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October 28

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Construction Contracts & the Importance of Clear Quotations

By Virtual QS

October 28, 2019


People may feel fear when they hear the word ‘contract’, but the truth is we are all entering various contracts throughout our day to day lives. A legally binding contract needs three main elements: an offer, consideration, and acceptance. While the terms “offer” and “acceptance” are fairly straightforward – an offer is made, and either rejected or accepted – “consideration” refers to something of value that is being gained through the contract (Find Law, 2019). To use an example many of our clients will be familiar with; Contractor A gives a quote to plaster a room for £300, the customer accepts. The offer is to plaster the room, the client has accepted, and the consideration (value) applied to it is the £300. Technically you are now in contract without having even written a thing down. Therefore, most of you will be used to entering and agreeing contracts without realising.

In construction though, there can often be disputes which arise either accidentally through miscommunication or misunderstanding, or intentionally when one party is purposely trying to treat the other unfairly. The best way to avoid this is having a clear definition of the scope of work, programme, cost, and payment terms. This can easily be done through your quotation.

Many in the trade industries price jobs on a lump sum, sometimes even in a simple text message or verbally. The issue with this is that both parties could be confused with what is expected of them and this could lead to disputes and bad reviews. To avoid this we encourage all of our clients to provide a detailed itemised breakdown of their works, even if they are charging a lump sum at the bottom. If finishes such as tiles or paint are involved, it is also best practice to name the exact specification of that item so there is no confusion in what has been priced.  When sending your quotation it is also best practice to outline programme (when you will start and finish), as well as how you wish to be paid. For example, if you are undertaking work that will take a few weeks to complete and are expecting to be paid weekly based on the value of work undertaken, it could be a shock to the client who was expecting to pay at the end of the project. Clearly defining these items at the beginning will reduce potential conflict later down the line.

For our clients undertaking larger works, there are a few main construction contracts around and most contractors that are working on medium to higher value projects will use one of the JCT contracts available. JCT contracts are used throughout the building industry and clearly outline the responsibilities of each party, and will be easily enforced in court if need be. However, for most of our clients working on smaller value works this could be unnecessary and time consuming.

We hope that this brief introduction has highlighted the importance of clearly defining the scope when entering into a contract. If you require any advice, need quotation templates created, or would like Virtual QS to undertake the drafting of quotations and invoices on your behalf, please get in touch. We can save you time, effort, and stress so that you can focus on delivering high quality work.