Due to the nature of the construction industry, contractors are bound to be faced with a dispute at some point.
The disputes may involve developers, subcontractors, consultants, suppliers or specific individuals.
So, what actions can contractors take to limit the possibility of encountering disputes?
1. Invest sufficient time in the contract
The content of the contract is often overlooked by contractors, sometimes due to the desire to secure work for new or existing clients, and at other times due to the urgency to commence work on projects.
However, it is important for contractors to review any contracts in detail prior to execution and obtain legal advice to ensure a detailed understanding of their obligations and risks, and also determine whether they are feasible, as there is no benefit in agreeing to obligations that cannot be carried out or complied with.
Another advantage of obtaining legal advice prior to executing the contract is, contractors will have more scope to negotiate the terms with respective parties, in particular any developers, to ensure any expectations under the contract are realistic.
2. Sign the contract before commencing work
Signing/executing the contract prior to commencing work is important as not only is it less stressful for both parties (as all negotiations regarding the terms have been concluded), but the contractor knows what they have signed up for and the expectations they are required to manage under the contract.
3. Abide by the contractual terms
The contractor must comply with all the terms under the contract, unless it has been agreed that the terms of the contract have been varied, waived or the contract has been terminated.
If the contractor fails to comply with the contractual terms, then the other party may issue a claim against the contractor for breach of contract, but also, the contractor may be prohibited from any entitlements to extensions of time, or loss and expense where any project delays occur and the notice provisions have not been complied with (conditions precedent).
In some instances, payment may also be withheld where the contractor fails to execute and deliver other documents required under the contract, e.g., warranties.
4. Execute the project in accordance with the contract
This links to point 3. above. It is important for contractors to carry out the works as per the contract, meaning in accordance with all the contract documents, including but not limited to:
- the specification, developer's requirements, programme, and drawings;
- using the level of skill, care and diligence required, and complying with the regulations;
- not using or specifying for use any materials which are deleterious; and
- completing the works are per the agreed contractual sum and within the original timescales.
5. Good communication with the contract administrator
As with all aspects of life, "communication is key" and it is extremely important for contractors to develop and maintain a good relationship with the contract administrator, which includes working together, being reasonable when receiving, serving and acting in accordance with notices, keeping them regularly updated with progress and notifying them of any issues or delays as soon as possible.
6. Address and deal with unforeseen issues as soon as possible
This cannot be emphasised enough. One of the easiest ways to avoid or limit disputes arising is to keep parties updated regularly regarding progress, and flag up any issues as soon as contractors become aware of them.
It is also useful to make note of the issues that may occur, the impact they may have on the project, the actions the contractor intends to take to deal with them, and liaise with the other parties to ensure reasonable steps can be taken to reduce their impact.
Top 6 Things A Contractor Can Do To Avoid Disputes was discussed in our 20 Brilliant Construction and Engineering Questions – and answers! webinar on 20 August 2020. This question and answer was provided by Donald Charrett of Expert Determination Chambers. To see other Brilliant Construction and Engineering Questions and answers from the webinar, please click hereto see a PDF of the presentation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
