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QS APC > Contract Practice > Flashcards

Contract Practice Flashcards

1
Q

What is contract?

A
  1. A legally binding promise in return for a consideration.
  2. Offer, Acceptance, Consideration and Intent.
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2
Q

Define ‘express terms’

A

Terms of an agreement which are expressly agreed between the parties.
Ideally will be written down in the contract.

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3
Q

Define ‘implied terms’

A

Terms have not been expressly agreed between the parties, but it has been implied into the contract by common law or statute.

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4
Q

what is tort?

A

A civil wrong
Concerned with loss or harm

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5
Q

What is a statutory provision?

A

Law set out and must be complied with.
e.g. Equality Act 2010

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6
Q

What are contract provisions?

A

Refers to contract in question and the clauses set out.

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7
Q

What is a breach of Contract?

A

When one party in a binding contract fails to deliver accoring to the terms of the agreement. Could be both written and oral.

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8
Q

What is the Local Democracy, Economic Development and Construction Act?

A

Came into force in October 2011
It amended the HGCRA
It introduced an amended regime for payment and adjudication

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9
Q

What are the key provisions under the Local Democracy, Economic Development and Construction Act?

A
  1. Contracts - It repealed the need for contracts to be in writing and covered oral.
  2. Payments - determined when payments are due.
  3. Payment Notices: Contractual requirements
  4. Payment Notices - payees notice in default of payment notice.
  5. Pay less notice
  6. Suspension for performance for non-payment
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10
Q

What is a letter of intent?

A

A letter from the employer to the contractor indicating the employer’s intention to enter into a formal written contract.
The letter of intent asks the contractor to commence works without a signed contract.

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11
Q

What is included in a letter of intent?

A
  1. Contract sum
  2. Date of possession
  3. Date for completion
  4. ADR Method
  5. Expiry Date of letter
  6. Method of payment.
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12
Q

What is the key advantage of a Letter of Intent?

A

Allows works to commence before the main contract is signed

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13
Q

What are the dis-advantages of a letter of intent?

A
  1. Contractually less robust
  2. Employer loses incentive in negotiations on main contract.
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14
Q

In what circumstances might a letter of intent be used?

A
  1. When the employer needs to commence on site quickly
  2. Where materials have long lead times
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15
Q

What are the different types of Letter of Intent?

A
  1. Comfort Letter - a written document intended to give assurance that an obligation will be met.
  2. Instruction to proceed with consent to spend - allows work to proceed up to a certain value while the contract itself is still being drafted.
  3. Recognition of contract
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16
Q

What is assingment?

A

The process whereby the benefit of a contract is transferred from one party to another, but the burden of the contract remains with the original party of the contract.

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17
Q

What are antiquities?

A
  • Historical artefacts, pottery, coins
  • Bones, fossils
  • Archaeology
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18
Q

What should a contractor do if they discover such objects?

A
  1. Stop work immediately
  2. Take steps to preserve the location
  3. Inform the contract administrator
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19
Q

What are Defects?

A
  • A defect in workmanship, design or materials results in failure of the building or causes damage to people or property causing financial harm or losses to owner.
  • Rectification period is 12 months – most defects will become apparent in this time.
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20
Q

How does the NEC contract define defects?

A

‘A part of the works which is not in accordance with the works information’ or ‘works which are not designed by the contractor’

21
Q

What is a patent defect?

A

Defects which can be discovered by reasonable inspection – cracks, broken windows, missing tiles, sagging gutters etc.

22
Q

What is a latent defect?

A
  • Defects which cannot be discovered by reasonable inspection
  • Problems found several years after completion (issues with foundations etc.)
23
Q

How long is the defect rectification period?

A

Usually 12 months. With all 4 seasons, most defects will become apparent.

24
Q

What is novation?

A

Refers to the process by which the design consultants are contracted to the client but are then ‘novated’ to the contractor.

25
Q

What is retention?

A
  • A percentage of sums certified for payment held by the Contractor/Employer (3 – 5%)
  • RICS Guidance on Retention – 1st Edition – 2012.
  • Purpose of retention to safeguard against defects that the contractor/subcontractor may fail to fix.
  • Alternative to retention is a ‘retention bond’.
26
Q

When is retention released?

A
  • On PC first half of retention released.
  • Second half certified and released upon the expiry of the defect period.
27
Q

What can you use retention for?

A

If a contractor does not return to rectify defects, then retention can be used to fund the payment to correct these defects. Relevant notices will need to be given before works can be undertaken.

28
Q

What can you use retention for?

A

If a contractor does not return to rectify defects, then retention can be used to fund the payment to correct these defects. Relevant notices will need to be given before works can be undertaken.

29
Q

What is CPD (Contractors Design Portion)?

A

It is associated with JCT construction contracts.
It is an agreement for the contractor to design specific parts of the works.

30
Q

How are CPD elements executed?

A

A performance specification is provided which the contractor provides a design and proposals for in response.

31
Q

What are domestic sub-contractors?

A

Chosen by the Contractor to execute a works package.
No employer influence.

32
Q

What are named sub-contractors?

A

Employer provides a list of named sub-contractors who are pre-approved.
Contractor selects one from the list and appoints.

33
Q

What is insolvency?

A

The inability to pay ones debts.

34
Q

How can we protect at tender stage against insolvency?

A
  1. Financial checks
  2. Bank References
  3. Previous references
  4. Request a bond or PGC
35
Q

What is termination?

A

When a contract is terminated and both parties no longer are required to complete their once, binding obligations.

36
Q

Can a contractor suspend works for non-payment?

A

In accordance with the Housing Rights and Grants act, and the Construction Act 2009. Yes.

37
Q

What are delay damages?

A

Where the employer has suffered loss because of the late completion of works.
(loss of rent, loss of income, legal cost, capital salaries).

38
Q

What is PC?

A
  • It is a JCT term for Practical Completion
  • Practical completion means ‘fit for purpose’ or sufficiently complete for the employer to take over and nothing remains outstanding.
  • You cannot rescind a PC certificate after it has been issued.
39
Q

What is a Non-completion certificate?

A
  • Issued by the CA to confirms that works have not been completed by the contractual completion date.
  • Consequences are:
    o Employer to issue pay-less
    o Employer has right to withhold liquidated damages
    o Employer must write to contractor notifying them of intention to levy LD’s.
40
Q

What happens upon PC?

A
  • 50% retention released
  • Defect period starts
  • Employer required to start insuring the building
  • Liquidated damages ceased.
41
Q

What is an interim valuation?

A

A document which is put forward by the Contractor which contains current progress against each element of work.

42
Q

What are the main elements of an interim valuation?

A
  • Prelims
  • Measured works
  • Variations
  • Fees
  • Retention
  • Materials on/off site
  • Contra-charges
43
Q

What are the implications of an over and under value of works?

A
  • Over valuation - high risk to the contractor/employer
  • Under valuation - could cause financial strain on contractor/subbies
44
Q

What does the term ‘on account’ mean?

A

For any item where works may have been undertaken in good faith and a payment is due but not yet fully assessed or agreed.

45
Q

What is a variation?

A

A change in the scope of works.

46
Q

What happens if the employer fails to pay the amount due before the final date for payment?

A
  • Liable for interest (subject to contract)
  • Contractor may wish to suspend works
47
Q

What is the payment timeline of a JCT D&B?

A
  • Sub-Contractor should make application 7 days before ‘Due date’
  • Payment notice should be issued no later than 5 days after the due date.
  • Final date for payment is 14 days after the due date.
  • Pay-less should be issued no less than 5 days before the FDFP.
48
Q

What is the payment timeline of an NEC ECC?

A

QS APC (23 decks)

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