Case Study - All Flashcards
Open book accounting?
Contracts: Original contracts and variations.
Invoices and Payments: Detailed invoices and payment records.
Purchase Orders: Documentation of material purchases.
Cost Reports: Regular expense reports.
Labor Records: Hours worked and wages.
Subcontractor Agreements: Scope and pricing.
Receipts: Miscellaneous project expenses.
Change Orders: Modifications to scope.
Financial Statements: Balance sheets and income statements.
Audit Trails: Records of financial audits and reviews.
Contractor Insolvency and ‘Notional Final Account’?
Assessment: Evaluate completed work and identify outstanding tasks.
Documentation Review: Review contracts, invoices, and payment certificates.
Quantification: Measure completed work and assess value.
Valuation of Variations: Assess changes to the original scope.
Identification of Liabilities: Identify outstanding obligations.
Agreement: Negotiate and agree on the account.
Resolution: Resolve disputes through negotiation or legal means.
Closure: Finalize financial settlements and project completion plans.
Renovation and Refurbishment difference?
Renovation typically involves restoring or repairing existing structures, fixtures, or finishes to their original condition or improving them without significant alteration to their form or layout. It often includes tasks such as repairing damaged walls, replacing outdated fixtures, or refinishing floors.
Refurbishment, on the other hand, typically involves more extensive changes to modernize or upgrade a property, including structural alterations, layout changes, and installation of new fixtures or finishes. It may involve completely transforming the appearance or functionality of a space to meet modern standards or accommodate new requirements.
Frustration, Vitiation, Repudiation - Definitions and JCT Procedures?
Frustrated Contract: Unforeseen event renders performance impossible, leading to automatic termination.
Vitiated Contract: Void due to defects like misrepresentation, with remedies outlined in contract terms.
Repudiated Contract: Serious breach allows innocent party to terminate with notice, as per contract provisions.
If Client unilaterally terminates the contract (based on frustration)?
The JCT contract does not have a specific clause addressing frustration, as frustration is a common law doctrine that operates independently of contract terms.
In the event of frustration, parties would rely on common law principles rather than contractual clauses.
[SH: If Frustration is acknowledged (after resolution if there is a dispute) the parties are released from further obligations (including any damages?)]
So, how might a JCT Intermediate Building Contract 2016 be Terminated as a result of Frustration?
To terminate the contract due to frustration, the party seeking termination must demonstrate that the frustrating event makes performance impossible, illegal, or radically different from what was originally contemplated. The party must notify the other party of their intention to terminate the contract, citing frustration as the reason.
Upon termination, the parties are discharged from their future obligations under the contract, and any rights and liabilities accrued up to the point of termination are preserved. The contract sum is adjusted to account for work done and expenses incurred, and any payments due are settled accordingly.
Termination due to frustration is a legal concept and may require interpretation by a court or other dispute resolution forum if the parties cannot reach agreement on the consequences of the frustrating event.
What could be the consequences of terminating the contract based on Frustration?
If the client unilaterally terminates the contract when the contractor is not at fault under the JCT Intermediate Building Contract 2016, it may constitute a repudiatory breach by the client. Repudiation occurs when one party demonstrates an intention to no longer be bound by the terms of the contract. In this scenario, the contractor may have grounds to claim for damages resulting from the client’s repudiatory breach.
How would the contractor go about claiming damages resulting from repudiatory breach?
Notice of Breach: Contractor notifies client in writing of termination’s breach, asserting repudiation of contract.
Assertion of Rights: Contractor can claim damages under contract and common law.
Mitigation of Losses: Contractor minimizes losses, seeks alternative work.
Claims for Damages: Contractor pursues compensation for wrongful termination.
Dispute Resolution: If unresolved, parties resort to contract-specified dispute resolution mechanisms.
So, if the contract is determined to be Repudiated, what is the procedure?
Repudiated Contract: Clause 8 (Termination and Determination) of the JCT Intermediate Building Contract 2016 outlines the procedures and grounds for termination of the contract, including termination for default or repudiation by either party. The innocent party may terminate the contract in accordance with the provisions set out in this clause, which typically require giving notice of termination to the other party.
Contract mechanisms for change control, agreeing costs, time, programme, and loss and expense claims?
Change Management: Instructions detail scope changes.
Cost Agreement: Procedures for valuing variations.
Time Management: Progress monitoring and program updates.
Loss and Expense Claims: Contractor may claim incurred losses.
Structured Framework: Ensures clarity and transparency in contract administration.
Why might these mechanisms be impractical?
Administrative Burden: Managing numerous variations consumes time and resources.
Uncertainty: Unknown costs lead to disputes over valuation.
Contractual Constraints: Fear of cost overruns impedes necessary changes.
Risk of Overruns: Inflexibility increases the risk of exceeding contract sum.
Negotiation Required: Parties may need alternative solutions.
How might they be negotiated, what would be an appropriate solution?
Early Communication: Open dialogue to discuss challenges.
Change Management: Streamlined process for variation evaluation.
Cost-Sharing: Agreement to share financial risks.
Contingency Provisions: Reserve funds for unforeseen variations.
Progressive Payments: Payments based on completed works.
Dispute Resolution: Alternative mechanisms for dispute resolution.
