[ Questions answered: Legal advice ]
who tried to run their job on a traditional basis, complained that the payment provisions were onerous. If the rules are followed by all parties, there is no reason why your account should not be agreed and paid on as timely a basis as before or, indeed, even quicker. If the project is managed as intended, the management and surveying team should have the final account agreed and paid much sooner than is usual, which will free them to go onto your next project.
In an effort to generate business, we have extended our services to include a design-and-build service. During what turned out
to be some protracted negotiations, and after we had prepared some detailed drawings, the customer has given the work to one of our competitors. We are smarting at the experience, and we have been left with a rather large bill. Is there anything we can do?
The basic position in relation to any sort of pre-contract negotiations is that the parties
bear their own costs until and unless an agreement is reached. However, it is possible during these negotiations that the customer knowingly put you to work in the expectation that somehow you would recover your costs. And it is possible, even though the work did not go ahead, that the client has become liable to you for a proportion of your outlay. Your question is unclear as to whether
the customer is a consumer or business. If the customer is a consumer, the Cancellation of Contracts Regulations requires that you provide a written cooling-off period before a contract is enforceable. Unless the regulations are followed, it is unlikely that an obligation can be established. The regulations are untested and have not been drafted with this scenario in mind; it is unclear as to the possible outcome. Developer customers have no such
protection, and we suggest a case is made for recompense and a ‘reasonable’ bill levied. Small claims courts deal with disputes for less than £5,000, and perhaps the bill should be valued accordingly. Finally, and with the benefit of hindsight, a series of design and build terms and conditions could be formulated that detail the costs per drawing, before and after contract.
Sore point on tender issue
The invitation to tender said the work was to be priced on the drawings and specification only. The specification did contain some quantities but these were issued ‘for guidance only’. When tendering, we noticed the number of electrical points required was substantially overstated, by almost 100 per cent. We tendered on the correct number and won the work. The ‘error’ has come to light and the client is insisting we refund the balance. He dismisses our tender calculations as ‘irrelevant’. Is he right?
The risk, when tendering on a known error, is that this situation will always rear its head. There may have been a commercial advantage to you in not pointing it out pre-contract, and as you did not draft the documents, you may be excused. On balance, we prefer to note the discrepancy and have it clarified during the tender period, as the converse situation often applies. However, you have acted correctly. If the contract is truly a drawings and specification job, it is the quantities that are shown on the contract drawings that you should be paid for, and the sum to be paid is the contract price. If there are no variations, then there is no entitlement to amend the price. Do not be misled by the quantities described somewhere else if those amounts do not form part of the bargain. Problems often occur when the quantities change. Any price adjustment must reflect the prices in the contract, an agreed shopping list or be on a fair and reasonable basis. If the contract is silent as how to value extra works, then it would be wise to value the total effect of any change, and place a quotation in front of the customer before proceeding.
March 2011 ECA Today 55
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