Contract conditions
These are the Contract Conditions referred to in the attached Agreement. The Agreement and these Contract Conditions are to be read as a whole.
In these conditions ‘Employer’ means the employer named in the Agreement and ‘Contractor’ means the contractor named in the Agreement.
The Employer has sent the Contractor the Agreement describing the Works which the Employer requires the Contractor to perform. The Contractor has accepted the Agreement either by signing and returning the copy/counterpart agreement or by commencing performance of the Works.
The Agreement incorporates by reference these Contract Conditions and the Numbered Documents identified in the Agreement.
The Contract between the Employer and the Contractor comprises the Agreement, these Contract Conditions and the Numbered Documents.
The Contract constitutes the entire agreement between the Employer and the Contractor relating to the performance of the Works and supersedes and replaces any and all previous agreements, arrangements or understandings between the Employer and the Contractor in respect thereof. [For the avoidance of doubt, the Contractor’s own standard terms and conditions of engagement shall have no validity under this Contract.]
1. Interpretation
1.1 In this Contract the following expressions shall have the following meanings unless the context requires otherwise or this Contract specifically provides otherwise:
Certificate of Making Good Defects means the certificate issued to the Contractor by the Employer pursuant to clause 3.7.
CDM Regulations means the Construction (Design and Management) Regulations 2015, SI 2015/51
Contract means together the Agreement, the Contract Conditions and the Numbered Contract Documents.
Contract Sum means the amount set out in the Agreement (exclusive of VAT) and payable by the Employer to the Contractor for the carrying out and completion of the Works.
Defects Rectification Period means the period commencing on the date of Practical Completion of the Works and expiring [12] months thereafter.
Nominating Body means the body identified in the Agreement who shall nominate an adjudicator.
Numbered Documents means the numbered documents which the Agreement indicates are to form part of the Contract.
Practical Completion means the completion by the Contractor of the Works in accordance with the terms of this Contract and to the satisfaction of the Employer save for any minor items of incomplete work or minor defects and/or blemishes, the existence, completion or rectification of which would not, in the
reasonable opinion of the Employer materially interfere with the beneficial use and/or enjoyment of the Works.
Principle Contractor means the person identified in the Agreement as the principal contractor for the purposes of the CDM Regulations.
Principle Designer means the person identified in the Agreement as the principal designer for the purposes of the CDM Regulations.
Statutory Requirements means all legal and regulatory requirements applicable to the design, carrying out and completion of the Works which are current at the date or dates on which such services are performed and/or such works are carried out (including Acts of Parliament and subordinate instruments; orders; rules and/or regulations made thereunder; and/or the rules; regulations and/or bye-laws made by any body of competent jurisdiction in respect of which the
Contractor has a legal obligation to comply, each as is in force from time to time).
Works means the works identified in the Agreement as the works to be carried out by the Contractor under the Contract including and/or taking account of any variations thereto subsequently instructed by the Employer (pursuant to clause 4).
1.2 In this Contract:
1.2.1 any words importing the singular meaning shall include the plural and vice versa
1.2.2 references to statutes or statutory instruments shall be construed as including references
to any modification extension amendment or re-enactment of them current at the time
the relevant Works are carried out and shall include any subordinate legislation made
under it and shall include any and all subordinate instruments, orders, rules, regulations
and bye-laws made thereunder and any guidelines issued in respect thereof
2 Works
2.1 The Contractor will carry out and complete the Works in accordance with:
2.1.1 the Agreement, these Contract Conditions and the Numbered Documents
2.1.2 all Statutory Requirements
2.1.3 all the obligations imposed on it as ‘contractor’ and, where indicated in the
Agreement, as ‘Principal Contractor’ and/or ‘Principal Designer’, under the CDM
Regulations insofar as they apply to the Works
2.1.4 all reasonable instructions, directions and other requirements of the Employer.
2.2 Insofar as it is responsible for any design in respect of the Works, the Contractor shall, in
carrying out and completing such design, exercise the reasonable skill, care and diligence of
a professional designer experienced in carrying out and completing designs in relation to
projects of a similar scale, scope, character, complexity and value as the Works.
2.3 The Contractor shall carry out the Works in a proper and workmanlike manner and all
workmanship shall be of the standards described in the Numbered Documents.
2.4 The Contractor shall comply with all instructions given by the Employer to the Contractor
relating to the execution of the Works and which are in accordance with the Contract.
2.5 The Contractor and all personnel under its control shall have regard to the safety of all other
persons who may work on or visit the site and for those who live and pass near to the site
whose health and safety may be affected by the Works.
2.6 Unless otherwise agreed (in writing) with the Employer, goods and materials provided and
used by the Contractor in carrying out the Works shall be new and of satisfactory quality and
conform in all respects with the Numbered Documents.
2.7 The Employer shall grant to the Contractor such access to and use of the site as shall be
required for the Contractor to carry out and complete the Works in accordance with this
Contract and the Contractor shall make itself, its employees and all personnel under its
control aware of any and all site safety and security arrangements.
2.8 The Contractor shall not change any of the Key Personnel listed in the Agreement except with
the Employer’s prior written approval (such approval not to be unreasonably withheld) or
except where such person dies, retires, is dismissed or is otherwise prevented from carrying
out its functions. Is this relevant to your business Terry?
3 Commencement and completion
3.1 The Contractor shall as soon as possible and in any event within seven days of receiving the
Agreement provide to the Employer a programme for the Works.
3.2 The Contractor shall commence the Works on the Commencement Date set out in the
Agreement.
3.3 Any services or works relating to the Works carried out by the Contractor prior to the date of
the Agreement will be deemed to have been carried out under the Contract and any
payments made or owing by the Employer in respect of such services or works will be treated
as payments on account of sums payable to the Contractor under this Contract.
3.4 The Contractor shall proceed regularly and diligently with the Works and, subject to clause
4.2, shall complete the Works and each part of them by the date for completion set out in the
Agreement and/or in accordance with the Employer’s instructions.
3.5 The Contractor shall notify the Employer in writing when it considers the Works to have
reached Practical Completion and if the Employer agrees that Practical Completion of the
Works has occurred, it will, within seven days of such notification, issue a certificate of
completion to the Contractor.
3.6 Following completion of the Works, until expiry of the Defects Rectification Period the
Contractor shall at its own cost and within a reasonable time attend and rectify any and all
defects shrinkages or other defects in the Works of which the Employer notifies the
Contractor.
3.7 Upon the earlier of:
3.7.1 the expiry of the Defects Rectification Period (provided that there are no defects that
have been notified to the Contractor by the Employer that have not been rectified), or
3.7.2 the parties’ agreement in writing that all defects notified to the Contractor have been
corrected, the Employer shall issue a certificate to the Contractor to confirm that it has
fulfilled its obligations pursuant to clause 3.6 (a ‘Certificate of Making Good Defects’).
4 Variations
4.1 The Employer shall be entitled to issue, in writing, reasonable variations of the Works to the
Contractor. The value of variations required by the Employer and any associated adjustment
to the Contract Sum shall be agreed with the Contractor but in the absence of agreement
shall be determined on the basis of fair rates and prices by the Employer’s quantity surveyor.
4.2 If completion of the Works or any part of them is delayed and the delay is caused by a written
instruction from the Employer requiring a variation to the Works and which is not something
for which the Contractor is responsible or if the delay is caused by an act omission or default
by the Employer or another of its other contractors then the Contractor will notify the
Employer in writing and the Employer will grant the Contractor such extension of time for the
completion of the Works as is reasonable in the circumstances.
5 Liabilities
The Contractor will indemnify the Employer and keep it indemnified from and against any
claim liability damage loss or expense arising under statute or at common law in respect of
injury to or death of any person or damage to any property real or personal provided that the
same arises out of or by reason of the Works and is not due to any act or neglect of the
Employer or that of any person for whom the Employer is responsible
6 Insurances
6.1 The Contractor warrants to the Employer that it will:
6.1.1 take out and maintain, for the duration of the Contract, insurance cover in respect of
loss, injury or damage to any property real or personal arising out of or in connection
with the Works with a limit of indemnity not less than that stated in the Agreement,
and
6.1.2 take out and maintain public liability insurance and employer’s liability insurance in
respect of any legal liability arising in respect of or as a consequence of the carrying
out of the Works and with a limit of indemnity not less than that stated in the
Agreement.
6.1.3 [take out and maintain professional indemnity insurance with a limit of indemnity of
not less than the sum set out in the Agreement. The Contractor shall maintain such
insurance for such amount during the Works and thereafter for a period of not less
than six years from the date of practical completion of the Works provided always that
such insurance is generally available in the market on commercially reasonably rates
and terms]
6.2 As and when reasonably required to do so, the Contractor shall provide the Employer with
reasonable documentary evidence that the insurance required under this clause 6 are in force
and being maintained.
7 Payment
7.1 The Contract Sum shall be paid by instalments as identified in the Agreement and the ‘due
date’ for the payment of each such instalment shall be the date of receipt of the Contractor’s
application under clause 7.2.
7.2 The Contractor shall submit an application for payment to the Employer in respect of an
instalment at the end of the calendar month in which such instalment becomes payable. Such
application shall be the notice of payment and shall state the sum that the Contractor
considers to be due to it (the ‘notified sum’) and the basis on which the sum due has been
calculated and shall be supplemented by such other information as may reasonably be
necessary to allow the Employer to verify the application to its satisfaction.
7.3 The final date for payment shall be 14 days from the due date.
7.4 Subject to clause 7.5, the Employer shall pay to the Contractor the notified sum stated as due
in the Contractor’s application submitted in accordance with clause 7.2.
7.5 Not later than five days before the final date for payment the Employer may give written notice
to the Contractor which shall state its intention to pay less than the notified sum, the amount
the Employer considers to be due on the date the notice is served and the basis on which that
sum is calculated.
7.6 Prior to Practical Completion of the Works, the Employer will retain from the Contractor an
amount equal to [3]% of the amount that the Contractor considers to be due from each
payment. From Practical Completion until the issue of the Certificate of Making Good Defects,
the amount retained by the Employer from any interim payments to the Contractor shall be[1.5]%.
7.7 The final payment, being the difference (if any) between the sums due under the Contract and
the aggregate of all interim payments including release of retention previously made shall
become due not later than [three] months after the Practical Completion. This final payment
shall be paid within 28 days of the date it becomes due. Terry is this practical for you?
8 Interest
If either party fails to make payment in accordance with this Contract the other party shall be
entitled, in addition to any unpaid amount that should properly have been paid, to simple
interest on that amount from the final date for payment until the date of actual payment such
interest to be calculated at a daily rate of [5]% above the Bank of England base rate which is
current at the date the payment became overdue. It is agreed that this clause 8 constitutes a
substantial remedy for the purposes of section 9(1) of the Late Payment of Commercial Debts
(Interest) Act 1998. I have put this in because not all of your customers are companies
therefore it gives you a right to claim interest from individuals too. The Late Payment act
relates to business transactions only. Is there level of interest at %5 sufficient?
9 Liability for late completion
If the Contractor fails to complete the Works or any part of them by the date for completion
stated in the Agreement (subject to any extension of that date agreed between the parties)
the Contractor will pay to the Employer liquidated damages at the rate stated in the
Agreement until Practical Completion occurs.
10 Assignment and subletting
The Contractor shall not assign or sublet the whole or any part of the Contract without the
Employer’s written consent (such consent not to be unreasonably withheld or delayed).
11 Termination
11.1 The Employer may terminate this Contract at any time by giving seven (7) days’ written notice
to the Contractor if the Contractor:
11.1.1 fails to carry out the Works in accordance with the Contract, including compliance
with the Employer’s instructions
11.1.2 fails to proceed regularly and diligently with the Works
11.1.3 is in material breach of its obligations under this Contract and fails, within seven (7)
days’ of notice of such breach from the Employer, to take reasonable steps to rectify
the breach
11.2 Either party may terminate the Contract with immediate effect if the other party ceases to
carry on business or is declared bankrupt or, if the Contractor is a company, goes into
liquidation (except for the purpose of solvent amalgamation or reconstruction), administration
or receivership, or otherwise becomes insolvent.
11.3 In the event of the termination of the Contract pursuant to clauses 11.1 or 11.2, the Employer
shall pay to the Contractor any payments which are due to the Contractor for the Works
properly executed (including, where relevant, any design work properly carried out) up to the
date of termination, less any amounts previously paid to the Contractor any other sums which
are properly due to the Contractor in accordance with this Contract at the date of termination.
The Contractor shall not be entitled to any payment or reimbursement of any loss of profit or
any other costs, losses or expenses arising out of or in connection with this Contract.
12 Contracts (Rights of Third Parties) Act 1999
Nothing in this Contract confers or purports to confer on any third party any benefit or right to
enforce any term of the Contract which would not have existed but for the Contracts (Rights of
Third Parties) Act 1999.
13 Dispute resolution
13.1 Without prejudice to clause 13.2, if either the Employer or the Contractor disagrees with any
action of the other which could result in a dispute or difference arising between them, the
parties agree first to try in good faith to settle the disagreement by negotiation before invoking
adjudication or any other dispute resolution procedure.
13.2 Where the Housing Grants Construction and Regeneration Act 1996 (as amended) applies to
the Contract, the parties may, at any time, refer any dispute to adjudication which shall be
carried out in accordance with the Scheme for Construction Contracts (England and Wales)
Regulations 1998, SI 1998/649 (as amended) and the adjudicator shall on the application of
the party who is referring the dispute or difference, be an individual to be nominated by the
Nominating Body.
14 Notices
Any notice or communication given or made in accordance with this Contract (a ‘Notice’) shall
be in writing and shall (save as otherwise agreed) be deemed to be properly given if delivered
personally (when service shall be effective on delivery), or by recorded delivery (when service
shall be effective on delivery) to the addresses of the parties shown in this Contract, or such
other address as either party may from time to time notify to the other in writing.
