Contract Practice and Administration Flashcards
What is acceleration?
Mechanism in the contract which allows the client to ask the contractor for a quotation to complete the works before contract PC date
What are the options of acceleration considered?
Re-sequencing the works, Increasing the working time, Increasing the resources employed, Changing the working methods, Increasing incentives
What are the most effective and least effective methods of acceleration?
Most: Resequencing the works
Least: Increasing hours / resources employed on site - less productivity
What are the timing processes for acceleration under the JCT?
Schedule 2 Quotation, EA request quote, Contractor has 7 days to notify no comply, 21 days to submit quote, Employer has 7 days to confirm acceptance / rejection / more time required
What is novation?
When a contract is transferred from the employer & DT to contractor & DT, Transfer rights, obligations & benefits, Client like this as they keep continuity of the design team
What is assignment?
Involves the rights of the contract being transferred to a 3rd party, Rights and benefits transferred, e.g. collateral warranties to subsequent owners / lease holders, Clause 7.1 states assignment rights under the contract is totally excluded, Clause 7.2 optional clause enables assignment
If an problem becomes apparent after novation of the design team to the contractor, who is responsible?
The design team are responsible for the problems in design
What are the key issues with novating?
Does new party have the right to take action against novated party for breaches that occurred prior to novation
Ensure novated DT responsibilities adequately transferred to contractor to establish a duty of care
Obtain all relevant CW
What is a domestic sub-contractor?
One whose selection and employment the employer generally plays no part, although the employer may be required to give consent to the appointment where specified in a particular contract
What is a nominated contractor?
One who is selected by the employer, but who then enters a sub-contract with the MC
Employer remains responsible for certain aspects of the nominated contracts performance even though MC has overreaching obligation to carry out & complete
works
What is a bond?
Protects against disruptions or financial loss due to contractors failure to meet contract specifics
How can you protect the client under a contract? (Types of bonds)
Performance Bond
Advance Payment Bond
Retention Bond
What is a collateral warranty?
They are supporting documents to the primary contract which creates a bilateral agreement to the contract between the client and the 3rd party
Why bother with a collateral warranty when the 3rd party act exists?
CW can be written with inclusion of specific terms and conditions
Physical agreement = easier negotiation
Parties specifically named
What is professional indemnity insurance?
Provides cover against claims of negligence & used widely where professional services are being provided to a developer
Provide insurance for up to a specified amount where negligence is proven to have been committed on part of the service provider
What is public liability insurance?
Required by contractors to cover against death, injury of damage to property of a 3rd party
Liability for claims is unlimited
What is employers liability insurance?
Compulsory after employer liability act 1969 by UK statutory
Provides indemnity to an employer for its legal liability to its employees for death / disease or personal injury arising out of their employment
The limit of indemnity provided must be for a minimum amount of £5m in respect of any claim
What is joint names insurance?
Where employer & contractor both can benefit from rights under the insurance agreement, regardless of party that fronts the cost
What is non-negligent damage?
Insurance is available to cover liability for damage to adjoining buildings where there has been no negligence on part of contractor
D&B optional provision from this type of insurance and would need to be in ER’s
What is terrorism cover?
Clause 6.8 in the JCT and is an insurance provided in joint names for physical loss & damage to work executed, site materials, existing structures and their contents caused by terrorism
What is defects liability insurance / latent defects insurance?
Can be used instead of collateral warranty - costs generally between 0.65 - 2%
Covers event of an inherent design defect, workmanship or materials becoming apparent after PC
What is subrogation?
The right for the insurer to pursue a third party claim that caused an insurance loss to the insured
Insurers right to pursue for loss
What are the insurance options under the JCT contract?
Option A - insurance of a new site by the employer
Option B - insurance of a new site by the contractor
Option C - insurance of an existing site by the employer
What is run-off cover?
Cover needs to be provided should a claim be made against you or a former practice for work undertaken in the past
If a company comes to an end, run off cover must be in place to cover for any claims which may be made after this date (when PI does not exist anymore)
What is the procedure if loss or damage occurs as result of an insured risk?
Contractor notify architect in writing for location, extent of damage
Valuation of works take no account of the damage
Once insurers make inspections, contractor should rectify damage at their cost
Under option A: contractor must enable insurers to pay out any monies due to the employer
Reinstatement value depends on insurance option used
Employer can only recover indirect losses sustained by an insured event if he can prove negligence on part of the contract
What is the joint fire code?
Fire prevention on construction sites
Compliance with CDM regulations
Specific guidance on high risk sites & timber frame buildings
Change to requirements for storing combustible materials & burning waste on site
Requirement to liaise with fire & rescue during design process
Fire protection / hot work / electricity / gas safety
What is a parent company guarantee?
Form of security that can protect clients in the event of a default on a contract by a contractor
What are the differences between a guarantee & a warranty?
Guarantee: Usually free, legally binding contract, must explain about how to make a claim in simple terms
Warranty: Similar to an insurance policy, sometimes referred to as an extended guarantee, can cover a longer period than a guarantee
What are the advantages & disadvantages of a Collateral Warranty?
ADV: Physical Agreement, Parties specifically names, assignment easier to undertake.
DISADV: Standard forms Unsatisfactory, expensive and time consuming
What are the advantages & disadvantages of rights of third parties?
ADV: Large saving in cost and time v CW, Can extend rights to entire classes of 3rd parties
DISADV: Enabled classes of parties to bring action enforcing the contract, operation of the act untested in law, no physical paper agreement
What is net contribution clause?
Where 2 or more parties involved in construction project are each jointly liable for the same loss or damage. The liability of each party is limited to the amount which would be apportioned to that party by the court
Why are both CWs and Third Parties needed?
Construction security - can claim losses from those liable
Because of privity of contract, only those party to contract can enforce its terms
Employers will now ask advisers / contractor to agree CW / 3PR to any funders
What are step-in rights?
Rights for a party to step in & take over the development to complete it, e.g. funder will require that step in rights are included in CW
If employer becomes insolvent through construction process, other party steps in and completes development in employers role
What is the difference between a conditional and unconditional bond?
Conditional bond: Can only be called upon by the bondsman when contractor has gone insolvent and you have to prove they’ve gone insolvent & cost of X to retender project
Unconditional bond: Can be called upon at any time - don’t have to prove the condition has been met. Contractors don’t tend to accept this.
What is all risks insurance?
Insuring the materials & the site (the contract works)
What are the 4 types of insurance on construction projects?
All risk, Professional indemnity, Employers Liability, Public Liability
What is the difference between performance bond & guarantee?
Guarantee free, Performance bond covers 10% of the package / works, Guarantee the parent company steps in and carries out the works of the contractor
What is a contract?
A legally binding agreement which is enforceable by law
What is legislation?
The process of making or enacting laws
What is the privity of contract?
States that only a party to a contract has the benefit of that contract or is subject to the obligations contained in it
Only a party to a contract can enforce the terms of that contract
A 3rd party cannot be subjected to a burden of a contract to which he is not party
Only parties of contract can sue one another
Contractors / rights of 3rd parties & collateral warranties changed this rule
What is the purpose of a contract?
An agreement entered into voluntarily between 2 parties which is intended to be legally enforceable
What is Contra Proferetem?
Where a party modifies a clause, it is their responsibility to make the wording clear & they should lose out if there is any ambiguity
What is Quantum Merit?
Judicial policy that allows a party to recover losses in the absence of an agreement or binding contract
What is the scheme for Construction Contracts?
Applies when a construction contract does not comply with the construction act
Makes provision for adjudication where the contract does not comply with HGCRA
Sets out payment provisions that are to be used in cases where the parties have entered a contract but the provisions of the contract to not provide an adequate mechanism determining what payments become due and when
How can a contract be executed?
Orally, Underhand, As a deed
What are the aims of Construction 2025?
Reduce construction costs, greenhouse gases
Push sustainable, whole life cycle costing
What was the Latham Report 1994?
Highlighted the inefficiencies of the construction industry
Suggests government should become best practice client
NEC should be used more
Create standardisation & integration of contract documents & guidance notes
What was the Egan Report 1998?
Improving quality & efficiencies in UK constructionQuality driven agenda
What are the standard construction contracts?
JCT, ICE (NEC), FIDIC
What are the contract conditions?
They set out the relationship between parties, including risk and price
What are the advantages and disadvantages of standard contracts?
ADV: Written by legal experts
Fair (as prepared by recognised organisations & institutions RIBA, contractors, RICS, etc.)
Rights and obligations clearly set out
Risk allocated evenly
Saving in time & expense
Familiarity
DISADV: Familiarity decreased as they are often amended
May not be appropriate in the needs of the client
Using inappropriate standard contract for a project will cancel out benefits
What are the advantages and disadvantages of using a bespoke contract?
ADV: Beneficial for major projects with novel obligations
Risk can be transferred as required
Specific to employer
DISADV: Parties unfamiliar with terms
Can be ambiguous = disputes
Liable to unfairly allocate risk
Expensive to produce
Not gone through the courts
Cannot contradict current law
What elements should you consider when choosing a contract?
Procurement route
Sector
Risk allocation
Size of project
Client experience
Design responsibility
Contract sum
What is tort law?
A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits a tortious act
E.g. negligence, financial losses, injuries etc.
What is required for a contract? OACLIC
Offer, Acceptance, Consideration, Legality, Intent, Capacity
What amendments have you made to a contract?
Payment date from 14 -21 days
Retention percentage from 3% to 5%
Rectification period from 6months to 12 months
Change % released retention at PC / Certificate of making good e.g. demolition give 100% as there is no making good necessary (in theory)
Risk allocation
Inserting obligations such as the provision of bonds / collateral warranties
What is the difference between an intermediate building contract and minor works?
IBC: Traditional route
Drawings with spec / BoQ
Lump sum
Fairly detailed contract provisional without it being complex
With contractors design is the same but their design is specified
MW: Small & basic construction
Possession of site not given to contractor
No detailed rules for variation or valuations
No advance payment or CWs
EOT beyond control of contractor
What is a measured term?
Minor works at irregular occurrence on agreed schedule of rates
What is a framework agreement?
Carry out work regularly with supply cain & build on relationships
What is partnering?
Partnership to improve delivery, collaborative processes, project / strategic partnering, dispute avoidance
What are the main provisions for carrying out works under a JCT?
Definitions
Carrying out the works
Controlling of the works
Payment
Variations
Injury damage & insurance
Assignment, third party rights, CWs
Termination
Settlement of disputes
What are advantages and disadvantages of Traditional?
ADV: Familiarity amongst industry
Client retains control over design and quality
Direct reporting design team to client
Independent CA
Some price certainty at contract
Prices based off same information - no risk premium
Contractor is responsible for programme
DISADV: Design should be fully developed before tendering to avoid expensive variations
Fragmented design/ construction process leads to disputes e.g. design defects or construction defects?
Over-designing / over-engineering
Contractor cannot buy into design or offer advice on buildability
Fixed price lump sum rarely achieved
Price escalation post-contract with CCRFs
Contractor could win job not reflecting works carried & claim back money
What are the contract documents under JCT SBC?
Articles of agreement & conditions of contract
Contract drawings
Bill of quantities
Specifications
Schedule of work
Schedule of tender adjustments & clarifications
Requirements for performance bond or CW
What are the advantages and disadvantages of D&B?
ADV: Speed
Single point of responsibility
Acceptance of design from MC
Contractor input on buildability
DISADV: Initial price may be high due to risk premium
Post-contract variations costly
Client less control on design due to novation
Small scope for client change once in contract
Discrepancies between ER’s & CP’s
What are the contract documents under JCT D&B?
Articles of agreement & conditions of contract
ER’s
Contractors Proposals
CSA
How is the JCT contract set out? ARACACS
Articles of agreement, Recitals, Articles (D&B), Contract particulars, Attestation, Conditions, Schedules
What are the differences between IBC & SBC?
IBC more appropriate for simpler construction projects with detailed contract provisions but without the requirement for the installation of complicated building services or other specialist work
IBC has more extensive control than MW but less than SBC
Not suitable for projects where the contractor is required to build in discrete parts of the work
What is an EOT?
A provision in the contract for an amendment of the scheduled practical completion date due to unforeseen circumstances
Have you had any experience of EOTs in your projects?
17CC - Lift out of order caused delay for strip out program.
Where in the contract (SBCXQ) is the EOT?
Notice by contractor for delay: 2.27
Fixing completion date: 2.28
What methods of delay analysis are there?
Facts, Actual vs Planned Progress, Critical path analysis, Focused methods analysis
What is a relevant event?
A mechanism to define what constitutes an EOT - doesn’t always lead to a loss & expense claim
Clause 2.29
What are some relevant events in your contract?
Variations to the contract
CAIs
Deferment of site possession
Adverse weather
Loss or damage by specified perils
Civil commotions
Antiquities / statutory undertaker
Force majeure
What is a dispute?
A disagreement or argument
What are the types of avoidance & dispute resolution?
Negotiation, Mediation, Conciliation, Adjudication, Arbitration, Litigation
What is the difference between adjudication and arbitration
Anyone has the right to adjudication / arbitration must be agreed and written in at contract stage
Adjudicator cannot award costs, only their own fees / arbitrator has power to order costs
What is insolvency?
When a company doesn’t have sufficient funds or assets to cover its debts
What are the signs of insolvency?
Not making payments to creditors
Late sub-contractor payments
Poor progress against cashflow
Overclaiming
Legal action against the company
Site murmurs
On account payments requested
Materials claimed for not onsite
Quiet on site
What are the different types of insolvency?
Company Voluntary Agreements (CVA)
Administration
Winding up
Administrative receivership
Voluntary
What is the difference between liquidation and administration?
Administration aims to help the company repay debts in order to escape insolvency
Liquidation is the process of selling all the assets before dissolving the company completely
What is the difference between insolvency and liquidation?
Insolvency is where a company doesn’t have sufficient funds or assets to cover its debts
Liquidation is the legal ending of a company
What are the QS responsibilities pre-insolvency?
Check companies house
Keep key details / emails
Investigate verbal evidence
Relaxation of payment terms
Reletting work to others
Direct payments to avoid insolvency
Termination
What should you do if a party becomes insolvent?
Ensure the clients’ interests
Appoint skilled people
Legal advice
Consider claim on bond
Prepare notional final account
What steps should be taken upon a contractor becoming insolvent?
Advise client of contractual position and recommend action
Secure the site
Prepare a detailed valuation
Stop processing any payments to the contractor
Contact S/C, suppliers and commence discussions about continuation of contracts
Check the contract bonds / PCG
Contact the administrator / liquidator / client about their views with regards to project completion
Keep a record of time spent and costs incurred in dealing with insolvency
What is legislation?
The process of making or enacting laws
What are the CDM regulations 2015?
The construction design and management regulations
Main set of regulations for managing health, safety and welfare of construction projects
All building works from demolition to repairs
What was the Consumer Rights Act 2015?
Replaced supply of goods & services act 1992
Faulty goods / faulty digital content
Unfair terms in the contract
What changed in the Local Democracy Economic & Construction Act in 2009?
No longer allowed to define within contract who should bear the cost of adjudication
Adjudicators have right to correct contract errors within 5 days of decision
Dates for payment must be in contract
Can go to adjudication even if contract not formalised in writing
Notified sum is payable by the final date for payment
If client fails to issue, contractors application becomes the default
Supersedes HGCRA as latest legislation
What is the Housing Grants & Construction Regeneration Act 1996 (HGCRA)?
Right to be paid in interim payments
Right to suspend performance if not paid
Disallowing pay when paid clauses
Right to adjudication
What is the Third Party Rights Act 1999?
Also known as the contract act 1999
Removed the need for a separate collateral warranty in order to bring a claim against someone in the contract
When were pay less notices introduced?
Form of withholding notices - when were these introduced into construction contracts?
What are LDs?
Genuine pre-estimate of loss defined by the client early on and included in the contract
Not penalties but pre-determined damages set at contract
Actual loss incurred if LDs section crossed out
What are the pre-conditions for claiming for LDs?
PC date not achieved
Employer issues non completion notice
Notified contractor of intention to require LDs payment (payless at 1 valuation)
Employer has fulfilled an EOTs
What are the common issues with LDs?
Challenge of the sum levied (imposed)
Delay in certificate of completion
If relevant section of contract is blank then unliquidated damages will apply
NIL in contract = no entitlement to LDs
If there is no mechanisms in the contract to allow EOT then client cannot claim benefit if they are responsible for delayed possession or change to scope
What are unliquidated damages?
Type of compensation that is considered ‘at large’, meaning the amount is not stated when a contract is established
Instead, these damages are determined by a judge or jury in a court following a breach
Can you advise on LDs?
No, I would advise my client to consult legal professionals and help provide information on actual / direct loss incurred
I can advise on: Loss of rental
Leasing alternative accommodation
Finance cost
Loss of earnings
Benchmark data
What are the 3 types of LOI?
Comfort Letter, Consent to spend, Into contract
What is a LOI?
Used where a contract cannot be signed prior to start of project, a LOI can be used to commence works whilst negotiations continue
What is beneficial about a PCSA agreement?
Enables contractor to contribute to design, advise on buildability, packaging on works, develop the cost and programme, assist with planning regs.
Gives more price certainty
Employer not contractually obliged to award the work the MC who’s undertaken a PCSA
What is a PCSA?
Pre Construction Services Agreement
Enable clients to employ MC before main construction contract commences
Typically part of a 2 stage tender process
What is the difference between a LOI and PCSA?
Legally - minimum difference
PCSA - used during 2 stage tender for MC to collaborate with design team. No provision for the MC to enter site or carry out works
LOI - not part of tendering process & will provide for the contractor to enter site and carry out preliminary work
What is a relevant matter?
A mechanism that defines what constitutes loss and expense
What are the types of relevant matter?
Variations to contract
CAIs
Opening up works to test if works are in accordance with the contract
Any impediment, prevention or default
Delay in receipt of approval for the purposes of development control requirements
What is loss & expense?
Additional costs incurred by a contractor as a result of disturbance to the regular progress of the works caused by the employer
What does a contractor usually include in an L&E claim?
Prolongation
Thickening of prelims
Disruption
Increase in material / labour costs
Head office overheads
Loss of profit
Finance charges
Acceleration costs
Claim preparation costs
How do you ascertain L&E for the above factors?
Prolongation: Comparison between the period of time that the item would have been on site had issue not occurred vs time reasonably to have been on site given the matter did occur
Disruption: Request contemporary records, avoid application of overall %, Where labour required in short notice = premium
Abortive material purchase: Double handling of materials = more waste
Inflation: Works executed later than relevant matter allows, costs not reimbursable under fluctuation clause would be included in claim
Head office: Loss in recovery of the head office overheads is an admissible item
Loss of profit: If as a direct result of a relevant matter referred to in the conditions of contract, then loss of profit is suffered that could have been gathered in contractors business elsewhere can be claimed
Finance charges: A debt that has interest charges on money borrowed by the contractor (that could not be earned on capital)
What are the 3 categories of delay?
Excusable event, Neutral, Culpable event
Should you pay for materials on site?
Paid in valuations provided that their value shall only be included if they are adjacent to the works, adequately protected a nd are not in the works prematurely
Describe the materials offsite payment process?
Listed items are in accordance to the contract (with adequate insurances)
Vesting certificate stating the materials are vested from the contractor to the employer
Materials should be wrapped up, protected and clearly marked as property of the employer, with site address
Photographs and packing list provided to ensure all materials are accounted for
Unique items provide a bond (e.g. cupola, listed joinery)
Materials should be ready for incorporation
What are the options under the suite of contracts (e.g. engineering & construction) (7nr)
Option A - priced contract with activity schedule
Option B - priced contract with BOQ
Option C - target contract with activity schedule
Option D - target contract with BOQ
Option E - cost reimbursable contract
Option F - management contract
Option G - term contract
What is the NEC?
New Engineering Contract (NEC4)
Stimulates good management
Clear, simple without legal terminology
Major projects
Promote partnering between client / MC - strongly recommended in the Latham Report
What is included in an NEC contract?
Name of parties
Form of agreement
Conditions of contract
Contract data
Prices, activity schedule, BoQ
Works / site information
What were the key changes between NEC3 & NEC4?
New contracts introduced (DBO & alliance contract)
Review and acceptance of defined cost during project
Subcontractor costs included in schedule of cost components
Fee percentage / people overheads
Programme changes - new provisions for treated acceptance of contractor programme
What are the 9 core clauses of the NEC?
General terms
MC responsibilities
Time
Testing & defects
Payment
Compensation events
Title
Risk & insurance
Termination
ADVS & DISADVS of NEC?
ADV: Contract well supported with additional materials including flow charts / guidance notes
Clear terms
Focuses on real-time management of the project
Flexible due to 8 NEC suites & 7 contract options
DISADV: Conciseness = ambiguity & much of the terminology untested in court
Heavy on administration & required a good understanding of its procedures
Requires sufficient resources to administer
What are the key differences between NEC & JCT?
No prov sums, Compensation event encompass both, programme key document that is regularly updated, ECC flexible to allow any design responsibility, QS not named, Simplified language, Rolling final account.
What is possession?
Date contractor gets possession of the site
What is completion?
Completion date in the contract
What is partial possession?
No pre-agreed in the contract & agreed with contractor who cannot unreasonably withhold permission to grant partial possession
Half retention released
Defects liability commences
Client becomes responsible
What is sectional completion?
Pre-defined set of dates clearly defined with LDs
Amount of retention to be released to be agreed
What is practical completion?
Contractually required to complete on or before
Issue of PC certificate depends on minor snagging to be rectified in stated time
Triggers the following:
Rectification period
Release half retention
Employer responsibility for securing the site
Insurances transferred
Bonds expire
LDs cannot be levied
Starts FA procedures
Who owns the float?
Used to describe the amount of time that an event or activity can be delayed without delaying the overall completion of works
Employer owns it unless the contractor claims successfully for a relevant event to a critical path activity
What is a certification of non-completion?
In the event of failure to meet PC date, employer can claim LDs by notifying the contractor
What is ‘time at large’?
When PC date is not reached & non-complete notice / EOT not issued, contractor to complete in reasonable time = high cost risk for the client
What is a defect?
Something that is innately wrong with design, construction or building material which does not perform under the contract
What is a patent defect?
Identified during the rectification period as a result of reasonable inspection
How would you go about resolving a defect?
Contractor has obligation to correct / make good any patent defects in the rectification period
Contractor has obligation to correct / make good any latent defects in the liability period
Notice of completion of making good issued by CA to certify defects are made good & triggers release of retention
What is a latent defect?
Exists before its discovery but could not be identified from a reasonable inspection
Hidden or concealed flaws - when it is identified it becomes patent
How is snagging different to defects?
Snagging occurs before PC is given to the contractor
How does you contract manage defects?
The JCT SBCXQ contains provisions to address defects
CA / Architect can open up works for inspection at client risk
The second half of retention is returned after certificate rectifying defects has been authorised
How long is the defects rectification period on your scheme?
12 months - usually 6months in a standard contract but amended so the building withstands the 4 seasons
What is the managing defects process?
Defect identified & reported to PM / MC
Contractor visits site & inspects
Contractor agrees to rectify in time period
Contractor to confirm rectified
Client to signoff & issue closed
What happens if a contractor refuses to correct a defect in the rectification period?
Remaining half of the retention money can be used to secure the services of another contractor
How do you claim for latent defects after all contractual obligations have finished?
Contractual remedy in law of contract
Remedy may arise under tort law
Claim under dwelling for negligence by design / construction of the building when occupied
What are the employers requirements?
Provide a description of the clients objectives
Project overview
Scope
CSA
Form of CPs
Project brief
Specification / DWGS
Form of contract
Programme
Site information
It is very important that CPs match the ER’s to remove discrepancies
What are the contractors proposals?
Response to the ER’s & set out proposal for D&B of project & cost
Format should be set out in the ER’s - if not set out ask for a compliant tender
Design dwgs / spec
Schedules
Method statement
Programme
Details of inconsistencies between ER’s / CPs
What are the differences between an EA & CA?
CA: Expected to act impartially as employed under contract
Appointed to administer terms of the contract by Employer
Must act independently without reference to ER’s
Mentioned frequently in the SBC but EA isn’t
Client leads project
EA: Administers contract on behalf of the employer therefore they cannot be deemed impartial
Must certify in completely impartial matter
Undertakes all duties on Employers behalf
An error in the delivery of the EA’s services could lead to the employer being responsible
Contractor leads project
What are the reasons for difference in QS / CA role?
Traditional you have pricing document that you have put together - you have visibility on the cost with no input from contractor
Contractor has no obligation to provide any detail to their contract sum, so wouldn’t be feasible for us to cost works
Comes down to visibility
What is termination?
Where the parties to a contract are no longer required to perform their obligations under the contract
What is repudiation?
To refuse or reject something
Where the behaviour of one party makes it difficult for the other party to carry out contractual obligations, then the injured party can claim that the contract
has been repudiated
When one party makes it clear that they no longer intend to be bound by the provisions of the contract
What are some examples of repudiation?
Abandonment on site / moving plant
Refusal by party to carry out the works
Employment of other contractor to carry out the works
Access denial by employer
What are the consequences of a breach of contract?
If a party commits a breach of contract significantly serious it entitles the innocent party to break the contract and terminate / sue
Termination clauses in contracts give rights to parties to terminate in certain circumstances
How does the contract deal with termination?
Termination by employer: Default by contractor / Insolvency by contractor / Corruption / Employers decision not to complete the works.
Termination by contractor: Default by the employer / Insolvency by employer
Termination by either party
What is the process for termination?
Issue warning notice specifying default
Not resolved in 14 days
Further notice submitted within 21 days of 14 days to terminate
What is termination for convenience?
Wording inserted into contract allowing party to terminate without having to establish that some event has occurred or breach committed
Used where employer reconsiders use of land, cannot secure financing for entire project or cannot secure anchor tenants
Contractor may find project too risky or unprofitable or project has been suspended for a significant period with no prospect of recommencement
What is determination?
Allows ending of contractors employment under the contract, contract itself remains in place and so do the rights of both parties
What is a valuation?
The total values of work properly executed by the contractor
What are the components of a valuation?
Works executed
Preliminaries
Variations
Provisional sum expenditure
Materials on / off site
Claims / L&E
OH&P
Advance payments
Currency fluctuations
Retention
Previously certified
Adjustment of prime cost sums
What is the key difference between SBC & D&B when it comes to valuations?
Under D&B contractors shall issue an interim valuation on the interim valuation date
Under SBC contractors may issue an interim valuation on the interim valuation date
What is a variation?
The alteration or modification of the design, quality or quantity of the scope of works
What are the different pricing documents in the contract?
CSA
Schedule of works
Schedule of rates
Bill of quantities
