Group 1 Flashcards
What are extensions of time?
Extensions of time adjust the completion date and relieves the contractors liability to pay liquidated damages for the period of the extension.
What are liquidated damages?
A genuine pre-estimate of the likely loss incurred by the employer should the completion date not be met.
What must be in place before LDs can be deducted?
- A non-completion certificate
- A withholding notice
What if the employer actually suffered no loss or damage?
The damages can still be deducted at the value stated in the contract.
What are the benefits of being able to grant an extension of time?
- it relieves the contractors liability for liquidated damages for a delay that they did not cause
- it enables another completion date to be set, which maintains the employers ability to deduct liquidates damages if another delay occurs.
What happens when ‘time is at large’?
- There is no set completion date
- the contractor only has the obligation to complete the works in a ‘reasonable time’
- liquidated damages cannot be claimed as there is no date to take them from
- the employer would have to try and prove that the contractor had not completed the works in a reasonable time
What are relevant events in a JCT form of contract?
They are events that entitle the contractor to an extension of time
What are the relevant events?
There are 13 relevant events set out in JCT forms including:
- variations
- instructions
- execution of an approximate quantity that is not reasonable accurate forecast
- deferment of possession of the site
- suspension by the contractor for non-payment
- the carrying out of work by statutory authorities
- impediment, prevention or default by the employer
- loss or damages occasioned by the Specified Perils
- exceptionally adverse weather conditions
- strike or lock out
- Civil commotion or terrorism
- the exercise of any statutory power after the base date by the UK govt
- force majeure
What are the main elements you would include within an interim valuation?
- Preliminaries
- measured works
- variations
- materials on site
- materials off site
- loss and expense
- retention
What needs to be in place for you to include payments for materials on site?
- the materials should be for the works
- they should be adequately protected
- delivered to programme
- in a reasonable quantity
What needs to be in place for you to include payments for materials off site?
- proof that ownership will transfer to the employer upon payment (vesting certificate)
- Insurance until materials arrive at site
- materials are clearly labelled as for the site and set apart from other materials
- a materials off site bond has been provided if required
What is a retention of title clause?
- Where the sun-contractor or supplier retains ownership of materials until they are paid for them by the contractor
- this highlights the importance of vesting certificates as the employer may pay for materials that are not owned by the contractor
- this legal principle can lead to disputes in the event of insolvency
How do you evaluate interim valuations?
- go to site and inspect the works to form a view on the percentage of works undertaken
- check for materials on site and Materials off site
- value time related and fixed preliminaries items undertaken
- value any agreed variations and claims
- the valuation amount is presented as the gross valuation, less previous payment made and retention
- finally I would send my recommendation to the EA or contract administrator for them to prepare the payment certificate
How do stage payments work?
- the stages and their values are set out in the contract particulars
- the stages are usually related to the completion of significant design items for example completion of substructure or achieving a water tight structure
What is the interim certificate conclusive of?
- Interim certificates are not conclusive
- they carry no contractual significance to state that the quality of materials or workmanship is satisfactory
- it is only the final certificate that is conclusive
