Contract Practice Flashcards
What key contract rules came from the Housing Grants Construction and Regeneration Act 1996?
- Gives a right to adjudication
- Gives a right to stage/periodic/milestone payments for projects >45 days
- A payment notice MUST be issued 5 days after the due date
- Right to suspend work for non payment
- Removes pay when paid provisions
- Created the scheme for construction contracts to cover the above if they are not specified within the contract
What is the valuation procedure under a standard JCT
- Valuation date (fixed under the contract as a set date every month. But it must be a working day)
- 7 days (excl BH) later is the due date
- 5 days later is the payment certificate
- 14 days after the due date is the final date for payment
- 5 days before the final date for payment is the final date for a pay less
- Valuations must be done regardless of if the contractor submits their valuation or not
What is the valuation procedure under a JCT D&B
- Valuation date (fixed under the contract as a set date every month. But it must be a working day). If the contractor submits their valuation late, the following are pushed back by the same number of days
- 7 days (excl BH) later is the due date
- 5 days later is the payment certificate
- 14 days after the due date is the final date for payment
- 5 days before the final date for payment is the final date for a pay less
What is the timeline for adjudication
- Either party raises a notice of adjudication
- Within 7 days of the notice, an adjudicator is chosen (either already named in the contract or an adjudicating body) and the referring party must issue the adjudicator with a referral notice
- The adjudicator must make a decision within 28 days after the referral notice, or 42 days if the referring party consents, or longer if both parties consent
What powers does an adjudicator have?
- Ask for any documents/statements reasonably required
- Question any party to the contract or their representatives
- Visit sites and undertake tests
- Give directions as to the conduct of the adjudication
What must a notice of adjudication contain?
- The nature of the dispute and involved parties
- Details of where and when the dispute arose
- The nature of the redress which is sought
- The names and addresses of the parties of the contract
What is the effect of an adjudicator’s decision?
It is binding on all parties unless legal redress is sought
What is the effect of an arbitrator’s decision?
It is legally binding on all parties
What are the JCT contract sections?
- Recitals
- Articles
- Particulars
- Attestation
- Conditions
What are the contract recitals?
Factual explanations for the basis of the contract e.g. cost, where the drawings are, sections etc
What are the contract articles?
Sets out what is agreed
What are the contract particulars?
Aspects of the contract that are specific to the project
What is contract attestation?
- Confirming the agreement is genuine
- Under hand or deed
What are the principles of contract law?
- Offer
- Acceptance (might be by action, rather than a signature)
- Consideration
- Intention to create legal relations
- Capacity
- Legality (lawful purpose for the contract)
What are some contract documents?
- The contract
- Schedule of amendments
- Preliminaries
- Contract Sum Analysis or BoQ
- Section Sums (if applicable)
- Information release schedule
- Drawings
- Specifications
- Employer’s requirements
- List of named/nominated sub contractors
- Client policies (net zero, H&S etc)
- Pre-Construction Information pack
What is included in a Pre-Construction Information Pack?
Information about:
- The project
- Planning and management
- H&S hazards and how they are to be addressed
- Any existing H&S file
- ER’s and Contractor’s proposals
What are the types of contract?
JCT
- SBC
- MW
- IC
- D&B
NEC
FIDIC
What are the NEC Payment Options?
A - Priced contract with activity schedule
B - Priced contract with BoQ
C - Target contract with activity schedule
D - target contract with BoQ
E - Cost reimbursable
F - Management
What are some NEC Option Clauses?
- W Clauses (1-3) relate to adjudication
- X Clauses (1-29) deal with risk allocation (Delay damages, CDP etc)
- Y Clauses (1-3) deal with UK specifics
- Z Clauses (custom) form the SoA
What are key difference between the JCT contracts?
Intermediate contract includes for:
- Section completion
- Clerk of works
- Collateral warranties
SBC includes the above AND:
- Schedule 2 quotations
- BoQ
- Retention bond
- Third Party rights
MW includes for none of these
What is the SBC final account timeline?
- 6 months after receiving the PC cert, the contractor will submit all info necessary to make final adjustments to the contract sum
- If they fail to do so, the CA may at any point following issue the contractor with a reminder and 1 month to issue said information
- Following this, the CA or QS will review this information and make their own assessment
- An agreement is made between the parties
What is the D&B final account timeline?
- Within 3 months of receiving the practical completion certificate, the contractor will supply the client with their final statement (States the amount calculated in the final adjustment)
- If they don’t do this, the client can issue them with a reminder
- If still nothing is received, the client may issue their own final statement
- An agreement is made between the parties
What is the difference between partial possession and sectional completion
- Sectional completion is a predetermined agreement within the contract
- Partial possession is a request from the client that the contractor must not unduly decline
What relevant matters are there?
- Variations
- Opening up of works that were undertaken correctly
- Discrepancies
- Prevention such as: delay to site possession; failure to supply materials etc.
What relevant events are there?
- Variations
- Opening up of works that were undertaken correctly
- Discrepancies
- Prevention such as: delay to site possession; failure to supply materials etc.
- Exceptionally adverse weather conditions
- Force majeur
Specified perils e.g. floods, fire etc. - Civil commotion or terrorism
- National strikes
What is the process for notifying about loss and expense
- The contractor should notify the architect/CA of the likely effect coming from a relevant matter.
- Along with this or soon after, the contractor should follow with their initial assessment of the amounts likely occurred
- The contractor should provide the architect/CA at monthly intervals with information reasonably required to ascertain the loss and expense
- The CA/QS should provide the contractor with their assessment within 28 days of the initial claim, and 14 days after every release of new information.
What are Liquidated Damages
- A genuine pre-estimate of loss
- Cannot be seen as a penalty as this would be unenforceable
What are the principal changes to JCT D&B 2024?
- Adopt gender neutral language
- Adjustments to reflect the new Part 2A of the building regulations
- Adjustment to allow for notices to be issued by email
- Removing the optionality of the supplementary provisions for: sustainability, collaborative working, and negotiation
- Amendments to the time frame for deciding an EoT
- Include epidemics as a relevant event
What are the main differences between JCT SBC & D&B?
- SBC has CA; D&B has EA
- SBC puts the design risk on the client; D&B puts it on the contractor
What types of bond are there?
- Retention bond
- Performance bond
- Materials off site bond
- Tender bond
What is a tender bond?
- A financial mechanism that states that a Contractor will enter into a contract with the Client under the tendered-for terms if they are selected
What are day works?
Method of valuing additional or substituted work that can’t be valued by measurement.
What is the date for final payment under JCT SBC?
No later than 2 months after whatever occurs last:
- End of the rectification period
- Notification of making good defects
- Final statement
What are collateral warranties?
A mechanism to create a contractual link between parties who would otherwise have none
What are third party rights?
Under the contracts (rights of third parties) act 1999, it allows named parties who are not privy to the contract to confer rights under said contract.
What is a final certificate? (Final statement under D&B)
Issued at the end of the project, after the rectification period, and it brings the contract to a close, stating the final contract sum.
What is a certificate of making good defects?
Issued after all items raised during the rectification period have been rectified. This releases the second moiety of retention.
What are the 3 JCT fluctuations Clauses
A - Contribution, tax, levies
B - Labour and material, and taxes
C - Formula based
What are rough value guidelines for JCT contracts?
JCT MW - <£250k
JCT IC - <£1m
JCT SBC - >£1m
What is joint names?
Where the two insured parties (client and contractor) are treated as one and the same, so the insurer has no rights of subrogation
Why would a waiver of subrogation be needed?
In an insurance option other than joint names, to prevent the insurer coming after the other party for the damage money
What is a schedule 2 quotation?
A formal quotation from a contractor for works. The rates provided cannot be relied upon unless instructed
What are some common contract amendments?
- Payment dates
- Retention
- Responsibility of ERs
- Third party provisions (CWs, 3rd party rights)
What has been introduced under the building safety act 2022?
- Introduced an Accountable Person who is responsible for managing the safety risks of a building
- Golden thread of information to ensure info about a building is stored, updated, and available
- Introduced new responsibilities
What are requirements for the golden thread of information?
- Kept digitally
- Kept securely
- The single source of the truth
- Available
- Presented clearly
