Words Matter but Written Words Matter More
Posted on: November 2019
It’s important for parties entering into any significant economic transaction to have written contracts. This is especially true for construction projects which are, by their nature, complicated. (Ward & Smith, 2017) A contract on a construction project sets forth the parties’ obligations to each other and determines how risks will be shared or divided on the project. (Ward & Smith 2017)
A general contract or construction contract does not have to be reduced to written words for it to be valid or in effect. Once two parties have made an agreement by which one party performs construction work, and the other party provides remuneration in the form of money. In the case where work has been performed by one of the parties a construction contract is formed whether it was reduced to writing and signed by both parties or not.
The key distinction between a written contract and a verbal contract is the terms that control or define the parties’ agreement. A well written contract will clearly define the parties’ expectations, respective risks and obligations. With a mere oral and verbal contract there are no written terms and the terms that provide guidelines are determined by the parties’ verbal discussions and negotiations. One of the largest problems with a verbal contract is that each parties’ respective memory of the agreement changes as time goes on. This can be especially true in a time of disagreement and a dispute arises. Similarly parties’ are simply dishonest about the terms of the agreement when a dispute arises. Due to large amounts of money at stake. A parties’ recollection of the agreement may not always be the truth. Thus, improving their position. This can be avoided by simply having a written agreement in place.
At AGORA we believe that there are many additional benefits in having a written contract, therefor we work with all forms of construction contracts available. We identify and apply one that best suits the client and their needs. Additional to this AGORA specialises in the setting up of unique and specialised contracts for each type of development and situation, we then apply the contract accordingly until the completion of the contract has been reached.
AGORA found through first-hand industry experience and successfully managing construction contracts over a multitude of different types of developments. That having a paper trail in the form of writing when working with agreements, site instructions, variation orders, toolbox talk and negotiations is crucial. It has been found that even when professional teams together with the client and contractor trust each other there is still benefits to have all agreements and instructions down in writing.
Benefits of written contracts, agreements & discussions:
- Provides a clear road map at the onset of the project of how the parties will proceed to carry out work.
- Provides a foundation on which disputes are handled, this ensures that the product of the outcome is fair to all parties involved.
- When handling all site and contract instructions, written communication will make that it is binding. Also ensuring that contractor carries out the instruction correctly and evidently having proof of what was requested to be performed by the professional team.
- Written contracts provide opportunity for all parties involved to lay down the ground rules before commencing with work. Parties enter into an agreement knowing they had the opportunity to address their concerns and distinguish a clear path going forward.
- It has been found that during site visits, phone calls, meetings & discussions that instruction are issued, designs get altered and information gets exchanged that might be valuable to other professional team members. When such things are not documented it can be noted that magically no one remembers who issued the instruction and no responsibility is taken by any of the team members. This leaves the client in a vulnerable position and many a time a costly mistake which the client must carry.
At AGORA we are aware of all the dangers of just going ahead without planning, making decisions without documenting all discussions, negotiations, emails and phone calls. That we have build the business on the core foundation of documenting and storing everything, we mean everything! We have advanced IT systems and many levels of backups to ensure that our valuable documents never get lost we have years or stored crucial information where proof is required proof Is given.