JS Contract Practice Flashcards
Confidential Project Phase East, what was your advice to the Client on the LoI
My advice to the Client was to avoid using a letter of intent due to the contractual risk it puts the Client at, this included a Loi doesn’t have level of detail and also can lead to not entering contract and exposing client. Risks are there are no provision for LDs, no PC, no EOT, payment done on a quantum merit basis
Confidential Project Phase East, what was your advice to the Client in terms of the retention release?
My advice was that there was no PC certificate issued by the time the CM proposed half retention should be released, therefore half retention should not be released back to the contractor
What is a retention bond?
Retention Bond is a type of Performance Bond that protects the client after the completion of the contract. This provides a guarantee that the contractor (the Principal) will fix any issues after the job / project has finished (even after full payment has been made).
What happens with the retention bond at PC?
Similar to retention, the value of the retention bond would decrease
Can you tell me when the different types of retention are released?
First half of retention is released after PC and the second half after the certificate of making good defects.
Amazon AVOC why did you advise on a JCT intermediate rather than Standard
Size of the project and contract value and the different provisions included within each contract. This included third party rights, schedule 2 quotations, value of project 3% retention and gives full list of events and matters – complexity of the project needed detailed provisions
What are third party rights in a contract?
A right for a person outside of the contract to enforce the benefit of a term in the contract. They must be expressly identified in the contract and the provision must be a benefit to the third party. Can be named specifically or by class (tenant of a building).
What are third party rights an alternative to?
Collateral Warranties
What contract documents did you include in your Amazon IC contract?
Articles of Agreements, Conditions and Schedules, Schedule of Amendments, Drawings, Pricing Document, Specification.
On Amazon POP regarding payment dates, what did you advise your client?
I advised the Client that bank holidays were excluded from the timescales, however, weekends were included. I advised that should the, say due date fall on a bank holiday, it would be moved to the nearest working day, so the Tuesday.
How do payment timescales differ from JCT intermediate to JCT design and build?
The timescales are the same although may change due the amendments. The main difference is that a design and build contract, the contractor submitting their application will dictate the payment dates.
Can you tell me the payment timescales for a JCT IC contract?
IVD, +7=DD +5=PC + 14 = FDP -5 = PL
Can you describe the process for undertaking valuations in accordance with your firm’s quality management system procedural checklist?
Once the contractor’s application was received, a desktop check was undertaken to make sure there were no errors. I then met the contractor on site to view the works in person and took photos to substantiate my assessment.
How did you value materials off site?
I went to site to see that the materials were clearly labelled as the clients and were separate to other materials. I also ensured the items were listed in the contract and a vesting certificate was signed by both contractor and the client
Why would a vesting certificate be used on construction projects?
Items with long lead in times, space constraints on site, materials are of limited supply so buying in advance will ensure they are available.
What’s another form of protection you could use other than a vesting certificate?
Off site materials bond as weaknesses with vesting and supplier retention of title meaning they can still claim ownership in event of insolvency of main contractor
What happens if the EA or CA misses the latest date to issue a payment certificate
Main contractor can put in a valuation and this is deemed to be the value that is due
You mention the client wanted to use a LOI on BP project – what types of things might you expect to see in an LOI
Conditions of appointment, expiry date, spending cap, schedule of activities
What is a prolongation cost?
Contractual mechanism for recovery of extra costs that the contractor may incur as a result of a delayed event caused by the client. In this case, the trade contractor was delayed to late issuing of design from the design team.
Can you give me some examples of relevant matters?
Failure to give possession of site
Delays in receiving instructions
Discrepancies in the contract documents
Instructions relating to expenditure of provisional sums
Issues relating to CDM
Can you give me some examples of relevant events?
Variations
Adverse weather conditions
Civil commotion or terrorism
Failure to provide information
Statutory undertaker’s work
Talk me through the process of assessing an extension of time.
Under clause 2.27, the contractor had to provide notice of a delay including all information. In line with clause 2.28, the CA had 12 weeks to make an assessment. During this time, I assessed the facts provided by the contractor, as well as reviewing the prolongation costs to ensure the costs claimed are actual costs rather than weekly drawdowns. I also did a critical path analysis with the CA.
What was your conclusion for the EoT?
The contractor was entitled to the EoT and prolongation costs, due to the late issuing of design information by the design team. I did however advise the additional health and safety officer was not required, as the scope had not increased, it had just changed. I also pushed back on fixed prelims items such as PPE and protection, as these items were not effected by time increases.
On Amazon POP, what were the valuation rules within the contract?
The valuation rules were that, in the first instance, use contract rates, adjusting where there are changes in method of fixing, quantity or character. If this can not be achieved than a fair and reasonable assessment is to be made. Dayworks can also be produced
How does these variation rules differ from JCT D&B
Firstly, DNB is called change rules not variation rules, small differences as DNB refers to CSA, but the principles of the measurement rules are the same
What are the four requirements for forming a contract?
Offer, Acceptance, Consideration, Intention
What are the employer’s obligations under the contract?
Pay the contractor on time
Provide access to the site
Provide instructions and info to the contractor
Depending on insurance option, take out insurance
What are the contractor’s obligations under the contract?
Deliver the work to the right workmanship, within programme and for the agreed cost
What happens if the contractor does not submit their application under JCT Intermediate Contract?
The CA is encouraged to ask the QS to still undertake a valuation and ascertain the amount due to the contractor.
What do the JCT Intermediate refer as the dates
The contract conditions refer to reckoning periods of days
What happens when the due date lands on a bank holiday
Moved to the closest business day
What is a collateral warranty?
Provides a contractual link between a party within the primary contract and a third party
How do third party rights differ from collateral warranties
Collateral warranties are a physical document; third party rights can be granted at any time where collateral warranties usually after main contract is formed
What’s the difference between assignment and novation
Novation is a process by which contractual rights and obligations are transferred from one party to another.
Assignment is the transfer of a right or an interest vested in one party (the ‘assignor’) to another party (the ‘assignee’)
What are performance bonds
Performance bonds insures the client against the risk of the contractor not fulfilling their contractual obligations
What are the different types of bonds?
On demand and conditional. Conditional requires the party to provide evidence that the contractor has not met their obligations
How much is a bond typically worth?
The bond is typically worth 10% of the construction contract
What Is a Parent Company Guarantee?
A PCG is a guarantee from the third pay and provides financial responsibilities for the obligations or liabilities of it’s guaranteed company
What is a letter of Intent?
A letter intent is used to express the intention of one party to enter into a formal agreement or transaction with another party when the contract has yet to be signed or still agreeing minor details.
What complications and difficulties did you advise on using a LOI
Downside is that doesn’t have level of detail and also can lead to not entering contract and exposing client. Risks are there are no provision for LDs, no PC, no EOT, payment done on a quantum merit basis
What are the different types of Letters of Intent?
Instruction to proceed with consent to spend
Comfort Letter
Recognition of Contract
What is a Letter of Comfort?
Authorises the contractor to proceed with the works however is not a contract, it imposes obligations onto the contractor but the contractor can stop at any time. There is also no provisions for LDs
What is an IF contract?
A legally binding contract where works are to proceed up to a certain value while the main contract is finalised
What are some typical things that are included in LOI?
Who the parties are, the works to be carried out, payment information, value of works, insurance requirements, termination of required
BP Phase East
Which part of the contract did you cite in your advice to the client re dictating the release of retention?
Clause 4.18
Amazon FIt Out Project
Why did you use a JCT Intermediate?
Project Simplicity - scope was internal fit out which was largely FFE based with minimal MEP scope
Project value - less than 2m
Intermediate is less detailed than the SBC, meaning from a administrive perspective it is more straight forward
What provisions did you advise that were different
Sectional Completion
Detailed provisions for CDP
Fluctuations are more detailed
Provisions for Advanced Payment, Retention, and Bonds
On Amazon POP regarding payment dates, what did you advise your client?
I advised the Client that bank holidays were excluded from the timescales, however, weekends were included. I advised that should the, say due date fall on a bank holiday, it would be moved to the nearest working day, so the Tuesday.
How do payment timescales differ from JCT intermediate to JCT design and build?
The timescales are the same although may change due the amendments. The main difference is that a design and build contract, the contractor submitting their application will dictate the payment dates.
Can you tell me the payment timescales for a JCT IC contract?
IVD, +7=DD +5=PC + 14 = FDP -5 = PL
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