We are three months into the job, the scope has changed twice, and nobody has signed anything since the letter of intent.
Construction disputes are almost always about what was agreed and when. We own the contract layer, the appointment, the subcontracts, the variations and the payment notices, so the record exists while the job runs rather than being reconstructed afterwards. Reconstruction is the expensive part: by the time a final account is in dispute, the people who were on site have moved to other jobs and the only evidence is whatever somebody happened to write down.
Dinmore Bell acts as the outsourced General Counsel for construction businesses: main contracts and subcontracts, letters of intent, variations, payment and pay-less notices, retention recovery and the disputes that follow. It is a retained function on a fixed monthly fee rather than a law firm billing by the hour.
How we own it
Off the letter of intent, onto a contract
Work that starts under a letter of intent and never moves onto the real contract is the most common expensive mistake in the sector. We close that gap, and where work has already started we establish what actually governs it. A letter of intent is usually written to cover a few weeks of early work with a modest cap on expenditure, and it is usually still the governing document six months and several hundred thousand pounds later. When that happens, the parties are in a contract, but not the one either of them priced. The letter rarely contains a proper variation mechanism, a liquidated damages regime, a full set of insurance obligations or a defects liability period, and it often contains a cap that has been silently exceeded, which raises the question of what the legal basis for the work beyond the cap actually is. What governs the job in that situation is a matter of establishing what the parties agreed by conduct, from the tender documents, the correspondence, the programme and what was actually done. That is a worthwhile exercise and it is a poor substitute for a contract. The practical point is that moving onto the intended contract gets harder the longer the job runs, because by then each side knows where it stands under the letter and one of them usually prefers it. So the work divides. On live jobs, get the contract executed, with a commencement provision that picks up the work already done so there is no gap between the two documents. On jobs already well advanced under a letter, establish the position in writing, agree the variations and the account to date while people still remember them, and cap the exposure going forward.
Variations recorded as they happen
A change instructed on site and confirmed in a meeting is worth very little six months later. We put a process around instructions and confirmations that takes minutes on the day and settles the argument at final account. The process has to be light enough that a site manager will actually use it, which rules out most of what is proposed. What works is a single numbered log, one line per instruction, recording who instructed it, when, under what clause, the effect on time and the effect on cost even where that is an estimate, and a confirmation sent the same day to the person who gave the instruction. Where the contract requires a particular form of confirmation of a verbal instruction, that form is used and the clock in it is respected, because a confirmation sent outside the contractual window can be treated as no confirmation at all. The value shows up at the final account. A contractor with a numbered log and same-day confirmations negotiates from a position where the other side has to explain why each item is wrong. A contractor with a bundle of site diaries and recollections negotiates from a position where it has to prove each item is right. The commercial difference between those two positions, across a whole account, is usually far larger than the cost of keeping the log. The same discipline applies to delay. Notices of delay and extension of time applications have contractual deadlines and content requirements, and a good entitlement can be lost by a late or bare notice. Holding the timetable is ordinary retained work.
Payment notices, and the money they protect
Payment and pay-less notices are unforgiving about timing, and missing one can be decisive regardless of the merits. We hold the timetable, draft the notices, and pursue retention rather than writing it off. The statutory regime is the reason. Under the Housing Grants, Construction and Regeneration Act 1996 a payment provided for by a construction contract becomes a notified sum, and the payer must pay the notified sum on or before the final date for payment unless it has given a valid notice of intention to pay less. That notice must specify the sum the payer considers due, even if that sum is zero, and the basis on which it is calculated. Where the contract does not set the period, the notice must be given not later than seven days before the final date for payment. The consequence is stark and is the basis of a whole category of adjudication. A payer who disputes an application on the merits but fails to give a valid and timely pay less notice is obliged to pay the notified sum anyway, and can be made to do so quickly, leaving the merits to be sorted out later. That cuts both ways depending on which side of the account you are on, which is why the timetable is worth holding as a live diary rather than a policy. The content of the notice matters as much as the date. A pay less notice that gives a figure without the basis of calculation, or that cross-refers to a document not enclosed, is vulnerable. Getting that right takes an hour and protects the payment.
Adjudication, and deciding whether to be in one
Construction contracts carry a statutory right to refer a dispute to adjudication at any time, and the timetable is short by design: a decision inside twenty-eight days of referral in the ordinary case, extendable by agreement. The decision binds the parties until the dispute is finally determined, which in practice is usually never, because most adjudication decisions are simply accepted. That speed is an advantage and a trap. The claiming party prepares its referral at leisure and the responding party has days to answer it, so the side that starts has a real procedural advantage. Preparation before referral is therefore where the case is won: the documents assembled, the account reconciled, the notices checked, the quantum evidenced. The decision worth taking properly is whether to adjudicate at all. A payment dispute with a clean notice position is usually worth referring. A complex final account with contested variations and delay is often better negotiated, because an adjudicator with twenty-eight days may not be able to do it justice and a decision you dislike still has to be honoured. Dinmore Bell prepares and runs the commercial side of an adjudication and instructs specialist counsel where the dispute needs it.
Retention, and the money nobody chases
Retention is written off quietly and constantly. Half is typically released at practical completion and the balance at the end of the defects liability period, and the second half is the one that disappears: the certificate is never issued, the employer becomes unresponsive, the subcontractor moves on, and eventually nobody is asking. The fix is administrative rather than legal. Every retention balance in one register, with the release dates, the certificate that triggers each release, and a named person chasing it. Where a release is refused, the reason is either a defect, which can be dealt with, or nothing, which can be pursued through the payment mechanism and adjudication. Where an employer is in difficulty, retention held in a separate trust account is in a materially better position than retention that is not, and whether the contract provides for one is worth knowing at the point of signing rather than at the point of insolvency.
Where specialists come in
Adjudication, arbitration and litigation are conducted by regulated specialists — solicitors, counsel and where appropriate claims consultants — whom we instruct, brief and coordinate. Health and safety enforcement, CDM prosecutions and building safety regulatory matters are handled by appropriately qualified specialists. Quantum and delay analysis is prepared by instructed experts. We hold the budget and remain accountable for the commercial outcome.
Services we run here
- What happens if we are still working under a letter of intent?
- You are in a contract, but not the one either party priced, and usually one without a full variation mechanism, damages regime or defects liability period. The priority is executing the intended contract with a commencement provision that picks up work already done, so there is no gap between the two.
- Is a variation instructed verbally on site enforceable?
- Often yes, but proving it is the difficulty, and many contracts require a specific form of written confirmation within a set period. A same-day confirmation in the contractual form is what turns a site conversation into a recoverable item at final account.
- What is a notified sum?
- Under the Housing Grants, Construction and Regeneration Act 1996, the sum that becomes payable following a payment application or payment notice. The payer must pay it on or before the final date for payment unless a valid pay less notice has been given.
- How long do we have to give a pay less notice?
- Whatever the contract specifies, and where it does not, not later than seven days before the final date for payment. The notice must state the sum the payer considers due, even if zero, and the basis on which it is calculated.
- What happens if we miss a pay less notice?
- The notified sum becomes payable regardless of the merits of the underlying valuation, and the payee can enforce it quickly through adjudication. The valuation dispute survives, but the money moves first.
- How quickly does adjudication produce a decision?
- Ordinarily within twenty-eight days of referral, extendable by agreement. The decision binds the parties until the dispute is finally determined, and in practice most decisions are simply accepted.
- Should every dispute go to adjudication?
- No. A payment dispute with a clean notice position usually should. A complex final account with contested variations and delay is often better negotiated, because a short timetable may not do it justice and an unwelcome decision still has to be honoured.
- How is retention actually recovered?
- By holding every balance in one register with its release dates and triggering certificate, and chasing each one. Where release is refused for no substantive reason, it can be pursued through the payment mechanism and adjudication like any other sum.