Contract Practice Flashcards
Under JCT Standard what are the roles?
Employer = Payer
Contractor = Payee
Contract Administrator = Certifier
QS = Valuer
Under JCT D&B what are the roles?
Employer = Payer
Contractor = Payee
Employers Agent = Certifier
Under NEC 3 What are the roles
Employer = Payer
Contractor = Payee
Project Manager = Certifier
When was JCT Last updated?
2016
Name 5 types of JCT Contracts
JCT Standard Building Contract (with & without quantities, with & without CDP) JCT Design and Build JCT Intermediate JCT Minor Works JCT Major Construction Works
What are the key differences with regards to valuations and interim payments between D&B and Standard Contracts?
- No QS offically listed under D&B
- Certifier is known as Employers Agent under D&B, but Contract Administrator under standard
- Under Standard the contractor must submit interim application no later than 7 days before the due date, under D&B they can submit anytime up to due date
What is total payment cycle under JCT D&B?
14 Days
What is total payment cycle under JCT Standard?
21 Days
Name 2 bits of legislation that influenced the interim payment structure and payment dates?
Housing Grants, Construction and Regeneration Act 1996
Local Democracy, Economic Development and Construction act 2009
What did HGCRA State?
- Any project over 45 days is entitled to interim payments
- Payments are to be done by either valuing works to date or stage payments
- Stated that party cannot just withhold monies without relevant notice being issued.
What did LDEDCA state?
- gave payee right to suspend due to late payement
- removed existing barriers to adjudication
- Made all written and verbal contracts subject to the act
- Payee allowed to issue payment notice if Certifier fails to do so within 5 days of due date
- Payment notices have to include build up
- Pay less notice
- Made it possible for sum due to be zero.
Name the changes between JCT 2011 - 2016
- Now a set date each month for valuation as oppose to ‘monthly’
- Interim valuations are to occur monthly even after PC but in 2011 it was 2 monthly after PC
- Inclusion of CDM Regulations 2015
- Inclusion of Public Contracts Regulations 2015 and right to fair pay.
- Any assessment of Loss / Expense must not be done within 28 days of receipt of 14 days from any update, 2011 there was no time limit
- Client is now employer
To make a contract you must have:
- Offer
- Acceptance
- Consideration
- Capacity
- Legality
- Intent
What is a contract?
A legally binding agreement to carry out a service / provide goods that can be upheld in the court of law
What are the different sections of JCT Contracts?
- Recitals
- Articles
- Contract Particulars
- Attestation
- Conditions
- Schedules
What are the 6 types of NEC contracts
- Priced contract - with activity schedule
- Priced contract - with BoQ
- Target Contract - with activity schedule
- Target Contract - with BoQ
- Cost reimbursable
- Management
What are some of the key changes with NEC 4
- Includes contractors proposals
- employer is now known a the client
- Consensual dispute is added - 4 week negotiation period
- Contractor can now claim for producing quotes that are not instructed
- Works information is now called scope
Name some of the NEC X clauses
X1 - Price adjustment for inflation
X7 - Delay Damages
X16 - Retention
Name NEC Y Clauses
Y1 - Project bank account
Y2 - Housing grants, construction and regeneration act 1996
Y3 - Contract act 1999
What are FIDIC Contracts
International Federation of Consultant Engineers
Name the 4 types of FIDIC Contracts
Red Book - Employers Design
Yellow Book - Design and Builds
Silver Book - Turnkey
Gold Book - Design, Build and operate
What is Novation?
Transferring the rights of one party to another party.
What is Assignment?
Like novation however the contract parties stay the same. it only transfers the rights
What are Third Party Rights?
Providing rights to a third party to be able to enact on the clause or benefit from the contracts
Name 4 types of bonds?
- Performance Bond - where one party agrees to underwrite the performance of a contractor in case of breach of contract or failure. It is typically 10% of contract sum to allow for re-tendering and lasts until project is complete.
- Advanced Payment Bond - Bond to provide guarantee against paying for items in advance
- Off-site Materials Bond - Bond to cover payments of materials off site
- Retention Bond - Bond in lieu of taking % of retention.
What is an alternative to a performance bond?
Parent Company Guarantee - Allows a parent company or group to underwrite performance of contractor. Lasts for 12 years as oppose to ending when project complete.
What are the JCT Options for insurances?
A) Contractor insures new works
B) Employer insures new works
C) Employer insures existing works
What is subrogation?
Allows the insurer to step into the shoes of the insured to enact on a benefit of the contract
Name 3 types of insurances
- Professional Indemnity Insurance - Covers act of negligence
- Employers Liability Insurance - Covers the employer for any injury/ disease/ death to an employee
- Contractor All risk - Covers contractor for loss / damage to the works.
How are advance payments dealt with?
They must be agreed in the contract, what for, when, value and how they are to be recovered.
What are the elements of a valuation?
M - Measured works P - Prelims O - On / off site materials V - Variations / Change E - EOT / Loss & Expense P - Provisional sums R - Retention
Most People Own Vans Except the Proper Rich
What are 3 fluctuation options under JCT?
A - Taxes / Leves
B - Materials & Labour Taxes / Leves
C - Formula Adjustment
What are the 4 JCT Constituent Bodies?
Royal Institution of Chartered Surveyors
Royal Institute of British architects
Association of independent construction Adjudicators
Chartered Institute of arbitrators
What is retention?
A deduction of payment to provide the employer with security following completion that any defects to the works will be rectified.
What do you know about retention?
- Amount of retention is not stipulated within JCT contract but industry standard is 3 or 5%.
- 3% or standard or D&B and 5% on minor works or intermediate
- Retention is released 50% on practical completion and 50% upon issue of certificate of making good defects
- Alternative is retention Bond
What are collateral warranties?
- create contractual link between parties that would otherwise not have been linked
How would you deal with materials off site?
- Must be clearly listed in the contract
- Must be clearly labelled for employer and project
- QS Must visit and check they are labelled, quantity is correct and they are not damaged
- Vesting certificate must be in place
- Must be insured
- Must be stored properly away from weather etc.
What is an EOT?
Extension of time is when the completion date is adjusted to prevent the contractor being charged LD’s
Under JCT what constitutes an EOT?
Must be a relevant matter such as:
- Adverse Weather
- Late possession of site
- Impediment by the employer or employers team
- CAI’S
What are Loss and Expenses?
They are losses or expenses incurred by the contractor that are not deemed to be able to be recuperated through any other avenue under the contract
Under JCT what constitutes an L&E?
- Adverse Weather
- Opening up of the completed works
- Discrepancies in the contract
- Antiquates
What is a global claim?
One where they put all claim items into a single claim. QS can ask them to split them to relevant items prior to assessing.
What is Concurrent Delay?
When there is both a contractor and employer led delay within the programme
In concurrent delay which delay is the extension based upon?
- Dominant cause of delay as based on case law this is the fairest assessment
- If contractor has programme float and the employers delay eats into it before an EOT is required that is fine
What are Liquidated Damages?
Genuine pre-estimate of likely loss on the event of an delay to the completion of works
What are named Sub-contractors?
Employer provides a list of contractors they would like to work on the project it is the contractors discretion as to whether they use them or not
What are Nominated Sub-Contractors?
Employer states contractors that have to work on the project and contractor has to use them.
What are the valuation rules
stated within contract conditions, a scale of how to value variation to works under the original contract and how best to value them.
Can use a number of different valuing sources:
- pricing document / Bill rates
- Contractor Quotation
- Fair assessment
- Day Works
What must be in place before LD’s can be deducted?
- A non- completion certificate
- A with holding notice
What happens if the LD are construed to be a penalty?
they will not be enforceable and the employer will have to sue for any actual direct loss that can be proved.
What are the benefits of having LD’s in a contract?
The contractor knows the consequences of delay from the outset
What if the employer actually suffered no loss?
Irrelevant they can still deduct the liquidated damages stated within the contract
Which bonds under JCT are conditional and unconditional
Performance Bond - Conditional
Retention Bond - Conditional
Advanced Payment - Unconditional
Offsite Materials - Unconditional
Name the different sections of a JCT contract
Recitals Articles Contract Particulars Attestation Conditions Schedules
Name 10 Things found within contract Particulars
Base Date date of possession Completion date sectional completion dates amount of retention Insurance options rate of liquidated damages rectification period Date of first valuation Limit of insurance cover
What’s included within recitals
Description of works
Location of site
Where drawings and employers requirements can be found
What’s included within articles
Contract sum
Name and addresses of design team e.g. architect, QS etc
