Change, Breach and Termination Flashcards
Who’s consent may be needed to a variation even if both parties agree to it?
A person who has been granted third party rights under the Contracts (Rights of Third Parties) Act 1999
Novation means what?
Creating a new contract (with your customer’s agreement) through which someone will take over contract performance for you
The Housing Grants, Construction and Regeneration Act 1996 only applies to what?
Construction contracts (whether or not they are in writing)
What is the term used in contract law to describe change to the content of a contract after it comes into existence?
Variation
What is a blue pencil clause?
A clause that invites a judge to selectively void certain offending clauses, but to leave the rest of the contract operative
Name three common areas of uncertainty for which provision is made within construction contracts to allocate risk between the parties?
Unknown ground conditions
The risk of change in currency values
The risk of shortages or price increases in building materials
Blue Circle -v- Holland Dredging (1987) is an important case on the ‘limits of scaleability’. Why?
A court decided that even if a contract has a clause entitling a client to add extra work to the contractor’s ‘package’ there are implicit limits to what can be added. Here increasing a dredging contract to include creation of an island was too big an increase in the scale of the work to fit within a standard clause requiring a contractor to accept extra work in the contract.
If a contractor sub-contracts performance of part of the works to a sub-contractor he will…
Still be liable under the main contract for successful performance of those sub-contracted works
What happened in Linden Gardens -v- Lanesta Sludge (1994) ?
A purported assignment of the benefit of a contract was made by one client to its replacement. The assignment was ineffective because the contract in question required the contractor’s consent to any assignment. No consent had been obtained. The ‘new’ client tried to sue for damages due to contractor default but was unable to show a cause of action because no rights had in fact been validly assigned to it. The old client was unable to sue because it hadn’t suffered any loss. The court decided that the old client was an implied trustee of the contractual rights that they had tried unsuccessfully to assign to the new client. Therefore the new client had beneficial ownership fo those rights in equity, whilst legal ownership of they had stayed (stranded) with the original client. The old client could thus sue the contractor on behalf of the new client and their losses.
When is quantum meruit available?
If a contract contains no price provisions
Name three provisions of the Housing Grants, Construction and Regeneration Act 1996?
Construction contracts of 45 days or greater duration must have provision for ‘stage payments’
‘Pay when certified’ and ‘pay when paid’ clauses are not allowed in construction contracts
Construction contracts must provide rights for contractors to suspend work where they are not paid
What price adjustments are likely to be found in a ‘fixed price’ contract?
Indexation
Taxation
Change of law
When are liquidated damages permissable?
If they are a genuine pre-estimate of loss
Making time of the essence means what?
Notifying the other party to the contract that you are now going to insist upon strict performance of applicable contractual timescales, and you will regard any failure to do so as a material breach of contract giving grounds of termination.
What is a promise given by a bank or other financial institution (for a fee) which will pay up a specified amount if a named person fails to comply with their contractual obligations?
Performance Bond
