Practical Law

Work to a privately owned residential property can range from a large, complex project to simple, cheap works. While the underlying issues are often similar to those on other construction projects, the forms of contract can be very different.

Many construction lawyers spend the bulk of their careers advising on commercial or public sector projects. Even those who advise on non-commercial projects are often engaged at the prestige end of the market; either that, or they only become involved when a small project has gone disastrously wrong.

Ironically, construction lawyers sometimes run into the most difficulty when advising on smaller projects for work on a client’s home. This may be because most clients expect a smaller project to mean a smaller legal bill, which is not always realistic. More important, perhaps, is the real concern that complex contract terms are inappropriate for inexperienced parties. Negotiating a good, simple contract is not as easy at is sounds.

What contracts are available?

An internet search will reveal a plethora of standard form contracts for projects involving work on a home. Some of the best-known forms on the market include:

• Federation of Master Builders Plain English Contracts, which are free and include:
  • Domestic Contract for Minor Building Work (Up to £50k);
  • Domestic Building Contract (Scotland) for Minor Building Work (Up to £250k); and
  • Domestic Building Contract (Up to 500k).
• JCT homebuilding contracts (2005 editions, revised 2009), which include:
  • Building Contract and Consultancy Agreement for a Home Owner/Occupier (HO/C and HO/CA); and
  • Building Contract for a Home Owner/Occupier who has not appointed a consultant to oversee the work (HO/B).
• JCT Home Repair and Maintenance Contract (HO/RM) (2006 edition, revised 2009).
• TrustMark Mini Form of Contract (published in April 2012).

In addition, parties sometimes use the JCT Minor Works Building Contract, 2011 edition, although it is not intended for use as a homebuilding contract. Indeed, a few top-end home building or refurbishment projects use even more sophisticated contracts from the JCT suite.

When advising on a home project, commercial construction lawyers often find themselves drawn to the JCT homebuilding contracts. Although these have important differences from the JCT’s commercial contracts, they include many familiar features too. However, as in all cases, it remains true that the choice of contract should be governed by the needs of the parties and the project.

Questions to consider when selecting a contract

When deciding which form of contract to use, you should ask yourself the following questions:

• What is the scale of the project? Some contracts are intended for house building and large-scale refurbishment, others are suited for smaller scale works.
• What is the contract value? Most contracts include a rough guide of the value of works for which they are appropriate.
• What is the duration of the works? For example, the TrustMark contract is for works lasting 12 weeks or less.
• Does the project need a professional consultant to administer it on the employer’s behalf? For example, the JCT HO/C caters for a professional consultant and provides a suitable form of professional appointment, the JCT HO/CA.
• Who is designing the works? Does the contractor have any design responsibility at all?
• Insurance. What are the project’s insurance needs? The insurance provisions of a commercial building contract, such as the JCT Minor Works form will require amendment to cater for a homeowner scenario.
• Does the contract deal with practical issues that may arise in a house? For example, does it provide for hours of working, toilet facilities and so on?
• Does the contract provide for a retention? Is a retention needed for this type of project?
• Does the contract provide any warranty for the quality of the works? For example, the TrustMark contract includes provision for the client to purchase a warranty.
• What dispute resolution procedure is appropriate? For example, do the parties want to refer their disputes to adjudication (and will this clause comply with any relevant consumer protection legislation)?
• Will the parties be able to operate the contract in practice? There is little point using a building contract that neither party understands and which gets ignored once the project gets going. This is particularly important if the client intends to administer the contract without professional advice.

In addition to these questions, the construction lawyer must consider wider issues concerning the parties and the project, many of which arise in commercial construction projects too (for example, questions about a party’s covenant strength or damages for delay). These may require innovative solutions or bespoke contract amendments, just as in any other project.