Contract Practice Flashcards
Can you tell me what the HGCRA and LDEDCA introduced?
HGCRA – 1996
* Introduced the right to be informed of how much is going to be paid to the contractor
* The Right to Adjudication
* The right for the contractor to suspend works for non-payment
LDEDCA – 2009
* Stated that verbal contracts and instructions are legally binding
* Abolished Pay when Paid clauses
* The referring party is not always liable for adjudication costs.
Can you talk me through the Payment Timelines on one of your Projects?
IVD = Date agreed in the contract
Due Date = 7 days from IVD date
Payment Notice / Certificate Due = 5 days from the Due Date
Final Date for Payment = 14 days from DD (unamended)
Final Date for Pay less = No later than 5 days before the FDfP
Can you talk me through some of the key contractual differences between the JCT D&B and JCT SBC?
SBC
- CA will administer the contract
- Used for traditionally procured projects
- Pricing document = BoQ, Schedule of works, Schedule of rates
D&B
- EA will administer the contract
- Used for Design and Build procured project
- Document = CSA
On 3B, were there any risks you identified with using a LOI for the Enabling Works?
- No formal contract in place (not a means tested contract in place)
- Works being completed without guarantee of main works being appointed
- Limited protection for both parties
How else might you have Contracted with the Contractor for those works? (where the letter of intent was used)
A minor works contract could have been used to complete the enabling works.
Can you talk me through how you valued materials off-site for 3B?
- Receive the contractors valuation with an application for materials off-site application.
- Check the items are listed under the contract
- Complete off-site check (checking quantities, insurances, labels and storage)
- Vesting certificates received
- Check no retention of title in the vesting certificates.
Can see you reference Liquidated Damages on your Dorking Halls project, did you advise the Client on the Rate to include within the Contract? Would you ever?
No I did not advise on the liquidated damages to be enforced. I can advise on items for consideration (i.e. loss of earnings, over heads, staffing costs etc) but refer my clients for legal advice on the amount to be entered in the contract.
Do you know the difference between stating £0 / Nil, and leaving the entry blank against Liquidated Damages? What do they become if left blank?
If left blank = Unliquidated damages can be enforced (these damages are assessed and determined by a court based on the actual loss or injury suffered by the aggrieved party)
If nil = No liquidated damages can be enforced.
Can you talk me through the advice you gave to your Client on GE3B as to whether to go for Performance Bonds and Parent Company Guarantees?
Performance Bond = More expensive. Normally around 1% of the contract sum to cover 10% of the contract sum. But does mean that there is guaranteed protection for my client.
PCG = Not expensive but relies on the basis that the parent of a subsidiary company will step into the shoes of the subsidiary to complete the works if they are unable to.
What other Bonds are you aware of? What are the different types of Bond?
Advanced payment bond
Retention bond
Tender bond
Types of bond
On demand = Can be called upon immediately, without proof of contractor default
Conditional = Proof is required for payment of these bonds and has to meet specific requirements
What insurances are you aware are in place on a D&B contract for example?
- Professional Indemnity Insurance
- Employer liability insurance
- Public liability insurance
- Contractors All Risk Insurance
- Non-negligence insurance
On GE3B action as EA what was your role?
- Chairing monthly meetings with all parties
- Issuing instructions
- Acting on behalf of the client for client changes and managing these with the contractor
What certificates were you responsible for issuing? (As EA on GE3B)
- Payment notices
- Sectional completion notices
- Practical completion notices
- Notices of defects and making good
- Payless notices
If the contractor was submitting an EOT claim what would they need to demonstrate?
- They would need to demonstrate that a relevant event has occurred (employers instructions, statutory works, failure to provide the amin contractor access to site, deferment of possession of the site, extremely adverse weather conditions)
- They would also need to demonstrate each relevant event and the impact it has had on the programme, leading to their EoT claim.
What would they have to submit prior? (For L&E claim)
- Perhaps an early warning notice to the employer, making them aware that they are going to experience a delay, noting their best endeavours to avoid this delay. They should submit this as soon as it becomes “reasonably apparent” to the contractor.
What they have to demonstrate to be able to claim L&E?
- That a relevant matter has occurred. For example, employer instructions, opening up works (that show the works have been completed in accordance with the contract)
What items of work can be omitted by the employer as part of a payless notice?
- Works not in accordance with the contract
- Defective works
- Liquidated damages
On GE3b, you undertook the role of the EA. What is the traditional role of an EA?
- Act on behalf of the Employer for the extent of the contract
- May also conduct pre-contract services to the client
- Administer the contract and issue notices
What needs to be in place for a contract to be legally binding?
- Offer
- Acceptance
- Consideration
- Intention to create legal relations
- Capacity
- Legality
