It is extremely important to have a contract for any works to protect both the Client, Builder and to lay down the terms and conditions under which the work will be undertaken. A contract will define the scope of the works, insurance requirements and price of the works, together with details of when payments should be made. There are numerous contracts to choose from and the most common in use today are the Federation of Master Builders Contract, the JCT Contract (Minor Works, intermediate and full contract), the New Engineering Contract and the ICE Conditions of Contract. The type of contract will depend upon the nature of the works to be undertaken. The JCT and New Engineering Contracts come in many different forms. The best way to decide which contract to use is to obtain professional advice.
A contract protects a Client from unreasonable claims for extras, late completion of a contract and against defective workmanship. It will also ensure that the builders provide the necessary insurances to protect the works during the contract. If the correct insurances are not in force, it may be necessary for the client to bear the cost of any problems such as a fire or collapse, which may not be covered by a normal domestic insurance policy while works are being undertaken.
From a Builder's viewpoint, the contract will lay down the terms for payment and make provision for interest should payments be received late. The contract will also lay down various provisions and will define what work has been priced. Any additions to the contract instructed by the Client can then legitimately be claimed as extras and costs recovered through provisions in the contract. The project may be delayed for a reason outside the Builder's control and the contract will enable an extension of time to be granted to the Builder to avoid liquidated damages being imposed when any delay is outside his control.
In order for a contract to work efficiently, it should be administered by an Engineer or other suitably qualified professional.