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. A claim by the builder that the householder could not defend his claim was rejected.
In the view of the presiding judge there were in the contract "terms which had the object or effect of-
- inappropriately excluding or limiting the legal rights of the consumer vis-à-vis the supplier in the event of total or partial non-performance or inadequate performance by the supplier of any contractual obligations, including the option of offsetting a debt owed to the supplier against any claim which the consumer may have against him;
- irrevocably binding the consumer to terms which he had no real opportunity of becoming acquainted before the conclusion of the contract;
- obliging the consumer to fulfil all his obligations where the supplier does not perform his; and
- xcluding or hindering the consumer's right to take legal action or exercise any other legal remedy, and...duly restricting the evidence available to him … ."
These terms could not be relied upon by the builder.
However, terms which placed reliance on the adjudication provisions in the contract were not considered to alter substantially the balance of the parties' rights and obligations and thus were deemed enforceable.
