DTM Legal’s Mark Williams gives his top tips to ensure your contract rights are protected
If you can judge how well a city is doing by counting the number of cranes towering above its skyline then in Spring 2015 Liverpool is doing nicely with 17 large cranes on building sites across the City Centre and £1.13 billion worth of development underway.
With over £520 million of investment due to complete in the City Centre during 2015, investors have returned to Liverpool as finance for construction projects becomes more accessible.
The value of major schemes completed in the City of Liverpool since January 2010 is £2.8 billion with a value of £648 million completed since January 2014. However, as the number of projects gathers pace even the smallest construction project has a potentially complex structure of contractual relationship between multiple parties.
It is important to ensure that contracts are drafted in a way that protects a party’s rights. Here are 5 things to consider when drafting a construction contract to ensure
- One size does not fit all – it has been highlighted in many legal blogs and articles but think about who you are entering into a contract with and the purpose of the contract. Precedents are not advisable as the circumstances, requirements and expectations often differ from project to project.
- Think carefully about whom you are contracting with – a construction project often comprises the employer, contractor, architect, engineer, quantity surveyor, sub-contractors and suppliers. There is potential to be mis-guided as to who you think you are contracting with.
- Strictly define roles and responsibilities – as the cost and complexity of a project increases, greater emphasis is placed on the definition of roles and responsibilities between the parties by the use of lengthy building contracts, which not only define the scope of the work, price and time, but also provide mechanisms for variation, valuation and payment during the course of the works.
- Provide clear instructions and put communications in writing – a lack of written communications and confirmations between the parties will make it extremely difficult to establish who is responsible for any issues and importantly what is owed by whom at the conclusion of the project.
- Be vigilant to variation – any agreement which varies the terms of an existing contract must either be supported by “consideration” or be executed as a deed. Consideration is a legal definition that can take various forms, however, in relation to a construction contract it is where the variation of the contract can benefit or prejudice either party, a possible detriment or benefit will suffice as consideration for this purpose.