Benefits of Using Standard Forms of Contract

Here are some advantages of using standard forms of contract instead of composing a new fresh contract document for each project:

  1. They are made by professionals in construction industry, therefore hopefully it can make a more clear understanding of contract terms (ambiguities and inconsistencies are reduced to a minimum)
  2. They give options to both parties (the employer and contractor) to choose which standard form of contract will be used according to strategic business plan they may have
  3. The rights and obligations of both parties are set out clearly and to the required degree of detail (fair risk allocation to both parties)
  4. Because it is standardized, frequent users are familiar with the provisions in a particular form (easiness of use). Such familiarity leads to administrative and cost efficiency
  5. We can save time and expenses which usually incurred in preparing a new contract document (more economical)
  6. It gives certainty in terms of the compliance with country law
  7. All important terms and conditions of contract have been written down in the contract
  8. It will give a higher chance in avoiding unwanted disputed for both parties (minimize possible claims and disputes)
  9. In a case of dispute, the Court can make a fair decision based on their interpretation of standard form of contract (certainty in meaning)

 

Beside the benefits of using standard form of contract, there are some demerits of using it in construction industry. There are some significant disadvantages which appear from using the standard form for both contractors and employers.

 

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