Contracts

Question 1

3 elements of a contract

Answer 1

Offer & acceptance
Price & payment
legal relations and capacity

Question 2

What is a contract

Answer 2

Mutually binding agreement which obligates the seller to provide the specified product and obligates the buyer to pay for it

Question 3

Purpose of contracts

Answer 3

Determine rights and obligations of parties
Allocate risks

Question 4

What is a breach of contract

Answer 4

Where on party fails to perform as required

Question 5

What is a liquidated damage clause?

Answer 5

Pre determined
Contractor pays client due to failure to achieve practical completion

Question 6

What is non - liquidated damage

Answer 6

Not pre - determined

Question 7

Advantages of non liquidated damages

Answer 7

Client has recovery of unforeseen losses

Question 8

Disadvantages of non liquidated damages

Answer 8

Unknown liability for contractor

Question 9

Standard forms of contract (3)

Answer 9

JCT, NEC, ICE

Question 10

Characteristics of ICE contract

Answer 10

Valuation by measurement
Contractor designs, procures and makes method

Question 11

ICE alterations can’t

Answer 11

Change fundamental nature of work
Omit work to another contractor
Be constructed after practical compleation

Question 12

Payment method for ICE

Answer 12

Admeasurement based on value of work

Question 13

What two certificates are issued in ICE?

Answer 13

Certificate of substantial completion
Defects correction certificate

Question 14

What does the defects correction certificate state?

Answer 14

Project must be delivered to the condition specified in the contract

Question 15

Two types of defects

Answer 15

Patent and latent

Question 16

What is JCT normally used with?

Answer 16

Traditional, D&B, built environment

Question 17

What payment method is used for JCT?

Answer 17

Lump sum

Question 18

What type of project uses JCT?

Answer 18

Larger than £1m
Experienced contractor

Question 19

3 objectives of NEC

Answer 19

Simple
Flexible
Stimulus to good management

Question 20

Features of clarity for NEC

Answer 20

Simple language
logical structure

Question 21

How is NEC not simple/clear

Answer 21

Too many forms

Question 22

Features of flexibility in NEC

Answer 22

Contractor role is varied
Variety of payment methods
International

Question 23

How is NEC not flexible?

Answer 23

Contracts are not flexible

Question 24

How is NEC a stimulus to good management?

Answer 24

Clear division of responsibility
Early warning system
‘Proactive rather than reactive’
Risk reduction meetins

Question 25

How is NEC not a stimulus to good management

Answer 25

Legal compliance more important than effective management

Question 26

How does NEC reduce risk

Answer 26

Early warning register;
Risk reduction meetings
Warms of increase in price, delay of completion

Question 27

5 layers of NEC contracts

Answer 27

Core clauses
Main payment option
Dispute resolution
2nd option clauses
Z clauses

Question 28

Example of a core clause NEC

Answer 28

Contractor responsibilities
Timings

Question 29

Example of a 2nd option clause NEC

Answer 29

Low performance damages

Question 30

Example of a Z clause NEC

Answer 30

Enhanced site security
Official secrets act