Grenfell: a cavalier approach to contractual documentation
6 September 2024
In addition to the wide-ranging recommendations to reform the construction industry, phase two of the Grenfell Inquiry report quite rightly criticises the failure of certain parties involved in the initial construction of Grenfell Tower to formalise their contractual arrangements.
Unfortunately, this issue is not specific to Grenfell; we frequently see the difficulties caused by a failure to formally agree full written terms before carrying out works/services. However, the findings of the committee put into sharp focus the disastrous effects that can be caused on projects when the parties fail to confirm their respective roles and obligations in formal contractual documentation. In particular, the inquiry found that the principal contractor, Rydon, “did not ensure that its sub-contractors and consultants properly understood their different responsibilities”.
The inquiry did not hold back in expressing that this approach to contractual relations is cavalier. It remarked that “Studio E, Rydon and Harley all took a casual approach to contractual relations. They did not properly understand the nature and scope of the obligations they had undertaken, or, if they did, paid scant attention to them. They failed to identify their own responsibilities for important aspects of the design and in each case assumed that someone else was responsible for matters affecting fire safety. Everyone involved in the choice of the materials to be used in the external wall thought that responsibility for their suitability and safety lay with someone else”.
The report goes on to comment that “such a casual approach to contractual relations is a recipe for disaster if events take an unexpected turn”. Highlighting the irresponsibility of a such casual approach to contractual relations, the report found that “what appears to be a widespread culture of getting on with the job without waiting for terms to be formally agreed is unprofessional and likely to result in a failure by those carrying out the work on site to understand the scope of their responsibilities.”
Dispute risk
On one end of the spectrum, a lack of clarity over terms can lead to disputes down the line over (among other things) what terms apply, the scope of works, the way in which the works are to be valued and payment. This is precisely the issue discussed by our own John Fawcett in his article Beware the Letter of Intent, in February this year. The time and costs of dealing with these disputes can be avoided if the parties agree full terms before works commence. On the other end of the spectrum, a failure to document contractual relations in writing invites a lack of awareness of the parties’ respective obligations which – as we have seen with Grenfell – can lead to horrific consequences.
The Birketts view
The message is simple: getting your contractual documents in order is responsible, mitigates the risks of disputes over the applicable terms once works / services commence and enables parties to properly understand their role. Not only is this good practice, but it serves to reduce the risk of matters of building safety being missed.
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Steven Williams
Services
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at September 2024.