01.10.2018

Contracts and Avoiding Disputes

Jessica Kerr from Sinclair + May Talks about Contracts and Avoiding Disputes

Many of the most common disputes that arise between building designers and their clients could be avoided, or managed in a much less damaging way, with a contract that clearly outlines the scope of works and requirements of both parties.

Understanding your contract

Often, disputes stem from misunderstandings about the exact scope of work that is being performed or delivered, and when key things are meant to happen. Ensuring that your client understands upfront exactly what is included in your quote or scope of works is one thing, but it’s equally important for your own business to ensure that this is accurately reflected in the contractual documents that both parties sign.

A solid contract that you both understand and use to your advantage will be a great help, even in the face of the most difficult and demanding client. Contracts aren’t necessarily the most enthralling documents to read and review, but they are crucial to your business. Ensuring that you have the right one, and that it covers everything in the way that you need, is a relatively simple way of keeping your business on the right track.

The type or form of contract that you use may be informed by the particular work that you are doing for each client, or the registration that you hold. It is important that you are familiar with the contracts that you use and are aware of what they require of you. In addition to outlining your own responsibilities, understanding its terms will enable you to keep on top of what you can contractually require from your client at various points. It’s surprising how many large, costly and time consuming disputes stem from an initial misunderstanding of one party’s contractual responsibility. If at least you are familiar with your documents, you can prevent disputes getting out of control early on.

Get you contract right

Your contract should at the very least cover the following things:

  • The core design (and other) services that you are going to provide;
  • Any additional services that may be necessary, depending on the project;
  • A cost outline – what is payable, and when? Are there billing triggers that need to be highlighted?
  • Fees – what are you going to charge, and how is this to be calculated?
  • Time and due dates;
  • Intellectual property;
  • Insurances and liabilities;
  • Client and designer obligations – do you require the client to provide you with input or to make selections or determinations? The rights and obligations should be fair, appropriate, reasonably able to be met, and clearly explained.
  • General conditions;
  • Dispute resolution;
  • Termination clauses – are there triggers for termination?

What about by mutual agreement?

Always ensure that everything you have discussed with the client is reflected in the contract that you have in place. If things have been agreed or discussed verbally, unless they are reduced to writing, it becomes very difficult to prove or rely on them in the event of a dispute.

Also, as far as possible, reduce or resolve any ambiguities in the scope of works and specifications. The less ambiguous and ‘to be determined’, the less room for misinterpretation, time and cost blow outs, and a breakdown in relations between the parties.

Make the contract move with the work

Whenever there are any changes or variations, either to the scope of work, timelines, or even minor amendments to specifications, make sure these are documented and confirmed in writing. There may be additional legislative requirements to comply with (for example, if you are covered by the Domestic Building Contracts Act), but it is best practice to ensure that all changes are documented. When there are numerous iterations and version of documents, and emails or text messages going back and forth making changes, it can be extremely difficult to keep on top of the exact agreement and scope of works as it changes. It is also dangerous to assume that everybody has the same understanding of where things are at, when lots of changes are made.

Seek help early

Many disputes and disagreements could be avoided by checking the terms of the contract before acting or communicating with the other party. If you are uncertain as to your obligations, or whether you have the right to act in a particular way, it is much better to seek advice early. Often contracts and relationships can be salvaged if you step back and consider your position, or have a lawyer or other adviser assist you to do this. It is not uncommon for a designer, architect or other professional to inadvertently prejudice their own position by acting too soon or too definitively, for example to terminate a contract. If you would like any assistance to review your existing documents, draft a custom agreement, or provide any other assistance or insight, please don’t hesitate to contact us for a free initial consultation.

Jessica Kerr is Director of Clifton-Hill-based law firm Sinclair + May, a Corporate Member of BDAV. They were announced as Boutique Law Firm of the Year Finalist 2018 in Lawyers Weekly Australian Law Awards.