Stay on the ball
It is vital to keeps tabs on the terms and clauses in contractors’ agreements, advises Simon Colegate
When appointing contractors it is not unusual for social housing providers to be faced with negotiations as potential suppliers seek changes in their favour. On receiving any request for amendments a housing provider should ask itself whether it has any discretion to accept them.
If the housing provider has appointed the builder as part of a framework under an EU procedure, both parties are tied to certain terms. This means that not only is it inappropriate to be requesting amendments, but the provider could be leaving itself exposed to a challenge by other contractors if it agrees.
If there is scope for a document to be amended then the provider can be faced with requests for a bewildering range of limitations. For example, the builder may request the inclusion of a net contribution clause within the contract - this is where the builder may only have to pay a portion of the loss caused in the event of its negligence.
Other requested amendments may be evaporation clauses, where the contractor is only liable for loss to the extent it can recover from its insurer; and caps on liability. If a compromise needs to be struck, then the general market view would be that a suitable cap is the least objectionable of these.
Good relationships in any sector are built on clear communication about risk and reward. Social housing providers should ensure that all obligations are explicitly outlined in all communication, deadlines are drawn up and risk, especially design risk, is allocated clearly.
Simon Colegate is an associate at Weightmans