Contract Practice - 'Hooks'

Question 1

What is required to form a legally binding contract

Answer 1

To form a legally binding contract you must have the need for:

Offer (tender from contractor)
Acceptance (by client)
Consideration (typically money)
Legality 
Capacity
Genuine Consent

Question 2

What different JCT forms of contract are you aware of?

Answer 2

Minor Works Building Contract
Intermediate Building Contract
Standard Building Contract 
Major Project Construction Contract 
Design & Build Contract 
Management Building Contract 
Construction Management Contract 
Measured Term Contract 
Prime Cost Contract

Question 3

What is a Relevant Event?

Answer 3

A relevant event is an event that causes delay to the project which is not caused by the contractor and impacts the completion date. It entitles the contractor to an extension of time under the contract.

Question 4

What is a Relevant Matter?

Answer 4

Is a matter for which the Employer is responsible for impacting the progress of works on site and may entitle the contractor to claim for loss and expense that has incurred.

Question 5

Can you give an example of a Relevant Event?

Answer 5

Variations and Instructions

Deferment of Possession

Suspension of the works by the Contractor

Statutory undertaker’s work.

Exceptionally adverse weather

Loss of damage from specified perils - floods etc

Civil Commotion - terrorism

Strikes

Force majeure (such as a war or an epidemic).

Question 6

Can you give an example of a Relevant Matter?

Answer 6

Variations or Instructions

Deferment of possession of site

Any impediment of the works by the client

Question 7

What is the role of the Employers Agent

Answer 7

To manage the delivery of a D&B construction project on behalf of the Client and complete their obligations under the Contract.

Includes:

Issuing instructions 
Managing change control procedures 
Assessing EOTs
Certifying Practical Completion 
Issuing the certificate of making good defects

Question 8

What is the role of the Principal Designer

Answer 8

To manage, monitor and co-ordinate Health & Safety during the pre-construction phase of a project.

Question 9

What is the difference between a contract being executed under hand and as a deed?

Answer 9

Under hand:

• Simple contract that legally binds 2 parties for 6 yrs
• Can be executed verbally
• Consideration is required

As a deed:

• Specialty contract that legally binds 2 parties for 12yrs
• Must be in writing
• Consideration is not required
• Need at least 1 director to sign it

Question 10

What is a Vesting Certificate?

Answer 10

Vesting certificates is a document which evidence the transfer of ownership of offsite materials to the Client upon payment.

Question 11

You say you’ve advised on Materials off site, what do you need to be in place before you can certify materials offsite?

Answer 11

Offsite materials bond / Contractor insures offsite materials for loss or damage

Vesting Certificate

Question 12

Who is responsible for insuring materials offsite?

Answer 12

The contractor is responsible for insuring offsite materials until they are delivered to site when they will be deemed as on site materials and insured under the works insurance.

Question 13

For what period is the contractor responsible for insuring offsite materials?

Answer 13

Until they are delivered to site where they will be deemed onsite materials. Onsite materials materials will become the Employers property when included in any interim payment but subject to insurance option B or C (if applicable’ the Contractor shall remain responsible for loss of damage to them

Question 14

On St James square you say there was no contractual mechanism in place to pay for offsite materials. What would have to be in place contractually to allow for offsite materials?

Answer 14

Items would need to be listed in the Contract

And a Offsite materials bond would be required

Question 15

Why might a Client not want to list offsite materials in the contract?

Answer 15

There is a risk that the supplier / contractor becomes insolvent and that the materials are not delivered to site.

There is also a risk off the materials being damaged in transit.

Question 16

What can you do to mitigate the risks associated with making payment for offsite materials?

Answer 16

Check the financial status of the contractor to assess the likely hood of insolvency

Use a Vesting Certificate

Ensure items are set aside and clearly marked with the Clients details

Ensure materials are ready of incorporation to the works

Ensure the materials are insured against specified perils for the period they remain off site

Offsite materials bond

Question 17

What is the concern If the Contractor goes bust and you have already paid for offsite materials which have not been delivered to site?

Answer 17

Potential issues with materials being delivered to site.

Supplier may dispute who owns the materials

Question 18

What is the default position in JCT of who owns materials on site?

Answer 18

materials and goods become the employer’s property once they are certified and paid for – provided that the contractor has a valid title to them; although the contractor remains responsible for loss or damage to them.

Question 19

What is the difference between a deed and underhand?

Answer 19

The limitation periods

Deeds - legally binding for 12 years
Must be in writing
Consideration not required
Needs to be signed by at least 1 director

Underhand - legally binging for 6 years
Can be executed verbally
Consideration is required

Question 20

What are the Heads of Terms commonly used in Loss & Expense Claims

Answer 20

Prolongation Costs

Finance Charges

Disruption

Costs of compiling the Claim