Contracts Flashcards
3 elements of a contract
Offer & acceptance
Price & payment
legal relations and capacity
What is a contract
Mutually binding agreement which obligates the seller to provide the specified product and obligates the buyer to pay for it
Purpose of contracts
Determine rights and obligations of parties
Allocate risks
What is a breach of contract
Where on party fails to perform as required
What is a liquidated damage clause?
Pre determined
Contractor pays client due to failure to achieve practical completion
What is non - liquidated damage
Not pre - determined
Advantages of non liquidated damages
Client has recovery of unforeseen losses
Disadvantages of non liquidated damages
Unknown liability for contractor
Standard forms of contract (3)
JCT, NEC, ICE
Characteristics of ICE contract
Valuation by measurement
Contractor designs, procures and makes method
ICE alterations can’t
Change fundamental nature of work
Omit work to another contractor
Be constructed after practical compleation
Payment method for ICE
Admeasurement based on value of work
What two certificates are issued in ICE?
Certificate of substantial completion
Defects correction certificate
What does the defects correction certificate state?
Project must be delivered to the condition specified in the contract
Two types of defects
Patent and latent
What is JCT normally used with?
Traditional, D&B, built environment
What payment method is used for JCT?
Lump sum
What type of project uses JCT?
Larger than £1m
Experienced contractor
3 objectives of NEC
Simple
Flexible
Stimulus to good management
Features of clarity for NEC
Simple language
logical structure
How is NEC not simple/clear
Too many forms
Features of flexibility in NEC
Contractor role is varied
Variety of payment methods
International
How is NEC not flexible?
Contracts are not flexible
How is NEC a stimulus to good management?
Clear division of responsibility
Early warning system
‘Proactive rather than reactive’
Risk reduction meetins
How is NEC not a stimulus to good management
Legal compliance more important than effective management
How does NEC reduce risk
Early warning register;
Risk reduction meetings
Warms of increase in price, delay of completion
5 layers of NEC contracts
Core clauses
Main payment option
Dispute resolution
2nd option clauses
Z clauses
Example of a core clause NEC
Contractor responsibilities
Timings
Example of a 2nd option clause NEC
Low performance damages
Example of a Z clause NEC
Enhanced site security
Official secrets act
