The 12 Major Things Builders Get Wrong That Either Cause or Complicate Contract Disputes
- Correctly identifying your own trading entity and the licence applicable to the work
Get this wrong and you can face a statutory prohibition on payment, invalidate your insurance, or at least make recovery of payment difficult.
- Correctly identifying the party you are contracting with and ensuring that party owns the land and has obtained the finance
If a company is involved, get a Directors’ Guarantee.
- Adequately identifying the site
Always inspect and cover soil tests, a site survey, compaction, engineering, retaining etc. in a preliminary agreement.
- Making the contract sufficiently certain to be enforceable
Be detailed and specific. Avoid terms like “standard inclusions” which can be legally meaningless.
- Adequately understanding and applying PC and PS adjustments
To the maximum extent possible, all elements should be specified and accurately priced before contract. If you must have PC and PS allowances, they must be reasonable, itemised, and the schedules completed fully.
- Being clear on the building period
Understand the “date for commencement” and the “date of commencement”, and the distinction between actual damages for late completion and “liquidated damages”.
- Properly documenting variations and extensions of time (‘EOT’)
If a variation document is not signed, don’t start it, and claim an appropriate EOT at the time and within the contract time limits.
- Considering the particular features of special products
e.g. feature timber floors and the need to moisture test.
- Documenting subcontracts
These can be simple and short, but you must have them.
- Properly applying and enforcing the payment provisions under the contract.
Consider the Building and Construction Industry Payments Act (‘BCIPA’) and Subcontractors’ Charges Act where applicable.
- Understanding rights and obligations on Practical Completion
Notice – defects inspection, defects document, no possession until payment, and ability to lodge a caveat where applicable.
- Taking the right action when a problem arises
- Suspension of work
- Notice to Remedy Breach
- If necessary, terminating properly. Be aware of the perils of “repudiating”.
Overall, if you’re not “crystal” on all of the above, you can minimise cost by effectively “subcontracting” your paperwork. Let us look at it and advise you so you can avoid problems, rather than suffer the stress and cost after the problem “hits you”.
This publication has been carefully prepared, but it has been written in general terms and should be viewed as broad guidance only. It does not purport to be comprehensive or to render advice. No one should rely on the information contained in this publication without first obtaining professional advice relevant to their own specific situation.