Contract Practice Flashcards
(32 cards)
What is a contract?
A legally binding agreement between two or more parties.
What are Defined Terms?
Typically written in italics, and are explained through definitions under the contract.
What are Express Terms?
Are those terms which have been explicitly agreed between the parties.
What are Implied Terms?
Those terms which are implied through tort law.
What are the condition for a contract to be in place?
- Offer
- Consideration
- Acceptance
- Intent to form a contract
- Legality to form a contract
- Capacity to make an agreement
What is tort law?
It is part of civil law, where a claim in tort relates to loss incurred and the remedy is compensation.
Are oral contracts acceptable?
Oral agreements are legally binding, however difficult to enforce. Therefore, it is best to have a contract in place with the terms and conditions clearly agreed upon.
What are the principles surrounding the Construction Act 2009?
- Payless notice must be issued if certifying below the applied amount
- Payment notice must be issued describing how the amount due has been determined.
- The Contractor has the right to suspend works if payment has not been received by the due date and a payless and/or payment notice has not been received.
What is a Letter of Intent (LOI)?
A method of commencing works prior to a contract agreement being finalised. It is issued by the employer.
What are the key aspects of a LOI?
- A letter outlining client’s intentions to enter contract
- Enables the contractor to commence works while the contract agreement is being finalised.
It should include:
- Scope of works to be completed
- Value of works
- Form of contract to be entered into
- Date of possession
- Date of completion
- Expiry date
What are the disadvantages with LOI?
It is less robust than a contract agreement, once it is in place there may be complacency in getting the contract agreement signed off.
In which circumstances are LOI used?
When there are programme pressures and works need to commence by a certain date.
What is your firm’s policy in regards to LOI?
I am not permitted to advise on Letter of Intents, but encourage the finalisation of contract agreements. Furthermore, I am not permitted to draft Letters of Intent.
What is a Parent Company Guarantee (PCG)?
A form of security to the client in the event the subsidiary company defaults and the main organisation steps in to fulfil the agreement.
What are antiquities?
The discovery of historical artefacts, archaeological items or fossils
Who owns these antiquities once they are discovered?
The Employer/ Client
What should happen when an antiquities discovery is made?
Works should cease, the contractor must not disturb it and preserve it and notify the Employer or relevant authorities. The time and cost impact of such events are typically borne by the Employer, for these eventualities.
What is a bond?
A form of financial security that the contractor takes out with a third party in the name of another for any eventualities.
What is typically included under a bond?
It is made in writing, to be under a deed, contains the value, expiry and terms of coverage.
Name some of the types of bonds you are aware of?
- Advance Payment Bond
- Retention Bond
- Performance Bond
- Materials held off-site bond
- Tender Bond
When are bonds appropriate to have in please?
When risks to losses are present and security is needed to clients.
When can the Employer can call upon a Performance Bond?
When the contract has been breached, and not as and when.
What is a Performance Bond?
A financial bond for the Employer to call upon when there has been poor performance, breach of contract or default on the part of the Contractor. Typically the coverage of the bond is 10% of the value of the contract.
What is a Tender Bond?
Provides security to clients as part of the tendering process to avoid having anyone withdrawing and submitting unrealistic bids.
