‘There was this instant mutual trust’, ‘I liked his face’, and ‘He seemed honest’ are all reasons people have given for employing a builder, and all are harmless enough criteria in their own right — as long as they are backed up with a good, sound, watertight contract. These days, drawing up a contract need not involve a notary or solicitor; you can go and buy one from a contract supplier.
The most commonly used supplier of contracts to the building trade and its customers is the Joint Contracts Tribunal (JCT), which was formed by a reputable group of interested parties including the Royal Institute of British Architects (RIBA), the Royal Institution of Chartered Surveyors (RICS), the British Property Federation and the Association of Consulting Engineers — among others — in order to introduce recognisable and reliable standard contracts for the industry. And with the advent of the JCT, they have largely succeeded.
The JCT Minor Works Agreement (MW98) is suitable for most relatively straightforward domestic jobs up to a value of around £150,000. One of the criteria for using the MW98 is that ‘the work involved is simple in character’, so for a larger and more complicated job you may require the Intermediate Form of Building Contract (IFC98), which provides ‘more detailed provisions and more extensive control procedures’ than the MW98.
For very simple jobs, the JCT also offers the HO/RM Contract for Home Repairs and Maintenance (not for use in Scotland). This includes provision for the price being either a lump sum or based on an hourly rate, but provides for payment only on completion of the work. For this reason it is not suitable for jobs which are expected to last longer than four weeks, and is generally used for much shorter works.
Other contract suppliers include the Federation of Master Builders (FMB). Its contract for domestic work has won an award from the Plain English Campaign. There are now four FMB minor works contracts to choose from, including one for Scotland. The Quality Mark scheme has simple forms of contract for minor home repair and improvement work.
There are certain advantages in using one of the Standard Form Contracts. For example, you get:
• an industry-wide accepted form with a fixed lump sum price
• a procedural recognised framework for the builder, contract administrator and building owner
• certainty as to start and completion dates
• a certain balance of risk allocation between the parties.
Disadvantages of the Standard Form Contracts are as follows:
• the forms are a compromise of rights between the various institutional organisations, which publish the forms primarily for the benefit of their members in the industry not the consumer
• some procedures provide a mechanism for unreasonable money claims or extension of time claims by builders
• in practice the fixed lump sum invariably becomes a varied sum, seldom lowered but often increased.
For these reasons, homeowners may require independent professional advice about the type of contract required and any special terms.
What to include in a contract
In general your contract should establish the following points :
• the name of the contractor who will carry out the work
• the sum total of the fee, plus the frequency and conditions of interim payments (such as the amount of work that must be completed before payment is due), and the amount of retention (usually 5 per cent) — a sum of money which is not paid until all defective work has been put right • the start and completion dates, with provisions outlined for damages payable in the event of ‘unreasonable’ delays (not all builders will agree to this, however, particularly on smaller contracts.)
• that any variations to the work, including to costings and any projected alteration to the completion date, should be authorised in writing before being carried out
• that the contractor carries appropriate public liability, employer’s and bankruptcy insurance
• limitation (The law allows you up to six years to sue for breach of contract, and six years to sue for negligence. If the contract is by way of deed (under seal) then the time in which to sue is 12 years from the date of breach or the effective date the damage was suffered. This can be extended to up to 15 years under the Latent Damage Act, depending on the circumstances.)
• arrangements for the resolution of disputes.
The contract should include certain express terms to the effect that the contractor will:
• execute the work with reasonable care and skill, in a workmanlike and competent manner in accordance with the schedule of works, drawings and other contract documents including the conditions of contract
• use materials which are of satisfactory quality and fit for their purpose
• regularly attend the site and diligently carry out the work
• keep the site tidy and dispose of rubbish
• comply with applicable health and safety and statutory obligations
• confirm he has appropriate ‘all risks’ and public liability insurance to cover the foreseeable value of claims in the future
• provide guarantees for certain manufactured items.
Sometimes builders try to cap the time you have to raise any defects with them. They shouldn’t do this as you cannot exclude someone’s statutory rights. You should, however, bring to the builder’s attention the defects as soon as possible. If, for example, your delays result in the deterioration of your property then the contractor may not be liable for your additional losses that result.
In addition to the terms you expressly agree, the Supply of Goods and Services Act 1982 and the Defective Premises Act 1972 also imply specific terms into your contract.
The contract documents for major works will include the contract itself, as well as the tender drawings, the specification (a written brief from the architect or engineer outlining the precise nature of the work to be carried out and the materials to be used), and the priced Schedule of Works describing the work to be carried out and the price for each item of work. Copies of the contract are signed and exchanged with the builder, and you are then both bound to abide by it. You can make clear any detailed requirements you have in this documentation, even if they are in the form of a handwritten plan.
The Schedule of Works
This is a document which provides an overview of the entire job, broken into simple stages detailing payment and completion schedules for each phase. It is essentially a précis of the specification with some additional information, ideally contained on a single sheet of A4 to make it more user-friendly for the non-expert (ie. you). An example might be:
Weeks 1-2 (August 7-21) Site preparation, plumbing installation.
Week 3 (August 21-28) Bathroom completed; first payment due.
Week 4 (August 28—September 4) Preliminary work on kitchen begins.
This way, if you get to September and the bathroom is not finished but the builder is still asking for payment, you have an at-a-glance guide with which to make a judgement.