Contract Law Flashcards
Simple definition of a contract?
Legally Binding Agreement
What are the six requirements for a bonding contract?
1 - Agreement between parties
2 - Parties need to have Capacity to enter into an agreement
3 - Genuine intention to for a binding legal relationship
4 - Contract has to be supported by consideration
5 - Contract must have lawful intent and not be contrary to public
policy.
6 - Certain Formalities may be required
When does an offer lapse?
After a specified time, after a reasonable time or upon the death of the offer.
Does a qualified acceptance create a contract?
No the Acceptance must be unconditional
Can action amount to acceptance rather than a verbally communicated acceptance of an offer.
Yes acceptance may be by action rather than by oral or written communication
How can you check if someone entering into a contract on behalf of a corporation is authorized to do so?
Obtain a company by law that states the person is authorized to do so
What determines whether an owner is allowed to make changes to the scope of the work.
Whether it is written in the contract
What is an agreement between owner and the contractor to make a certain change in the contract work for an agreed price or method of payment?
Change order
Contractor has no right to change the work without what?
Written permission from a consultant
3 common methods for payment used for changes in work
Contractor quotes a price for a proposed change is then payed monthly till completion of extra work
Paid for at unit price included in the contract
Work is paid for using a cost plus formula
3 common methods for payment used to settle claims, disputes and matters of interpretation?
Negotiation
Mediation
Arbitration
Who is responsible for creating builders lien rights?
Provincial legislation
What is a builders lien?
A charge or encumbrance a person has on some property for payment of a debt.
Why is the owner required to holdback a percentage of the payments to the contactor?
The fund stands in the place of the property so that, if a lien is registered, the owner can use the retention fund to clear the lien from the land title.
In Alberta, the statutory holdback is what value of the work done?
10%
The Alberta lien statute requires the contractor to issue the certificate of ?
Substantial performance when the contractor considers the work to be substantially incomplete
Where do you file a lien and what is it against?
Filed at the Land Titles Office against the land title of the project property.
If not written in the contract does a contractor require permissionof the owner to submit subcontracts to outside parties?
No
What is Novation?
The process of novation is used when a party to a contract wants to pass both there rights and obligations to a third party.
Another name for a tender?
A Bid
Why do owners elect to use the bid process?
To use competition to help obtain lowest price for the project
What governs the process of public bidding?
Governed by municipal, provincial, or federal regulations depending on the funding of the project.
Purpose of a surety bond?
Bonding company guarantees a contractor will meet certain obligations to the owner
Why can signing a surety bond be costly
If all the details and implications are not understood prior to signing
