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As if building contract were not tricky enough, life becomes even trickier when the customer happens to be a consumer. Special rules apply in situations that involve the consumer 鈥� or, put another way, special rules do not apply. Let me explain.

In the left-hand corner is the builder 鈥� yes, the bloke who buys bricks, employs the lads, scrambles around in the rain, makes a thin profit if he鈥檚 lucky, and is wholly dependant on the next cheque. In the right-hand corner is the consumer, who in this case have just lost their 250-year-old house in a fire, and the insurers.

In this story Mr Domsalla is the builder, Mr and Mrs Dyason are the consumers and Lloyds TSB/Zurich are the insurer.

One night in January 2003, the Dyason鈥檚 home went up in flames. Disaster. The insurance policy clicked into place. The loss adjuster organised the tender documents, specification and contract documents. He chose the builder. The first technical point, which I doubt the builder or homeowner spotted, was that when they signed the JCT Minor Works document, the homeowner actually signed as an agent for the TSB/Zurich and as himself. So the three folks were in contract. And when the dispute broke out 鈥� the work was late and was said to have defects 鈥� the consumer got niggled, the builder got niggled, and the builder began an adjudication.

The adjudicator decided that, since an withholding notice had not been issued in time, he would not even look at the claim for defects. Ah, but what about the fact that statutory adjudication and all the fancy payment rules about 鈥渨ithholding notices鈥� don鈥檛 apply to residential occupiers? Since the JCT Minor Works had been signed, this was a 鈥渃ontractual adjudication鈥� using the rules printed in the JCT, which meant, the adjudicator held, that withholding notices applied.

Credit: Simone Lia

"We only have time for swotting these days-no time for sandwiches"

The riposte to that was the Unfair Terms in Consumer Contracts Regulations, 1999 鈥� of which, of course, no true life builder has ever heard. Nor is it mentioned in JCT Minor Works. In short, the consumer is protected from unfair terms even if they have signed up to them. So builders have to know not only their stock bricks from their granite sets but also their consumer contract law.

In dealing with hard-headed contractors, the consumer is likely not to understand the legal effect of crafty smallprint. In adjudication they can shout 鈥榰nfair鈥�

Fat chance.

The unfair terms regulations strike down any smallprint in contract paperwork that causes a 鈥渟ignificant imbalance in the rights and obligations of the parties鈥� to the detriment of the poor old hard-done-by consumer. The notion is that the consumer, when dealing with hard-headed commercial suppliers and contractors, is likely not to understand the legal effect of crafty smallprint. When it comes to adjudication the consumer can shout 鈥渦nfair鈥�.

In this case the owner of the house wanted to withhold money because he believed there were defects. Snag is, he hadn鈥檛 realised the need for the withholding notice. The adjudicator had to decide whether the need to issue a notice five days before the cheque was due was an unfair term and did not apply to consumers. He decided that the withholding notice was fair play and ordered the customer to pay up because no notice had been sent.

The High Court took a different view. It decided that, for consumers, the withholding notice was an unfair term. The judge decided that the consumer had been deprived of a right to have his defects complaint heard and, if necessary, withhold money. So, technically, the adjudicator had unfairly shut out the withholding and defects claim.

Interestingly, the judge would not strike down 鈥渃onsumer adjudication鈥� as an unfair term. He judged that it did not cause a 鈥渟ignificant imbalance in the parties鈥� rights to the detriment of the consumer鈥�.

Beware, then: the withholding notice is characterised as an unfair term when dealing with Mr and Mrs Consumer. So, all you builders don鈥檛 forget to mix a little bit of law in with your sand and cement.