MF/1 - The Mother of All Construction/Installation Contracts?

Before turning to a more analytical analysis of MF/1 in the next week or so, it’s worth noting as a starting point that if you like your contracts to be “all singing, all dancing”, then the MF/1 fits that bill. This is because it contains no fewer than 9 appended templates, some of which are very useful. They include an entire sub-contract (Form 9), a variation order (Form 7) and taking-over (i.e. practical completion) certificate (Form 8), a PCG (Form 2) an array of bonds, comprising a demand bond (Form 3), a performance bond (Form 4) and even something called a defects liability demand guarantee (Form 5). As the term might suggest, this type of bond allows the Purchaser (i.e. the Employer) to demand a sum of money (not to exceed the amount specified) from the Contractor’s Guarantor if the Contractor fails to carry out its obligations to rectify certain specified defects or damage for which the Contractor is responsible under the MF/1. Alternatively, the Purchaser can demand the guaranteed amount if it terminates the MF/1 due to Contractor insolvency. This is an unusual (although not unprecedented) option and could be used to replace the conventional performance bond at take-over. It is, however, an “on-demand” bond, so it’s unlikely to be popular with sureties and would not be cheap to procure.

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