The New Construction Act: Papering Your Files
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The Construction Lien Amendment Act, 2017 (the “Act”), received royal assent on December 12, 2017. Although a few provisions of the new Construction Act came into force immediately, the majority of key changes have yet to come into force. These changes are expected to receive proclamation this spring. In addition to the major changes we discussed in our previous article, “4 Key Changes to the Construction Lien Act”, the construction lien and litigation process will become highly document-driven once the Act is in force.
Litigation is often a necessary tool for collecting debts and solving contract disputes in the construction industry. The following five tips, which can be implemented into your everyday business practices, will assist with dispute management and building a paper trail in case you need to litigate your construction disputes:
Use Customized Written Contracts
Although it may be a traditional business practice to make verbal agreements, often using a handshake to seal the deal, the courts want to see written contracts. While it is true that a verbal agreement can form a binding contract between parties, it is significantly more challenging to prove what the agreement was or how it should be interpreted in court. Verbal agreements often result in a he-said-she-said disagreement with both parties remembering or interpreting the agreement differently. A written agreement provides more clarity for the courts and the parties.
Businesses commonly adopt a standard form contract that they can use for a variety of projects. It is important to read through the standard form contract to ensure it fits each project. It is easy to customize standard form contracts by adding supplementary conditions.
Get it in Writing
A lot of communication happens between the parties throughout the duration of a project, often varying the initial agreement. It is essential to have written documentation of all communication regarding each project because verbal agreements and conversations are difficult to prove in court. Use email to communicate whenever possible. When you do have a verbal conversation over the phone or in person, it is advisable to send a follow-up email summarizing what was discussed. If you receive an email with incorrect information, your position should be clarified in a return email, otherwise it may appear as though you agree with the content of the email.
Document Your Progress
Make notes and take photographs of work completed regularly throughout a project. This creates a clear timeline of events. It is also a good idea to keep the client updated on progress throughout the project. This ensures that both parties are on the same page and can help to identify and resolve disputes early on.
Maintain Organized Files
Keep all documents for a project together in one file, organized chronologically or by another method that works for your business. Additionally, all documents should be dated and titled before filed. The key is to be able to quickly identify and locate project documents.
Organizing your email inbox can also save a lot of time when trying to locate a specific email or conversation, especially considering the vast number of emails we typically send each day. Create folders for each project in your email inbox to organize incoming and outgoing emails. Utilizing descriptive subject lines can further assist with organizing and identifying emails.
Diarize Key Dates
Courts can be strict about deadlines within contracts. It is important to diarize contract deadlines such as delay notice provisions, change requests or dispute provisions. Courts are also strict about timelines within the Act, such as within the lien procedures or the new prompt payment regime. It is imperative to familiarize yourself and your staff with the timelines within the Act, otherwise you may miss your opportunity to lien or litigate a construction dispute.
While it may take more time to implement these procedures in your day-to-day operations, it will save you time and money in the long run when it comes to managing disputes and litigation. Maintaining organized files can prevent disputes from arising. When disputes do arise, you will be more prepared to litigate. The courts expect to see documented evidence for claims under the Act. Failure to produce documentary evidence could prevent you from obtaining a favourable court judgement and collecting the money you are owed.
Please contact Michael Paiva for more information about the new Construction Act, or if you require assistance with a construction dispute.