Wise Up Wednesday – How Should Contracts Be Set Up And What To Watch Out For! Part 1.
The Standard JCT Building Sub-Contracts all follow the principle of having separate Articles of Agreement and Terms and Conditions documents. Over time the forms have been revised such as in 2011 to take account of the amendments to the Construction Act and again in 2016 and 2024 to take account of various issues.
Whatever version you are offered, it is worth considering how things work and some of the key provisions, so that you can be alive to any onerous amendments.
Contracts Comprise Two Documents
Standard Form Contracts comprise two parts; the Articles of Agreement and the Sub-Contract Conditions. Most larger Contractors use their own bespoke terms, and the Articles of Agreement part is incorporated into their own format.
The terms and conditions part is not usually issued to you as you are taken to have a copy. And here’s where many Specialist Contractors might come unstuck because they don’t have a copy!
Further confusion often occurs because the Contractor usually has a list of amendments which are hard to understand if you don’t have the document that is being amended!
Articles of Agreement
This document is where the job specific details are set out. And it’s essential that one way or another you have these details set out because they deal with key details such as:
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- Details of the Parties to the contract – you need to know exactly who you are contracting with
- The documents forming the Sub-Contract
- Contract Sum – is it Lump Sum or Re-measurable?
- Adjudication – who appoints the adjudicator?
- Arbitration or Litigation – extremely important if there’s a dispute such as not getting paid!
- Programme – what is the contract period, start date, end date etc.?
- Attendances – what is the Contractor providing?
- Interim Payments – what are the Due Dates and Final Dates?
- Listed items – are you going to get paid for materials and goods off site?
- Retention – what percentage is it and when do you get it back?
- Dayworks – what are the daywork rates?
- Insurance – what are you contracted to provide and what is the Contractor insuring?
- Numbered documents – the order of precedence and details here can be crucial
- Attestation – where the document is executed (signed)
- Schedule of Main Contract Information
Sub-Contract Conditions
1. The subcontract conditions set out the rules of the game!
2. Definitions and interpretation
3. Carrying out the Sub-Contract works
4. Control of the Sub-Contract Works
5. Payment
6. Valuation of Work and Variations
7. Injury Damage and Insurance
8. Termination
9. Settlement of Disputes
Onerous Amendments
Unfortunately, many Contractors are likely to amend the latest standard JCT forms, just as they did the old one, and I could probably fill a whole book with the onerous terms I have come across in practice.
I have certainly filled this week’s Wise Up Wednesday, so look out for Part 2 of ‘How Should Contracts Be Set Up And What To Watch Out For!’ next Wednesday morning where I’ll go into detail about those onerous terms.
Finally, make sure you understand the contract and watch out for onerous amendments to the standard form or the Contractor’s own bespoke terms. Don’t just accept what’s put in front of you. Negotiate!
And if you’re not sure what that wording means, take professional advice by emailing us at info@streetwisesubbie.com or calling our helpline on 01773 712116.
Whatever The Terms, Not Getting Paid Is Still Killing Businesses.
Don’t Let It Kill Yours
If despite your best efforts you are still not getting paid then it’s time to escalate matters. That can be done in a number of different ways depending on the circumstances, and we can assist you with all of that. Just give us a call on 01773 712116 about contracts, payment, or or any other contractual issues you may have.
Part 2 of this this edition of ‘Wise up Wednesday’ will be posted soon.
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