Top 10 tips for contractors to avoid contract disputes

Donald McNaught and Torquil Murray

Donald McNaught and Torquil Murray

15 November 2023

While the last thing any contractor wants is to be caught in a dispute over non-payment, these things can happen. As in every walk of life, prevention is much better than cure and in this guest blog, Torquil Murray has provided his top 10 tips for contractors where good day to day practices can help avoid later disputes!

Torquil is a Chartered Quantity Surveyor, Adjudicator, Arbitrator, Dispute Resolution Consultant and Construction Attorney. Our Restructuring team regularly works with construction businesses, and often engage the services of a Quantity Surveyor (QS) to assist in the collection of contract debts. As you can imagine, an insolvency event generally triggers the most inventive and creative excuses for non-payment!

These tips will help ensure that you’re prepared to weather any tricky situations.

  1. It sounds obvious, but ensure you thoroughly read the contract before signing or accepting, particularly in terms of performance. This includes making sure the contract that the client sends you for signing is exactly the same as previously intimated. There have been cases where amendments were made by the hiring client and not picked up by the contractor.
  2. Raise any contract clauses or requirements you are not happy with and ask for them to be changed before you sign. Sometimes it is worth getting a consultant to check over the contract, especially for difficult or lengthy clauses.
  3. Ask around if a contractor or client you have never worked for asks you to undertake a project. It’s wise to seek recommendations especially if the job is a quick start, and even more so if works have already started and there was a previous contractor/sub-contractor on the site.
  4. Remember the 3 Rs – records, records, records! If you have a claim, the best way to evidence it is using contemporaneous records such as detailed timesheets, site diaries and a photographic record. Make sure any incorrect minutes of meetings are highlighted as soon as you notice the errors. Indeed, diligent and thorough records are worth having even if you don’t have a claim yourself, as you never know when a claim could come your way from up or down the line.
  5. Try to make sure everything is in writing: send an email rather than agree matters over phone calls. Follow up any verbal discussions with an email or a formal notice under the contract.
  6. Make sure you comply with condition precedent clauses. Condition precedent clauses are where you must do something before you have a right to any entitlement. This is especially important when it comes to variations to the work or extension of time that may be needed for the job. It may be the contract states timescales within which you must notify the client of an entitlement. For example in respect of a delay, you may have to notify the client within X number of days on becoming aware of a delay that may affect completion. If you do not notify within the correct timescales you may lose your entitlement to claim an extension of time.
  7. Make sure your applications for payments are submitted in time, in accordance with the contract provisions or the Construction Act. Also, ensure your applications for payment are as detailed as possible.
  8. Check payments have been made in accordance with the Construction Act. Failure by your client to comply with the requirement to issue a timeous payment certificate, or failure by your client to issue a pay-less notice, can result in all monies that were claimed by you having to be paid by your client, even if you have overclaimed in your valuation. This is commonly known as a ‘Smash and Grab Adjudication’. Any overclaimed monies would have to be effectively paid back in due course, but the intention of the Act is to ensure cash flow for the contractor – as this has been described as the ‘lifeblood of the industry’.
  9. Seek professional advice early if you think there may be issues bubbling away. Often, well-crafted emails and letters can pay dividends later on if a dispute does happen.
  10. If you are not getting paid because of poor performance, seek professional advice. Just because you did not perform well on a contract does not mean that you are not entitled to payment.

Get in touch

Our Restructuring team is always willing and available to chat if you might be facing a contractual dispute and want to understand what options you may have and whether you could benefit from a recommendation of a suitable QS, mediator, Construction Attorney or solicitor. Torquil is a member of the Association of Construction Attorneys (formerly the Association of Commercial Attorneys). Construction Attorneys have the right to conduct litigation in the Scottish Courts in respect of construction matters, and given the combination of construction and legal skills, this can often be a cost effective way of dealing with construction disputes.

For more information, please get in touch with Donald McNaught or Torquil Murray.

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