Contract Practice Flashcards
What are principles of contract law
- offer
- acceptance
- capacity
- intent
- legality
what is meant by an offer
- 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
what is meant by acceptance
- 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)
what is meant by consideration
- 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
what is meant by capacity
- 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
What is meant by intent
- 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
What is a letter of intent
- 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
what are the three typical ways of a LOI will operate
- Comfort Letter
- Recognition of Contract
- Consent to Spend
What is a comfort letter
A comfort letter is a non-binding statement of the future intention of both parties
what do Comfort Letters recognizing the existence of Contract do
- 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??
What is an LOI with consent to spend
- 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
What is the HGRCA 1996
- 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
what rights does the HGCRA give construction professional?
- 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
what were the change the HGCRA in 2009
- 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
List some the Forms of Contract in the JCT suite
- JCT Design and Build 2016
- JCT Standard Building Contract 2016
- JCT Intermediate Building Contract 2016
- JCT Minor works Contract 2016
- JCT Measured Contract 2016
Other forms of contract aside from JCT
- 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)
What is assignment
- 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
What is novation?
- 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
what is a collateral warranty
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
what is a performance bond
A means of insuring the client against the Contractor failing to fufill their contractual obligation
why might you get a performance bond for a smaller contractor
they are more at risk of going solvent
less well established, probably are more dependent on credit and good cash flow.
how much is a typical performance bond worth
10% of Contract Sum
who issues performance bond
Banks/Insurance companies
what are the two variations of performance bonds
- 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
how long would you recommend a performance bond should stay in place
until the end of the Defects Liability Period
name insurances that you may come across in a construction contract
- Public Liability
- Professional Indemnity
- Employer’s Liability Insurance
- Contract Works Insurance
- terrorism insurance
- flood insurance
- Legal Indemnity Insurance
What is Contract Works Insurance
- non-standard insurance policy
- coverage for property damage and third-party injury or damage claims, the two primary types of risks on construction projects
what is Employer’s Liability Insurance
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
what is Public Liability Insurance
Provides cover against personal injury or death, loss o damage to property of third parties. e.g. the general public or sub contractors
what is professional indemnity insurance
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
what is legal indemnity insurance
- 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
what is an advance payment
when a contract sum is paid in advance of the exchange (prior to works being done/ goods supplied)
why may a contractor request advance payment
if there are significant start up/ procurement costs, e.g. expensive items with long lead times
how might the client protect themselves when paying a Contractor in Advance
Secure a payment bond from the Contractor
what are the implications for paying for goods that the sub-contractor has ordered but have not yest been delivered to site?
Put the client at the risk in case that the supplier/sub-contractor goes insolvent, as they may never receive the materials
materials for the project have been sourced and delivered to site. Does the client pay for those materials
Yes, unless stated otherwise in the Contract. Payment is made regardless of whether Contractor has paid supplier
what is ‘retention of ownership’ in regards to materials
- 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.
what is meant by fluctuations
- a mechanism to deal with inflation, particularly useful in long lasting projects
- accounts for the inflation of labour costs, transport, materials (escalation), overhead
how are fluctuation calculated
- using nationally published price indices
- payment is based on cashflow projections of material, then quarterly percentage assessments of inflation are added to projection
are all projects subject to fluctuations
No, only projects whereby it is stated within the Contract that fluctuation will be accounted for
What is retention
-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.
what are three types of fluctuations considered under JCT1
- Changes to statutory contributions, levies and taxes
- Changes to labour, materials, transport (sometimes referred to as escalation)
- Increase in head office/administrative costs
when does retention get released
-half released at practical completion, half upon certification of making good defects
who keeps the interest on the retention money
the client
what happens with the retention money the client keeps
The contract may state that the retention money is kept in a separate bank account
what issues do sub-contractors have with regard to retention
- 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
what is retention bond
- 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
what are change procedures
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
when should change procedures be introduced
change procedures may be tendered:
- after design freeze
- after tender documentation is released
- after project is tendered
- after the Contractor is appointed
what should change procedures ensure are defined
- 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
what is variation
an alteration to the original scope of works in a construction contract
-this may be an omission, substitution or addition of works
why do variations occur
- 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)
what are express terms in a Contract
Express terms are those that have been explicitly agreed by both parties and can be oral or in writing
does a contractor have to carry out variations
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
how are variations valued
- 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
why do variations cause conflict
- 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
what is an extension of time
where the client allows the Construction Period to be extended due to delays that are not the fault of the Contractor
how does the Contractor acquire an extension of time
Gives CA/EA written notice identifying the relevant event that caused the delay
-proposes adjusted completion date
what counts as a relevant event that can result in an EOT?
- variations
- weather
- terrorism
- force majeure
- strikes
- nominated sub-contractor delays
if the contractor can foresee a delay caused by a relevant event, what should they do
- 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
how should a contractor prepare for a claim of EoT?
- Provide good quality information
- Demonstrate link between breach and delay
- demonstrate delay against progress of the works, not programme
what are liquidated damage
-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.
what are claims of loss and expense
the contractor can claim direct loss and/or expense as a result of relevant matter the client is responsible for
give some examples of when a Contractor may be entitled to Loss and Expense
- failure to give contractor site possession/access
- delays in instruction
- discrepancies in Contract Documents
- failure to supply goods/materials
what costs can be claim under loss and expense
varies between contracts, for example overheads may be excluded.
what are the various methods of dispute resolution
- mediation
- adjudication
- arbitration
- litigation
what are the alternative dispute resolution methods generally found in Contracts
- medication
- adjudication
- arbitration
what is adjudication
- 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
what are the timeline for adjudication
- 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
what is arbitration
- 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
what is medication
- 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
what is litigation
- 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
what are three main types of sub-contractor
- domestic sub-contractor
- named sub-contractor
- nominated sub-contractor
what is a domestic sub-contractor
a subcontractor selected and appointed by the main contractor
what is a nominated sub-contractor
a sub-contractor is selected by the client to carry out an element of works
how is a nominated subcontractor appointed
- 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
why would the client nominate a sub-contractor
- 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
what is a named subcontractor
- 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
what are the advantages of naming sub-contractors
- 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
what is sectional completion
when a project has different completion dates for different sections of the works
-this is common in large projects
what consideration should you make when incorporation sectional completion into a contract
- 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
what happens with regards to commissioning and O& M manuals at the end of a sectional completion
these items may be left outstanding until practical completion of the whole site
what are the key considerations for sectional completion
- logistics
- protection of completion sections
- insurance for all sections at all times
- H& measures dealing with the risk of construction adjacent to occupied areas
what is partial possession
hand over part of the site before official completion
why would partial possession of the site be given
- 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
what are the implication for retention LDs and DLP when partial possession of the site was given?
- 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
what’s the difference between partial possession and sectional completion
partial possession differs from sectional completion as it is not planned , and therefore no provision for sectional completion are in the Contract
why might the Contractor not wish to allow partial possession
- if it disrupts the works
- if it disrupts access routes
- if it occurs additional costs
- the contractor is not obliged to allow partial possession
what is meant by Contractor’s Design Portion
- 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
what is the difference between design and build, and a standard building contract with Contractor Design Portion
In design and build, the contractor is appointed to design the whole works, whereas CDP relates to a specific part of the works
How is CDP incorporated into the Contract
- 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
If the main contractor sub-contracts out the CDP, what responsibilities remain with the MC?
- coordinating design and construction between the specialist subcontractor and the main works
- ensuring subcontractor design complies with the building regulations
how are the requirements for the CDP communicated to the Contractor
- 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)
what is determination
Determination relates to ending a Contractor’s employment under the Contract. The contract remains in place, as do the rights of both parties
why do contracts provide for determination of the Contractor’s obligations
- 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
what is termination of a Contract
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
what is a Final Account
- 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
when is the final payment made
Generally after defect liability period, subject to all defects being made good
what certificate is issued at the end of the DLP, if all defects are made good in the JCT 2016 Contract suite
Certificate of Making Good Defects
What certificate is issued at practical completion in the JCT 2016 contract suite
Certificate of Practical Completion
what happens after the certificate of Making Good is issued?
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
In the JCT Design and Build 2016 Contract which clause refers to Final Account procedures
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
why may the Final Account be different to that agreed in the Contract Sum
- variations
- fluctuations
- provisional sums
- prime cost sus
- liquidated damages
- loss and expense claims
- contract claims
The final account is often an adversarial procedure. What can be done to mitigate this?
-Agreed adjustments as projects progresses
what happens if after completion of contract, latent defects emerge?
client may claim for damages for breach of contract or negligence
what happens on practical completion
- 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
when does the Contractor’s obligation to insure the works come to an end
At PC
what is a rolling Final Account
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
In the JCT 2016 Deign and Build Contract, what are the provisions set for interim payments
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
what are LADs
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
what are un liquidated damages
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.
how long does the defects liability period
6-12 months from Practical completion
who manages the DLP
- 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
who’s responsibility is it to identify and rectify defects
the contractor
what happens at the end of the DLP with regards to the outstanding defects
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.
what clauses relate to Defects in JCT DB2016
Clause 2.35 Schedule of defects and instructions
Clause 2.36 Notice of Completion of making good
what are different methods of calculating sums due at payment?
- staged payments
- milestone payments
- payment following on activity schedule
- Periodic payments (work done to date)
what are recitals in a Contract
- introductory statements at the beginning of a contract
- first recital-name of project + address
- scene setting, explanatory in nature
what are articles in Contract
- 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
what are contract particulars in a contract
- 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
what is attestation in a contract
- 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)
what purpose do the schedule of amendments serve
- 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
what situation would result in LADs
Limited and Ascertained damages would be due if there was a delay to the completion date caused by the contractor
what is a relevant event
-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
what must a contractor do if they foresee a relevant event
- notify the CA immediately
- attempt to mitigate the issue
what is legality
conditions in the contract that has been offered/accepted cannot be illegal/unlawful
what insurance option would you choose for a new building project under a JCT contract
- 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
what insurance option would you choose for on an existing building project under a JCT contract
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
what are the main contract suite available
- JCT
- NEC
- FIDIC
- ICE
- ACA
how many forms of NEC contract are there
A-G
what FIDIC contract would you use for a design and build project
- Conditions of contract for plant and design and build-the yellow book
- Conditions of contract for EPC turnkey projects-the silver book
what are three main types of contract for design and build
- 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)
what is package deal or turnkey project
- 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
what influence may influence choice of contract
- 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
what is the first step in procuring a building for a client
devising a project strategy, which entails:
- reviewing benefits
- reviewing risks
- reviewing financial constraints
- reviewing clients approach to time/ cost/ quality
how is the contractor usually appointed in a traditional for of procurement
competitive tender, not often negotiated
what is the cost certainty like in traditional procurement
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
when are design decision made in traditional procurement
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
where does risk sit in traditional procurement
- 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
how is design and build often tendered
two stage tender
what types of contract fall under the traditional procurement route
- lump sum contracts
- measurement contracts
- cost reimbursable
what types of contract fall under the design and build procurement route
- package deal/turnkey contracts
- design and build contracts
- contractor’s design for specific elements only
what types of contract fall under the management procurement routes
- management contracts
- construction management
- design-manage
- Construct
what is a design-manage-construct contract
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
what will the choice in procurement route & contract influence
- 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)
how are design obligations passed on to contractor in JCT suite
- 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
what is a package deal or turnkey project
where the client settles on a complete package usually to some standard specification from a commercial firm
what are JCT’s view on amendments
- 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
what is design & build contract appropriate
- 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)
what is price based on in JCT DB 2016
lump sum with stage payments or periodic payments as stated
what are third party rights
- 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)
what are differences between collateral warranties and third arty rights
- collateral warranties can be laborious to compile, sometimes expensive
- CW’s seen as more effective as they mirror building contract
what are key different provisions between JCT DB 2016 and JCT SBC
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)
what are the conditions of contract and how do they relate to the contract particulars
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
List the key sections to a JCT DB contract
- agreement
- recitals
- articles
- contract particulars
- attestation
- conditions
what’s the difference between a final certificate and final statement
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
list relevant matters
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.
what are principles of Contract Law
- offer
- acceptance
- consideration
- capacity
- intent
- legality
