Research released today reveals that over 60% of subcontractors in the UK remain unprotected should the principal contractor go into receivership. Alarmingly an even higher number had not considered what practical steps they could take to mitigate loss suffered in such circumstances.

The research carried out by DTM Legal also shows that building and construction companies are exposed to thousands of pounds of potential liabilities as contacts are often not in place before works begin.

These issues are compounded by the challenging economic climate as figures released by the Bank of England show that in the last quarter of 2010 the UK’s economy contracted by 0.5% and there remains uncertainty about what lies ahead.

Jim Morris, partner at North West based DTM Legal comments: “Whatever the nature of the work, it is important to get the right contract in place to not only protect your interests but ensure the collaborative works are carried out as agreed. In tough economic times it can be tempting to cut corners but in doing so it can compromise a company’s position and open oneself up to significant liabilities.”

Firms entering into agreements are advised to take some practical steps should the principal contractor go into administration. Some of the advice includes securing the site, plant, & equipment; notifying insurers; serving withholding notices; or claiming on a performance bond.

Morris continues; ”Not doing some or all of these steps has the potential to make a bad situation even worse. It’s important to take proactive steps to limit loss but most importantly to have robust contracts from the outset.”