While building works can happily be commissioned and concluded without a formal building contract, the risks of misunderstanding and dispute are elevated. This may not facilitate a calm or stress-free working environment for either party and can result in protracted financial disagreement.
What does a formal building contract cover?
A formal building contract, such as the JCT Minor Works Building Contract 2024, will identify and record the extent and detail of the required works and the agreed contract sum. It will also stipulate the agreed commencement and completion dates and provide the facility to register Liquidated Damages for delayed completion.
What is the contractor’s obligation?
The first article of the contract states what the Contractor’s Obligation is under the agreement: ‘The Contractor shall carry out and complete the Works in accordance with the Contract Documents.’ Section 2 details the contractor’s obligations encompassed in the above statement. The contractor shall:
- Carry out the works in a workmanlike manner in compliance with the contract documents and the Construction Phase Plan, and meet all statutory requirements.
- Suggest economically viable amendments to the works.
- Supply to the employer all information regarding the environmental impact of the supply and use of materials for the works.
- Demonstrate that materials and standards are to the satisfaction of the Contract Administrator.
- Encourage the contractor’s personnel to be registered cardholders under the Construction Skills Certification Scheme.
Contract administration, payments and disputes
The contract will name the Contract Administrator and the appointed parties for compliance with the Construction Design and Management Regulations 2015 (CDM 2015). This includes the Principal Designer and Principal Contractor, and in addition for Building Regulations where applicable. It will also identify whether the works are notifiable to the Health and Safety Executive (HSE) and require an F10 notice.
While the contract in part engages the Contract Administrator effectively as the employer’s agent, they have a duty to act as an independent administrator of the contract. This requirement is reinforced by a specific clause requiring collaborative working between all parties to the contract. Payment intervals are stated, with retention percentages on works valuations defined (It is the intention of HM Government to imminently ban the withholding of retention monies).
The contract allows for the notification and negotiation of disputes by nominating named representatives from the respective parties . Additionally, it provides options for adjudication or arbitration should disputes not be resolved by the contract parties.
Practical completion and contractual limitations
The rectification period following practical completion can be detailed, with a default period of three months. The contract can be signed under hand or as a deed, providing respectively a six- or twelve-year period in which to bring legal proceedings in contract.
It would be wrong to say that using a formal building contract for a project renders the process problem-free or stress-free. A contract is not a panacea, but engaging in a formal process is more likely to result in a satisfactorily delivered project for all parties.
How can Vickery Holman help?
The building surveying team at Vickery Holman has wide experience of administering building contracts and welcomes enquiries for your project.
