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    Contracts Security Of Payments


    Law is a set of systematic rules and regulations that are created and are enforceable with the help of social and governmental institutions for the effective regulation of behaviour. It helps in the effective regulation of the social behaviour of an individual. In this context, it can be evaluated that there are different types and forms of law which can be characterised as commercial law, corporate law, contracts securities law or construction law (Angrist, Chen, and Song, 2011). In this present report, various aspects and concepts related to the Construction law will be discussed. In this regard, the term contract in the context of security of payments will also be illustrated. Also, different cases related to contract and different concepts will also be demonstrated.

    Identification Of a Contract And The Way In Which It Has Been Formed

    A contract is a legal written document which is consist of all the essential particulars and elements in it. In other words, it can be defined as the agreement which is comprises of all the essential elements which are required to make a contract a legal one (Berton, Richiardi and Sacchi, 2012). In this case, it can be further noted that written agreement is formed between the parties to the contract so that they should have an appropriate idea regarding the terms and conditions that has been imposed on each other by both the persons or parties in the contract.

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    With reference to the given scenario, Agro Builders Inc enters into a contract with the Supersafe Prisons Inc for building of new prison facility. The former party also engaged the Ego architects for an intention to prepare architectural drawings. After sometime, the drawings were presented and approved by the Agro inc. but later on it has been refused by the said party that it did not comprised of all the recent techniques and techniques which are required to be there in accordance with the contract (Saunders and Cornett, 2014). It can also be said that after sometime, in a meeting organized in between both the parties, they have agreed with the terms and conditions in a verbal form and agreed that all the proceedings will be continue on the basis of the said agreed terms and conditions. After some time, Agro Inc refused to pay the amount as drawings were not correct and also the conditions are not complied with the terms of written contract.

    There are different types of contract which can be characterised as verbal and written contract. A verbal contract is the one which is formed on the basis of words of mouth. On the other hand, written contract is the contract which is framed by both the parties to the contract with the agreed terms and conditions in a written form (Chen, Li and Susilo, 2012). In accordance with the provisions of law, verbal contract is not considered as an effective form of written declaration as it is not in written form. Moreover, in verbal form of contract , it does not avoid any type of conflicts as parties may change their terms and conditions accordingly.

    With reference to the given case, it can be evaluated that there is a formation of contract between Agro inc and Ego architects. The contract has been framed in the terms of verbal contract. The contract has been settled because both the parties have agreed with the terms and conditions specified by both of them and also they have agreed to continue their proceedings on the basis of the verbal contract that has been framed between both of them.

    Can The Terms Of Verbal Contract Vary From Written Agreement

    With reference to the given scenario, it may be noted that Agro Inc and Ego Architects has formed their contractual relationship between them through verbal agreement or contract. In this case, the terms of verbal contract may not differ from written agreement as terms and conditions are same in the written agreement as well (Broder and Tucker, 2011). The major difference is that the all the terms that has been agreed by the parties to the contract will be framed in the written format if they would have been agree to establish their contractual relationship through written contract. It can be noted that verbal contract is a contract which is made through the words of mouth, but on the other hand, written agreement is a contract which is in the written format. Written contract is consist of all the terms and conditions agreed by the parties in a written form.

    Also, in the case of any disputes between both the parties, it may be noted that there can be many disadvantages in the context of the verbal contract. Also, it can be assessed that a written agreement will present a good sense in such a way that it will reduce the risks and any type of ambiguity. In return it ultimately results in the minimisations of the risks in terms of disputes in between the parties (Brice and Reeder, 2011). So, in this case, the terms and conditions agreed by both the parties cannot differ, but the way of communication of agreed conditions creates a difference. It can be further noted that in the given case, Agro Inc refuses to pay the amount for the Ego Architects as there were no written contract between the parties. In addition to this, it has been suggested for the effective transaction between the parties to form a complete and legal written contract which will minimise risks and chances of confusion and ambiguity.

    Legal Principles Applicable And The Hierarchy Of Contract Documentation

    In accordance with the provisions of the construction law, it can be noted that there are many parts of construction law which deals in varied forms of fields. It can be characterised as the contract law, commercial law, tort law etc (Chirelstein, 2013). On the other hand, it can be noted that construction contracts are the contracts which are related to the transaction of construction of buildings etc. also, a standard form of contract has been provided by the arbitration so as to avoid any type of misunderstanding and ambiguity. It can be further noted that in regard to public contract the parties to an agreement negotiates the effects of contract and other requirement of an agreement.

    Deviation has been considered as another term which means that when the plan has been adopted for an intention of form of a building and also, during the work in progress, if any changes are made which results in the deviation from the original plan that has been made will be referred as the deviation from he actual plan. So, with reference to the given case, it can be evaluated that there Agro Inc has not accepted the drawings of Ego Architects as the drawings are not complete and up to the mark which causes deviation in their original plan.

    Hierarchy of contract documents will be considered as the situation in which the court by its decision held that one rule of the interpretation is that where a term which has been specifically drafted or formed for a contract or an agreement , then that term will precedence over that standard term (Deakin and Morris, 2012). Although this rule that can be considered as the reasonable and also it is not applicable for all contracts.

    Various Legal Principles That Has Been Discussed In The Context Of The Case Are As

    • A contract should be form with all the essential requirements present in it. It can also be noted that it should be in written form which should avoid every ambiguity which might arise in near future (Rejda, 2012).
    • Both the parties to the contract should sign the contract which shows that they have agreed with all the terms and conditions specified in relation to the contract.
    • All Terms and conditions relating to the contract should be clearly mentioned in the contract which should be agreed by both the parties to the contract and should serve as an effective basis depending on which the contract will be in process by the parties.

    Legal Impact Of Stamping The Specifications “Approved” On Any Future Contractual Point

    There is a great significance of stamping the specifications that has been approved on any future contractual point. Stamping can be considered as the legal effect in any contract. It can also be treated as the same as the concept (Derthick, 2011). Seal is the concept, which is affixed in the contract having a special significance at various times having a special significance. It means that the contract has been approved in the legal terms. It can also signifies that a contract has been approved in a legal manner. It has its own significance as it removes the necessity of consideration or a value in a written declaration. It is also considered as an important part of a contract as it would enable the parties to the contract to realise the legal effect of contract and also it demonstrates the seal has been used beyond the doubt that a legal transaction was been intended by parties. It can e further noted that there are various other effects which can be realised as important for stamping an agreement (Duffield, 2014).

    Various Implications Related To The Stamping The Contract Are As:

    • It can be noted that the payment can not discharge a sealed or stamped contract or a written agreement, in the case if the instrument is not destroyed in a physical manner.
    • Also, fraud can not be occurred to be treated as a mechanism of defence as it is a sealed contract.

    Also, if the terms and conditions that has been illustrated in the contract are legally stamped or sealed then, it would be treated as the approval of both the persons to the contract to respective conditions. With reference to the given scenario, if the said parties would have been formed a contract in a written form then, it is required by them to seal and stamp the contract. It will imply that they have agreed with the mentioned terms and conditions relating to the contract.

    Procedure To Deal With An Issue Of Amendments During Construction

    In this case, Agro inc has entered into contractual relationship with Ego Architects and there is an existence of verbal agreement or contract between the said two parties. Verbal agreement can be treated as a contract which is formed between the parties in a verbal form. On the other hand, contract can also be formed in the sense of a written format which can be termed as the written contract. In this type of contract both the parties agreed with all the conditions ans terms which are offered by parties to the contract. It can also be noted that there are different issues which might arise in the case of verbal contract.

    Also, with reference to the given case scenario, it can be noted that the parties have framed a contract which is not in a written format (Fischer and Ghatak, 2010). Agro Inc and Ego Architects have agreed with the terms and conditions or any requirements related to the construction,which are communicated through verbal agreement. It can also be noted that written agreement which is characterised as the effective and legal instrument can be made more effective if the all the conditions and requirements of a valid and legal contract are fulfilled.

    In accordance with the given case scenario, it can be concluded that both the parties have framed and communicated their terms and conditions in a verbal form. Also, they have been decided that the proceedings of the transaction will be continued in pursuance with the said conditions only. After some time, the Agro Inc has rejected the drawings by saying that it is not complete and up to the mark. In this case, if they have formed a written contract instead of verbal contract, then it can impact the parties in a different way. It will not give rise to any issues and conflicts between the said parties.

    In the light of this case, there are certain procedures that can be illustrated in the context of the various problems and issues that has been encountered in the given case. These can be encountered in the following way:

    • To avoid any issues of amendments in the case of the construction of a building it can be made effective that there should be an effective legal and lawful contract that should be formed in between the parties to the contract.
    • Also, every drawings of contract should be updated and also recent and new plan and procedures should be encountered or introduced by the subcontractors so as to avoid any confusion and conflicts (Giannetti, Burkart and Ellingsen, 2011). Also, the date and other necessary requirements along with the blue prints should be mentioned in the contract of construction so as to make it more effective and legal in nature.

    Court Proceedings In Respect Of Non Disclosure Of Complete Specifications

    There can be some cases where there can be insufficiency or lack of complete specifications in regard to the contract. It means that the parties have not specified the whole specifications of particulars in regard to the construction contract. It is a duty of to make sure that the court can take effective steps to overcome this issue. Also, an expert is a person who has a relevance expertise in relation with the knowledge or experience of a particular field or stream. Also, expert witness is an another person who has a duty to make sure that knowledge and experience should be made effectively available to court so that it can be easy for court to understand the case and make decisions accordingly (Grath, 2011). Also, it has to be make sure by an expert witness that there can be made more effectiveness in specifications. The need of expert evidence can be recognised in the terms when there is an existence of the disputes which requires technological and elaborated knowledge. Also, the evidence of court can only be admissible in the case when it can there is a presence of matters which requires an expert opinion or observation. Courts now have a right to exclude the expert evidence it can be concluded that there are variations regarding the admissibility. Also, there are certain circumstances where it can be considered that the evidence can not be admissible. These are as follows:

    • If it has been considered by the judge that qualification of expert or experience are not able to match up with the relevant issues (Miller and Reisel, 2011).
    • Also, in the case if the parties itself are able to appear as a witness.

    There are some ethical considerations also which are required to be present in the duties of an expert. An expert should be able to owe his duty in a legitimate manner and he should discharge his duties in a positive manner to his client and court also.

    Payment Process Under The Said Act

    In accordance with the relevant section 14 of the Building and Construction Industry Security of Payment Act, it can be evaluated that a person who is liable to claim the payment regarding the work, may serve a claim of payment on the person under who the construction has been sought or may be liable to make the payment.

    A payment claim is supposed to be in the relevant form and also in the prescribed form. Also, the claim regarding the payment is also considered to have the prescribed information. The claim of payment should identify the work related to construction and goods and services to which the payment s related (Love and et. al., 2010). Also, it has been made under this act. The claimed amount can be termed as the state related to the prescribed act. It can also be considered as the claim should be made with all the amount mentioned in it.

    The claim amount must not include any amount which has been considered as an excluded amount. The said act was been formed for the purpose of determination of rapid claims of progress under building contracts and subcontracts. This procedure has been designed with an intention to ensure and assure the cash flow to business in the building industry.


    From the above report, it can be held that there are different forms of law and their types. In this present report, various aspects of construction law has been discussed. Also, it can be concluded that there are various aspects and concepts which are related to the security and payment act. It can be evaluated that there are certain provisions which are related to contract and its types. Also, verbal and written contract has also been discussed. In addition to this, it can be evaluated that there are certain principles which are required to be concerned in the while payment of claims . Concepts related to the stamping of documents in relation to the parties to the contract has also been discussed.


    • Chirelstein, M., 2013.Chirelstein's Concepts and Case Analysis in the Law of Contracts, 7th (Concepts and Insights Series). West Academic.
    • Deakin, S.F. and Morris, G.S., 2012.Labour law. Hart publishing.
    • Derthick, M., 2011.Agency under stress: The social security administration in American government. Brookings Institution Press.
    • Duffield, M., 2014.Global governance and the new wars: The merging of development and security. Zed Books Ltd..
    • Fischer, G. and Ghatak, M., 2010. Repayment frequency in microfinance contracts with present-biased borrowers.
    • Giannetti, M., Burkart, M. and Ellingsen, T., 2011. What you sell is what you lend? Explaining trade credit contracts.Review of Financial Studies,24(4), pp.1261-1298.
    • Grath, A., 2011.The handbook of international trade and finance: the complete guide to risk management, international payments and currency management, bonds and guarantees, credit insurance and trade finance. Kogan Page Publishers.

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