Check that Order

Once signed there is no turning back

Part 1 - Successful Contractor Notification

You have been made aware that you are the successful contractor following a recent bid, firstly congratulations, allow yourself the pat on the back, but before you celebrate too hard remember that the victory dance cannot be performed until the order is fully agreed and the below has been completed

Part 2 - Pre-Contract

Firstly, do not carry out any works whatsoever until you receive the order no matter how hard your client pushes you, if the works he requires you to perform are so drastically required then surely he can type up a Contract! Worst case, to get these drastic initial project requirements started prior to receiving the contract you may commence works under a valid Letter Of Intent (see our guidance on LOIs here to ensure that the Letter Of Intent is a contractually binding document otherwise you may be working for free).

Part 3 - Contract Receipt

You have now received the Contract offer, you must allocate some time to accurately review this document confirming all details are correct and reflect your proposal, this is your only chance to do so. Remember, do not commence with any works until the contract has been reviewed, negotiated, agreed and signed by all parties.

If you were to commence with any works prior to the final agreement of the contract, it may be deemed that you have accepted the contact in its initial form as it was originally issued to you from your client and all your comments and negotiations are then voided. Case law shows us this in historic disputes, if the receiving party to the contract commences works following the receipt of the initial contract documents this is deemed as acceptance of the received contract and therefore the binding agreement, all negotiations after the date of commencement are voided if work has commenced by the receiving party until a point where both parties to the contract sign the negotiated document. This negotiation period in many occasions can be lengthy so ensure that as the receiving party to the contract you do everything in your power to get the contract signed ASAP.

Part 4 - Contract Review, the “Agreement”

The first thing to check is if the offered contract is inline with the contract that you were informed you would be working under at the time you bidded for the works, on many occasions the client will change the contract or his amendments to a much more onerous document to what was initially issued as part of the tender information.

Secondly you should read that agreement part of the contract to ensure that the company names, company numbers and company addresses are correct. Following this you will start to see the further agreements within the contract such as the list below, follow our guidance on each point to help you foresee any potential “dirty tricks” that your client has attempted to slip in to your obligations (please note that this list is not exhaustive:

  1. Definitions - Check the definitions of the Contract to ensure that all words have the expected meaning.
  2. Insurance requirements - do your current policies comply with the requirements?
  3. Scope of Works detail - Is this correct and as per your Tender?
  4. Price - Is the price correct and as per you last Quotation or Agreement?
  5. Main Contract Link - Is another Contract referred to in your Contract? If so are you to “Understand” the other Contract, or “Comply” with it? If you are to Comply with the Contract then ensure that you receive a copy of it and do not sign up to accepting you can only view it within your employing parties Office.
  6. Programme - are the detailed Commencement and Completion dates acceptable? Are there any Sectional Completion requirements? Is there a Programme? You must review these carefully to ensure you can comply with the requirements.
  7. Retention and Defects - What is the Retention percentage, is this acceptable? Is the defect period acceptable?
  8. Liquidated and Ascertained Damages (LADs) - Are you liable for the entire amount or only your proportion of the Damages based on your Contract Value against the Employing Parties overall Contract Value? Are the LADs Capped? If the LADs are not detailed then this may also be an issue as the LADs have no limit.
  9. Applicable Law - Is the Contract to be under English Law?
  10. Documents of Highest Precedent - If there is any ambiguities or confliction between any documents, if so which one has the highest precedent and its contents shall over rule the other documents?
  11. Contract Base Date - Is a reference date from which changes in conditions can be assessed. Do you require any historic pre-contract agreements to form part of this contract?
  12. Discounts (MCD) - Some contracts detail a Discount requirement, this is more recently detailed at 2.5% (Historically detailed at 1/39th of the contract value), did you agree to any discounts with your Quotation? If you accept this discount the detailed amount shall be deducted from your Quotation amount and you cannot recover this money!
  13. Schedule Of Rates or Bill Of Quantities - Did you agree to prepare a SORs or BOQ to form part of the contract? Many contracts detail that you are to issue these documents or face heavy fines or deductions until you do.
  14. Attendances - This is generally an agreement drawn up between the parties covering the agreement of particulars, this may be who is providing the site cabins, scaffolding, etc. make sure you arent down to provide anything you haven't included for in your bid.
  15. Numbered Documents - it is becoming common practice for the numbered documents of a contract to be a huge list of documents, some of these you may have seen during the tender period and some may be newly listed documents, if you sign the contract without commenting or removing these documents then they form part of the contract and you are deemed to have included for them. Also, another trick that is often played is to include the most recent revision of the documents within the contract, not the tendered documents. The differences can be hugely significant, again if the revisions are not reset to reflect the tendered documents within the contract then you are deemed to have accepted the requirements as detailed in the contract.

Part 5 - Contract Review, the “Conditions”

Many Clients make amendments to the standard conditions of contracts such as the JCT, NEC, etc. Generally speaking there is no reason for the amendments to have been created other than to swing the contract in favour of the issuing party. All amendments need to be studied to see if they are acceptable and what the implications of working under these clauses may be

This article is for general information purposes only and should not be relied upon in any specific situation without appropriate advice. If you require advice or wish to discuss any of the issues raised in this article, please contact us.