Law for Project Managers

David Wright

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351663359
• Edition: 2
• Topic: Business
• Subtopic: Business General
• Index: Business

Law for Project Managers provides an easily understandable and practical guide to the laws of contract, liability, intellectual property and so on, entirely from the perspective of the project manager. It will enable you to approach projects forewarned and forearmed, able to avoid potential legal problems altogether.

The book covers everything from intellectual property disputes with the client organisation about who actually 'owns' the outcome, to confusion arising during an international project from the different legal systems and their approach to contracts and health and safety problems in the management of contractors. Most importantly, it explains everything in very straightforward terms; legal jargon is either avoided altogether or defined with its relevance to the project manager explained.

In essence, Law for Project Managers is a clear, readable and expert guide on this and many other important legal matters for the practising project manager as well as a supplementary text for post- or undergraduate students studying the commercial aspects of law, contracting and project management.

Part I

General

To understand any system or set of rules properly we have to start by looking at the background and the assumptions that lie behind them.

This is what Chapters 1 and 2 set out to do.

Legal systems throughout the world derive from or at the very least are influenced by European legal ideas in their approach to the areas of law that apply to the commercial project.

And, although virtually every country in the world has its own individual law, there are three common factors that always apply. The law is simple in its approach. It does not take any account of commercial relations, however good or bad they might be. It is only concerned with the legal position of the parties. The commercial organisation is expected to be professional, skilled and able to look after its own interests. Finally the commercial organisation will get no help from the law if it makes a mistake.

1	The law’s approach

This chapter looks at how different legal systems relate to each other, and how the law sees the commercial organisation. It is presumed to be professional, able to look after itself, and therefore has ‘freedom of contract’, that is the freedom to drive a hard bargain.

Law is about relationships

Engineers, project managers, contract managers and many others run contracts and projects.

Contracts and projects deal with getting something done. They also involve relationships. Every organisation wants to have contracts to sell its products to others and contracts to buy things from others. Every project will involve the organisation in buying in something that it needs for that project, work equipment or services, from someone else. Once that happens the project involves interfaces between organisations – purchaser, contractor, subcontractor/supplier, and maybe also consultants such as an architect, consulting engineer, quantity surveyor and so on. Some of those interfaces may be informal, but most turn into contracts – and often even an informal relationship will actually be a contract whether we know it or not.

As soon as there is a contract the law is involved. If there is an accident causing injury or damage the law is involved. If there is a dispute over who owns what or who is responsible for doing what or how much someone should be paid the law is involved.

Every contract or project will have problems; if there were no problems we would not need project managers to deal with them. And of course most problems or disagreements will be settled by sensible discussion between the parties. When that happens it is useful to know what the law is. Sometimes problems get more serious, and then it becomes vital to know what the law is.

This book aims to give you some of the answers about some of the areas of law that matter most to engineers and project managers running contracts and projects within the UK or under UK law. It helps with other legal systems as well.

Some points to bear in mind

When reading this book always remember:

• law turns commercial relationships into contracts;

• those contracts are based upon the terms agreed at the time of contract;

• the agreed terms then remain fixed for the duration of the contract; and

• therefore the contract forces the parties to make firm positive decisions at the start of the commercial relationship as to how it is to be organised and the rules that will apply.

This makes for good contractual and commercial discipline because it concentrates the mind on the need to clarify both the relationship and the task from the beginning. However, it does have some disadvantages, especially if the contract is large, complex or long-term:

• the time required to agree everything in detail before contract can delay the start of work or make a letter of intent necessary;

• we can never foresee or provide within the contract for everything that might happen;

• however hard we try we are usually not aware of all the facts;

• we never know what the other side really thinks; and

• the contract rules are fixed but the commercial relationship is not. It may change over time, or because of unforeseen circumstances.

Also the law creates other problems:

• the contract always tends to take a simplistic view of areas such as risk or liability;

• whereas in our world these may be very complex issues, with both sides bearing some degree of responsibility;

• the law is not especially good at solving or dealing with the commercial dispute;

• its quick remedies are aimed at the small, consumer contract rather than the commercial contract;

• its slower remedies can be very slow and very expensive;

• success depends not on what we know but what we are able to prove, and proving something may not be easy in areas of commercial, factual or technical complexity;

• slow justice (often/usually several years later in the case of the complex commercial dispute) is no justice; and

• excessively expensive justice may be of no practical use either.

Legal systems

Countries

In the realms of science fiction we often get a world government. In real life we have to live with something completely different – a world made up of nearly two hundred separate countries, each with its own laws and legal system. It is impossible to describe the law in every country of the world. It is probably almost impossible even to describe the law in any two countries in the world without causing you total confusion.

However, there are common factors.

Law must work

Every country has to have law and that law must actually work. If the law didn’t work then everything would have to stop until the law was put right. Therefore, however odd the law in another country may look to the outsider, the insider knows that the law will work, and knows how to make it work. When you are involved with a project or contract in another country always remember that local people and organisations will know how their own law works even if you don’t. They will expect you to know how it works as well, or at least to know enough to avoid getting into trouble. (So you will need advice, and the best source of advice about local law is usually a local organisation, agent, consultant or lawyer).

Families of legal systems

Legal systems tend to develop as groups, largely as a result of history. We can call these groups ‘families’ of systems. All the countries within each family have broadly similar law and legal systems.

First there is the Common Law family, systems based on English law. This family includes the UK (except Scotland), the USA, Eire, and almost all the countries of the British Commonwealth, plus one or two others. Then comes the Civil Law family, countries whose law goes back in the dim distant past to Roman Law, adopted as the basis for French law, in 1804–6, and then spread to its neighbours. These are France, Germany, Scotland, the other countries of western Europe and their former empires, and Japan. Then there is the Russian Law family in Russia, China and the countries of what used to be eastern Europe. Finally there are the Sharia Law systems of muslim countries in the Middle East, Pakistan and elsewhere.

Theory and result

Common law and civil law often have different theory but usually produce very similar results in commercial areas. The theory that underlies the common law contract is that of the ‘bargain’, so that the contract creates liability because the parties have made a bargain, and the bargain should be respected. The theory that underlies the civil law contract is that of a general obligation to the rest of society, so that we have a duty not to commit a crime, injure anyone by negligence, fail to honour a serious promise and so on. Then within the civil law family there are two distinct approaches to commercial relationships: the ‘objective’ French approach which concentrates on the commercial contract, and the ‘subjective’ German approach which concentrates on the commercial organisation.

Russian law is an amalgamation of common law and civil law ideas. Sharia law systems often borrow ideas from common law or civil law as well, especially in areas of commercial (as opposed to personal) law.

The jurisprudential aspects of all this are fascinating to the expert; however, the practical results of all these different approaches are as near identical as makes no difference.

In summary

Broadly speaking:

• contract and commercial law is similar in most countries (even when the theory is different the practical results will be very much the same, but there will be differences in detail);

• often the laws on agency, who is entitled to act for the company, will be different;

• the law on control of clauses in contracts that seek to limit or exclude liability for breach of contract and so on will vary from country to country;

• administrative law – import/export licences, visas/work permits, compulsory licencing or insurance for contractors and many other similar areas will be very different;

• ‘international trade’ law will be almost identical all over the world, particularly the laws relating to transport/shipping and payment – bills of lading and airwaybills, letters of credit and bills of exchange and so on;

• liability law – compensation for accidents or damage caused to others, will be generally similar;

• health and safety law will be very similar throughout the EU, but in other countries may be very different (also there may be differences in the way the law is applied);

• organisation law, the law of partnerships, companies, corporations and so on, will be generally similar but may be very different in detail;

• the law on the financial regulation of organisations, bankruptcy and so on will be different;

• environmental protection law may vary considerably;

• criminal law will be different in detail, occasionally very different;

• intellectual property law, patents and copyrights etc., will be broadly similar but different in detail;

• ‘dispute’ law, how the legal system works will be different in every country; and

• finally, every country will have its own legal system – different courts, judges, advocates and procedures.

Many of these areas are explored in this book.

Law and companies

Law in general

Law can be very complicated. However, remember that there are two kinds of law. There is the law you need to know to avoid trouble. Then there is then the law that you need to know to get yourselves out of trouble once you’re in it. Almost always the law you need to know to avoid trouble is comparatively simple. Once you’re in trouble, however, getting out again can be an awful problem.

Every project manager will need help at some time. When we need help we want advice from someone urgently, to tell us what the law says we should do. Once we need help it is usually already too late to start looking for the best person to give us the advice we need. It is much better to identify in advance where we can go for help.

Law people and organisations

The law looks at the world in a very simplistic way. It sees two kinds of people. First there are normal human beings. They are little weak and helpless, probably not very clever in legal terms at least, and certainly lacking in commercial bargaining power. As a result they need some protection – both as consumers and as employees. This has resulted in considerable amounts of protective legislation. Employee protection has been put in place by a number of Acts of Parliament, culminating in the Employment Protection (Consolidation) Act (1978), and now the Employment Rights Act (1996). Consumer protection comes from a whole mass of legislation, such as the Consumer Protection Act (1987) and the Unfair Contract Terms Act (1977).

Then the law sees the commercial organisation. The commercial organisation may be of almost any size. It can be a single individual, what is known as a ‘sole trader’. It may be a partnership, a firm (of solicitors or accountants for example), a ‘corporation sole’ (such as a government department headed by a minister), a ‘corporation aggregate’ (such as a local authority headed by a ‘mayor and corporation’ or the BBC), or a company. (For t...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• About the author
• Preface
• Note on the second edition
• PART I General
• PART II The origins of law
• PART III Contract law
• PART IV Involving the experts
• PART V Liability law
• PART VI Other topics
• Index