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Why should we have a formal contract with a contractor?

Why should we have a formal contract with a contractor?

It goes without saying that a formal contract is important, but in the past, these haven’t always been utilised fully, or indeed sometimes at all. In this blog, we will briefly discuss the contract between a client and a contractor, which is undertaken prior to, and runs throughout, the construction phase of works.

The contract, in summary, states that ‘the contractor’ will provide the agreed works for an agreed price and time, on behalf of ‘the client’. This contract is usually administered (or overseen) by the architect or designer of the works who has worked with the client up to this stage and acts as an impartial third party to ensure that works progress as per the agreed drawings, specifications and other relevant documentation. It is important that the architect takes on this role as they have a prior understanding of a) the project – having worked with the client up to this point, and b) construction methodology – allowing them to work with the contractor to resolve issues which may occur during the build. It also allows a level of continuity and control over the construction phase which would otherwise be lost.

With a domestic project, the most common form of contract will be the SBCC Minor Works Building Contract for use in Scotland (2011 Edition). This is a standard form of agreement, and will remain unaltered unless there are exceptional circumstances. The reason for leaving the document unaltered is that, in its existing form, it provides a fair and equally secure balance between the rights of both parties. As the administrator, this is a balance that you don’t want to upset, as it can lead to bad feeling and possibly dispute between parties right from the outset.

The contract sets out the obligations of both the contractor and the client and, as mentioned above, states the scope of the works to be carried out, and the time and cost of these based on the previous tender process and documentation. The contract encourages prompt communication, payment when due and provides a legal safeguard if something unexpected were to occur to disrupt works.

The contract is broken into ten main sections: Recitals and Articles, Sections 1 to 8, and Schedules. All being well, the contract does not need to be ‘enforced’ or ‘altered’ as works progress on time, on budget and without variation to scope, cost etc. In some cases, however, jobs may run over time, or changes may be made or required. The contract provides a legal basis for these to take place, for deductions or additions to cost, or for recompense from one party to the other if needed. Without the contract, legally, there is no footing for these and they would prove difficult, if not impossible to enforce.

Understanding the contract and all of its particulars, clauses and details can be a daunting prospect. Especially if it is something that you don’t deal with on a regular basis, as is the case with the vast majority of domestic clients, but we are happy to run through this with you and answer all queries before the start of works so that you can be secure in the knowledge that you will get the building you have envisioned for the cost you expect!