Construction Disputes and how to avoid them

Posted on: February 9th, 2017

Coffin Mew recently met with a group of construction specialists based in Brighton, ranging from main contractors, subcontractors, surveyors, architects and developers, to discuss the challenges and issues which their organisations face in the construction industry, which often lead to disputes. We also discussed how best to avoid them.

The discussions were wide-ranging and covered topics including defective works, design liability, payment, collateral warranties and LADs. We considered how to avoid disputes in relation to these areas through the use of correct contracts, payment notices, the use of experts and options for adjudication, arbitration, mediation and court. Chaired by Coffin Mew’s Mark James, this cross-section of the local construction industry was also joined by a barrister specialising in construction law.

The group of construction specialists identified areas where disputes can often arise, and some of the key points out of the discussion are summarised below:

PAY LESS NOTICES

  • Work out the “Due Date” straight away
  • Protect your position – are Pay Less Notices under used?
  • Strict timings apply to service of Payment Notices and Pay Less Notices – follow the contract
  • If Pay Less Notice is not served – full payment must usually be made
  • Commerciality applies – once served, discuss the problems which the Notice relates to (if not already in discussion)

DEFECTS

  • Be aware of the contractual defects liability period
  • If there are defects – what do you need to do? Should you serve a Pay Less Notice, for example?
  • Use experts
  • Understand the difference between Patent v Latent defects
  • Know your site – try to resolve defects issues as they arise

DESIGN LIABILITY

  • Know your contract – who bears the design liability?
  • Consider whether there is a cap on liability – is it at the right level?
  • Consider collateral warranties

COLLATERAL WARRANTIES

  • Check your insurance requirements – do they need to see or approve them? Is there a limit on how many can be given on a project?
  • The more collateral warranties you give, the more exposure to risk and potential claims

LADs

  • Are they a genuine pre-estimate of loss or a penalty?
  • Spend time working out what is needed and keep records of any calculations
  • Do not be afraid to enforce them
  • Pass liability down the contractual chain if necessary
  • Are you better off without LADs – going unliquidated?

ADJUDICATION

  • Is adjudication under used?
  • Provides a swift resolution – quicker & cheaper than court proceedings or Arbitration
  • Prepare your case fully before you start it – timescales are short once Notice of Adjudication is served

Coffin Mew have a dedicated and specialist construction legal advisory team, if you would like to find out more about our services please contact Mark James on 0333 000 0435 or markjames@coffinmew.co.uk