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)