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.
Where a contract is prepared without due care, or by people with inadequate training and experience, the resultant documents often do not adequately cover all that has been agreed and, where a dispute occurs, reference has to be made both to the written agreement and that which has been discussed and agreed but not recorded in writing.
In the middle of farm fields, an isolated house, which had been built and altered over a century or more, was extensively modified for its new owner. The owner engaged an individual who took on a role akin to that of general contractor but who described his function as ‘project manager’ and who had experience but lacked professional qualifications.
The work started based on unminuted discussions and some exchange of correspondence. Initially the documents describing the work comprised the employer’s ‘wish list’ of jobs to be done on the house and his maximum budget.
Because of the need to obtain formal consents from the local authority, the project manager engaged an architect who prepared outline drawings and sporadic specification notes. From these, sufficient consents were obtained for work to commence.
The monies to be spent, several hundred thousand pounds, would have been sufficient to build the accommodation from scratch. In proportion to the envisaged costs the works were relatively modest.
Notwithstanding the project manager’s assurances that he would look after the quality, programme and general organisation of the works, the employer was wary of proceeding on too informal a basis and asked if it were not appropriate for a proper contract to be entered into. The project manager acquiesced and engaged a quantity surveyor to draft one. They selected a standard JCT form for contractor’s design and prepared both contractor’s proposals and employer’s requirements which they submitted to the employer for signature.
The proposed contract documents did not refer to the original agreements. The description of the work in the proposed JCT agreement was sufficiently vague to make ambiguity and absence of detail appear a skilled art form which thoroughly obscured the extent of divergence between the original and proposed agreements.
The work progressed poorly, the quality being far below the standard that it was reasonable to expect from the monies being expended. Eventually, when the payments demanded exceeded the original budget although the work was far from finished, the employer sought independent advice. He dismissed the project manager and, by so doing, the various builders and professionals the project manager had engaged.
The project manager brought and won an adjudication for payment of the monies he said were outstanding. The employer appealed to the High Court, disputing the applicability of the JCT form and therefore the adjudicator’s jurisdiction. The employer’s appeal having been confirmed by the court, much money had been spent but the dispute remained fully unresolved.
Added to the dispute over the quality and cost of the work was an argument over the agreement under which the building work was being carried out. Because much of what had been agreed had been dealt with orally and because the written records of these oral agreements were scant summaries with no detail of the breakdown of prices and quality of work, the disputants had to rely extensively on expert evidence. As every aspect of the agreement – as well as most aspects of the quality and correctness of the work – became a matter for debate, the cost of fighting the dispute rapidly exceeded the sums which were in contention.
It was found that the contract contained both express terms (written and oral) as to the scope of the work, and implied terms in respect of quality. Reference to the JCT form was not relevant as it was made after a contract had come into force.
The failure to prepare contract documents and to record agreements in writing is not restricted to domestic work. It is a deceptively easy path to follow. Time pressure to achieve results often leads to a start on site, on a shake of the hand or letter of intent, without full formal records of what has been agreed. Whilst work entered into on such a basis may be completed successfully, it is often later necessary to clarify or vary the terms of the works, with resultant problems.
If a clear agreement is not in place at the outset, or is not properly understood by both parties prior to commencement of the work, the terms of the agreement – i.e. what really was intended by each party – may not be clear. When things go wrong it may require lawyers to sort out matters. The best way of ensuring that lawyers are not needed to resolve construction disputes is to start with a written agreement linked to a set of information which makes clear what is required, how disagreements are to be resolved and, if appropriate, the effect of varying the work.
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.
Where a contract is prepared without due care, or by people with inadequate training and experience, the resultant documents often do not adequately cover all that has been agreed and, where a dispute occurs, reference has to be made both to the written agreement and that which has been discussed and agreed but not recorded in writing.
In the middle of farm fields, an isolated house, which had been built and altered over a century or more, was extensively modified for its new owner. The owner engaged an individual who took on a role akin to that of general contractor but who described his function as ‘project manager’ and who had experience but lacked professional qualifications.
The work started based on unminuted discussions and some exchange of correspondence. Initially the documents describing the work comprised the employer’s ‘wish list’ of jobs to be done on the house and his maximum budget.
Because of the need to obtain formal consents from the local authority, the project manager engaged an architect who prepared outline drawings and sporadic specification notes. From these, sufficient consents were obtained for work to commence.
The monies to be spent, several hundred thousand pounds, would have been sufficient to build the accommodation from scratch. In proportion to the envisaged costs the works were relatively modest.
Notwithstanding the project manager’s assurances that he would look after the quality, programme and general organisation of the works, the employer was wary of proceeding on too informal a basis and asked if it were not appropriate for a proper contract to be entered into. The project manager acquiesced and engaged a quantity surveyor to draft one. They selected a standard JCT form for contractor’s design and prepared both contractor’s proposals and employer’s requirements which they submitted to the employer for signature.
The proposed contract documents did not refer to the original agreements. The description of the work in the proposed JCT agreement was sufficiently vague to make ambiguity and absence of detail appear a skilled art form which thoroughly obscured the extent of divergence between the original and proposed agreements.
The work progressed poorly, the quality being far below the standard that it was reasonable to expect from the monies being expended. Eventually, when the payments demanded exceeded the original budget although the work was far from finished, the employer sought independent advice. He dismissed the project manager and, by so doing, the various builders and professionals the project manager had engaged.
The project manager brought and won an adjudication for payment of the monies he said were outstanding. The employer appealed to the High Court, disputing the applicability of the JCT form and therefore the adjudicator’s jurisdiction. The employer’s appeal having been confirmed by the court, much money had been spent but the dispute remained fully unresolved.
Added to the dispute over the quality and cost of the work was an argument over the agreement under which the building work was being carried out. Because much of what had been agreed had been dealt with orally and because the written records of these oral agreements were scant summaries with no detail of the breakdown of prices and quality of work, the disputants had to rely extensively on expert evidence. As every aspect of the agreement – as well as most aspects of the quality and correctness of the work – became a matter for debate, the cost of fighting the dispute rapidly exceeded the sums which were in contention.
It was found that the contract contained both express terms (written and oral) as to the scope of the work, and implied terms in respect of quality. Reference to the JCT form was not relevant as it was made after a contract had come into force.
The failure to prepare contract documents and to record agreements in writing is not restricted to domestic work. It is a deceptively easy path to follow. Time pressure to achieve results often leads to a start on site, on a shake of the hand or letter of intent, without full formal records of what has been agreed. Whilst work entered into on such a basis may be completed successfully, it is often later necessary to clarify or vary the terms of the works, with resultant problems.
If a clear agreement is not in place at the outset, or is not properly understood by both parties prior to commencement of the work, the terms of the agreement – i.e. what really was intended by each party – may not be clear. When things go wrong it may require lawyers to sort out matters. The best way of ensuring that lawyers are not needed to resolve construction disputes is to start with a written agreement linked to a set of information which makes clear what is required, how disagreements are to be resolved and, if appropriate, the effect of varying the work.
No comments:
Post a Comment