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1. My contractor is due to start on site next week and I
have been given a building contract to sign. It's a JCT. Is
that okay? >>more>>
2. The Architect, Engineer and Surveyor are working as a team.
I haven't had any contact with the Engineer. Is that okay?
>>more>>
3. What is a collateral warranty? >>more>>
4. I'm a tenant. Why do I need a collateral warranty? >>more>>
5. What about the Third Party Rights Act - doesn't that give
me some rights? >>more>>
6. The contract completion date was May, the Architect says
that has now been postponed to July. What can I do about this?
>>more>>
7. The price in the contract was £x. I have paid that
already and they are nowhere near finished. What is this going
to cost me? >>more>>
8. The contractor is nearly finished and I want to get into
the building to sort out the interior fittings. The Architect
and Contractor are being awkward about this. Why? >>more>>
9. The building works were completed 12 months ago and the
contractor is being difficult about coming back to do the
snags. What should I do? >>more>>
10. The contractor has just gone bankrupt. The job is half
finished. Help! >>more>>
11. I don't agree the Architect's latest certificate. It's
more than the contract price. Should I pay it? >>more>>
12. I am the contractor. The architect is ignoring my legitimate
claim for loss and expense. What should I do? >>more>>
13. Adjudication - what's that? >>more>>
14. Great! What do I do to start an adjudication? >>more>>
15. How do I get an adjudicator appointed? >>more>>
16. What next? >>more>>
17. Do I need a lawyer? >>more>>
18. I have the adjudicator's decision. It's wrong. What can
I do? >>more>>
19. I am the contractor. Should I start work on the back of
a Letter of Intent? >>more>>
20. I am reorganising my contractor group of companies. Can
I transfer my existing contracts to the group company which
will now carry on this type of work? >>more>>
1.My contractor is due to start on site next week and
I have been given a building contract to sign. It's a JCT.
Is that okay?
JCT stands for Joint Contracts Tribunal. The JCT is a committee
of people who represent most of the interest groups involved
in the construction process. The JCT produce a number of standard
form building contracts which they hope are reasonable and
fair to the parties involved. A JCT contract will usually
be a good starting point but to know if it is "okay"
for your project we would need to know more about the scheme
and the risks you are prepared to take primarily in terms
of design, control, cost, time, etc.
2. The Architect, Engineer and Surveyor are working as
a team. I haven't had any contact with the Engineer. Is that
okay?
It depends. If you haven't met or written to him at all he
is probably working for the Architect. Check the Architect's
appointment to see if it mentions engineering services. It
is usually better practise if the Engineer and Surveyor are
appointed directly by you.
3. What is a collateral warranty?
It's a contract between anyone with an interest in a development
(typically a tenant, fund or purchaser) and someone responsible
for the construction of that development (typically an architect,
engineer, quantity surveyor, contractor or subcontractor).
The person giving the warranty "warrants" that it
will properly perform its contract for the construction of
the building. If there is a problem with the completed structure
the warranty may be used to claim damages from those responsible.
4. I'm a tenant. Why do I need a collateral warranty?
If there is a problem with the building you may have to repair
it under the terms of a repairing covenant in your lease.
If you have warranties from the designer and contractor you
may be able to recover reasonable repair costs and other foreseeable
losses (e.g. loss of income) caused by the failure. If you
have no warranty it is unlikely that you will be able to claim.
5. What about the Third Party Rights Act - doesn't that
give me some rights?
Most standard form contracts expressly exclude the operation
of the Act. People prefer to rely on the certainty of contracts.
If the Act applies, it will only give you rights if there
is some evidence that the contracting parties intended this.
There is some uncertainty about how this will be proved.
6. The contract completion date was May, the Architect
says that has now been postponed to July. What can I do about
this?
Most standard form contracts allow for some flexibility in
the completion date. If May really is a "drop dead date"
you need non standard provisions in the contract, which should
be drafted by a solicitor.
If you didn't get special completion provisions drafted,
delays caused by adverse weather, variations and additional
works will usually be your risk. The contractor will get an
"extension" of the time he has to complete the job.
If you have caused the delay the Contractor may also be entitled
to recover costs associated with this extra time on site.
If the contractor is late for reasons, particularly where
he has been inefficient, he may have to compensate you for
the delay. Most standard form contracts provide that the contractor
must pay liquidated damages at a weekly rate. Talk to your
architect about whether these should be deducted from the
next valuation payment. If you want to proceed, check the
contract provisions and follow them to the letter. The onus
is on you, not the Architect to send notices etc. If in doubt,
take legal advice.
7. The price in the contract was £x. I have paid
that already and they are nowhere near finished. What is this
going to cost me?
Discuss this with the design team and the contractor. There
may be any number of reasons why this project is costing you
more than originally anticipated. If you want any changes
to design get them costed by the surveyor and the builder
before going ahead. If you want a guaranteed maximum price
say so at the outset and get some legal advice on how to ensure
you have a binding commitment from your construction team.
You may need legal advice on amendments to the standard form
contracts.
8. The contractor is nearly finished and I want to get
into the building to sort out the interior fittings. The Architect
and Contractor are being awkward about this. Why?
Most standard form contracts do not allow you to occupy the
building for any purpose until it is finished. The Architect
may be worried because your tradesmen could disrupt the contractor's
progress. If this disruption causes extra cost or delay, you
will have to compensate the contractor.
Also, if your consultants are checking the work to see that
it is complete, the fit out works may make that task more
difficult. Discuss this with the contractor and the architect.
Perhaps you can have limited access to specified areas or
at particular times without this having any impact on progress?
It is not in your interests to pressure the Architect to
certify practical completion when the works are not really
finished. This is particularly unwise if you have a performance
bond which lapses on practical completion.
9. The works were completed 12 months ago and the contractor
is being difficult about coming back to do the snags. What
should I do?
Check the contract. Have you issued a snagging list in the
way it describes? If so, there is usually a procedure whereby
you can give notice then carry out the works using another
contractor. You can deduct the cost from the retention. If
you are unsure about the procedure or the work will cost more
than the retention, take legal advice.
10. The contractor has just gone bankrupt. The job is
half finished. Help!
Don't panic! First find out exactly what has happened to
the contractor. Perhaps an Administrative Receiver has been
appointed who wants to finish the job. If so, ask him for
his detailed proposals and consider them carefully with your
advisers. If a liquidator has been appointed he will not continue
the works but he may well introduce you to someone who will.
Don't dismiss such proposals out of hand; the liquidator doesn't
want you to spend money unnecessarily either. Consider approaching
the firms on your original tender list. Take legal advice
on any contract to complete the works and any further payments
to the contractor or any nominated sub contractor. Follow
the contract procedures about termination and sorting out
the final account.
11. I don't agree the Architect's latest certificate.
It's more than the contract price. Should I pay it?
If you are convinced the works are not properly valued and
determined not to pay you only have a few days to write to
the contractor setting out your reasons for non payment. (The
exact time limit should be in the contract. If not, you have
5 days from the date of the certificate):
1. Write a letter to the architect explaining your concerns.
Remember he has to act independently. Do not try to bully
or threaten him.
2. Consider taking a second opinion on the costs certified.
Take legal advice before embarking on this process.
3. If you do not pay the certificate there is every likelihood
that the contractor will suspend work and start an adjudication.
Unless you are prepared to deal with the consequences, pay
this valuation and work closely with the design team to understand
their professional advice. Take legal advice.
12. I am the contractor. The architect is ignoring my
legitimate claim for loss and expense. What should I do?
Has he given you an extension of time (with reasons)? If
not, press him for this first step. If you have the extension,
point out that you will be claiming finance charges for the
period from the date when losses were incurred to when they
were paid. Send him a calculation. If all else fails, go to
adjudication.
13. Adjudication - what's that?
You have the right to refer all disputes under construction
contracts to an adjudicator. He or she must decide the dispute
within 28 days of his appointment.
14. Great! What do I do to start an adjudication?
Check your contract for procedure. You will need to serve
a notice. It is a good idea to get the notice checked by a
solicitor who will make sure it properly describes the dispute.
If the description is too vague, narrow or wrong this could
lead to problems with enforcement.
15. How do I get an adjudicator appointed?
Check the contract. If it doesn't say anything then you can
go to a number of professional bodies who will select an adjudicator
for you. Think about what professional background you think
the adjudicator should have. You will have to pay a fee for
the appointment.
16. What next?
The adjudicator will probably suggest a procedure. If you
think his procedure is not fair, say so and explain your view.
However, at the end of the day you should comply.
17. Do I need a lawyer?
It depends on your claim/defence. If there are difficult
legal issues solicitors will be well placed to help. If you
think there is a serious injustice in the procedure take legal
advice before the adjudicator's decision is due.
18. I have the adjudicator's decision. It's wrong. What
can I do?
Is it a mistake? If so, write to the adjudicator immediately
to tell him you think he has made a mistake. If you do this
quickly enough (perhaps within hours), the adjudicator may
issue a corrected decision.
Is it wrong/unfair? Take legal advice in good time before
the decision is due for payment. However, in most cases the
decision will be enforceable. If you want to take the issue
further you will have to consider litigation or arbitration.
19. I am the contractor. Should I start work on the back
of a Letter of Intent?
Letters of Intent are common, but what actually does it say
and is it legally binding? Is the Letter to cover a short
period while agreed contract documents are circulated for
signing or are there major contract terms still to be agreed?
You may be authorised to spend up to a stated amount under
the Letter but what about loss of profit claims and discontinuance
costs if a Contract is never signed? Don’t run the whole
job on the back of a Letter of Intent.
20. I am reorganising my contractor group of companies.
Can I transfer my existing contracts to the group company
which will now carry on this type of work?
This is not straightforward and detailed legal advice needs
to be obtained. For example even if the Contract permits assignment
of the rights and benefits under contracts, obligations cannot
normally be transferred without the Employer’s or sub-contractors
consent. There may be other issues such as continuing P.I.
cover for contracts involving contractor’s design, and
changing bonds and dealing with retentions.
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