Contract Practice Flashcards
RICS guidance note
Defining completion of construction works
What is the standard recertification period
6 months, standard ammendment is to 12 months
Types of JCT contract
Minor works - less than £500k (traditional procurement)
Intermediate- £500k-£1m (traditional procurement)
Standard building contract -£1m+ (design & build or traditional procurement)
Standard retention
3%, minor works is 5%
Why have retention
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
Contract under hand
Doesn’t have to be in writing
Money to be validated
Limitation period is 6yrs
Contract deed
Has to be in writing
Limitation period is 12yrs
Needs a witness
5 requirements of contract
Offer
Consideration
Acceptance
Intent to create legal relations
Agree
Who signs the practical completion certificate
Contract administrator (traditional) or employers agent (d&b)
How is PC achieved
Awarded If fully functional and signed off from parties & building regulations - use practical completion checklist
What is sectional completion
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
What is partial possession
Not detailed in the contract
Project may be delayed so a section is handed over
Releases same mechanism as sectional / practical completion
What happens if PC isn’t awarded
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
What are liquidated damages
Pre determined calculation of loss
What are Damages
Not set out in contract
Actual loss
Eg if Tesco pc was delayed by a month, damages are a month of revenue
After signing PC what happens
PC certificate is handed over to
Retention is released
Client notifies insurance company
What are rectifications
Point in time from PC when the contractor has to rectify snags
What are limitations
Point from PC that contractor/ client can sue each other (6 or 12yrs)
Latent defects
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
Patent defects
Obvious defects. Notice them straight away eg carpet is cut
What is a relevant event
Delay
Eg delay in completion due to exceptionally adverse weather
Can’t claim money only extension of time
What is a relevant matter
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
Employers agent
Design & build contracts
Administer contract in behalf of the client
Can exist before the construction contract is executed
What is a contract administrator
Traditional
CAs administer contractor impartially
Role only exists once construction contract is executed
What is a parent company guarantee
Parent company will sign up to deliver contractual obligations if the contractor goes bust
What is a performance bond
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