Sept 2023 25 Q&A

Question 1

2. Explain the concept of “time at large” in construction contracts.

Answer 1

• Time at large means that the main contractor has not fulfilled their obligation to meet practical completion, and no certificate of non-completion has been issued. It implies no set completion date and the obligation to complete within a reasonable time.

Question 2

3. Define frustration in contract law.

Answer 2

• Frustration occurs when events or circumstances beyond the control of both parties change the contractual obligations, making it impossible or illegal to fulfill them.

Question 3

4. How does a contract under deed differ from a contract underhand?

Answer 3

• A contract under deed is signed by the parties and a witness, traditionally authenticated by a seal. A contract underhand is only signed by the parties, with no witnesses or seal.

Question 4

5. What steps would you take if the client advised that liquidated damages were to be £100,000 per week?

Answer 4

• Verify whether the liquidated damages are based on a genuine pre-estimate of financial loss. Explain that they should be substantiated and cannot be punitive.

Question 5

6. What is the purpose of liquidated damages in a contract?

Answer 5

• Liquidated damages serve as a genuine pre-estimate of the likely loss incurred by the employer if the completion date is not met.

Question 6

7. What documents must be in place for liquidated damages to be deducted?

Answer 6

• A non-completion certificate, a payless notice, and other documentation or notices stipulated within the contract.

Question 7

8. Can liquidated damages be deducted even if the employer suffered no loss or damage?

Answer 7

• Yes, liquidated damages can be deducted at the value stated in the contract, regardless of whether the employer suffered damages.

Question 8

9. Explain the concept of the “defects liability period” in construction contracts.

Answer 8

• The defects liability period is a duration, typically 52 weeks after completion, during which the contractor is responsible for rectifying any defects arising from materials or workmanship not in accordance with the contract.

Question 9

10. When is a bespoke contract typically used in construction projects?

Answer 9

• Bespoke contracts are used for major projects with unique obligations, often requiring specialist advisors to draft specific contract conditions.

Question 10

11. What are the advantages of using standard forms of contracts over bespoke contracts in construction projects?

Answer 10

• Standard forms offer clarity, consistency, allocation of risk, time savings, established case law, and reduced preparation time.

Question 11

12. What are the disadvantages of using standard forms of contracts compared to bespoke contracts in construction?

Answer 11

• Standard forms may not always allocate risk appropriately, may not suit the project’s needs, and can lead to disputes if not tailored correctly.

Question 12

13. In what situations would you use a bespoke contract instead of a standard form in construction?

Answer 12

• Bespoke contracts are used for complex projects with unique requirements or when specialist advisors can draft specific contract conditions.

Question 13

14. What is a “retention of title” clause in a construction contract?

Answer 13

• A retention of title clause allows a subcontractor or supplier to retain ownership of materials until they are paid for by the main contractor.

Question 14

15. What are collateral warranties in construction contracts, and why are they used?

Answer 14

• Collateral warranties create contractual relationships between the main parties of a contract and external third parties who have a financial interest in the project. They are used to provide third parties with contractual rights.