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Contract Practice > JCT Contract Mechanisms > Flashcards

JCT Contract Mechanisms Flashcards

1
Q

What are the contract elements of JCT?

A

Articles of Agreement - who is involved (employer, contractor, registered offices), parties intentions to work together

Recitals - description of the works, contract drawings, specs, who parties are

Articles - what is agreed between the parties e.g. obligations of C /E, named Architect, rights to adjudication and arbitration

Contract particulars - aspects of the project that are particular to the project

Attestations - parties sign; deed or underhand

Conditions - Sections 1- 9

Schedules - 1 - 7

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2
Q

What is included in Contract Particulars?

A

Contract sum
Retention %
Interim payment method
Third Party Rights / CW’s

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3
Q

What is included in the conditions?

A

Section 1 - Definitions & interpretation

Section 2 - Carrying out the works (contractor obligations, PC, LADs, Contractors design docs)

Section 3 - Control of the works (CDM regs)

Section 4 - Payment provisions (Contract sum & adjustments, payments, notices, interim payments)

Section 5 - Variations (valuation rules)

Section 8 - Termination

Section 6 - Injury, damage and insurance

Section 7 - Assignment, Performance Bonds, PCG, Third party rights, CW’s

Section 8 - Termination

Section 9 - Settlement of Disputes

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4
Q

What are the schedules under a JCT SBC?

A

1 - Design Submission Procedure

2 - Variation and Acceleration Quotation Procedure

3 - Insurance options

4 - Code of Practice

5 - Third Party Rights

6 - Forms of Bonds

7 - Fluctuation Option A

8 - Supplemental Provisions

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5
Q

What are the insurance options in JCT contracts?

A

Option A - New buildings - all risk insurance by Contractor

Option B - New buildings - all risk insurance by Employer

Option C - Joint names insurance by Employer of existing structures

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6
Q

What key contract terminology is different in the JCT D&B?

A
  • Variations are referred to as changes
  • ER’s and CP’s
  • EA
  • Final certificate is referred to as the Final statement
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7
Q

Where discrepancies are found in CP’s or ER’s, what occurs in a JCT D&B?

A
  • CP’s result in the Contractor correcting at no cost if proposed amendment is accepted
  • ER’s treated as a Change with associated EoT, L&E
  • ER’s take precedent over CP’s (gold tap vs brass tap!)
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8
Q

What bonds are available under a JCT D&B?

A

Advanced Payment Bond
Retention Bond
Bond for offs-site materials
Performance Bond

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9
Q

What are ER’s in a JCT D&B?

A

Provides a brief to the Contractor to produce the CP’s. Can be general or more detailed

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10
Q

What are CP’s in a JCT D&B?

A

Form part of the contract documents, contractors response to the ER’s

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11
Q

What is included in ER’s?

A

Referred to at Article 4 of CP’s
-The works
-Division of works into sections
-Site details
-Planning and other constraints
-Information about the contract
-Provisional sums
-Form and content of the CP’s

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12
Q

How do ER’s and CP’s differ?

A

-ER’s are the responsibility of the Employer whereas CP’s are the contractors responsibility.
The liability for errors lies with the respective parties.

-ER’s can have provisional sums. Within CP’s provisional sums are considered fixed sums

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13
Q

What is the CSA used for? JCT D&B

A

-DB 2016 is lump sum
-Used as a basis for calculating interim payments (Alternative B)
-Used to assess the value of changes
-Used to assess increase in price if fluctuation Option C applies

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14
Q

How do CDM regulations apply to a JCT D&B?

A

-Employers duty to appoint a principal designer and principal contractor - usually contractor for both under D&B
-Employer provides pre-construction info to Contractor
-Where Contractor is the principal contractor they must ensure construction phase plan is prepared before setting up site
-H&S file to be complied by principal designer, contractor must provide the information
-Clause 2.27 requires contractor to have complied with CDM before practical completion is issued “

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15
Q

How has the JCT D&B changed from the 2011 to the 2016 edition?

A

-Adjustment to reflect CDM 2015 regs
-Simplification of Section 4 payment provisions to introduce procedure for prompt assessment of Loss and Expense claims
-Inclusion of provisions for performance bonds and parent company guarantees

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16
Q

What roles are there under a JCT D&B 2016?

A

Architect
Employers Agent
Principle Designer
Principle Contractor

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17
Q

What are the roles under JCT SFC 2016?

A

Architect / CA
QS
Principle Designer
Principle Contractor

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18
Q

What are the insurance options under a JCT?

A

Option A - Contractor takes out in Joint Names all risk insurance

Option B - Employer takes out in Joint Names all risk insurance

Option C - Employer takes out in Joint Names all risk insurance for refurbishment or extensions to existing structures. Specified Perils insurance taken out for an existing building

Joint names = policy of insurance where insurers have no right of recourse against any person names as an insured

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19
Q

What are the fluctuation options in a JCT?

A

Option A - fluctuations in contributions, levies and taxes

Option B - fluctuations in labour, materials and taxes

Option C - some items are fixed but others are variable. Price adjusted usually using BCIS data

Default is Option A

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20
Q

Do all JCT contracts have fluctuation options?

A

Intermediate - A only
Minor works - A only

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21
Q

What contracts can have a CDP?

A

Intermediate

Minor Works

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22
Q

What contracts can have a PCSA?

A

D&B
Major Project
Intermediate
SBC w / wo quantities

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23
Q

When would you use a measured term contract?

A

When there is no full design

Works are for a package of minor or maintenance works over a set period

Not used in frameworks

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24
Q

When would you use an Intermediate contract? Traditional Lump Sum

A

‘-Where full design is available or CDP is needed
-Where works are relatively simply with out complex specialist works
-Circa £1m, straightforward works lasting less than a year
-Where detailed procedures are or named sub-contractors
-Can use a PCSA
- Where sections are needed
- Architect / CA / QS administer contract
- Employer provides BoQ / spec / work schedules
- Where lump sum is quoted to be include CSA or Schedule of Rates
- Lump sum, interim payments
- Only provides limited fluctuation provisions (contribution, levy and tax changes)
- Provisions for PB / PCG, CW

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25
Q

When would you use a Minor Works Contract? Traditional Lump Sum

A

‘-Where full design is available or CDP is needed
- Where work is simple in character
- Where employer is required to provide drawings / spec / work schedules
-Circa £500k, straightforward works lasting less than a year
- Architect / CA / QS to administer
- Private and local authority employers
- No phases or sectional compltetion
- Not where BoQ are required
- Not where detailed control procedures are needed
- Lump sum, monthly interim paymnets
- Includes options for fluctuation provisions

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26
Q

What do you know about SBC w. Quantities Contracts? Traditional Lump Sum

A

’- Larger works design and detail by employer with either work schedule or specification
- Can use with a CDP
- Where sectional works are required
- Private and local authority employers
- Where provisions are required to cover named specialists
- Based on lump sum and monthly interim payments
- Lump sum is a CSA or Schedule or rates
- Architect / CA / QS administer contract
- Provisions for advanced payment, retention and offsite material bonds
- Includes options for fluctuation provisions
- Provisions for PB / PCG, CW

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27
Q

When would you use an SBC w. Approximate Quantities contract? Traditional measurement

A

’- For larger works designed where detailed contract provisions are needed
- Approx BoQ, subject to remeasurement
- Architect, CA and QS to administer
- Can use CDP
- Where works are in sections
- Private and Local authorities
- Provisions required to cover named specialists
- Ascertained final Sum on remeasurement and valuation of work
- Traditional Measurement
- Provisions for PB / PCG, CW

28
Q

When would you use an Measured Term contract? Traditional Measurement

A

’- Employers who have a regular flow of maintenance and minor works over a specified period of time
- Where work is instructed from time to time and measured and valued on the basis of an agreed schedule of rates
- CA administers
- Priced based on Schedule of Rates followed by series of Orders for each separate item of work
- Traditional Measurement

29
Q

When would you use a Prime Cost Building Contract? Traditional Cost Reimbursement / Cost Plus

A
  • Used when needed early start on site
  • Design by Employer but not a full design before works commence
  • Where detailed contract provisions are necessary
  • CA and QS administer conditions
  • Can use sections
  • Private and local authority employers
  • Costs bases on breif spec, drawings and estimate cost
  • Often for alteration work and urget repair work where early start is necessary and exact nature is not known
  • High risk for client
  • Contractor paid prime cost of works certified by Architect / CA. Employer also pays COntract Fee relating to non-site overheads and profit (fee may be lump sum and adjusted as Prime Cost varies from estimate)
  • Contract fee can be adjusted as scope varies
  • Traditional cost reimbursement / cost plus
  • Provisions for PB / PCG, third party rights / CW
30
Q

When would you use a Major Project Contract?

A
  • For major works where employer regularly procures large scale construction work
  • Contractor required to take on greater risk than under other JCT contracts
  • Parties have their own detailed procedures - only limited set out in contract conditions
  • Contractor carries out works and complete design
  • Employer employs a representative to exercise powers and functions as Employer under contract (EA)
  • Used for sections
  • Monthly lump sum
  • Design and build procurement
  • JCT Practice note gives no details on fluctuations etc
31
Q

When would you use a D&B Contract?

A
  • ER’s prepared for Contractor
  • Construction and design
  • Employers Agent
  • Where sections required
  • Private and Local Authority
  • Lump sum interim or stage payments
  • Makes no provision for independent CA. Employer is directly responsible. May employ an EA
  • Uses a CSA
  • Provisions for advance payment, retention and off-site materials bonds
  • Includes provisions for fluctuations
  • Provisions for PB / PCG, third party rights / CW
32
Q

When would you use a Management Contract?

A
  • Large scale projects with early start on site
  • Works designed by Employer but not possible for full design information before works commence
  • Management Contractor administers the conditions
  • Contractual link between MC and works contractors
  • Used with Sectional completions
  • Private and LA
  • Prime Cost of project + Management Fee, Interim payments usually
  • Employer appoints Architect / CA / QS
  • Uses a Contract Cost Plan
  • MC sets out, manages, organises, supervises and secures the carrying out and completion of a project
  • Consequences of Works Contractor do not fall on MC if they comply with their terms
  • Provisions for PB / PCG, third party rights / CW
  • Management Procurement
33
Q

When would you use a Construction Management Appointment Contract?

A
  • Where CM is to manage the project on behalf of the Employer
  • Employer enters into direct separate trade contracts using the CM Trade Contract
  • Can use with sections
  • Can be used as a suite of documentation for separate contractual responsibilities of the management, design and construction
  • CM acts for Employer issuing instructions, making decisions and preparing certifications
  • Lump sum or complete remeasurement
    Interim monthly or pre-determined stages
  • Provisions for advanced payment, retention and off-site bonds
  • PB / PCG, Third party rights / CW
34
Q

When would you use a PCSA?

A
  • For supply of pre-construction services by a contractor selected under a 2 stage tendering
  • Where main contract is SBC, D&B, Major, Intermediate
  • Whether or not contractor is responsible for design
  • Where there is to be novation to the Contractor
  • Private and LA
  • Can be used with CM with adaptations for the provision of pre-construction services with prospective trade contracts
  • Unless otherwise stated in the provision of services, liability for design work will only arise once contract for construction work is executed
35
Q

What types of Partnering contracts are there?

A
  • Constructing Excellence Contract used with
  • Constructing Excellence Contract Project Team Agreement
36
Q

What other types of contract are you aware of?

A
  • Framework agreement - used where public procurement rule compliance is needed, can be a single project
  • Consultancy agreement - public sector services
37
Q

What are the payment provisions in a JCT SBC?

A
  • Contractor makes application
  • 7 days until due date**
  • 5 days after due date is the Payment notice
  • 5 days before final date for payment is the Pay Less notice**
  • Gap between due date and final date for payment is 14 days **
  • After the date of final payment, the contractor has right to suspend works 7 days after a notice of non- payment

** = dates are prescribed and can be adapted

38
Q

What are the payment provisions in a JCT D&B?

A
  • Application for payment
  • If application is made late, the due date moves respectively
  • 7 days until due date**
    – 5 days before final date for payment is the Pay Less notice**
  • Gap between due date and final date for payment is 14 days **
  • After the date of final payment, the contractor has right to suspend works 7 days after a notice of non- payment
39
Q

What happens where no key dates are agreed in a contract?

A

The Supply of Goods and Services Act 1982 / Consumer Rights Act 2015 prpvides that work completed within reasonable time

It is known as “time at large” if no mechanism to change the date and the Contractor is delayed

40
Q

How is possession referred to under JCT contracts?

A

’ It is treated the same under all JCT contracts
- Failure to give possession entitles the Contractor to EoT and L&E. Extended breach entitles Contractor to terminate the Contract
- Clear site possession must be given to enable Contractor to work in whatever way they wish
- Where there are restrictions on possession by Employer, this must have been included in tender and contract documents
- Once possession is given, Employer can issue instructions regarding the postponement of work, which would give EoT and L&E

41
Q

What are the requirements on the Contractor to progress works?

A
  • They are required to process regularly and diligently once possession has been granted
  • Contractor is free to organise own sequence of works regardless of the impact on the Employer
  • Good practice to have an agreed programme prior to Employer giving possession, this must be in the ER’s
  • Programme isn’t a contractual document but can be used to alert Employer when final decisions should be made and when changes can be made without delaying progress
42
Q

What happens if Contractor reaches Practical Completion early? Does this differ from NEC?

A

Under JCT, the Employer is obliged to issue a PC statement and take possession even if not convenient.

Under an NEC, the Employer can state within the contract they do not want the works completed early

43
Q

What are the different terms used for completion dates?

A

o Date for completion – date stated in the CP’s
o Completion date – above date or any other date fixed by the EoT provisions of the contract

44
Q

What are Supplemental Provisions under a JCT for completion?

A
  • Supplemental Provision Schedule 2
  • Enables Contractor to provide an estimate of the valuation of change which includes assessment of delay to completion date
  • Employer can investigate the acceleration of progress of works where Contractor quote includes for change to completion date
  • Where agreement is reached, this becomes the new Completion Date
  • Where agreement cannot be reached or Supplemental Provisions do not apply, the Completion Date is adjusted by EoT provisions in clauses 2.23 - 2.26
45
Q

What is issued on completion under a JCT D&B? How does this differ from SBC?

A

A Practical Completion Statement is issued when works are practically complete and Contractor has completed Clauses as built and following CDM regulations.

In a SBC, this would be known as a Practical Completion Certificate as CA / A could certify

46
Q

EOT - Can you list some Relevant Events?

A

Clause 2.26
-Variations
• Exceptionally adverse weather
• Statutory undertaker’s work
• Specified perils
• Deferment of possession of the site
• Force majeure
- Statutory powers enforced by Government after the base date
- Strike affecting trade on works or engaged in manufacture or transportation of goods or design work for the CDP (Stevenage)
• Civil commotion or terrorism
• Impediment, prevention or default by the Employer

47
Q

What is a Relevant Event?

A

In clause 2.26

Categories of events that if they cause a delay to the Contractor, they are entitled to an EOT. May be neutral events or the fault of the employer

48
Q

What is the process for granting an extension of time under the JCT?

A

-As soon as the contractor becomes aware that the works are in delay, or are likely to be delayed, they submit notification to Employer (Clause 2.27)
-The contractor must then submit further particulars in order to allow for an assessment of the delay
- From this, the architect / CA has 12 weeks in which to make a decision. (Clause 2.27)
- Employer must state the amount of time awarded and the Relevant Event against which it has been awarded. Must be fair and reasonable
- Where completion is within 12 weeks, Employer is to notify new completion date prior to existing completion
- Where EoT is granted, time awarded for extension must be reviewed within 12 weeks of PC (cannot take back time)

49
Q

What are key conditions in SBC?

A
    1. Definitions and Interpretation
    1. Carrying out the works
    1. Control of the works
    1. Payment
    1. Changes
    1. Injury, Damage and Insurance
    1. Assignment, 3rd Party Rights, Collateral Warranties
    1. Termination
    1. Settlements of Disputes
50
Q

What are the insurance options in JCT contracts?

A

‘Option A - New buildings - all risk insurance by Contractor

Option B - New buildings - all risk insurance by Employer

Option C - Joint names insurance by Employer of existing structures

51
Q

What are key clauses within the JCT D&B that set out the contract definitions?

A

-1.1 sets out the definitions
-1.3 states the contract is to be read as a whole and nothing contained in any other contract documents shall override or modify the conditions (e.g changes to ER’s require add)
- 1.4 aids with the interpretation e.g. gender inclusive of any gender
-1.5 how days are counted e.g. day one refers to the day following the specified date
- 1.7 notices required in writing
-1.11 contract shall be governed by law of England

52
Q

What are EA duties?

A

To issue

  • Applications
  • Consents
  • Instructions
  • Notices
  • requests or
  • Statements

Depending on appointment EA may also be responsible for agreements to change instructions with financial or specification changes, agreeing of fees to other consultants

53
Q

What duties does the client maintain under a D&B?

A
  • Providing possession of the site
  • Making the payments in accordance with the paynt notices
  • issuing notice to the contractor of withholding of payment or deduction of LD’s following non-completion notice
54
Q

Under a D&B, can a contractor refuse to comply with an instruction?

A

No - even if the price has not yet been agreed the contractor must comply within 7 days.
If no action within 7 days, others may be employed at the contractors expense
Only exception is when instruction is not in writing

There are mechanisms in the contract for the valuation of the change

55
Q

What should be included in a written instruction?

A
  • Reference to the contract and the date of execution
  • Reference the parties
  • Contract clause of issue i.e. a change, extension of time, due to non compliant work etc
56
Q

What actions can be taken if defective work is identified?

A
  • Issue instruction for removal from site the work, materials or goods
  • Issue change instructions necessary to accept the defect, with no additional time or cost
  • Issue instruction reasonable for open up for inspection with no addition to the contract price, whatever the results of the opening up
57
Q

How are applications for payment made on a D&B?

A

Alternative A - Stage. Made at the completion of each stage as set out in the CP’s

Alternative B - Periodic. Made on the dates provided in the CP’s

58
Q

What is the process of taking LD’s?

A
  • Non-completion notice must be issued
  • Employer to provide written notice of the deduction of LD’s, prior to issuing the Pay Less Notice (Employer, not EA!
  • Withheld from the money due
  • The Payment notice value should not be reduced by the amount of LD’s. The value of the work is still valid
59
Q

What is an EA’s duty of care to the employer?

A

Duty of care to not let them fail in their contractual obligations, not cause damage or loss to the employer and to act in the employers best interests

60
Q

What is typically covered in ER’s?

A
  • Details of site, boundaries
  • Purpose for the building
  • Project description and any drawings prepared
  • Specific requirements for any elements
  • Payment method (a or b)
  • Details of any provisional sums
  • Access restrictions
  • Statement of planning constraints
61
Q

What is included in a tender pack for D&B?

A

ITT
ER’s
Draft CSA
Tender return form
Tender return label
Timescales

62
Q

”
When can you use a PCSA?”

A

When main contract is:
-SBC
-D&B
-Major Project
-Intermediate

Regardless of design responsibility

Where novation to contractor of specialist sub / supply / consultancy contracts

Minor adaptations to use with CM

Not for between employer or main contractor and specialist sub contractors

63
Q

What can you not do under a PCSA? Why?

A

Any works that contitute construction works
- Insurances - no all risk cover
- No valuation rules
- No detailed provision for CDM regulations / F10 forms

64
Q

What is the difference between a PCSA and LOI?

A
  • PCSA looking for contractor input on design and buildability, division of works into sub-contract packages
  • LOI still concluding terms of contract
65
Q

What is in a schedule 2 quotation?

A
  • Value of adjustment
  • EoT required
  • Direct loss from preparing
  • Additional resources for instruction

Contract Practice (13 decks)

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