Lincoln Lawyer: Prevention is better than cure for building contracts

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Kate Reynolds joined McKinnells Solicitors in Lincoln in 2011, after she qualified as a solicitor in 2008 and worked on a wide range of both contentious and non-contentious matters including employment matters, judicial review proceedings, planning disputes, boundary disputes and construction work including advice on contracts and adjudication.

No one really likes to speak to solicitors because it always seems that we’re needed when something’s gone wrong. But like the Yellow Pages, we’re not always here for the bad things in life and can really help you when it comes to trying to prevent problems before they arise.

Lawyers love small print and I have to admit that I can often be found reading the terms on a packet of biscuits or a toothpaste tube because I’m genuinely interested in how parties control risk. Take contracts: the reason we are always stressing to clients that they should have written contracts is so that it is clear from the outset who is responsible for what.

If you know what your obligations are at the beginning of a relationship, you are far less likely to end up in a dispute because you can be in control of the situation. However, in the current economic climate where construction projects are few and far between, too many builders are neglecting to read the small print and it’s only when relations start to sour that contracts are brought out of drawers, dusted off and sent to the solicitors to try to find a way out. That’s the time when clients are taken aback to discover exactly what it is they’ve signed up for. It can often come as a nasty shock.

If you are a builder, then the most important things you need in any contract, large or small, is a clearly defined scope of works, what price has been agreed, how you deal with variations, how you get paid, for how long do you need to guarantee your work and what happens in the event of a dispute. These are the fundamentals. There are a myriad of other provisions set out in the standard form building contracts but essentially if you have these bases covered, that’s a great starting point.

If you’re being asked to sign a standard form contract, with reams of non-standard amendments attached, there are areas where you need to be particularly cautious. Design clauses, for instance, can be very onerous and if you are being asked to ensure that a project is fit for purpose on completion, take great care before agreeing to the provision as your liability could be extensive and your insurers may try to limit their indemnity.

Also look out for provisions that delay your entitlement to payment, or impose liquidated damages at punitive rates. You also need to be aware that contracts should be compliant with the Housing Grants, Construction and Regeneration Act 1996 and where they aren’t, the Scheme for Construction Contracts kicks in and terms will be implied into your contract. On 1 October 2011 the Scheme was amended to take into account changes to payment and adjudication provisions and if you don’t know about them, you won’t know what your position is should things go wrong.

At McKinnells we offer a fixed fee contract review service where we will go through your contracts before you sign them and point out the areas where you may be unnecessarily exposing yourself to risk.