14. CP Flashcards
What does JCT stand for? What are the basic principles of JCT?
Joint Contracts Tribunal
Used in the UK building sector.
It’s contracts help facilitate the responsibilities and obligations of parties, to mitigate risks.
It has 3 main contracts (Traditional, D&B, Minor Works Contract).
It has 8 contact options, e.g. lump sum, measurement, cost reimbursement, management (similar to NEC), although usually lump sum.
Differences between NEC and JCT?
- NEC major civils, JCT UK building sector.
- JCT has variations. NEC has CEs.
- JCT is QS / CA. NEC is PM.
- JCT is most commonly used as a lump sum contract, either with or without quantities. The NEC goes further with 6 pricing options, e.g. These include target cost & cost reimbursable.
- NEC written in laymen/simple terms that is easy to understand. NEC also tries to be more collaborative ‘Mutual trust and understanding’.
JCT Change Notes. Differences to NEC?
- Variation (D&B it’s called change).
- CA issues instructions.
- No timeframes for responding etc.
- JCT allows instructions to be issued verbally as long as a Confirmation of Verbal Instruction) in writing is done after.
- Time and money dealt separately.
- Subcontractor gets paid for time taken to do the quotation.
What does FIDIC stand for? What are the basic principles of FIDIC?
International Federation of Consulting Engineers (commonly known as FIDIC, acronym for its French name)
Used overseas.
Was aimed at the Civil Engineering sector.
It has different coloured books, each allocating responsibility/risk.
- Red book (Traditional) - majority of the design is with the Employer.
- Yellow book (D&B) - majority of the design is with the Contractor.
- Silver - majority of the design is with the Contractor. Also significant risks on the Contractor.
- Gold (D&B & Operate).
- Green (Short)
It also has 5 golden principles that must be observed. e.g. Amendments must be clear and unambiguous.
FIDIC change notes. Differences to NEC?
- Variation.
- CA or Engineer issues instructions.
- No timeframes for responding etc.
- Little guidance on instructing a variation, other than in it must be in writing, some forms e.g. Red Book accept an informal email.
- Contractor cannot notify a variation under some books, e.g. Red Book.
What differences / change differences are there in the NEC compared to JCT/FIDIC that make the NEC contract so unique?
Generally, written in laymen terms and looks for greater collaboration between parties.
The NEC change process is good because it sets timeframes for change to be agreed upfront before the work has been carried out. This provides clarity for parties.
What is a contract?
A legally binding agreement between parties.
What are the key elements required to make a binding contract?
Offer
Acceptance
Consideration
Intent to create legal relations
Capacity
In terms of contract execution, what is the difference between an under hand contract and a deed?
Under hand - contract that is executed by 1 person who is authorised by the company’s directors.
Deed - contract that must be signed by 2 directors registered by Companies House.
What is a letter of intent?
Letter outlining intention to enter into contract.
What are delay damages?
Costs payable to the Client for late completion of the project. They are stated in the contract and are a.k.a liquidated damages.
X7 = delay damages.
Define express terms.
Define implied terms.
Express terms: are clauses that are expressly agreed/stated by the parties.
Implied terms: terms not agreed upon by both parties in a contract, but are still legally binding.
What is the HGCRA? What is it also known as?
Housing Grants Construction and Regeneration Act.
Also known as the Construction Act 1996.
Talk about the HGCRA and it’s aim.
Payment & Adjudication: It relates to payment provisions and the process for determining a dispute by way of adjudication.
HGCRA is intended to ensure that payments are made fairly and promptly throughout the supply chain. Projects over 45 days must have periodic interim payments.
It also aims to ensure disputes are resolved swiftly by way of adjudication.
What happens if the payment / adjudication requirements in a contract didn’t comply with the HGCRA (Construction Act)?
Disputes can arise because of this.
The Scheme for Construction Contracts Regulations 1998 states that where a construction contract does not comply with certain sections of the Construction Act, the provisions in Part I & Part II of the Schedule to these Regulations shall apply.
Part I = Adjudication
Part II = Payment
Give examples of different contract documentation.
Specifications, drawings, WI, BOQ.
What are the NEC payment options?
A to F
What is a BOQ?
Bill of Quantities.
List of items with detailed descriptions, and quantities of the work.
Talk about pay less notices.
The HGCRA requires a pay less notice to be made if the previously agreed payment isn’t going to be paid.
What is the privity of contract rule?
Law that states only the 2 parties of a contract have the right to sue or be sued.
What do you know about the Contract (Rights of Third Parties) Act 1999?
The privity of contract rule stated that only the parties in the contract could enforce terms, however the Contract Act 1999 changed this. It enabled third parties to enforce terms in contracts.
It is stated in the NEC contract under Y3.
What are collateral warranties?
They create a contract between the main parties of a contract with an external third party! e.g. UKPN.
The contract would not otherwise exist with the third party due to privity of contract (only the parties who signed).
They are to provide remedies for interested third parties.
What is W1 and W2 in the NEC contract?
Dispute Resolution
Option W1 - for use on projects that are NOT subject to the HGCRA 1996 (Construction Act 1996)
Option W2 - for use on projects where the parties ARE subject to the HGCRA.
