13 - Contract Practice

Question 1

What key function does a contract perform on a construction project?

Answer 1

Provides a legally binding agreement/promise between one party and another party based on conditions to carry out work.

Outlines scope of works, payment provisions, risks, duration, deliverables etc.

Question 2

What is a contract?

Answer 2

A legally binding agreement promising to carry out a service/obligation. Enforceable by law. Sets out agreed terms and conditions

Question 3

Define express terms?

Answer 3

Terms of the agreement, expressly agreed between parties in writing or verbally

Question 4

Define implied terms?

Answer 4

A contractual term not expressed agreed by the parties, but implied in the contract either by common law or statute

Question 5

What six conditions need to be met for a contract to be in place?

Answer 5

1. Offer one party requires something from the other
2. Acceptance contract signed
3. Awareness both parties must be aware they are entering into an agreement, can not be signed under duress
4. Consideration something of value must be provided in return for the service
5. Capacity parties have capacity to understand terms and conditions they are signing to
6. Legality subject to law of the jurisdiction

Question 6

What are the main suites of construction contracts?

Answer 6

JCT - Joint Standards Tribunal
NEC - New Engineering Contract
FIDIC

JCT - most common on construction projects
NEW - more common on engineering projects
FIDIC - more common on international projects

Question 7

What is tort?

Answer 7

A civil wrong, concerned with loss or harm where someone breached a duty of care

Protects people from other peoples negligence

Ensures victim is compensated for any losses

Question 8

What are the influences which will affect contract selection?

Answer 8

Nature of client
Scope of works/size of project
Allocation of risk
Complexity of project/quality
Type of work
Public or private employer
Cost of project
Quantity of work
Location
Repeat works/activities

Question 9

Can you name the standard forms of contract that can be used on a construction project

Answer 9

JCT form of contract (joint contracts tribunal)
NEC form of contract (new engineering contract)
ICE contracts (institue of chartered engineers)
FIDIC

Question 10

What do you understand about the following forms of contract; FIDIC, JCT, NEC, ACA, ICC, IChemE

Answer 10

• FIDIC - usually used for international projects
• JCT - most common for construction projects
• NEW - more aimed at engineering contracts, but is becomming more common on construction projects
• ACA (Association of Chartered Architects) - more flexible between client and construction professionals, usually used by Architects
• ICC (Infrastructure Conditions of Contract) - for infrastructure projects
• IChemE (Institution of Chemical Engineers) - best practice for process industries

Question 11

What does JCT stand for?

Answer 11

Joint contracts tribunal

Question 12

Name the key components of the JCT contract suite

Answer 12

Measured term contract
Minor works contract
Major works contracy
Standard Building contract
Design and Build Contract
Intermediate Building Contract
Management Building Contract

Question 13

What are the main parts of the JCT contracts?

Answer 13

• Articles of Agreement
• Contract particulars
• Conditions of contract
• Schedules

Conditions:
* Definitions
* carrying out the works
* control of the works
* payment
* variations
* Injury, damage and insurance
* Assingment, third party rights, collateral warranty
* Termination
* Settlement of dispute

Question 14

What are the JCT schedules?

Answer 14

Appear at the end of the contract

Appendices to elaborate/expand/clarify on certain parts of the main contract

Question 15

How are relevent events and relevent matters dealt with under NEC?

Answer 15

Compensation events

Question 16

How does NEC deal with loss and expense?

Answer 16

• Contractor to notify PM of occurence of a compensation event within 8 weeks of the contractor becomming aware of the occurence.
• Failure to do so means the contractor is not entitled to claim for additional time/costs for the Compensation Event.

Question 17

What types of insurance are required under JCT?

Answer 17

-Injury to persons and property
-Insurance Against Personal Injury and Property
-Insurance of the Works
-Professional Indemnity Insurance

Question 18

What are liquidated damages?

Answer 18

Contracts generally include a clause making a provision for contractor to pay LD’S, Predetermined damages to the client in the event that the terms of the contract is breached.

I.e. usually where PC is not acehived.

They are often calculated on a daily or weekly rate.

Question 19

How is fitness for purpose dealt with under JCT DB/CPD?

Answer 19

Many JCT D&B contracts are expressing provisions which absolve the contractor from a fitness for purpose obligation

In a construction context, this means that a contractor is effectively guaranteeing that the components and the finished building will be fit for their intended purpose.

Question 20

What is the contractors design liability under JCT Contracts for CDP elements?

Answer 20

The contractor is liabile to provide reasonable skill and care responsibility.

Limits the contractor’s liability in respect of any inadequacy in his design of the contractor’s designed portion to the same liability as an architect or other professional designer would have. So, it limits it to a reasonable skill and care responsibility.

Question 21

When would you use a JCT Intermediate Intermediate Contract?

Answer 21

• For construction projects involving all the recognised trades and skills of the industry, where fairly detailed contract provisions are needed, but without complex building service installations or other specialist work
• Suitable for projects procured under the traditional method

Question 22

When would you use a JCT minor works contract?

Answer 22

• For smaller, basic construction projects where the work is of simple nature.
• Suitable for projects procured via the traditional method