Contract Practice Flashcards
1
Q
What are the different forms of standard building contract available in the UK?
A
JCT
NEC
FIDIC
2
Q
Where are the different contract suits commonly used?
A
- JCT – most commonly used
- NEC – more suited to engineering contracts
- FIDIC – more suited to large international project e.g. Channel Tunnel
3
Q
What is the JCT and what are their suite of contracts?
A
Joint Contracts Tribunal, formed in 1931 Suit of Contracts includes: • Standard (with quants, without, with approx.) • Intermediate • Minor works • Design and Build
4
Q
What are the advantages with a standard form of contract? How is it formed?
A
The advantages of a Standard Building Contract include:
• Developed over a long period
• Has input from legal, client, contractor, local authority
• Has more case law
• Less costly and time consuming to produce than a bespoke contract.
• Guidance notes available
5
Q
What is an intermediate Contract?
A
- Contract for simple works without any major complex service adjustments
- It is a form of traditional procurement
- Design must be in place
- Can have sectional completion
6
Q
What is included in a payment notice?
A
- Date
- Issue number
- Contract sum
- Valuation sum
- Valuation sum minus retention
- Valuation sum minus amount previously certified
7
Q
What are the timelines for payment? Where can this information be found?
A
- Interim valuation/applications date is stipulated in the contract, and is same day each month (or nearest business day).
- This is outlined in section 4 of the contract particulars
- Contractor can submit their application, is 7 days to review.
- CA/EA has 5 days from the due date to issue payment notice/cert.
- Employer has 14 days from the due date to issue payment.
- Payment timelines are outlined in Section 4 of the Conditions (4.9)
8
Q
What is Practical Completion? What does it Trigger?
A
• When all works in the contract have been deemed to be completed and the client can take occupation.
- The point at which a building project is complete, except for minor/ de minimis defects that can be put right without undue interference or disturbance to an occupier.
- The contractor has complied with clauses 2.37 and 3.16
• It releases half of the retention
• Ends the contractor’s liability for LD’s
• Starts the defects liability period
- The client to carry out its own FRA.
9
Q
What documentation is required at PC?
A
- Testing and commission certs
- Health and safety files
- Building control sign off
- O&M’s
- Clients insurance in place
10
Q
What is sectional completion and what is partial possession?
A
- Sectional completion is defined in the contract
- Partial possession is not determined in the contract, and is up to the contractors discretion to grant.
- Both will mean that section is ‘practically complete’
- LD’s will cease for that period.
- Contractors decide whether to grant partial possession.
11
Q
What are staged payments?
A
- OPTION A in the contract
- Pre-agreed stages defined in the contract particulars – milestones in the project
- On completion of the stage, payment is awarded.
12
Q
What is the interim payment process? Where is this specified in the contract?
A
- OPTION B
- Payment at agreed specific dates throughout the project, usually on a monthly basis.
- This is outlined in the contract particulars and timings in section 4 of the contract conditions.
13
Q
What guidance documents are available?
A
- RICS – Appropriate Contract Selection
* JCT – Guide to selecting the appropriate JCT
14
Q
What is the difference between an Employers Agent and a Contract Administrator?
A
- CA = Standard form/ traditional of contract. Role only takes place when in contract. Administer the contract impartially.
- EA = D&B role takes place before contract.
15
Q
What is a material/non-material breach?
A
- Material – serious breach. End contract
* Non-material – claim damages
16
Q
What is the Housing, Grants and Regeneration Act?
A
- Ensure payments are mad promptly
* Any project over 45 days must have interim payments
17
Q
What did the update to the Housing grants and regeneration act include?
A
- Dates for payment must be included in the contract
* If client fails to issue payment notice, contractor can issue default payment notice. (ISG vs Ceevic college)
18
Q
What contract suite do you have experience in?
A
The JCT Suite, mainly D&B.
19
Q
What do you know about NEC?
A
Both another form of contracts to choose from but I do not have experience in these.
NEC:
- Written in simple language.
Defects correction period is 2 – 3 weeks
- There is no QS.
- There are no provisional sums
- There are options for target cost contracts
- The programme is a contractual document
- Payment is located in three separate sections of the contract as opposed to JCT where it is all found in one - clause 4.
JCT deals with time and money separately with EOTs whereas NEC will deal with both time and money.
20
Q
What does NEC stand for?
A
New Engineering contract
21
Q
What is an EA?
A
- JCT D&B contract
- EA represents the client on all matters
- Role can commence at appointment rather than when the building contract starts.
22
Q
What is a CA?
A
- JCT Traditional contract
- Solely responsible for administering the contract.
- An impartial role
- Commences when the building contract commences.
23
Q
What is an interim valuation?
A
The payment process at interim stage of the project, set out at clause 4.7 and the contract particulars refer.
24
Q
What are the payment timescales for a D&B contract?
A
This depends on whether you have opted for alternative A or B.
Alternative B is periodic payments, monthly.
- Contractor makes an interim application (7 days prior to due date)
- QS makes its recommendation within 2 days of the due date.
- +5 days of the due date for the payment notice by EA
- Pay Less Notice if applicable (no later than 5 days prior to final date for payment)
- Final date for payment of an interim payment is 14 days from its due date.
25
What is a Making Good certificate?
When the defects identified have been made good, the EA shall issue a notice to that effect. Shows that defects have been made good and the final certificate can be issued.
26
What is a client monitoring team?
- After novation a CMT can be appointed to stay client side and oversee and monitoring the progress.
27
What did you do in terms of PC when you were receiving pressure from the client and the contractor?
- Explain the risks to the client.
- Obtain written confirmation from both parties to certify.
- If really in doubt you should advise your client to seek legal advice.
28
Why did the client agree a lease when PC had not been issued?
It was under the impression that PC would be issued following promises from the contractor to complete works in December but this was not achieved until April.
29
What was considered a health and safety/ life safety risk and how did you conclude that no items fell into these categories?
- Fire related issues
- Statutory requirement
- Building control final certificate
- MEP testing and witnessing of services and certification for use
- Emergency lighting
- CDM requirements have been met
- Domestic water compliance documentation
- Floor pressure certificates
- Cause and effect
- Black building testing
Regular liaison with the professional team of when these items were signed off and took advice on what could be completed post PC.
30
What does the JCT document 'Deciding on the appropriate JCT contract' outline/
To be answered .
31
What is an EOT?
To be answered.
32
How do you manage and conclude an EOT?
To be answered.
33
What are the risks of partial possession?
To be answered.
34
What partial possession agreed in the contract?
To be answered.
35
What is needed for a contract to be agreed?
```
o Offer
o Acceptance
o Consideration
o Intent to create legal relations
o Capacity
```
36
What is the purpose of a contract?
- The first documents asked for when you need there is a dispute.
- Outlines the rights and duties of all the parties
- Risk allocation
37
What needs to be considered when selecting a form of contract?
- decide on the appropriate procurement method.
- Parties must understand their respective rights and obligations and how risks are allocated between them.
- Understand the contracts available.
- Are amendments required.
- Insurance obligations.
38
What alternative forms of contracts are you aware of?
I'm aware of partnering but do not have experience in this.
- openess, shared vision, collaboration, rather than confrontational.
- Still needs to be formalised.
39
What are schedule of amendments?
Agreed amendments to the standard forms of contracts.
40
What is Design and Build?
- The design is taken to a particular stage and then handed over to the contractor to complete the design. - Provides greater cost certainty,
- single point of responsibility for project owners
- high quality results,
- greater opportunity for VE,
- faster delivery.
41
What is Traditional Procurement?
- Breaks down as design, bid and build.
| - Design team delivers the complete design documents.
42
What is a Performance bond?
- A bond issued by a bank or other financial institution, guaranteeing the fulfilment of a particular contract.
- A means of insuring a client against the risk of a contractor failing to fulfil contractual obligations.
- Typically set at 10% of the contract value.
43
What is a parent company guarantee?
- A company that controls another ‘subsidiary’ company.
- Form of security that may be required by clients to protect them in the event of default on a contract by a contractor that is controlled by a parent company.
- Default may be caused by insolvency.
44
What is a collateral warranty?
Agreements which are associated with another primary contract. They provide for a duty of care to be extended by one of the contracting parties to a third party who is not party to the original contract.
45
What is a warranty?
- Legally binding assurance or promise.
| - Assurance that one party to another that goods/ services will meet certain expectations. E.g. fit for purpose.
46
What types of insurance are you aware of?
1. Contractor's All Risk insurance - physical damaged all risk policy on material used in construction
2. Employer's liability - Legal liability of the employer for any illness, injury or death suffered by employees.
3. Professional indemnity - Awards of damages, costs or settlements from a negligence claim.
4. Public liability - Standard cover to provide indemnity for damages or compensation arising from accidental injury to third parties.
47
What is Contractor's All Risk insurance?
- Cover referring to only material damage covered on the contract works.
- Contract doc will say who is to provide this cover.
- Should be taken out in joint names of the employer and contractor.
48
What are recitals?
These are what contextualise the agreement, giving factual explanations for the basis of the contract.
49
What are articles?
these set out what is agreed between the parties?
50
What are contract particulars?
This section sets out the aspects of the contract that are particular to the project to which the contract relates. it is a schedule for the variables in the agreement and conditions.
51
What is attestation?
The assestation is the process of confirming that something is correct or genuine, or that a particular requirement has been met.
52
What are the conditions of a D&B contract?
1. Definition and interpretation
2. Carrying out the works
3. Control of the Works
4. Payment
5. Changes
6. Injury, damage and insurance
7. Assignment, Performance bonds and guarantees, third party rights and collateral warranties
8. Termination
9. Settlement of Disputes
53
What are the conditions of the standard building contract?
1. Definition and interpretation
2. Carrying out the works
3. Control of the Works
4. Payment
5. Measurement and valuation
6. Injury, damage and insurance
7. Assignment, Performance bonds and guarantees, third party rights and collateral warranties
8. Termination
9. Settlement of Disputes
54
What are the schedules of a D&B contract?
Schedule are procedures to follow;
1. Design, submission, procedure
2. Supplemental Provisions
3. Insurance Options
4. Code of Practice
5. Third Party Rights
6. Forms of Bonds
7. JCT Fluctuations of Option A
55
What are the schedule of a SBC?
Schedule are procedures to follow;
1. Design, submission, procedure
2. Carrying out variation and acceleration quotation procedure
3. Insurance Options
4. Code of Practice
5. Third Party Rights
6. Forms of Bonds
7. JCT Fluctuations of Option A
8. Supplemental provisions
56
What are common contract documents
- conditions of contract and any amendments to standard forms
- Preliminaries
- Contract sum analysis
- Drawings
- Specifications
- Existing building information
- Any contractor's proposals for CDP work
57
What different types of standard building contract are there?
Three types:
1. With quantities
2. Without quantities
3. With approximate quantities
58
When should you use a JCT Minor Works contract?
- Projects that are short in duration, small and simple
- Guidance is for a value of up to £150,000
- it is a short, easy to follow contract.
- It is a lump sum form, design should be completed prior to execution.
- Not as comprehensive as others - limited claims provisions, no fluctuation.
59
When should you use a JCT Intermediate Contract?
- Recommended for projects that do not exceed one year's duration.
- for projects that are simple in content, require only basic skills and trades and where building services are not complex and where the works are already designed.
60
When would you use a JCT Standard contract with Quantities?
- Work has already been designed
- Where there is a bill of quantities
- it is a lump sum form
- the contract'r risk is limited to price only
- The employer takes the risk of errors in the bill
61
When would you use a JCT SBC without quants?
- Work has been designed prior to contract but there is no bill
- Contract documents will include drawings, specification and schedule of rates
- It is a lump sum form of contract
- The contractor's risk includes both price and quantity
62
When would you use a JCT SBC with approximate quants?
- This is a re-measurement form of contract
- There is no contract sum
- Use where the design is not completed at the time of execution
- An approximate bill of quantities has been prepared.
- Construction is wished to commence prior to the design being completed.
63
When would you use JCT Major Works?
- Project that are significant in both size and quantity
| - Generally for clients that have their own in house contractual procedures.
64
When would you use the JCT D&B contract?
- when the contractor is responsible for design and construction.
- Similar in complexity to the SBC
- The contractor's proposals form the basis of the contract.
- There is no mention of an architect or QS.
65
What is a PCSA?
A Pre-construction services agreement.
- This documents the services that the contractor is to perform before entering in the building contract and identifies the terms and conditions under which these services are to be performed.
- Used in a two stage approach to facilitate early contractor involvement.
66
What is a bespoke contract?
Contract conditions that are drafted specifically for a particular project.
67
What are the advantages of standard forms over bespoke projects?
- Written by legal experts
- Rights and obligations of each party are clearly set out
- Risks are allocated
- Parties should be familiar with the provisions in the form - greater consistency.
- Time and expense preparing bespoke is avoided.
- Case law has built up over time.
68
What are the disadvantages of standard forms over bespoke.
- Apportionment of risks is rarely questioned and therefore becomes implicit.
- Familiarity is decreased as they are rarely used as printed - amendments.
- May not be appropriate to that particular project.
- using an inappropriate form may cancel out the advantages.
69
what are the changes to the JCT 2016 contracts from 2011?
- Payment provisions
Simplified. clauses in a more logical order. New procedure for dealing with L&E claims and payment provisions
- Insurance provisions
Expansion to Works insurance Option C. Provides alternative solutions for cover for tenants when they undertake construction work.
- Inclusion of CDM Regulations.
- Warranties, bonds, PCGS
Now inclusion of provisions for the grant of performance bonds and PCGS
70
What is a letter of intent?
A method of instructing the contractor to proceed with the Works before the contract has been formally executed.
legally binding until the actual contract is signed and allows works to commence.
71
What are the main elements of a LOI?
- state the contract it is intended to enter into and any amendments.
- State the intended contract sum.
- Scope of works
- Procedures such as payment, termination, dispute
72
What are the advantages of a LOI?
- Allows work to commence - programme
| - Provides more safeguard than just a verbal agreement.
73
What are the disadvantages of a LOI?
- complacency
- less robust than the actual contract
- you would not want the works to continue very long on LOI. Better to get the contract in place.
74
What is a nominated subcontractor?
- specialist sub contractor selection by the client
- client names them specifically in the prelims
- chosen based on advice
75
What is a named subcontractor?
- Client supplies a list of names in the prelims and the contractor chooses which one they want.
76
What is included in a novation agreement?
- Services that are to be transferred from Client to Contractor.
- The process of novation itself does not make contractor responsible for any design carried out for the client prior to novating their contract.
- To achieve this the building contract needs to specifically state that the contractor has examined the design and
adopted it
77
What the grounds for termination?
- insolvency of contractor, subcontractor, - failure to comply with CDM regs,
- is guilty of corrupt practices,
- wholly or substantially withhold the works without reasonable cause
- fails to comply with instructions,
- fails to proceed regularly and diligently,
- unauthorised assignment or subcontracting
78
What is the CSA?
Contract sum analysis – agreed figure. Not to be changed unless:
- Agreed change
- Confirmed acceptance of acceleration quotation
- Deduction of all provisional sums in the ERS
- Instruction for change.
79
What are employers requirements?
- Typically used on D&B projects.
- Provide a description of the client’s requirements, including, the spec for the building, the scope of services required from the contractor and an allocation of risk for unknown items.
80
What are contractor's proposals?
- CPs are prepared in response to the ERs. These present the contractor’s suggested approach for designing and constructing the building, along with their price.
81
What are the articles of a D&B?
1. Contractor’s obligations
2. Contract Sum
3. Employer’s agent
4. Employer’s requirements and contractors proposals
5. Principal Designer
6. Principal Contractor
7. Adjudication
8. Arbitration
9. Legal proceedings
82
What is the payment schedule?
- Lists the dates setting out when payments will be made from the employer to the contractor
- Staged/ in turn payments came from housing grants, construction and regeneration Act 1996.
- Dates must be set out in construction contracts.
83
What is retention?
- The purpose of retention is to ensure the contractor completes the works required under the contract.
- The recovery of retention could be challenging for employers with cash flow issues, leading to non payment to the contractor.
- Retention bonds are a way to protect this.
- Amounts that would have been retention held are instead paid, with a bond being provided to secure the amount and value will reduce after PC by half (must include the expiry date)
- Retained by the client
- At PC, half the retention is released
84
how is a contract executed?
Underhand
- 6 years limitation period to bring a claim
- Signed As Witness
- Employer, contractor
Deed/ seal
- 12 years limitation period to bring a claim
- Signed by 2 directors
85
What are contractor's obligations?
General obligations:
- Complete works in a proper and workmanlike manner in compliance with contract docs, CPP and statutory requirements
Materials, goods and workmanship
- As per the ERs or CPs or contractors design documents
- Workmanship to be of the standard within the ERs
- Provide samples
- Proof that materials comply
- Ensure contractor’s persons are all cardholders of the CSCS
86
What is the date of possession?
Contractor to retain:
- Possession of the site and works up to PC
- Possession of each section until section completion statement
87
what is deferment of site?
- Contracts usually grant the contractor exclusive possession of the site until PC when a handover meeting takes place and possession reverts to the client.
- Deferment of possession – is a provision that enables the client to defer possession of the site without being in breach of contract.
88
What is a relevant event?
Clause 2.26:
- Claim for EOT
- Changes
- Employer’s instructions – except for EAIs relating to discrepancy in or between the CPs and / or other design documents
- Deferment of site
- Weather conditions
- Strikes of workmen
89
What is a non-completion certificate?
- If the contractor fails to complete the works by the relevant completion date, the employer shall issue a notice to that effect. If a new completion date is fixed after issue of such a notice, such fixing shall cancel that notice provided:
The employer has issued a non-completion notice for the works
The employers has notified the contractor before the due date for the final payment under clause 4.24.5 that he may require payment of, or may withhold or deduct liquidated damages
- The employer may, not later than 5 days before the final date for payment of the amount payable under clause 4.24 give notice to the contractor in the terms set out in clause 2.29.2
90
What is partial
| possession?
- Contractors consent required to give possession. Notice to be given by the contractor and identify the relevant part and relevant date.
- When PP is given, PC is deemed to have occurred for that relevant part and the rectification period commenced.
- Insurance – Contractor insurance for that relevant part A, B or C shall cease
- LDs for the relevant part shall reduce
91
When should a schedule of defects be provided?
- Schedule of defects to be given no later than 14 days after the expiry of that rectification period.
92
What is a making good certificate?
- States defects, shrinkages and other faults have been completed after the defects have been dealt with at the end of the defects liability period.
93
What are as-built drawings?
- Reflects what has actually been built.
94
What are the interim payment valuations?
Clause 4.7
.1 Made by the employer to the contractor in accordance with section 4 and whichever stage payments or periodic payments is stated in the contract particulars.
.2 During the period up to the due date for final payment, the monthly due dates for interim payments by the employer shall in each case be the date 7 days after the relevant interim valuation date
.3 The contractor makes an application stating the sum due.
.4 Each interim payment application shall be accompanied by such further information.
.5 Not later than 5 days after each due date, the employer shall give notice (A payment Notice) to the contractor, stating the sum that is being paid.
95
What is a payment notice?
If a payment notice is given in accordance with the clause 4.7.5, the employer shall, subject to any pay less notice pay the contractor the sum stated as due in the interim payment application.
96
What is a pay less notice?
- Given by either party with the amount it considers as due to the other party.
97
What is loss and expense?
- Contractor can claim when the progress of the works is materially affected by relevant matters for which the client is responsible
98
What are liquidated damages?
- Contracts generally include a clause making provision for the contractor to pay LD’s to the client in the event that the contract is breached.
- Usually relate to the contractor failing to achieve PC by the completion date.
- Often calculated daily or weekly.
- LDs are not penalties. They are pre-determined damages set at the time that a contract is entered into, based on the actual loss the client is likely to incur if the contractor fails to meet the completion date.
- Rent, temporary accommodation, removal costs, running costs.
99
What are the insurance options available?
The provisions relating to insurance of the works and (where applicable) existing structures set out in Schedule 3.
- Option A – New buildings – All risk insurance of the works by the contractor. This option is applicable to the erection of new buildings where the contractor is required to take out a joint names policy for all risks insurance of the works.
- Option B – New Buildings – All Risks Insurance of the Works by the Employer. This option is applicable where the employer has elected to take out such joint names policy.
- Option C – Insurance by the Employer of existing structures and works in or extensions to them. This option is for use in the case of alterations of or extensions to existing structures; under it the employer is required to take out a joint names policy for All Risks insurance for the works and also a joint Names Policy to insure the existing structures and their contents owned by him or for which he is responsible against loss or damage by the specified Perils.
100
What does the contract say about early use by the employer?
Early use by the Employer:
.1 Notwithstanding clause 2.3, the Employer may, with the Contractor’s consent, use or occupy the site or the Works or part of them, whether for storage or otherwise, before the date of issue of PC or section completion. Before consent by the contractor is given, the Employer shall notify the insurers under whichever of the insurance options applied and obtain confirmation that such use or occupation will not prejudice the insurance.
2.33 Insurance of the relevant part.
As from the relevant date, the insurance obligation of the contractor under insurance option A-C whichever applies, shall terminate in respect of the relevant part. Where insurance option C applies, the obligation of the employer to insurance under paragraph C1 shall from the relevant date include the relevant Part.
101
What are the Recitals in the Contract in JCT D& B?
Gives context to the agreement, 7 recitals.
1. Definition of 'The Works' - Cat B fit out works at Address
2. As a response to the ERs, CPs provided
3. CPs reviewed and agreed to meet Employer's ERs
4. Status of the Client at the base date for the purpose of CIS and Finance Act
5. Division of works in Sections
6. Finance Agreement?
7. Supplemental Provisions
102
what are the recitals under Standard JCT contract?
1. The Works
2. BoQ provided to the Contractor
3. Refers to the Contract Drawings
4. If Employer is Contractor under CIS
5. Refers to Information Release Schedule by Client to Contractor?
6. Works in Sections?
7. CDP?
103
Letters of Intent and PCSA difference?
LOI - Letter intending to enter in contract. Allows works to start in the absence of a contract being agreed and executed early works such as site strip out, ordering of materials. Can be both binding or non-binding depending on how its drafted. Depends on how its drafted, could or could not constitute a contract.
PCSA - services prior to construction start on site designs, logistics plan, procurement schedules, programme advice, site surveys Not necessarily strip out works - only pre-construction Contract
104
What are disadvantages of PCSA?
Contractor can be embedded into the project, risk that the Client may lose their bargaining power - If contractor is not selected to go further any contractor may be reluctant to adopt responsibility for previous contractor's work
105
What is loss and expense?
Sum of the works Breakdown, Adjusted contract sum, programme implications, a method statement, the amount of any direct loss and/or expense
106
What are examples of a relevant matter?
- programme that is the Client's fault e.g. nominated subcontractor,
- deferment of site, late information
- client changes,
- instructions,
- opening up works- inspection or testing of work,
- suspension by the contractor for no payment not necessarily a delay
107
What is an EOT?
Adjust completion date and removes liability for contractor to pay for liquidated damages for the period of extension
108
What can contractors do to prevent an EoT?
Contractor has to constantly use best endeavours to prevent delay in the progress of the Works or the Section. Contractor must do all that may be reasonably required to proceed with works or sections So do subcontractors. A duty to prevent delay
109
What do you understand by force majeure?
Any natural event or disaster that takes place that cannot be prevented which affects the project
110
What is the final account?
Final account is the conclusion of the contract sum including all necessary adjustments
111
What are variations?
Alterations or modifications to the design, quality or quantity of the contract works, to the site access or working conditions.
112
What is the procedure for claiming an EOT?
The contractor must give notice
The EA must acknowledge
The contractor must give supporting evidence
The EA reviews
The EA makes a recommendation to the client
The extension is certified and the completion date is altered.
If the EOT resulted in a change to the works then this will need to be closed via instruction.
Financials will then need to be dealt with in terms of whether this was a relevant matter.
Programme to be updated.
113
How long can the EA take to decide on an EOT?
12 weeks.
114
What elements will be taken into consideration at valuation?
1. Prelims
2. Measured work
3. Variations
4. Materials on site
5. material off site
6. L&E
7. Retention
115
What is a vesting certificate?
Certifies that ownership of the goods, plant or materials listed in a schedule will transfer from one party to the other upon payment and confirming that they will be properly identified, separately stored and insured.
116
What are the consequences of PC?
- Half retention released
- Defects liability period commences
- The contractor's responsibility for insuring the works ends
- contractors liability for LDs ends
- Employer now responsible for any damages to the works.
117
What is a non-completion certificate?
issued by the CA/ EA to certify that the works have not be completed by the relevant completion dates.
118
What is a defect?
Reference to faulty workmanship, materials or design.
119
What is a patent defect?
Obvious at the time of inspection as part of the handover.
120
What is a latent defect?
hidden and becomes apparent at a later date.
121
What are Liquidated damages?
A genuine pre-estimate of the likely loss incurred by the employer should the complete date not be met.
122
What is novation?
A new contract that transfers the rights and obligations of one contractual party to a new third party.
123
What is reasonable skill and care?
The ordinary skill and care expected of an ordinary competent person carryout that particular act.
124
What is fitness for purpose?
- The provision of a building that is suitable for the employer's intended purpose
- it is clearly a more onerous obligation than reasonable skill and care.
125
What are the options for insuring the works and where is each appropriate?
option A - Insurance of new works by the contractor
Option B - insurance of new works by the employer
Option C - insurance of works to an existing structure by the employer
126
What needs to be taken into account when preparing the final account?
- Provisional sums
- L&E
- Variations
127
What is frustration?
Termination at common law due to neutral events that have made the performance of the contract impossible, illegal or radically different from that which was envisaged, due to the fault of neither party.
128
Which takes precedent ERs or CP?
If amended could be the ERs.
CPs for unamended, standard - if a change then they pay for it.
If CPs are wrong - the Contractors are responsible.
If in ERs - then will need to be a change, instruction and payment.
129
what is the default for the defects liability period.
Default is 6 months but usually amended to 12 so that the building can perform over a full cycle of seasons.
130
how do you value materials off site?
Firstly, this needs to be written into the contract and an allowance made.
Then a vesting certificate is issued.
131
Why would you issue a vesting certificate?
So that if that manufacturer became insolvent and debtors collected items, they would not be allowed to take the materials under a vesting certificate as they are the property of the other person.
132
How do you value works on site?
Take the valuation and do an inspection to review the % claimed for against the actual materials and progress on site.
