Protecting Your Bottom Line: How to Identify and Challenge Unfair Contract Clauses

In episode 93 of The Subcontractors Blueprint podcast, host Jacob Austin addresses the critical issue of unfair contract terms in the construction industry. He provides practical advice and cautionary tales to help subcontractors identify and navigate potentially one-sided clauses that could lead to significant financial consequences. Jacob emphasises the importance of thoroughly understanding contract terms, negotiating fairer conditions, and seeking expert advice when necessary. He also discusses legal principles related to fairness and enforceability, sharing real-world examples to illustrate the impact of unfair terms. This episode is essential listening for subcontractors aiming to protect their interests in contract negotiations.

KEY TAKEAWAYS:

•  Unfair contract terms create significant imbalances, often placing undue risk on subcontractors while benefiting the main contractor or client.
•  Common unfair terms include "pay when paid" clauses, extreme payment delays, one-sided termination rights, and unrealistic notice periods.
•  Subcontractors often accept unfair terms due to commercial pressure, fear of losing jobs, lack of negotiating power, and sometimes not fully understanding the contract.
•  Legal frameworks like the Unfair Contract Terms Act and general principles of fairness can protect against extreme terms, but court battles are costly and slow.
•  A real case, Glazer vs. Atay, illustrates how overly harsh contract terms can backfire, resulting in the barristers losing their fee due to an unfair payment clause.
•  Subcontractors should read contracts thoroughly, negotiate terms, consult experts if necessary, and document agreements to protect themselves from unfair clauses.

 

BEST MOMENTS:

"An unfair contract term is a contract clause that is so one-sided that it creates a significant imbalance between the parties."

"Imagine a clause that says the subcontractor will be liable for absolutely any delay on the project, no matter what the cause."

"The rule against penalty clauses is a term that implies a punishment or an excessive consequence on a party for breaking the contract."

"Make it a habit to read thoroughly through the contract, or pass that obligation on to somebody who understands it."

"A moment spent reading that contract can save you countless headaches and a few pounds down the road."

 

Jacob is on a mission to help the 1 million SME contractors working within the construction industry. If you've taken something of value from this episode, please share the podcast with someone you know, and pass the value on.

HOST BIO: Meet Jacob Austin, a Chartered Quantity Surveyor with a rich background at construction industry giants Balfour Beatty, Kier, and Vistry Group. With extensive involvement in education, health, and residential projects spanning various scales, from £1000s to £100M in concurrent developments, Jacob brings a unique perspective. Having collaborated with numerous small businesses, he's now committed to sharing his expertise to drive their success. Join Jacob on his podcast, where he blends his profound insights and personable approach to offer guidance, industry secrets, and inspirational stories.

LinkedIn - www.linkedin.com/in/jacob-austin/

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