RENOVATING IN SOUTH AFRICA

Choosing the right contract for your renovation will depend on the complexity and size of your project. By complexity, we are referring to the number of different trades involved such as painting, tiling and plumbing.

Self-managed Projects

If your project only involves one trade and you are managing the project yourself, then accepting the service provider’s quotation in writing is sufficient for a contract to be in effect. Similarly, if you are managing the project yourself and different service providers will be engaged, acceptance of each quotation in writing is adequate.

It is usually advisable to arrange self-managed projects as labour-only contracts where you buy the materials directly from a supplier to avoid the risk of a service provider disappearing with your deposit.

Appointing a Builder

Where a number of trades are involved and you are appointing a builder to carry out part of the works and manage sub-contractors, we recommend the use of standard forms of contract. Standard forms of contract are much safer option, especially for newcomers to construction. Standard forms of contract hold several advantages for both parties to a construction contract:

1. Clarity and Consistency: Standard forms provide clear and concise language that is widely understood within the construction industry. This reduces the potential for misunderstandings or ambiguous interpretations of contract terms and conditions.

2. Time and Cost Savings: Standard forms save time and effort in drafting contracts from scratch for each project. They already contain common clauses and provisions that have been vetted and refined over time. This reduces the need for extensive legal review and negotiation, resulting in cost savings.

3. Risk Allocation: Standard forms allocate risks and responsibilities between the parties involved in the project. They provide a balanced framework that considers the interests of both the client and the contractor, ensuring a fair distribution of risks.

4. Legal Protection: Standard forms are often drafted by legal professionals and undergo regular updates to reflect changes in legislation, industry practices and case law. They provide a level of legal protection by including provisions that address common issues and disputes that may arise during construction projects.

5. Industry Acceptance: Many industry stakeholders, including contractors, subcontractors, suppliers, and insurers, are familiar with and have experience working with standard forms. This promotes consistency and helps to streamline processes and communication.

6. Dispute Resolution: Standard forms often include provisions for dispute resolution mechanisms, such as mediation or arbitration, which can help resolve conflicts more efficiently and cost-effectively than going through lengthy court proceedings.

7. Financial Control: Standard forms typically include provisions related to payment terms, progress payments, variations, and project milestones. These provisions help to maintain financial control, prevent payment disputes, and provide a clear framework for handling changes to the scope of work.

8. Quality Assurance: Standard forms often incorporate quality control and inspection procedures, ensuring that the construction work meets established standards and specifications. They also include provisions for addressing defects or deficiencies in the workmanship.

9. Flexibility and Adaptability: While standard forms provide a baseline, they are usually customizable to suit the specific needs of a project. Parties can add or modify clauses to address project-specific requirements or unique circumstances.

In our experience, bespoke contracts are usually prepared in a manner which gives an advantage to one party over the other in a contract. For example, a contract prepared by a builder’s lawyer, might shorten the duration for which he is liable for defects. Similarly, a contract prepared by a homeowner’s lawyer might have excessive penalties for late completion.

It's important to note that the advantages of using standard forms may vary depending on the specific form chosen and the circumstances of each construction project. Consulting with legal professionals and industry experts is advisable when selecting and implementing a standard form of building contract.

In our next post, we will review the standard forms of contract commonly used in South Africa.

References

Institute of South African Architects Practice Manual D2: Types of Building Contract (1989)

Thomas, Reg Construction Contract Claims (1994) Macmillan, London