Building contracts and disputes

Commercial building disputes can be costly and time-consuming. Seemingly minor disputes can quickly escalate into large-scale litigation. Fully understanding the importance of, and insisting on a sound contract and watertight conditions at the outset, with pragmatic and careful management of any difficulties that crop up during the performance of the contract, can help you avoid litigation where possible.  

First, it is vital that you do your research, and satisfy yourself that your contractor is reputable, creditworthy and trustworthy.  Unscrupulous contractors may have a history of failed businesses in their wake, and of going out of business to avoid liability - contracting with someone like this could leave you not only out of pocket but also potentially liable to others. 

Clear itineraries, detailed costs schedules, material specifications and realistic timescales are all measures which should be considered and incorporated into contracts to ensure that all parties are on notice of their obligations from the outset.   Check licences and insurance arrangements for them, and their sub-contractors and retain copies for your records. 

As the works progress, ensure that any variations of the building contract are agreed in advance and confirmed in writing in accordance with the contract terms. 

A pragmatic approach can go a long way towards helping you to avoid unnecessary fall-outs, but disputes are sometimes inevitable. Unexpected delays, unforeseen weather conditions, difficulties in sourcing materials, unpaid invoices etc. are just some of the problems you may encounter, which can give rise to a dispute.  

If a dispute arises aim to keep lines of communication open but seek early advice.  Often disputes can be resolved by negotiation without the need for Court proceedings.    

If firm but fair negotiation does not succeed, alternative forms of dispute resolution (ADR) may be available, such as, arbitration or mediation (and often a mandatory referral to these ADR mechanisms is written into the contract). Mediation is available to parties on both sides of a dispute. A professionally trained mediator acting as an intermediary can facilitate dialogue between the parties and provide an informal forum for parties to reach an agreement that is fair and costs-saving.  

Mediation does not always preclude the case from going to court; however, the mediation process can still partially resolve issues and parties will be expected to have made a conscious attempt to amicably resolve matters before involving the Court. Further, having made attempts to narrow the outstanding issues, the court process will, as a result, be more expedient and less expensive. 

Litigation should be seen as a last resort. Legal disputes can cause disruption, damage reputations and have serious financial implications.  

Preventative measures at the outset of a business relationship can be highly cost-effective. Seeking advice from a solicitor and involving them in the preparation of contracts could be money well spent.  

The specialist Disputes & Litigation team at Wolferstans works closely with our commercial team to offer complete support to business clients.  We have the experience and expertise to advise you on a range of issues affecting your building contracts.  For further information contact Nicola Mitchell –Rodd on 01752 292278.