Peter McHugh*

mediation

Specialist in commercial contract disputes

Case Study 3

A dispute between a building contractor and a door manufacturer over the fit and performance of doors at a residential care home.

The problem
A contractor won a contract to refit a Residential Care Home. Under that contract all of the internal doors to the residents’ private rooms were refitted. Almost immediately after the installation, it became apparent that the doors were poorly fitted and hence their performance was seriously compromised.  The customer (the care home company) was withholding part of the payment for the building works until the problem was rectified.

The contractor believed that the door manufacturer was at fault because the doors were manufactured incorrectly. The door manufacturer denied that the fitting and performance was their fault, because they had worked to the contractor’s drawings and specifications.  They believed that they had been given insufficient detail, and what detail had been provided was incorrect, but according to the manufacturer they had been correctly made. Neither party brought technical drawings or any evidence to mediation to support their claims so it was impossible to assess where the fault actually lay.

The solution
The door manufacturer was adamant that, if they were not paid, they would have to take the case further to claim payment for their work. Whether any drawings existed that would prove that the door manufacturer had been instructed incorrectly, remained unknown at the mediation session, but if drawings had to be produced during legal proceedings the contractor would be liable for all legal costs.

The contractor eventually conceded to pay. The door manufacturer, as a gesture of goodwill, and without admitting any liability, said that they would undertake a site visit and offered three days of rectification where repairs were required.

The benefits
The benefit for the door manufacturer was, of course, that they were paid in full. For the contractor, if the case gone to court, and if the door manufacturer had managed to prove that they had worked to the contractor’s drawings, the contractor would have had to pay the legal fees, which may have been substantial.  The goodwill offered by the door manufacturer was of financial benefit, but it was made clear that further costs would be charged if they were incurred beyond the rectification period.