Home improvement contracts Letters of agreement

A letter of agreement is a good way of setting out the basics of the work to be completed

Problems with contracts are one of the major causes of jobs going wrong – because, often, neither party takes the time to agree who does what, when and for how much. If your project goes wrong, it's essential to be able to claim and get due compensation so you can finish it to the standard you want.

For small jobs of less than £5,000 it is possible to sign a letter of agreement rather than a full-blown contract. This is a good way of setting out the basics of the work to be completed. It should include the following.

A description of the work

Outline the work to be carried out. For example: ‘Fitting ten kitchen units, a 10mx1.5m worktop, one and a half bowl sink and taps.’

Also state what needs to be done before the workmen arrive. For example: ‘Remove old kitchen, empty the room of furniture, roll up the carpet.’

Who does what

Confirm who is buying the materials and organising delivery and who liaises with the local council. Go through each job and state who is going to do it.

Qualifications

A description of the qualifications of the people doing the work. For example: ‘All contractors have the relevant qualifications to carry out the work, including NVQ Level 2. The electrician is a current member of NICEIC.’ 

Facilities

Agree which areas the workmen can access, including toilet or washroom facilities. You may not want dirty boots traipsing through your house or your only loo to be occupied by a succession of labourers.

Building regulations

Confirm exactly which building regulations are relevant to the work and who liaises with the building control officer.

Price

The price for the work – set out what each job is going to cost and whether it will be paid on a daily rate or any other basis.

Timing of payments

How the work will be paid for – and at what stages. For example: ‘Payment for the kitchen on proof of delivery and supply of an invoice. Labour to be paid for on a weekly basis by cheque on supply of an invoice and in accordance with the price quoted.’

Contingency

How increases in the project cost will be dealt with. For example: ‘If the price of the work is going to go above the agreed sum, any extra expenditure must be agreed before the costs are incurred.’

Timetable

When the work will be carried out. State which day the project is to start and finish and what the contractor will do if either of these change.

Disputes

What happens if there is a disagreement. For example: ‘If there is a dispute over the quality of the finish, then 10% of the job cost will be withheld by the client for rectifying any defects proved in the work.’ Agree on how an independent arbiter will be appointed, who will pay for this (whether you will cover the costs jointly) and that the third party’s decision will be final.