Home improvement contracts Drawing up a contract

A contract helps to make sure that everyone agrees in advance how to solve problems

Drawing up a contract is a good way of ensuring that things go well. Problems and unforeseen difficulties are common features of any building project. A contract helps to make sure that everyone agrees in advance how to solve them. If there are any disputes you can’t resolve, it also helps you to take action.

Never sign any contract offered to you by a company without reading it carefully – including the small print. Ask it to take you through the contract terms and conditions one by one.

Ideally, get the contract checked out by a solicitor. It may cost a few hundred pounds, but if you are spending thousands, it is a small price to pay to ensure that you are signing something that protects your interests as well as those of the company you employ.

Make sure that both you and the contractor have a copy of the signed contract before you go ahead with your project.

If you are employing a qualified architect, it is likely that you will be asked to sign one of the standard contracts created by the Royal Institute of British Architects. Depending on the level of work, your main contractor will also be asked to sign a contract direct with your architect.

Basic requirements

Basic information that should be included in a contract in addition to any letters of agreement includes the following.

• The contractor’s name, address and contact details (during the day and in an emergency).
• Company registration and VAT number, if applicable.
• The price of the works and what it will do if extra charges occur – make sure the contractor warns you before going over your budget.
• What materials, equipment, plant and outsourced labour will be used and who will supply it – you or the contractor. For example, you may be doing some of the work yourself, or ordering and supplying some of the materials.
• A start date and finish date for the work. Include details of any compensation or penalty fee or damages if the work doesn’t start or finish on time. This is likely to be an agreed figure on a weekly basis. This should also include details of what time the work starts and finishes each day.
• What happens if the contractor cannot complete the work for any reason – if it falls ill or goes out of business, for instance.
• State that the contractor will comply with all statutory requirements, local and national regulations and by-laws. Who will be responsible for making the required notifications and arranging the necessary site inspections? (This is usually the contractor.)
• State that the contractor will provide the appropriate public and employer’s liability insurance.
• Ensure that the contractor will make good any damage to your premises that it, its employees or third-party contractors it provides, is responsible for.

Detailed requirements

These are more complex issues that you must agree between yourself and the contractor before work starts.

Poor or uncompleted work

Set out what happens if the work isn’t up to the agreed standard or if the contractor leaves the site for more than an agreed number of days (say, five working days) without a reasonable explanation.

In these cases, you should have to pay only for the work done satisfactorily to date, less any compensation or additional expenses incurred as a result of these problems or the contractor leaving. Also add in a time limit setting a deadline by which any poor work has to be rectified – for example, within five days of notifying the company of the problem.

Payments

State how much, when and how you will pay the contractor and under what circumstances you can withhold payment. Also say what recourse the contractor has should you not pay. Try to include a clause that keeps retention of 5% to 10% of the total fee for at least a month after completion to ensure that the work has been completed satisfactorily. See ‘When to pay’.

Facilities

Outline how the contractor and its employees will behave on site. For example, which toilet facilities they will use, and how they will protect areas they use to gain access to where they will be working. Also, if they need to walk up and down your stairs to get to the loft or loo, how will the stairs be protected?

Rubbish

Agree how often the site will be cleared of rubbish – on a daily basis or at the end of the work – and how it will be taken away. This is particularly important if the work is dusty and may affect the rest of the property, especially if you have someone in the family who is asthmatic.

Guarantees

State what guarantees will come with the work. For example, most timber work and damp-proofing comes with a 25-year guarantee; other work may be for a lifetime or ten years. Make sure there is also some recourse if things go wrong and that the guarantee is still valid should the company stop trading during the validity period.

It’s essential to keep any paperwork relating to the work done on your property, including any guarantees. If you decide to sell your home, this information will help smooth the legal transfer to the new owner.

Other paperwork

There are several documents that should be attached to the contract, including:

• a specification and drawings of the work to be carried out
• a copy of the required building regulations that the work will need to satisfy
• any certificates that will be required, such as gas safety certificate
• copies of the contractor’s up-to-date insurance documents
• copies of any guarantees.

Finding a contract

If your builder or architect can’t supply a standard contract, or you want one to compare against a contract you are offered, there are various organisations that can help.

• The Federation of Master Builders. Email it the name and details of the builder you are going to use – whether a member or not – and it will send you back a contract.
• A local solicitor will either have a standard contract that you can adapt or will draw one up for a few hundred pounds. Make sure that the solicitor has some experience and knowledge of issues that arise during home improvements.
• The relevant trade association may have a sample contract you can use.
• Some local councils have sample contracts you can see.

The Office of Fair Trading has a comprehensive document that explains contracts and gives up-to-date wording that should be used for home improvements. Search its website for ‘Guidance on unfair terms in home improvements contracts’.