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International Construction Law Review

DRAFTING AND RISK ALLOCATION IN THE NEW HONG KONG STANDARD FORM OF BUILDING CONTRACT

DENIS LEVETT

Founding Director of and now Consultant to Levett & Bailey Chartered Quantity Surveyors Limited FRICS, FHKIS, FAIQS, FHK Inst. Arb., HKIA (Honorary Member)

This paper is not about “Topics not discussed in the Grove Report”. On the contrary, it is all about the topics discussed in the Grove Report which are of great interest to me in connection with the drafting of the new private sector building contract. I wish to share with you the way that the joint contracts committee (the JCC) dealt with the allocation of the risks featured in the Report. I must therefore begin by saying something about the JCC and the new building contract.
The JCC consists of representatives from the Hong Kong Institute of Architects, the Hong Kong Society of Builders and the Hong Kong Institute of Surveyors under the chairmanship of W H Lam. Professor Arthur McInnis is the honorary legal adviser. I was made principal author by the JCC about four years ago because I did not know how to say no nicely.
The new contract is being drafted to replace the current contract, which was published in 1968. The 1968 contract is a faithful copy of the JCT 1963 contract, with changes restricted to things particular to Hong Kong, like the word “typhoon” replacing the word “frost” and very little else. But time marches on and now the current contract is very much out of date and even the word “typhoon” has changed in contractual terms to “tropical cyclone”. I should not really call it the “new” contract as it has not replaced the current one, but I am doing so in anticipation of that event and more importantly for the sake of brevity.
The committee’s aim has always been to produce a contract which is fair to both parties and has a sensible allocation of risk. We have tried very hard to achieve this objective. In any case, it would not be logical to overwhelm the contractor with unsustainable risks when the employer is relying on him to build a high quality project and complete it on time. On the other hand, where the contractor is in the best position to prevent or mitigate a risk, he should be given the incentive to do so.
Our construction industry is capable of accomplishing great things. As Tony Walker says in his book The Building of Hong Kong, “Hong Kong, from barren rock to international metropolis in just 150 years—there is no other
Pt. 4]
Drafting and Risk Allocation in Hong Kong

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