November 2009

Construction adjudication remains the most popular way of resolving construction disputes - but what if an adjudicator makes a mistake?

IF AN ADJUDICATOR MAKES A MISTAKE IN HIS AWARD, CAN IT BE PUT RIGHT?

In adjudication proceedings there is a rule known as the “slip rule” whereby it is implied into the contract that in certain circumstances, an adjudicator’s decision can be altered. This gives the adjudicator some flexibility to put right a mistake that becomes apparent after the issue of a decision.

The slip rule is designed to operate within a short period of time from the date that the adjudicator’s decision is given.

An example of a recent case where the slip rule has been considered is that of YCMS Ltd (T/A Young Construction Management Services) v (1) Stephen Grabiner (2) Miriam Grabiner (2009). In this case, it was stated that it would only be in exceptional and rare cases that a revision could be made more than a few days after the decision. This comes back to the main statutory purpose of adjudication which is to aid cash flow by allowing disputes to be resolved quickly; were the slip rule to extend to weeks after the decision, then it would slow down the process and interfere with the speedy enforcement of decisions.

WHAT KIND OF MISTAKES CAN BE PUT RIGHT?

In the YCMS case it was highlighted that the slip rule could not be used to enable an adjudicator who had second thoughts to correct his award. The slip rule is intended to correct mistakes that could be corrected relatively simply and speedily such as arithmetical mistakes or the transposition of incorrect names i.e. “patent errors”. It is unlikely that an adjudicator would be permitted to change his decision on, for example, a major point of fact or of law.

In this regard, the slip rule exists to correct the decision itself, not the basis for making a decision. Even if the adjudicator later has second thoughts and decides that the basis of the decision is wrong, it is unlikely that the decision could be altered under the slip rule.

April 2009

Make sure you know what is implied in a contract even though the terms are not written down.

Question: If a contract is silent in relation to liability for design, is it an implied term that the service will be limited to reasonable skill and care?

Answer: Pursuant to the Supply of Goods and Services Act 1982 (“the Act”) where there is a contract for the supply of services, such as design services, there is an implied term that the services will be carried out with reasonable skill and care (section 13). This term will be implied only if the contract is silent on the issue. In other words, an express term in the contract can exclude/negate the implied term (although, this does not apply unless it is inconsistent with the Act). The burden of proof falls on the party claiming that the supplier of the service has failed to use reasonable skill and care.

Question: Will this situation be different where the contractor is building and designing?

Answer: Where a contractor takes on both construction and design work (commonly known as design and build), and his skill and judgment are relied upon, unless an express term displaces the implication of a term, there will be an implied term as to the fitness of those works for their intended purpose. An employer will find this valuable because it will be no defence for the contractor to show that he has taken reasonable skill and care in the preparation of the relevant aspect of design. Most standard form contracts tend to attempt to limit the contractor’s responsibility for design to one of reasonable skill and care.

Question: What is the obligation regarding materials?

Answer: Section 4(5) of the Supply of Goods and Services Act states that where the contract is one for the transfer of goods (including materials), there is an implied condition that the goods supplied under the contract are of satisfactory quality and “reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied.”

Again, the implied condition can be excluded or negated by express agreement between the parties or by reference to evidence of the intentions of the parties.

In general terms, the Courts will imply terms into a construction contract (and indeed any type of contract) where the term is implied by statute or if necessary in order to achieve the intentions of both parties to the contract and if necessary to make the contract work as a matter of business efficacy.

April 2009

Regulations governing the cancellation of contracts made in a consumer’s home or their workplace came into force six months ago.

You should be aware of these regulations, so please take time to read this reminder of the ‘Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008’ that came into force on 1 October 2008.

Q. What are the regulations?

A. The Cancellation of Contracts Made in a Consumer’s Home or Place of Work etc Regulations 2008’ were introduced to align the law around cooling-off periods and cancellation rights that consumers have when contracts are made during solicited and unsolicited visits by traders. They give consumers greater rights in areas where they might be most vulnerable and create a level playing field for honest business.

Q. When did the regulations come into force?

A. The regulations came into force on 1 October 2008.

Q. Who is affected by these regulations?

A. The regulations are aimed at traders who enter into a contract with a consumer at their home, workplace, another individual’s home, or on an excursion arranged by the trader to a location away from their business premises. Businesses affected include those who provide home building and maintenance services, energy suppliers as well as those who sell consumer goods and house wares through door to door or face to face methods. The Regulations also apply to businesses in other sectors. Consumers will benefit from cancellation rights and a cooling off period for contracts entered into during solicited visits as well as unsolicited ones.

Q. What are the key provisions for businesses?

A. The Regulations:

• Replace the ‘Consumer Protection: (Cancellation of Contracts Concluded Away from Business Premises) Regulations 1987
• Extend the cooling off period and cancellation rights to include contracts made during unsolicited visits by traders and contracts made during solicited visits by traders
• Set the threshold at which the Regulations apply at a total payment value of £35
• Require that the notice of the right to cancel be prominently displayed in the same document, where the contract is completed wholly or partly in writing
• Set the cooling off period at a minimum seven calendar days (some businesses already offer a longer cooling off period for customers)
• Require that for certain types of contract where a consumer has requested that performance of the contract should begin before the end of the cooling off period
  
  (a) that the trader must include in the notice of the right to cancel, a statement that payment may be required to be made if the contract is subsequently cancelled and
  (b) that the consumer must record his agreement in writing to performance of the contract beginning before the end of the cooling off period if that is what the consumer wishes 

• Provide that failure to include a statement regarding liability to pay or other required information in the notice of the right to cancel will constitute an offence, with the penalty of a fine at level five of the standard scale, relating to failure to provide notice of the right to cancel
• Provide for the automatic cancellation of a related credit agreement where a cancellation notice which cancels a contract for goods or services is served on a trader.
   

Q. What are the benefits for business?

A. The changes mean that businesses will in general be able to work with one contract for both solicited and unsolicited visits, helping to reduce costs in administration and staff training. As well as creating a fairer competitive market, this will also enhance the reputation of door-to-door salespersons.

Q. What do businesses need to do?

A. All affected businesses will need to ensure their sales teams are aware of and understand the requirements. They may also need to review the content of their contract documentation and internal procedures connected to the delivery of their products and services. A guide to the regulations offering advice on the changes businesses will need to make can be accessed from the websites listed below.

Q. What happens if businesses don’t comply with the requirements?

A. Businesses who don’t comply with the regulations would be unable to enforce the contract against the consumer and they may face investigations by their local authority trading standards service, which could result in prosecution and fines. They may also lose their customers.

Q. Where can I get further information?

A. Further information about the regulations and the government consultation can be found on www.berr.gov.uk/consumers/buying-selling/Doorstep-selling/index.html.
 

Guidance for businesses can be found on the following sites: www.businesslink.gov.uk/doorstepselling for England

www.bgateway.com/doorstepselling for Scotland

www.hiebusiness.co.uk/doorstepselling for Scottish Highlands and Islands

www.nibusinessinfo.co.uk/doorstepselling for Northern Ireland

www.business-supportwales.gov.uk for Wales.