Contract Practice

Question 1

What are Extensions of Time?

Answer 1

Adjustments of the Completion Date relieving the contractor of liability to pay Liquidated Damages.

Question 2

What are Relevent Events?

Answer 2

Events entitling the contractor to claim for an Extension of Time.

Question 3

What are the Relevant Events?

Answer 3

VIA DS S I PESTSM

Question 4

What is Retention?

Answer 4

A % of each Interim Certificate deducted and retained by the Employer.

Question 5

What is the purpose of Retention?

Answer 5

i) To rectify defects
ii) Financial security in the event of contractor default

Question 6

What is a Retention Bond?

Answer 6

A bond provided by the contractor in lieu of taking Retention.

Question 7

What is Acceleration?

Answer 7

The completion of works in a shorter time frame or programme recovery

Question 8

What is a Fixed Price Contract?

Answer 8

Where the contract sum is only adjusted for Statutory Contribution, Taxes, or Levies.

Question 9

What is a Fluctuating Price Contract?

Answer 9

Where the contract sum is also adjusted for changes to Material and Labour costs as well as Statutory Contribution, Taxes, or Levies.

Question 10

What is Practical Completion?

Answer 10

Where works are
substantially complete and
the employer can gain beneficial occupancy and
responsible for arranging insurances.

Question 11

What is Sectional Completion?

Answer 11

Completion and handover of the works in agreed stages.

Question 12

What is Partial Possession?

Answer 12

Contractor consents to the employer taking possession before the date for Practical Completion.

Question 13

What are Collateral Warranties?

Answer 13

A means of creating a contractual relationship between the main parties of a contract with an external third party.

Question 14

Why are they used?

Answer 14

To give remedies to the third party who would no otherwise have them

Question 15

Who might want a Collateral Warranty?

Answer 15

A third party with a financial investment in a project eg the employer with a subcontractor.

Question 16

What are the common clauses/terms in a Collateral Warranty?

Answer 16

LiDuPiiAssNov

Question 17

What is Assignment?

Answer 17

The rights and BENEFITS of one contractual party are TRANSFERRED to a third party.

Question 18

What is Novation?

Answer 18

A new contract which TRANSFERS the RIGHTS AND OBLIGATIONS to a new third party.

Question 19

What is Limitation Clause?

Answer 19

A clause which limits a party’s liability for potential losses [financial losses].

Question 20

What is a Bond?

Answer 20

A guarantee [financial] from the surety in favour of the employer that contractual obligations will be fulfilled.

Question 21

What form do Bonds take?

Answer 21

In writing
Executed
With a duration
Financial Limit

Question 22

What is a Parent Company Guarantee?

Answer 22

A guarantee where the contractual performance of a company in a corporate group is underwritten by other members.

Question 23

What is a Performance Bond?

Answer 23

A bond that guarantees payment up to a stated amount should the contractor breach their contractual obligations.

Question 24

What is a Notional Final Account?

Answer 24

A Final Account prepared when the main contractor is facing insolvency, including costs for new contractor to complete works.

Question 25

What is Insurance?

Answer 25

A FUND that is made available for payments that may arise.

Question 26

What is Indemnity?

Answer 26

A PROTECTION against legal responsibility [to another party] or compensation [to another party].

Question 27

What is Subrogation?

Answer 27

A technique where the insurer steps into the shoes of the insured to take benefit of any legal remedies they may have.

Question 28

What is discussed at Pre-Start Meetings?
What do Preliminaries Document contain?
What is in a PQQ?
What matters might be covered in a Qualitative Analysis?
What are discussed in Post Tender interviews?

Answer 28

TeMeCoPrLoPr