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Yr 2 Semester 1 > Private Sector Contracts - EXAM > Flashcards

Private Sector Contracts - EXAM Flashcards

Exam Prep

1
Q

Standard Forms/Yellow Form - What are the Constituent Parts of the Yellow Form of Contract?

A
  1. Articles of Agreement
  2. The Conditions of the Contract
  3. The Appendix
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2
Q

Standard Forms/Yellow Form - What are the conditions of the Contract?

A
  1. The conditions cover matters of Quality of the work, Cost, Time, nominated suppliers, Insurance, Fluctuations, VAT and Dispute Resolutions
  2. They clarify the rights and responsibilities of parties if a dispute arises
  3. All amendments to the Articles must be initialled by both parties to confirm no amendment was made post-contract signing
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3
Q

Standard Forms/Yellow Form - What are the key topics covered in The Articles of Agreement?

A

Article 1 - Basic duty of the Contractor is to execute and complete the works
Article 2 - Basic duty of the Employer is to pay the contractor
Article 3 - Identifies the Architect
Article 4 - Identifies the QS
Article 5 - Is the section where signatures or seals are completed by the parties. A signed contract binds the parties for 6 years, a sealed contract binds the parties for 12 years.

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4
Q

Standard Forms/Yellow Form - What is the Contract Appendix?

A
  1. The appendix summarises the variable items that will be particular to a contract.
  2. This enables a reader to get a concise overview of the details contained within the other sections.
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5
Q

Standard Forms/Yellow Form - What 9 Information points may be contained in the Contract Appendix?

A
  1. Designated Date
  2. Insurances
  3. Start Dates
  4. Completion Dates
  5. Period of Interim Payments
  6. Lengths of defects liability period
  7. Value of LADS
  8. Retention value
  9. Period of final measurement
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6
Q

Standard Forms/Yellow Form - Explain the Liasion Committee & their recommendations for Standard form of Contracts

A

The LC is made up of the RIAI, SCSI, CIF, EI & AECI. Their main function is to make recommendations to members on any amendments to the Agreement and schedules of the standard forms of contract.
They also make recommendations relating to Tendering, Producing BOQs, Daywork Rates & dealing with disputes between members.
They strongly advise that amendments are not undertaken without legal advice due to the Contra proferentem rule stating that the most onerous interpretation of the change will be applied against the drafter/draftsman.

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7
Q

What is Clause 21 A

A

Clause 21A states that the Contractor shall be liable and indemnify the Employer in respect of Loss or Damage to Property and Injury to Persons.

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8
Q

What is Clause 21B Option 1?

A

Clause 21B Option 1 - states that the Contractor must take out insurance to cover his liability to the employer. The insurance must stay in place for up to 18 months from PC.
These insurance types are:
1. Public Liability - Insurance that covers 3rd parties (general public) if a Contractor becomes liable for injury, death, damages, expenses, costs etc.
2. Employers Liability - Insurance that covers employees if anything happens in the course of them fulfilling their duties.
3. Motor Insurance - Required to cover employees driving company vehicles

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9
Q

What is Clause 21B Option 2?

A

The same as option 1 but the Employer takes out the Public Liability Insurance on behalf of the Contractor.

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10
Q

What is Clause 22?

A

All Risks Insurance

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11
Q

Clause 22 - What 5 items does All Risks Insurance Cover?

A
  1. Full cost of reinstatement of damaged works
  2. Cost of Site Clearance
  3. Professional Fees
  4. The Works - Building & Site Works
  5. Ancillary Works - Temporary Works & Materials required to do the job
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12
Q

Clause 22 - Who takes out All Risks Insurance?

A

Either the Contractor or the Employer. If taken out by the Employer, it will cover the 5 usual items but also include VAT if the Employer is not VAT registered.
1. Full cost of reinstatement of damaged works
2. Cost of Site Clearance
3. Professional Fees
4. The Works - Building & Site Works
5. Ancillary Works - Temporary Works & Materials required to do the job
6. VAT (if required)

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13
Q

Clause 22 - What 6 items are important to note if the Employer takes out All Risk Insurance?

A
  1. Insurance Compensation is paid into a joint account
  2. Compensation less fees are paid
  3. Architect must certify payments from the account
  4. Payments are not subject to retention
  5. If the compensation does not fully cover the costs, the shortfall must be made up by either the contractor or the employer depending who took out the policy
  6. If reinstatement works cost less due to variation in spec/scope the employer may keep the balance between cost & compensation payment.
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14
Q

What is Clause 23

A

Insurance Policies - Rules & Stipulations
1. The insurance must be with a Provider approved by both client & employer
2. Insurance must be in the Joint names of the Contractor and employer
3. Insurance must be in place before work begins
4. Insurance Exclusions are listed examples are War Risk, Sonic Boom, Offshore work, terrorism, etc.

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15
Q

Clause 33 - What actions by a Contractor can allow an Employer to determine a Contract?

A
  1. If the Contractor suspends the works without reasonable cause.
  2. Fails to proceed with the works with reasonable diligence
  3. Persistently fails to carry out instructions
  4. Fails to build as stated in the contract
  5. Seriously breaches the contract
  6. If the Contractor becomes bankrupt
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16
Q

Clause 33 - What is the process for an Employer to determine a contract?

A
  1. A notice must be delivered to the Contractor, specifying the default by hand/registered post.
  2. If the default continues for 10 working days the Employer may determine the contract within the next 10 days.
  3. The Contractor cannot remove any plant or materials from site unless the Employer has not taken possession of the site within a month of serving the notice.
17
Q

Clause 33 - What may the Employer do if the Contractor becomes bankrupt?

A
  1. Employ another contractor to complete the works
  2. Have the original Contractor assign the benefit of sub-contracts & supply contracts to the Completion Contractor
  3. Have the Original Contractor remove all items from the site and can sell/dispose of these items
  4. Refuse to pay any further money to the original contractor until all employer expenses are met.
18
Q

Clause 33 - What should happen once an Employer determines a Contract?

A
  1. The architect must secure the site as soon as a letter of notice is served.
  2. Any additional security must be paid for by the Original Contractor or a Bondsman
  3. After 1 calendar month has passed from the notice being served, the Contractor will no longer be liable to pay the additional security or other recurring cost.
19
Q

Clause 34 - What is the sequence of events that allows a Contractor to determine a Contract?

A
  1. If an Employer fails to pay a Contractor within the specified timeframe, the Contractor must send a notice to the Employer. After a further 5-day period, the Contractor can suspend the works for 10 working days. If the payment is still outstanding at the end of this period, the Contractor may Determine his employment but if a payment is made the the completion time must be extended by two times the suspended period.
  2. If the Employer commits an act of Bankruptcy
20
Q

Clause 34 - What should happen if a Contractor determines the Contract?

A
  1. The contractor will remove all his materials and plant.

The Employer must pay the following
1. Completed value of works as per clause 13
2. Value of works commenced but not completed
3. Value of materials actually paid for or legally bound to be paid.
4. Any losses or damages owed to the contractor for the determination
5. The Contractor may take possession of all unfixed materials until payment from the Employer is received.

21
Q

Clause 35 - What does Clause 35 deal with?

A

Payments and Retention

22
Q

Clause 35 - Why are contractors entitled to Interim Payments?

A

It is set out in the provisions of the Construction Contracts Act 2013.

23
Q

Clause 35 - When should Interim Payment Applications be issued?

A

Within one calendar month from the “Date of Possession”. This will be stated in the contract Appendix.

24
Q

Clause 35 - What should be included in an Interim Payment Application?

A
  1. Gross valuation of executed work
  2. Less retention
  3. Less defects & LADS
  4. Less previously certified/paid amounts
25
Q

Clause 35 - What can be claimed in an Interim Payment Application?

A
  1. Prelims
  2. Variations
  3. Contract works completed
  4. Materials on-site
  5. Materials off-site, if an agreement is in place with the Architect - Vesting Certificates may be required.
26
Q

Clause 35 - What is the normal procedure for the administration of Payment Applications?

A
  1. The contractor will prepare a details Progress Application and submit to Clients QS
  2. The client’s QS reviews and issues a payment recommendation to the Architect.
  3. The architect will issue a Payment cert within 5 working days of receipt of the recommendation.
  4. The employer must pay the certified value within 7 working days.
  5. The Architect must provide a full breakdown of any differences between the claimed amount and the certified amount.
27
Q

Clause 35 - What are the important points for retention

A
  1. Retention is usually an agreed % which can be agreed at contract stage
  2. The Liasion Committee provides a sliding scale
  3. It shall not exceed the “Limit of the Retention Fund”
28
Q

Clause 35 - What are the 2 options for retention?

A
  1. Retention is held “On Trust” by the Employer and released in 2 stages, 1st & 2nd Moiety
    OR
  2. On achieving PC, the Contractor can provide a retention bond and the retention is released in full. Alternatively, the retention is invested in an interest-earning joint account and the contractor is entitled to the interest earned. The retention is held “In Trust” by the Employer for the Contractor
29
Q

Clause 35 - What happens at Final Account?

A
  1. Within 3 months the Contractor will have provided the Architect with all necessary documents of the final account
  2. The final measurement & valuation can now proceed.
    3.
30
Q

Clause 35 - When should the final certificate be issued?

A

When defects are made good, after final measurement and at the end of defect period . All must be complete.

31
Q

Insurance - What are the 4 Insurance Clauses

A
  1. 21A The Contractor must indemnify the Client for injury to persons & property
  2. 21B The Contractor must take out insurance to cover his liabilities to the Employer.
  3. 22 All Risks Insurance
  4. Insurance Policies - Rules & Stipulations

Yr 2 Semester 1 (4 decks)

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