“I was always brought up to have a cup of tea at halfway up a rock face”. - Bear Grylls
Construction projects are complicated things. Whatever you are building is probably unique, probably nobody has ever built anything exactly the same before. It has multiple components, which have to be delivered and put up and fitted in the right order over a period of time. It involves many different trades and skills coming onto a site at different times, and those times have to be the right times. And it costs a lot, whether you are putting an extension on your house or building a tower block. Things can go wrong at any stage and for many reasons. You may have problems in your supply chain, the weather may be exceptionally hot or cold, the design may not work and you may need to change things as a consequence, you may encounter unexpected site conditions which need a change in the design and working methods, the list goes on. Alternatively, you may want to change your mind about what is being built, or the contractor may find a way to build it more cheaply.
The construction industry is also governed by a unique set of rules which govern how payment is made and a compulsory dispute resolution procedure, adjudication. If your contract doesn’t incorporate the rules properly or include adjudication, then in most cases these things are imposed on you by law and you cannot opt out.
So it makes sense, doesn’t it, to have a contract in place which sets out what is going to be built and by whom and what will happen if things go wrong or if you change your mind? And which deals with payment and adjudication properly? And things like insurance?
You would have thought so, but as a construction lawyer I regularly see situations where there is no contract in place, the contract is totally unsuitable for the project, or it has not been done properly, leading to expensive and time-consuming arguments. Great for me, but not so great for my clients.
So here are my top tips for making your life easier by getting a suitable contract in place.
1. Avoid free downloads from the internet
There are lots of free contracts out there but these must be used with extreme caution. Some of them contain clauses that are totally unsuitable in a construction contract, one example being clauses that make time of the essence. I’m going to blog about time being of the essence in the future, but take it from me, time of the essence is a really, really bad idea. Then there are often clauses about enurement (no, me neither) and concepts like punitive damages that don’t really have a place in UK law. All of the free contracts I have looked at take no account of adjudication or the compulsory payment procedures in the construction industry, which are major omissions. Avoid!
2. Use a standard contract
Luckily, there are a number of standard contracts available for companies or individuals to use. These have been prepared by industry bodies and usually offer a fair balance between the interests of the employer and the contractor. Of course these cost money, but in the context of the many thousands being spent on a building project it makes sense to get your contractual arrangements in order. To buy one of these contracts costs tens of pounds, depending on which one you choose, but using one could save you thousands of pounds.
The best-known contracts are published by the Joint Contracts Tribunal, or JCT, but there are plenty of others, all known fondly by their initials, ACE, CIOB, FIDIC, NEC, IChemE, ICE, I/M, PPC2000. Professional bodies such as RIBA also produce professional appointment documents. There is no shortage of standard documentation available from which you can choose a contract to suit the particular project.
The JCT contract suite provides contracts for projects of all sorts and sizes from the daddy of them all, the JCT Design and Build Contract (most construction lawyers sleep with one under their pillow), to the JCT Homeowner’s Contract for domestic building projects. I am a big fan of the Homeowner’s Contract, which costs £27 plus VAT, or £29 if you want to add in an architect’s appointment.
3. Seek Professional Advice
The standard contracts are great but only go so far. Often it is necessary to amend the contract to provide for conditions or situations unique to the project which the contract doesn’t take into account, or you might want to adjust the payment provisions or deal with who is responsible for particular items like existing site conditions. It makes sense to have a bespoke contract for a bespoke building project, and in the context of the cost of the project as a whole spending money on legal advice is money well spent. It could save you many many thousands of pounds just by helping you to avoid a dispute or avoiding unnecessary and unpleasant surprises as the project unfolds. Here at Stevens & Bolton we can advise you on the right contract, and the right amendments.
Be like Bear – have a cup of JCT!