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RICS-SY > Contract Practice > Flashcards

Contract Practice Flashcards

1
Q

What are principles of contract law

A
  • offer
  • acceptance
  • capacity
  • intent
  • legality
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2
Q

what is meant by an offer

A
  • A promise made by one party which matures into a Contract when accepted by the other party
  • An invitation to treat does not turn into a contract ; it merely a stage in negotiations, inviting the other party to make an offer
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3
Q

what is meant by acceptance

A
  • where a party agrees to the terms of the offer presented by another party creating a binding contract
  • acceptance must be unconditional (e,g a signature on a contract of employment)
  • negotiations are counter-offers, not acceptance
  • Silence is not acceptance, unless it is clear acceptance was intended (as substantiated by the party’s conduct)
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4
Q

what is meant by consideration

A
  • parties must exchange something of value for a contract to be binding
  • for example, selling their house for £1 is valid consideration, selling your house for nothing is not
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5
Q

what is meant by capacity

A
  • all parties must have the ability to understand the terms of and any obligations under the contract
  • consent to the contract must be freely given (force, fraud, misrepresentation, inebriation renders the contract void)
  • people under 18, under the influence of drugs or those suffering from mental health conditions generally lack the capacity to enter into contracts.
  • the client/company must have the capacity to be able to deliver the work/pay for the work, e.g, I do not have the capacity to enter into a contract to deliver a £100m scheme because I am one person with £0 capital no labor, etc
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6
Q

What is meant by intent

A
  • not all agreements between parties are contracts. It must be clear that the parties intended to enter into a legally binding contract
  • the person who wants the agreement to be a contract must be prove the parties actually intended to enter into a legally binding contract
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7
Q

What is a letter of intent

A
  • A letter from an employer to a Contractor indicating intention to enter into a formal written Contract for works described
  • LOI’s are used to begin work before formal contract is executed
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8
Q

what are the three typical ways of a LOI will operate

A
  • Comfort Letter
  • Recognition of Contract
  • Consent to Spend
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9
Q

What is a comfort letter

A

A comfort letter is a non-binding statement of the future intention of both parties

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10
Q

what do Comfort Letters recognizing the existence of Contract do

A
  • Also referred to as a letter of acceptance, it is used by some forms of Contract (e.g. FIDIC) to formally execute the Contract. Generally such a letter will be issued following the agreement of the Contract and marks the completion of negotiations.
  • In some cases it can act as an Interim Contractor on its own terms, which will govern the relationship between parties unless and unit a formal written Contract is executed??
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11
Q

What is an LOI with consent to spend

A
  • Sometimes referred to as an ‘if’ Contratc
  • Allows work to proceed up to a certain value whilst Contract is being finalized
  • Creates a legally binding Contract between parties which pre-dates the principal Contract but will be superseded once principle Contract is executed
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12
Q

What is the HGRCA 1996

A
  • Housing Grants, Construction and Regeneration Act 1996
  • Applies to all contractors for ‘construction operations’ (incl consultants)
  • Intended to ensure payments are made promptly throughout the supply chain and that disputes and resolved swiftly
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13
Q

what rights does the HGCRA give construction professional?

A
  • right to be paid in interim, periodic or stage payments
  • right to be informed of the amount due, or any amounts to be withheld
  • right to suspend performance for non-payment
  • The right to adjudication
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14
Q

what were the change the HGCRA in 2009

A
  • LDEDCA2009, local democracy, economic development and construction act saw changes to HGRCA
  • Includes all Contracts, including those not in writing
  • Withholding notice replaced with pay less notice, altering how the sum to be paid is built up
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15
Q

List some the Forms of Contract in the JCT suite

A
  • JCT Design and Build 2016
  • JCT Standard Building Contract 2016
  • JCT Intermediate Building Contract 2016
  • JCT Minor works Contract 2016
  • JCT Measured Contract 2016
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16
Q

Other forms of contract aside from JCT

A
  • NEC3 ECC
  • FIDIC Red Book (Conditions of Contract for Construction)
  • FIDIC Yellow Book (Conditions of Contract for Plant; Design-Build)
  • FIDIC Silver Book (Conditions of Contract for EPC Turnkey Projects)
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17
Q

What is assignment

A
  • The benefit of a contract is transferred from one party to another, but the burden of the contract remains with the original party
  • Contrast of Novation
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18
Q

What is novation?

A
  • the process whereby both the benefit and the burden of a Contract are transformed from one party to another
  • Requires consent from all parties, usually parties enter into tripartite novation agreement
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19
Q

what is a collateral warranty

A

a way of forming a direct contractual link between two parties with otherwise wouldn’t have a link, such as between a client and a subcontractor

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20
Q

what is a performance bond

A

A means of insuring the client against the Contractor failing to fufill their contractual obligation

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21
Q

why might you get a performance bond for a smaller contractor

A

they are more at risk of going solvent

less well established, probably are more dependent on credit and good cash flow.

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22
Q

how much is a typical performance bond worth

A

10% of Contract Sum

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23
Q

who issues performance bond

A

Banks/Insurance companies

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24
Q

what are the two variations of performance bonds

A
  • Conditional: client has to prove that the contractor has not performed
  • On demand: No pre-conditions needed to be met. Not often used, seen as too harsh
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25
Q

how long would you recommend a performance bond should stay in place

A

until the end of the Defects Liability Period

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26
Q

name insurances that you may come across in a construction contract

A
  • Public Liability
  • Professional Indemnity
  • Employer’s Liability Insurance
  • Contract Works Insurance
  • terrorism insurance
  • flood insurance
  • Legal Indemnity Insurance
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27
Q

What is Contract Works Insurance

A
  • non-standard insurance policy
  • coverage for property damage and third-party injury or damage claims, the two primary types of risks on construction projects
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28
Q

what is Employer’s Liability Insurance

A

Covers compensation if employees are injured or become ill because of the work they do.
All firms that employ staff are legally required to hold Employers liability Insurance

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29
Q

what is Public Liability Insurance

A

Provides cover against personal injury or death, loss o damage to property of third parties. e.g. the general public or sub contractors

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30
Q

what is professional indemnity insurance

A

Provides cover for negligence on part of service provider. Will ensure service providers will not be bankrupted by successful claim, and recompense to client to re-mediate consequences of negligence

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31
Q

what is legal indemnity insurance

A
  • Provides recompense in the event that the policy holder incurs capital loss or expense dealing with a range of possible legal issues
  • examples can be unforeseen rights of way issues over land that has been purchased, incurring costs to rectify
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32
Q

what is an advance payment

A

when a contract sum is paid in advance of the exchange (prior to works being done/ goods supplied)

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33
Q

why may a contractor request advance payment

A

if there are significant start up/ procurement costs, e.g. expensive items with long lead times

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34
Q

how might the client protect themselves when paying a Contractor in Advance

A

Secure a payment bond from the Contractor

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35
Q

what are the implications for paying for goods that the sub-contractor has ordered but have not yest been delivered to site?

A

Put the client at the risk in case that the supplier/sub-contractor goes insolvent, as they may never receive the materials

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36
Q

materials for the project have been sourced and delivered to site. Does the client pay for those materials

A

Yes, unless stated otherwise in the Contract. Payment is made regardless of whether Contractor has paid supplier

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37
Q

what is ‘retention of ownership’ in regards to materials

A
  • this is clause that allows the supplier to hold ownership of materials until payment
  • good for supplier as it encourages payment, improves cashflow
  • bad for the client as if items are not affixed, as client may pay Main Contractor but Main may not pay supplier. Supplier could reclaim those items.
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38
Q

what is meant by fluctuations

A
  • a mechanism to deal with inflation, particularly useful in long lasting projects
  • accounts for the inflation of labour costs, transport, materials (escalation), overhead
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39
Q

how are fluctuation calculated

A
  • using nationally published price indices
  • payment is based on cashflow projections of material, then quarterly percentage assessments of inflation are added to projection
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40
Q

are all projects subject to fluctuations

A

No, only projects whereby it is stated within the Contract that fluctuation will be accounted for

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41
Q

What is retention

A

-Retention is a percentage (often 5%) of the amount certified as due to the contractor on an interim certificate, that is deducted from the amount due and retained by the client.

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42
Q

what are three types of fluctuations considered under JCT1

A
  1. Changes to statutory contributions, levies and taxes
  2. Changes to labour, materials, transport (sometimes referred to as escalation)
  3. Increase in head office/administrative costs
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43
Q

when does retention get released

A

-half released at practical completion, half upon certification of making good defects

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44
Q

who keeps the interest on the retention money

A

the client

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45
Q

what happens with the retention money the client keeps

A

The contract may state that the retention money is kept in a separate bank account

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46
Q

what issues do sub-contractors have with regard to retention

A
  • causes cash flow problems
  • release of retention can be delayed for reasons out of their control, e.g. defects liability period not ending due to other parties not remedying defects
  • construction supply chain payment charter proposed abolishing retention by 2025
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47
Q

what is retention bond

A
  • instead of holding back money, client receives bond valued at the same amount as would otherwise be retained
  • This allows contractor to keep money, helping cashflow, but also protects the client as they can cash in on the bond if required
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48
Q

what are change procedures

A

a process that ensures potential changes to the deliverable of a project or the sequence of work in a project, are recorded, evaluated, authorized and managed

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49
Q

when should change procedures be introduced

A

change procedures may be tendered:

  • after design freeze
  • after tender documentation is released
  • after project is tendered
  • after the Contractor is appointed
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50
Q

what should change procedures ensure are defined

A
  • reason for the change
  • who is requiring the change
  • consequences of change time/cost/quality/ who bears the cost
  • risks associated with change
  • Proposals to mitigate consequences
  • alternatives to the proposed change
  • time by which change must be instructed
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51
Q

what is variation

A

an alteration to the original scope of works in a construction contract
-this may be an omission, substitution or addition of works

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52
Q

why do variations occur

A
  • client changes mind (design development or contract documents not stipulating what the client originally wanted in sufficient detail)
  • geological anomalies
  • statutory changes
  • technological advances (changing client requirements)
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53
Q

what are express terms in a Contract

A

Express terms are those that have been explicitly agreed by both parties and can be oral or in writing

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54
Q

does a contractor have to carry out variations

A

If there are no express terms, contractor does not legally have to carry out variation
-contractor can continue to carry out works as per agreed at tender

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55
Q

how are variations valued

A
  • contract rates
  • if contract rate are not available (for example fr D&B contract that was tendered wit limited design info), the PQS and Contractor’s QS will negotiate to what is deemed reasonable and fair. Market testing, BCIS data and in-house data can be used by the PQS to review Contractor submissions
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56
Q

why do variations cause conflict

A
  • Conflict over the value of the change
  • Over whether the change is a client cost or Contractor Risk
  • Often conflict occurs where there are gaps in the spec. Contractor may argue it is therefor a change, but Client is not bound to pay for things that a reasonable contractor must have understood to be done
  • example: specification may not state every screw used to fix a radiator to the wall, but within the spec for a radiator, pattressing etc, a Contractor would reasonably be expected to assume the inclusion of the screws
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57
Q

what is an extension of time

A

where the client allows the Construction Period to be extended due to delays that are not the fault of the Contractor

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58
Q

how does the Contractor acquire an extension of time

A

Gives CA/EA written notice identifying the relevant event that caused the delay
-proposes adjusted completion date

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59
Q

what counts as a relevant event that can result in an EOT?

A
  • variations
  • weather
  • terrorism
  • force majeure
  • strikes
  • nominated sub-contractor delays
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60
Q

if the contractor can foresee a delay caused by a relevant event, what should they do

A
  • they are required to prevent or mitigate the delay even if it is not their fault
  • if they cannot avoid the delay, they can request an EoT
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61
Q

how should a contractor prepare for a claim of EoT?

A
  • Provide good quality information
  • Demonstrate link between breach and delay
  • demonstrate delay against progress of the works, not programme
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62
Q

what are liquidated damage

A

-pre-determined damages set at the time the contract is entered in to, based on the actual loss the client is likely to incur if the Contractor fails to meet the completion date.

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63
Q

what are claims of loss and expense

A

the contractor can claim direct loss and/or expense as a result of relevant matter the client is responsible for

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64
Q

give some examples of when a Contractor may be entitled to Loss and Expense

A
  • failure to give contractor site possession/access
  • delays in instruction
  • discrepancies in Contract Documents
  • failure to supply goods/materials
65
Q

what costs can be claim under loss and expense

A

varies between contracts, for example overheads may be excluded.

66
Q

what are the various methods of dispute resolution

A
  • mediation
  • adjudication
  • arbitration
  • litigation
67
Q

what are the alternative dispute resolution methods generally found in Contracts

A
  • medication
  • adjudication
  • arbitration
68
Q

what is adjudication

A
  • contractual or statutory procedure for swift interim dispute resolution
  • provided by a third party adjudicator selected by parties in dispute
  • purely based on documentary submissions
  • decision are binding unless and until revised by arbitration or litigation post completion
  • no power to award costs
69
Q

what are the timeline for adjudication

A
  • notice of intention to adjudicate must be submitted by one party to the other
  • adjudicator appointed within 7 days of notice
  • decision made within 28 days of appointment (can be extended to 42)
  • adjudication is confidential and a statutory right
70
Q

what is arbitration

A
  • a procedure both parties agree to let an impartial third party decide the case
  • maybe a lawyer or expert in the field of dispute, or in some cases an arbitration panel
  • arbitrators ‘award’ is legally binding and can be enforced through the courts (can award costs)
  • no appeal except under special circumstances
  • arbitrators have powers to ascertain facts as opposed to just review submissions
71
Q

what is medication

A
  • where a third party mediator is appointed to assist in the negotiation of a resolution to a dispute
  • different types of mediation,e.g. evaluative, facilitatve, settlement
72
Q

what is litigation

A
  • the process of engaging in or contesting legal action in court as means of resolving a dispute
  • pros: judges can compel parties to comply; defined rights of appeal in cases where errors of fact or law are made
  • cons: expensive; longer time period to obtain judgement; -public
73
Q

what are three main types of sub-contractor

A
  • domestic sub-contractor
  • named sub-contractor
  • nominated sub-contractor
74
Q

what is a domestic sub-contractor

A

a subcontractor selected and appointed by the main contractor

75
Q

what is a nominated sub-contractor

A

a sub-contractor is selected by the client to carry out an element of works

76
Q

how is a nominated subcontractor appointed

A
  • the client negotiates a price with the nominated sub-contractor, then instructs the main contractor to appoint them for those works
  • the contractor will include the sub-contractors price as a prime cost sum in the contract sum for the main contract, to which they add OH& P& attendance
77
Q

why would the client nominate a sub-contractor

A
  • if the works involves long delivery times
  • if specialist design input is required for the package
  • where the client orders a preferred item (perhaps that they wish to have complete design control over ) such as specialist plant/equipment
78
Q

what is a named subcontractor

A
  • a named subcontractor is a subcontractor that has been short-listed by the client as an acceptable sub-contractor in the tender documents for the main construction contract
  • in the contract sum, a provisional allowance is made for the subcontract package in question. After the Contract is awarded, the package is tendered to the list of named sub-contractors and the provisional sum is replaced by the actual cost+ on costs
79
Q

what are the advantages of naming sub-contractors

A
  • allows the client to influence the subcontractor selection whilst leaving responsibility for their performance to the main contractor
  • alternative to the nominated sub-contractors, which are not included as a provision in JCT contracts
80
Q

what is sectional completion

A

when a project has different completion dates for different sections of the works
-this is common in large projects

81
Q

what consideration should you make when incorporation sectional completion into a contract

A
  • liquidated damages must be specific to each section
  • retention/retention release must be specific to each section
  • EoT clarifications required, i.e; if EoT is required on section 2 will it impact section 3
  • Sectional completion must be specified in Expressed Terms in the Contract
82
Q

what happens with regards to commissioning and O& M manuals at the end of a sectional completion

A

these items may be left outstanding until practical completion of the whole site

83
Q

what are the key considerations for sectional completion

A
  • logistics
  • protection of completion sections
  • insurance for all sections at all times
  • H&AMP measures dealing with the risk of construction adjacent to occupied areas
84
Q

what is partial possession

A

hand over part of the site before official completion

85
Q

why would partial possession of the site be given

A
  • if the client wishes to occupy part of the site
  • when there is no sectional completion in the contract
  • when part of the site is deemed to have achieved practical completion
86
Q

what are the implication for retention LDs and DLP when partial possession of the site was given?

A
  • half retention for that section of works is released
  • the defects liability period begins for that part of the site
  • liquidated damages are reduced proportionally
87
Q

what’s the difference between partial possession and sectional completion

A

partial possession differs from sectional completion as it is not planned , and therefore no provision for sectional completion are in the Contract

88
Q

why might the Contractor not wish to allow partial possession

A
  • if it disrupts the works
  • if it disrupts access routes
  • if it occurs additional costs
  • the contractor is not obliged to allow partial possession
89
Q

what is meant by Contractor’s Design Portion

A
  • Associated with JCT Contracts
  • It is an agreement for the Contractor to design specific parts of the works
  • The Contractor may in-turn subcontract this portion out
90
Q

what is the difference between design and build, and a standard building contract with Contractor Design Portion

A

In design and build, the contractor is appointed to design the whole works, whereas CDP relates to a specific part of the works

91
Q

How is CDP incorporated into the Contract

A
  • there is a CDP in the JCT SBC
  • A separate sub-contractor design agreement is available for when the main contractor wishes to allocate part of all of the CDP to a subcontractor
  • In JCT Intermediate Building Contract has separate Contractor’s Design Agreement as well as a Sub-Contractor Design Agreement
92
Q

If the main contractor sub-contracts out the CDP, what responsibilities remain with the MC?

A
  • coordinating design and construction between the specialist subcontractor and the main works
  • ensuring subcontractor design complies with the building regulations
93
Q

how are the requirements for the CDP communicated to the Contractor

A
  • Requirements will be set out in ERs in the Tender Documents
  • Contractor will respond in the CPs
  • Design Consultants will judge how far design is taken before handing it over to the Contractor (level of detail in ERs for CDP)
94
Q

what is determination

A

Determination relates to ending a Contractor’s employment under the Contract. The contract remains in place, as do the rights of both parties

95
Q

why do contracts provide for determination of the Contractor’s obligations

A
  • For the eventuality that there is a breach of Contract by the Contractor or Client. For example:
  • The Contractor may no longer be performing diligently and regularly with the works
96
Q

what is termination of a Contract

A

Ending of a Contract
This occurs when there is a repudiatory breach (fundamental breach of Contract) such as the Contractor indicating they no longer intend to accept their obligations under the Contract
-The Contract is terminated and the innocent party can sue for damages

97
Q

what is a Final Account

A
  • the final account is the conclusion of the contract sum

- (including all necessary adjustments) and signifies the agreed amount that the employer will pay the contractor

98
Q

when is the final payment made

A

Generally after defect liability period, subject to all defects being made good

99
Q

what certificate is issued at the end of the DLP, if all defects are made good in the JCT 2016 Contract suite

A

Certificate of Making Good Defects

100
Q

What certificate is issued at practical completion in the JCT 2016 contract suite

A

Certificate of Practical Completion

101
Q

what happens after the certificate of Making Good is issued?

A

Final Certificate issued. The client pays the remainder of the retention money minus kept back for the defects that were not rectified
In some cases, the Contractor may owe the Client money

102
Q

In the JCT Design and Build 2016 Contract which clause refers to Final Account procedures

A

Clause 4.24 Final Statement and Final Payment
Clause 4.8 Relevant Statement and Final Payment Notice
Clause 4.9 Interim and Final Payments-final date and amount

103
Q

why may the Final Account be different to that agreed in the Contract Sum

A
  • variations
  • fluctuations
  • provisional sums
  • prime cost sus
  • liquidated damages
  • loss and expense claims
  • contract claims
104
Q

The final account is often an adversarial procedure. What can be done to mitigate this?

A

-Agreed adjustments as projects progresses

105
Q

what happens if after completion of contract, latent defects emerge?

A

client may claim for damages for breach of contract or negligence

106
Q

what happens on practical completion

A
  • CA/EA certifies PC when all works have been completed
  • half retention is released
  • end of contractor’s liability for LDs
  • Defect Liability Period begins
  • Various documents may be released to client such as M manual health and safety file
  • Client takes possession
107
Q

when does the Contractor’s obligation to insure the works come to an end

A

At PC

108
Q

what is a rolling Final Account

A

Rolling final accounts will ensure that all instructions and cost effects to a project are agreed and up-to-date at the point of the latest financial report

109
Q

In the JCT 2016 Deign and Build Contract, what are the provisions set for interim payments

A

Clause 4.7
1) Interim Payment made by Employer to Contractor as per section 4 and the payment method
2) Due date will be 7 days after relevant Interim Valuation Date
3) If the interim Payment Application is received after the Interim Valuation Date, the due date shall be 7 days from whenever the Application is received
4) Interim Payment application shall be accompanied by further info as may be specified in ERs
5) no later than 5 days after the due date the Employer shall give payment notice to the contractor
Clause 4.9
1) Final date for payment 14 days from due date
2) Employer must pay sum on payment notice on or before final date for payment
3) if payment notice is not given, Employer must pay what contractor has stated in interim application
4)in case of final payment, the Employer shall pay the sum stated in Final Payment Notice. if FPN not given
5) No later than 5 days before Final Date for Payment shall Pay Less Notice be given to Contractor

110
Q

what are LADs

A

Liquidated and Ascertained Damages
are pre-determined damages set at the time that a contract is entered into, based on a calculation of the actual loss the client is likely to incur if the contractor fails to meet the completion date.
they are generally calculated weekly or daily, and are not a penalty. they must be based on actual loss from things such as rent, income

111
Q

what are un liquidated damages

A

unliquidated damages are damages, the exact amount of which has not been pre-agreed, and are typically determined by the courts.
a client can claim for unliquidated damages evne if LADs are specified in the contract, if the actual loss incurred is much more than originally expected.

112
Q

how long does the defects liability period

A

6-12 months from Practical completion

113
Q

who manages the DLP

A
  • the Ca acts as the bridge between the client and Contractor
  • Client reports to the CA who decides whether the issue is a defect or maintenance issue.
  • If it is seen to be a defect, the CA will instruct the Contractor
114
Q

who’s responsibility is it to identify and rectify defects

A

the contractor

115
Q

what happens at the end of the DLP with regards to the outstanding defects

A

the CA prepares a schedule of defects not required, and agreed a date with the contractor by which they will be rectified
if the contractor does not rectify them, the cost to rectify then shall be taken out of the retention.

116
Q

what clauses relate to Defects in JCT DB2016

A

Clause 2.35 Schedule of defects and instructions

Clause 2.36 Notice of Completion of making good

117
Q

what are different methods of calculating sums due at payment?

A
  • staged payments
  • milestone payments
  • payment following on activity schedule
  • Periodic payments (work done to date)
118
Q

what are recitals in a Contract

A
  • introductory statements at the beginning of a contract
  • first recital-name of project + address
  • scene setting, explanatory in nature
119
Q

what are articles in Contract

A
  • set out what is agree between the parties
  • Contractor’s obligation (1) and Contract Sum (2)
  • Identifies CA/EA
  • Identifies principal designer
  • identifies contractor
  • reference to adjudication/arbitration in event of dispute
120
Q

what are contract particulars in a contract

A
  • sets out aspects of contract that are particular to the project fills in the blanks
    e. g. where the ERs/CPs/CSA can be found, drawing references, key dates, sections, payment method, insurance option
  • it is a schedule of variables for the agreement and conditions
121
Q

what is attestation in a contract

A
  • the attestation is the process of confirming that something is correct or genuine or that a particular requirement has been met. It may be completed:
  • under seal (signed by both parties, witnessed & made it clear it is executed as a deed)
  • under hand (just signed by both parties)
122
Q

what purpose do the schedule of amendments serve

A
  • they amend the conditions set out in the standard form of contract
  • For example, in a JCT DB 2011 contract you may wish to amend the date the contractor submits his/her interim application to 7 days prior to the due date. there are no provisions in JCT DB 2011 contract for a QS to review /value the works, so this amendment gives the QS 7 days to do so
123
Q

what situation would result in LADs

A

Limited and Ascertained damages would be due if there was a delay to the completion date caused by the contractor

124
Q

what is a relevant event

A

-a delay that was not the contractors fault
-the fault may be from the client or neither party (e.g. extreme weather)
-Definitions of relevent events will be found in the contract, e.g. delay in the possession, variations, weather, terrorism, civil unrest, changes to statutory requirements
Contractor may be entitled to EoT or claim to loss and expense

125
Q

what must a contractor do if they foresee a relevant event

A
  • notify the CA immediately

- attempt to mitigate the issue

126
Q

what is legality

A

conditions in the contract that has been offered/accepted cannot be illegal/unlawful

127
Q

what insurance option would you choose for a new building project under a JCT contract

A
  • Option A: requires contractor to take out and maintain joint names all risk insurance of the works
  • Option B: requires employer to take out and maintain joint names all risk insurance of the works
128
Q

what insurance option would you choose for on an existing building project under a JCT contract

A

Option C-requires the employer to take out and maintain joint names specified peril insurance in respect of the existing structures and contents and all risks insurance of the works

129
Q

what are the main contract suite available

A
  • JCT
  • NEC
  • FIDIC
  • ICE
  • ACA
130
Q

how many forms of NEC contract are there

A

A-G

131
Q

what FIDIC contract would you use for a design and build project

A
  • Conditions of contract for plant and design and build-the yellow book
  • Conditions of contract for EPC turnkey projects-the silver book
132
Q

what are three main types of contract for design and build

A
  • package deal and turnkey
  • design and build contracts
  • contractors design for specific elements only (strictly these are traditional contracts with limited design provisions for specific portions of work)
133
Q

what is package deal or turnkey project

A
  • where the client settles on a complete package, usually to some standard specification from a commercial firm
  • -such arrangements sometimes result in a specially drafted contract, but they will usually be based on the provider’s standard forms
134
Q

what influence may influence choice of contract

A
  • nature of project is new build, refurbishment, reinstatement, extension
  • scope of works e.g. complexity, location, size of works, requirements for sophisticated design
  • clients desire for control over design
  • accountability; single point of responsibility
  • appointment of contractor; works only, design, management role
  • certainty of final cost
  • start/completion times
  • restrictions, noise, working hours, phasing
  • likelihood of post contract change
  • client view on risk
  • is building a relationship with supply chain important
135
Q

what is the first step in procuring a building for a client

A

devising a project strategy, which entails:

  • reviewing benefits
  • reviewing risks
  • reviewing financial constraints
  • reviewing clients approach to time/ cost/ quality
136
Q

how is the contractor usually appointed in a traditional for of procurement

A

competitive tender, not often negotiated

137
Q

what is the cost certainty like in traditional procurement

A

reasonable cost certainty as contract sum is known at the outset of the construction, through may vary dependent on the number of post-contract changes

138
Q

when are design decision made in traditional procurement

A

during the design stage

post contract design changes can be accommodated usually at a price in terms of direct and related costs and extra time

139
Q

where does risk sit in traditional procurement

A
  • in lump sum traditional-low risk in clients favour. Cost known at outset and quality in control of client as client appoints design team. Time is generally longer due to sequential phasing
  • In re measurement-still balanced, though cost not known until end of the project
140
Q

how is design and build often tendered

A

two stage tender

141
Q

what types of contract fall under the traditional procurement route

A
  • lump sum contracts
  • measurement contracts
  • cost reimbursable
142
Q

what types of contract fall under the design and build procurement route

A
  • package deal/turnkey contracts
  • design and build contracts
  • contractor’s design for specific elements only
143
Q

what types of contract fall under the management procurement routes

A
  • management contracts
  • construction management
  • design-manage
  • Construct
144
Q

what is a design-manage-construct contract

A

This and other variants of management procurement exist but such contracts are invariably on the basis of specially drafted forms to suit the particular situations

145
Q

what will the choice in procurement route & contract influence

A
  • composition of team (who takes on what roles, where risk lies)
  • compatibility of documents (what is required of professional consultants in building contract must be reflected in the schedule of professional services)
  • documents for tendering purposes
  • The contract sum (Q/XQ)
146
Q

how are design obligations passed on to contractor in JCT suite

A
  • having contractor’s design portion in intermediate contracts or SBC
  • major project construction contract or design and build contract
  • Optional integrated provisions in JCT SBC
  • Using integrated named sub-contractor/employer agreement
147
Q

what is a package deal or turnkey project

A

where the client settles on a complete package usually to some standard specification from a commercial firm

148
Q

what are JCT’s view on amendments

A
  • contracts should not be amended unless absolutely necessary
  • when necessary must only be done following appropriate professional advice
  • JCT contracts are generally accepted to be fair and evenly balanced for parties to which the project is designed
149
Q

what is design & build contract appropriate

A
  • where detailed contract provisions are necessary
  • where ER’s have been prepared and provided to the contractor
  • where the Contractor is to carry out design not just construction
  • where the employer appoints an Agent to administer the conditions (may be external consultant)
150
Q

what is price based on in JCT DB 2016

A

lump sum with stage payments or periodic payments as stated

151
Q

what are third party rights

A
  • the contracts (third party rights) act 1999 enabled third party rights to be created by a contract
  • alternative to collateral warranties
  • the right is created to enforce a term in a contract, e.g. contractor is required to carry out works to be fit for purpose
  • must expressly stated that a third party has specific rights (often excluded)
152
Q

what are differences between collateral warranties and third arty rights

A
  • collateral warranties can be laborious to compile, sometimes expensive
  • CW’s seen as more effective as they mirror building contract
153
Q

what are key different provisions between JCT DB 2016 and JCT SBC

A

Unlike a SBC, DB:

  • doesn’t require QS, CA, Clerk of Works
  • Requires an Employers Agent
  • Contractor is responsible for design
  • Silent on ground condition risk (Contractor takes no risk in SBC)
154
Q

what are the conditions of contract and how do they relate to the contract particulars

A

the contract particulars ‘fill in the blanks’ and confirm which clauses are relevant by stating the particulars for this contract, for example which payment method is used

155
Q

List the key sections to a JCT DB contract

A
  • agreement
  • recitals
  • articles
  • contract particulars
  • attestation
  • conditions
156
Q

what’s the difference between a final certificate and final statement

A

Both certify the final amount to be paid to the contractor

  • Final certificate is from a CA in SBC
  • Final Statement is from EA in DB
157
Q

list relevant matters

A

anything that has had a cost impact on the contractor causing them to lose out, e.g

  • site access delay
  • delay in instruction
  • client interference that has meant they’ve had to suspend work temporarily, resulting in longer hire of cranes, scaffolding etc.
158
Q

what are principles of Contract Law

A
  • offer
  • acceptance
  • consideration
  • capacity
  • intent
  • legality

RICS-SY (17 decks)

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