This month, our panel of legal experts from Berwin Leighton Paisner suggests a nimble way to sidestep a row over unattractive render, and set out the options for a firm that lost a contract despite giving the client a discount on a previous job
Remedies for render
We recently constructed a house under a minor works contract (which provides for adjudication) and have a quality problem with the external render. The material is a good ready-mix cement, as specified, but workmanship and finish specification were poorly specified.

Rendering was completed early June and the architect made limited complaints. On 1 August the architect wrote that although many areas of render were acceptable, "taken as a whole the result is not satisfactory" and invited our proposals for remedial works.

While we agree the rendering could look better, it has stuck to the wall well and removal would damage the underlying blockwork. The architect's failure to specify workmanship more carefully or to ask for a sample panel or to condemn it sooner has made matters worse and increased the cost of remedial works. The render subcontractor has run away from the problem and we are left to resolve it. What are the liabilities in this situation?

Clause 1.1 of the JCT Minor Building Works Contract says that the contractor is responsible for completing works according to the contract specification and with reasonable skill and care.

The architect will decide if the works and materials used are to the required standard. If the parties are not in agreement about the architect's appraisal of the works, the standard of the works becomes a question of fact for an adjudicator.

The architect will argue that the work is defective. Under clause 2.5 of the JCT minor works form, the contractor is solely responsible for correcting defects discovered within three months of practical completion. Clause 4.5.3 allows the architect to withhold an amount due on final completion for any defects, provided that it gives the contractor five days' notice prior to the date for final completion.

If the contractor is found liable by an adjudicator, and the architect chooses to withhold retention money, the contractor could then look to the subcontractor for redress. It seems, however, that the subcontractor wants nothing to do with this dispute. The contractor may be able to instigate a similar retention of money owed to that subcontractor, depending on the terms of the subcontract.

However, the contractor must be careful not to act in the absence of such a contract term, or it may fall foul of the Construction Act, which gives subcontractors the right to suspend the contract in the event that they are not paid in full by the final payment date of the agreement.

Equally, if the contractor does not wish to move straight into adjudication and the architect does trigger a retention of payment due, the it could threaten to suspend the works on the basis that the architect has no grounds on which to retain payment. This would be risky, however, given that the architect may be found to be correct in its analysis of the cause of the defect – suspension by the contractor in such circumstances amounts to a repudiatory breach.

The alternative is to convince the architect to suggest a revised specification and then treat this as a variation to the contract, allowing the contractor to proceed in the corrective works without suffering retention of monies for defects.

Promises, promises

We constructed a factory extension to the sum of £75,000, and we put in extra pads for a mezzanine floor to be installed at a later date. The owner of the firm said we would be doing the work if we did a cheap job on the first stage. We did not get the job nor were asked to submit a tender. Do we have any legal redress?

If the fitting of the pads was not included in the original contract specification and you were asked during the work to provide the extra pads, you appear to have a right to be paid for the extra pads as this seems to be a variation to the original contract.

If the fitting of the pads was included in the original contract specification and you were paid for that contract then this is a separate matter. The question is whether a second contract was made. On these facts the promise to be given the second job may well have been an “offer” that you then accepted, but there was no “consideration” from you so as to create a second contract.

To form a legally binding contract there must be an offer from one party that is accepted by the other, and each party must contribute something to the bargain. The contribution is called consideration and the most common forms of consideration are payment of money, provision of goods, or performance of work.

There could be a second contract, however, if the client did not pay for the pads and the intention was that you would get to carry out, or submit a tender for, the mezzanine job. If this is the case then the factory has breached this agreement. In that event you are either entitled to seek damages to the value of the profit you would have made if you had been given the work or to claim damages for the “loss of opportunity”. This will normally be a percentage of the likely profit based on the likelihood of you winning the work.