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Building Contracts
Download
JCT Minor Works Specimen Contract Also
see item on insurance here
Some
general points
Don’t get swept away
An agreement letter
Standard forms of agreement
The JCT Agreement for Minor Works
The Building Contract for a home owner /
occupier
The world of construction is alien to most people and by tradition not easily accessible. Care and planning is needed to ensure that what you end up with is what you want, but if it is not there is a remedy to hand.
Please note that these comments are not given as any specific legal guidance to go it alone. It is intended to draw your attention to planning and thinking along the lines of formally recording what you want and what the builder is expecting to give you. If you are unsure, it is important to seek professional advice.
There is a tendency to get swept into the somewhat attractive laid back style of the builder who gives the impression that to join our ways is not to concern yourself with the unknown. " Don’t worry we’ll sort it for you". "This is bread and butter work to us". "No one else asks for that". "That contract stuff makes the job cost more". Then the unexpected occurs and its "I thought you said" and "I thought you knew what you were getting", the result is dissatisfaction and a dispute. You should note that this is a deceptively easy path; time pressure to achieve results often leads to a site start without a formal agreement. The start is made on a ‘letter of intent’. Later it becomes necessary to vary the terms of the works and the fun starts.
If a clear agreement is not in place that is understood by both parties, prior to commencement of work, the terms of the work, i.e. what really was intended, by each party may not be clear. When things go wrong it may take lawyers to sort out matters. The general rule is that if you expect the builder to follow any particular standards, you must jointly agree the rules at the time of making the agreement. The only remedy is a formal agreement, in writing, linked to a set of information, which clearly sets out the entire requirements and conditions before any start is made. Also, you must list out what is not settled, i.e. what is not completed in the design and requires further pricing or agreement. In general terms the agreement must set out the offer from the builder and the acceptance from you, with all the information available and the conditions, in two identical copies signed by each party and exchanged.
For smaller projects a friendly style letter setting out the essential elements of the agreement to ensure that a contract is formed would be a good basis. The key is to list what you want and get the builder to formally acknowledge that this is understood. The points to cover would be along the following lines:
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It is important that two identical copies are produced and each party signs the agreement.
As we have said, the purpose is to clearly establish what is required and what to do if matters go wrong, it is tedious but important, it is what lawyers call the all-important paper trail and it can save thousands of pounds. It is worth a little effort at the planning stage. If the project is of a reasonable size it is definitely important to seek professional advice at some point from your lawyer. An architect or other chartered professional can start off the agreement process.
the standard forms of agreement
It is usually better to use one of the standard forms of contract, which are to industry accepted standards and known by professionals and contractors.
There are some excellent standard printed forms of agreement intended for projects of a few thousand pounds upward such as: -
The traditional Agreement for Minor Building Works issued by the Joint Contracts Tribunal (JCT) which you would be well advised to seek some professional advice on or the new Building Contract for a home owner / occupier. This is the newly launched contract intended for home owners with very accessible wording and clear explanation booklets attached.
You can contact RIBA (publications department) to purchase a copy of Agreement for Minor Building Works etc.;
Minor Works 98 inc amendments 1-4 = £11.64 inc VAT +P&P
Home Owner Contract (without consultant)= £10.99
The RIBA’s London phone number is 020 7580 5533.
Prices for postage may vary.
Other sources for purchases are RICS books 020 7222 7000 and Construction Confederation (0121) 722 8200 or high street bookshops.
Again when you complete the forms you need to be specific about the work you want done. Your contractor could ignore anything you omit or leave unspecified leaving you with little or no legal redress.
You can have a look at the points below which outline the main headings, to familiarise yourself with the important points the standard forms of agreement contain.
the JCT Minor Works Agreement Download JCT Minor Works Specimen Contract
the Agreement
This is the front section, which sets out the parties to the agreement, what is required and what information the agreement is based on and how much you will have to pay for the described work.
The parties are basically you and the builder, but may include an agent such as an architect or surveyor.
A point to be aware of is that many contractors may employ sub-contractors especially for specialist works. You may wish to have a contractual link to these companies in case the main contractor ceases trading so that the sub-contractor is obligated to carry out and complete the work to a proper standard and be responsible for defects is available direct to you. You should seek advice on this, as warranties can be complex.
It is important to be sure if the contractor is responsible for designing and building as a package or is only responsible for building to a design someone else has prepared.
This agreement page is linked to the conditions, which expand on what is to happen and how the work is to be controlled to specific standards.
the conditions
intentions of the parties
This sets out the obligations you and the contractor will be under for the duration of the contract and any continuing obligations. The contractor is to carry out and complete the work in the specification and on the drawings, under the conditions stated, to the agreed standard, cost and time and you to pay for the work as agreed. It is worth noting that one of your obligations could be to hand over the site to the contractor in its entirety to allow the contractor to carry out the work as required. This may include unlimited hours unless you agree prior to signing, which could mean problems if neighbours complain about late working. It is of prime importance to agree what is wanted and expected to be carried out and who has access at the start. See also comment above regarding responsibility for design and below under architect for access to the works.
commencement and completion (programme)
This will include commencement and completion dates. Be aware that most agreements state the completion date, as on or before. If before is a problem, say so, but you may need professional advice on the implications of this.
The contractor can be held to the dates in this section so be sure that the dates are properly agreed.
If the work is completed late as a result of circumstances within the contractor’s control you may be put to additional costs such as hotel accommodation. These costs may be claimed back from the contractor in certain circumstances. The cost of this eventuality must be pre-agreed and written into the contract if you are able to deduct the damages without resorting to court assessment. The damages must be a pre-estimate of your loss - they cannot be punitive.
Professional guidance should be sought in this area as reasonableness must enter the equation and the contractor may add 2 or 3 weeks of the damages to the estimate if there is any likelihood of late completion. Poor weather probably would not entitle the deduction of damages.
control of the works
If you employ a professional to inspect the work in progress provision must
be made for that person to issue instructions and have access to the site. You
will have to agree with the professional the limit of instruction authority.
This clause will contain authority for the contractor to sub contract the work
if this is to be allowed.
It is vitally important that you have the ability to vary the specification in
case of change of mind or unavailability of something that you have specified,
this will have implications on the damages clause too. If you require to vary
the terms of the contract this must be done in agreement with the contractor and
not unilaterally.
payment
The price for the agreed works is in the recitals and the clause sets out
when the money is due. You should note that what ever the builder has called the
price "an estimate", "a quotation" or "my best
guess" if the agreement is signed up, that is the price for the works
described unless it is clear that the work is subject to re-measurement and
final price settlement.
Professional advice is needed on that point. If interim payments are to be made
the details will be contained here. Some contracts provide for retention money
to be held often 5% of the contract sum until completion then 2.5% for a
maintenance period of 3-6 months. There may be a requirement for the money to be
held by an independent party such as a solicitor.
statutory obligations
The contractor should be directed as to complying with statute and
regulations and if fees are applicable, for example with Building Regulations
application directions as to payment should be included.
This section will also contain VAT clauses
injury, damage and insurance
The contract must contain directions to the contractor to insure. Many contract forms place the contractor under an obligation to indemnify the employer against any claims arising out of or in connection with the works and to take out insurance to cover the obligation. This is to make sure that there is no gap between your protection and the contractor’s insurance. An important point is that the insurance is the property of the contractor and a loss may initially be suffered by the property owner as any claim may be directed at you, especially if the contractor has ceased trading. Professional guidance is recommended as joint names insurance is usually taken out. If you have a mortgage the mortgagee will have an interest too.
determination
These clauses set out what happens if the builder does not perform as required and it becomes necessary to finish the contract. This is a potential minefield and needs expert guidance around the potential problems. There is protection here for the contractor should you not pay for the work as agreed or prevent access to enable the contractor to carry out their obligations.
dispute resolution
The current route to dispute resolution is initially through an adjudicator, an independent professional in the construction industry who will follow a strict formula and timetable to give a rapid settlement. Such a person may be agreed on at contract signing stage. The professional institutions will give guidance on the selection process.
You need expert advice if considering changes to these clauses.
building contract for a home owner / occupier
The form is a duplicate book with boxes to be filled in requiring straightforward information entries under the following headings:
the parties to the contract
As before; you and the builder.
the work to be done
As set out on information in the quotation, specifications, drawings and any other relevant documents.
planning permission
Identifies who will be responsible for obtaining planning, building regulation and party wall approvals.
using facilities on the premises
Allowing the contractor to use electricity, toilets, telephone and water if acceptable.
price
The agreed price and mechanism for variations.
payment
How payments will be made to the contractor.
the working period
The programme for the work.
product guarantees
Appliance warranties to be passed to the customer and not the contractor.
insurance Also see item on insurance here
Responsibility between the contractor and the customer.
working hours
Any limits on the contractor hours on site.
occupation of the premises
Giving access to the contractor and taking precautions against intruders.
disputes
The routes of dispute settlement through the courts or adjudication are referred to.