General Contract Conditions

Question 1

What is a defect?

Answer 1

Non-compliance with the contract documents.

Question 2

What is termination? And the ground for termination by the Employer?

Answer 2

Terminate the Contract

 Fails to proceed regularly and diligently
 Failure to comply with instructions in connection with defective work etc.
 Unauthorised assignment or subcontracting
 Failure to comply with the CDM Regulations
 Offence under the Bribery Act 2010
 Insolvency

Question 3

What are the consequences of termination by the Employer under JCT?

Answer 3

• No further payment
• Employer may employ others to carry out works
• All design docs to be provided by MC
• Additional cost of retendering liable to MC

Question 4

On what grounds can the Contractor terminate under JCT?

Answer 4

Non-payment
 Interfering with or obstructing the issue of any certificate
 Failing to comply with the terms of assignment under the contract
 Failure to comply with the CDM Regulations
 Suspension for the longer than the Suspension Period in the Contract Particulars
 Insolvency

Question 5

What is liquidation?

Answer 5

Assets being sold to pay off debts

Question 6

What is administration?

Answer 6

Continue to trade but external administrator brought in to manage debts.

Question 7

What is assignment?

Answer 7

Rights are transferred to a third party

         Beneficiary
               ^  Developer > Contractor (Contract)

Question 8

What is novation? What would be expected in a novation agreement?

Answer 8

Rights and obligations to a third party – assignment is rights only.

Wording such as:

• Warrant design
• Limit liability of Employer
• Reasonable skill and care
• Payment provisions

Question 9

What are third party rights?

Answer 9

Contract (Rights of Third Parties) Act 1999 enables a third-party beneficiary to enforce
a term of a contract to which they are not a party

Question 10

What is a Letter of Intent?

Answer 10

A letter of intent is a document expressing an intention to enter into a contract at a future date but creates no contractual relationship until that future contract has been entered into

Question 11

What is a defined provisional sum?

Answer 11

Defined work that the contractor will be deemed to have made due allowance in
programming, planning and pricing preliminaries

Question 12

What is an undefined provisional sum?

Answer 12

the contractor will be deemed not to have made any allowance in programming, planning and pricing preliminaries

Question 13

What is the Base Date?

Answer 13

Base Date usually 10 days before tender return date. Stated in Contract Particulars

Question 14

What is the difference between a named / nominated subcontractor?

Answer 14

Named - no obligation

Nominated - obligation

Question 15

What would you do if your contractor went insolvent?

Answer 15

o Check legitimacy
o Take out bond
o Agree Final Account
o Go to site, secure site and materials
o Get in touch with administrative receiver
o Withhold any payments
o Start contacting suppliers and sub-contractors to try and continue works
o Keep record of all time spent

Question 16

What is the risk of a letter of intent?

Answer 16

Disincentive to execute form of contract

Not as rigorous as contracts

Question 17

What happens if there are no ER’s?

Answer 17

No control of design for the client
CP’s will become ER’s
Risk in case scope is not understood

Question 18

Process for termination under the contract?

Answer 18

Notice of default, 14 days to correct

Further 21 days after 14 days gives notice of termination