Contract Admin Flashcards
What is a Contract Administrator (CA)?
A third-party role, usually the surveyor or architect, appointed to administer the building contract between employer and contractor — ensuring both parties meet their obligations.
What are the core duties of a CA?
Issuing instructions
Certifying valuations, extensions of time, and completion
Monitoring progress and quality
Chairing meetings and minuting
Managing contract documentation
When is the CA appointed?
Typically before construction begins, often during tender or pre-contract stages, depending on procurement route.
What are Instructions under a JCT contract?
Architect’s/CA Instructions (AIs): formal directions to the contractor to vary the works, correct defects, or clarify details.
Must be in writing.
What is a Variation?
A change to the works, quantity, or method from the original contract.
Must be issued as a formal instruction and usually leads to a change in price and/or time.
What is a Valuation and Interim Certificate?
Valuation = contractor’s progress claim
CA assesses and certifies it via an interim certificate
Usually monthly, until Practical Completion
JCT Standard Timeline for payment
- Interim Payment Application
- The Contractor submits an application (usually monthly).
- The application must be served in accordance with the contract (often 7 days before the due date).
- Due Date
- Often 7 days after the application is received (may vary).
- Payment Notice
- Must be given within 5 days after the due date.
- Issued by the Employer (or Architect/Contract Administrator).
- Final Date for Payment
- Usually 14 days after the due date (check contract specifics).
- Pay Less Notice
- Must be issued at least 5 days before the final date for payment.
- States the reduced amount the payer intends to pay and how it was calculated.
What is Practical Completion?
The stage when the works are substantially complete and can be used for their intended purpose.
CA issues the Practical Completion Certificate, triggering retention release and start of defects period.
What is the Defects Liability Period?
A period (often 6–12 months) post-Practical Completion where the contractor must remedy any defects at their own cost.
Ends with Final Certificate issued by CA.
What are Common CA Documents?
Contract drawings/specifications
Instructions
Interim certificates
Variation orders
Minutes of meetings
Final account & Final Certificate
What are Bonds in Construction Contracts?
A bond is a guarantee from a third party (often a bank or insurance company) that ensures the contractor will perform the work as agreed.
- Performance Bond: Guarantees completion of work.
- Payment Bond: Ensures subcontractors and suppliers are paid.
What are Guarantees in Construction?
A guarantee is a promise from the contractor or manufacturer that the work or materials will meet certain standards for a defined period after completion (e.g., 2-year guarantee for defects).
Can cover things like materials or workmanship.
What are Warranties in Construction?
A warranty is a legal promise that certain aspects of the project (e.g., design, materials) will be free from defects for a specified period, usually longer than guarantees.
Often included in construction contracts to protect the client against issues post-completion.
What are Third-Party Rights?
Third-party rights allow a party not directly involved in the contract to enforce terms of the contract (e.g., warranties or guarantees).
- Often used in collateral warranties where the building owner, tenants, or funders might have the right to claim under the contract.
What is Collateral Warranties?
A collateral warranty is a side agreement where a third party (often a funder, tenant, or building owner) is given the right to enforce certain provisions of the main contract.
- Common in projects where a third-party investor is involved or the building is leased.
Building Defects Case Law – Key Case
London Borough of Merton v Stanley [2001]
Issue: Contractor’s failure to follow plans resulted in defects.
Outcome: The court emphasized the contractor’s responsibility for defective works and the extent of the contractor’s duty to make good those defects.
Key learning: Contractors must adhere to the terms of the contract and workmanship standards.
Commencement of Works – When do works officially commence?
Works are deemed to commence when the contractor starts work on-site as per the contract’s start date.
Usually marked with a formal Notice of Commencement issued by the contractor or client.
What is Completion in a Construction Contract?
Completion occurs when the works are substantially finished, and the client can occupy the property for its intended purpose.
Practical Completion: Works are largely completed, but minor defects may remain.
Completion Certificate: Issued once the works are finished and comply with the contract terms.
Construction Insurance – What types exist?
Contractor’s All Risk Insurance (CAR): Covers damage to the works and third-party claims during construction.
Professional Indemnity Insurance: Covers consultants against errors in professional services.
Public Liability Insurance: Protects the contractor against third-party claims for injury or damage.
Contract Administration Case Law – Key Case
St. Martins Property Corporation Ltd v Sir Robert McAlpine Ltd [1994]
Issue: Dispute regarding the validity of an interim certificate and the role of the Contract Administrator in certifying payment.
Outcome: Court reinforced that the CA’s role in certifying payments must be performed properly and independently according to contract terms.
Key learning: The Contract Administrator’s role is independent, and any act or omission affecting certification must follow the terms of the contract strictly.
What is the Commencement Date in Contracts?
The commencement date marks the official start of the contract, triggering the contractor’s obligations to begin work on site.
It’s important for determining timeframes for completion and penalties for delays.
What is a Completion Certificate?
Issued by the Contract Administrator or Employer’s Agent when the works are completed to satisfaction, confirming that the contract has been fulfilled and no further works are required, aside from any minor defects (if any).
Case Law on Contract Administration: **
Costain Ltd v Charles Lawrence International Ltd [2006]
Issue: Dispute regarding delays and the Contract Administrator’s role in certifying extensions of time.
Outcome: The court clarified the Contract Administrator’s role in granting extensions of time is discretionary, but must be based on clear evidence and the contract’s provisions.
Key learning: Contract Administrators must exercise their discretion responsibly, based on clear, documented facts.
What are Defects in Construction?
Defects refer to any part of the work that does not comply with the contract specifications, drawings, or relevant building standards.
Identified during the Defects Liability Period (DLP).
The contractor is usually required to remedy defects at their own cost
How is Defect Liability Period (DLP) Managed?
DLP starts after Practical Completion and typically lasts 12 months.
Contractor’s responsibility to repair defects within the period.
Defects can include poor workmanship, material failure, or non-compliance with design.
What are Extensions of Time?
An Extension of Time is a formal adjustment to the completion date due to delays that are the responsibility of the client, or events beyond the contractor’s control (e.g., adverse weather, changes in law).
Must be requested in writing by the contractor and approved by the Contract Administrator (CA).
How are Extensions of Time Granted?
The contractor must submit evidence supporting the delay and request the extension within the required timeframe.
Extensions are granted for delays caused by client actions, variations, or force majeure events.
Liquidated damages may apply if there are delays not excused by the extension.
What is a Final Account in Construction?
The Final Account is the final statement of all sums due under the contract, covering:
Works completed
Variations
Claims for loss and expense
Retentions
The contractor submits the final account, and the client may dispute or negotiate it.
What is the Purpose of a Final Certificate?
A Final Certificate is issued by the Contract Administrator once all works are completed and the final account is agreed.
Confirms the project is complete and the contractor’s obligations are fulfilled.
Releases any retentions and marks the end of the contract.
What is a Letter of Intent?
A Letter of Intent is a preliminary agreement sent to a contractor to begin work before the formal contract is signed.
Provides an indication of intent to enter into a contract.
It does not constitute a legally binding contract but allows work to start to prevent delays.
What is Loss and Expense in Construction Contracts?
Loss and Expense refers to additional costs that arise due to unforeseen events or changes, such as:
Delays caused by the client
Changes in scope (variations)
Disruption or interference on site
The contractor can claim for loss of time or extra resources required to complete the project.
How are Loss and Expense Claims Managed?
The contractor must notify the employer or contract administrator within a set time period of any event that will result in a claim.
The contractor must provide detailed records to support the claim for additional costs.
Claims are usually subject to contractual conditions and dispute resolution processes.
How is Payment Managed in Construction Contracts?
Interim payments are made at agreed intervals, typically based on work completed or stages reached.
The Contract Administrator certifies the amount due to the contractor.
Final payment is made after practical completion and settlement of the final account.
What is the Importance of Payment Provisions in Construction Contracts?
Ensures cash flow for contractors and subcontractors.
Failure to comply with payment terms can lead to payment disputes and claims for interest on late payments.
Statutory interest can be applied if payment is delayed beyond the contract period.
What is Liquidated Damages in Construction?
Liquidated damages are a pre-agreed sum set out in the contract to compensate the employer for delays caused by the contractor.
Calculated based on the loss or inconvenience caused by the delay.
The contractor must pay these if they fail to complete the project on time, unless extensions of time are granted.
What is the Importance of Documenting Variations?
Variations must be formally documented and agreed upon through the contract’s variation process.
Variations affect costs and completion dates.
Failure to document can result in disputes over payment or time extensions.
