Kenya and Africa at large, is now world renown for its current and potential investment opportunities in the real estate, design and construction industry. In the same breadth, the need for professional services in construction contracts law and management cannot be understated.
Indeed, at F.M. Muteti & Co. Advocates, we understand that construction is itself complex, capital intensive, time consuming and involves different professionals with very distinct and separate roles. In light of this, our Real Estate and Construction Department ardently approaches construction contracts in Kenya and projects in a systematic and rational manner, recognizing that every thought and effort we put in construction project management goes a long way in determining the sustainability of our Clients’ construction investments.
What are the Key Clauses in Construction Contracts in Kenya?
From proven experience, a well drafted design and construction contracts agreement in Kenya MUST comprehensively encompass the role and import of the builders, designers, regulators, purchasers and the ultimate end users of the construction project. To achieve this, the following are the key clauses in a design and construction contracts.
- Scope of Work- Who does what, when, how, why, where?
This clause is important because it clearly spells out the work to be completed, including design and construction requirements. It is advisable to definitively identify the specific roles and performance indices of all the professionals involved in the project.
- Project Timeline- When do you expect the project to be completed?
This clause establishes both the deadline for completion of the project in its entirety and the deadlines for completion and commissioning of any milestones, phases or stages.
- Payment Terms- Who are you paying, for what and when?
Details the payment schedule, including amounts, due dates, and conditions for payment.
- Change Orders- Can you change your mind on the design or scope of the construction?
It is natural and normal to anticipate a need for changing or altering the scope of work. As such, to avoid potential disputes, this clause outlines the process for handling changes to the scope of work, including how costs and timelines will be adjusted in case of certain eventualities or circumstances.
- Performance Standards- How do you expect the project to be undertaken?
This clause will assist you in taking charge of the project by specifying your overall and specific expectations of the quality standards of the project together with and compliance with relevant regulations and codes.
- Liability and Indemnity- Who do you blame for losses and damages on site?
When losses and damages occur on site, this clause addresses liability for the same and includes indemnity clauses protecting parties from certain risks.
Accordingly, it is advisable to require the contractor to take out insurance, a bank guarantee or a performance bond so that in the event that the construction project is not completed, you can be compensated for the financial loss arising from damages or non-completion.
- Dispute Resolution- Where and how do you want to resolve disputes between parties?
There are various mechanisms such as arbitration, mediation and litigation that may be adopted to resolve disputes arising in the course of the project. However, it is important to consider the most efficient and sustainable dispute resolution mechanism to avoid unnecessary setbacks in the completion of the project. such as mediation or arbitration.
- Termination Clause- Do you or the contractor want to stop the project?
This clause details the conditions under which either party can terminate the contract and the consequences of such termination.
- Force Majeure- Can nature or certain circumstances render performance of the contract untenable?
Defines circumstances under which parties are excused from fulfilling their obligations due to unforeseen events for instance floods, earthquakes and other natural events which may frustrate the performance of the contract.
- Assignment and Subcontracting- Can the contractor delegate obligations?
It is important to know and ascertain whether the contractor will require and/or employ the skills and services of another entity or person (s) so as to regulates the assignment of the contract rights to assess the impact and viability of subcontracting to the scope of the project.
- Governing Law- Which law will you submit to?
Lastly, this is an important clause which specifies the laws that will govern the contract and its interpretation in case a dispute arises as to either its operation, validity or obligation of parties.
At F.M. Muteti & Co. Advocates, we know that construction is riddled with risks and uncertainties. Our team of top construction lawyers in Kenya is ready to help you identify and deal with the legal risks in your design and construction project by developing tailor made construction management agreements to guarantee you a smooth construction journey.
Disclaimer: The information provided in this article is provided for information purposes only and does not constitute a legal advisory. We advise prospective Clients to get in touch with us for more comprehensive and contextualized legal advice.
