11 function of an engineering contract

Question 1

What is an engineering contract?

Answer 1

A mutual agreement between 2 parties for the purpose of undertaking, on a commercial basis, certain clearly specified engineering works

Question 2

Who are the parties in an engineering contract?

Answer 2

the principle- party that requires the work to be done

the contractor- party who agrees to undertake the work for payment

Question 3

What are negotiations?

Answer 3

Spoken and written transactions between parties leading to a contract agreement

Question 4

How is a contract negotiated?

Answer 4

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

Question 5

How is the existance of a contract demonstrated?

Answer 5

contract should be clearly evidenced by writing down agreed terms and conditions under an instrument of agreement - signed by all parties

Question 6

Why is a contract needed?

Answer 6

To ensure the final negotiated agreement is enforceable by law

Question 7

In the event of a party failing to keep a contract agreement, what does the law of contracts consider?

Answer 7

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

Question 8

What are the 2 types of contract?

Answer 8

formal and simple contracts

Question 9

What is a formal contract also refereed to? and what does it mean?

Answer 9

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

Question 10

what are the 3 differences between a formal and simple contract?

Answer 10

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

Question 11

What does the principle’s representative do?

Answer 11

represent in all matters relating to the management of the contract

Question 12

Who is the principle’e representative in an engineering and construction contract?

Answer 12

the project manager

Question 13

What are the 4 basic requirements of a contract?

Answer 13

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

Question 14

When does an instrument of agreement maintain a simple contract?

Answer 14

both parties sign with no witness

Question 15

When does an instrument of agreement create a formal contract?

Answer 15

the instrument of agreement states that it is a deed and is signed, sealed and delivered by the parties in presence of attesting witnesses

Question 16

What 2 elements does a simple contract needs that a formal does not?

Answer 16

1 offer and acceptance - an offer is made by one party and unconditionally accepted by the other
2 valuable consideration = payment for work done

Question 17

What is the privity of a contract?

Answer 17

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

Question 18

What happens in assignment in a contract?

Answer 18

when one of the parties to a contract substitutes another party in its place for all or some of the purpose of the contract

Question 19

When does discharging a contract occur?

Answer 19

When the project is completed or terminated

Question 20

How can a contract be discharged?

Answer 20

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

Question 21

What is a fundamental breach?

Answer 21

the breach causes a situation in which the other party is unable to perform their duties and responsibilities

Question 22

Why is contract law the product of commercial civilisation?

Answer 22

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

Question 23

What is a merger?

Answer 23

transformation of simple to formal contract by creating a formal instrument of agrrement

Question 24

What are the 4 main factors that influence the type of contract when classified by method of payment?

Answer 24

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

Question 25

What is the difference between an item and an activity?

Answer 25

item is a process of work, activity is a discrete unit of project construction

Question 26

Whats the difference between BoQ and schedule rates?

Answer 26

BoQ has quantity estimates for each item so allows estimate of total construction phase

Question 27

How can legality of purpose occur?

Answer 27

illegal but common law or by statute ie commit a crime, hinder administration of justice, injure public services or attempt corruption

Question 28

How can a person not have legal capacity?

Answer 28

underage
not mentally stable 
under the influence of alcohol or drugs 
bankrupt 
in legal custody