What is a basic contract for a self builder who is getting a builder to do it in stages?

[CalvinHobbes]

With the world being so crazy and we don't have unlimited funds. We planned on getting someone to do it in stages. So demo/clearance and doing the founds/trenches would be stage 1.  We figured on using a builder who is just coming back to work f/t after a health issue. His reputation is second to none, I have been asking past clients. Everyone said civil, honest and does a good job. He is happy to do it and has had a digger man out already checking it out. 

I recall reading somewhere here you have to be careful of not becoming a developer tax wise yourself for tax. I can't find it though and frankly I need it explained in plain english.

Can anyone give me an idea of a basic contract I could use or is it necessary?

Edited November 29, 2022 by CalvinHobbes

[JohnMo]

If your doing a self build for yourself to live in, you cannot be construed as being a developer.  If you were building one for self plus other properties on the same land that may be a different story.

 

I took a couple of years off work to built our house.  Now back at work, did not get paid for the work I did, but obviously paid the contractors used.  If I was some how making a profit and sold it soon after it was completed, then it falls under capital gains I believe, not being a company or a contractor.

[CalvinHobbes]

Thank you, this really is a self build for our family. A relative is building for herself next door at the same time so we will be sharing the builder so to speak. Hoping to get economies of scale especially for plant hire etc. 

[twice round the block]

Hope you get a price off the builder for stage 1, and don't do it on a day work price.

Will stage 1 include putting the drainage in and supervising the concrete pour for the footings? so stage 2 will get the slab in and upto dpc etc.

[CalvinHobbes]

Thanks twice, I shall heed your advice. At the moment just stripping the old cottages and removing roof tiles. Presently doing day rate but after demo will get a set price agreed for stage 1 and 2 as you described. A relative who is a qs is sitting us down for a talk on Thurs.  I don't know if you can call a day rate builder a principal contractor? 

Edited December 6, 2022 by CalvinHobbes

[twice round the block]

Some day rate builders are epic, time served, been in the game most of their working lives, know all the building regs, and can run the job for you and advise every step of the way.

 

Some day rate builders aren't worth a day rate.

[ETC]

Look at the NEC suite of contracts. The concept can be quite simple and can work like a shopping list of what you want a contractor to do.

[CalvinHobbes]

We changed our plans re the stripping. Didn't take the tiles off etc but did get them to board it up to keep it safe ( a few stones lobbed through windows). Focusing on safety and planning it right. Cheers, looking at the contracts.

[SBMS]

My personal view is get clarity on the spec of what your builder will be doing, and develop a payment plan where you pay in arrears at the end of a stage. You might have to put a deposit down up front to get them going, but most of the materials they purchase and their costs will be on 30 day terms. 
 

I believe you should be looking at finding someone you trust to a high degree, and a contract is less necessary. If your builder breached it, would you really sue them? If they are a limited company they’ll have indemnity insurance that will pay defence costs anyway - could you afford to? If they’re not limited then how successful would you be and how could you prove a breach for example?

 

Im not sure a contract is all that useful. Having really well understood responsibilities and payment terms - perhaps linked to BCO sign off is the way we went, and it’s paid off. If I was wanting to tie my build up into contracts I’d probably start wondering about how much trust I’ve built with my builder. Building is such a stressful, complex thing that in the event of a dispute you need to know you can talk and resolve amicably.

 

Just my opinion!

[ETC]

Think seriously about doing anything without a written contract. As I said before the NEC have a suite of contracts where everything you need a contractor to do is listed like a shopping list. Check it out.

[SBMS]

7 minutes ago, ETC said:

Think seriously about doing anything without a written contract. As I said before the NEC have a suite of contracts where everything you need a contractor to do is listed like a shopping list. Check it out.

If it makes you feel more comfortable I don’t think it’s bad advice, im just not sure how useful they are in the event of a dispute. Especially a third party contract where both parties fundamentally weren’t involve in its terms and authoring and at the end of the day need to consult a solicitor to interpret. If you’re a major construction project (see the ‘who uses us’ section of NEC) NEC model contracts are a great starting point but are they suitable for the lay self builder and lay contractor (that’s not rhetorical, I genuinely don’t know!) 

Edited December 13, 2022 by SBMS

[ETC]

13 minutes ago, SBMS said:

If it makes you feel more comfortable I don’t think it’s bad advice, im just not sure how useful they are in the event of a dispute. Especially a third party contract where both parties fundamentally weren’t involve in its terms and authoring and at the end of the day need to consult a solicitor to interpret. If you’re a major construction project (see the ‘who uses us’ section of NEC) NEC model contracts are a great starting point but are they suitable for the lay self builder and lay contractor (that’s not rhetorical, I genuinely don’t know!) 

Phew - I’m glad you don’t think I’m giving bad advice! I don’t think you understand how a typical construction contract works.
 

I’ve never done any construction project without a contract (and wouldn’t dream of doing so) - domestic and commercial - using JCT mostly but colleagues and consultants I have appointed have used the NEC suite. Personally I prefer the JCT but many contractors prefer the NEC.

 

The OP is able to consult a QS and I would suspect that the QS will be able to advise him in relation to the most appropriate type of contract to use.

 

I genuinely think advising someone not to use a contract when doing construction work is very bad advice - with the best will in the world and even if the contractor was his best friend - something could go wrong and the contract is there to protect BOTH the contractor and the employer.

Trusting a contractor will only get you so far.

[SBMS]

9 minutes ago, ETC said:

Phew - I’m glad you don’t think I’m giving bad advice! I don’t think you understand how a typical construction contract works.
 

I’ve never done any construction project without a contract (and wouldn’t dream of doing so) - domestic and commercial - using JCT mostly but colleagues and consultants I have appointed have used the NEC suite. Personally I prefer the JCT but many contractors prefer the NEC.

 

The OP is able to consult a QS and I would suspect that the QS will be able to advise him in relation to the most appropriate type of contract to use.

 

I genuinely think advising someone not to use a contract when doing construction work is very bad advice - with the best will in the world and even if the contractor was his best friend - something could go wrong and the contract is there to protect BOTH the contractor and the employer.

Trusting a contractor will only get you so far.

 

Fair enough @ETC. I didn’t advise the OP not to use a contract (I have a simple set of terms and conditions with ours) but was trying to impress the importance of prioritising and developing trust and finding a good builder over relying on a set of contracts. Especially if your contractor is more a one more band as appears the case of the OP. I always question the usefulness of a contract in the event of dispute - and having worked developing commercial contract agreements for a couple of decades can speak to the fragility of any contract when a dispute does arise, and the expense of enforcement, litigation, justifying limitation of liability levels, proving damages etc. On a self build scale, understanding the terms and conditions of a third party contract - even with a helpful QS - I’d still question. 

[jamieled]

As someone who has worked with NEC contracts in my day job I would strongly not recommend them for a self build unless you are familiar with them. They require quite a lot of understanding to administer and I would go so far as to say a self builder may be putting themselves at more risk by trying to do so. NEC contracts often use specialist contract administrators - they work well for the scale of project they were envisaged for. If you do need to go down the route of a self build contract then JCT is often mentioned and other options are available.

 

For me, I had no contract on our self build. A few suppliers in or trades with terms and conditions but we had no main contractor overseeing the work. This is not me advising you not to use a contract, but the majority of self builds I'm aware of around us haven't used one so it is not unusual.

[CalvinHobbes]

18 minutes ago, jamieled said:

As someone who has worked with NEC contracts in my day job I would strongly not recommend them for a self build unless you are familiar with them. They require quite a lot of understanding to administer and I would go so far as to say a self builder may be putting themselves at more risk by trying to do so. NEC contracts often use specialist contract administrators - they work well for the scale of project they were envisaged for. If you do need to go down the route of a self build contract then JCT is often mentioned and other options are available.

 

For me, I had no contract on our self build. A few suppliers in or trades with terms and conditions but we had no main contractor overseeing the work. This is not me advising you not to use a contract, but the majority of self builds I'm aware of around us haven't used one so it is not unusual.

Thank you, so if you don't mind me asking - who took responsibility for h&s /cdm? I was kind of hoping they could do it themselves if there was no one else on site.

[SBMS]

5 minutes ago, CalvinHobbes said:

Thank you, so if you don't mind me asking - who took responsibility for h&s /cdm? I was kind of hoping they could do it themselves if there was no one else on site.

As a domestic client, the health and safety responsibilities pass to the contractor (or principal contractor). 
 

https://www.hse.gov.uk/construction/areyou/client.htm

[ETC]

I think we will agree to disagree. Not having a contract between a contractor and an employer is a bad idea and even though some contracts may be a bit tricky to administer I wouldn’t use this excuse not to enter into a contract - even with a one man band.

[jamieled]

12 hours ago, CalvinHobbes said:

Thank you, so if you don't mind me asking - who took responsibility for h&s /cdm? I was kind of hoping they could do it themselves if there was no one else on site.

As above - where we used individual trades I got them to take responsibility for their work. I took responsibility for general site stuff such as having a first aid kit, providing signed off scaffolding etc which they might use.

[jamieled]

11 hours ago, ETC said:

I think we will agree to disagree. Not having a contract between a contractor and an employer is a bad idea and even though some contracts may be a bit tricky to administer I wouldn’t use this excuse not to enter into a contract - even with a one man band.

We're probably not a million miles away from similar opinions. If I was to get a turnkey build then I would absolutely not do it, nor recommend anyone else does it, without a contract. 'Bit tricky to administer' does not apply to NEC contracts -they are a whole different ball game, they do not work as per lots of other contracts and there are better options for self builders.

 

Not using a contract might put you at more risk, but if the self builder is doing a lot of work themselves and using trades (as a lot of people do), then trying to use or enforce the use of contracts can have downsides. 

 

 

 

 

[saveasteading]

There really should be a very simple contract covering the principles.

Anybody used 'JCT minor works'?

 

Many years ago there was an 8 page contract (*) that covered all the 'what happens if...' stuff, and listed correspondence. Easy to understand, and just in case of a big issue.  Our construction lawyer said it was very sensible, but also best not to use it as it was not industry standard.

 

* Federation of Small Builders, or some such.

 

 

[Drellingore]

On 14/12/2022 at 11:25, jamieled said:

'Bit tricky to administer' does not apply to NEC contracts -they are a whole different ball game, they do not work as per lots of other contracts and there are better options for self builders.

 

Which better options do you recommend? Also keen on other posters' opinions.

 

I found this thread when I was searching for NEC and JCT contracts, hoping to see if there was consensus on what would be an appropriate choice for a the conversion of a barn and the demolition and rebuild of another. I avoided using the term "self-build" as it covers way too much  Going contractless would be wildly inappropriate for our situation, and I'm a firm believer in both building trust and also using a contract to communicate expectations, not just as an arse-covering mechanism.

 

 

[jamieled]

1 hour ago, Drellingore said:

 

Which better options do you recommend? Also keen on other posters' opinions.

 

I found this thread when I was searching for NEC and JCT contracts, hoping to see if there was consensus on what would be an appropriate choice for a the conversion of a barn and the demolition and rebuild of another. I avoided using the term "self-build" as it covers way too much  Going contractless would be wildly inappropriate for our situation, and I'm a firm believer in both building trust and also using a contract to communicate expectations, not just as an arse-covering mechanism.

 

 

I'm probably not well placed to answer - I chose not to use any form of contract for our self build (with the exception of some T&C's for materials supply and one or two specialist contractors for specific jobs like insulation). I was happy with this at the time but I can easily see how it would not always be appropriate.

 

JCT seems the most common option for self build from what I've read. In some ways NEC fits the bill for a contract that 'communicates expectations' - it was designed (and is used) as much as a project management tool as well as a contract (this is based on my experience of its use outside of self-build situations - commercial engineering). It's downsides are that it requires quite a a bit of time to 'manage' the contract which is probably where it varies from a lot of self build contracts that are written and then only ever used if there's a problem requiring the contract as a reference for what to do.  This works OK on large-ish jobs where the contract management fee is proportionately small compared to the job. The second aspect is that both parties to the contract need a really good understanding of it and someone on each side who can administer it. If you're chosen contractor/builder has this skillset then it might be a goer, but as it's not a common form of self-build contract then this might be a struggle?

 

That's probably not much help though, hopefully some more contractually-experienced self-builders will be along soon!

 

 

[Drellingore]

I was just listening to a presentation about NEC, and after an hour, the speaker who is extolling the virtues of NEC admitted that in three house builds, he used JCT because the architect advised that builders don't know and understand anything else  

[SBMS]

2 hours ago, Drellingore said:

 

Which better options do you recommend? Also keen on other posters' opinions.

 

I found this thread when I was searching for NEC and JCT contracts, hoping to see if there was consensus on what would be an appropriate choice for a the conversion of a barn and the demolition and rebuild of another. I avoided using the term "self-build" as it covers way too much  Going contractless would be wildly inappropriate for our situation, and I'm a firm believer in both building trust and also using a contract to communicate expectations, not just as an arse-covering mechanism.

 

 

I think you need to outline exactly what you are hoping to achieve and what you've currently agreed regarding terms with your contractor/builder.

 

Here's my very simplified view on this topic, and the replies on this thread.  There are typically two types of routes the average self builder goes down:

 

1. Large, primary contractor

2. Smaller family/local builder

 

I think there's a disparity of expectation here.  The self builder will look to the large primary contractor because of the reduction in risk, capacity for dealing with problems, resource they might throw at it, dedicated project managers etc etc. But with that, likely, comes a higher cost.  The smaller/family/local builder is probably the opposite of that, but obviously comes in at a reduced cost.

 

What I would expect here, and what happens in most other industries, is that the supplier provides contractual terms and conditions.  This is because they are the ones that deliver the service and therefore they need to formulate their capability to deliver, what their liability is, how their contract feeds into their indemnity insurances etc etc.  I don't know of any industry where the customer brings/formulates a suggested contract/delivery terms to a supplier.  Granted, there's always scope for negotiation and tweaking terms, but it's generally the supplier that provides their contract.

 

I think the problem with some of the comments in this thread is that self builders are choosing the smaller/local/family builders, but then attempting to overlay onto them a set of (often) onerous contract terms.  My point that I've referred to repeatedly, is that I don't believe this works.  Even if this small builder agrees to your terms, the likelihood is your project/build is maybe only one or two that they have on the go.  In the event that something disastrous happens and you come to attempt to rely on those terms, what's the likelihood of legal success? Will you have a day in court, or will your contractor likely fold and phoenix, as it's a much more cost effective route.  Larger contractors that do have their terms (or adopt JCTs etc) will typically have a fairly hefty insurance policy/Professional Indemnity cover that backs their capability to defend any legal action you might take - and actually means that in the event that you're right, and they messed up, and you need compensating or making whole, their PI cover picks this up.  Smaller builders just don't have this.

 

It's why I said, earlier in the thread, that selecting a contract and enforcing it, or even proposing it on your smaller builder just doesn't make logical sense to me. With a larger contract, and a larger contractor, you don't need a huge amount of trust. You could even pay in advance knowing if you get shafted, you can sue and get your money back.  With a smaller builder - get referrals, pay in arrears, built trust as you go, inspect often etc.

 

TLDR: If your contractor doesn't already have a suggested contract/engagement/terms likelihood is they don't have an insurance policy that would back this up in the event you legally needed to refer to it.

[saveasteading]

The main purpose of a contract is to deal with any argument. They usually stay in the drawer.

Major events are dealt with, such as what happens in a national emergency.

Also dealing with any dispute.ie how to resolve it.

 

Thus when lockdown eas imposed, the national contracts would have it covered, fairly to all parties.

 

As to the project itself , it will be referred to by reference to the spec and drawings, so the contract doesn't add a lot.

 

Perhaps the main benefit is providing a check list of payment terms and programme.

 

It gets messy though when there is not a single contractor.

 

If it is of any use , my company always had a JCT contract with our clients. We hardly ever used a nationally recognised contract between ourselves and subcontractors....instead using a purchase order which spelt out terms.

 

A simple exchange of messages is often plenty to set up a supplier, and will suffice legally. If you can't explain it in writing, then you don't really know what the scope of work is, so the  writing of it is useful in itself.