If you believe that a contract that sets out how much you’ll get paid is good enough, you are kidding yourself. Money might be – for suppliers, contractors and consultants – your highest priority. But your client wants to know what she is getting for her cold hard cash.
The five legal requirements for a contract are:
- acceptance (yes, not a yes, but)
- consideration (anything of value)
- intention to create a contract (presumed B2B) and
- certain terms.
My books on Letters of Intent in Just 500 Words and on Consultant Appointments in Just 500 Words review the legal requirements in Chapters 4 and 3 respectively. Download free chapters for letters of intent or consultant appointments for more information.
So what are the certain terms your contract needs? The bare minimum for a building contract (and in this order of priority) is:
“agreement as to parties, workscope, price and time”
In reality, English law can supply a price and the time for the works, goods or services to be performed if your contract misses those out. But if you want your contract to help you do business, you can’t rely on implied terms aka reading between the lines. You need to cover the ten essentials listed in this blog.
More important might be the damage to your reputation if your contract protects what you are interested in (money) without explaining what your client is interested in (services, aims, success). Trust cannot exist where the terms are not certain. When a developer realised he hadn’t defined what ‘build costs’ meant, there was acrimony. When a client realised his idea of a ‘high quality’ home was not met, he demolished a new (but unsatisfactory) £3m villa!
Your reputation depends on creating and keeping trust between you and your client. Don’t leave that to chance.
Quote is from Hart Investments Ltd v Fidler  EWHC 2857 (TCC), para 60.