Contract Practice Flashcards

Question

What is the payment timeline in JCT SBC 2016?

Answer 1

Valuation period (7 calendar days before due date) Due Date Interim certificate issue (5 calendar days after due date) Pay less notice issue (deadline is 5 days before Final Date for Payment) Final date for payment (14 days after due date)

Answer 2

Deciding on the appropriate JCT contract 2016

Answer 3

- CA, QS, Clerk of Works - NO design responsibility - NO contractor's risk for ground conditions - Sections - EoT full list of events - Detailed rules for valuation - Quotation provision for variations - CoP covering testing of other work - Inspection and testing provided for - Advance payment & advance payment bond - Retention & retention bond - Bond in respect for payment for off-site materials - Loss and expense expressly provided for - NO Stage Payments - detailed provision - All 3 insurances - 3rd party rights + Collateral Warranties - Arbitration agreement provided for

Answer 4

- EA (NO QS) - Design responsibility - Silent on ground conditions @ contractor's risk - Sections - EoT full list of events - Detailed rules for valuation - Quotation provision for variations - CoP covering testing of other work - Inspection and testing provided for - Advance payment & advance payment bond - Retention & retention bond - Bond in respect for payment for off-site materials - Loss and expense expressly provided for - Stage Payments - detailed provision - All 3 insurances - 3rd party rights + Collateral Warranties - Arbitration agreement provided for

Answer 5

- CA, QS, Clerk of Works - NO design responsibility - NO contractor's risk for ground conditions (ICD silent) - Sections - EoT full list of events - Detailed rules for valuation - NO Quotation provision for variations - NO CoP covering testing of other work - Inspection and testing provided for - Advance payment & advance payment bond - Retention, NO bond - Bond in respect for payment for off-site materials - Loss and expense expressly provided for - All 3 insurances - Collateral Warranties - NO 3rd party rights - Arbitration agreement provided for

Answer 6

- CA - NO QS, Clerk of Works, EA - NO design responsibility - NO contractor's risk for ground conditions - NO sections - NO EoT full or restricted list - NO Detailed rules for valuation - NO quotation provision for variations - NO provisions for testing/opening-up - Retention on payments - NO to all bonds/advance payments,off-site materials etc - Provisions for all insurance apart from B - new builds insured by employer - NO provisions for warranties/3rd party rights - Arbitration agreement provided for

Answer 7

There was no "interim application for payment" date, the contractor could have submitted up to or on the Due Date

Answer 8

To give enough time for myself, the QS, to receive, review and return my recommendation prior to the EA issuing his Payment Notice

Answer 9

Contract Particulars "fill the blanks". The Contract, clauses are already fixed. Amendments change the clauses, fundamentally changing the contract

Answer 10

To suit clients needs, many clients have amendments they use on all projects To change the balance of risk to the benefit of the client or contractor

Answer 11

``` Agreement Recitals Articles Contract Particulars Attestation Conditions ```

Answer 12

1.1 Definitions 1.2 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

Answer 13

A - New Buildings - All Risks Insurance of the Works by the Contractor B - New Buildings - All Risks Insurance of the Works by the Employer C - Joint Names Insurance by the Employer of Existing Structures and Works in Extensions to them

Answer 14

- New Buildings - Contractor takes out joint names policy for all risk insurance for the works OR include them on that basis on their Annual Construction policy

Answer 15

- New Buildings - Employer takes out joint names policy for all risk insurance for the works OR include them on that basis on their Annual Construction policy

Answer 16

- Set out what is agreed between the parties - Contractor's obligations (1) and Contract Sum (2) - Identifies CA/EA - Identifies QS - Identifies principal designer - Identifies Contractor - Reference to adjudication/arbitration in event of dispute

Answer 17

- Introductory statements at the begining of a contract - First Recital - name of project + address - Scene setting, explanatory in nature

Answer 18

- 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

Answer 19

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 clear it is executed as a deed) - Under hand (just signed by both parties)

Answer 20

- Used for alternations of or extensions to existing structures - Employer takes out Joint Names Policy for All Risk Insurance for the Works - If C1 applies, Employer must also take out Joint Names Policy to insure Existing Structures and contents owned by him/which he is responsible against loss/damage by the Specific Perils. C1 = The Employer must take out joint names policy for works and existing structures + contents for reinstatement of loss/damage due to Specific Perils unless stated otherwise

Answer 21

Contractor

Answer 22

Contractor

Answer 23

Insured parties are unable to claim against one another in respect of an insured loss, as they are considered to be one-and-the-same for the purposes of the insurance.

Answer 24

- neither party needs to take out its own insurance policy, which can lead to dual insurance, unnecessarily increasing the project’s total insurance cost - it can help avoid costly litigation between the jointly-insured parties who may otherwise try to claim against the other - The insurer has no rights of subrogation

Answer 25

When an insurance company pursues a third party for damages, it is said to "step into the shoes of the policyholder," and thus will have the same rights and legal standing as the policyholder when seeking compensation for losses.

Answer 26

- No fault claims, so sub-contractor can claim on insurance and the main contractor won't be sued by sub-contractor's insurer - Higher insurance cost

Answer 27

Not in the contract. QS acts as a third party validator

Answer 28

- Ideally no amendments will be made, contracts are designed to be balanced in terms of risk for their procurement route - Client's may have their own - Amendments must go through Lawyers

Answer 29

JCT ICD 2016 - Central London Office Fit Out JCT DB 2016 - West London Academy

Answer 30

No - LDs are based on employer's loss of income/expense in delay, I do not know what that is - Insurance company to advise on insurances

Answer 31

Liquidated Damages Not a penalty. If the contractor does not complete works by agreed PC date, they are to compensate the Employer based on the actual loss of income the Employer would experience. Generally £X/week

Answer 32

When a project has different completion dates for different sections of the works. PRE AGREED. This is common in large projects.

Answer 33

- 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

Answer 34

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

Answer 35

- Logistics - Protection of completion sections - Insurance for all sections at all times - H&S measures dealing with the risk of construction adjacent to occupied areas

Answer 36

- Domestic sub-contractor - Nominated sub-contractor - Named sub-contractor

Answer 37

Handing over part of the site before official completion. NOT PRE AGREED

Answer 38

- 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

Answer 39

- Half retention for that section of works is released - The Defects Liability Period (DLP) begins for that part of the site - Liquidated Damages are reduced proportionally.

Answer 40

Requirements described in ERs. On my project incl: - Design drawings - Specifications - Method statement - Programme - CSA - Detail of insurances - CV of staff + relevant experience

Answer 41

- Articles of Agreement & Conditions of Contract - Employer's Requirements - Contractor's Proposals - CSA - BoQ (for some of design if poss)

Answer 42

- Articles of Agreement & Conditions of Contract - Working drawings - BoQ - SPecification - Schedule of work - Information release schedule - Schedule of tender adjustment/clarifications - Requirements for Contractor to provide performance bond/collateral warranties

Answer 43

Retention is a percentage 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.

Answer 44

On a case my case basis. If it's a riskier project/contractor you may apply higher %age.

Answer 45

IC 2016 - 5% before PC DB 2016 - 3% before PC

Answer 46

I think it serves a purpose in protecting the client which is good from the client's perspective Bad for Contractors cash flow, can cause issues for client if contractor goes bust due to poor cash flow so overall possibly bad

Answer 47

Lots of discussion around ending retention Instead could use performance bonds Will add an extra premium to project Following Carrilion collapse in 2018 - Build UK, the Civil Engineering Contractors Association and the Construction Products Association provided a joint submission to the ongoing government consultation, stating that; 'The industry is fully committed to achieving zero cash retention and we believe that government must introduce legislation to ensure there is zero cash retention within the industry by no later than 2025.'

Answer 48

- Under seal (signed by both parties, witnessed & made clear it is executed as a deed) - Under hand (just signed by both parties) (simple contract)

Answer 49

Simple contracts and contracts under seal have different limitation periods. An action founded on simple contract cannot be brought after six years from the date on which the cause of the action accrued. The limitation period for a contract under seal is 12 years.

Answer 50

Alternative A - Stage Payments Alternative B - Periodically

Answer 51

No staged option, periodically assumed

Answer 52

``` Employers Liability Insurance Public Liability Insurance All Risk Insurance (to works + contents) Professional Indemnity Insurance Terrorism Cover ```

Answer 53

Loss or damage to work executed and Site Materials caused by or resulting from terrorism as is from time to time generally available from insurers who are members of the Pool Reinsurance Company Limited Scheme

Answer 54

fire, lightning, explosions, storm, flood, earthquake, water from pipe/tank/apparatus

Answer 55

Practical Completion

Answer 56

- CA/EA certifies PC when all works have been completed - Half retention is released - End of Contractor's liability for LDs - DLP begins - Various documents may be released to client such as O&M manual, H&S file. - Client takes possession

Answer 57

At PC????????

Answer 58

No absolute definition of practical completion in JCT but generally a project is deemed PC when works are complete and there are no outstanding defects (aside from snagging or minor items) so the building can be used.

Answer 59

No, only 2011

Answer 60

Interim Valuation must be submitted by Contractor 7 days prior to due date

Answer 61

- Client wanted to retain control over aspects of the design | - No requirement for other provisions such as staged payments, CoP covering testing of other works, retention bond

Answer 62

- Project was sectioned | - Full list of EoT revents desirable to limit EoT requests as risky project.

Answer 63

- 3 floors, c. 25k sqft each | - c. £4m

Answer 64

A way of forming a direct contractual link between two parties with otherwise wouldn't have a link, such as between a sub-contractor and a client.

Answer 65

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

Answer 66

- The process whereby both the benefit and the burden of a Contract are transferred from one party to another. - Requires consent from all parties, usually parties enter into tripartite novation agreement.

Answer 67

- 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

Answer 68

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 state that a third party has specific rights (often excluded)

Answer 69

- Collateral Warranties can be laborious to compile, sometimes expensive - CW's seen as more effective as they mirror building contract

Answer 70

Interim Valuation Date AKA 7 days prior to due date

Answer 71

When the Interim Payment Application comes in

Answer 72

The risks that are covered are named within the JCT Contract as: ``` Collapse. Subsidence. Heave. Vibration. Weakening or removal of support. Lowering of groundwater. ```

Answer 73

``` Schedule 1 - Insurance Options Schedule 2 - Name of sub-contractor Schedule 3 - Form of Bonds Schedule 4 - Fluctuations Schedule 5 - Supplemental provisions SChedule 6 - Design Submission Procedure ```

Answer 74

In the tender documents as "Employer's Requirements", responded to with "Contractors Proposals".

Answer 75

Stage 2/3 level of design

Answer 76

- it must be made abundantly clear exactly what the specialist has to design within the work section. - A performance specification must describe quality both in terms of function and form, bearing in mind that contractors tendering in competition will respond with the cheapest option available to meet the specification.

Answer 77

See Schedule 6 - Design Submission Procedure (clause 2.10.3) ER's state design requirements Contractor prepares and submits Contractor's Design Documents to CA w/in sufficient time to allow design team to comment CDD marked A/B/C. If not marked A (compliant), then comments will be included as to why the CDD is not good enough

Answer 78

A = can carry out works in strict accordance with CDD B = can only carry out works if CA/architect comments taken on board C = cannot carry out works

Answer 79

A matter for which the client is responsible that materially affects the progress of the works.

Answer 80

- Changes - Employer instruction for opening up/inspection or testing of works - Client delays giving possession of site - Impediment, preventon or default whether by act or omission by the Employer/Employer's Person - Exceptionally adverse weather - Strike - Force majeure - Delay in receipt of necessary permission/approval from statutory body in which contractor has taken all practicable steps to avoid or reduce

Answer 81

- Variations - Employer instruction for opening up/inspection or testing of works - Client delays giving possession of site - Impediment, preventon or default whether by act or omission by the Employer/Employer's Person - Exceptionally adverse weather - Strike - Force majeure

Answer 82

- Changes - Employer instruction for opening up/inspection or testing of works - Impediment, prevention or default whether by act or omission by the Employer/Employer's Person - Compliance with 3.15.1 or Employers instructions under 3.15.2 (relating to discovery of fossils/artifacts)

Answer 83

- Variations - Employer instruction for opening up/inspection or testing of works - Employer instructions in relation to errors, omissions and inconsistencies in or between the Contract documents - Impediment, prevention or default whether by act or omission by the Employer/Employer's Person

Answer 84

Section 2 - Carrying out the works 2.26

Answer 85

Section 4 - Payment 4.21

Answer 86

Section 2 - Carrying out the works 2.20

Answer 87

Section 4 - Payment 4.17

Answer 88

CPs supersede ERs so CPs However always check amendments

Answer 89

Contractor

Answer 90

You can ask contractor to provide quotation for large piece of work without having to go to tender. This would sit outside existing contract if IC/MW. MW simple contract, not expected to do major additional scope

Answer 91

Limit of indemnity, i.e. what is the maximum amount we are liable for in the case of negligent advice. Try to reduce this to protect firm

Answer 92

We have to use RICS wording as a minimum in our PI insurance, to ensure key parts are covered as stated in RICS.

Answer 93

- Contract Works. - Public Liability Insurance. - Employers' Liability Insurance.

Answer 94

- extend period to make payment (bad for cashflow) | - contractor payment application"

Answer 95

- JCT ICD 16 - ERs - CPs - CSA CHECK

Answer 96

- Half retention released on PC - Any defects that emerge must be made good by contractor within timeframe - At end of RP, if defects not rectified, EA will list and give time limit for contractor to make good. - If not made good, remaining retention monies will be used to bring in different contractor - If made good, Certificate of MGD issued + remaining retention released

Answer 97

a. Programme forms part of the contract b. Compensation events c. The JCT Contract contains provisional sums, whilst the NEC Contract does not.

Answer 98

Where a delay which impacts the completion date is not caused by the contractor, it may be a ‘relevant event’, for which the contractor may be entitled to an extension of time and to claim loss and expense incurred as a direct result of the delay.

Answer 99

No, in the recitals there are options for BoQ/works schedules/specification, delete as appropriate

Answer 100

DB first point in valuation rules related to add/omit of design works. ICD only has this for CD parts

Answer 101

``` ITT, Form of Tender, declaration of non-collusion, drawings, spec, employer requirements, CSA, provisional programme, RFI schedule, Tender return slip ```

Answer 102

pay premium for owner to take insurance of works into their policy

Answer 103

Check contract and amendments for relevant matters, ascertain whether it's a valid claim

Answer 104

a contribution to a claimant’s increased overheads resulting from a client-culpable delay.

Answer 105

I've never had to do this, it is something that I would instruct the lawyers to do. A schedule of amendments would be appended to the contract.

Answer 106

Employer's Requirements prepared, CPs returned, graded on A/B/C basis

Answer 107

``` Change/variation = difference to works Instruction = not necessarily changes works ```

Answer 108

Loss and expense = claim

Answer 109

A - staged payments B - interim valuations JCT DB. If not selected, B assumed (interim payments w/ monthly interim valuation dates) JCT ICD assumes interim payments

Answer 110

No, could explain them but not advise which they should select

Answer 111

Issue non-completion certificate

Answer 112

Compensation events vs relevant matters/events Programme forms part of NEC contract No PM in JCT No PSUMS in NEC Instead of different contract suites e.g. DB/MW you build your contract NEC geared towards partnering. JCT contract there may be some cost scrutiny via the contract sum analysis and tender negotiations but the NEC contract has an open book procedure with the key concepts of defined cost and disallowed cost

Answer 113

If the project has complexities for which MW does not provide adequate provisions, e.g. - Sectioning - Contractor design responsibility - A third party/CW to the contract

Answer 114

Internationally

Answer 115

- inefficient use of labour/plant - increases in cost of labour/materials during period of disruption - site running costs - head office overheads - finance charges and interest (on borrowed money) - loss of profit

Answer 116

- Prolongation and disruption are two separate elements that might result in a claim for loss and expense. - Claims for disruption result from the additional cost of adopting inefficient working methods as a result of the disruption - The prolongation element is dependent on the completion date being delayed.

Answer 117

Prolongation

Answer 118

- Client default on payment - Insolvency of employer or client - If the suspension of works is over max time in contract

Answer 119

Housing Grants, Regeneration and Construction Act 1996 - 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

Answer 120

Local Democracy, Economic Development and Construction Act 2009 - 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

Answer 121

- Applies to all Contracts for "Construction Operations" (incl consultants) - Intended to ensure payments are made promptly throughout the supply chain and that disputes and resolved swiftly

Answer 122

- If the client wanted it - If I/consultants/PMs were confident in using it (I would do diligence to ensure I was) - For the benefits of partnering/collaborative work

Answer 123

Benefit = control design up to stage 4 but still transfer risk over to contractor Negative = lose benefit of reducing overall programme

Answer 124

I have no used JCT MP but am aware that it's a design and build contract for large-scale construction projects. I will have to learn more about it if we use that contract type