COMMON TYPES OF STANDARD FORM BUILDING CONTRACTS

Firstly, it is those prepared under the auspices of Malaysian institutions or industry groups such as the Pertubuhan Akitek Malaysia (‘PAM’), Institution of Engineers Malaysia (‘IEM’), Construction Industry Development Board (‘CIDB’) and Palm Oil Refiners Association of Malaysia (‘PORAM’).

Secondly, it is those written or commissioned by a government/ public sector like the Jabatan Kerja Raya (‘JKR’) which is used in relation to public work.

Thirdly, it is those drawn up by major employers like Putrajaya, TNB and Petronas for their own specialist need and use.

Finally, it is those drawn up by international or foreign institutions like the Federation Intenationale des Ingenieurs Conseils (‘FIDIC’) and the Institution of Civil Engineers (‘ICE’), United Kingdom for use in other jurisdictions. This group of standard forms may be relevant in the Malaysian context if one or more of their clauses are borrowed to be included in an ad hoc contract, or if a Malaysian contractor tenders on a project elsewhere for example, in the Middle East or in India.

THE PAM STANDARD FORM OF BUILDING CONTRACT

During the Contract, PAM 2006 is used as the preferred standard form of contract. The PAM standard form of building contract falls into the first category of ‘institutional originated’.

They are used extensively in the Malaysian building industry and are generally considered as the de facto Malaysian Standard Form of Building Contract. It is estimated that 90 per cent of the building contracts in the private sector are based on the PAM form.

Many of the clauses in the earlier PAM standard form of building contract have their origin in the corresponding United Kingdom forms, some being identical. There seems, however, in recent times for the forms to diverge, no doubt because of increasing differences between the conditions prevailing in Malaysia.

From the context of the local building industry, it is viewed to be more contractor friendly particularly by employers and consultants who still remain the single most influential segment of the local building industry.

Advantages of Using Standard Form of Contract

-No drafting is needed and less uncertain terms in the contract.

-Spread risk equally to the employer and a contractor.

-Body of case law has developed addressing the specific contract terms and clauses used in these types of contracts so that when issues arise, the parties can look to prior decisions to see how certain key provisions have been interpreted.

-Relatively low Cost

Disadvantages of Using Standard Form of Contract

-The terms and clauses might not be able to fit on all projects.

-The terms of conditions in the forms is not easy to understand. Interpretation between parties can be different that can arise disputes.

THE PROVISIONS OF THE PAM 2006 FORM

Like the PAM/ISM 1969, PAM 1998 and CIDB 2000 Forms, the PAM 2006 Form makes detailed provisions regulating:

the work to be executed by the contractor; the sum to be paid; the extent of the contractor’s liability for design; the extent of the contractor’s liability for defective works; the procedure for variations in work; the procedure for payment to the contractor; the circumstances in which the contractor is entitled to be paid additional

sums for variations in the work and/or disturbance to the progress of the work;

liabilities with respect to insurance; the circumstances in which either party may determine the contract either on

default of the other party or in other events; and the settlement of disputes.

Difference between JKR and PAM Contract