Contractual Issues for Contractors


The building industry is one of the largest contributors to the HVAC industry, many contractors, small and big, acquire a lot of new work from this industry. However, an increasing number of HVAC contractors experience a common difficulty when entering a construction tender usually with a JBCC Nominated or Selected Sub Contract and the various contractual obligations. In some cases the contract might be a direct Domestic Sub Contract with the builder.

Understanding the obligations and rights in a contract is a skill that every HVAC contractor should master, whether he or she is a contractor dealing directly with the client or sub-contractor to a builder, it is vital to pin this skill down. A contract is a binding agreement between two or more parties, it helps define the expectations of each participant and the terms of remuneration that come with the work. This principal document sets a date and specifies which parties are going to participate in the construction process and the specific work to be completed. Usually, the contract agreement is executed between the manager of the project and the sub-contractor who will be undertaking the specific work within the project, such as an air conditioning installation.

Very often, issues between the project manager and the sub-contractor arise. When this happens, various issues that involve the conditions of the contract are involved, these can easily escalate arguments and disputes. When such situations are not resolved quickly, it could lead to dispute resolution mechanisms and if not resolved to legal action. This can lead to delays in the completion of the project which may consume cash flow and valuable time.

Contracts are at the very heart of the relationship between the project manager and the contractor and a sub-contractor. They define the specific terms and conditions of the project and work to be completed as well as the benefits that may (or may not) be expected upon completion.

The South African Refrigeration and Air Conditioning Contractors Association (SARACCA) just concluded 3 rounds of branch meetings where members, new members and non-members in the HVAC industry discussed the contractual issues, particularly around Payment delays and how to best combat these issues. The first step to preventing contractual disputes is to ensure both parties are happy with stipulations. When the partnership begins on a clear and positive note, it makes both parties more willing to talk things through even if the situation turns sour down the road.

There is a lot that might happen during the construction process. Having a solid understanding of a contract that stipulates a proper terms of payment is very crucial for the livelihood of the HVAC Industry. SARACCA encourages members to make use of the opportunities in attending a JBCC seminar such as the recent one where a discounted fee was available.

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This edition

Issue 39