How to Avoid Payment Disputes with Contractors at Your Industrial Premises

As a lawyer and solicitor with years of experience in business law, dispute resolution, and industrial leases and purchases, Glenn Duker has seen his fair share of contractual wrangling – and it can stem from the simplest of communication issues. Let’s take a look at the scenario below.

 

You’ve purchased an existing building for your industrial premises, or you’ve completed the build of a new one. Now you need to apply the finishing touches. You call in a contractor to get a quote on the cost of floor tiling.

 

Let’s say the tiling area, based on the building plans, consists of 650 square metres. The rate you are offered for the job is $40 per square metre, or $26,000. You agree to this, shake hands, and the job begins.

 

However, as with so many things, the difference between abstract plans and gnarly reality rears its ugly head. The tiling area in practice works out to be greater than what was discussed in the agreement between contractor and building owner. But that shouldn’t be a problem – after all, you’ve agreed on a lump sum price, right?

 

Unfortunately, the contractor disagrees – in their opinion, you agreed to pay $40 per square metre rather than a set fee. This is what’s known as a schedule of rates contract, in which the contractor charges not by the abstract building plans but by the “actual” area completed. So, who’s right?

 

In situations like this – where an agreed-upon quote contains both rates – there can unfortunately be a case for both perspectives, and thus many long and time-consuming court cases and tribunals are born, with no guarantee of which party will win.

 

First of all, it needs to be established whether there is a significant difference between the original area agreed upon and the actual area. If it is decided that this is the case, it then has to be put to the client that they are required to pay for this difference. It may be argued by the client that any extra work should require a separate quote, or even that it should be included within the original. This can end up going back and forth for quite some time!

 

However, such long-running disputes are easy to avoid simply by ensuring that you have a clear contract drawn up from the beginning, containing a firm agreement to one type of quote over the other. When you look at the big picture, obtaining professional assistance with this from a trained lawyer such as Glenn Duker is worth it, potentially saving you a large amount of money and time.

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