JCT Contracts

Question 1

What is the function of a relevant matter as a contractual mechanism?

Answer 1

Entitles the contractor to Loss and Expense

Question 2

What is the function of a relevant matter as a contractual mechanism?

Answer 2

Entitles the contractor to claim for Loss and Expense

Question 3

What is the contractual significant of a Relevant Event?

Answer 3

Allows the Contractor an Extension of Time

Question 4

You have prepared contract documents, could you talk through the full suite of contract documents you have prepared?

Answer 4

For D&B projects, split into 3 volumes:

1 - Contract
Form of contract
Insurances

2 - CPs
CPP
CSA
Interim Payment Schedule

3 - ERs
Preliminaries
Design Information 
Change Control Procedures 
Basebuild Information

Question 5

You’ve undertaken interim Valuations and issued payment recommendation to the EA. What are the timescales for providing payment recommendations?

Answer 5

Payment recommendation is not a contractual term.

Timeline under JCT for interim Valuation payments

21 day payment cycle from payment application to final date for payment

Contractor submits interim application for payment 7 days before the ‘due date’

5 Days after the due date EA issues the Payment Notice

14 days after the due date is the final date for payment

5 days prior to the final date for payment a pay less notice can be issued

Question 6

What is a payless notice?

Answer 6

If the Client intends to pay less than the amount set out in the payment notice they must issue a pay less notice, along with the basis for its calculation 5 days prior to the final date for payment

Question 7

You talk about assessing the value of EA instructions, how have you done this?

Answer 7

First principal to use contract rates

Benchmarked rates

Market testing

Question 8

How could market testing be used to agree variations?

Answer 8

…………

Question 9

You’ve done a final account, what’s the contractual process how the final account is submitted and agreed?

Answer 9

The contractor submits final account with all supporting information (ie back up to all valuation of variations)

Generally a final account meeting is arranged to agreed any outstanding variation costs

Final account statement is drafted including all necessary adjustments and signed by both parties and concludes the financial obligations of both parties (except for defects)

Question 10

What happens after the contractor submits the final account?

Answer 10

the final account should be ascertained no later than 3 months after receipt on all supporting information from the contractor (which should be no longer than 6 months of Practical Completion)

Question 11

What is a final account?

Answer 11

“The final account is the conclusion of the contract sum (including all necessary adjustments) and signifies the agreed amount that the employer will pay the contractor. It includes any works that are paid to the contractor through the main contract” - RICS Black Book

Final account procedures RICS Guidance Note 1st Edition

Question 12

What does the final account include?

Answer 12

The contract sum

Variations / Instructions 
Provisional Sums 
Loss and Expense 
Prime cost sums (if applicable)
Acceleration (if applicable)

Any other items affecting total cost

Question 13

On Elsley House, you advised on a letter of intent, what advise did you give your client?

Answer 13

I advised that we could instruct the Contractor to proceed with consent to spend up to a certain value while the contract was being finalised.

This enabling the Contractor to start procuring long lead items prior to entering into contract

Question 14

What is included in a letter of intent?

Answer 14

 The parties – the names and titles of the parties as stated within the contract documents
 The works – described in clear and concise terms
 The price (if agreed) – clearly stating the currency and whether this price is to be considered
a maximum expenditure limit until the formal execution of the contract
 A statement of the intention of the parties to enter into and be bound by a formal contract
 The dates for possession and completion and whether there is any sectional completion
envisaged or required within the contract
 Entitlements of both parties upon the revocation, frustration or repudiation of the contract
 Procedure for calculating interim payments if work proceeds
 Procedure for calculating and issuing final payment should the work not proceed or if a formal
contract is not executed between the parties
 Insurances that are to be provided
 The maximum expenditure limit allowed under the letter of intent
 Termination procedure
 Confirmation that the contract created by the letter of intent will terminate upon execution of
the principle contract(s)
 Dispute resolution procedure.

Question 15

What risks might you make your client aware of before proceed under a letter of intent?

Answer 15

Contractor has no contractual obligation until contract is signed and could potentially walk away

Delays achieving a fixed price / cost certainty that you get when the entering into a contract

Question 16

If you had a letter of intent and the contract never arrived or was taking a long time to be prepared, could the contract carry out the whole project working under a letter of intent?

Answer 16

Yes sometimes works are carried out without a formal contract using a letter of intent, however this is bad practice and if disputes arise the parties will need to resolve the issue of what kind of legal obligation has been created - if any - and what rights it gives each party.

Question 17

What are the differences between a letter of intent and a PCSA?

Answer 17

PCSA is where the contractor is brought in and paid a fee on a 2 stage tender to develop the design, provide early buildability input and early procurement of long lead items - Fee basis

Letter of intent is a bridging agreement between to parties before going into contract