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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
What is a bond?
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
26
What is a Performance Bond?
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
27
Performance Bond vs PCG?
Bond added to contract sum, PCG is free Contractor might not have a parent company.
28
What is a Retention Bond?
Retention amounts paid, Bond provided to recover retention Retention recovery
29
What is an Advanced Payment Bond?
Secure cover for advanced payments Contractor provides bond
30
What is a PCSA?
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
31
What is a Letter of Intent?
Method of instructing a contractor to carry out work before the contract is executed Value of works; dates; payment method
32
What insurance options [works insurance] are there in the contract?
A - New Build - Contractor B - New Build - Employer C - Existing - Joint names via employer
33
What are Specified Perils?
Fire Lightning Explosion Storm Flood Events that can cause significant damage
34
What is All Risk?
Insurance for physical loss or damage to work executed and site materials
35
What are Excepted Risk?
Toxic explosions Pressure waves
36
What is subrogation?
Legal technique where the insurer steps into the shoes of the insured in order to take the benefit of legal rights and remedies
37
What is advanced payment?
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
38
What are timescales for payment?
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
What if a contractor doesn't submit a claim?
Value myself
40
What is the valuation process?
Contractor submits on valuation date QS reviews Recommendation sent to CA CA issues payment cert
41
What is an on account payment?
Acknowledging payment for works done, but value not agreed
42
What is a star rate?
Works that cannot be valued with contractor rates, so built up by contract rates
43
What payment options are in the contract?
A - Stage Payments B - Periodic Payments
44
What if a QS over certifies a payment?
Check to see if there is an overpayment Calculate the difference If not processed, rectify Notify client and state future check remedies
45
What is opening up works?
If you are under the impression that the works are not in accordance
46
What options are there for opening up works?
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
When do you pay for on site materials?
Protected Covered by works insurance Only materials around that stage Materials actually on site
48
When do you pay off site materials?
Listed items Proof of ownership (vesting certificate) Materials clearly labelled Covered by insurance Visit site where located
49
What fluctuations are in the contract?
Allows for adjustment of contract sum A - (Default) - levy and tax B - Labour and materials and tax C - Price adjustment formula
50
Which would you recommend? (fluctuations)
B and C for long term - contractor can adjust, so less risk added
51
What is Retention?
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
What is Change Control?
Administrative process that implements contract mechanisms for instruction change Identify Sign off from CA/Client Instruction raised Tracked
53
What is included within an instruction?
Description of change Cost Programme Reference to drawings Signed
54
Can a contractor reject an instruction?
If it: Affects H&S Affects access Hinders design process Days to comply ....
55
What is an extension of time?
Allows for CA to extend time of completion date Stops time becoming at large and postponing clients right to claim liquidated damages
56
What is the procedure for an extension of time?
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
What is Loss and Expense?
Enables the contractor to claim direct loss due to delay or disruption Intended to put contractor back in original position
58
What is a Relevant Event?
An event that causes delay to completion of works Time no money 14 events - section 2 Force majeure Specified Perils Adverse weather
59
What is a Relevant Matter?
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
What is the process of L&E?
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
How do you assess L&E?
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
What is Practical Completion? What happens?
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
What documents are required for PC?
H&S file O&M manuals Building Control approval Planning permission Test and Commissioning Certificates
64
What is the Final Certificate?
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
What is the difference between Sectional Completion and Partial Possession?
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
What are the implications of Partial Possession?
Employer is now responsible of damage Contractors insurance ends PC assumed CA issued written confirmation LDs reduced
67
What is Early Use?
Employer occupies an area of storage Insurances - contractor
68
What are Liquidated Damages?
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
What is the Defects Liability Period?
The period where a contractor has an obligation to make good any defect Defects: Shrinkages/wrong material Snags: works of a trivial nature
70
What is the Rectification process?
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
Final Account procedure?
Prepared throughout project Inc: CSA Variations PS Claims Revised CS minus paid to date
72
What is termination of a contract?
Where the contract works are lawfully stopped under the contract. 3 ways: 1- Employer 2 - Contractor 3 - Both/either parties
73
What are ground for employer to terminate?
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
Ground for contractor to terminate?
6 grounds: Failure to employer to pay Suspension of works for continuous period Insolvency of employer
75
Termination by either?
Force majeure CAI/variation discrepancies Damage via Specified Perils
76
What is suspension of works?
Contractors have right to suspend when payments not made Default period 2 months 7 days notice Not suspend statutory duties Insurance to halt
77
What are antiquities?
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
What is Acceleration?
Completion of works in a shorter time Resequence work Increase Work time Increase resource
79
Duties of CA?
Technically not till contract administered Ensure appointments in place Records Site inspections Meetings Reporting Instructions Valuations EoT PC L&E
80
Can a contractor refuse and instruction?
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
What happens with a verbal instruction?
Contractor must confirm in writing within 7 days If not withdrawn it will take affect 7 days after confirmation
82
What is Joint Fire Code?
A practice code on protection of fire By Fire Protection Associations Projects high risk of fire
83
CA vs PM?
CA administers contract PM manages team from inception: Makes decisions on behalf of employer Communications RICS guidance
84
Certificates a CA issues?
EoT Payment Certificates Variation PC Making good Final Certificate
85
Culpable Delay?
Delay which is completely contractor's fault
86
Process of Partial Possession?
Contractor notifie[d] elements of possession; date Rectification period starts Insurances cease LDs reduce to some proportion
87
What's Acceleration?
Increase rate of progress to complete project earlier Risk: Not listed If contractor takes risk - premium Standard forms don't detail how quantified
88
Process of LDs?
Issue non-completion certificate Notified the contractor before due date of final payment no later than 5 days Further notice Payless notice
89
Types of Letters of Intent?
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
What's Joint Fire Code?
Fire prevention on construction sites Large projects over £2.5M or projects with sifnificant fire risk.
91
Roles of CA?
Meetings Update client Payment Variations Site visits EoT Record keeping Issue certs
92
What are 3 things required for EoT?
Relevant event Demonstrate raised as reasonably apparent All ways tried to mitigate
93
Advantages/disadvantages for Letters of Intent?
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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