract, collective bargaining, labour disputes
and settlement.