CLC Statement on Standard Appointment Terms

The Construction Leadership Council (CLC) has expressed concerns about clients and their solicitors amending standard construction contracts, introducing onerous and often uninsurable terms. The CLC advocates for minimal amendments to industry-standard contracts, recommending changes only to address specific project risks. Unnecessary modifications, they argue, make contracts unviable, reduce competition, and increase legal costs.

Onerous amendments often create liabilities exceeding what Professional Indemnity Insurance (PII) policies cover, leaving contractors and consultants financially vulnerable. Many PII policies only cover liabilities as they would exist without a contract, and growing liability exposures coupled with limited insurance availability create a significant disconnect. This situation risks financial instability for contractors and unresolved claims for clients.

The CLC’s PII Working Group has found that disproportionate amendments often affect smaller contractors and sub-consultants, who lack the resources to navigate these complexities. To address this, the CLC recommends using unamended standard contract templates, with any changes clearly highlighted and justified in a schedule. This transparency would reduce confusion, save costs, and particularly benefit SMEs.

Risk allocation should be proportionate and assigned to competent, well-resourced parties, supported by tools like a Design Responsibility Matrix. Simplified contracts and clarified responsibilities, especially in fire safety design, align with the Grenfell Tower Inquiry’s recommendations and the Building Safety Act’s accountability goals.

Samantha Peat, Chair of the CLC PII Working Group, emphasizes that adopting these practices will improve risk management, clarify liabilities, and address the challenges of PII in construction, fostering a more collaborative and sustainable industry.