Contract Practice (Additional) Flashcards
What is the base date?
Covers changes to statutory requirements, tax and fluctuations, i.e. if there is a change in statutory requirements after the base date then contractor may be entitled to additional payment
Common practice for base date to be date that contractor returned its tender for the works
What are the differences between JCT and NEC?
- Programme – contractual document under NEC, dates only under JCT
- Practical Completion – subjective in JCT, well defined in NEC
- Provisional Sums – none in NEC, unknown items valued as compensation events, client’s risk
- Early Warnings – large part of NEC, incentive for contractor as affects cost/time award down the line
- Collaboration – less adversarial approach, focus on early warnings, risk registers, risk sharing etc.
- Claims – EoT for time and loss & expense for cost under JCT; both are compensation events in NEC
What is Practical Completion?
‘A state in which the Works are complete in all respects and free from apparent defects, save for any minor items of incomplete work or minor defects the existence, completion or rectification of which would not prevent or interfere with the use and enjoyment (or the fitting out for use) of the Works’
What happens at PC?
- Snagging inspections
- Handover checklist e.g. EPC, H&S file, O&Ms, BCA, planning, CWs, meter reading, snag list, warranties
- Letters received from CMT
- PC certificate
Why is PC so important?
- Ends rights to LADs
- Employer must pay % of retention (usually 50%)
- DLP commences
- Risk of loss or damage to works transfers to employer
- No more variations can be instructed
- Other consequences e.g. final account provisions in JCT
- Employer must insure building
Assignment
- Assignment is the transfer of a right or an interest vested in one party to another party
- Rights assigned primarily relate to transfer of benefit/interest under construction documents (CWs, contracts, etc.) from assignor to assignee e.g. transfer of client’s rights under a contract to purchaser of finished works
- Includes benefits from a contract such as right to payments but not burdens like obligation to pay
- Original contract parties like client will have their own protection e.g. DLP with contractor and CW with subbie, third party e.g. purchaser will want those rights too by way of assignment of these benefits
- Assignment acts as an alternative to CWs and third party rights
Novation
- Novation is the transfer of all rights and obligations of one party under a contract
- Agreed between at least three parties, e.g. employer, contractor and architect (consent from all three)
- Most commonly arises on DB projects: design team is novated from employer to DB contractor
- Novation amounts to the extinguishing of the original contract and the substitution of a new contract under which the same acts and obligations are to be performed, but by different parties
- Effect is that outgoing party is released from all future liabilities under the contract
- Employer will generally require a CW in its favour following novation
- Employer often wants novated party to continue to work on some services, may raise conflict of interest
What is an LOI?
- Used where employer and contractor are still concluding contract negotiations when they need to start procurement, site setup etc.
- Gives both parties a legal framework in which contractor can start and be paid for work
- Employer only agrees to pay for that work up to a given sum
What is a PCSA?
• Used in two stage tendering, used on larger or more complex projects where employer tenders project on basis
of incomplete design, price and programme prepared by their professional team
• Once contractor then chosen to work with employer based on its proposal for second stage
• Contractor advises on buildability of design, final cost estimate and other pre-construction services
Extension of Time - Timescales for Response
- Contractor notifies delay if any whenever it becomes reasonably apparent that the progress of the works is being or is likely to be delayed. Delay notice should:
- Be in writing
- State cause of delay
- Identify Relevant Event
- As soon as reasonably practicable provide an estimate of effect
- Notify Employer of any material change in the estimated delay.
- CA decides whether the events qualify for extension of time, and whether the completion of the works is likely to be delayed beyond the completion date.
- CA must issue the relevant notice within 12 weeks of the contractor’s notification.
- If less than 12 weeks to Practical Completion should endeavour to decide before Practical Completion.
- Following practical completion the CA may, within a further period of 12 weeks, review all extensions of time granted and may adjust the overall contract completion date if he considers it fair and reasonable to do so (cannot ‘take back’ time that has already been awarded)
What are specified perils?
Disasters: fire, lightning, explosion, storm, flood, escape of water from any water tank, apparatus or pipe, earthquake, aircraft and other aerial devices or articles dropped therefrom, riot and civil commotion but excluding Excepted Risks.
What is the Joint Fire Code?
- Provides guidance on fire safety on site – precautions and safe working practices. Examples of content:
- Emergency procedures
- Portable fire extinguishers
- Hot works
What is a large project under the Joint Fire Code?
• Value more than £20m
What is the purpose of the Joint Fire Code?
• Reduce the incidence of fire on construction sites. Can be a requirement of insurance cover. Non-compliance could result in insurance cover being withdrawn, resulting in possible breach of contract.
