There are many common mistakes after signed construction agreement from the both side contractor and owner. This article focuses to the owner side with the 3 mistakes which can create a great damage, although the construction agreement was signed after a perfect review by an experienced lawyer.
First Mistake: Makes the payment when the work hasn’t done on time without memorandum of the agreement “MOU”. Most of Construction Agreement comes with a strong Bill of Quantities “BOQ” however the contractor always come up with some good reason for the need of the payment before the work meets with the BOQ, the contractor always gives to the owner some reason that the work can’t continue, he doesn’t have enough money for labor, material and equipment etc. Of course, the owner wants the construction to be finished.
How many options and solutions for this situation?
There are many…. refuse the payment, terminate the Construction Agreement or just pay. Isn’t easy to say which option/solution is the best that depend on some factor which differ from case to case. But if the owner agrees to pay then he needs an evidence for the proof in the future if needs. The owner should make a MOU to proof that why the payment makes even if the work hasn’t done. It needs to be made in written and signed by the contractor before the 2 witnesses who is okay to be witness in the future. This to be clear to the Court to understand the situation and make an order favor to the owner, not the contractor.
In this case, if the owner makes the payment without MOU. It means the owner is making a common mistake which created a great damage. How the owner can convince the Court to believe his story? Under this circumstantial and evidences, all convinces the Court to think and believe that the payment is accepted even the Quantities of work, although, in fact the quantities of work is different with the construction agreement. The judgment will be favor to the contractor in case of dispute or argument about this. The owner will not be able to say that the contractor is in breach of the Construction Agreement
Article By Akenarin Thongplod
Thai Barrister at Law
Notarial Services Attorney