Contract Compilation & Execution Flashcards
What is a contract
A legally binding agreement
Needs offer, acceptance and consideration under English law and both parties must be intended to be bound and fit to enter into contract
Unilateral vs bilateral contract
Unilateral - one promise in exchange for another promise
Bilateral - exchange of mutual promises
Deeds vs under hand
Deeds - solemn promise, signed and witnessed, consideration not required, 12 year limitation period
Under hand - can have any form, simple signature required, 6 year limitation period
What is tendering
Process of finding and appointing a contractor
Client approaches market (invitation to treat)
Contractors submit bids (offers)
Bids are reviewed and evaluated
Most suitable tenderer becomes contractor (acceptance)
Best value or lowest price award
What is a letter of intent
A letter from an employer to a contractor (or from contractor to SC) indicating the employer’s intention to enter into a formal written contract for works described in the letter
And asking the contractor to begin those works before the formal contract is executed
What is determination
A contract being stopped before completion
Usually a result of one party not being able to continue (insolvency, default of payments from client)
What is discharge
Extinguishing rights and obligations
By performance (normal), agreement or frustration (contract now impossible to perform at no fault of the parties)
Unliquidated damages basis for assessment
Assessed on basis of reasonably arising loss
What are liquidated damages
A genuine attempt to pre-estimate loss in the event of specific breaches
What are the implications of privity of contract
No third party can be affected (obligations)
Only the parties can enforce terms (rights)
Third party cannot sue under contract they were not party to
What are collateral warranties
Agreements used where the contract creates an obligation from one party to provide a warranty to a third, independent party outside the contract (e.g. residential development extending to tenants)
Key elements of NEC4 contracts
Clauses (terms and conditions)
A section for project parameters (Contract Data)
Definition of works (Scope, site information)
Pricing information (the Prices)
Design content (Scope including drawings and specifications)
Composition of NEC4 Contract
Core clauses
Main option (provides payment method)
Secondary options (X clauses)
UK specific clauses (Y clauses)
Dispute resolution (W clauses)
Custom options (z clauses)
What is a compensation event
An event which can affect the cost to the client, the time when the works will be completed or both
There are up to 29 potential CE’s under NEC4 dependent on X clauses selected
What are early warnings
Obligation to notify other party of any event that may:
Increase the prices
Delay completion
Delay meeting a Key Date
Impair the performance of the works once in use