INDUSTRY NEWS
even in the courts, resulting in considerable expense and delays for both parties. It remains a mystery why so many parties continue to enter into verbal agreements, instead of using one of the several standard forms of printed building contracts, drafted by experts and designed to suit every type of project. Building agreements are often drawn up on “a wish and a prayer” or on the back of a cigarette box, leaving many questions unanswered and creating a contractual time bomb loaded with risks for both parties.
VERBAL AGREEMENTS ARE WORDS WITHOUT WEIGHT It was movie mogul Samuel Goldwyn, famous for his grotesque malapropisms (such as “Keep a stiff upper chin” and “Include me out!”), who once declared: “A verbal agreement’s not worth the paper it’s written on” – but though the idiom was unintentionally misplaced, its truth certainly was not. The East Cape Master Builders’ Association (East Cape MBA) receives regular requests to assist with disputes on small, medium and even larger contracts, many of which could have been avoided had a standard contract been entered into between the parties. By that stage, though, matters are often too late to resolve through alternative dispute resolution such as mediation or adjudication and end up in arbitration or
“THE COUPLE OF RAND IT COSTS FOR A STANDARD FORM OF AGREEMENT IS A TINY FRACTION OF THE MASSIVE EXPENSE INCURRED BY BOTCHED JOBS BASED ONLY ON A CONVERSATION AND A HANDSHAKE.”
JULY 2021 SOUTH AFRICAN BUILDER
The couple of rand it costs for a standard form of agreement is a tiny fraction of the massive expense incurred by botched jobs based only on a conversation and a handshake, yet many ignore this vital step and use inadequate homemade documentation or none at all. A standard form of contract contains all the necessary provisions, including: • Legal compliance • Sub-contracting provisions • Design responsibility • Guarantees • Insurances • Duties and obligations of parties • Execution of the works • Stages of completion • Defect liability • Payment • Final accounts • Disputes Do not end up in costly litigation or sour your relationship with your contractor because of constant disagreements when a simple form can pave the way for a successful building project. The East Cape MBA requires all contracting members to use the appropriate standard form of agreement for a particular project. Protect your client and protect yourself – simply call one of the East Cape MBA offices for assistance in selecting the correct contract for your project.
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