Forms of Contracts

Question 1

How is a contract formed?

Answer 1

Offer + Acceptance + Consideration (payment in return for design or construction work) + Intention to create legal relations

Question 2

Who are parties?

Answer 2

The people or organisations who make or have legal bind to the contract

Question 3

Who are stakeholders?

Answer 3

Individuals or organisations who are involved in the project, and whose interests are affected by the completion of the project

Question 4

What do contract terms do?

Answer 4

Define the rights and obligations of the ocntract - include statements made on drawings / specifications

Question 5

What are express terms?

Answer 5

All those written in contract and agreed upon by contracting parties

Question 6

Whata are implied terms?

Answer 6

Those implied by the court where they feel important express term is missing

Question 7

Name 3 popular forms of standard contract

Answer 7

The New Engineering Contract (NEC3)
The Joint Contracts Tribunal (JCT) contract
The Internal Federation of Consulting Engineers (FIDIC) contract

Question 8

What are some general advantages of forms of contracts?

Answer 8

Don’t need to be written for every contract
Parties become familiar with them and their risks
Makes tendering easier
Case precedents if taken to court

Question 9

What are the clients obligations under standard forms of contract?

Answer 9

Provide access to site
Pay the contractor
Provided specified insurances
Comply with H&S requirements
Appoint Contract admin (CA)
Not to hinder or prevent

Question 10

What are a clients rights under standard forms of contract?

Answer 10

Right to know details (scope, budget, timeline)
Right to written contract (terms, warranties)
Right to quality workmanship (industry standard)
Right to timely completion
Right to transparency of communication
Right to dispute

Question 11

What are the contractors obligation under standard forms of contract

Answer 11

Construct and complete work in accordance to contract
Site security and control
Updates on construction
Correct defects in work
Follow H&S guidlines
Provide appropriate insurance

Question 12

What are the rights of the contractor under standard forms of contract?

Answer 12

Right to be payed with clear mechanism
Right to safe working environment
Right to stop if feeling unsafe
Right to terminate contract if client breaches
Right to dispute

Question 13

What are contracts for domestic projects called?

Answer 13

Home owner contract (HOB or HOC)

Question 14

Name a JCT member organisation?

Answer 14

British Property Federation
Royal Institute of British Architects

Question 15

What percentage by number of contracts are JCT?

Answer 15

88%

Question 16

What is a JCT SBC contract?

Answer 16

‘Traditional’ contract used with seperate design organisation
Design organisation carries out design, contractor builds
Provisons for ‘contractors’ design portion

Question 17

What is a JCT IC contract?

Answer 17

Intermediate building contract
Slightly simplfied SBC - less complex projects

Question 18

What is a JCT MW contract?

Answer 18

Minor works contract
Small straightforward contract
Lump sum not intended for use with BOQ

Question 19

What is a JCT DB contract?

Answer 19

Design and build
Written specfically for D&B contracts

Question 20

What is a JCT SBC/Q contract?

Answer 20

Standard building contract with quantities
Employer provides drawings and BOQ
Payment = lump sum
Both public and private contracts
Sub-contractors vetted by architect/CA
PCSA can be used
Can be used for framework

Question 21

What is a JCT SBC/XQ contract?

Answer 21

Standard Building Contract Without Quantities (SBC/XQ)
The project is generally not complex enough to require bills of quantities

Question 22

What are the differences between JCT and NEC contracts?

Answer 22

JCT - seperate form of contract for different purposes
NEC - Relies heavily on selectable option - smaller range of standard forms
NEC publish all contracts with similiar format and layout to be mutually compatible

Question 23

What are some advantages of NEC contracts?

Answer 23

Good management of relationships between two parties
Can be used in a variety of situations and types of work
Clear and simple document using easy language and structure

Question 24

What is the NEC3 ECC?

Answer 24

NEC3 Engineering and Construction Contract

Question 25

What are the 8 main parts of the NEC 3 ECC?

Answer 25

1) 9 core clauses
2) Main option A-F
3) Dispute resolution W1 / W2
4) Secondary options - X1 - X20
5) Option Y
6) Additonal conditions - Z clauses
7) Schedule of cost
8) Contract data - part 1 (client) and part 2 (contractor)

Question 26

What are the NEC 3 9 core clauses?

Answer 26

1. General terms
2. Contractor’s main responsibilities
3. Time
4. Testing and Defects
5. Payment
6. Compensation events
7. Title
8. Risk and insurance
9. Termination

Question 27

What are the NEC 3 main options?

Answer 27

Option A - Priced contract with activity schedule
Option B - Priced contract with bill of quantities
Option C - Target contract with activity schedule
Option D - Target contract with bill of quantities
Option E - Cost-reimbursable contract
Option F - Management contract

Question 28

What main options are sutiable for design and build contract projects?

Answer 28

A & C

Question 29

What main options are suitable for traditional contract projects?

Answer 29

A to E (any)

Question 30

What main options are suitable for management contract projects?

Answer 30

F

Question 31

What are the 10 steps in preparing an NEC3 ECC for tender?

Answer 31

1) Select pricing/payment method (A to F)
2) Chose dispute resolution W1 or W2
3) Choose and many secondary options as required (X1-X20)
4) Choose Y
5) Chose additional contract conditions (Z)
6) Complete contract data (part 1)
7) Refer to site investigation
8) Include contract data (part 2) for contractors to complete
9) Include BOQ if needed
10) Include tendering instructions

Question 32

What is included in and who carries out NEC ECC contract data part 1?

Answer 32

Client carries it out
Fundamental information
Defines option A-F, dispute resolution and secondary
Brief description of works
Works and site information
Details of employer, proj manager etc

Question 33

What is included and who carries out NEC ECC contract data part 2?

Answer 33

Contractor carries out
Returned with tender
Key pricing data
Working area
Key people
Necessary designs requested
Programme and completion date