RECOMMENDED MODEL AGREEMENTS BETWEEN …

1 1 This document remains the property of the NHBRC. It is subject to the copyright laws of the Republic of South Africa and any infringement of this law pertaining to this documentshall be subject to criminal action by the holder of such Home Builders Registration CouncilRECOMMENDED MODEL AGREEMENTS BETWEENHOUSING CONSUMERS AND HOME BUILDERS FOR THECONSTRUCTION OF A HOME(14 October 2002)1 Requirements of the Housing Consumers Protection Measures Act for AGREEMENTS betweenConsumers and Home BuildersSection 13 of the Housing Consumers Protection Measures Act (Act 95 of 1999) requires a Home Builder toenter into a written agreement with a Housing Consumer that, as a minimum: is signed by the parties; sets out the material terms including the financial obligations of the housing consumer; contains the specifications pertaining to materials to be used in theconstruction of the home.

2 And contains plans that reflect the dimensions and measurements of the home, as approved by Act deems such an agreementto include warranties enforceable by the housing consumer against thehome builder in any court of law as set out in the Standard Home Standard Home Warranty establishes thelimitations, qualifications and exclusions to the warranty, amountspayable from the fund, the undertakings of the Home Builder, Housing Consumers and the Councilin relation tothe Warranty and essential data pertaining to the home. This document must be issued prior to construction. (Ahome builder normally Enrolls a home only when the construction price has been agreed upon and the contactis in place.)

3 The Standard Home Warranty can only be issued after the home enrolment certificate has beenissued.)2 Type of agreementsThe agreement BETWEEN a Home Builder and a Housing Consumer can be either for the construction or the sale of ahome. In this document, only the agreement for the construction of a home is drafting of unique AGREEMENTS for the construction of a single home is expensive and is unwarranted. It ispreferable to rather use a standard form of contract. Such forms of contract are produced by industry basedorganisations and set out the rights, liabilities and obligations of the parties in general terms.

4 Certain parameters andpieces of information that are contract specific need to be filled in these forms. These forms are not specifically draftedfor use in the context of the Act. As a result the terms used are inconsistent with those contained in the Act. Typicallythese forms of contract use the terms Employer and Contractor to designate the parties to the terms of this document, the Housing Consumer is the Employer and the Home Builder is the contentof construction contractsContracts for construction works comprise a number of component documents dealing with different topicsgrouped together in a logical 0403: Code of Practice for the Formatting and Compilation ofProcurement Documents provides a standard framework within which construction contracts can be full list of documents and an outline of their contents as described in SABS 0403 is as follows.

5 2 Part 1: AGREEMENTS and contract andAcceptanceFormalises the legal process of offer and DataStates the applicable conditions of contract and associated contract specific data that collectively describethe risks, liabilities and obligations of the contracting parties and the procedures for the administration of ofSecuritiesProvides the securities required by the forAdjudicatorsAppointmentStates the terms and conditions upon which the adjudicator is to be appointed, if appointed when thecontract is 2: Pricing the criteria and assumptions which it will be assumed (in the contract) that the tenderer has takeninto account when developing his prices, or target in the case of target and cost reimbursable / Bill ofQuantitiesRecords the contractor's prices for providing supplies / services / engineering and construction works whichare described elsewhere in a specification within the Scope of Work section of the 3.

6 Scope of WorkC3 Scope of WorkSpecifies and describes the supplies, services, or engineering and construction works which are to beprovided and any other requirements and constraints relating to the manner inwhich the contract work is tobe performedPart 4: Site information (engineering and construction works contracts only)C4 Site InformationDescribes the site as at the time of tender to enable the tenderer to price his tender and to decide upon hismethod of working and should be noted that in contracts BETWEEN Housing Consumers and Home Builders:1)Securities are not necessarily )Adjudication (a form of dispute resolution) is only provided in some standard forms of contracts,andwhere adjudication is provided, adjudicators are only appointed when a dispute )The Home Builder is required in terms of the NHBRC procedures to appoint a competent person toinvestigate the geotechnical site conditions and to classify the site in accordance with the provisionsof the Home Building )The parties may choose to contract under common law, in which case there is no need to establishconditions of )

7 The Home Builder may contract to construct the home on a lump sum , the requirements of the Act may be satisfied if only the following component documents arecompleted (see Appendix A): Offer and acceptance Scope of workIt is, however, not RECOMMENDED to contract in terms of common law. The following industry standard forms ofcontract provide a sound basis upon which to contract and should be referenced in the Contract Data: NEC Engineering and Construction Short Contract (1st Edition, 1999); FIDIC Short Form of Contract General Conditions (1st Edition 1999); or BIFSA House Building and Small Contracts agreement (where no agent is employed)(January 2002)Where contractors price works on the basis of activity schedules, the section for Pricing Data should contract documentsThe following proforma contract documents (see Appendix B) are provided to assist Housing Consumers andHome Builders to conclude an agreement and thereby satisfy the requirements of the Act.

8 3#Title of proforma documentCommentsCover pageInsert this page in the front of the and acceptanceThis document must be included in all DataOne of the following documents be Contract Data (BIFSA agreement ) Contract Data (FIDIC short) Contract Data (NEC short) Instructions*Activity schedule*These documents should be included where a Home Builder breaks the lump sumprice into a number of activities. This document is not required where the HomeBuilder offers to construct the house for a lump of workThis document must be included in all contractsC4 Site InformationThis document may be included in all contracts*on projects where bills of quantities are used it will be necessary to replace the pricing instructions with a document that makesreference to the standard system of measurement that is to be used eg.

9 -Standard System of Measuring Building Work for Small or Simple Buildings issued by the Association of South African QuantitySurveyors in consultation with the Building Industries Federation South Africa;-Standard System of Measuring Building Work published by the Association of South African Quantity Surveyors in Consultationwith the Building Industries Federation South Africa-etcIt should be noted that the terminology used in the proforma documents is as follows: Contractor is the term used for the Home Builder; and Employer is the term used for the Housing a contractSelect the documents from the attached proformas (see Appendices A and B) that are required and completethem as instructed.

10 Compile the contract in the order that is set out in the above the appropriate form of contractThe Home Builder or Housing consumer should select one of the following forms of Engineering and Construction Short Contract (New Engineering Contract)(NEC) (First edition)The Engineering and Construction Short Contract (ECSC) is suitable for use with contracts which: do not require sophisticated management techniques; comprise straightforward work; and impose only low risks on both the Employer and the parties to the contract are the employer and the contractor. The ECSC permits the employer to delegateany of the employer s actions and to cancel any such contractor has full responsibility for providing the works in accordance with the scope of events ie events which may have an impact on the cost or completion date are well describedand include: the loss of plant and materials or damage to the works which is not the fault or responsibility of thecontractor or could not have been prevented by any reasonable action of the contractor; adverse weather in excess of a number of days determined in accordance with a simple formula.