Building Contracts

Anyone considering having major home improvement undertaken would be advised to have a contract made between them and the builder. Until recently most Building Contracts required a professional to be hired to administer the terms of the contract. This situation has now changed with the issue of the 'Home Owner Contract' but more about that later.

Firstly we must understand the basic principles of a contract.

There are three basic elements to any contract.

  • Agreement: The parties must have reached agreement.
  • Intention: The parties must have intended to create legal relations.
  • Consideration: According to the terms of the agreement some advantage moves from each party to the other. The giving of mutual advantages by the parties is the essence of a bargain.

In any transaction where one of these elements is missing there is no contract.

An agreement may be made in any manner whatsoever provided the parties are in communication. An agreement may be:

  • in writing, or
  • by word of mouth, or
  • by inference from the conduct of the parties and the circumstances of the case, or
  • by combination of the above.

Most problems in contracts are caused by breach of contract, where a party neglects or refuses to honour a contractual obligation, there is a breach of contract. A breach by one party causes a right of action to accrue to the other.

The usual remedy for breach of contract is damages, i.e. the award of a sum on money to put the aggrieved party in the position he would have enjoyed had the contract not been broken.

The two main standard forms of building contract used for domestic building work are the "Building Contract for a Home Owner / Occupier" and the "JCT Agreement for Minor Building Works (MW98)".

While care has been taken in preparing this note it should not be treated as definitive legal interpretation or commentary. You should seek proper legal advice from a suitable qualified person.

*Not for use in Scotland