23 July, 2019
It is a reality that on many construction projects, the contract between the parties is often not finalised, not signed or simply forgotten. While at the outset of the project agreeing the contract may seem like a tedious task, when a problem occurs, the contract will prevent a dispute arising, provide for how the issue should be resolved and will protect the rights of the parties.
While the law recognises an oral contract and a contract agreed through the conduct of the parties (in certain circumstances), a written document prepared at the beginning of a project which sets out the parties’ rights and obligations can save considerable time, cost and stress if something does go wrong. Additionally, for those who are embarking on a project which will be partially financed through a mortgage or borrowing facility, most lenders will require a signed contract as a condition of the borrowing.
Practically speaking, construction in the Cayman Islands presents its own unique set of challenges and uncertainties particularly in respect to the weather, the supply of materials, cost inflation, the availability of specialised professionals and compliance with relevant building and planning regulations. As well as including standard terms and conditions, a properly drafted contract should account for the unique and often unpredictable nature of the local Cayman construction environment.
On smaller construction projects, we see a number of disputes arising which relate to the “defects liability” period and the retention of funds by the homeowner because the parties disagree whether “practical completion” has occurred. Another common issue is the occurance of unforeseen events which are outside the parties’ control and which significantly change the fundamental assumptions upon which the contracts are based. Below is a non-exhaustive list of considerations the various parties to a construction contract should have in mind when negotiating terms of an agreement. The points listed below provide a general overview only and more detail on a number of these considerations will be provided in subsequent articles, which will address the common pitfalls experienced on construction projects more specifically.
Considerations for the Builder –
Considerations for the sub-contractor(s) or design consultant–
Considerations for the developer or homeowner -
As all construction contracts are unique and differ in one way or another, the list above is intended as a guide only and it is strongly recommended that if you are going to be involved in a construction project (even to a limited extent), you seek proper legal advice before the contract is signed. This should ensure that as the builder or sub-contractor your rights are properly protected and that you are only held liable for the work that you are responsible for completing. Similarly, for the building owner, having the appropriate contracts in place should ensure that you only pay for the work you intended to pay for and have a clear path to recovery and the resolution of disputes, should things not go to plan.
Broadhurst LLC have extensive expertise in a range of construction projects both locally in the Cayman Islands and internationally. Whether you require advice on setting up structures for a complex project, assistance with reviewing or drafting an agreement, dispute resolution or just general advice, our team are able to help throughout every stage of the process. For further information, please contact our office on 1 345 949 7237 or by email to Laura Stone at firstname.lastname@example.org.
*This publication and the material on this website are prepared for general information purposes only to provide an overviewof the subject matter. It is not a substitute for legal advice nor is it a legal opinion and should not be taken as such. It deals in broad terms only and is subject to change without notice. If you require legal advice, our experienced Attorneys are available to assist, please contact us and arrange a consultation.