In many commercial situations, businesses are used to dealing with each other by the use of 'standard form' contracts. One of the common instances of the use of such contracts is in the building industry, where construction projects are often governed by standard JCT contracts.
In a recent case, a builder who entered into a standard JCT 'minor works' contract with a residential occupier sought to enforce the decision of the adjudicator that he should receive interim payments which had been withheld by the customer. The payments were withheld because of disputes about delays in the work and the quality of some of the workmanship. The withholding of the interim payments was not accompanied by the issuing of withholding notices, which are required under the JCT agreement. The adjudicator therefore ruled that the interim payments were due to be made, because the customer had not complied with the terms of the contract as regards the withholding of payments.
This decision was challenged, using EU consumer law, on the grounds that the contract entered into took away normal standard consumer rights and thereby created an imbalance of rights between the builder and his customer. To rely on the provisions of the contract, it would be necessary for the builder to have specifically drawn the attention of the customer to the relevant terms of the contract. Because this was not done, the court ruled that the stage payments were not payable.
Says Kam Majevadia "Any business that relies on standard contracts and whose customers are private individuals must make sure that where the contract contains clauses limiting the usual consumer rights, these are brought to the customer's attention and agreement to them is specifically evidenced. Failure to do so could result in the relevant clauses being considered to be void by the court."
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