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Explanatory Notes
Standard Terms & Conditions for Construction Work
B137 Standard Terms & Conditions for Construction Work
Designed from the Contractor's point of view, these standard terms and conditions are intended as a template for any contractor who is engaged in the business of providing construction or engineering works, especially when the works are to be carried out on premises of the Client. These terms and conditions are intended to be used with a Quotation submitted by the Contractor to a Client and a form of Quotation is included. The Quotation needs to be completed by the Contractor, and the Terms & Conditions plus other relevant documents – Specification, Drawings, Contract Price breakdown etc. – sent to the Client. Two signed copies of the Quotation should be sent and the contract will only be formed when one of them is returned to the Contractor, signed by the Client. If the Client wants to change anything, it may be necessary to have anther Quotation signed incorporating the changes. To avoid later disputes it is advisable for both parties to be very clear as to the detailed scope of the works and the price – vagueness in the specification is more likely to result in disputes than clarity. Turning to the specific clauses in the Terms & Conditions: 1. DEFINITIONS As indicated above, this refers to the Contractor's Quotation and contains some other relevant definitions. 2. CONTRACT FORMATION This is intended to make it clear that the Contractor's terms and conditions override those of the Client. In practice, this can be more difficult than it appears and legal advice should be obtained. 3. GENERAL OBLIGATIONS Basic obligations on the part of the Contractor to exercise reasonable skills and care with an obligation from the Client to provide access to premises. Planning permission and other licences are also dealt with here. 4. VARIATION This is designed to ensure that if a Client asks for a change, the Contractor will be paid for it at an appropriate rate. Also, a variation can result in a change to the contract period and this is covered by 4.2. In 4.4 the Contractor should be protected if unforeseen problems arise and in 4.5 the Contractor reserves the right not to undertake changes if these exceed a specified value of the Contract price. 5. CONTRACT PRICE & PAYMENT This refers back to the Quotation to a large extent but in case the Quotation does not cover everything, there is provision for monthly invoicing. Also the Contractor has the right to give notice to suspend the work for non-payment (this is a statutory right in the UK) as well as the right to claim interest on late payment. The statutory interest entitlement works out currently at 8% above base rate. 6. INSURANCE This will need to be tailored to the particular circumstances but, except where works are carried out in an existing building, see 6.3 - the Contractor has primary responsibility for works insurance and public liability insurance. 7. DURATION, HANDOVER & DEFECTS LIABILITY This refers to the planned commencement and completion dates in 7.1 and allows for the Contractor to get an extension of time if he is delayed by reasons beyond his control under 7.2. In accordance with the usual practice in the UK, the Contractor has responsibility for remedying defects for 12 months following completion and, under 7.3, the Contractor (in effect) fixes the date for handover of the works. Under 7.6, it is made clear that the Contractor's liability is limited to remedying defects during the 12 months defects liability period and the clause aims to exclude any other liability of the Contractor to the Client. Legal advice is recommended here as the wording of limitation clauses may need to be adjusted to take account of particular circumstances and there is also legislation designed to protect consumers against unfair terms. It is quite common for a contract to contain a clause whereby the contractor becomes liable for liquidated dames – i.e. a fixed daily or weekly amount – if he is late in completing the works. No such clause is included here. In some ways a liquidated damages clause can benefit a contractor as the amount of liquidated damages in the contract may be less than the actual loss which the client can suffer as a result of delay. 8. TERMINATION This gives each party the right to terminate the contract if the other party commits a material breach, and either party can terminate if the other becomes bankrupt. 9. DISPUTES
This clause contains a three stage method of resolving disputes – first, direct negotiation, second a reference to adjudication and, thirdly, the courts. Adjudication is a legal right to any party to a construction contract in the UK and there is generally a 28 day period within which the adjudicator must reach a decision – much quicker and cheaper than court proceedings. If, however, the adjudicator's decision is objected to by one of the parties, the dispute will eventually to the courts for a final decision. There is information on adjudication in the Free Information section of our website. 10. MATERIALS Sometimes the client will make materials or equipment available to the contractor for incorporation in the works and this clause says which of them is responsible for those materials before they are used. 11. GENERAL This contains a number of provisions concerning notices, assignment, etc. For more detail on some of these subjects, see Free Information on our website. This is one of many of our construction contracts.
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