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July 2017

Issue of the Final Certificate under the JCT Intermediate Building Contract 2011

By | Problem Solved

The Problem

Back in 2014, the building company I work for entered into a JCT Intermediate Building Contract 2011 to construct a large extension to a health and fitness centre for a well-known company.

Soon after work was started on site, it became obvious that the person, who had been nominated by the external building consultants as the contract administrator, was well out of her depth.  Fortunately, we took the initiative and ‘powered’ our way through the project, meeting the original date for completion.

The end of the defects period arrived in mid-2016, and having received the list of defects from the same contract administrator, we were pleased to receive the certificate of making good and the final certificate shortly after attending to the defects.  The final certificate had even agreed our final account and released the retention.  However, we have since hit a brick wall with the client, insofar that it is refusing to make payment against the final certificate on the basis that it not only disagrees with the level of the final amount certified, but is also claiming that the contract administrator should never had issued a certificate of making good defects because defects still exist with our works, which the contract administrator failed to note on her initial list of defects.

The monies that are owed were certified towards the back end of 2016, but the client has not issued a pay less notice.  Can you give any advice on how to proceed?

Jake, Stapleford.

Michael’s Response

In spite of what must have been a difficult project due to a ‘below-par’ contract administrator, your company deserves credit for achieving its obligations as to time, and no doubt your client, at least at the time of completion, must also have been pleased to have use of its new facilities on time.

Although you have mentioned that your client has not issued a pay less notice against the final certificate, which I would normally observe that in the absence of a timeous pay less notice, the amount certificate must be paid and then argued later, your overall situation is different with the contract administrator having issued the final certificate.

Under your form of contract, where the final certificate has been issued, this becomes conclusive evidence on matters such as the standard of workmanship and the quality of the materials are as described in the contract documents, or the adjusted contract sum is in accordance with the terms, unless challenged by some form of proceedings no later than 28 days after the final certificate has been issued.

I therefore recommend that you instigate [adjudication] proceedings, for the monies certified in the final certificate based on the absence of a timeous pay less notice.  Any proceedings that your client may instigate in relation to the recovery of [what it may see as] any over-payment, and / or alleged defects, notwithstanding latent defects, you have the evidence of the final certificate in defence to this.  If there were indeed defects outstanding at the time that the contract administrator issued the final certificate (even if the defects were simply missed by the contract administrator), you will not be liable to make good those defects and the only recourse for your client would be to bring a claim against the building consultant who employed the contract administrator.

The advice provided is intended to be of a general guide only and should not be viewed as providing a definitive legal analysis.

What can your company do if you have signed up to a contract which automatically renews itself?

By | news, Problem Solved

What if your company has signed a contract with “Tie-you-in Limited” which contains an “auto-renewing” term – such as, say, you must give a minimum of three months notice before the end of the first 12 months period to end the contract. Otherwise it renews for a further 12 months.-

Argue you are in fact a consumer

“Consumers” have considerable protection under the Consumer Rights Act. The Court may regard as unfair, taking into account all the circumstances of the contract. A term which has the effect of: –

…automatically extending a contract of fixed duration where the Consumer does not indicate otherwise, when the deadline fixed for the Consumer to express his desire not to extend the contract is unreasonably early.

In the Regulations, a “Consumer” is a natural person who is (in summary) not signing the contract for business purposes.

However, if you can show that you signed the contract partly for personal reasons and/or the benefit of the contract was only incidental regarding your business, you may be able to bring the contract under these Regulations.

So, for example, you might be a “Consumer” if you sign a contract as a business which buys and improves properties, but also use each one to provide a home for your family – i.e. the contract is purportedly with your business but is intended to benefit both you and the business.

Argue Incorporation of Terms

Any term must be incorporated to be enforceable.

Terms and conditions which are immediately visible to a contracting party will form part of the contract, however long and complicated the agreement might be.

There is normally no obligation for Tie-you-in Limited” to draw the automatically renewable  term to your attention.

However, there is a principle that where there is a contractual provision which is particularly unusual or onerous, but not immediately visible, Tie-you-in Limited  would not be able to rely on the clause unless they have done enough to bring the clause fairly to your attention, particularly where a contract may have been signed under pressure of time or other circumstances.

Argue UCTA:

The Unfair Contract Terms Act (generally known as UCTA) limits a company’s ability to avoid to business contracts in respect of terms regarding contractual performance, misrepresentation and restriction of contractual remedies.

UCTA does not normally allow a business to challenge unfair standard terms which relate to its own performance or obligations – which would generally mean that businesses are not protected against a term automatically extending the contract.

However certain respected legal commentators have said that you could bring an auto-renewal clause under UCTA if you could show that it allowed Tieyouin to render a contractual performance substantially different from that which was reasonably expected of it.

I have not seen any case law on this point.

Argue Ambiguity:

If there is any ambiguity at all in Tieyouin’s auto renewal clause, you could argue that the clause should be construed against Tieyouin – known in English law as the “contra proferentem” rule.

Argue Performance:

You should look at the history of Tieyouin’s performance and consider whether there is any defect in this performance which would legitimately allow you to bring the contract to an end.

Argue Misrepresentation:

Can you remember what was said or written at the time the contract was made?

Perhaps Tieyouin’s salesman made promises which it has not lived up to.

Give Notice:

If all else fails, make a diary note to give notice at a convenient time to your company, or if you are not particularly concerned about the business relationship with Tieyouin, if notice has to be given “at least X months prior to …” why not give a written notice straightaway by a recorded delivery letter.

The Pressures within “Big Firm & Co.”

By | news

In a recent article by Karen Jackson that featured in the Law Society News, she talked about the typical large law firm and the unrealistic billing targets they set for their lawyers “which hang over them like the sword of Damocles.” In her article, Karen Jackson talks about the impact high billing targets on lawyers stress levels and ultimately their mental health but I would like to look at it from a different perspective. The client perspective.

I recently gave some employment advice to a junior member in a large firm, which I will call “Big Firm & Co.”

They had arrived at BFC from another large firm, and did not have a client following, but were immediately given a monthly billing target of £15,000 per month.

Somewhat unsurprisingly (if you are in this trade) it took BFC two weeks to train and arrange support and start to supply clients.  By the end of the month, my client had only billed £5,000, and she was therefore already £10,000 down on her yearly target.

By the end of month two she had edged up to £10,000, and by the end of month three, she billed just over £13,000.

But to catch up with the deficits, and make an impression, she felt her effective target for that year was really somewhere in the region of £18,000 to £20,000 per month from then on.

Following our conversation, I did wonder what the effect of all this stress must be on the client relationship and the progress of their work.

The stress of being stretched to high billing targets is not only a feature for junior members. Senior members of large firms can also come under enormous and relentless billing pressure, particularly where the firm has a structure which gives them very large and inflexible overheads.

They may also experience further stress from political pressure and boardroom disputes.

In my view, the moral contract between a solicitor and client must be something like: –

  1. The client pays the fee;
  2. The client receives advice which: –
    1. Is only ever in their best interest;
    2. Is delivered with assiduous devotion to that interest;
    3. Is correct.

It is difficult to imagine how that equation can be properly balanced when the solicitor is under large external pressures, which must be all the more distracting if they emanate from colleagues.

The danger is the temptation to give the advice to fulfill the Solicitors’ needs, rather than what is in the client’s best interests.

The balance of the equation must be upset to a degree, depending upon the resilience of the solicitor delivering the service.

Does this ring a bell with any legal service users out there?

Have you ever been in a legal relationship where looking back, you realised that you received no real advice, perhaps only options, and were moved along a litigation “conveyor belt” feeling powerless to effectively ameliorate your situation?

Needless to say, we don’t work to high billing targets at Cato Solicitors. To find out more visit: About Us

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