Why do you need a written contract?

In the current economic climate, where a move to new premises may not be an option, many businesses are looking to reconfigure their premises to make the existing situation better for the business.

But no matter what the size or value of these construction works, it is essential to ensure that agreements with contractors are correctly documented in writing.

A number of construction projects, especially works of a smaller nature, may still be commissioned by an oral agreement or “on the back of a cigarette packet”.

However, despite this reluctance to document arrangements, a written contract provides certainty and if things do go wrong, it gives a better chance of a successful claim (with better recovery of damages).

It can be difficult to prove anything if the necessary paperwork is not in place.

The most important points to consider in a construction contract are:

Insolvency: Given the current market, consideration needs to be given to what will happen if there is insolvency, either of the developer or the contractor, or even, unthinkable until recently, a bank providing funding.

Risk: There should be the appropriate risk allocation between the parties, ideally to those parties who are best placed to manage and deal with it.

For example, who is to bear the risk of any delay or cost implications for actions which are either unforeseen or due to the activities, or inactions, of one party or the other?

Alterations: In what circumstances can the price, works or the completion date be altered?

Insurances: Are the necessary property/third party insurances in place?
Dispute: In the event of a dispute what procedures are in place for resolution?

It will be time and money well spent to ensure matters are clear from the start.