Contract Practice

Question 1

• Where are LD’s included in a contract?

Answer 1

Section 2.29 of the Contract (JCT DB) with a value inputted into the contract particulars.

Question 2

• What part of a contract relates to quality?

Answer 2

Section 2.2 Materials, Goods and Worksmanship

Question 3

Can you please name some different types of a JCT contract?

Answer 3

Minor Works
Intermediate
Standard
Design & Build
Prime Cost
Management
Major Works

Question 4

What are included in the Recitals?

Answer 4

Recitals contextualise the agreement, giving factual explanations for the basis of the contract. Seven recitals describe what is required and the events that have taken place.

1-7 Recitals
1- Describes the work required, site and preparation of design and bills of quants
2- Confirms a priced copy of the bills of quants has been supplied to the employer
3 - Identifies contract drawings
4 - Identifies whether employer is considered a contractor for tax purposes
5 - Refers to an information release schedule (Optional)
6 - Whether works are to be carried out in sections
7 - Only applies when contractor is obliged to complete design works under a CDP.

Question 5

What is included in the Articles?

Answer 5

These set out what is agreed between the parties.

Article 1
The obligation of the contractor

Article 2
The obligation of the employer

Article 3
Identifies the architect (or contract administrator) or employer’s agent).

Article 4
Identifies the quantity surveyor.

Article 5
Identifies the principal designer.

Article 6
Identifies the principal contractor.

Article 7
Makes reference to the right to adjudication in the event of any dispute.

Article 8
Makes reference to the right to arbitration in the event of any dispute.

Question 6

What are the Contract Particulars?

Answer 6

Sets out the variables that are particular to the specific project.

Question 7

What is attestation and how is it completed?

Answer 7

Attestation is the process of confirming that something is correct or genuine or that a requirement has been met. It can be completed as:

• A Deed - (signed and witness) - 12 years limitation period
• Underhand - just signed by both parties - 6 years limitation period

Question 8

What happens if the value of LDs is left blank?

Answer 8

It means they are unliquidated damages and the value is agreed in court. It can be unlimited.

Question 9

What is novation?

Answer 9

Novation is a process in which contractual rights and obligations are transferred from one party to another.

Question 10

How does novation differ from assignment?

Answer 10

Assignment transfers the benefits of of a contract, Novation transfers both the benefits and the burdens/obligations.

Question 11

When does a novation agreement need to be agreed.

Answer 11

Novation agreements need to be agreed at appointment with the consultant and be written into the contract with the contractor.

Question 12

What is an alternative to a novation agreement?

Answer 12

A consultant switch - simply transfers the consultant from working for the client to the contractor by terminating the current contract and entering a new one.

Question 13

Retail Hornchurch - How did you ensure that you were competent to draft a contract?

Answer 13

I have experience in drafting contracts previously and pulled the contract together using NBS Chorus. Once it was drafted I issued it to the employers legal representatives and for ensuring that is was legally sound.

Question 14

Retail Hornchurch - At what point did you issue the contract particulars to the contractor for comment?`

Answer 14

I would input the the contract particulars that I could at the time, I would issued these to the contractor in a table for comment.

Question 14

What is the retention in the JCT Minor Works Contract?

Answer 14

5%

Question 15

What is the typical max value for JCT MW Contract?

Answer 15

£250k

Question 16

Was the contract issued via Docusign, if so, how did you ensure that data is secured when contracts issued over docusign?

Answer 16

I safely stored contract documents in password protected files. I issued the contract to the legal advisors via an password protected file send. I received confirmation from all parties that they were happy for me to share the document in this manner.

Question 17

What is the difference between CA and EA?

Answer 17

EA is for Design and Build Contracts whereas CA is for traditional forms?

The CA is completely impartial and the role begins following the execution of the contract.

EA is reports to the Employer.

Question 18

Could please describe the process of implementing insurance option C?

Answer 18

In understanding the project i knew that the works were occurring within an existing building. I inputted Insurance option c within the contract particulars and shared this with the client and contractor for approval. I inserted this into the contract and advised my client of the requirement to take out joint names insurance of the works and the existing structure against specified perils.

Question 19

What is Insurance Option C, what section of contract is it in and what are the other options

Answer 19

Insurance Option C is found in Section 6 of teh Contract Particulars and requires the the employer to take out joint names insurance on the works and the existing structure.

Option A - contractor insurers the work
Option B - employer insurers the work

Question 20

How did you insure the contractor held adequate PL?

Question 21

What is the difference between a collateral warranty and a third party right?

Answer 21

Collateral warranties transfer the whole contract obligations s to the third party.

Third party right transfers specific clauses of the contract to the third party.

Question 22

When are collateral warranties beneficial?

Answer 22

Getting recourse from the supply chain if their are defects and the contractor has gone bust.

Question 23

How are third party rights documented?

Answer 23

Will be name and the contract clause referenced within the contract.

Question 24

What changes are in the JCT 2024 suite of contracts?

Answer 24

• Gender neutral language
• electronic signatures
• changes to extension of time
  -epidemics
• Changes off the back of BSA 2022
• extended limitation periods
• defined PC and PD roles

Question 25

What is the standard rectification period under each JCT Contract?

Answer 25

MW - 6 Months
IN - 12 Months
D&B - 12 Months

Question 26

What is a performance bond?

Answer 26

A form of insurance against the risk of a contractor failing to fulful obligations to the client. Most commonly this is to cover in the case of contractor insolvencies.

In this case the performance bond will provide compensation by a third party up to an agreed percentage. Usually 10% of contract value.

Question 27

What other bonds exist?

Answer 27

Retention Bonds - held to ensure the contractor properly completes work under the contract.

Will usually be either 5% or 3% depending on typical contract value.

Advance payment bond- used if and when advanced payments are required.

Question 28

What can you do if the consultant declines to be novated?

Answer 28

• Outset i would ensure that the requirement to accept novation is written into their appointment
• if this isnt the case, i would get the contractor to appt another person within their firm to undertake the same role.

Question 29

What is a waiver of subrogation and how can it be applied when using option c?

Answer 29

a contractual agreement that prevents an insurance company pursuing the responsible party for losses above a certain value.

Question 30

What is the response timeframe for EOT under the Intermediate contract?

Answer 30

• No set timeframe under intermediate or MW.
• Only a set timeframe for D&B, standard etc - 12 weeks however reducing to 8 under new suite of contracts

Question 31

What are the 4 things that make a contract?

Answer 31

• Offer
• Acceptance
• Considerations
• Intention to create a legally binding contract

Question 32

What is Net Contribution Clause?

Answer 32

A NCC states that where two or more parties involved in a construction project are each jointly liable for the same loss or damage, the liability of each party will be limited to the amount which would be apportioned to that party by a court.

Question 33

When does a Performance Bond get paid out?

Answer 33

Depends on the type of bond it is, whether on-demand or by default.

Question 34

What is the new JCT Contract being introduced?

Answer 34

JCT Target Cost Contract

• Contractor undertakes design and construction
• Unlike D&B there is no fixed lump sum
• Contractor would be paid ‘allowable’ costs together with a contract fee (% or fixed sum)