The Problem
I am a construction contractor and have worked on a client’s site for six months. We have split the project into five phases, and have almost finished phase two, so I have submitted my tender for the next three.
In preparation, some small phase three jobs are complete, and the client has paid me at my tendered rates for these tasks. However, when I spoke to the contracts manager to create a written contract for the remainder of the work, he replied ‘Just crack on with it’. This response has given me reservations about completing the job without a contract or at least a letter of intent.
My relationship with this client has been great, and I do not expect future problems. Still, I would like some advice to prevent threatening this rapport. Without a contract, where do I stand health and safety-wise for the upcoming stages?
Thanks in advance for your help,
Malcolm
Response
Hello Malcolm. I understand your wish to maintain good relations with this income source. However, a written contract is vital before continuing to the subsequent phases.
Why a Written Contract is Valuable
A written contract is insurance for your agreement. Most will never see the light of day after being filled, but you will want it if anything goes wrong.
Issues with Verbal Contracts
Though verbal contracts can be legally binding (as long as they have an offer, acceptance, consideration and intent to enter an agreement), they are fraught with danger. You may find yourself with a case of ‘your word against mine’ and unable to prove that a guilty party broke the agreement.
Verbal contracts often do not cover vital construction contract terms, including:
- The agreed sums
- Payment terms
- The project’s timeframe and liability for delays
- The project’s scope and what happens if this changes
- How disputes are resolved
- What happens if a party breaks or terminates the contract
A verbal agreement rarely specifies your rights and obligations, leaving you open to disputes and their costs.
Letter of Intent
I am not a fan of supposed letters of intent! A proper letter of intent demonstrates a party’s intention to enter a future contract. However, I have seen many that form binding agreements. If you face time pressure to start a project, you can draft a combined Early Engagement Letter and Letter of Intent to appoint you as a contractor and begin work whilst drafting the main contract.
Health & Safety
Your written contract will cover health and safety as you must observe and implement strict requirements like the CDM Regulations 2015. Employers have duties governed by statute, such as providing adequate information, instruction, training and supervision for safe work. What’s more, self-employed persons have legal obligations to their own health and safety, ensuring their work is safe for others.
Forming a Robust Contract
Preparing a robust written contract saves you from unnecessary legal proceedings arising from uncertainty. A construction contract will specify the agreement’s sum and payment terms and establish your rights.
It should set out how the project will be constructed, including the different phases, the liable parties and deadlines. Include your triggering events and process for clarity.
Then you should cover warranties and insurance and how parties can raise and resolve issues. It will save time and money if a problem occurs.
Instruct Our Solicitors
Our construction solicitors can help you form clear, detailed contracts covering every element of your project. Contact us today for a free consultation.
Featured image: Pexels Licence - Tima Miroshnichenko
