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APC PRE QUAL > Contract Practice > Flashcards

Contract Practice Flashcards

1
Q

RICS guidance note

A

Defining completion of construction works

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2
Q

What is the standard recertification period

A

6 months, standard ammendment is to 12 months

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3
Q

Types of JCT contract

A

Minor works - less than £500k (traditional procurement)
Intermediate- £500k-£1m (traditional procurement)
Standard building contract -£1m+ (design & build or traditional procurement)

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4
Q

Standard retention

A

3%, minor works is 5%

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5
Q

Why have retention

A

Withheld from contractor.
At PC drops to 1.5% of contract sum
To incentivise contractor to complete the works
Retention held so if contractor walked away there would be money to cover the cost of completing the defects

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6
Q

Contract under hand

A

Doesn’t have to be in writing
Money to be validated
Limitation period is 6yrs

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7
Q

Contract deed

A

Has to be in writing
Limitation period is 12yrs
Needs a witness

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8
Q

5 requirements of contract

A

Offer
Consideration
Acceptance
Intent to create legal relations
Agree

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9
Q

Who signs the practical completion certificate

A

Contract administrator (traditional) or employers agent (d&b)

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10
Q

How is PC achieved

A

Awarded If fully functional and signed off from parties & building regulations - use practical completion checklist

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11
Q

What is sectional completion

A

Must be detailed in contract amendments
IDF rooms are 4 weeks prior to PC
Has the same mechanisms as PC in terms of retention & insurances

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12
Q

What is partial possession

A

Not detailed in the contract
Project may be delayed so a section is handed over
Releases same mechanism as sectional / practical completion

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13
Q

What happens if PC isn’t awarded

A

Non completion certificate is issued
With detailed reasons why PC wasn’t achieved
Revised PC date
Client can claim liquidated damages if set out in contract

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14
Q

What are liquidated damages

A

Pre determined calculation of loss

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15
Q

What are Damages

A

Not set out in contract
Actual loss
Eg if Tesco pc was delayed by a month, damages are a month of revenue

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16
Q

After signing PC what happens

A

PC certificate is handed over to
Retention is released
Client notifies insurance company

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17
Q

What are rectifications

A

Point in time from PC when the contractor has to rectify snags

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18
Q

What are limitations

A

Point from PC that contractor/ client can sue each other (6 or 12yrs)

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19
Q

Latent defects

A

Notice later on (not obvious) eg cracks in foundations
Can claim within rectification period - why amended to 12months to ensure the project has gone through all seasons

20
Q

Patent defects

A

Obvious defects. Notice them straight away eg carpet is cut

21
Q

What is a relevant event

A

Delay
Eg delay in completion due to exceptionally adverse weather
Can’t claim money only extension of time

22
Q

What is a relevant matter

A

Money
Loss & expense claim
Eg if client wanted to cut open the works to see if something was complete, contractor could claim to make good the area

23
Q

Employers agent

A

Design & build contracts
Administer contract in behalf of the client
Can exist before the construction contract is executed

24
Q

What is a contract administrator

A

Traditional
CAs administer contractor impartially
Role only exists once construction contract is executed

25
Q

What is a parent company guarantee

A

Parent company will sign up to deliver contractual obligations if the contractor goes bust

26
Q

What is a performance bond

A

Financial guarantee that the contract will be undertaken
10% of contract sum - so project can be retendered if the contractor went bust
Get choice over who gets the contract if retendered

27
Q

What is advance payment bond

A

Protects client in case of contractor deferring in the contract
Have one with ergonom

28
Q

When materials are off site what do you have

A

Vesting certificate
Evidence of transfer of payments of goods stored off site
Used for insurances to protect the client

29
Q

Retention bond

A

Alternative to holding retention
Good if contractor has Cash flow issues
Insurance company provides the bond
Not often used

30
Q

What are collateral warranties

A

Legal document (separate to contract) where 3rd party with an interest to the project has rights
Client may have one with design consultants as they have rights over design

31
Q

Step in rights

A

Allow party to take place of another eg funding party steps into shoes of insolvent party to complete project

32
Q

Third party rights

A

Statutory right, same as collateral warranties but in the contract

33
Q

3 ways benefits can be transferred in JCT contract

A

Novation
Assignment
Collateral warranties

34
Q

Example of assignment

A

Contractor assigning their right to receive payment to a third party eg a bank. Then bank (third party) is then entitled to receive the payment

35
Q

express v implied terms

A

express- clear in contract agreed by both parties (contractual)
implied- not set out in the contract but implied by common law/ statute

36
Q

local democracy, economic development and construction act 2009

A

came into force in 2011
amendment from housing grants and regeneration act 1996

37
Q

key provisions of LDED

A

contracts:
requirement for construction contracts to be written
payments:
pay when certified clauses can no longer be used to prevent paying a subcontractor
payment notices:
contract must specify that either the payer or payee will issue a payment notice contract requirements:
this must be issued no later than 5 days after the payment due date and paid before the final date for payment identified in the contract
must clarify the sum that the payer/ee considers due
a payment notice must be issued even if the payment is nil
payment notices default of payers notice:
if the payer is required to issue the payment notice and doesnt the payee is entitled to issue a default payment notice
a default payment notice obliges the payer to pay the amount due and allows the payee their statutory right to suspend performance for non payment
payless notice:
paying parties are required to pay the notified sum or default payment notice by the final date or serve an effective pay less notice. the payer can amend the sum due if its later discovered or the amount notified turns out to be unsound.
suspension of performance for non payment:
contractors right to suspend carrying out work in the event of non payment

38
Q

types of letter of intent

A

comfort letter- expresses party’s intention to act in a particular way
instruction to proceed with consent to spend- instructs work to proceed, sometimes referred to as an if contract. similar to NTE
recognition of contract- letter of acceptance, used in FIDIC to formally execute the contract itself. usually marks completion of negotiation between parties

39
Q

letter of intent case law

A

ampleforth abbey trust v Turner & townsend
contractor never signed the contract, whole works were procured using letter of intent. the trust wasnt able to claim liquidated damages under the contract due to late completion of works.

40
Q

difference between bond and collateral warranty

A

bond is a financial commitment backed up by a third part, collateral warranty passes on contractual obligations
bonds are within the contract
CW are a side agreement out of the contract

41
Q

case law for collateral warranties

A

laing o’rouke v parkwood leisure
The Court was required to determine whether a collateral warranty was a “construction contract” within the meaning of section 104 of the Housing Grants, Construction and Regeneration Act 1996. Akenhead J found that there was no doubt that this particular collateral warranty was to be treated as a construction contract under section 104.

42
Q

typical clauses of assignment

A

standard to allow assignment of rights twice without consent
should be notified in writing to the other party

43
Q

5 bonds you might use on a project

A

performance bond
retention bond
off site materials bond
advance payment bond
tender bond

44
Q

on demand v conditional performance bond

A

on demand- money immediately available without needing to meet any preconditions
conditional- provide evidence that the contractor hasnt performed to obligations and that they have suffered a loss as a consequence

45
Q

what is a tender bond

A

provides security against risk of successful bidder failing to enter into contract
prevents idle tendering

APC PRE QUAL (7 decks)

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