Contracts

C is for Construction Contracts

Posted on Posted in A-Z of Construction Law

We were going to do Collateral Warranties, but thought we’d save that for another day! If you want more on them, head over to Sarah Fox’s excellent website and take a look at her latest book.

For now, the Contract, as it’s something we understand a bit more clearly…

From what we’ve been told, it’s the bedrock of any good construction project. And the curse of any bad one.

What is it?

Well first up, in England and Wales at least, it can be anything. It doesn’t have to be in writing, and it can be subject to ‘statutory adjudication’ (more about that when we get to ‘S’…).

For a contract to exist you need a few things:

  1. Offer – someone needs to make an offer. For example, in a supermarket, they offer you biscuits for 50p a packet.
  2. Acceptance – someone needs to accept the offer. In our supermarket example, we accept the offer when we accept the price at the checkout.
  3. Consideration – you need to do something to ‘pay’ for the offer. In our supermarket example, we part with 50p. But it needn’t be money. You might part with labour, or time for example.
  4. Intent – this is always the difficult bit in law lessons, but there has to be an intention to create ‘legal relations’. In our supermarket example, the intention is clear once you’ve gone through 1, 2 and 3. Both sides clearly intend to be bound by the contract they’ve entered into.  Intention is generally presumed to exist in business-to-business transactions, but there are two exceptions: marking all related documents subject to contract or where there is evidence of continuing negotiations.

Once you’ve got all this, you have a contract. Why do we care? Because being in a contract creates all kinds of obligations on both sides. Without a clear contract, there’s no certainty. And without certainty there’s risk. As our legal friends will tell you – never start work without a contract! But so often, people do.

…And don’t talk to us about Carbolic Smoke Balls.

NB – we’re not lawyers, and we don’t do legal advice. Ever. The idea of these pages is to expand on some of the things we’ve picked up in the past 20 years of events and working with people in our sector. Hopefully sharing them a bit more clearly and succinctly than your average seminar or lecture. (And thanks to Sarah Fox for her input on this page!)