To contract or not to contract

[Jimbo37]

Hi all - I am about to embark on a build of a new house, to replace my existing, but hit a bump - another bump  In a nutshell

 - I had architect to design, get quotes and (planned to use her for) quote evaluation, contractor selection & sign-up (one main contractor to do full shell and landscape), build control application, and to consult thereafter to support me and builder as we progress. Unfortunately, the architect was taken ill (very ill), so I evaluated the quotes and selected the builder - he comes recommended, and is affable. So getting to my questions

(i) Id like to sign a contract, and although he is agreeable, he'd "doesn't think they are worth the paper" - is it the absolute only thing to do?

(ii) what sort of contract do we sign - are there templates. Builder was given building control level drawings for quote, his response is marked estimate, and there are some things that may be subject to change/decision (e.g. the lanscaping levels). In a nutshell, I'd like to regularise the relationship as much as possible, without rewriting everything - Im thinking of making sure the less obvious stuff is clear, like what happens if the site is vandalised, payment terms, warranties, etc. Any pointers or contract suggestions, please. 

Relevant, I guess - I feel my architect is imprtont to my design, and Im really hoping to get her back, so not eager to appoint another - Id rather patch on through, if I can

TIA, James
PS, I am excited to finally be nearing build stage, in case the above came across as dry & glum!

Edited January 31, 2023 by Jimbo37

[andyscotland]

My advice would be that you & builder are both right.

 

Contracts (of any kind) are often "not worth the paper they're written on" in so far as it can be very challenging to enforce them if a relationship falls apart and usually in that situation the only winners are lawyers. So they're not a substitute for research, references & (justifiable) trust.

 

But the process of agreeing a contract necessarily flushes out a lot of the uncertainties and assumptions on both sides. Even if some are just acknowledged as being details/costs to be agreed at some future point, with a basis for when that needs to be decided and what the process will be. It is very often uncertainties and assumptions that lead to a relationship breakdown, so the more they can be eliminated or at least documented, the better.

 

So as a tool for making sure everyone is on the same page and the relationship is starting off with the best chance to succeed, contracts are extremely useful.

 

And of course there are still some times when a contract is vital, particularly if things go so wrong that insurers get involved as it needs to be very clear which insurer is liable to avoid a situation where they all decline the claim.

 

In terms of templates, yes there are several common building agreements (some which assume a qualified/neutral arbiter e.g. architect as part of the day-to-day relationship).

 

The details of those are beyond my competence to give an opinion but I'm sure others will be along to advise.

[Kelvin]

There is a thing called a small works contract in Scotland which is what I’m using or trying to. There will be something similar in England (I’m assuming you’re there btw). The bump I’ve run into is the groundswork guy typically doesn’t do contract’s although can put one together for me. My building contractor also doesn’t really do contracts although we’ve pulled an estimate together. This seems all pretty normal where I live and typical when you use small one man band trades. Both come highly recommended and even the BCO said they were very good. I do have contracts in place for other aspects of the build though so it’s not all a wing and a prayer just the important stuff 😂 

Edited January 31, 2023 by Kelvin

[nod]

A contract is good as far as it will list all the work he is responsible for and also your responsibilities regarding stage payments 

Unfortunately he’s right 

A contract isn’t worth the paper it’s written on 

[Jimbo37]

Thanks all 3, good comments there - and maybe the idea that they are not great from an enforcement perspective, they do flush out honest, but possibly inaccurate assumptions, by both parties, and of course keep the insurers on the hook, as well as highlight payments. @Kelvinin N Ireland. Ill think we have a Small Works contract too, but Ill get on it. I was titteriing at the "dont do contracts", coz that seems to be a thing here too, maybe a rural thing! Help appreiated all 3

Edited January 31, 2023 by Jimbo37

[Ralph]

We used the JCT minor works contract.

It all went tits up with our builder, culminating in him going into liquidation. I'm pretty sure the contract saved us significant amounts of stress and more importantly, money. 

He had a couple of other customers who had handshake agreements and by all accounts they came off badly.

[Jimbo37]

Of course @Ralph, there is the bust builder thing too - thats sealed it for me, definately getting something signed - Idont suppose you have a blank version of yours? (Ignore the request - I just located JCT online, tx)

Edited January 31, 2023 by Jimbo37

[Kelvin]

The main thing is who is buying the stuff and if you’re paying for stuff up front (and providing the builder with the funds). This is where you can be financially exposed. In my case I’m buying everything myself. 

[ETC]

@Jimbo37Just check that whatever contract you do use doesn’t need a contract administrator.  The JCT Minor Works needs one.

[Ralph]

1 hour ago, ETC said:

The JCT Minor Works needs one.

Yeah that's a good point. Our architect acted as ours.

[Jimbo37]

Cool, will do - thanks all

[Jimbo37]

I’ve had a read through the jtcmw (that was a slog, but good education) and think I’ll use it as a prompt for my own 3 or 4 page, or wherever it ends up at, document that is wo administrator. Mainly to cover things like scope, tie into spec & quote, payment terms, insurance and break clause.

[ETC]

Look at the RIBA Domestic Building Contract as well. It might help but again it requires a CA.

 

[ETC]

These contracts usually come with an addendum for use in NI - check them out.

Edited February 1, 2023 by ETC

[Adam2]

I'm almost finished and had quite basic quotes and documented (via email) agreements/modifications so it was reasonably clear what should be done and for what price. Some large firms (glazing, concrete planks etc) had their own which probably were a bit one sided but no dramas luckily. I did have 2 companies go bad on me but nothing too major as only paid for work done to date.

 

One thing I would stress is that when you have a fixed price job say for electricians 1st fix then get at the same time an agreed day rate for additions. I failed to do this and feel I was beholden to them for 2nd fix (they had records of where everything was behind plasterboard etc) and the day rate was I feel elevated and I had limited options. Similar principle would apply for others where initial work is fixed price but where there may be extras.

 

Key thing is agreeing to a decent degree the scope and where possible the timing and paying when work is done and limiting any advance payments - use cards if at all possible for advance payments (we did this for glazing which was ordered a year ahead of schedule!).

 

Maybe worst experience was scaffolding company - agreed fixed cost for the duration (in an email so would stand up as a genuine agreement) but he decided 40 weeks was too long so said I had to pay more else he'd take it down the next week. This was difficult as I'd paid a fair amount after install and to get a replacement would have been difficult at short notice and 100% he would have taken boards and left scaffolding to piss me off which would have stopped any progress. Sometimes you have to suck it up and that hurts but you have to consider the bigger picture.

 

Best of luck, it will be a rollercoaster, contracts or not 🙂

 

[andyscotland]

9 hours ago, Jimbo37 said:

I’ve had a read through the jtcmw (that was a slog, but good education) and think I’ll use it as a prompt for my own 3 or 4 page, or wherever it ends up at, document that is wo administrator. Mainly to cover things like scope, tie into spec & quote, payment terms, insurance and break clause.

 

One piece of advice I was given by a lawyer long ago is to be careful writing your own contracts. There is established precedent for interpreting words in a contract that can be quite technical and not exactly the "plain English" meaning of a word that a non-lawyer would expect.

 

His advice was:

 

a) if you might want a court to enforce a contract, ideally have a lawyer write it

 

or b) if you have to DIY then write in your own words, avoid legal-sounding language, and include a statement that "the language should be interpreted as plain English". Then if it does get into a dispute there's less risk of getting bogged down in / caught out by a legal dictionary definition of one word and the test is more likely to be "what would a reasonable person think that sentence meant in context".

 

I have always therefore gone with option (b) as life is too short to be paying lawyers unnecessarily 🤣

 

So if you do want to use JCTMW as a reference of points to include, fine, but ideally write that as a letter of agreement in your own words rather than copy&pasting the language from the original.

[Jimbo37]

@ETC will do & tx for link @Adam2 you say cards, do you mean any card as opposed to cash, or do you mean credit card for that additional guarantee that comes with their purchases. The additions comment is good, and something that is a potential area for stress, so Ill get that in @andyscotland I'll go plain English, and call that out, tx

Edited February 2, 2023 by Jimbo37

[Adam2]

21 minutes ago, Jimbo37 said:

@Adam2 you say cards, do you mean any card as opposed to cash, or do you mean credit card for that additional guarantee

Yes exactly for the protection

[saveasteading]

As AndyS. 

If you dabble at being clever with the wording then it gives lawyers a lot to argue about.

A simple exchange of what you want and what the builder is to do is worthwhile. In very plain English and short sentences. And how payment will be made.

I went to a construction talk on contracts where the lawyer said his most constructive work was in setting up contracts, and the most profitable was in arguing clauses meant when surveyors had altered  clauses in standard contracts.

 

Moral,  use a standard contract or just write your own summary. If you email it to the builder and they start work then that is your contract, signed or not, for better or worse.

[Drellingore]

On 31/01/2023 at 19:45, Jimbo37 said:

they do flush out honest, but possibly inaccurate assumptions, by both parties

 

I'm not sure I'm adding much to the conversation, but I'd agree with this and @andyscotland in that in my experience of running a few businesses and negotiating quite a few contracts, they're useful for signalling intent. Hopefully you won't have to enforce them, but they're a good way to expose disagreements early and to ensure that everyone has the same expectations.

[saveasteading]

You can also have a system of running contracts, all written by you. Eg an email saying, dear Dave*, as agreed today, please construct the footings and blockwork up to dpc and backfill. Includes all labour, plant and materials, and details to the drawing I gave you today.

To begin on monday and be completed within 2 weeks. Payment in full of £x within a week of completion.

 

There are many gaps in this but it covers enough to prevent a major dispute.

 

* what is the ubiquitous name for builders these days? Stefan perhaps.

[Jimbo37]

All good, thanks - will take that email tip too. Also, what is the norm with electricity costs - presumably these will be considerable over the year or so build? Do I absorb them, or absorb them to a level or is it more usual to hand him the bill - I do have my WFH office my separate garage? Also, has anyone good tips on warranty - what should I expect/aim for?

Edited February 2, 2023 by Jimbo37

[saveasteading]

You pay it. Assuming you have mains the use is a tiny cost.

Nothing will spoil relations more than you charging..

Anyway, if you tell the builder you will charge for it, then he will rightly add it to his quotation as a job cost.

[saveasteading]

warranty - what should I expect/aim for?

 

None. A builder who has a dependable warranty will charge a lot.

Common law covers it in theory. 

Either pay 50% more for a bigger company, or learn up and check build quality as you go.

 

Do make sure the insurance is valid and relevant. Get a copy if it and read the small print.

it needs to be for a surprisingly high level of cover.. someone else may know the going rate.

[Jimbo37]

Thanks all - I got this oer last night, 100% guided by advice here - every day english and covers the areas in the templates suggested, all in 3/4 of a page, emailed last night. TY