Avoid disputes with records

Having considered how a clear contract can help you avoid disputes, Susannah Lee, an expert disputes solicitor,  looks at how disputes can be won and lost with records. Records are an essential (if boring) part of contract management.

Max Abrahamson wrote

A party to a dispute… will learn three lessons (often too late): the importance of records, the importance of records and the importance of records. It is impossible to exaggerate the extent to which lawyers can find unexpected grounds… on which to cast doubt on evidence if it is not backed by meticulously established records* [my emphasis]

Good records act as both a shield and a sword! Do it once, do it correctly and do it at the time.

Records have three main roles:

  • provide evidence: to support claims for payment (especially on a target cost contract where the contractor may have to establish that each and evey penny was properly incurred relating only to these works); to evidence and support claims for compensation (whether updated programmes for more time or invoices for more money)
  • defend allegations: to manage/defend claims from your own (sub)contractors and to resist refusals from your client
  • report: many contracts have requirements for regular project or cost reports and clients are increasingly insisting on audit rights to ensure compliance throughout their supply network with specific mandatory duties like modern slavery, bribery, data protection.

Keeping accurate, brief and clear records is extremely important (the ABC of writing applies to records too). To manage the record process you need to:

  1. Agree what ie the scope of records and who ie which party will be responsible for maintaining them (before you start) – be consistent once you start as omissions can be misinterpreted
  2. Check record keeping – it’s often too late to rectify missing data once a claim has already arisen
  3. Retain your records – it’s no good writing the killer document if you can’t find it in 3 months or 3 years’ time!

Records can stop an issue escalating into a full-blown dispute and ensure that your discussions focus on the facts. Technology can help eg with annotating photos on your phone, or editing BIM data while at site, or audio recording site meetings.

For example, being able to produce a valid payment notice ‘on demand’ can stop disputes about payment escalating.  For example, if bad (aka exceptionally adverse) weather delays your works, goods or services, being able to refer to contemporaneous and clear site diaries and photos will support your claim for an extension of time. For example, being able to point to clear minutes of progress meetings and relevant drawing/model revisions can resolve questions about the exact nature and scope of any additional works ordered (and to establish their associated costs you may need signed timesheets and invoices clearly listing extra materials).

Although no-one really likes admin, every member of the project team should be aware that their site diaries, emails, post-its notes, invoices, and photos as well as more formal records like site minutes, applications and responses, can become evidence of what was happening on site.  Hurried notes in your own special shorthand can be impossible for you to decipher at a later date, nevermind anyone else – they become meaningless. That is a wasted opprtunity to create something of real future value.

Your records need to be accurate (ie precise), brief (say what is needed and no more) and clear (to any reader). Not only do they need to kept, dated and maintained, they should be checked and verified (countersigning improves the strength of your evidence), kept up-to-date, and referenced/archived.

As trust is a theme on Sarah’s blog, let me reinforce that any records must be honest and reflect the true state of affairs on site.  You might be well-meaning party, but don’t sugar-coat the truth. Don’t make project progress sound better than it is!  Don’t create invoices to cover costs incurred because you can’t find the real ones. Don’t fabricate weather data to cover strikes. These are bordering on fraud and can seriously damage your claim, your reputation and your business.

If her final post, Susannah will consider how dispute resolution clauses can prevent a dispute escalating to the time-sapping and eye-wateringly expensive phase. If you would like more tips, techniques and tools to help you avoid disputes, Susannah and Sarah can deliver an interactive practical in-house workshop focusing on your contracts, your projects and your business. Just get in touch.

Susannah Lee, consultant solicitor specialising in the construction and engineering sector (susannah@sjleelegalservices.com)

Ref: Engineering Law and the ICE Contracts, 4th Edition, 1979

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