CONTRACT PRACTICE Flashcards
What is a contract?
A legally binding agreement between two or more parties.
What is needed to create contractual relationships?
Offer, Acceptance, Consideration and Intention to enter into legal relationship
What are the different forms of standard building contract available in the UK?
JCT
NEC
FIDIC
What are some advantages and disadvantages of each? Where are they used?
- JCT – most commonly used
- NEC – more suited to engineering contracts
- FIDIC – more suited to large international project e.g. Channel Tunnel
What is the JCT and what are their suite of contracts?
Joint Contracts Tribunal, formed in 1931 Suit of Contracts includes: • Standard (with quants, without, with approx.) • Intermediate • Minor works • Design and Build
What are the advantages with a standard form of contract? How is it formed?
The advantages of a Standard Building Contract include:
• Developed over a long period
• Has input from legal, contractor, local authority
• Has more case law
• Less costly and time consuming to produce
What is an intermediate Contract?
- Contract for simple works without any major complex service adjustments
- It is a form of traditional procurement
- Design must be in place
- Can have sectional completion
What is included in a payment notice?
- Date
- Issue number
- Contract sum
- Valuation sum
- Valuation sum minus retention
- Valuation sum minus amount previously certified
What are the timelines for payment? Where can this information be found?
Interim valuation/applications date is stipulated in the contract, and is same day each month (or nearest business day).
- This is outlined in section 4 of the contract particulars
- Contractor can submit their application, is 7 days to review.
- CA/EA has 5 days from the due date to issue payment notice/cert.
Employer has 14 days from the due date to issue payment. - Payless notice has to be issued 5 days before due date.
What is Practical Completion? What does it Trigger?
When all works in the contract have been deemed to be completed and the client can take occupation.
Deminimus in nature.
- It releases half of the retention
- Ends the contractor’s liability for LD’s
- Starts the defects liability period
What documentation is required at PC?
- Testing and commission certs
- Health and safety files
- Building control sign off
- O&M’s
- Clients insurance in place
What is sectional completion and what is partial possession?
- Sectional completion is defined in the contract
- Partial possession is not determined in the contract, and is up to the contractors discretion to grant.
- Both will mean that section is ‘practically complete’
- LD’s will cease for that period.
- Contractors decide whether to grant partial possession.
What are staged payments?
OPTION A in the contract
Pre-agreed stages defined in the contract particulars – milestones in the project
On completion of a stage, payment is awarded.
What were the risks to the client by using staged payments?
The risk was this could leave the client exposed if they had not completed an amount of work in line with the payment amount.
What is the interim payment process? Where is this specified in the contract?
OPTION B
In comparison, a 2-weekly valuation and interim payment solution would be the optimum, as this would check.
This is outlined in the contract particulars and timings in section 4 of the contract conditions.
What guidance documents are available?
- RICS – Appropriate Contract Selection
* JCT – Guide to selecting the appropriate JCT
What is the difference between an Employers Agent and a Contract Administrator?
CA = Standard form/ traditional of contract. Role only takes place when in contract. Administer the contract impartially.
EA = D&B role takes place before contract.
What is the Housing, Grants and Regeneration Act 1996?
Ensure payments are made promptly
Any project over 45days must have interim payments
What is a collateral warranty?
A side agreement which established a contractual link between two parties which would not otherwise exist.
- Subcontractor warranties to client.
What impacts the clients choice of contract?
- Size, value & type of project
- Appetite for design risk
- Need for cost certainty
- Employers experience
- Scope for design change
What would you include when pricing an EOT?
- Prolongation of prelims
- Subcontractor mobilisation costs
- Management staff, security, cleaners etc
Why use a JCT minor works contract?
- Adopted on smaller more basic construction projects where the work is of a straightforward nature.
- Limited provision for sectional completion.
- Suitable for traditional forms of procurement
When use a JCT D&B contract?
- Used for projects where the main contractor retains risk for the design and construction.
- When client has less appetite for risk.
- Contain detailed provisions for SC and insurances.
What is force majeure?
Certain events beyond the control of the parties.
War, Hostility etc
