Contract Practice Flashcards
What is a variation request?
Covered under Section 5 of the JCT Contract, and is defined as an alteration or modification of the design, quality or quantity of the work.
What are the JCT suite of contract options?
JCT Minor Works Building Contract
JCT Intermediate Building Contract
JCT Standard Building Contract
JCT Major Project Construction Contract
JCT Construction Management Contract
JCT Design and Build Contract
JCT Management Building Contract
JCT Prime Cost Building Contract
JCT Repair and Maintenance Contract
NEC Contract Options?
A = Priced Activity Schedule
B = Priced Bill of Quantities
C = Target Cost Activity Schedule
D = Target Cost BofQ
E = Cost Reimbursable
F = Management
NEC4 Design, Build and Operate Contract (DBO), released in 2017
G = Term contract (for the appointment of a consultant based on a priced schedule of tasks).
How do the two suites of contracts differ?
- NEC promotes collaborative working
- A programme is a contract document under NEC
- JCT has variations, NEC has compensation events
- Each has a person allocated on behalf of the employer (CA in JCT, PM in NEC)
- JCT has provisional sums, NEC does not
- QS is only mentioned in JCT contracts
How does a standardised form benefit a project?
A standardised form benefits a contract as it is inexpensive, saves time and resources, and ensures both parties are familiar with their rights and obligations. It is drafted by a legal professional so it should reduce the chance of disputes and improve overall efficiency.
What typical amendments have you encountered?
Amendments I have encountered are when clients have proposed to amend the payment dates on contracts or remove some relevant events or matters, notably adverse weather.
Can you amend a standardised form?
You should not amend standardised forms as it is expensive for the client and contractor to appoint legal professionals and can increase the risk of dispute.
What would you do If asked by a client to amend a standard form?
I would tell a client that is best practice to work under an amended standard form, but if an amendment was important, they must appoint a legal professional to do this and it is outside my scope of competence.
What are the parties’ responsibilities and duties under a contract?
Under a JCT contract (excluding D&B), the client is responsible for the design, appointing a CA and PQS for the contract. It is their responsibility to ensure these roles are filled through the duration of the works.
It is the contractor’s responsibility to manage the budget alongside the PQS and ensure the project is completed on time.
What is the significance of the Local Democracy, Economic Development and Construction Act 2009?
The LDEDC introduced the following:
* Contracts – oral contracts are now covered under this act and allows parties to adjudicate even though the contract is not in writing.
* Pay when certified clauses have been removed
* Payment Notice must be issued 5 days after the due date
* If no payment notice is issued, the payee is entitled to issue a default payment notice
* Right to suspend work – contractor can suspend work in the event of non-payment, the payer must pay costs or expenses for the contractor to suspend the work.
What are the essential components of a valid contract?
Offer, Acceptance, Consideration, Intent to create legal relations and Capacity
Can you name 2 types of performance bond?
- On demand bonds
- Conditional Bonds
What is the principal difference between a parent company guarantee and a performance bond?
A PCG is given by the contractors parent company to guarantee the contractors work.
A PB is an insurance taken out by the Contractor, usually at the Client’s expense. This introduces a third party who is external to both the Client and the Contractor and provides the guarantee.
What are standard forms of contracts?
JCT Suite
FIDIC
NEC 3/4
PPC 2000
What is PPC2000 for?
Partnering contracts
Why use standard forms?
- saves time and cost
- benefit from familiarity
- provide benchmark for negotiating
- flexibility
- checklist for items to be agreed
- judicial decisions on contract terms
How do you select the most appropriate form?
- Understand client’s objectives
- Undertake a broad review of standard contracts
- Advise client on contract terms and obligations
- If client wants to make amendments advice them to consult with a lawyer
What should a Letter of Intent include?
- How work is to be valued
- A cap of the value of work
- Does the client have step in rights to subcontractors if the contract is terminated
- Contract the standard form is to be based on
- Scope of work covered
- Insurances
Is it possible to have a contract that is GMP?
Many JCT contracts can be amended to be GMP, however it is hard to see how a contractor can be held to a contract sum when changes occur.
The JCT Constructing Excellence contract uses the term but will adjust the sum is changes occur.
Under a JCT Design and Build form, is there a precedence between the employer’s requirements and contractor’s proposals?
There is some uncertainty as the JCT form does not expressly state what takes precedence. Amendment should be made to the third recital to make this clear.
Should a standard form be ammended?
Not necessarily but amendments are currently fairly standard, such as the removal of inflation/fluctuation provisions. amendments can be made to suit the project but these should be kept to a minimum.
What is a fixed price contract?
A contract where the contract sum is not to be adjusted for price/inflation increases.
What is a lump sum contract?
A lump sump contract requires a contractor to perform all obligations in the construction contract for a specified sum of money.
NOT to be confused with GMP
Who takes the risk on ground conditions under a JCT contract?
JCT contracts do not have express clauses for ground conditions so it is likely the risk is with the contractor. If the contract is a re-measurement contract, there may be ability to recover cost of additional excavation and earthworks.
