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Tom APC 2023 > Contract Practice > Flashcards

Contract Practice Flashcards

1
Q

What’s the difference between Assignment and novation

A

An assignment transfers the benefit of a contract to another party but not the burden

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2
Q

Can the right to assign be excluded or restricted by contract

A

Yes

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3
Q

What’s the difference between collateral warranties and third party rights

A

Third party rights can be narrowed to specify exactly which rights and/or contract terms are to be transferred.

CW’s transfer the terms of the entire contract

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4
Q

What’s the benefit of third party rights over collateral warranties

A

Less expensive
Less admin and time

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5
Q

When would a Letter of Intent be used

A

As an interim arrangement to mobilise construction prior to a formal contract being executed

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6
Q

What’s a letter of intent

A

A document expressing an intention to enter into a contract at a future date

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7
Q

What are the four principles of a contract

A

Offer
An intention to create legal relations
An agreement
Consideration

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8
Q

What’s a consent to spend

A

A letter with instructions to proceed up to a certain value while the contract is still being drafted

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9
Q

Can a consent to spend be captured within a letter of intent

A

Yes

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10
Q

What’s a letter of comfort

A

A written document intended to give assurance that an obligation will be met

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11
Q

What is a performance bond

A

It’s a bond taken out by the contractor to compensate the Client if they default or fail to meet their obligations

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12
Q

How is the value of a performance bond generally calculated

A

As a % of the contract sum (usually 10%)

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13
Q

What is a parent company guarantee

A

A financial commitment made by the parent company that it will step in and fulfil the contractors obligations if they fail to do so.

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14
Q

How’s the value of a parent company guarantee calculated

A

% of the contract sum (often 75%)

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15
Q

What’s the benefit of a parent company guarantee compared to a performance bond

A

It’s free

Performance bond may have conditions that need to be met before paying out

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16
Q

What are the two types of performance bond

A

Conditional
Unconditional

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17
Q

What is non-negligence insurance

A

A policy which provides cover for damages or losses without any clear demonstration of negligence

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18
Q

Who generally obtains a non-negligence insurance policy

A

Contractor

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19
Q

How can the client protect themselves from advanced payments

A

Advanced payment bonds

Vesting certificate

Order direct

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20
Q

What 5 things do I need to check before certifying advanced payments

A

That they are properly identified
Separately stored
Insured
Free from encumbrances
And ordered in a timely manner

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21
Q

What can be used to check that the material off site is for my site

A

Stickers

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22
Q

What does free from encumbrances mean in relation to advanced payment

A

The payment is made without any existing claims, debts or legal obligations against it

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23
Q

What’s fluctuation option A

A

Contribution, levy and tax changes levied by the government for labour and materials

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24
Q

What’s JCT fluctuation option B

A

Labour, material costs and tax

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25
What’s JCT fluctuation option C
Formula adjustment
26
What date in the contract are fluctuations measured against
Base date
27
What are the main suites of contract
JCT (Joint contract tribunal) NEC (new engineering contract) FIDIC (international federation of consulting engineers) Bespoke
28
What’s a collateral warranty
A contractual link between two separate parties
29
What collateral warranties do you know of
Purchaser/ tenant Employer Funder
30
Name the pros and cons of a PCSA
Pros: - Early design input from the contractor - Can secure price on elements of the contract sum Cons: - Price of the remaining works may be less competitive - If costs are too high will have to start tender process again
31
What prices would you secure under a PCSA
- prelims - risk allowance - OH&P - Design fees - inflation
32
How many NEC contracts are there
6
33
Name some insurances
Employers liability Public liability Contract works PI Non-negligence Existing buildings
34
What is Employers Liability
Insures the people the policy holder employs in case of injury or death in a business environment
35
What is PI
Insurance which cover’s professional negligence
36
What is contractors all risks insurance
Insures for accidental physical loss or damage to a property/ materials during the construction period
37
What’s the difference between an Employers Agent and Contract Administrator
EA’s are on Design and Build whereas CA’s are traditional EA’s issue notices. CA’s issue certificates
38
What Contract are Contract Administrators used on
Traditional JCT’s
39
What are the common contract docs on JCT D&B
- the contract (with any amendments) - CSA - Employers Requirement - Contractors Proposals - prelims
40
What are the time frames for the payments cycle on Leeds
Contractors QS submits application 7 days before due date 5 days from due date I issue my valuation and payment notice Final date for payment is 14 days from the due date
41
How many days before the final date for payment can I issue a pay less notice
5 days
42
How do you calculate the first date for payment
28 days after possession
43
What happens if I don’t issue a payment notice within the required time frames
The contractors application becomes the certified valuation
44
What happens if you make an error in the payment notice
Ring the contractor to highlight the error and issue an amended version
45
Why would advanced payments be requested by the contractor
- secure the price - prevent delay due to long lead times - help with cashflow
46
What’s a vesting certificate
A certificate which transfers the ownership of the materials to the client
47
Can you vest against a deposit
No, as there’s no material to vest
48
Whose name is the vesting cert in
Clients
49
What’s the disadvantage of an advanced payment bond
Costs money
50
What are third party rights
An alternative to collateral warranties which allow a third party to be written into a contract
51
What’s an extension of time
An adjustment to the completion date relieving the contractors liability to pay liquidated damages
52
What’s a relevant event
An event that entitles the contractor to an extension of time
53
Give some examples of a relevant event
Variations Particularly Adverse weather Delays in receiving possession Force majure
54
What’s a relevant matter
A delay caused by the client entitling the contractor to loss and expense
55
What are the loss and expense heads of claim
Prelims Overheads Loss of profit Interest Finance charges
56
Why would you use an advanced payment bond
The bond will protect the client in the event that the contractor fails to fulfil its contractual obligations, for example if the contractor becomes insolvent.
57
What types of bonds do you know of
Advanced payment bond Performance bond Retention bond
58
What is a retention bond
A bond is taken out instead of taking retention from interim valuations.
59
Benefit of a retention bond
Improves contractors cashflow
60
What are the 4 main features of the proposed JCT 2024
Modernising and streamlining- gender neutral language and flexibility of electronic notices New Target Cost contract Building safety 2022 act updates Future proofing
61
Does a relevant matter mean an EoT also has to be provided and why
No. As the Contractor may be entitled to loss and expense without any programme delay
62
How long does the contractor have to submit their information required for the final account
3 months after PC
63
What are prime costs
Similar to provisional sums however they only include the material provide.
64
Other than prices what else can you secure under a PCSA
Programme
65
Where can you find a advance payment bond template
In the JCT contract
66
How would you assess the EoT claim in terms of delay
I would review the delay against the critical path
67
Give some examples of a relevant matter
Failure to give the contractor possession of site Delays from receiving instructions Failure by the client to supply materials or goods
68
What’s a certificate of non completion
A certificate issued when the contractor does not meet the contract completion date
69
How long does the EA/CA have to respond to the contractors EoT request
12 weeks
70
What happens to the retention bond at PC.
The bond amount reduces by 50%
71
How does a retention bond work
Valuation are paid to the contractor without deducting retention. The value of the bond increased as works progress in line with what retention would have been paid out. At PC the value of the bond decreases by 50% At the end of the defects liability period it drops to 0%
72
Who pays for a retention bond
Contractor
73
What act requires construction contracts to include specific provisions relating to payment and adjudication
Construction Act 1996
74
When was the construction act amended
2011
75
What scheme applies when construction contracts don’t comply with the Construction Act 1996
The scheme for construction contracts
76
What does part 1 of the the scheme for construction contracts do
Makes provision for adjudication where the contract does not comply with the requirement for adjudication in the Construction Act
77
What does part 2 of the the scheme for construction contracts do
Replaces those provisions/ lack of provisions in relation to payment that do not comply with the Construction Act
78
Name some requirements of the Construction Act 1996 (as amended in 2011)
The right to adjudication The right to suspend performance for non- payment Each and every persons will require a payment notice to be issued within 5 days of the due date. If the payer fails to value completed work, the payee can serve a payment notice. Payment notices are required to contain the basis upon which notified sums are calculated (can be £0) A payer must pay the notified sum unless it serves a pay less notice. A pay less notice must value the work at the date the notice is served rather than the due date.
79
What must be in place before LD’s can be deducted
Non completion cert Pay less notice
80
What happens when time is at large
There is no set completion date The contractor only has the obligation to complete the works in a reasonable time LD’s can’t be claimed
81
Give an example of a defined and undefined provisional sim
Defined - Reception Desk Undefined - Groundwork’s below an existing structure where extent of work cannot be determined until the structure is demolished
82
What are the common contract docs on JCT standard building contract (with quants)
The contract and any amendments Bill of Quants Specification & drawings Prelims
83
What’s a contract
An legally binding agreement between two parties to fulflil and obligation.
84
What are the requirements of a valid contract
Offer Acceptance Consideration Capacity Intention to create legal relations
85
Does a contract have to be in writing
No
86
What is concurrent delay
It’s where more than one event occurs at the same time but not all of the events enable the contractor to claim an EoT or loss and expense.
87
Where does JCT deal with acceleration
Deals with in schedule 2 (variation and acceleration procedures)
88
How would you go about instructing the contractor to accelerate the programme
The contractor is required to put together an acceleration quote which includes the additional resource, revised programme and associated additional costs. The consultants teams would prepare a report on the contractors proposals, including a risk assessment of matters that may prevent the prog being achieved. I would comment on the viability of the additional costs. An agreement would then be made
89
What’s included in the ER’s
Drawings Specs Area schedule Prelims Surveys and reports Planning consents Pre construction info
90
What are the tender prelims
They outline all the things the tenderer needs to factor into their logistics and the method of achieving competing the works. They also outline any constrains
91
What’s a preamble
A short explanation of a document (often the contract)
92
What’s the limitation period for a deed and under hand contract
Deed - 12 years Under Hand - 6 years
93
What document would you refer to if you wanted clarification on how to let a contract
JCT Tendering Practice Note 2017
94
Under option C who insures the existing structures where th employer is a tenant of a multiple occupancy building
The Landlord with the premium recovered from the tenants of the building
95
Give some examples of specified Perils on an all risks insurance
Earthquakes Explosions Fire Flooding
96
Whats a specified peril
A listed danger which may not be covered under the all risks insurance
97
What time frames do you use when PC is issued
Stick to the same timeframes specified under the contract
98
Who provides the liquidated damages rate
The Client
99
What do collateral warranties provide to a third party
A duty of care extended by one of the contract parties which makes them liable to the third party.
100
What’s the difference between partial possession and sectional completion
Sectional completion is pre-planned and defined within the contract whereas partial possession is not
101
Example of patent and latent defects
Patent - decorations Latent - structural
102
What contracts would you use for NRM3
Minor works (minor works for a short period of time) Measured term contract (for ongoing works such as PAT testing or legionella testing)

Tom APC 2023 (17 decks)

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