Construction projects are often an expensive commitment and where one party’s personal property is involved the emotional turmoil is often evident for all to see. Notwithstanding this, the parties will often fail to spend the appropriate time and money considering the key contractual terms and getting these in place which can give rise to significant issues between the parties at a later date.
In this article we intend to set out a number of “Do’s” and “Don’ts”, that both the employer, and contractor should take into consideration before embarking on construction projects, whether this be a major value dispute, or alternatively, works to a private individuals residential property.
1. Put everything in writing
Without a proper agreement in place many hours will be spent analysing the intention of both parties which can be extremely time consuming and lead to expensive litigation proceedings. When appointing a third party to carry out construction works it is essential that there is a proper appointment in place setting out the manner in which monies will be paid and specifying the exact services that the third party is expected to perform.
2. Be honest
A contract will be upheld where a particular clause may seem unfair, as long as one party does not induce the other party into a contract based on a ‘lie’. In these harsh economic times parties may simply tell each other what they think the other wants to hear in order to secure a contract. All parties should resist doing this and ensure that all statements made are accurate before and during the contract period.
3. Spend time investigating the project
Before a construction agreement is agreed both parties should ensure that they have researched the nature of the particular work involved. You should always consider carrying out an inspection of the site in order to obtain a clear idea of the scope of the work and draw out any significant issues that must be addressed in the contract. If the construction is to be completed in line with various plans, drawing and/or specifications then these should also be considered carefully and it may be worthwhile making reference to such documents in the Contract.
4. Consider incorporating adjudication provisions into the contract
Under the Construction Act 1996, all parties have a statutory right to adjudication. Whilst the Act does not apply to construction contracts with residential occupiers, the current JCT minor works forms or indeed any current standard form of contract should now include contractual adjudication procedures. One benefit to the adjudication procedure is the speed and relatively lower costs involved in resolving disputes.
1. Don’t make informal variations to the Contract
Variations must be in writing. Both parties should clearly set out the nature of the change and the impact that it will have on both costs and time. Where both parties are often enthusiastic to get on with the project they may ignore the need to put in writing any alterations to the original contract. A contractor or sub-contractor should not assume that they will be paid accordingly once the work is complete and likewise, the employer should not assume that the increase in costs as a result of the alterations can be agreed at a later date. Research shows that oral instructions and poor administration of the contract are a major cause of construction disputes.
2. Don’t ignore the possibility of a dispute arising
A properly drafted Contract setting out various terms of agreement will go along way to bringing a speedy resolution to the dispute however, it is not unusual for disputes to occur. You should be prepared for this possibility and ensure that you carefully file and store all documents relating to the construction project, you may never know when you might need them.
The above article is not legal advice; it is intended to provide information of general interest only.
Should you require any information on contract disputes please contact Chris Ahearne on 01245 228130 or email firstname.lastname@example.org.