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Tom APC 2023 > Contract Practice > Flashcards

Contract Practice Flashcards

1
Q

What’s the difference between Assignment and novation

A

An assignment transfers the benefit of a contract to another party but not the burden

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2
Q

Can the right to assign be excluded or restricted by contract

A

Yes

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3
Q

What’s the difference between collateral warranties and third party rights

A

Third party rights can be narrowed to specify exactly which rights and/or contract terms are to be transferred.

CW’s transfer the terms of the entire contract

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4
Q

What’s the benefit of third party rights over collateral warranties

A

Less expensive
Less admin and time

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5
Q

When would a Letter of Intent be used

A

As an interim arrangement to mobilise construction prior to a formal contract being executed

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6
Q

What’s a letter of intent

A

A document expressing an intention to enter into a contract at a future date

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7
Q

What are the four principles of a contract

A

Offer
An intention to create legal relations
An agreement
Consideration

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8
Q

What’s a consent to spend

A

A letter with instructions to proceed up to a certain value while the contract is still being drafted

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9
Q

Can a consent to spend be captured within a letter of intent

A

Yes

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10
Q

What’s a letter of comfort

A

A written document intended to give assurance that an obligation will be met

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11
Q

What is a performance bond

A

It’s a bond taken out by the contractor to compensate the Client if they default or fail to meet their obligations

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12
Q

How is the value of a performance bond generally calculated

A

As a % of the contract sum (usually 10%)

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13
Q

What is a parent company guarantee

A

A financial commitment made by the parent company that it will step in and fulfil the contractors obligations if they fail to do so.

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14
Q

How’s the value of a parent company guarantee calculated

A

% of the contract sum (often 75%)

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15
Q

What’s the benefit of a parent company guarantee compared to a performance bond

A

It’s free

Performance bond may have conditions that need to be met before paying out

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16
Q

What are the two types of performance bond

A

Conditional
Unconditional

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17
Q

What is non-negligence insurance

A

A policy which provides cover for damages or losses without any clear demonstration of negligence

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18
Q

Who generally obtains a non-negligence insurance policy

A

Contractor

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19
Q

How can the client protect themselves from advanced payments

A

Advanced payment bonds

Vesting certificate

Order direct

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20
Q

What 5 things do I need to check before certifying advanced payments

A

That they are properly identified
Separately stored
Insured
Free from encumbrances
And ordered in a timely manner

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21
Q

What can be used to check that the material off site is for my site

A

Stickers

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22
Q

What does free from encumbrances mean in relation to advanced payment

A

The payment is made without any existing claims, debts or legal obligations against it

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23
Q

What’s fluctuation option A

A

Contribution, levy and tax changes levied by the government for labour and materials

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24
Q

What’s JCT fluctuation option B

A

Labour, material costs and tax

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25
Q

What’s JCT fluctuation option C

A

Formula adjustment

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26
Q

What date in the contract are fluctuations measured against

A

Base date

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27
Q

What are the main suites of contract

A

JCT (Joint contract tribunal)

NEC (new engineering contract)

FIDIC (international federation of consulting engineers)

Bespoke

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28
Q

What’s a collateral warranty

A

A contractual link between two separate parties

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29
Q

What collateral warranties do you know of

A

Purchaser/ tenant
Employer
Funder

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30
Q

Name the pros and cons of a PCSA

A

Pros:

  • Early design input from the contractor
  • Can secure price on elements of the contract sum

Cons:

  • Price of the remaining works may be less competitive
  • If costs are too high will have to start tender process again
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31
Q

What prices would you secure under a PCSA

A
  • prelims
  • risk allowance
  • OH&P
  • Design fees
  • inflation
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32
Q

How many NEC contracts are there

A

6

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33
Q

Name some insurances

A

Employers liability
Public liability
Contract works
PI
Non-negligence
Existing buildings

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34
Q

What is Employers Liability

A

Insures the people the policy holder employs in case of injury or death in a business environment

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35
Q

What is PI

A

Insurance which cover’s professional negligence

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36
Q

What is contractors all risks insurance

A

Insures for accidental physical loss or damage to a property/ materials during the construction period

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37
Q

What’s the difference between an Employers Agent and Contract Administrator

A

EA’s are on Design and Build whereas CA’s are traditional

EA’s issue notices. CA’s issue certificates

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38
Q

What Contract are Contract Administrators used on

A

Traditional JCT’s

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39
Q

What are the common contract docs on JCT D&B

A
  • the contract (with any amendments)
  • CSA
  • Employers Requirement
  • Contractors Proposals
  • prelims
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40
Q

What are the time frames for the payments cycle on Leeds

A

Contractors QS submits application 7 days before due date

5 days from due date I issue my valuation and payment notice

Final date for payment is 14 days from the due date

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41
Q

How many days before the final date for payment can I issue a pay less notice

A

5 days

42
Q

How do you calculate the first date for payment

A

28 days after possession

43
Q

What happens if I don’t issue a payment notice within the required time frames

A

The contractors application becomes the certified valuation

44
Q

What happens if you make an error in the payment notice

A

Ring the contractor to highlight the error and issue an amended version

45
Q

Why would advanced payments be requested by the contractor

A
  • secure the price
  • prevent delay due to long lead times
  • help with cashflow
46
Q

What’s a vesting certificate

A

A certificate which transfers the ownership of the materials to the client

47
Q

Can you vest against a deposit

A

No, as there’s no material to vest

48
Q

Whose name is the vesting cert in

A

Clients

49
Q

What’s the disadvantage of an advanced payment bond

A

Costs money

50
Q

What are third party rights

A

An alternative to collateral warranties which allow a third party to be written into a contract

51
Q

What’s an extension of time

A

An adjustment to the completion date relieving the contractors liability to pay liquidated damages

52
Q

What’s a relevant event

A

An event that entitles the contractor to an extension of time

53
Q

Give some examples of a relevant event

A

Variations
Particularly Adverse weather
Delays in receiving possession
Force majure

54
Q

What’s a relevant matter

A

A delay caused by the client entitling the contractor to loss and expense

55
Q

What are the loss and expense heads of claim

A

Prelims
Overheads
Loss of profit
Interest
Finance charges

56
Q

Why would you use an advanced payment bond

A

The bond will protect the client in the event that the contractor fails to fulfil its contractual obligations, for example if the contractor becomes insolvent.

57
Q

What types of bonds do you know of

A

Advanced payment bond
Performance bond
Retention bond

58
Q

What is a retention bond

A

A bond is taken out instead of taking retention from interim valuations.

59
Q

Benefit of a retention bond

A

Improves contractors cashflow

60
Q

What are the 4 main features of the proposed JCT 2024

A

Modernising and streamlining- gender neutral language and flexibility of electronic notices

New Target Cost contract

Building safety 2022 act updates

Future proofing

61
Q

Does a relevant matter mean an EoT also has to be provided and why

A

No. As the Contractor may be entitled to loss and expense without any programme delay

62
Q

How long does the contractor have to submit their information required for the final account

A

3 months after PC

63
Q

What are prime costs

A

Similar to provisional sums however they only include the material provide.

64
Q

Other than prices what else can you secure under a PCSA

A

Programme

65
Q

Where can you find a advance payment bond template

A

In the JCT contract

66
Q

How would you assess the EoT claim in terms of delay

A

I would review the delay against the critical path

67
Q

Give some examples of a relevant matter

A

Failure to give the contractor possession of site

Delays from receiving instructions

Failure by the client to supply materials or goods

68
Q

What’s a certificate of non completion

A

A certificate issued when the contractor does not meet the contract completion date

69
Q

How long does the EA/CA have to respond to the contractors EoT request

A

12 weeks

70
Q

What happens to the retention bond at PC.

A

The bond amount reduces by 50%

71
Q

How does a retention bond work

A

Valuation are paid to the contractor without deducting retention.

The value of the bond increased as works progress in line with what retention would have been paid out.

At PC the value of the bond decreases by 50%

At the end of the defects liability period it drops to 0%

72
Q

Who pays for a retention bond

A

Contractor

73
Q

What act requires construction contracts to include specific provisions relating to payment and adjudication

A

Construction Act 1996

74
Q

When was the construction act amended

A

2011

75
Q

What scheme applies when construction contracts don’t comply with the Construction Act 1996

A

The scheme for construction contracts

76
Q

What does part 1 of the the scheme for construction contracts do

A

Makes provision for adjudication where the contract does not comply with the requirement for adjudication in the Construction Act

77
Q

What does part 2 of the the scheme for construction contracts do

A

Replaces those provisions/ lack of provisions in relation to payment that do not comply with the Construction Act

78
Q

Name some requirements of the Construction Act 1996 (as amended in 2011)

A

The right to adjudication

The right to suspend performance for non- payment

Each and every persons will require a payment notice to be issued within 5 days of the due date.

If the payer fails to value completed work, the payee can serve a payment notice.

Payment notices are required to contain the basis upon which notified sums are calculated (can be £0)

A payer must pay the notified sum unless it serves a pay less notice.

A pay less notice must value the work at the date the notice is served rather than the due date.

79
Q

What must be in place before LD’s can be deducted

A

Non completion cert

Pay less notice

80
Q

What happens when time is at large

A

There is no set completion date

The contractor only has the obligation to complete the works in a reasonable time

LD’s can’t be claimed

81
Q

Give an example of a defined and undefined provisional sim

A

Defined - Reception Desk

Undefined - Groundwork’s below an existing structure where extent of work cannot be determined until
the structure is demolished

82
Q

What are the common contract docs on JCT standard building contract (with quants)

A

The contract and any amendments

Bill of Quants

Specification & drawings

Prelims

83
Q

What’s a contract

A

An legally binding agreement between two parties to fulflil and obligation.

84
Q

What are the requirements of a valid contract

A

Offer

Acceptance

Consideration

Capacity

Intention to create legal relations

85
Q

Does a contract have to be in writing

A

No

86
Q

What is concurrent delay

A

It’s where more than one event occurs at the same time but not all of the events enable the contractor to claim an EoT or loss and expense.

87
Q

Where does JCT deal with acceleration

A

Deals with in schedule 2 (variation and acceleration procedures)

88
Q

How would you go about instructing the contractor to accelerate the programme

A

The contractor is required to put together an acceleration quote which includes the additional resource, revised programme and associated additional costs.

The consultants teams would prepare a report on the contractors proposals, including a risk assessment of matters that may prevent the prog being achieved.

I would comment on the viability of the additional costs.

An agreement would then be made

89
Q

What’s included in the ER’s

A

Drawings

Specs

Area schedule

Prelims

Surveys and reports

Planning consents

Pre construction info

90
Q

What are the tender prelims

A

They outline all the things the tenderer needs to factor into their logistics and the method of achieving competing the works. They also outline any constrains

91
Q

What’s a preamble

A

A short explanation of a document (often the contract)

92
Q

What’s the limitation period for a deed and under hand contract

A

Deed - 12 years

Under Hand - 6 years

93
Q

What document would you refer to if you wanted clarification on how to let a contract

A

JCT Tendering Practice Note 2017

94
Q

Under option C who insures the existing structures where th employer is a tenant of a multiple occupancy building

A

The Landlord with the premium recovered from the tenants of the building

95
Q

Give some examples of specified Perils on an all risks insurance

A

Earthquakes

Explosions

Fire

Flooding

96
Q

Whats a specified peril

A

A listed danger which may not be covered under the all risks insurance

97
Q

What time frames do you use when PC is issued

A

Stick to the same timeframes specified under the contract

98
Q

Who provides the liquidated damages rate

A

The Client

99
Q

What do collateral warranties provide to a third party

A

A duty of care extended by one of the contract parties which makes them liable to the third party.

100
Q

What’s the difference between partial possession and sectional completion

A

Sectional completion is pre-planned and defined within the contract whereas partial possession is not

101
Q

Example of patent and latent defects

A

Patent - decorations

Latent - structural

102
Q

What contracts would you use for NRM3

A

Minor works (minor works for a short period of time)

Measured term contract (for ongoing works such as PAT testing or legionella testing)

Tom APC 2023 (17 decks)

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