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Contract Practise > Level 1 - Written Documents > Flashcards

Level 1 - Written Documents Flashcards

1
Q

When would you use JCT & NEC Contracts?

A
  • Both suites provide a variety of options to suit client requirements
  • Consider procurement route, scale & size of project, payment method, quantification, design and the client approach
    NEC Contract if:
  • Collaborative approach
  • Limited experience; plain english
    JCT Contract if:
  • Previous experience with JCT
  • Prepared set of amendments
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2
Q

Name some differences between the two if you were advising a client on what to use as a proposed form?

A

PALM:
- Programme - unamended JCT not contractual whereas it is in a NEC
- Admin - JCT is administered by the CA/EA whereas in NEC the Project Manager
- Language - JCT contracts use complex legal jargon whereas, NEC plain English
- Money & Time - JCT has relevant events & relevant matters whereas NEC together in compensation events

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3
Q

Can you name the types of NEC Contracts?

A
  • Option A: Priced Contract with activity schedule
  • Option B: Priced Contract with BoQ
  • Option C: Target Contract with activity schedule
  • Option D: Target Contract with BoQ
  • Option E: Cost reimbursable Contract
  • Option F: Management Contract
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4
Q

Can you name the contract within the JCT suite?

A
  • Minor Works
  • Intermediate Building Contract
  • Standard Building Contract
  • Design & Build Contract
  • Major Projects Construction Contract
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5
Q

Describe the layout of JCT?

A

Articles of agreement:
- Recitals
- Articles
- Contract particulars
- Attestation
Conditions:
- Section 1: Definitions and Interpretations
- Section 2: Carrying out the works
- Section 3: Control of the works
- Section 4: Payment
- Section 5: Change
- Section 6: Injury, Damage and Insurance
- Section 7: Assignment, third party rights and collateral warranties
- Section 8: Termination
- Section 9: Settlement of Disputes
Schedules:
- Contractors design submission procedure
- Supplemental provisions
- Insurance Options
- Code of practise
- Third Party rights
- Form of Bonds
- Fluctuation Options

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6
Q

How do you pick which contract to use?

A
  • Consider the project specific requirements
  • Procurement Route
  • Scale of the project
  • Method of payment / quantification
  • The design of the project
  • Clients drivers / approach (Time/Cost/Quality/Risk)
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7
Q

When would you use JCT Standard Building Contract?

A
  • SBC used for Traditional procurement route
  • Where detailed contractual provisions are required
  • ‘with quantities’ and ‘without quantities’ both fixed price lump sum
  • ‘with approximate quantities’ is remeasurement
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8
Q

When would you use an Intermediate contract?

A
  • Used for traditional procurement route
  • Used to bridge the gap between Standard and Minor works contract
  • Less lengthy contract terms than standards, more detailed than minor
  • Fixed Price Lump Sum
  • Intermediate with CDP is available
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9
Q

When would you use Minor Works Contract?

A
  • Minor works contract is for Traditional procurement route
  • Used for smaller, lower value, basic construction works where detailed contract provisions not required
  • Not suitable where project is complex enough to require bills of quantities, detailed control procedures, or provisions to govern work carried out by named specialists
  • Fixed Price Lump Sum
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10
Q

Whats the difference between minor works and intermediate?

A
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11
Q

What’s the difference between intermediate and standard building contract?

A

SBC has 3% retention
ICD has 5% retention
ICD has no provision for third party rights
ICD has no provision for retention bonds

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12
Q

When would you use JCT Design and Build Contract?

A
  • Design and Build Procurement Route
  • Client wants Contract to take design and construction responsibility
  • Used where detailed contractual provisions are required - project can vary in size/scale
  • Fixed price lump sum
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13
Q

Name some contractual mechanisms within the D&B contract?

A
  • 2.3 Date of Possession; Contract Particulars; date when site is given to the contractor, begin construction and proceed to complete on it before completion date - can be sectional completion
  • 4.7 Payment - 4.7.1 Method of Payment - Periodically in accordance with Alternative B (clause 4.13)
  • 4.7.2 - Interim Payments - Interim Valuation Dates; one month after the Date of Possession
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14
Q

Do you have Collateral warranties in a D&B contract?

A

Yes

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15
Q

What are Collateral Warranties?

A
  • Create a contractual link between the employer and a third party which would not be there otherwise.
  • For the benefit of those parties that may otherwise have no recourse, if one party defaults
  • I would advice the Client to request CW’s for all subcontractors who have any design responsibility, for example; the facade, steelwork, roof
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16
Q

Who may want a collateral warranty?

A
  • Employer with sub-contractors who have design responsibility
  • Third party with a financial interest in the project but is not protected by the contract e.g. funding institutions/ future purchasers
17
Q

How are defects addressed in JCT contract?

A
  • Under JCT contract the employer can issue a Schedule of Defect - up to 14 days after the rectification period
  • Contractor must return at no cost to the employer and rectify the defects - unless otherwise instructed
  • If agreed that the contractor will not return, reasonable adjustment can be made to CSA
  • Once defects are rectified a ‘notice of completion of making good’ will be issued by the CA/EA
18
Q

What is a change called in a JCT Design and Build Contract?

A
  • A change
19
Q

What constitutes a change in JCT SBC?

A
  • Alteration or modification of the design, quality, or quantity or the works
  • Employer imposed additional or altered obligations or restrictions e.g. access to the site, limitations on working space
20
Q

What is a change called in a JCT Standard Building Contract?

A
  • A variation
21
Q

What are the valuation rules?

A

There are a variety of valuation rules, the main ones are:
- Using rates within the priced document (CSA) - when works are of a similar ‘character’ to the contract documents
- Value at fair rates and prices - when works are not of a similar nature
- Dayworks - when works cannot be properly valued by measurement
- Changes to the CDP works -

22
Q

What are dayworks?

A

NRM2 defines dayworks as - ‘the method of valuing work on the basis of time spent by the contractors workpeople, the materials used and the plant employed’.

23
Q

What happens at practical completion?

A
  • Certificate of practical completion is issued
  • Release of 50% retention
  • Defects liability period begins
  • Ends contractors liability for LD’s
  • O&M are handed over
  • H&S file handed over
  • As built drawings are issued by the contractor
  • Client takes possession & responsibility for insuring the site
24
Q

What is sectional completion?

A
  • Pre-planned and defined sections of work which allow different completion dates for each section.
  • Follows same procedure as PC for the whole job apart from some items will remain outstanding
25
Q

What is partial possession?

A

Where the employer with consent of the contractor takes possession of parts of the works before practical completion.

26
Q

What happens at partial possession?

A
  • the part is deemed to have achieved practical completion
  • Half of the retention for that part is released
  • Defects liability period (or rectification period) begins for that part
  • Liquidated damages reduced proportionally
  • Client is responsible and should insure that part
27
Q

What insurances are required under a JCT Standard Building / Design & Build Contract?

A
  • Option A: Taken out by Contractor (Joint names)
  • Option B: Taken out by Client (Joint Names)
  • Option C: Taken out by Client (Joint Names) for works to Existing Structures
28
Q

What insurances would you expect under JCT?

A
  • Contractors Public Liability Insurance - (injury to persons or property in course of completing the works).
  • Employer Liability - (contractor takes out insurance in names with Employer, protects Employer from any claims due to injury / damage to property etc.)
  • Works Insurance - Option A / B / C
  • Terrorism Cover - Pool Re cover against loss or damage due to terrorism
  • Professional Indemnity Insurance - Contractor takes out insurance to protect against negligence claims
29
Q

What constitutes a contract?

A
  • Offer
  • Acceptance
  • Consideration
  • Intent to create legal relations
  • Capacity
  • Legality
  • Certainty
  • Performance
30
Q

What is the difference between a CA and a EA?

A

CA - referee, act impartially in the spirit of the contract - manages the contract on behalf of both parties
EA - coach, act on behalf of the client on all matters - employer gives authority to manage the project on their behalf

31
Q

Why did you advise that the rectification period be changed from 6 to 12 months?

A

This allows for a full years use of the building through all seasons to discover any latent defects.

32
Q

What is all risk insurance?

A
  • Cover against any physical loss or damage to works / materials
  • Covers cost to remove debris, shoring and propping of works
  • Excludes - repair, replace and rectify costs
33
Q

What is Joint Names Policy?

A
  • Insurance that includes the Employer and Contractor as composite insurers
  • Means insurers have no recourse against another named party
34
Q

What is subrogation?

A
  • Subrogation is another party’s legal right to collect a debt or damages on your behalf
  • Insurers have the right to subrogate and claim back from another party
  • Does not apply on joint names policies
35
Q

What is Pool Re Cover?

A
  • Insurance against damage to works or materials from terrorism
36
Q

What is Specified Peril?

A

Fire / Flood / Earthquake / civil commotion / lightening

37
Q

What is a Schedule of Amendments?

A
  • A set of Amendments to the standard form of contract
  • Parties set out agreed changes to published terms
  • Must be read in conjunction with the contract
  • Must be properly incorporated into the contract
38
Q

What is a Parent Company Guarantee?

A
  • Typically a parent company or another group company of the Contractor
  • They will guarantee their performance of the works under the same contract terms
  • If the contractor defaults, guarantor effectively steps in to complete the work
39
Q

What is a performance bond?

A
  • The bond protects the insured party should a contracted entity fail to meet its obligations set out in the contract between the insured and the contractor.
  • Usually around 10% of the contact sum.
  • Provided at client expense
  • Usually limited to a value of 10% of CSA - limits the loss that could be recovered
  • Client will have to find another Contractor to take on the risk of completing the works

Contract Practise (6 decks)

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