Construction contracts – don’t let work get ahead

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Construction cases often result in particularly valuable lessons for lawyers and commercial organisations alike who are involved in construction and property – particularly where work commences before the contract is finalised. The commercial lawyers at Bahamas law firm ParrisWhittaker are experts in drawing up commercial contracts including construction agreements. In a recent commercial property dispute, the UK’s High Court looked at what factors the court will consider where it is unclear as to the terms of the engagements under which the parties are acting, in the scenario that work ‘gets ahead’ of the legal documents.

Construction cases often result in particularly valuable lessons for lawyers and commercial organisations alike who are involved in construction and property – particularly where work commences before the contract is finalised.  The commercial lawyers at Bahamas law firm ParrisWhittaker are experts in drawing up commercial contracts including construction agreements.

Premature works

In a recent commercial property dispute, the UK’s High Court looked at what factors the court will consider where it is unclear as to the terms of the engagements under which the parties are acting, in the scenario that work ‘gets ahead’ of the legal documents.

The facts of the case involved a claim against a contractor for £3.5m following a fire which destroyed the claimants’ house.  The house was still under construction, and the works were being done in three phases.  The fire took place during the third phase. The claimants applied for summary judgment and had to establish that there was no real prospect of the defendant successfully the claim. 

The defendant argued that there was no written contract for the works carried out in the third phase.  There was no contractual obligation beyond placing an order with the subcontractor concerned and it was therefore not liable for the losses caused.

There were a number of issues to be resolved, including whether the parties had ever entered into a contract in relation to the carrying out of the relevant works. The court concluded that they had entered into a contract (incorporating the standard terms of the JCT Intermediate Contract).  Even if those standard terms were not incorporated, there were various implied terms as to the quality and standards of workmanship to be provided by the defendant.

The defendants were therefore contractually responsible for the acts and omissions of its subcontractors and in breach of its contract with the appellants. 

What can we learn from this ruling?

Work should not start until all relevant documentation is in place and signed by all parties clearly identifying and formalising all the parties' contractual responsibilities. Contractors should not start their work without a contract; and no payments should be made until the contract terms governing such payments are in place.  This extends to all professionals involved in a construction project.

Insurance is another important issue for our clients.  For instance, all works sub-contracted out to others must be adequately covered by contractors’ and consultants’ insurance and the terms and extent of the insurance checked.

How can we help?

The commercial litigation lawyers at ParrisWhittaker are adept at drafting clear, unambiguous contracts ensuring there is no uncertainty should a dispute later arise.  We give robust, strategic advice to our clients where multiple parties are involved in a project to mitigate any risk of claims against our clients. Contact us now for experienced advice and representation.

^{1 Iliffe & Anor v Feltham Construction Ltd [2014] EWHC 2125 (TCC))}