BESA Connects you to Navigating the Contractual Minefield
BESA Group
The Building Engineering Services Association is the UK's leading trade organisation for building engineering services.
Contracts can be a minefield, and unfair contract conditions are hindering the progress of far too many built environment SMEs, so ensuring your company's contracts are managed efficiently can save your business not just time, but money too.
As Group Head of Legal & Commercial, Abiola Aderibigbe is dedicated to supporting BESA members by providing expert legal and commercial guidance tailored to the building engineering services sector, and offers several practical steps you can take to protect yourself during a contract negotiation.
Base Date: The Base Date serves as a critical reference point that defines the project’s initial conditions including costs, laws, regulations, and market conditions. It is a good idea to ensure that this date is as close as possible to the date of commencement for the project.
Collateral Warranties: Collateral warranties (CWs) are contracts associated with your construction contract (the “underlying contract”). It allows for you to “warrant” to a third-party beneficiary that you have fulfilled your obligations under the underlying contract. It provides security and privity to the third-party beneficiary, while mirroring the responsibility in the underlying contract.
In industry, it has become standard to request for these, however it is essential there is a limit to the amount of these a contractor is required to give. Therefore ideally (subject to commercial circumstances), you should be looking to give no more than 2 CWs.
Fluctuations: The aim of fluctuation provisions is to transfer some of the effect of increased cost during the execution of the contract to the counterparty. Therefore, it enables a contract to consider the impact of the cost of goods, materials, equipment, and labour, caused by circumstances such as rising inflation costs, economic and geopolitical factors.
Having these clauses in a contract, can help a contractor/sub-contractor mitigate some of their exposure to potentially uncertain market conditions.
Performance Bonds: A performance bond is a financial guarantee used in the industry as a means of security against the risk of a contractor/sub-contractor defaulting on its obligations. The surety/guarantor providing the bond is usually a bank, insurance company or other independent financial institution.
The amount of bond is typically a percentage of the value of the contract sum and they are in place for the duration of construction works expiring on practical completion or completion.
Unlimited Liability & Limitation of Liability (Cap): Unlimited liability should not be accepted under any circumstance. Therefore, it is essential to ensure that you insist on inserting a cap on liability which limits your maximum exposure under the contract (save for personal injury, fraud and death which cannot be limited by law).
BESA’s legal & commercial team is dedicated to pointing out the above risks and many more within your contract agreements to improve negotiations and help the industry work to safer, fairer, and more business helpful terms and conditions.
Introduction to Contract Law - When to Sign on the Dotted Line
If you are responsible for reviewing and signing contracts, this short online course is for you.
Ensure you have a solid grasp of contract law to protect your interests and minimise risks and negotiate favourable terms for your business.
Why complete the Introduction to Contract Law course?
More ways the Legal & Commercial Team can support you and your business
Support you with compliance?
It is crucial that employers understand and manage the wide range of regulatory requirements and obligations they must comply with.
Being an employer does not simply mean running a business, it also includes a range of legal regulations, duties and obligations you must comply with and follow.
Remaining compliant is essential. If you do not adhere to Government enforced?legislation then you will face fines and criminal proceedings, putting your company at unnecessary?risk.
Eliminate Risk with our free credit check facility?
Credit checking can be expensive, so most companies will only carry out checks on larger customers, where they stand to lose far more if payment isn’t forthcoming. As a BESA member there is no limit to the number of reports that you can request.
Each report will give you a detailed financial picture of a customer before you decide to work with them, helping to eliminate any risk.
Debts & Disputes
Debts, disputes and payment issues can cause a real impact on your business' cash flow meaning the right advice and guidance can be essential.
Especially in this economic climate getting paid in full and on time is critical. Unwanted pressure can arise when payments are not made or they are delayed which in turn impacts on your cash flow.
Business Protection
As a business owner, protecting and de-risking your business from threats is essential and having plans and processes in place along with a support network is key.
Our legal experts have developed a range of advice and guidance documents designed to give members a commercial infrastructure which de-risks their business and protect it from insolvency and enable management of your cash flow as effectively as possible.
Remember to take the time before you sign...?
The BESA Legal team offer guidance on the issues you should consider when reviewing your contracts. If you're already a BESA member login to the?legal and commercial section of the BESA Members’ Area?to take advantage of our suite of contractual precedents, templates, guidance documents - these documents are not only free but specially designed to de-risk a BESA member business model regardless of their size or specialism.
For more information about BESA Legal & Commercial visit the website here >
Domestic Ventilation Designer (inc PassivHaus ventilation design)
1 个月When we get a CW request for a particular project, we always explain that it's separate from our usual ￡5m insurance cover and needs to be assessed and priced by the underwriters before we can agree and it be paid for as a separate policy fee, chargeable to the client, before our work commences under the project. None of them have (as yet) come back to complete a CW agreement/policy, most accepting our (very comprehensive) PL cover instead, with only 1 potential client walking away from us because they didn't feel they should pay extra for the CW agreement they insisted upon.