11 function of an engineering contract Flashcards
What is an engineering contract?
A mutual agreement between 2 parties for the purpose of undertaking, on a commercial basis, certain clearly specified engineering works
Who are the parties in an engineering contract?
the principle- party that requires the work to be done
the contractor- party who agrees to undertake the work for payment
What are negotiations?
Spoken and written transactions between parties leading to a contract agreement
How is a contract negotiated?
1 principle invites proposal to one or more qualified contractors
2 formal offer made by contractors = tender bid
3 if only one party then direct negotiation, if more than one then competitive tendering
How is the existance of a contract demonstrated?
contract should be clearly evidenced by writing down agreed terms and conditions under an instrument of agreement - signed by all parties
Why is a contract needed?
To ensure the final negotiated agreement is enforceable by law
In the event of a party failing to keep a contract agreement, what does the law of contracts consider?
1 whether a contract exists
2 the intentions of the contract
3 whether the contract has been broken
4 what compensation is due to the injured party
What are the 2 types of contract?
formal and simple contracts
What is a formal contract also refereed to? and what does it mean?
contract under seal, a deed whose validity depends solely upon its form.
a dded must be signed under seal by the party executing the deed and a witness to affiliated with either party
what are the 3 differences between a formal and simple contract?
1 A simple contract must be supported by consideration - inducement to enter into a legally enforceable agreement
2 limitation period generally longer for formal contracts = time following breach in which innocent party can take action on the other.
3 A formal contract has an estoppel= rule of law that stops a party later claiming a statement in contract is incorrect
What does the principle’s representative do?
represent in all matters relating to the management of the contract
Who is the principle’e representative in an engineering and construction contract?
the project manager
What are the 4 basic requirements of a contract?
1 intention by both parties to form an enforceable contract must be demonstrable
2 genuine consent
3 legality of purpose
4 legal capacity of both parties
When does an instrument of agreement maintain a simple contract?
both parties sign with no witness
When does an instrument of agreement create a formal contract?
the instrument of agreement states that it is a deed and is signed, sealed and delivered by the parties in presence of attesting witnesses
What 2 elements does a simple contract needs that a formal does not?
1 offer and acceptance - an offer is made by one party and unconditionally accepted by the other
2 valuable consideration = payment for work done
What is the privity of a contract?
legal relationship and mutual interest that exists between the parties in a contract. The responsibilities of the contract parties are non transferable to a third party
What happens in assignment in a contract?
when one of the parties to a contract substitutes another party in its place for all or some of the purpose of the contract
When does discharging a contract occur?
When the project is completed or terminated
How can a contract be discharged?
1 performance of its provisions 2 agreement between 2 parties 3 operation of the law 4 frustration - when a contractual obligation is has become incapable of performance 5 fundamental breach
What is a fundamental breach?
the breach causes a situation in which the other party is unable to perform their duties and responsibilities
Why is contract law the product of commercial civilisation?
commercial civilisations developed trade that was not completed at the same time for both parties so laws and courts were needed to ensure promises were kept
What is a merger?
transformation of simple to formal contract by creating a formal instrument of agrrement
What are the 4 main factors that influence the type of contract when classified by method of payment?
1 degree of certainty about final design
2 flexibility to cope with design changes
3 contractors incentive for efficient performance
4 extent of risk likely to occur during the contract
What is the difference between an item and an activity?
item is a process of work, activity is a discrete unit of project construction
Whats the difference between BoQ and schedule rates?
BoQ has quantity estimates for each item so allows estimate of total construction phase
How can legality of purpose occur?
illegal but common law or by statute ie commit a crime, hinder administration of justice, injure public services or attempt corruption
How can a person not have legal capacity?
underage not mentally stable under the influence of alcohol or drugs bankrupt in legal custody
