Builders agreements

[sg1999]

Hi all,

We have agreed verbally with the builders to start on a house extension project and they have asked for a 10% deposit on the estimated project price in order to reserve their time / other projects. We have nothing signed so far and was thinking how is this done normally? Do people sign multi page agreements and do they get their lawyers to go over before handing over the cash?

Thanks

 

[^woody^]

lawyers

LOL. Snakes you mean

Do you trust them not to run off with the deposit or to then turn up when they say?

Whilst some very small firms or one-man bands may need help with cash flow, others should not - so no deposits - its not DFS.

Typically you should be paying in arrears, and only for materials delivered to site (or specialist made-to-order products) and for work done. Otherwise you are at risk of paying more then the value of work done or materials fixed and then if the builder goes bump, you are at a loss.

Any agreement you do sign, should be just that - an agreement. Don't blindly sign the builder's "terms and conditions", you can add and delete what you like as long as you both agree. There are standard domestic contracts from JCT or the FMB - do a search.

 

[Notch7]

Hi all,

We have agreed verbally with the builders to start on a house extension project and they have asked for a 10% deposit on the estimated project price in order to reserve their time / other projects. We have nothing signed so far and was thinking how is this done normally? Do people sign multi page agreements and do they get their lawyers to go over before handing over the cash?

Thanks

I think it depends on how far in advance you are talking.

I wouldnt start without a deposit, the start date on site is not the start date for the project. Skips, plant, subbies etc have to be organised and resources committed.

On the other hand I wouldnt be happy to pay a 10% deposit to a builder 6 or 9 months in advance. If you do have a great builder and want to book a fair time in advance, if he is Ltd do a credit check, speak to previous customers. Worth more than paying some lawyer money. If you think about what are you going to do in the case of a breach of contract? it might help you long term to have a well tied up contract, but short term a legal route will be about as useful as a chocolate teapot.

A builder I know had a £600k job booked, the customer kept asking for confirmation they could start on x date.

A week before starting the customer cancelled, decided not to do the project after all. The builder had turned down small extensions to commit to the half a years worth of work.

 

[^woody^]

A week before starting the customer cancelled, decided not to do the project after all. The builder had turned down small extensions to commit to the half a years worth of work.

He didn't sue for breach of contract then? Those are losses which can be recouped.

We don't pay any deposits to any contractor, never.

 

[wessex101]

A builder I know had a £600k job booked, the customer kept asking for confirmation they could start on x date.

A week before starting the customer cancelled, decided not to do the project after all. The builder had turned down small extensions to commit to the half a years worth of work.

It is examples like that that make me wonder why small builders seem to be so afraid of written contracts. If the builder had got the client to sign a contract they could have claimed for loss and expense when the client cancelled.

 

[wessex101]

Hi all,

We have agreed verbally with the builders to start on a house extension project and they have asked for a 10% deposit on the estimated project price in order to reserve their time / other projects. We have nothing signed so far and was thinking how is this done normally? Do people sign multi page agreements and do they get their lawyers to go over before handing over the cash?

Thanks

Some builders charge a holding deposit, some don't. If you really want to use that builder then 10% is not that outrageous.

Just make sure your paper trail is in order, written quotation complete with full details of builder or his company, written acceptance from you, payment made via a traceable source (not cash) directly to the named builder or company with written receipt confirming it is a holding deposit and terms for return of deposit if job is cancelled or delayed.

As Woody suggested there are very simple domestic building contract templates available, JCT do one for about £40 you can download from the internet.

 

[^woody^]

It is examples like that that make me wonder why small builders seem to be so afraid of written contracts. If the builder had got the client to sign a contract they could have claimed for loss and expense when the client cancelled.

Doesn't need to be written. All the one party needs to do is evidence that the work was commited to and there was an agreement (/understanding), which is not hard to do.

 

[wessex101]

Doesn't need to be written. All the one party needs to do is evidence that the work was commited to and there was an agreement (/understanding), which is not hard to do.

Fair point but most small builders don't seem that hot on their paperwork. The thought of trying to present scribbles on the back of envelopes and half remembered telephone conversations to a court when you can have a perfectly good contact for under £50, especially if they are up against some smarmy smart arse client probably with a tame solicitor in tow.

 

[endecotp]

He didn't sue for breach of contract then? Those are losses which can be recouped.

I’m no expert, but I think it would come down to whether the client knew, or should reasonably have known, that the builder would have trouble finding other work for that period after the cancellation. I would not bet on winning in court.

Wikipedia: https://en.m.wikipedia.org/wiki/Hadley_v_Baxendale

 

[endecotp]

there are very simple domestic building contract templates available, JCT do one for about £40 you can download from the internet.

Does anyone know what they actually say about consequential losses?

 

[^woody^]

JCT (in it's standard form) limits, excludes or caps the amount of indirect losses. Generally the amount recoverable will need to have been specified in the contract particulars. But parties are free to add or delete whatever they like from the standard form.

In any case, claims will be limited to whatever the parties would have known about or been notified about at the time the contract was signed.

 

[wessex101]

But we aren't talking about consequential losses or indirect losses we are talking about direct loss and expense claims.

 

[noseall]

Never asked for a deposit.

All I say is that once the customer can see there is sufficient progress on site, that there is obvious commitment, that there is value of work done or materials on site - only then do we talk about money changing hands.

I ask in return that they make money available as and when I need it but only after they see some value first.

To suggest that a builders' time is so precious that they need some kind of retainer is ridiculous. However, there has to be commitment both ways that is agreeable to both parties.

 

[sg1999]

I understand that there may be outlays right at the start, eg equipment, materials etc and the builder may want to be paid in advance ? As long as you pay for each step 15-30 days in advance and not 6 months it should be OK?

Now that I think of it more, I suppose there also needs to be a supervisor to make sure that the builders are building what they have been asked to build (according to the plans) rather than what they want to build ? Someone that will make sure what materials have been used and how many, especially the expensive ones (eg steel beams) ?

 

[garyo]

Never asked for a deposit.

Purely out of interest, during your quotation process to what extent are you interviewing and selecting the customer, and how often do you think "you're trouble, this ain't worth it" and price yourself out of the running for a job?