Last edited 17 Jun 2017

How to appoint a contractor

Contents

[edit] Introduction

Contractors are organisations appointed by clients (sometimes referred to as employers) to carry out construction works. This role is vital to the success of a project, and so great care should be taken to ensure an appropriate contractor is selected. This may involve seeking advice from consultants if the client is inexperienced.

In the construction industry, the process of selecting a contractor is generally referred to as ‘tendering’ and involves preparing tender documents that describe the project, and then inviting tender submissions from prospective contractors from which as selection can be made.

This article describes the process commonly followed for appointing the contractor after they have been selected. Other processes may be used on certain types of projects, such as Private Finance Initiative (PFI) projects.

[edit] Contract award

All tenderers should be informed of the decision to award the contract to a particular tenderer.

If OJEU procedures are being followed, it may be necessary to publish a formal contract award notice. A ‘standstill period’ may also be required. This is a pause of at least 10 calendar days between the decision being notified to all tenderers and the final contract conclusion. This allows for suppliers to challenge the decision.

[edit] Contract engrossment

Contract engrossment is the process of preparing the final agreed form of contract and its schedules and appendices so that it can be executed (signed).

Typically, the contract administrator (or sometimes the cost consultant) will collate the contract documents on behalf of the client and arrange for the printing and execution of two copies, one for the client and one for the contractor. Alternatively, the client might retain one executed contract, with certified copies being issued to the contractor, this can avoid potential errors in preparing two contracts for execution.

It is vital to ensure that the contract uses the correct legal names for the contracting parties. This is not always as straight-forward as it sounds, and errors can render contracts unenforceable.

See for example:

The contractor may also be required to provide a performance bond, warranties, evidence of insurance cover and so on.

Contract award and contract execution may not necessarily happen at the same time. In fact it is relatively common (although not advisable) for contracts to remain unsigned until well after work has begun.

Contracts may be executed under seal (signed by the parties, witnessed and most importantly made clear that they are executed as a deed) or under hand (a 'simple contract' that is just signed by the parties).

Simple contracts and contracts under seal have different limitation periods. An action founded on simple contract cannot be brought after six years from the date on which the cause of the action accrued. The limitation period for a contract under seal is 12 years. In addition, unlike a simple contract, a contract under seal does not have to be supported by valuable consideration (payment).

See Contracts under seal v under hand for more information.

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