iStock_000011289383_Small

A recent judgement [1] from the Technology and Construction Court (TCC) has highlighted the risks associated with amending standard form building contracts without legal advice and/or a full understanding of the subsequent implications.

The details

The parties entered into a building contract for the construction and fit out of two houses. A dispute arose which the claimant referred to adjudication, however the defendants contended that there was no contractual mechanism for adjudication.

The question for the TCC to determine was whether there was an express provision for adjudication within the contract. This was particularly important as there was an argument that the contract fell within the residential occupier exception (in the Construction Act). This meant that there was no implied statutory right to adjudicate, and an express agreement to adjudicate was required.

The relevant contract provisions were amended as follows:

Untitled

The outcome

For the reasons set out below, it was concluded that the contract did provide for adjudication despite the amendments.

  • Deleting Article 7 did not mean that adjudication did not apply as Clause 9.2 of the contract also provided for adjudication.
  • Inserting “n/a” into Contract Particulars 9.2 was ambiguous; it could mean that the parties did not want to adjudicate, or alternatively that they just didn’t want to set out specific conditions for how the adjudication should be conducted, for example, choice of adjudicator. In the circumstances, it was decided that the insertion had no effect on the clear wording of Clause 9.2.

Many provisions of the underlying JCT do not need a corresponding article to incorporate them into the contract; these provisions are self-standing and are automatically incorporated. With this in mind, it was concluded that Clause 9.2 was a self-standing provision; the absence of Article 7 did not affect the application of Clause 9.2.

Comment

This case illustrates the need for extreme care to be taken when drafting contract amendments. The defendants thought that the drafting adequately reflected the parties’ intentions by removing the right to adjudicate, however this turned out not to be the case.

Drafting and negotiating your own amendments to a building contract may seem like a good idea at the time, however, without a full understanding of the underlying building contract and the implications of any amendments, you may come to regret it. Remember, amending contracts yourself is done at your own risk…

For more information, email blogs@gateleyplc.com.

[1] Matthew J.Harding (trading as MJ Harding Building contractors) v Gary George Leslie Paice, Kim springall [2014] EWCH 4819 (TCC)


Leave a Reply

Your email address will not be published. Required fields are marked *

nine + 11 =

This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.