Negotiation and Mediation in Construction
Expert-defined terms from the Undergraduate Certificate in Construction Law and Contracts course at London School of Planning and Management. Free to read, free to share, paired with a globally recognised certification pathway.
Adversarialism #
A negotiation strategy where parties take aggressive positions and aim to win the negotiation at the expense of the other party. This approach is generally not recommended in construction law and contracts as it can damage relationships and make it more difficult to resolve disputes.
Alternative Dispute Resolution (ADR) #
A range of processes used to resolve disputes outside of court, including negotiation, mediation, and arbitration. ADR is often used in construction law and contracts to resolve disputes quickly and cost-effectively.
BATNA #
Best Alternative To a Negotiated Agreement. This is the most favorable outcome a party can achieve if the current negotiation fails. It is important to know your BATNA in a negotiation as it can help you determine your walk-away point and negotiate more effectively.
Claim #
A demand for payment or compensation made by one party to another. In construction law and contracts, claims are often made for additional time or money due to changes in the scope of work or unforeseen circumstances.
Collaborative Negotiation #
A negotiation strategy where parties work together to find a mutually beneficial solution. This approach is often recommended in construction law and contracts as it can preserve relationships and make it easier to resolve future disputes.
Concession #
A compromise or concession made by a party during a negotiation. It is important to carefully consider concessions before making them, as they can impact the overall outcome of the negotiation.
Conditions of Contract #
The terms and conditions that govern a construction contract. These may include the scope of work, payment terms, and dispute resolution procedures.
Construction Dispute #
A disagreement between parties involved in a construction project. Disputes can arise from a variety of issues, including changes in the scope of work, delays, and defective workmanship.
Contingency Plan #
A plan for dealing with unexpected events or circumstances during a construction project. It is important to have a contingency plan in place to minimize the impact of any disruptions to the project.
Default #
A failure to fulfill a contractual obligation. In construction law and contracts, default can result in legal action and the termination of the contract.
Defects Liability Period #
A period of time after the completion of a construction project during which the contractor is responsible for fixing any defects or issues that arise.
Dispute Resolution #
The process of resolving disputes between parties. In construction law and contracts, dispute resolution may involve negotiation, mediation, arbitration, or litigation.
Escalation Clause #
A clause in a construction contract that allows for the adjustment of prices in response to changes in costs, such as increases in the cost of materials or labor.
Force Majeure #
An unforeseeable event or circumstance that prevents a party from fulfilling its contractual obligations. In construction law and contracts, force majeure events may include natural disasters, strikes, or government actions.
LAD #
Liquidated Ascertained Damages. A pre-agreed amount of damages that a party must pay if they breach the contract. LAD is often used in construction contracts to compensate the other party for delays or other breaches of contract.
Litigation #
The process of taking legal action to resolve a dispute. Litigation is often used as a last resort in construction law and contracts, as it can be time-consuming and expensive.
Mediation #
A form of alternative dispute resolution in which a neutral third party, the mediator, helps the parties to a dispute reach a mutually acceptable agreement. Mediation is often used in construction law and contracts as it is less formal and less expensive than litigation.
Negotiation #
The process of communicating with another party to reach a mutually beneficial agreement. Negotiation is a key skill in construction law and contracts, as it is often used to resolve disputes and make agreements.
Notice #
A written communication that provides notice of a potential claim or issue. In construction law and contracts, it is important to provide timely notice of any issues or claims to protect your rights and avoid potential liability.
Parties #
The individuals or entities involved in a construction contract. Parties may include the owner, contractor, subcontractor, and designer.
Penalty Clause #
A clause in a contract that imposes a penalty on a party for breaching the contract. Penalty clauses are generally not enforceable in construction contracts.
Performance Bond #
A bond that guarantees the contractor's performance of the contract. Performance bonds are often required for public construction projects.
Procurement #
The process of obtaining goods, services, or construction work. In construction law and contracts, procurement may involve competitive bidding, negotiation, or other methods.
Program #
A schedule for a construction project. It is important to have a realistic and detailed program in place to ensure that the project is completed on time and within budget.
Quantum Meruit #
A legal principle that allows a party to recover the value of work or services provided, even if there is no written contract. Quantum meruit is often used in construction law and contracts to resolve disputes over the value of work or services provided.
Remedies #
The actions that a party can take to enforce its rights or protect its interests in a construction contract. Remedies may include damages, specific performance, or injunctions.
Retention #
A percentage of each payment made to a contractor that is held back until the project is complete and any defects or issues have been resolved. Retention is often used in construction contracts to ensure that the contractor completes the work to a satisfactory standard.
Risk Allocation #
The process of assigning risk in a construction contract. It is important to carefully consider and allocate risk in a construction contract to minimize potential disputes and ensure that all parties understand their responsibilities.
Scope of Work #
The work that is to be performed under a construction contract. The scope of work should be clearly defined and agreed upon by all parties to avoid misunderstandings and disputes.
Subcontract #
An agreement between a contractor and a subcontractor for the performance of a portion of the work required by the prime contract.
Variation #
A change to the scope of work or the terms of a construction contract. Variations must be agreed upon in writing by all parties to avoid disputes.
Warranty #
A guarantee or promise made by the contractor regarding the quality of the work or materials. Warranties are often included in construction contracts to provide assurance to the owner that the work will be performed to a certain standard.
Walk #
away Point: The point at which a party is willing to end negotiations and walk away from the deal. It is important to know your walk-away point in a negotiation as it can help you make informed decisions and avoid agreeing to unfavorable terms.