Contract practice (L1) Flashcards

Question

How and what contract provisions does the Local Democracy, Economic Development and Construction (LDEDC) Act 2009 impact?

Answer 1

Payment provisions such as - Payment Notices - for a payment notice to be valid it must specify the sum considered to be due and set out the basis on which that sum is calculated - Default Payment Notices - an application for payment from the payee/ contractor will become a default payment notice if the payer/ PM fails to issue a payment notice - Payless Notices - replaced withholding notices. If the payer intends to payless than the payment notice or default payment notice, they must issue a valid payless notice with the time prescribed before the final date for payment

Answer 2

If the provisions of a construction contract such as adjudication and payment provisions do not comply with the Housing Grants, Construction and Regeneration Act, then terms from the Scheme for Construction Contracts (England and Wales) Regulation 1998 will be implied

Answer 3

- Form of Agreement - Contract Data Part One and Part Two - Conditions of contract (e.g. core clauses, main Option clause, clause for resolving disputes, secondary Option clauses, Schedule and Shorter Schedule of Cost Components) - Prices - Activity Schedule or Bill of Quantities - Scope (Employers and Contractors for its Design (if applicable)) - Site Information

Answer 4

- The purpose of the form of agreement is to record the agreement between the two parties and identify the documents which form the contract

Answer 5

- It identifies the documents forming the contract such and works information - Contract Data Part One is completed by the Employer - Contract Data Part Two is completed by the Contractor

Answer 6

* To  Alter the risk allocation – e.g. deleting compensation events  Insert additional obligations – e.g. regularly and diligently added to providing the works in accordance with the Works Information  Remove rights e.g. amend right for a CE if not notified in 4 weeks as opposed to 8 weeks  Incorporation project-specific requirements

Answer 7

o The Employer will not be entitled to either liquidated or unliquidated damages

Answer 8

o NEC o JCT o FIDIC o IChemE

Answer 9

o A design and build form of contract would be used where the design and build procurement route has been chosen

Answer 10

o Single point of contact (reducing the need for client resource to appoint designer and contractors separately) o Single point of responsibility (contractor responsible for both design and construction meaning client risk is reduced) o Buildability (due to contractor involvement in design and planning) o Cost certainty (provided employer requitements are specified and no changes are introduced) o Reduced total project time due to overlapping of design and construction

Answer 11

o Client has to commit before the detailed design is complete o No design overview unless consultants are appointed o Bids difficult to compare (each design will be different) o Client driven changes can be expensive o Quality maybe compromised as client surrenders control to the design and build contractor

Answer 12

o To ensure there is a contractual link with a third party (such as a sub-contractor) to the primary contract (between a client and contractor) such that a contractual claim can be made (by the client) in the event such third -party breaches its contract which adversely impacts on the primary contract – particularly useful in a situation where the main contractor is insolvent o Collateral warranties protect the client from privity of contract rules

Answer 13

o Bonds are a means of protection against non-performance of the contractor. o Can be ‘on demand’ or ‘conditional’ (which requires evidence from the client) o They include  Performance bond – used as a means of insuring the client against risk of the contractor failing to fulfil contractual obligations. Typically set to 10% of the contract value to over client finding a new contractor complete the works for example due to non-performance of the contractor  Advanced payment bond – Client may agree to an advanced payment to the contractor (maybe due to significant start-up and procurement costs) in which case a bond maybe required to secure the payment against default by the contractor  Retention bond – It is an alternative to retention, in that the client agrees to pay amounts which would otherwise have been held as retention. The retention bond secures this amount.

Answer 14

o The client may agree to an advanced payment to the contractor maybe due to significant start-up and procurement costs in which case a bond may be required to secure the payment against default by the contractor o This would involve the contractor approaching a bank or insurance company to issue the bond – contractor pays a premium of this which is usually a percentage of the bond amount o The bind provider issues a guarantee to the client, promising the reimburse the advance payment if the contractor defaults

Answer 15

o Contractors design liability – limits contractors design liability to ‘reasonable skills and care’ and no obligation for design to ‘fit for purpose’ o Electronic communication and signature o New Relevant Events and Matters – Epidemics and government guidance now included as ground to EOT (Relevant Events) and loss/ expense claims (Relevant Matters) o Collaborative working – default requirement for parties to work cooperatively in good faith o Building Safety – changes addressing the Building Safety Act (introduced gullwing Grenfell Tower) o Dispute Resolution – ‘Notification and negotiation of disputes’ is now a default provision