Call McGarr Solicitors on: 01 6351580

Home » Blog » Construction law

Build me a City

The builder of the Empire State building in New York, when asked what the most important thing was in its building replied, “Getting the contract”.

What he did not say, but just might have been able to say, is that the “contract” may be subsequent to the commencement of work.

The reason for this lies in a practice common in the construction business, of issuing “letters of intent”. The intended purpose of these is to start the process of negotiation of the terms of the contract (or even to just gain time while the contract is being drafted), but to avoid inhibitions in the commencement of work.

The contract negotiation may be lengthy. Frequently, construction contracts are accompanied by “collateral” contracts intended to benefit third parties, such as the bank that is financing the construction.

Interesting, and profitable (for lawyers) questions arise when the work is completed in the absence of the formal signing of the contract. The correspondence may be replete with the slogan “subject to contract/contract denied”, but it will be difficult to maintain the position that there is no contract in such circumstances.

Depending on the course of the negotiations the planned terms of the contract may be readily discovered; very likely the intended terms were in the form of one of the RIAI contracts or some other model construction/engineering form.

Even if there is no contract, an “employer” is not entitled to deny responsibility for payment for work done. Claims of this kind used to be called “quasi-contract” but are now called “restitutionary”.

However, that circumstance and another where there was no “model” form of contract alluded to, present yet more interesting and profitable (for lawyers) questions as to what the subject matter of the contract was and whether one of the parties (the builder, usually) has complied with its terms.

This can easily arise where what was done was, say, constructing an extension to a house. Ideally, some construction professional (a surveyor, say) will have been engaged to specify the work and oversee its execution. If this has not happened and the work is not satisfactory, the “employer” must, belatedly, discover what are the minimum standards applicable to construction work. If the “employer” is not in business then the “employer” may be a consumer under the Sale of Goods and Supply of Services Act 1980 and some at least of the terms of the contract will be implied under the 1980 Act.

There is no reason, in the case of a small job, for work to commence before the execution of a proper written contract with a specification attached and for arrangements for the work to be supervised by a construction professional.