Third Party/Section 20 Actions

Often, in connection with building defects, reliance on information conveyed by manufacturers is cited as a cause. For example, a material or product may be specified because of the representations made by the manufacturer or supplier about its qualities. The product once bought may be found to be unsuitable and the sales literature to misstate the product’s qualities.

Building owners making the claim may have no contract with the product manufacturer. They may nevertheless, either directly or through their design team, have placed reliance on the representations made by the manufacturer.

‘State-of-the-Art’ defence

‘State-of-the-art’ may be defined as the current stage of development of practice or technology, involving the use of the latest techniques or equipment. It often involves the first or early use of materials or techniques before they have been proven by long practice. There is inevitably a risk in being one of the first to use something new. This risk may reduce in time as use reveals the weaknesses inherent in each development. Thus, with practice, the flaws in that which was innovative are discovered. Growing familiarity with each state-of-the-art development provides the knowledge base to improve reliability and avoid error.

Oral and written contracts

Whilst, strictly, an oral agreement is as binding as a written contract, dispute is more likely and proof more difficult where the paperwork is deficient or non-existent. There is often merit in the old saw: ‘an oral contract is worth the paper it is written on’.

Many builders are far keener to start on site than they are to prepare paperwork. This is frequently true of domestic projects where householders, lacking prior experience in building work and unassisted by qualified professionals, are seduced by the self-assured approach characteristic of many jobbing builders. It is easy to be swept along by builders’ general relaxed air of confidence into not worrying over the unknowns of building work. It is, after all, reassuringly routine ‘bread and butter work’ to builders while they are talking the job in.

Where householders seek the formalities of standard written contracts, they are likely to be assured that ‘no one else asks for that’ and to be solemnly advised ‘that contract stuff makes the job cost more’.

Then the unexpected occurs and causes delays, unforeseen costs and defects – with resulting dissatisfaction and dispute.

Fixed-Price Building Contracts

It is a common desire for clients to fix in advance the cost, quality and scope of a building project.

If complete certainty is required, a simple lump-sum agreement may be appropriate, but most standard forms are unsuitable as they provide mechanisms for revaluing the payments due. Before they enter into a building contract, it is wise to ensure employers fully understand the scope for costs to vary.