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Do you have any problems with contracts, disputes with clients or other legal questions you want answered? Our regular legal Q&A can help provide the answers

Following a telephone request, we started to work for a contractor, and three weeks later we received his order. The job has run into a number of problems and looks like it will fi nish late. The contractor reminds us that the penalty clause is £5,000 per week. ‘Can you afford to be late?’ he asks us. What do we do?

Until the new Construction Act becomes operable, your contract falls outside any protection the current Act may provide. Normally, the fi rst advice is to read your contract. However, from your question we are uncertain whether the order you received actually applies. Contracts are concluded when an acceptance is made of an offer. If the contractor failed to make it clear during the telephone conversation that his standard terms of trading would regulate the agreement, then it is unlikely all the usual terms will have been incorporated into the agreement. When you receive an instruction like this, it

is always a good idea to confi rm in writing the basis upon which you are agreeing to start; that way there can be no misunderstanding. Without all the usual terms about delays, extensions of time, penalties, and so on, the main contractor has waived his right to deduct liquidated damages. He can still consider unliquidated damages, but for these to apply, they will have to show that you are the principal cause of the delay and that you failed to progress the works in a reasonable manner, to a reasonable time frame. The answer is to reply saying: ‘We can never afford to be late, but whether we are vulnerable to damages or not is something that we very much doubt.’

It is always prudent to adopt good practice

when managing a contract and, whether an agreement calls for them or not, always write expressing concern about any cause of delay and indicate what effect the delay will have on your ability to perform.

54 ECA Today May 2011

My local holiday camp has contacted me about their in-house disco equipment. They own the equipment, and one of their

entertainment staff uses it to entertain their guests. They say they change the fuses at the start of the season but are asking me if there is anything else they should do?

When you buy electrical equipment, for your own use, the law pre-supposes that you’ll do nothing to put yourself in harm’s way. If you use this electrical equipment for anything other than relaxation and pleasure, such as for paid employment, then The Health and Safety at Work etc. Act will imply a duty, in your use of the equipment, for you not to harm yourself or others. However, if as an employer or third party you loan or provide the equipment to others, then under the Electricity at Work Regulations you are required to ensure the equipment is as safe as is practicably possible. The employer discharges this duty by having the equipment PAT tested. To record that the equipment has been tested, the details of the test should be recorded in a log. Under The Landlord and Tenant Act there

is a similar duty on landlords to ensure all the equipment they provide is safe. However, PAT testing is only intended for equipment that is easily moved from one place to another, especially while connected to the mains supply. The length of time between tests depends

on the age and use of the equipment – in this instance, anywhere between a 12 to 48 month cycles could be appropriate.

The shop fi t-out has been completed and we have issued our fi nal account for our portion of the works. The works changed during construction so we have included both a bill of variations and a remeasurement bill. However, as the work was let on a lump sum drawings and specifi cation basis, the

client’s representative is saying he will only adjust the contract price by virtue of instructions and drawings. We are seriously fi nancially exposed to the client and worried we may not receive any more money. How do we get paid?

Provided the contract makes

provision for variations then you should be alright. Schedule, from

day one, all the changes you believe are not of your making. Next, indicate on this schedule whether the changes are of addition or alteration. Expand the schedule to show what the original quantity was and where it is described in the original contract information. This may be by reference to a drawing or specifi cation or a combination of both. Now say what has changed and why this change occurred. It is likely you will need information from a variety of sources to demonstrate this. Consider site surveys, photographs, record sheets, drawing extracts – anything, in fact, that establishes a difference between that shown in the contract and that supplied. You will need to meet the client’s

representative to check that he accepts your reasoning and to agree how each change will be valued. Before leaving this meeting, ask that he assigns an approximate value to all the changes, and ask him to issue a further payment certifi cate on the strength of his ‘interim’ assessment. Agree when the subsequent valuation can be made, and offer to help in any way possible. Finally, prepare your own account and check the dispute resolution clauses.

Your questions answered:

If you have any legal queries or would like your questions answered in ECA Today, please email us at ECA members can receive free advice on commercial contract and legal issues from the ECA Commercial Contract and Legal department by calling 020 7313 4818.

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