Contracts With Contractors

Before engaging a contractor to supply services for the landlord, the agent must consider the following: 

• Is the contractor competent? This is partly tested by practice, but the contractor must be qualified in certain situations. Obviously, for gas work, they must be Gas Safe Registered; for electrical work, they must also be qualified to the appropriate level.
• Is the contractor insured? What kind of insurance does the contractor hold, and is it current? Is the public liability element sufficient for the job or the site situation? The insurer may have placed limitations on the policy, which should be checked by the agent, who should also note the renewal date and review this annually. Failure to do this basic check would place the agent in breach of his duty of care to the landlord and possibly the tenant.
• Is the contractor safe? The agent has a legal liability under the Health and Safety at Work Act 1974 to demonstrate that he has taken reasonable care to ensure the safety of his employees. The same legislation requires that the agent runs their business not to endanger those NOT in their employ. This would include contractors (as well as tenants, for example). It is simply unacceptable, in law, for an agent to engage a contractor to work on the client's property without having had due regard for that contractor's safety. The agent must address safety issues with the contractor before going on-site. In most cases, this will be straightforward. However, it becomes more complex if the job involves any work at heights or the possible presence of asbestos. Where the contractor is a firm with five or more employees, the contractor must, by law, have a written and up-to-date Health and Safety Policy. In addition to the statutory requirements, the agent also has a duty of care to the contractor to ensure the workplace is accessible. If the property is occupied, the agent must disclose anything around the occupancy that may present significant risks or issues to the contractor or his team.

Contract

Every agent engaging a contractor to work on a landlord's property enters into a legal contract; in fact, it is the most common contract an agent will ever enter into during agency business. Surprisingly, many agents apply little formality to this critical and high-risk activity.

Contractor Terms of Business templates are readily available and should be drafted or adapted to the agency's practice and used with every firm engaged by the business. This contract will specify what, in general terms, the contractor may or may not do. It will set out how and when he will be paid and his qualifications. It will set out the required procedures for attending the property, working arrangements, completion procedures, inspections, and signing off. Does the agent do that, or must the tenant confirm the job is complete?

Crucially, the contract will place upon the contractor a strict liability for compliance with the agent's requirements around insurance, health and safety requirements, building regulations, disclosure of matters that the agent or landlord should be aware of, rules and limits around sub-contracting, dealing with other parties such as the tenant and landlord. The business terms will also confirm that the agent is acting on behalf of a principal. It will require the contractor to invoice in the landlord's name, c/o the agent. This will prevent the agent from being liable should the landlord refuse to permit payment of the contractor's invoice. The contract may also provide a simple arbitration procedure for disputes about quality.