What is Order of Precedence in Contracts?
Construction Contracts are often very large and include lots of different Numbered Documents like the drawings, scope of works etc. To give these documents meaning and to rank their importance, many contracts include an ‘Order of Precedence’ Clause which helps you interpret which of these documents is most important.
Why is it important to refer to the Order of Precedence Clause?
Because construction projects are complex, the contract documents will often run into hundreds of pages and it is easy to have inconsistencies. These inconsistencies can often be used against you unfairly so the order of precedence clause acts as a safeguard to allow you to understand which documents are most relevant if there’s a dispute.
Let me give you a working example.
I’m a Subcontractor working on a Contract which includes both a Scope of Works Document and a Schedule of Attendances. The two documents say different things about whether I’m responsible for providing Scaffolding on the East Elevation. The Main Contractor is saying I need to provide scaffolding as per the wording in the Scope of Works:
The Subcontractor is responsible for any special scaffold access.
Despite this, we agreed something different at tender stage and I see that the Attendances Document reads:
Main Contractor to provide access via Scaffolding on the East Elevation.
We’re currently not progressing on site and this is causing problems in terms of time and money, but I don’t have the budget to erect an expensive scaffold – what do I do?
Clearly the two documents contradict each other.
One simple way to solve this is to see which document is “Precedent” … Clause 1.3 of the Contract Conditions deals with how to Interpret the Contract and says:
… if there is any inconsistency between the Sub-Contract Documents, the following order of precedence shall apply:
- The Articles of Agreement
- The Sub-Contract Conditions
- The Attendances Document
- The Scope of Works…
The Attendances are clearly the priority document and therefore, the wording in this document is more important than the Scope of Works. I can therefore confirm to the Main Contractor the following:
Further to your request for us to provide the Scaffolding to complete the works to the East Elevation, please note that the Attendances Document, which is precedent to the Scope of Works (see Clause 1.3) confirms that this is your responsibility. Please therefore ensure this is provided to prevent any delay to the works.
In a situation like this, understanding the Order of Precedence Clause can save you thousands of pounds. Construction contracts, as I mentioned, are highly complicated and often include contradictory information. When reviewing Contracts, always refer to the Interpretation Clauses which you can typically find in the front of the document and in JCT, in Clauses 1.2 – 1.9.
Understanding which document is the most important can help you in all kinds of situations including when you’re arguing variations or other important commercial matters.