HVP Magazine – Learn to say “no” to unfair contracts

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Learn to say “no” to unfair contracts

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Some clients I advise in different sectors of the industry have had enough. We have seen some significant construction organization bankruptcies in 2023, leaving behind a trail of debt, causing what I call the “domino effect”. This has hit the supply chain hard and several businesses are struggling to survive.

To counter this, I work with several member organizations in the finishes and interiors industry led by the force of nature, CEO Iain McIlwee. We are looking to run pilot projects across the UK to help businesses manage the commercial side of contracts much more effectively and efficiently and to help them avoid trouble. Pilot projects will include the implementation of the CICV Best Practice Guide (BPG). Additionally, we will host a national webinar on BPGs and work with several organizations to introduce BPGs to their site and contract and sales managers to improve the way they manage projects. We will also provide these organizations with an overview of JCT and SBCC contract terms, to help them detect onerous contract changes.

Another thing I’m working on is helping organizations say no, and here’s the message.

We will say “no” to the following:

• Do not send an offer with onerous contract changes that increase our risks and reduce yours, and the documents will simply be returned to you.
• Don’t force us to work with you for months using our “know-how” to help you close a contract and then you come back to us asking for an additional discount on our tender, because that won’t happen .
• Do not include extended payment terms
• Do not include liquidated damages clauses that are grossly disproportionate to the value of our work package, as we will not accept them.
• Do not include provisions that retention permissions will be dependent on the completion date of the main contract, as we will not accept this.
• Do not instruct us for additional work until we have agreed a price with you, as we will not carry out this work without agreement on the price.
• Don’t tell us you can’t pay us because the customer hasn’t paid you, that’s your problem not ours, and pay when paid retainers are prohibited.
• Don’t keep hitting us with false accusations of violation, because we won’t accept them, and if you don’t drop them, we will simply refer the matter to arbitration.
• Do not put a clause in the contract that says that if we enter into an adjudication we will be fully responsible for your costs and those of the arbitrator, because we will not accept that.
• Don’t keep telling us there’s still work in the pipeline that we’ll get provided we play with you on other contracts.
• Do not include compensation provisions between contracts, as we will not accept this.
• Don’t forget that you need us to carry out your projects. Remember, you need to treat your supply chain correctly, otherwise you won’t have a supply chain
• Do not extend the final account agreement date as we want to accept it
• Do not start a contract without clear responsibilities for those parts designed by the contractor.
• Don’t keep telling us that certain things are “design development” when you don’t even know what that means and it hasn’t been defined in the contract documents.

Many readers will no doubt shake their heads at all of these things and then say, “I’m afraid we need the job, Mr. Bunton.” I understand that, but adopting some of the statements made above should help you manage the business side. aspects of projects much more efficiently and cost-effectively.

In my experience, there are many good employers and contractors who will look after you and have long-term construction programs, who will value your contribution and want you to help them build successful projects within the costs and on time. and of high quality.

Be selective about who you work for and find out which organizations have long-term development programs, with which you can build a successful relationship.

A number of clients I work with are starting to say no, and it’s working, and their voices are being heard, and better, fairer contracts are being made.