1 - Definitions Flashcards
Relevant Event
An event that causes a delay to the completion date, which may be caused by the client, or a neutral event not caused by either party. Relevant event does not necessarily entitle the contractor to claim loss and expense Examples:
• Variations
• Deferment of giving possession
• Exceptionally adverse weather condition
• Civil commotion or terrorism
• National strikes
• Loss from a specified peril (flood/ storm)
• Force Majeure
Relevant Matter
Is a matter for which the client is responsible that materially effects the progress of the works This enables the contractor to claim direct loss and / or expense that has been incurred. Examples:
• Failure to give the contractor possession of the site
• Opening up works, delays in receiving instruction
• Disruption caused by works being carried out by the client
• Discrepancies in the contract documents
• Issues relating to CDM regulations
Procurement
The overall process of acquiring construction works or services:
Examples include :
• Traditional
• Design and Build
• Management Contract
• Construction Management
• Private Finance Initiative
Tendering
The method of obtaining the resources necessary to carry out the required works.
Examples include :
• Open
• Selective
• Single stage
• Two stage
• Framework
• Negotiated
Collateral Warranty
A collateral warranty provides a contractual link where there previously would have not been one. They provide for a duty of care to be extended by one of the contracting parties to a third party who is not party to the original contract. With a CW, the subcontractor or sub consultant employed under the main contract warrants to the 3rd party that it has complied with its obligations under the principal contract.
Novation
Process by which contractual rights and obligations are transferred from one party to another.
E.g. when a design consultant are initially contracted to the client but are then novated to the contractor in a D&B contract.
Assignment
Where the rights and benefits of one contractual party are transferred to a third party.
Named Subcontractor
Client supplies a list of names in the preliminaries / specification and the contractor chooses which one they want.
The named sub-contractor is then treated the same as a domestic subcontractor
Nominated Subcontractor
The selection of a specialist sub contractor or supplier for the project by the client - The client names them specifically in the preliminaries / specification.
They will often have been chosen and provided advice / design etc before the main contractor is selected. The work to be done is normally the subject of a prime cost or provisional sum
Domestic Subcontractor
Is a contractor that is solely employed by the main contractor and is their responsibility.
Bond
A promise (usually by deed) where person giving the promises to pay another a sum of money. Bonds man only makes the payment when requested to do so.
Examples include :
• Retention bond
• Performance bond
• Advanced payment bond
Prime Cost
A prime cost sum is a sum of money allowed for to cover a particular aspect of work by a nominated sub-contractor or supplier. A prime cost is the total direct costs of production, including raw materials and labor. Indirect costs, such as utilities, manager salaries, and delivery costs, are not included in prime costs. Businesses need to calculate the prime cost of each product manufactured to ensure they are generating a profit.
Provisional Sum
A provisional sum relates to works that cannot be designed / specified at the outset.
Defined provisional sums are those where specific works have not been fully designed, however, there is enough information available for the contractor to make a proper allowance in their price and programme.
Undefined provisional sums are not accounted for in the contractor’s price and programme. This means that the client is taking the risk for the works and the contractor may be entitled to an extension of time and additional payments.
Latent defect
It is the nature of construction projects that faults and defects caused by failures in design, workmanship or materials, may not become apparent or readily detectable (even with the exercise of reasonable care) until many years after completion of the project, long after the end of the defects liability period.
Such defects are known as latent defects (as opposed to patent defects which are apparent).
Examples of common latent defects include:
• Defective basement tanking allowing water penetration
• Inadequate wind-posts or wall ties causing movement damage to walls
• Under-strength concrete or misplaced reinforcement allowing movement damage to the structure
• Inadequate foundations causing subsidence of the building
Patent defect
At any point up until the final certificate has been issued, defects that are discovered by reasonable inspection (patent defects) may be reported to the contractor, who should rectify them within a reasonable time.
Under hand (contract)
Underhand is where signing of the contract is witnessed and signed by one director and a company secretary, or two directors (gives 6 years liability for rectifying latent defects).
Underdeed (contract)
As a deed would be where a director has signed the contract and affixed the common seal of the firm under the signature (gives 12 years liability for rectifying latent defects).
Liquidated Damages
Genuine pre-estimate of the likely loss the client will incur as a result of non-completion.
Unliquidated Damages
Unliquidated damages are damages that are payable for a breach of contract, the exact amount of which has not been pre-agreed. This is in contrast with liquidated damages which are a pre-agreed when the contract is entered into.
Joint fire Code
The Joint Fire Code covers activities through all stages of design, procurement and construction. Generally it applies to contracts with a value of more than £2.5million, but it can also apply to lower value contracts which are considered to be high risk or which form part of larger projects
