Disclaimer

These questions and answers are for general information and guidance only. They should not be relied on in particular situations without contacting Quigg Golden and receiving detailed advice.

How can we incorporate our terms and conditions, and how can we rely on them?

Benefits of own terms and conditions of contract

Before discussing how you incorporate your terms and conditions it is worth asking why you would want to. The answer is usually simple. You have a better chance of being paid promptly and in full. Also, perhaps there will be greatly reduced management and administration costs trying to get your money.

Usually unamended standard forms of contract are perfectly adequate. However, often changes are made which can be detrimental to you. Also, often you can be faced with terms that are not well drafted or dramatically favour the other side. In these circumstances, having a proper and balanced set of terms in place can benefit everyone.

You must have a contract in writing before it means that you can use the Construction Act (in UK).

So how do you incorporate your terms and conditions?

It may see obvious, but in order to incorporate your terms and conditions, you need to have a set of properly drafted terms and conditions to suit you. You will need to take time preparing this and it will probably have to be of general application as hopefully your terms will apply to many jobs. It is feasible to have several “general” contracts for different roles. The first thing to note is that when we refer to a “contract” we are not referring solely to a set of standard terms and conditions but are referring to the overall deal you strike. This could include all the documents that you have exchanged. This could include for each contract but may include:

• the articles of agreement;
• the priced bill of quantities;
• specification;
• letter of acceptance;
• tender drawings;
• standard for of contract;
• method of measurement;
• programme;
• site investigation report;
• correspondence;
• minutes of pre-contract meetings;
• telephone notes;
• details of the main contract;
• terms and conditions on the back of an order or tender.

Terms and conditions can be found in all of the above. It is extremely important therefore to make sure that there is no conflict. This will save you arguments later on. Decide which documents need including, and include them. For agreements to do construction wok there are no formal requirements for a contract to be in writing, nor for it to be signed by both parties. (Although in the UK, failure to have a written contract can mean you will not have a right to statutory adjudication).

The copy of the contract must be put together at the time the contract is formed because trying to recreate it at a later stage can lead to serious difficulties. We have had an arbitration for several hundred thousand pounds which turned on which revision of a drawing was included in a contract, and apart from memory there was no way of ascertaining which version was actually incorporated. It will also save arguments later as to which terms are included, and which are not. You may have negotiated some terms. Don’t lose the advantage of these if the other parties change their minds.

One of the most professional ways of putting the contract together is to put together all the correspondence and documents which you feel make up the contract and send a copy to the other side stating that this is the contract and no other documentation or representation forms part of the contract before wok commences on site. Include the terms and conditions that you want. If the other side do not write back querying its contents then it will provide very strong evidence in a later dispute as to the terms of the contract. There is absolutely no doubt that those who take the time to do this are in a much stronger commercial position, not only to take the matter to adjudication, arbitration or litigation but to also achieve a higher settlement than would have been possible had they not taken this action.

It is the contract that sets out the rights and obligations of the parties to it. Your terms and conditions should always include:

• how much should be paid;
• when it should be paid;
• who values variations;
• are extensions of time due;
• who is liable for design;
• are notices required, etc;
• mechanism for dispute resolution.

Lastly, make sure that there are mechanisms within the contract to take action! Mark relevant dates on a calendar and use them. In the UK, you will be able to go to adjudication under the Scheme, but if you have preferred way of resolving dispute include it. This way in the unfortunate event that there is a argument over terms and condition sit may be resolved quickly.

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