Getting Construction Contracts Right

Construction contracts, usually in the form of a JCT or RIBA, are used so often and contain so much information that a lot of contractors will not pay proper attention to their contents.
The temptation is to simply get on with the new work that has been won and use an old template contract, without really making sure that all if its contents are fit for the job.
Here are the top 5 things to check:

1. Parties Names
Make sure that you know who your contract is with and put it in the contract. Is your customer an individual, partnership or limited company? Are you contracting with a subsidiary or the parent company? Speak to your customer early on about who they think you are contracting with.
If you get this right then it avoids any problems in the future about, believe it or not whether there was ever a formal written contract and importantly who should be paying you.

2. Get it Signed
This happens more often than you would think. If both parties don’t sign it, there is scope to argue that its terms don’t apply – although there is case law that can impose the terms of an unsigned contract on parties, if the circumstances are right. But don’t run that risk.
If a contact isn’t expressly accepted by both sides, then you might miss out on vital protections such as the right to adjudicate or liquidated damages for delays.

3. Make sure you use the right contract
Use the right form contract for the right job. If you are carrying out a multi-million pound contract, you don’t want to use the JCT Minor Works Contract. It may seem like more work, but using the proper contract for the job will pay off by avoiding certain issues or, if things fall apart, dealing with issues in a way that is reflective of the contract price.

4. Get Your Notices right
Make sure you know, before you start work, what your rights are when it comes to notices. The time and manner when you should serve these is set out in the contract.
If you get them wrong, even serving one day late/early, you could give the other party the right to end the whole contract and claim damages. If in doubt, take legal advice.

5. Deal with problems quickly
If you think that you are falling out over the project, make sure you first check your contract about any notices you think you may have to serve, see 3 above, and then talk to the other party. The contract should also have provisions that tell you how to deal with a dispute. If the worst comes to the worst, you can take the problem to an adjudicator. It’s a quick and easy way of resolving the issue and often doesn’t cause the contract to fall apart.

Nine out of ten problems can be resolved without Court or adjudication proceedings. You may want to take legal advice before you do anything to make sure you aren’t compromising yourself.

This information is not intended to legal advice. If you have any questions regarding any construction issue, please contact Michael Clarkmichael.clark@otbeveling.co.uk 01392 829245.

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