If I was given a pound every time someone asked me this question I wouldn’t be in business any more. I’d be living on the beach on a Caribbean island but since I’m still here… let me explain the subject of contracts once and for all.
Usually when people ask ‘Do I need a contract?’ they mean: do I need a written document that is complex and boring but apparently it’s good to have one cause Joe Bloggs from across the street said it’s important? To bring some light to this matter you don’t need a ‘contract’ to enter into a contract. A contract is a form of an agreement that consists of offer, acceptance, consideration and an intention of creating legal relations. A contract also has to have critical elements such as price to be legally binding. We enter into contracts all the time. If you go to the shop to buy a pack of fags… excuse me, cigarettes, you have entered the contract with the shop for the supply of the item. You are making an offer to purchase a pack of cigarettes in exchange for £X here and now at the checkout. The offer is accepted by the cashier who is representing the store. Was there a lengthy document signed for the transaction to occur? No.
So. Coming back to the question: Do you need a contract in the sense of a written document to be in a legally binding transaction? No.
Is it good to have one in writing when it comes to building work?
That’s much more of a lengthy answer… let’s consider couple of examples.
Example no 1
Imagine a situation where Joe Blogs wants to have his garden fence painted in
bright pink (why pink? How do I know?! He is just a character of this story and I like pink 🤷🏼♀️). He has met Bob the builder in the pub who said he will paint his fence on Sunday for £500. Both of them agreed, shook hands and carried on drinking.
The next morning Joe met with Bob, paid him £500, handed over his garden keys and took his wife for a weekend in Paris (why? Cause it’s my story and I’m starting to like Joe 🤷🏼♀️).
Upon his return from Paris, Joe nearly died of a heart attack seeing his fence painted green. He called Bob asking politely WTF and found out that apparently after they entered ‘the contract’ and celebrated it with a decent amount of beer Joe asked for the fence to be green instead of pink. Joe does not remember the rest of the mentioned evening but he hates his green fence. Bob is adamant that Joe requested this colour. What can Joe do?
a) call Bob a wanker and leave the fence as is.
b) call Bob a wanker and re paint it himself.
c) call Bob a wanker but pay him another £500 for re painting the fence.
d) call Bob a wanker and hire Alan who quoted £650 for re painting Joe’s fence.
Whatever he does he is out of pocket, lost time or end up with something he didn’t want.
Would a written contract change this? Hell yeah! Even text message would do in such circumstances.
Example no 2
Max and Brenda bought their dream home a few years ago. They knew from the beginning that they wanted to build a lovely, open kitchen extension and convert the loft into spare bedroom. They have been saving money and managed to collect £150k.
As per Google's advice they had several builders coming to the house. They got 5 quotes and ended up choosing Ben who seemed the nicest and most competitive. They have paid him 50% of the quote as per terms and conditions. Ben said he has organised all the permission and the works soon start. Neither Max nor Brenda know enough about building work to question Ben on anything. Foundations have been cast, alongside slab and walls shortly followed. Now! Imagine faces of Max and Brenda when Ben asked them for a meeting to say that due to pandemic and Brexit prices of material and labour have gone up so he needs them to pay £50k more to the original price 😳
They soon noticed that the progress wasn’t as planned so they called Julia for advice. She came to site, pointed out several issues in terms of the structural works carried out, ran checks and found out that no planning has been granted or building control appointed. The terms and conditions that Max and Brenda had assumed were fine had no details of their rights in terms of quality, design responsibility, warranty including and dispute matters. At that point Max and Brenda were terrified because they had already paid half of their life savings to someone who now wants more money from them and has not delivered what was promised.
Would a standard form of building contract help?
Yes. It would answer all of the questions before things went wrong. It would give them clarity as to what they will get for the price they have agreed to pay. And finally, it would state what to do when and if any issues arose.
Two extremely different examples but are they really impossible? Let’s come back to the initial question: do you need a building contract?
I like to compare building contracts to insurance policies. So you need one? There is probably 90% of a chance that you won’t need it. But if you do need it and don’t have it - you will lose 100% of what the insurance would cover. It’s the same principle with building contracts. If and when you need it - it’s better to have one in place.
If you’d like to discuss your contract strategy to building work, you can now book a call with me where we will discuss your aims and plans so I can advise for on the best contracting option.