Spec Finish

Legal by other trades. Build in a float (i.e. a ‘buffer’ to cater for any delays youmay encounter that do not entitle you to an extension of time. Payment provisions Karyn Watt, Head of Infrastructure and Partner in the Anderson Strathern Corporate and Commercial Team, spoke on the basis that any contract should already include decent terms and conditions that cover how payments should be made and how you apply for them. Since 2009 we have had two Construction Acts that step in and govern the situation if your contract itself isn’t clear (the Construction Act as amended). There are contractual rules for payment in the contract which say there can be interim payments on account of the contract sum during works, but that sum, when you apply for it, will be subject to adjustment that will take into account value of changes (variations), any loss or expense claims, and fluctuations that youmay be able to claim for. If you are on a short contract (under 45 days from your start to your finish) you will be just entitled to the full whack once you have finished your work. The Construction Acts: 1. provide the entitlement at any time during the contract to go to adjudication; and 2. allow you to suspend your works, so if you are not paid in accordance with your contract (or the Construction Act) you are entitled to give seven days’ notice and walk off site – you will then be entitled to the money it will cost you for demoblisation, for the money you are losing while you are in suspension until you get paid and any costs you incur for remoblising again. An application for payment generates a ‘payment due date’ and this triggers a series of events: 1. If the employer disagrees with you, they can put in a ‘payer notice’ within five days of the payment due date. If the employer disagrees with your application but he doesn’t put in a payer notice, he can try to reduce the amount he has to pay you by issuing a ‘pay less notice’ within seven days before the final date for payment, if he doesn’t do that, he must pay the whole amount that you have applied for. 2. You can put in a ‘payee default notice’ that says what you are entitled to get paid. If you put this application in late, the final date or payment gets pushed back a corresponding number of days. This still means that if the employer doesn’t want to pay the full amount you have applied for, he has to serve a pay less notice no later than seven days before the final date of payment. 3. If you have put in a payee default notice (so the payer hasn’t objected to the application for payment) and you put in a notice to say that you have a different figure that you want to apply for, the payer still has to issue a pay less notice if he disagrees with the sum you have applied for. 4. If a pay less notice has been issued by the employer there are strict rules around this notice that are governed by the Construction Act, section 111. The notice must spell out what has been applied for, what the employer is prepared to pay and why – this has to be an accurate calculation with an explanation of how the figure was arrived at. 5. If your employer fails to pay you, you have a right to suspend (but be aware that the consequences of wrongful suspension can be severe so take legal advice before you suspend work). 6. If your contract doesn’t have an interest provision and the employer pays you late, there is the ‘Late Payment of Commercial Debts (interest) Act section 112, which entitles you to eight percent over the Bank of England base rate from the time that the debit is due. Final account Final accounts have to be submitted showing how this final sum was calculated and within certain time limits (as per your contract) and this will become conclusive evidence of what you have done in terms of workmanship, materials that have been used and any claims that you might be entitled to unless challenged. Design liability and professional indemnity insurance Stewart Gordon, Senior Associate at Anderson Strathern, said that design liability is increasingly being passed to specialist contractors under the terms of contracts and warranties, which should always be analysed carefully as these liabilities place more duties on specialist contractors in law and there are negative consequences if you accept greater design responsibility than your design input, or you are in breach of your design responsibilities. There are ways where you can take on design responsibilities inadvertently (for example, developing designs produced by others and selecting materials etc), you may also have to point out obvious defects in a system you’re installing. Beware when you are pricing work as the price is deemed to include the items that the designer overlooked and you may also be recommending or selecting those items. Design and build packages are becoming increasingly common, meaning that the main contractor becomes the single point of responsibility for all matters including design coordination. Clarify your role to protect yourself. If there is no design, make sure that your contract makes it clear that you are not responsible for any design. Beware of interfaces with any other parties’ design and workmanship and try to limit these as far as possible. Advise the employer that you are only liable for the works you actually carry out. There are clauses you can insert as part of the contractual framework: 1. A net contribution clause, which apportions blame between the parties depending on where blame should rest in relation to being fair and reasonable; and 2. A cap on liability clause, to limit the time you are liable for, and the amount you are liable for and if possible, state that you are not liable for anything that you are not insured for. Professional indemnity (PI) insurance If you are a designer responsible for any portion of the works you should have PI insurance in place equal to the level of liability under the contract, but this isn’t always possible, meaning that there could be losses that are uninsurable, so in these cases, any claim over and above the PI insurance level has to come out of your own pocket. The moral of this story is; know your contract inside out. Watch the full webinar here: www.thefis.org/webinar-recordings/ how-to-review-a-contract Contractual and legal advice – Scotland, England and NI FIS membership entitles you to 30 minutes’ free advice with an Anderson Strathern lawyer per case plus a 10% discount on fees for additional work. To use this service please call FIS on 0121 707 0077 FIS members can access a range of services to support them in managing the complexities of contracting and supplying products into the construction market, this includes template contracts, guidance on standard terms, support in dealing with disputes and a raft of best practice advice at www.thefis.org/knowledge-hub/contractual-and-legal/ www.thefis.org 15