Working For Private Individuals – Or How To Get Blood From A Stone

Domestic jobs – extensions, roofs, basements etc, are in my view far more difficult than commercial work. There are a number of reasons for this:

1.    There is unlikely to be any contract between the parties, at best there will be an exchange of emails or a single page draft which is in any event often forgotten once the work has begun. As a consequence, there is often no clear description of what is to be done, how long it is to take and how it is to be paid for.

2.    Domestic clients have unrealistic expectations of what is to be done, the standard of work they can expect and the time in which the work has to be carried out.

3.    Domestic clients are quick to withhold payments realising that the contractor will have little choice but to commence long and expensive proceedings if they want to get paid and will probably settle for less than they are entitled to if forced to do so.

4.    Because there is no proper contract between the parties there is often no dispute resolution mechanism, such as adjudication, which would allow the parties to resolve their disputes quickly and inexpensively.

5.    Finally, Contractors are often asked to undertake additional work which is not properly recorded and the value of which is not agreed.

There are other factors that a Contractor must bear in mind when contracting to undertake domestic works. In particular, if the Contractor agrees the terms of the contract at the customers house, as is often the case the Contractor will have to comply with the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.  These regulations require that the Customer is given a notice advising that they have the right to cancel the contract in 14 days. The Customer must be given the notice form to send to the contractor and has to be given some prescribed information about the contract and the Contractor.

If the Contractor does not give the required notice then,

1.    It commits a criminal offence

2.    It cannot receive payment for any works undertaken in the 14 days cooling off period.

3.    If the Customer discovers that it has the right to cancel the contract within 1 year and 14 days, it can cancel the contract and may be entitled to repayment of all sums it has paid to the Contractor.

It is therefore essential that the Contractor gives the proper notices before it starts the work if it is not to fall foul of the regulations.

So, faced with the difficulties of working for private individuals with limited funds and un realistic expectations and who are given extensive rights by the law, what should the small contractor do to protect itself as much as possible.

The first and obvious starting point is to have a contract with the customer.

There are a number of off the shelf contracts available for use from the FMB, JCT and others.

I often recommend the JCT Minor Works Contract. That contract provides for the appointment of an independent Contract Administrator whose job it is to monitor the works, issue instructions and issue a certificate valuing the works every 28 days. The advantage of the contract is that the Employer does not deal with the Contractor directly and the Employer does not value the works.

The JCT Minor Works Contract also includes an Adjudication clause which provides that disputes can be referred to an Adjudicator for resolution. Adjudication is a quick and inexpensive dispute resolution mechanism that avoids the expense and cost of court proceedings. Adjudication is not available for domestic contracts unless there is a right to adjudicate in the contract between the parties.

If you do not wish to use a standard form of contract you can get a bespoke form drafted for you by a solicitor. I often draft simple contracts for clients to use. They have the advantage of being shorter than the standard contracts as they provide for the essential clause required in a contract rather than the wider clause in the standard contracts.

A bespoke contract will set out the work to be undertaken, the cost of the work and the manner in which the Contractor will be paid. It will set out a mechanism for completion and for the claiming of additional time by the contractor. Importantly the contract will provide for the resolution of disputes by Adjudication proceedings.

Quite apart from the building contract a Contractor needs to check whether he has to give a notice of the right to cancel the contract and if he does needs to provide the required documentation to be issued to the customer. This includes a schedule of required information, the Notice to Cancel the contract (that has to be given to the Customer) and if works are to commence within 14 days an authority to be signed by the Customer confirming that they will pay for work done within the 14 day cooling off period.

A solicitor can provide the cancellation documents which, like the contract will not cost a great deal. Once obtained they can be used repeatedly and will help reduce the risk of contracting with private householder customers.

David Jackson, Solicitor, National Legal Consortium www.nlc.net or 0800 085 7772.