Perspectives from Across the Pond: Contracts, Quality and Payment on UK Construction Projects

David Morrison

It’s a pleasure to welcome the thoughts of David Morrison of the United Kingdom to NC Construction Law, Policy & News.  David has been a contractor, subcontractor, trader and project manager throughout his years in the construction industry.  Beginning life mixing concrete in Hackney, London in the 1980s, David soon began to develop a reputation as the “pen pusher” on-site when he became interested in law and legislation in the industry.  Having experienced both sides of construction disputes, David now enjoys a much more tranquil life on the marketing team at UK Tool Centre.  Admittedly, he does miss the smell of mortar and bacon at dawn, though…

Having a contract properly prepared and signed is the single most important aspect of securing payment for work carried out by tradesmen.  A document that clearly expresses the expectations of both customer and tradesman is invaluable should any dispute arise regarding work carried out and its worth.  Tradesmen in the UK should familiarise themselves with the Supply of Goods & Services Act 1982 and have their contracts and workmanship adhere to its specifications to ensure prompt payment for services rendered and the legal right of entitlement if payment in part or in whole is withheld.

Tradesmen are legally required to perform installations or repairs with a certain level of care and skill.  In cases where payment is withheld by a customer who believes that this level was not met and this is deemed unfair by a tradesman, the matter can be referred to a third party for resolution.  An arbitrator, or ombudsman, may be consulted to judge whether standards have been maintained and their decision will be binding on both parties.  A tradesman also has recourse to the small claims court if the withheld payment is below a certain amount or a higher authority if this amount is exceeded.  If either of these avenues is decided on, then it becomes a matter of how the chosen authority interprets ‘reasonable care and skill’.

If a contract exists that clearly defines the work agreed to by a tradesman and such work satisfactorily complies with what has been agreed, then a customer will legally be required to pay the amount stated in the contract.  The importance of the contract cannot, thus, be overstated.  An oral contract is vulnerable to a far wider definition of what could reasonably be expected by a customer both in materials supplied and in the standard of workmanship provided.

Lien laws in Britain can be complicated to summarise when it comes to the timeframe of their viability.  These can change and alter daily with an ongoing project and would need close consultation to determine the actionable period of each situation.  British liens place a legal obligation on the individual responsible for the private project to accept responsibility of payments to tradesmen.  Sub-contractors generally have 60 days to submit a lien after a job, whilst general contractors have only 30.  Both public and private liens in the UK adhere to the same set of regulations outlined in the revised Supply of Goods & Services Act 1982, which differs from the majority of mainland Europe.  Private tradesmen are often more exposed to the risks of working without lien rights, but the case is slightly different in the British Isles.

In the past, public projects have been difficult waters for British tradesmen who are operating under payment bonds rights.  In 2012 legislation was passed in The Commons to protect contractors working on public projects; assurances were made that payment bonds would result in “holding fast protection against lack of payment.”  Henceforth any private disputes between subcontractors and general contractors, including private contracts, would be second to the rights of the payment bonds.

Laws are generally set up to protect consumers from unscrupulous business practices, but those same laws also offer protection against unreasonable actions taken by a customer; such as refusal to make payment.  A customer is legally obliged to pay for services rendered and then to reclaim from a service provider any costs involved in repairs, or making changes to work done if it can be proved to be as the result of negligence.

Legal proceedings can, however, be both protracted and costly and, again, a well-drawn contract can is invaluable in avoiding the blame game.  A deposit, which covers the cost of materials to be purchased, can reasonably be written into a contract, with the approval of these materials, prior to commencement of the job, being granted to the customer if so desired by them.  ‘Get it in writing,’ is a good code to live by.  If materials, standard of workmanship and an estimated date of completion are clearly contractually defined and adhered to, then obtaining payment should present no problem.

Thanks again, David!  As always, comments are welcome.