Civil Engineering Reference
In-Depth Information
agree a financial settlement, can the
employer set-off money because of a
subsequent defect?
It is relatively common for the closing stages of a contract to be marked by an agreement
between the parties regarding the final sum due to the contractor. Obviously, where the
parties have reached an agreement rather than going through the contract procedures in-
volving the computation of a final account by the employer's quantity surveyor or, perhaps
on smaller contracts, by the architect, the architect cannot issue a final certificate. That is
because the final certificate is the architect's professional opinion about the amount due to
the contractor under the terms of the contract. The sum agreed between the parties is not the
result of the architect's opinion or the application of the terms of the contract; therefore, the
architect cannot issue a final certificate.
Clearly, one significant outcome of a settlement is that the rules surrounding the conse-
quencesofafinalcertificate donotapply.Therefore, itisamatter fortheparties themselves
to ensure that they know what they have agreed. By the time the parties have agreed the
amount due to the contractor, it is likely that the architect will no longer be involved with
the contract. The issue of the final certificate is usually the architect's last function; if that
is removed, the architect's last function is probably to check that all defects have been made
good and to issue a certificate to that effect. Even if the architect is still involved for other
reasons, it is no part of the architect's duty to advise the parties on the terms of their set-
tlement, other than perhaps to point them in the direction of a suitable professional capable
of drafting the agreement. Such a person will often (but by no means always) be a lawyer.
Firms of construction contract consultants are often perfectly able to deal with such a task.
In practice, the likelihood is that the parties simply come to an oral agreement, the em-
ployerpaysthebalance,andtheywalkaway.Problemscanariseifthecontractorlaterthinks
thatitwasentitledtomoremoneyortheemployerfindsdefectsintheWorkswhichthecon-
tractor refuses to correct.
agreement. Combined Stabilisation Ltd (CSL) was engaged by Jim Ennis Construction Ltd
(Ennis) to carry out ground works at a site in Wigan. Ennis were sub-contractors to Bo-
vis Lend Lease. After the sub-contract works were finished, the parties entered into nego-
tiations to agree the final account. CSL made a without prejudice offer to Ennis in the sum
of £735,000, to which Ennis countered by an offer of £700,000 in full and final settlement.
Eventually, a figure of £707,500 was agreed. Ennis sent a Certificate of Final Agreement to
CSL,andfurthere-mailswereexchangeduntilagreementwasreachedintermsunderwhich
