Does a construction contract have to be in writing?

You’ve been planning to make some upgrades to your home and you’ve approached a building contractor with a good reputation who is happy to take the job. The only question remaining is, do you have a written construction agreement drawn up, or can you and the contractor verbally agree on the scope of work and price?

Firstly, it is important to note that a verbal agreement is valid, binding and enforceable unless, in terms of law, a written agreement is required, such as a property sale agreement.

Construction contracts relating to renovations however are not normally agreements that need to be in writing, and as long as the general requirements for the conclusion of a contract are met (whether orally or in writing) a valid contract will be concluded.

There are however certain instances where construction contracts must be in writing. An example of a construction contract that must be in writing is an agreement to build a new house, which must be in writing and signed by both the home builder and a housing consumer as per section 13(1) of the Housing Consumers Protection Measures Act 95 of 1998.

However, when it comes to renovations, this will not apply and an oral agreement will be valid. It remains advisable to consider a written agreement also for renovations as this will provide certainty as to the terms of the agreement, the scope of work and specifications, the costs of the project, timeframes for concluding the project and other rights and obligations of the parties.

The difficulty with oral agreements is that in the event that a dispute arises, it is usually significantly more complex to resolve the issue. Disputes and misunderstandings often arise as a result of different expectations or understandings as to the terms of the oral agreement reached, whereas reducing the agreement to writing will substantially reduce the risk of misunderstandings, or at least, highlight such issues before the parties enter into an agreement. As they say ‘a stitch in time saves nine’ and this applies also to construction projects where it is well worth the cost of preparing a proper agreement upfront rather than having to resolve disputes later.

That said, a construction contract is a special type of agreement and it is advisable to engage a commercial or construction law specialist versed in drafting these agreements to ensure that the agreement is clear and appropriate to the nature of your renovation project.

Disclaimer: This article is the personal opinion/view of the author(s) and is not necessarily that of the firm. The content is provided for information only and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever and no action should be taken on the basis thereof unless its application and accuracy have been confirmed by a legal advisor. The firm and author(s) cannot be held liable for any prejudice or damage resulting from action taken based on this content without further written confirmation by the author(s).

October 20, 2023
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