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3 APC_J Brookes > Contract Practice > Flashcards

Contract Practice Flashcards

1
Q

What is a contract?

A

An agreement between 2 parties

Offer
Acceptance
Consideration
Intention

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2
Q

What are the sections of a contract?

A

Definitions
Carry out works
Control of works
Payment
Change
Insurance
PB/CW
Termination
Disputes

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3
Q

What are the main parts to a contract?

A

Recitals - summary of works
Articles of agreement - obligations
Contract Particulars - project specific items
Attestation - Sign
Conditions - Sections
Schedules - provisional
ERs/CPs

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4
Q

What are Building Regulations?

A

Statutory regulations to ensure building requirements are met

A - structure
B- Fire
C - Site Preparation

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5
Q

What is the Construction Act?

A

Housing Grants Construction and Regeneration Act 1996

Regulations for industy. Ensures to help payment/disputes

Right to stage payments
Right to suspend works for non payment

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6
Q

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

A

Amended the HGCRA

Contracts no longer have to be in writing
Pay when paid is illegal

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7
Q

What is the difference between HGCRA and LDEDCA?

A

left blank

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8
Q

What are the advantages and disadvantages of standard forms of contract?

A

Advantages:
Written by legal experts
Familiarity
Case Law

Disadvantages:
Amended versions impact familiarity
May not be appropriate in every situation

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9
Q

What is the NEC?

A

New Engineering Contract

A - Priced contract with activity schedule
B - Priced contract with BoQ
C - Target contract with activity shedule
D - Target contract with BoQ
E - Cost reimbursement
F - Management contract

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10
Q

What is a Form of Contract (FOC)?

A

A set of pre-determined arrangements and mechanisms that form a basis of agreement between parties.

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11
Q

What is a Z clause?

A

Additional conditions to an NEC contract

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12
Q

What is the difference between an NEC and JCT?

A

NEC has compensation events where JCT has variations
NEC - programme is a contract document
NEC - Project manager is named party
NEC - more collaborative

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13
Q

What are the advantages and disadvantages of NEC?

A

Can be harder to navigate
JCT doesn’t need amending - time and cost
NEC - easier to understand; more collaborative; more admin intensive

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14
Q

What are some changes from JCT 2011 to 2016?

A

The interim valuation date
Option for no fluctuations
Intro to BIM Protocol
CDM regulations update

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15
Q

What is the client role in a contract?

A

Pay contractor
Describe scope of works
Give possession of site

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16
Q

What is the difference between CA and EA?

A

CA - Traditional - Third party acting as legal agent, administers contract and make sure parties are fulfilling their obligations.
EA - D&B - act on behalf of client

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17
Q

Role of the contractor?

A

H&S
Construction work in accordance with documents
Submit applications for payment

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18
Q

What is Novation?

A

The transfer of rights and obligations from one party to another

Advantages - continuity at pre and post contract
Disadvantages - possible conflict of interest

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19
Q

What is Assignment?

A

Transfer of rights but not obligations from party to another

Transfer right to have construction work done and right to sue contractor of defective works
But not obligation to pay

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20
Q

What are Third Party Rights?

A

The right of a person who is not a party to a contract to enforce a benefit of that contract

Act sets out third party must be identified

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21
Q

What are the advantages and disadvantages of Third Party Rights?

A

Advantages:
Simpler to execute
Less admin

Disadvantages:
Little case law
No physical warranty

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22
Q

What’s a Collateral Warranty?

A

A side agreement which establishes a contractual link between 2 parties which wouldn’t have existed

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23
Q

What do Collateral Warranties include?

A

Parties/dates/PI

Notified to tenders at time of tender

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24
Q

What is a PCG?

A

A company that controls a ‘subsidiary’ company. The parent company protects the client if the subsidiary company becomes insolvent

letter or minutes

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25
Q

What is a bond?

A

An arrangement where a contractual duty owed by one party to another is backed by a 3rd party

Client needs to prove loss and obligations not fulfilled

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26
Q

What is a Performance Bond?

A

A means of ensuring a client against the risk of a contractor not fulfilling obligations

Includes: dates; cost; parties
On demand
Conditional - conditions are met - insolvency

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27
Q

Performance Bond vs PCG?

A

Bond added to contract sum, PCG is free
Contractor might not have a parent company.

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28
Q

What is a Retention Bond?

A

Retention amounts paid, Bond provided to recover retention
Retention recovery

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29
Q

What is an Advanced Payment Bond?

A

Secure cover for advanced payments
Contractor provides bond

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30
Q

What is a PCSA?

A

Pre-Contract Services Agreement

Document services a contractor has to perform
Good for limited design
The more work carried out, the weaker the client position

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31
Q

What is a Letter of Intent?

A

Method of instructing a contractor to carry out work before the contract is executed

Value of works; dates; payment method

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32
Q

What insurance options [works insurance] are there in the contract?

A

A - New Build - Contractor
B - New Build - Employer
C - Existing - Joint names via employer

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33
Q

What are Specified Perils?

A

Fire
Lightning
Explosion
Storm
Flood

Events that can cause significant damage

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34
Q

What is All Risk?

A

Insurance for physical loss or damage to work executed and site materials

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35
Q

What are Excepted Risk?

A

Toxic explosions
Pressure waves

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36
Q

What is subrogation?

A

Legal technique where the insurer steps into the shoes of the insured in order to take the benefit of legal rights and remedies

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37
Q

What is advanced payment?

A

Given to the contractor for long lead times for materials
Payments, values and dates should be set out in the CPs

Disadvantages - less incentive for contractor; bad for employer’s cash flow

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38
Q

What are timescales for payment?

A

Due date activated 7 days after valuation date
Pay no later than 5 days after certification
Pay less notice 5 days before payment is due (14 days from due date)

39
Q

What if a contractor doesn’t submit a claim?

A

Value myself

40
Q

What is the valuation process?

A

Contractor submits on valuation date
QS reviews
Recommendation sent to CA
CA issues payment cert

41
Q

What is an on account payment?

A

Acknowledging payment for works done, but value not agreed

42
Q

What is a star rate?

A

Works that cannot be valued with contractor rates, so built up by contract rates

43
Q

What payment options are in the contract?

A

A - Stage Payments
B - Periodic Payments

44
Q

What if a QS over certifies a payment?

A

Check to see if there is an overpayment
Calculate the difference
If not processed, rectify
Notify client and state future check remedies

45
Q

What is opening up works?

A

If you are under the impression that the works are not in accordance

46
Q

What options are there for opening up works?

A

Instruct contractor to remove defective work
Can remain
Issue instructions for variations
open up more works to check

Defect: contractor remedies at own expense, no EoT
Non defect: Vice versa of above

47
Q

When do you pay for on site materials?

A

Protected
Covered by works insurance
Only materials around that stage
Materials actually on site

48
Q

When do you pay off site materials?

A

Listed items
Proof of ownership (vesting certificate)
Materials clearly labelled
Covered by insurance
Visit site where located

49
Q

What fluctuations are in the contract?

A

Allows for adjustment of contract sum

A - (Default) - levy and tax
B - Labour and materials and tax
C - Price adjustment formula

50
Q

Which would you recommend? (fluctuations)

A

B and C for long term - contractor can adjust, so less risk added

51
Q

What is Retention?

A

A percentage of the amount certified, held back to ensure the works are carried out as required
3-5% (3 in contract)
Not taken off L&E, charges, suspension of works, fluctuations

52
Q

What is Change Control?

A

Administrative process that implements contract mechanisms for instruction change

Identify
Sign off from CA/Client
Instruction raised
Tracked

53
Q

What is included within an instruction?

A

Description of change
Cost
Programme
Reference to drawings
Signed

54
Q

Can a contractor reject an instruction?

A

If it:
Affects H&S
Affects access
Hinders design process
Days to comply ….

55
Q

What is an extension of time?

A

Allows for CA to extend time of completion date
Stops time becoming at large and postponing clients right to claim liquidated damages

56
Q

What is the procedure for an extension of time?

A

Notify as soon as delay is reasonably apparent
Identify cause of delay
Give any additional info
CA notifies contractor in writing 12 weeks from notification
CA - time awarded and [cannot read]

57
Q

What is Loss and Expense?

A

Enables the contractor to claim direct loss due to delay or disruption
Intended to put contractor back in original position

58
Q

What is a Relevant Event?

A

An event that causes delay to completion of works
Time no money
14 events - section 2

Force majeure
Specified Perils
Adverse weather

59
Q

What is a Relevant Matter?

A

An event that causes delay to completion of works. Contractor entitled to time and money - 5 section 4

Delay in approvals
Change/instruction
Opening up works
Later handover

60
Q

What is the process of L&E?

A

Contractor gives notice with their assessment
Employer must give notice within 28 days and 14 days for others
Once agreed, add to contract sum

61
Q

How do you assess L&E?

A

Prolongation - Prelims, divide into elements
Loss of Profit - Los of profit that could have been made on resource as a result of delay
Interest - Late payment
Office overheads - Hudson formula: Head Office % x (CS/contract period) x Period of delay
Labour - Timesheets

62
Q

What is Practical Completion?
What happens?

A

When all works and obligations within the contract have been carried out

Half retention released
Defects liability starts
Insurance and handover
Can’t claim LDs

63
Q

What documents are required for PC?

A

H&S file
O&M manuals
Building Control approval
Planning permission
Test and Commissioning Certificates

64
Q

What is the Final Certificate?

A

Issued at the end of the defects liability period

Can’t claim loss and expense
2nd retention released
Patent defects complete
Adjustments to contract sum

65
Q

What is the difference between Sectional Completion and Partial Possession?

A

Section:
Refers to pre-defined dates
Same procedure for PC

Partial:
Client takes possession of section before completion
Contract has to agree unless affects H&S/access

66
Q

What are the implications of Partial Possession?

A

Employer is now responsible of damage
Contractors insurance ends
PC assumed

CA issued written confirmation
LDs reduced

67
Q

What is Early Use?

A

Employer occupies an area of storage
Insurances - contractor

68
Q

What are Liquidated Damages?

A

Pre-estimate of loss suffered from late completion

Not a penalty
Applies when certificate issued
inc - loss of rent/third party fees/statutory fees

69
Q

What is the Defects Liability Period?

A

The period where a contractor has an obligation to make good any defect

Defects: Shrinkages/wrong material
Snags: works of a trivial nature

70
Q

What is the Rectification process?

A

PC issued
Default 6 months - 12 months common seasonal
Issue statement within 14 days of end of rectification period
Contractor carries out work at no expense to client
Remainder of retention released

71
Q

Final Account procedure?

A

Prepared throughout project

Inc:
CSA
Variations
PS
Claims
Revised CS minus paid to date

72
Q

What is termination of a contract?

A

Where the contract works are lawfully stopped under the contract. 3 ways:
1- Employer
2 - Contractor
3 - Both/either parties

73
Q

What are ground for employer to terminate?

A

7 grounds:
Insolvency
Breach of contract
Failure of CDM
Failure written instructions

Items 1-5 - written notice
14 days to stop default. If not further 10 days issue second notice

74
Q

Ground for contractor to terminate?

A

6 grounds:
Failure to employer to pay
Suspension of works for continuous period
Insolvency of employer

75
Q

Termination by either?

A

Force majeure
CAI/variation discrepancies
Damage via Specified Perils

76
Q

What is suspension of works?

A

Contractors have right to suspend when payments not made

Default period 2 months
7 days notice
Not suspend statutory duties
Insurance to halt

77
Q

What are antiquities?

A

Artefacts of history; fossils; old foundations

If found - contractor takes reasonable care to preserve
Instruction raised
Contractor entitled to EoT and L&E.
Mitigate - surveys and insurance

78
Q

What is Acceleration?

A

Completion of works in a shorter time

Resequence work
Increase Work time
Increase resource

79
Q

Duties of CA?

A

Technically not till contract administered

Ensure appointments in place
Records
Site inspections
Meetings
Reporting
Instructions
Valuations
EoT
PC
L&E

80
Q

Can a contractor refuse and instruction?

A

No, unless:
affects them meeting terms of contract
affects acces to site

After 7 days written notice of refusal - can instruct others - Deduct from CS

81
Q

What happens with a verbal instruction?

A

Contractor must confirm in writing within 7 days
If not withdrawn it will take affect 7 days after confirmation

82
Q

What is Joint Fire Code?

A

A practice code on protection of fire

By Fire Protection Associations
Projects high risk of fire

83
Q

CA vs PM?

A

CA administers contract

PM manages team from inception:
Makes decisions on behalf of employer
Communications

RICS guidance

84
Q

Certificates a CA issues?

A

EoT
Payment Certificates
Variation
PC
Making good
Final Certificate

85
Q

Culpable Delay?

A

Delay which is completely contractor’s fault

86
Q

Process of Partial Possession?

A

Contractor notifie[d] elements of possession; date
Rectification period starts
Insurances cease
LDs reduce to some proportion

87
Q

What’s Acceleration?

A

Increase rate of progress to complete project earlier

Risk:
Not listed
If contractor takes risk - premium

Standard forms don’t detail how quantified

88
Q

Process of LDs?

A

Issue non-completion certificate
Notified the contractor before due date of final payment no later than 5 days
Further notice
Payless notice

89
Q

Types of Letters of Intent?

A

Client issues:

Comfort Letters - Parties intent to act in a certain way [NOT A CONTRACT]

Instructions to proceed with consent to spend - Work to proceed up to a certain value

Letters recognising existence of building contracts - Issued once contract agreed.

90
Q

What’s Joint Fire Code?

A

Fire prevention on construction sites

Large projects over £2.5M or projects with sifnificant fire risk.

91
Q

Roles of CA?

A

Meetings
Update client
Payment
Variations
Site visits
EoT
Record keeping
Issue certs

92
Q

What are 3 things required for EoT?

A

Relevant event
Demonstrate raised as reasonably apparent
All ways tried to mitigate

93
Q

Advantages/disadvantages for Letters of Intent?

A

Advantages:
Tight timescales, instruct works before execution of contract
Comfort Letter not legally binding

Disadvantages:
Transfer of negotiation risk
Limits to scope

3 APC_J Brookes (16 decks)

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