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APC June 2025 > Contract Practice > Flashcards

Contract Practice Flashcards

(92 cards)

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1
Q

What is off-site vesting?

A

Where ownership of materials manufactured off-site is transferred to the Client upon payment

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2
Q

What is required to pay for off-site materials?

A
  1. Needs to be listed in the Contract
  2. In accoradance with ERs
  3. Vesting Certificate - signed by both parties
  4. Labelled with Client name and location fo the project
  5. Insured by the Contractor until delivered to site
  6. Bonds to be provided
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3
Q

Why was the JCT 2016 Minor Works with CDP recommended for the West-End retrofit project?

A

Scope of works were relatively small and didn’t require all the provisions of an SBC

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4
Q

What are some of the differences between SBC and MW?

A

Simpler provisions – MW doesn’t have a provision for named subcontractors
MW retention - 5% SBC - 3%
No provision for named subcontractor

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5
Q

What were the CDP items for the St James’ project?

A

Floor box and grommet positions
Thickness of partitions

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6
Q

What was your role within the West-End retrofit project contract?

A

Undertook post contract procedures such as interim valuations, valuing change

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7
Q

What is an example of a change you valued on the West-End retrofit project?

A

Change in the colour of paint to the internal office plate floors

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8
Q

How did you value the change in paint colour on the West-End retrofit project?

A

Used JCT valuation rules, and used a star rate

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9
Q

What other JCT Contracts were considered for the West-End retrofit project?

A

The contract used was JCT Design & Build. An alternative contract would be SBC however my understanding is design was not yet fully coordinated and therefore the Contractor was used to progress the design from RIBA Stage 3

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10
Q

What is the difference between a Relevant Matter and Relevant Event?

A

Relevant Matter - Employers actions which entitle the Contractor to Loss and/or Expense

Relevant Event - An instance where the Contractor is entitled to an Extension of Time

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11
Q

Where in the contract is Relevant Matter defined?

A

Relevant Matter – Section 4

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12
Q

Where in the contract is Relevant Event defined?

A

Relevant Event – Section 2

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13
Q

What is the contractual process for notifying and assessing loss and expense claims?

A

(Clause 4.20) Contractor notifies as soon as reasonably apparent, follow with contractors’ initial assessment of loss and expense

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14
Q

What are some examples of relevant events?

A

Force Majeure
Variations
Adverse weather conditions
Strikes

In 2024 – epidemics, change of statute after the base date

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15
Q

What is the base date?

A

Reference of the date of the conditions when the tender was prepared and therefore reflects that price

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16
Q

What are the heads of claims?

A

1.Prolongation costs
2. General disruption
3. Finance charges
4. Loss of profits
5. Wasted management time

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17
Q

What are some changes in the JCT 2024 Suite of Contracts?

A

Gender neutral
Time to review EOT amended from 12 weeks to 8 weeks
Additional relevant events including epidemics
Reference to new building safety act

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18
Q

What are some common amendments you see in your projects?

A
  1. Amending final date for payment to suit Client financial cycle
  2. Amend rectification period from 6 months to 12 months
  3. D&B – Employers requirements take precedence over Contractor Proposals
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19
Q

Can you talk me through the valuation timelines in the JCT SBC 2016?

A

Interim valuation date – 7 days for QS to walk around site
Due Date, 7 days after IVD. QS to raise recommendation
5 days after due date – CA to raise interim certification
14 days after – final date for payment
5 days before final date for payment, Client can issue Pay less notice

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20
Q

What are the JCT Valuation rules?

A
  1. Where works are similar to use a Contract Rate
  2. Where works are similar but the conditions of works are different, use an adjusted fair rate (star rate)
  3. Where works are not similar, works should be valued fairly (market-test)
  4. Use dayworks where works cannot be measured
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21
Q

What are the contract particulars?

A

Sets out project specific variables in the agreement (retention, dates)

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22
Q

What is retention?

A

Percentage of money held by Employer as a safeguard for any defective/non-conforming works

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23
Q

What percentage retention do you have on your projects?

A

3% on SBC and D&B
5% on Minor Works and Intermediate

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24
Q

When is retention released?

A

Half after PC or sectional completion
Remaining after rectification period

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25
What is required to form a contract?
1. Offer and Acceptance 2. Intent 3. Consideration 4. Capacity
26
Why have you recommended JCT contracts for your fit out projects?
Common in the fit-out industry and therefore saves time reviewing other contracts
27
Why was a Letter of Intent (LOI) required on this project?
To allow for items to be ordered ahead of start of site
28
What types of LOI are there?
1. Letter of comfort 2. Instructions to Proceed with Consent to Spend 3. Letters Recognizing the Existence of a Binding Contract
29
What is included within the LOI?
1. Scope of works 2. Limit of expenditure 3. Agreed CSA 4. Payment terms 5. ADR 6. Liquidated damages
30
Are letters of intent legally binding?
Based on Ambleforth Abbey Trust v Turner & Townsend case law – no
31
Why would you recommend LOI over PCSA?
PCSAs are used when Employer wants Contractor to provide pre-contract services such as advise on design.
32
How did your client maintain control of design under the CDP packages?
Ensure robust information within CDP documents CMT approval process Novate design team
33
What was included in the loss and expense claim in your St James Project? And what was the total agreed cost?
1. Prolongation costs 2. General disruption C. £130,000
34
What takes precedence ERs or CDP?
ERs
35
What are some differences between SBC and Minor Works?
Minor works has no provision for named specialists Minor works has no provision for acceleration Minor works is a simpler contract Standard retention 3% in SBC and 5% in MW
36
What is loss and expense?
Additional costs a contractor incurs due to an employer's breach of contract or events within the employer's control that disrupt the work
37
What is the new contract within JCT 2024 suite?
New Target Cost Contract
38
When is an EOT granted?
When a Relevant Event has occurred.
39
What is a Relevant Event?
An event that causes delay and entitles the Contractor to claim for an EOT.
40
What are some examples of Relevant Events?
- Variations - Force Majuere - Client Variations - Epidemics (in 2024)
41
Talk me through the process for granting an EOT
1. Contractor notifies CA / EA in writing of RE including anticipated impact 2. CA / EA reviews to determine if this is a RE 3. CA / EA to notify Contractor of decision within 12 weeks. (8 weeks in 2024 suite)
42
What is Loss and Expense?
Contractual mechanism for contractor to recover costs caused by a Relevant Matter / Client
43
What examples of RM are you aware of?
- Variations - Postponement of works - Impediment by the Employer
44
How to RE and RM differ?
RE allows a claim for EOT. RM allows to claim for L&E
45
What are the heads of claim you would find in a L&E claim?
1. Prolongation Costs 2. General disruption 3. Finance charges 4. Loss of profit 5. Wasted management time 6. Uneconomical working
46
What is the process for claiming L&E?
1. Contractor notifies CA / EA as soon as possible in writing. 2. Notification accompanied or followed with assessment of claim 3. CA / EA determines whether this is a RM 4. QS has 28 days after receipt to review and 14 days monthly thereafter if there are any changes.
47
Do you know what a global claim is?
One claim for multiple relevant matters
48
Did your assessment of L&E differ from the contractors?
Contractor applied for 7 weeks of prolongations, this was amended to 6 weeks
49
You mention a ceiling bulkhead issue which was not a variation. This was under a SBC contract, correct? How was this not a variation if the design was incorrect?
Contract was amended for the Contractor to undertake site risk. Ceiling bulkhead should have been identified in surveys of existing building
50
What is a Final Account?
Mechanism / Statement which concludes any adjustments to the Contract Sum and allows a Final Payment to be made.
51
What should you be doing prior to the Final Account?
Agree variations, loss and expense and provisional sums throughout the construction process
52
Why is it important to understand the rolling final account?
Helps Client to understand the costs
53
What would you prepare to agree the Final Account?
A statement that captures: * Expenditure of Prov Sums * Variations * Loss and Expense * Any other adjustments
54
Would you include deduction of LADs within Final Account?
No. This is seperate to the Construction budget
55
What would you do if you did not agree the Final Account?
Hold a FA meeting and try to negotiate an agreement to avoid dispute resolution.
56
What is the FA process for SBC?
1. FA issued by Contractor within 6 months of PC 2. QS has 3 months to review and agree. QS issues FA statement to CA. 3. CA issues Final Certificate within 2 months. 4. Final Payment made
57
What is the FA process for D&B?
FA within 3 months No timescales to agree / close out.
58
What is required to form a Contract?
1. Offer 2. Acceptance 3. Consideration – Each party receives something 4. Intention 5. Capacity 6. Legality
59
How can a contract be executed?
Under Hand or as a Deed
60
What is the difference bdtw
Liability period. 6 years for under hand and 12 years for as a deed As a deed needs to be a written contract
61
When was the Construction Act last amended?
2009 - Local Democracy, Economic Development and Construction Act 2009
62
What were amendments made to the Construction Act 2009?
1. Tolent clauses regarding adjudication have been made illegal 2. Conditional payment clauses are banned (pay when paid) 3. Specific reference has been made to the Bribery Act 2010
63
You mentioned the rectification period in your MW contract. What is the default rectification period in the MW contract?
3 months
64
How do you select an appropriate contract?
* Nature of the works. * Value. * Risk. * Quality required. * Design responsibility. * Cost certainty.
65
You say you understand why different contract forms are chosen. Why would you, for example, use a D&B Contract?
Transfer risk to the Contractor Programme benefits.
66
If you wanted to transfer risk to the Contractor, but wanted to maintain quality, how would you achieve this?
Robust ERs Specify materials and Sub-Contractors in the Prelims Appoint a Client Monitoring Team (CMT) to ensure ERs are met Novate design team.
67
You say you have prepared a contract before; can you tell me what the structure and components of a typical contract are?
Volume 00 - Building Contract (Contract Particulars, Schedule of Amendments) Volume 01 - Employers Requirements (Drawings, Prelims) Volume 02 - CSA Volume 03 - Contract Annexures (Surveys, PCI)
68
What are the recitals within a contract?
explains the facts, (works, site, drawings)
69
What are articles within a contract?
What has been agreed (contract sum and consultant details)
70
What are contract particulars within a contract?
records the variables (retention, possession, completion)
71
What is attestation within a contract?
Execution (under hand / deed)
72
What are the Schedules?
Sets out procedures such as Warranty Schedule
73
What are your obligations as a QS under an SBC contract?
Reviewing: * Valuations * Variations * Loss and Expense * Final Account
74
What are the payment timescales under the SBC?
1. The interim valuation dates should be stated in the Contract Particulars. 2. From this the due date is 7 days after the application. 3. The interim certificate should be issued 5 days from the due date. 4. The final date for payment for each interim payment shall be 14 days from the due date. 5. If the Employer intends to pay less than the stated sum, a Pay Less Notice shall be issued no later than 5 days before the final date for payment.
75
What do you do if the Contractor does not submit an Application for Payment?
* SBC – undertake a valuation without their input. * D&B – Process slides back as far as Due Date.
76
What would you find in an Application for Payment?
* Prelims * Measured Works * Variations * Prov Sums * Materials On Site * Materials Off Site * Loss and Expense
77
What are some of the differences between a JCT D&B and JCT SBC?
* D&B makes no reference to QS * D&B has an Employer’s Agent, but SBC has a Contract Administrator * The Contractor takes responsibility for the design under D&B
78
What is a Schedule of Amendments?
Client amendments to the standard form.
79
Why have a standard form of contract if you can amend it?
Standard contract covers most eventualities, but it is possible, it does not meet the Client’s needs completely.
80
What are some common amendments made to a contract?
* Payment Dates – 14 days is standard. 28 days common. * Risk - Add / Remove Relevant Events / Matters * Precedence of Documents (ERs over CPs in D&B) * Rectification period
81
What is the risk of amending a contract?
Can cause confusion / reduce the effectiveness of the Contract. Minimal case law
82
What are some of the key changes from the 2016 JCT Suite of Contractors to 2024.
* Email address for serving notices / Use of electronic signatures. * New RE and RM regarding Covid-19 (Epidemics). * Collaborative working a default. * Reference to Building Safety Act * Gender neutral language * EoT 12 weeks to 8 weeks
83
Would you advise your client to use the 2024 Suite or 2016 Suite of JCT Contract?
2024 as most up to date and therefore in line with most recent legislation
84
What would you advise if Client wanted to use 2016 suite of JCT contract?
Advise against it as 2024 most up to date with legislation and industry expectations.
85
You mentioned you issued a Letter of Intent, what is that?
Non-binding document that outlines the agreement in principle between two or more parties before a formal legal agreement is finalized
86
On the fit-out contract, what was the value and why was a LOI used?
£60k, to buy FCUs ahead of start on site to meet programme
87
When should you use a LOI?
Should only be used when there is good intention to start works before the conclusion of the formal contract.
88
What should an LOI include?
1. Capped limit of expenditure 2. Activities to be undertaken 3. Start and end date 4. Payment terms 5. Dispute resolution terms.
89
What are some of the dangers of a Letter of intent?
May function as disincentive to sign final contract. Far less robust than a main contract
90
What is key case law referring to LOIs?
Ampleforth Abbey Trust v Turner & Townsend Series of LOIs issued with no contract. When the project was late, Client couldn't levy damages as there was no contract in place
91
What are the alternatives to a LOI?
PCSA / Enabling Works Contract if demo.
92
Who prepares a LOI?
Lawyers

APC June 2025 (25 decks)

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