Key Terms

Question 1

Relevant Event

Answer 1

A relevant event is an event that causes delay to the completion date. This can be caused by the client or a neutral event not caused by either party. Relevant events entitle the contractor to claim an extension of time. Relevant events can include:

• Delay in giving the contractor possession of the site
• Variations
• Exceptionally adverse weather
• Force majuere
• National strikes

Question 2

Relevant Matter

Answer 2

A relevant matter is matter in which the client is responsible for affecting the progress of the works. This may enable the contractor to claim direct loss and/or expense that has been incurred.
* Failure to give the contractor possession of the site.
* Failure to give the contractor access to and from the site.
* Delay in recieving instructions.
* Discrepencies in the contract documents.
* Failure by the client to supply goods and materials.

Question 3

Liquidated Damages

Answer 3

Predetermined damages included in the preliminaries to cover the actual loss to the client if the project is not completed by the completion date. This can be triggered if a non-completion certificate is issued. Contractor prices the risk.

Question 4

Sectional Completion

Answer 4

Provision within the contract to allow different completion dates for different sections of the work. More common in larger projects. Allows the client to take possession of completed parts whilst construction continues on others.

Question 5

Partial Possession

Answer 5

The key difference between partial possession and sectional completion is that sectional completion is pre-planned and defined in the contract documents. Everything is then pro-rata. Defects period starts on an area and retention released for that bit.

Question 6

Collateral Warranties

Answer 6

These create a direct contractual relationship between parties that would not otherwise exist. It is often used by a 3rd party which is not party to the original contract. It is good for contractors design portion elements

Question 7

Base Date

Answer 7

This is the reference date for which conditions under the tender were prepared and considered to be known by the contractor.

Question 8

Parent Company Guarantee

Answer 8

This is a form of security that may be required by the client to protect them from default should the contractor not perform and be controlled by a parent company. (Such as insolvency)

Question 9

Performance Bonds

Answer 9

This is a means of insuring a client against the risk of a contractor not performing or failing to fulfil contractual obligations.

Question 10

Retention Bond

Answer 10

This can be used at the end of the project. Typically where the retention would not be enough.

Question 11

Advance Payment Bond

Answer 11

This can be used when there may be a large upfront payment before goods arrive on site. This can offer the client reassurance.

Question 12

Joint Fire Code

Answer 12

This is intended to reduce the fire risk on projects and is backed by insurance companies.

Question 13

Fluctuation Provisions

Answer 13

This provides a mechanism for dealing with the effects of inflation. Useful on large projects that may last several years. Smaller projects the contractor is expected to take inflation into account when calculating their price.

Question 14

Pay Less Notice

Answer 14

This is a written notice from the paying party that their intention is to pay less than the sum claimed.

Question 15

Final Payment

Answer 15

Contract administrator has 28 days after the end of defects certificate (or making good defects certificate) to issue a final payment. This reduces the retention from 2.5% to 0%.

Question 16

Final Account

Answer 16

The contractor must provide all the information for the final account within 6 months of issuing practical completion certificate.

The contract administrator then has 3 months to review.