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Understanding contracts

Last updated 19th Apr 2017

Have you ever been halfway through a project when you suddenly realise that you should have had a contract with your builder? Don't worry, you're not alone. Written contracts are rarer than they should be, and disagreements surrounding verbal contracts are all too common. But knowing when you need a written contract is not always straightforward.

When should you have a written contract?

In a perfect world, any agreement you make with a tradesman would be outlined in a detailed document which is signed and dated. However, sometimes this just isn't practical. It can also feel socially unacceptable (implying a lack of trust) for a very small and straightforward job. But even for these small jobs, it's important that everybody is clear on what work will be carried out, how much it's going to cost and what will happen if things go wrong. A quick discussion and 'mutual assent' typically constitute a contract.

Ultimately, it is a judgement call as to whether the project warrants a written contract, and this is something you should carefully consider. Written contracts start to become necessary when a project is complex, has staged payments, or is of significant cost. If in doubt, use a written contract, which you can write yourself in plain English. The following should help you make sure your contract is fit for purpose.

What is 'Mutual Assent'?

Mutual Assent is a formal way of saying that both of you agree to the same thing. Mutual Assent should contain both of the following:

  • An 'Offer' (for example, a plumber may 'offer' to replace and refit your mixer taps).
  • An 'Acceptance' (you agree to pay for the works detailed and you both agree to the terms).

Make sure to agree on terms

There are several terms you may want to consider agreeing on before works start. These include (but are not limited to):

  • A description of the works - Be specific about what you want. If you agree to your mixer taps being replaced but the type or brand is not specified, the tradesman could be within their rights to replace your mixer taps with any model they choose.
  • The cost - It may seem obvious, but agreeing the cost alongside the description of the works means that there can be no dispute as to what is being paid for. It also provides an easy reference point should alterations need to be made in future.
  • The payment terms - Agree how much is to be paid and when payment is due. Will you be paying for materials up front? Does the tradesman require a deposit? When and how should the final bill be paid? Are stage payments appropriate and, if so, when will each payment be due? Agreeing payment terms up front will help to avoid any disputes later on.
  • The tradesman's responsibilities - Do you need the tradesman to clear up at the end of the job? If you have children is it important for tools to be securely stored away? Agreeing details like these will help both you and the tradesman know exactly what is expected before work starts.
  • Your responsibilities - Of course this works both ways. You may agree to allow the tradesman access to the property between particular hours of the day or to use certain facilities in the property. If heavy objects need to be moved prior to the job, will this be your responsibility or that of the tradesman? Discussing your responsibilities with the tradesman will reduce the likelihood of nasty surprises later on.
  • Alterations - If a situation dictates that changes must be made to the original terms or description of works, make sure to confirm this in writing and get signatures if you can. By keeping a copy of the agreed amendments along with the original contract, you can refer back to this should any dispute arise. Try to pay as much attention to detail to the alterations as you did to the original description.
  • Defects - Tradesmen sometimes offer guarantees on their work and/or materials. If they don't, you should consider confirming which defects they would return to fix and the cost of those works. You should also agree on an appropriate length of time for this offer to stand.

Working with your builder

Having a solid contract is important, but it doesn't replace the need for a good working relationship with your builder. Even with a contract in place, there can still be miscommunications and misunderstandings. MyBuilder's hiring guides have detailed advice on how to avoid these issues and what to do if it you encounter them.

Contract templates

If you decide that you do need a written contract, it can be difficult to know where to get started. Standard forms of contract can be purchased through the Joint Contracts Tribunal (JCT).

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