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CiEn -248- Construction Law > Post midterm > Flashcards

Post midterm Flashcards

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1
Q

Contractor pays owner’s damages

A

Inexcusable Delay

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2
Q

Each party absorbs own damages

A

Excusable Delay

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3
Q

Owner pays contractors damages

A

Compensatory Delay

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4
Q

Owner pays for increasing work or decreasing time

A

Acceleration

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5
Q

An owner may accelerate the completion date of the contract in three ways:

A
  1. Decrease the amount of time
  2. Changing or incresing amount of work
  3. refusing to grant time extention when the contract requires it
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6
Q

refers not only to conditions that were unforeseen but also to those not reasonably foreseeable

A

unforeseen conditions

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7
Q
  • CCDC, MMCD, Master format type of contracts
A

Units price

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8
Q

A stipulated price contract

A

Lump sum or fixed price

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9
Q

Why standard construction contracts?

A
  1. Standardized + consistent
  2. Based on years of legal experience + designed by lawyers
  3. Allocating risk  between contractors + owners + consultants
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10
Q
  • *Advantages**
  • Owner knows price in advance
  • contractors entitled to keep any profits as cost savings measures
  • lower admin costs for contractors

Disadvantages
-contractor is assuming more risk
( eg. Responsible for any cost over runs)
- Contractor could take more risk for delays (eg. Bad weather
- Owner’s perspective price can change
- Quality -> contractor ma not want to use cheaper materials -> to avoid that have clear specifications and a strong QC(quality control) process -> another way to avoid this is to have prequalified process

- used for projects with well-defined scope of work + price

A

Stipulated price contract (CCDC)

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11
Q

Used when scope of work is well defined and quantities may not be as well defined but can be estimated.

Advantages

Disadvantages

  • Less paperwork in dealing with extra work
  • Less risk to contractor in regards to making profit
  • If you don’t really have a good estimate at start (owner perspective) àcost overruns
  • more paper work for tracking quantities
A

/Unit price

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12
Q
  • Is a contract in which the contractors is paid actual cost of goods + service performed plus a fee
  • used when the scope of work is not well defined
    AdvantagesDisadvantages
  • Lower risk for contractor (all work is paid for)
  • typically, don’t have to propose a tender
  • Owner can get more involved in the method and manner of contract
  • Quality is likely higher
  • Less paperwork with changes and extras
  • Cost is likely higher than stipulated price
  • Gives contractor opportunity to inflate prices
  • Little incentive to complete work in a timely manner
A

Cost plus

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13
Q

An event that extends the time for completion
has signficance and is substantial

A

Time is of essence

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14
Q

3 things needed to prove a delay to recover damage

A
  1. The delay was the fault of some other party
  2. A delay had to occurred
  3. The delay cost the claimant money -→ quantifiable additonal cost
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15
Q

Heads of damage are the recoverable categories of damage
Example:

additional labour costs due to the lengthened time on site
increased labour and material costs because payment must be made
later than originally anticipated, and after prices have risen
costs resulting from productivity loss and loss of profit
additional site and head office overhead
costs of extending warranties and obtaining additional bonding
loss of interest on holdback

A

Heads of Damages

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16
Q

is that point in the progress of a project at which
the owner can actually occupy and use a facility for its intended purpose

A

Substantial completion

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17
Q

The greatest importance to the contractor of final completion is that the
release of the….

A

Holdback

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18
Q

Difference between sustainable and final completetion

A

The bulk of the construction work will have been completed at the point of
substantial completion. Only minor work items and small deficiencies need to be
addressed after a project has been defined as being substantially complete.
FInal complete is where the warenty kicks in

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19
Q

is a claim for payment for
work done on a construction project or
materials supplied to it.

A

Builders lien

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20
Q

is required because other types of
security commonly used when goods or services are
provided on credit do not work in the construction
industry: a car can be seized, but paint or concrete
would be worthless if reclaimed

A

Lien Legislation

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21
Q

the claimant must prove that
labour or materials were provided in accordance
with the contract, that payment was not made, and
that all the requirements of the lien legislation were
complied with

A

To “perfect” the lien

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22
Q

How can you remove a lien

A

the owner can
provide substitute security: cash, letter of credit, lien
bond

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23
Q

is a percentage of the contract value that must be
held back from progress payments – creates pool of funds

A

Holdback

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24
Q

re contracts of indemnity and are governed by principles of contract
law.

A

Insurance polices

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25
Q

A promise to directly compensate or reimburse another party
for a loss or cost incurred.

A

Contract of indemnity

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26
Q

The payment or consideration for an insurance contract is called a…. The
….. guarantees that the insurance policy will be effective for a stated period of time

A

Priemum

27
Q

the insurer is entitled to the rights of its insured as against third
parties. In other words, the insurer is entitled to assume the legal position of the insured
in order to recover from some other party the amount it has paid out on a claim. To the
insurance company, this means that if it pays on a claim, it gains the insured’s right to
sue.

A

Subrogation

28
Q

policy provides insurance coverage for a loss
that “occurred” during the policy period, no matter when the claim is brought against the
insured

A

Occurance based policy

29
Q

provides coverage for a claim that is
brought within the policy period, no matter when the loss occurred.

A

Claims made coverage

30
Q

protects the insured party against claims made by third parties, such
as a claim against a design engineer for errors and omissions.

A

Liability insurance

31
Q

protects the insured against loss or damage to property in which the
insured has an interest as result of certain causes such as fire or theft.

A

Property insurance

32
Q

“Going Bareback”

A

is a term used to describe a party practicing without insurance

33
Q

policy covers claims by others for bodily injury and property damage.

(Liability insurance)

A

Comprehensive General Liability (CGL) Policy

34
Q

s the type of coverage a contractor will want to acquire to
provide insurance on a project as it is being built. This will cover the structure during
construction.

A

Builder’s risk insurance

35
Q

normally protects projects against losses caused by fire,
lightning, vandalism and malicious mischief (e.g. theft)

A

Standard Builder’s Risk

36
Q

provides broader coverage then a standard builder’s
risk policy but “all-risk” is a misnomer since the policy will still include exclusions and
not cover all perils (e.g. floods and earthquakes)

A

All-Risk Builder’s Risk Insurance

37
Q

policy is a liability policy that insures all direct participants in a construction
project, including the consultants, the owner and all subcontractors. It typically runs from
the end of a project until a specified time afterwards, such as the end of the contractor’s
warranty obligations

A

Wrap up policy

38
Q

Coverage designed to protect professionals such as engineers and engineer technologists,
against liability incurred as a result of errors and omissions in performing professional
services

A

Professional Liability Insurance (Errors and Omissions Insurance)

39
Q

Is like a judge, could have a construction law back ground

A

Arbitrator

40
Q

What is the difference between a General Condition and a Supplementary Condition? Also who would create a General Condition and a Supplementary Condition?

A

A general condition is a MMCD formed condition, they are the pink pages in volume 2 of the MMCD. A Supplementary condition would be a owner formed condition and there content is also owner formed.

41
Q

What are some potential problems that could arise if the contract documents are modified (List 4).

A
  1. Gaps with things that were left out.
  2. Varying overlaps ex. saying the same thing in two different ways
  3. Order of precende problems if the changes are not made on the right document
  4. Measurement and payment misalignment
42
Q

What is the underlying philosophy and benefit of the MMCD?

A
  1. Be fair to all parties
  2. Minimize risk taking by Contractor
  3. Provide equitable dispute resolution (GC 17)
  4. Provide equitable change management (GC 7, 8, 9)
  5. Use plain English
  6. Say it once!
43
Q

Difference between insurance and bond

A

Insurance covers specific losses, while a surety bond is for losses of any kind, for
those guarantees given, for example, performance and payment.

44
Q

is a guarantee provided by a
firm that states that the contractor will
fulfill the terms of the contract. Form of contract known as suretyship/

A

Bond

45
Q

Three types of Bonds

A

– Bid bonds
– Performance bonds
– Labour and material bond (payment
bonds)

46
Q

obligated to
pay a specified amount of money if the
principal does not perform. Guarantor on the
bond

A

Surety (the bond company)

47
Q

is the party whose performance is
promised or guaranteed (e.g. general
contractor)

A

Principal

48
Q

assurance that a contractor will enter
into a binding contract if the contract is
awarded to him or her.
5 to 10 percent of the amount of bid is
common
failure to include a bid bond will usually
result in bid being rejected.

A

Bid Bonds

49
Q

surety guarantees the obligation of the
contractor to perform its contract with
the owner
can have any face value but 50% of the
contract value is quite common
(maximum level of liability of the
surety)
on large contracts a prime contractor
often requires the major
subcontractors to provide a
performance bond.

A

Performance Bonds

50
Q

What can a surety do if its principal
defaults

A
  1. It may remedy the default, which means getting the
    contractor to performing its obligations or
    correcting the default itself.
  2. It may complete the contract itself in accordance
    with its terms and conditions.
  3. It may solicit bids for completion of the work, and
    pay the owner the difference between the accepted
    bid and the remainder owing to the principal under
    the original contract, up to the face value of the
    bond.
51
Q

guarantees that all claimants will be
paid for labour and materials (e.g.
subcontractors, suppliers and workers)

A

Labour and Material – Payment
Bond

52
Q

Payment bonds are typically required in
two situations:

A

the owner requires one from the contractor
the contractor requires one from its major
subcontractors

53
Q

What are the Three C’s

A
  1. Cash
  2. character
  3. capacity
54
Q

What does the bid bond promise to the
owner?

A

– Promise to owner that contractor will enter into a binding contract B if awarded the work
– Promise to provide required bonds for construction contract
– Failing to provide any of these contractor forfeits the face value of the bid bond

55
Q

What is the limit of liability of a surety
if the contractor defaults
(performance bond)?

A

Surety would be expected to complete the
project under the terms of the performance
bond

56
Q

What rights does a surety have in the
event of a contractor default?

A

Surety “steps into the shoes” of the
contractor and thereby it gains the rights of
the contractor had in the construction
contract.

57
Q

ASTTBC code of ethics

A
  1. Act in public best interest
  2. Known your limits
  3. Follow the law
  4. Follow the standards of government + ASTTBC
  5. State qualifitication accuracy
58
Q

The line between legal and illegal

A

Ethics

59
Q

tend to define
appropriate behavior for a
society (Norms in society)

A

Morals

60
Q

relate to the appropriate
behavior of professionals in
work settings

A

Ethics

61
Q

What is the purpose of the code of ethics for professional organizations?

A
  1. compentence
  2. trust+professional responsibility
  3. Ethics+moral
62
Q

Why do professional organizations have a need for code of ethics?

A

Law is considered to be the minimal acceptable behavior

Ethical codes provided unified document that should be used for all members

Formal standards of conduct

63
Q

Self Test

A

Would it harm someone

is it legal

is it honest

is it consistently with the code of ethics

am I comfortable

64
Q

8 Part test

A
  • Peer test
  • newspaper test
  • Values test
  • Safety test
  • Law test
  • family test
  • Gut test

Community test

CiEn -248- Construction Law (4 decks)

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