Construction Settlement Agreement for Hong Kong

Construction Settlement Agreement Template for Hong Kong

A Construction Settlement Agreement under Hong Kong law is a formal legal document used to resolve disputes and claims arising from construction projects. It documents the terms and conditions of settlement between parties involved in construction-related disputes, including payment terms, mutual releases, and any ongoing obligations. The agreement is governed by Hong Kong law and typically incorporates relevant provisions from Hong Kong's construction and contract law framework, including considerations under the Construction Industry Council Ordinance and Buildings Ordinance.

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What is a Construction Settlement Agreement?

The Construction Settlement Agreement is a crucial document used in Hong Kong's construction industry to formally resolve disputes between contracting parties without resorting to litigation or arbitration. It is typically employed when parties have reached a negotiated settlement regarding issues such as payment disputes, delay claims, defective works, or variations. The agreement comprehensively documents the settlement terms, including payment arrangements, scope of claims being settled, releases, and any continuing obligations. Being governed by Hong Kong law, it must comply with local construction regulations and contract law principles. This document is particularly important in Hong Kong's dynamic construction sector, where complex projects often lead to disputes requiring structured resolution.

What sections should be included in a Construction Settlement Agreement?

1. Parties: Identifies all parties to the agreement, including their registered addresses and company numbers

2. Background: Recitals explaining the original contract, nature of disputes, and context leading to settlement

3. Definitions and Interpretation: Defines key terms and establishes interpretation principles

4. Settlement Sum: Specifies the agreed settlement amount, payment terms, and timing

5. Release and Discharge: Details the scope of claims being settled and mutual releases

6. Representations and Warranties: Each party's confirmations about their authority and capacity to enter into the agreement

7. Continuing Obligations: Identifies any obligations from the original contract that survive the settlement

8. No Admission of Liability: Standard clause stating the settlement is not an admission of liability by any party

9. Governing Law and Jurisdiction: Specifies Hong Kong law and jurisdiction for dispute resolution

10. General Provisions: Standard boilerplate clauses including entire agreement, severability, and counterparts

What sections are optional to include in a Construction Settlement Agreement?

1. Confidentiality: Required when parties wish to keep the settlement terms private

2. Tax Provisions: Include when there are specific tax implications or allocations

3. Ongoing Works: Required when there are incomplete works that need to be finished

4. Third Party Rights: Include when the settlement affects rights of third parties like subcontractors

5. Insurance and Bonds: Include when dealing with insurance claims or performance bonds

6. Future Cooperation: Required when parties need to maintain ongoing business relationship

7. Media and Announcements: Include for high-profile projects requiring public communications control

8. Certification and Approvals: Include when settlement requires third-party certifications or regulatory approvals

What schedules should be included in a Construction Settlement Agreement?

1. Schedule 1 - Original Contract Documents: List and details of the original contract and variations

2. Schedule 2 - Settlement Payment Schedule: Detailed breakdown of payment amounts and dates

3. Schedule 3 - Outstanding Claims: List of all claims being settled

4. Schedule 4 - Remaining Works: Details of any incomplete works and completion requirements

5. Schedule 5 - Form of Release: Template for final release documentation

6. Schedule 6 - Related Parties: List of affiliated entities covered by the settlement

7. Appendix A - Supporting Documents: Key correspondence and documents referenced in settlement

8. Appendix B - Payment Evidence: Copies of relevant payment certificates or assessments

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Hong Kong

Publisher

Genie AI

Cost

Free to use
Relevant legal definitions
Relevant Industries

Construction

Real Estate Development

Infrastructure

Engineering

Architecture

Project Management

Insurance

Legal Services

Construction Materials

Building Services

Relevant Teams

Legal

Construction

Commercial

Finance

Operations

Risk Management

Contracts Administration

Project Management

Claims

Corporate Governance

Relevant Roles

Project Director

Construction Manager

Commercial Director

Legal Counsel

Contract Manager

Chief Executive Officer

Financial Controller

Project Manager

Claims Manager

Risk Manager

Quantity Surveyor

Construction Director

General Counsel

Chief Financial Officer

Operations Director

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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