Contract Practice COPY Flashcards
(157 cards)
1
Q
What constitutes a contact?
A
Offer Acceptance Consideration Intention Capacity Legality
2
Q
What are the NEC main options?
A
There are 6 main options;
A) Priced contract with an activity schedule
B) Priced contract with a bill of quantities
C) Target cost contract with an activity schedule
D) Target cost contract with a bill of quantities
E) Cost reimbursable contract
F) Management contract
3
Q
What are the clause headings in a JCT Contract?
A
Recitals Articles Contract Particulars Attestation Conditions of Contract Schedules
4
Q
What is included in a set of Contract Documents?
A
Preliminaries Contract Sum Analysis / Pricing Document Scope of Works Specifications Drawings Schedule of Amendments Pre-Construction Information
5
Q
What are the JCT Payment Provisions?
A
7 days prior to due date, contractor to submit application for payment
5 days from due date contract administrator shall issue their interim certificate
14 days from due date is the final date for payment
5 days prior to final date for payment employer may issue a pay less notice
6
Q
Tell me the differences between JCT and NEC contracts?
A
The NEC uses 6 main options whereas the JCT is a suite of different contract
The NEC is written in layman terms whereas the JCT used legal wording
The NEC does not mention a QS, only a project manager
The NEC uses Compensation Events whereas the JCT used Variations
The programme is a contract document in NEC. 25% of monies can be withheld if a compliant programme is not submitted
Bill rates are binding for Variations under JCT. In NEC they are not, the cost of Compensation Events is built up from first principles
7
Q
What other types of Contract are you aware of?
A
ICE - for civil engineering works
GC Works - Government forms of contract
FIDIC - International Federation of Consulting Engineers
8
Q
What happens at Practical Completion?
A
Once the Contract Administrator issues the certificate of Practical Completion;
Liquidated Damages cease to be levied
The Defects Rectification Period begins (usually 12 months)
Possession of the site passes to the employer
Insurance of the works passes to the employer (if not already in their name)
Half retention is released (the remaining half is release once the Certificate of Making Good is issued)
9
Q
What is a Relevant Event?
A
An event which would entitle the contractor to apply for an Extension of Time (Liquidated damages are not levied for this period).
Variations
Exceptionally adverse weather
Force Majeure
Deferment of possession of the site by the employer
Specified Perils?
10
Q
What is Loss and Expense?
A
Construction contracts generally provide for the contractor to claim direct loss and expense.
The works must be materially affected by the relevant matter(s) for which the client is responsible.
Claims are for direct loss and therefore consequential loss is generally excluded.
11
Q
What is a Relevant Matter?
A
An event which entitles the contractor to make an application for Loss and Expense.
Deferment of possession of the site by the employer
Suspension of the works
Instructions (around opening up / inspection works / provisional sums)
Delays in receiving instructions
Discrepancies in contract documents
Disruption caused by works carried out by the client
12
Q
What is the purpose of a Loss and Expense claim?
A
A claim for Loss and Expense should put a contract back into the position they would have been in, should the Relevant Matter not have occurred.
13
Q
What are the Heads of Claim for Loss and Expense?
A
Prolongation
Insufficient use of plant, labour, materials
Increased cost of plant, labour, materials
Loss of Profit
Head office overheads
Finance charges / interest
14
Q
How is a Loss and Expense claim paid for?
A
Contractor must give written notice of a claim as soon as it becomes reasonably apparent.
Once the total loss and expense has been ascertained, is should be added to the contract sum and paid on the next interim certificate.
Loss and expense claims are NOT subject to retention.
15
Q
How does payment option Alternative A in the JCT Design & Build Contract work?
A
Alternative A is to use stage payments.
Stages are clearly identified in the Contract Particulars. E>G Substructure
Payment for that stage is released upon completion
JCT D&B makes no mention of a QS, so this is a simplified payment option that an Architect could manage
It can incentivise the contractor to complete stages promptly
16
Q
What is a Specified Peril?
A
Specified perils tend to be significant events that would cause very significant damage, such as fire, explosions, earthquakes, flooding and so on. All-risks insurance will tend to cover a broader range of risks, albeit it may not cover every possible risk0
17
Q
How do you agree a Variation?
A
Variation is a modification to the design, quantity or quality of the work.
1) Use a contract rate - if there is a bill item of a similar nature
2) Use a star rate - this is based on experience of what is fair and reasonable
3) Use dayworks - Prime cost + labour + materials + plant + % additions (% addition for contractor profit is NOT included)
4) Benchmark / market testing
18
Q
Name the JCT Suite of Contracts.
A
JCT Standard Building Contract with / without / with approximate quantities
JCT Intermediate Contract
JCT Minor Works Contract
JCT Measured Form Contract
JCT Prime Cost Contract (Cost Reimbursable)
JCT Target Cost Contract
JCT Design and Build Contract
JCT Management Contract
JCT Construction Management Contract
JCT Framework
JCT Construction Excellence for Partnering
19
Q
What are the drawbacks of a Bespoke Contract?
A
Costly
Time consuming to produce
Untested in court
20
Q
What are the benefits of a Bespoke Contract?
A
Contracts can be made simpler
Contracts can be made easier to administer
Contractor may have input
Risk should have been allocated equitably between parties
Contract can include incentives for contractor to reduce costs
Employer benefits from clear, tailored allocation of risk and responsibilities
21
Q
Would you recommend a Bespoke Contract?
A
No. They are untested in court. The principle on Contra Referendum means that an ambiguous clause with be interpreted against the party who wrote it.
22
Q
What do you know about the Housing Grants Construction and Regeneration Act 1996?
A
Intended to make sure payments are made promptly and to improve cashflow throughout the supply chain. Also intends to make sure disputes are resolved quickly.
Provisions of the act include;
The right to be paid interim, periodic or stage payments
The right to be informed of the amount due or any amounts withheld
The right to suspend performance for non-payment
The right to adjudication
Disallowing pay when paid clauses
23
Q
Are you aware of the Local Democracy, Economic Development and Construction Act 2009?
A
The act now applies to contracts that are not in writing
It is no longer allowable to define within a contract who will bear the cost of adjudication + adjudicator can correct clerical error
Closed loophole in pay when paid clauses
24
Q
What should you do before terminating a contract?
A
Discuss the situation with the employer and other party
Take note of all relevant clauses for termination
Seek expert assistance
Write and serve notice in accordance with the contract, detailing the breach
Assuming the breach continues and after the requisite time period, dispatch further notice if the contract requires one
Prepare documents, final account, secure site, alternative contractor
25
What are the timeframes for agreeing a final account?
3 months from receipt of all relevant information
| The contractor has 6 months from PC to send relevant information
26
What is the JCT?
An affiliation of interest groups comprised of 7 member groups, including RICS
They produce standard forms of contract
They use a 'consensus' based approach, so views of all parties are taken into account when producing or amending contracts
27
What types of documents to JCT produce?
```
Main contracts
Sub-contracts
Consultancy appointments
Collateral warranties
Adjudication agreement
PCSA
```
28
Does the JCT D&B contract include novation provisions?
No. This will need to be added to the contract as an amendment.
29
Who developed the NEC contracts?
The ICE
30
What is FIDIC?
International Federation of Consulting Engineers
31
What dictates contract selection?
The procurement route
Industry sector (JCT or NEC) e.g London commercial sector is familiar with JCT
Size and complexity of the works (Minor Works or SBC)
Risk and Responsibility (any CDP?)
Basis of Contract Sum (with quants, without quants or with approximate quants?)
32
Why is it preferable to use a familiar form of contract?
Because using an unfamiliar suite would introduce unnecessary risk
A contractor would price this risk in their tender price
33
You have collated a contract for on of the projects you hsave worked on. How did you do this?
I completed the Contractor & Employer details, parts 1&2 of the Contract Particulars & the relevant information o the Execution pages, Collated documents for inclusion in the contract - indicative programme, drawings, pricing document
34
Did your client include a schedule of amendments in the contract? If so, why?
Yes, they included their standard schedule of amendments that is drafted by their legal advisor.
These amendments have the following affects;
Alter the project risk allocation (by reducing the number of relevant matters and relevant events)
Insert additional obligations (requirement for contractor to provide bonds, collateral warranties & PCG)
Removing rights (reducing the contractor's entitlement to object to proposed variation works)
Project specific requirements (contractor obliged to obtain necessary consents - LUL/CRL)
35
What legislation covers insolvency?
The Insolvency Act 1986 & 2000
36
Where can you find information on insolvency?
RICS has published a regulation / insolvency sheet which offers advise on regulation issued and the recommended course of action for a chartered surveyor
Companies House also produces a document that provides info on insolvency
37
What is Corporate Recovery?
It is the process of bringing and actions taken to being an ailing company back to full health
It can involve financial, restructuring, accounts and legal advice
38
What is a release agreement?
It lays down the terms of termination of contract
It provides a clean unequivocal break for the parties
Important if 1 or more parties are still solvent and wish to continue business unaffected by the termination
39
What is a letter of intent?
A method of instructing a contractor to proceed with work before a contract is formally entered.
Can lead to complacency and di-interest in signing main contract.
40
What types of letter of intent are you aware of?
Comfort letters
Instructions to proceed with consent to spend (x)
Letters recognising the existence of a contract
41
What is assignment?
The transfer of rights and benefits from a contractual party to a 3rd party.
42
When might assignment be used?
To transfer the rights of a contract from the employer to a party purchasing the building.
43
What is Novation?
The transfer of benefits and burden in a contract.
44
What is a Bond?
A tri-partite contract between the employer, contractor and a surety, guaranteeing payment in the event of default.
45
What types of bonds are there?
Performance bond (usually 10% of contract sum, conditional bond)
Advance payment bond (usually on demand bond)
Materials off site bond (usually on demand bond for value of materials, reduces as materials are brought to site)
Retention bond (used as alternative to retention, reduces after PC)
46
What types of Bond are included in the JCT Standard Building Contract?
Advance payment bond
Materials off-site bond
Bond in lieu of retention
47
What is a Guarantee?
A written undertaking to answer for performance of an obligation.
48
What are step-in rights?
They can be included in a collateral warranty so that the named beneficiary in the warranty can assume a role. For example, where a developer becomes insolvent, the 3rd party (a funder) can assume the role of the developer.
49
What is a Parent Company Guarantee?
A form of surety required by clients to protect them in the event of default by the contractor that is controlled by a parent company
Default is usually caused by insolvency of the contractor
Parent company is required to remedy breach, meet contractor's obligations and cover loss and expense incurred by client
50
What are the advantages of a Parent Company Guarantee over a Performance Bond?
Bonds have limited duration
Bonds do not provide for completion of the contract
However, bonds are more secure (parent companies can become insolvent too!)
51
What are Collateral Warranties?
A contract between a 3rd party interested in the project and a party involved in the design, construction or management of a project.
It creates a set of rights and obligations in favour of the 3rd party, that would not otherwise exist due to privity of contract.
52
What are 3rd Party Rights?
The allow a 3rd party to enforce specified term(s) of a contract in the same way as a collateral warranty, without the need for a separate contract.
53
What is a Latent Defect?
A defect that is not apparent at the time of completion.
54
What is a Patent Defect?
A defect known at the time of completion.
55
What are Express Terms?
Terms defined in the contract.
56
What are Implied Terms?
Terms not specified in the contract but know to exist.
| E.G the Sale of Goods Act 1979
57
What is the De Minimis Principle?
The test of completion for PC.
It means 'concerned with small things'.
It means certification of completion should not be withheld for only minor defects.
58
What is Sectional Completion?
Where the employer wishes to one or more sections of works without waiting for the whole of the works to be completed.
59
When might Sectional Completion be used?
Where a development contains retails units. The employer may wish to take these earlier so that the retail tenants can commence their fit-out.
60
What is Partial Possession?
Where the client wishes to take control of part of the works but it is not specifically anticipated in the contract.
Partial possession can only be taken with consent of the contractor.
However contractor's consent cannot be unreasonably refused.
61
What are Liquidated Damages?
A contract clause which stipulates a specific sum to be payable if a party breaches a specified term.
This is usually used for completion date however in engineering works it is sometimes used where the works are to meet specified performance criteria.
62
How do you decide on an appropriate contract?
It depends upon which procurement route you select
| Consult JCT Practice Note - Deciding on the Appropriate JCT Contract
63
What is OJEU?
Office Journal of EU
Advertise works and services in the public sector
Now replaced by FTS (find a tender service) - similar levels previously set by OJEU
64
What are the OJEU thresholds?
c. 4.7m for construction contracts
| c. 122k for professional services
65
What is the test for Practical Completion?
The De Minimis Principle.
It means 'concerned with small things'.
Meaning certification of completion should not be refused due only to very minor defects.
66
Why use a Schedule of Amendments?
They give the client a more favourable position
67
Give an example of what might be included in a Schedule of Amendments?
Payment terms - extending the number of days
| Bonds / Parent Company Guarantees - allows for their inclusion
68
Who writes the Schedule of Amendments?
The employer's legal team
69
What Insurance options are you aware of?
Option A - New Buildings - Insurance in Contractor's name
Option B - New Buildings - Insurance in Employer's name
Option C - Alterations/Extension - Insurance in Employer's name
70
What is Insolvency?
A company's inability to pay it's debts
71
What are the signs of Insolvency?
Slowing down of works
Less supply of materials
Increase in defective work
Complaints of non-payment from sub-contractors
Cash-flow behind forecast
Grossly over valued applications for payment
72
Should you suspend payments if you suspect a company is insolvent?
No. payments should be fairly made when they are due until the insolvency is proven
However great care should be taken not to over-pay as retrieving the client's money could be costly and lengthy
73
How can a QS help protect their client against insolvency?
Check company history and companies house documents
Ensure client is protected using contractual mechanisms, bonds, retention, collateral warranties, PII and LADs
Be vigilant about the early signs of insolvency
Check site security, suppliers should not be allowed to enter a site under control of the contractor that is on land owned by the employer
74
What is retention?
A sum generally deducted at each monthly payment notice, to give the client some surety that the contractor will return to correct any defects.
Generally - 50% released at certification of practical completion, remaining 50% released after certification of making good
75
What types of Insolvency are you aware of?
```
Company Voluntary Arrangements
Administration
Compulsory Liquidation
Administrative Receivership
Voluntary Liquidation
```
76
In what ways can a contract end?
Termination
Expiration
Frustration
Vitiation - Basis of contract incorrect
77
What types of breach can lead to termination?
Material breach
| Repudiatory breach
78
What is material breach?
Where one party to a contract fails to perform as required by the contract.
The innocent party can consider that it is discharged from any further obligations under the contract.
79
What is repudiatory breach?
Where one party behaves in such a way as to indicate that it no longer intends to accept its obligations under the contract.
The innocent party can terminate the contact and sue for damages.
The innocent party can affirm that the contract will continue or accept the repudiation and terminate the contract.
Inaction from the innocent party can be seen as affirmation of the contract.
Wrongful termination can be seen as a repudiatory breach
80
What breaches can constitute a repudiatory breach of contract?
These are generally set out by the contract, but they may include;
Refusal to carry out work
Abandoning the site
Removing plant from site
Failure to make payments
Employing others to carry out the work
Failure to allow access to site
Failure to process regularly and diligently
Failure to remove or rectify defective works
81
What formula do you use to calculate loss of profit for loss and expense?
Hudson Formula
| Eden Formula
82
What does the JCT say about acceleration?
The client can request the contractor to prepare an acceleration estimate (21 days). Contractor can stipulate how much time can be saved and for what cost.
83
What does the NEC say about acceleration?
The client can request the contractor to prepare an acceleration estimate to save a specified amount of time.
84
What are the changes to JCT 2016?
Introduced the updated CDM Regs - CDM Co-ordinator changed to principle designer
Introduced the government payment charter - first payment date is now specified in contract
Changes to Loss and Expense - CA must respond to initial claims within 28 days and within 14 days of any subsequent updates
The monthly payment cycle now continues to operate until the final account is concluded and certificate issued
85
What is the Joint Fire Code?
Sets out series of standards / procedures to be followed to minimise occurrence of fires.
JCT Clauses 6.13 to 6.16
Required on contracts over £2.5m although usually required by insurers
86
What are the JCT fluctuation options?
Changes in taxation
Changes in costs of labour, materials, etc (escalation)
Increases in head office overheads
87
How is design signed off in a JCT contract?
Schedule 1 is design submission procedures in D&B contract
After receipt of drawings, client responds within 14 days with a rating of A. B or C
If client fails to respond within 14 days design is deemed to be accepted
A - Accepted
B - Accepted in Principle
C - Rejected
88
What are the names of the construction Acts?
Housing Grants Construction and Regeneration Act 1996
| Local Democracy Economic Development Act 2009
89
What did the Local Democracy Economic Development Act do?
Contracts no longer in writing to give rise to adjudication
Adjudicator can amend clerical errors
Closed loop-hole in pay when paid clause (pay when certified)
90
Who pays for litigation?
Parties pay own costs of legal team but court and judge time is free.
91
Who gives arbitrators their power?
The arbitration Act
92
What types of contract are used in construction?
Standard forms
Modified
Bespoke
93
How would you calculate main contractor overheads for a loss and expense claim
Hudson formula - head office costs included in the contract
| Eden formula - % arrived at by dividing total overhead costs by the turnover of the company
94
Would you have an Employers Agent on a JCT major works project?
No. You would have an employers representative
95
What is the difference in tender docs between JCT SBC and D&B?
Performance requirements (for contractors designed works)
96
What are some differences between JCT Standard Building Contract and JCT Design & Build Contract?
D&B does not have a Contract Administrator
D&B has an employer's agent
D&B does not mention a Clerk of Works
Contractor is responsible for completing the design in D&B
D&B makes detail provisions for stage payments
D&B does not provide for a retention bond
97
What is concurrent delay?
Where more than one event occurs at the same time, but where not all of those events entitle the contractor to extension of time or loss and expense.
Two or more delay events occurring within the same time period, each independently affecting the completion date.
Apportionment of delay is appropriate where there is no dominant cause of delay.
All parties should keep a record to demonstrate an event did occur and did impact on completion date.
98
What do you know about NEC4?
Launched in June 2017
Tagline is 'improvement through collaboration'
Introduces two brand new forms of contract - a design, build & operate contract and a multiparty alliancing contract
Multiparty alliancing contract is out for consultation until 30th November, final version expected January 2018
Also introduces two new sub-contracts - a professional services sub-contract and a term service sub-contract
99
What are the changes to payment under NEC4?
Under Clause 50.9, contractor now notifies PM when part of defined cost has been finalised.
PM has 13 weeks to accept that the defined cost is correct or notify the contractor of errors.
Contractor then provides records requested or corrects the errors within 4 weeks.
The PM then has 4 weeks to accept costs as correct or notify the contractor of the correct costs.
If the PM does not notify the contractor in time, the contractor's assessment is treated as correct.
Clause 53 introduces the concept of a final assessment.
If they fail to do so the contractor may submit their final assessment to the client.
PM's assessment becomes conclusive unless a party takes certain steps, including starting an adjudication within 4 weeks.
Within 4 weeks of the defects certificate being issued, the PM provides their final assessment to the contractor.
100
What are the changes to programme under NEC4?
Under amended Clause 31.3, if PM does not respond (to the contractor's programme) then the contractor may issue a notice.
If the PM still fails to respond, the programme is treated as accepted.
Clause 36 has also been amended so both parties can suggest acceleration, and it is then discussed before a quotation is produced.
101
What other changes to NEC are you aware of?
NEC4 changes the terminology generally. 'employer' is now 'client' and 'works information' is now 'scope' and 'risk register' is now 'early warning register'.
NEC4 adds a new dispute resolution procedure - providing a meeting of senior representatives. This takes place within a 3 week period and is based on parties submitting no more than 10 pages explaining their position and providing supporting information.
NEC4 simplifies the contract data so there is now just a single fee percentage, without a separate one for sub-contracts
There is also now the option for parties to resolve disputes using a dispute resolution board (DAB). The board is appointed at the start of the project and members visit site and speak to parties at regular intervals in order to avoid disputes. DAB encourages parties to settle disputes but will provide a recommendation if not.
102
What takes priority, employer's requirements or contractors proposals?
Contractors proposals take priority in the contract.
| However most clients make amendments to make employer's requirements take precedent
103
What is a letter of intent?
A document outlining one or more agreements between two or more parties before the agreements are finalised.
I.E it's a way of instructing a contractor to start work before the contract has been executed.
104
What are the advantages and disadvantages of a letter of intent?
Advantages; earlier start on site
Disadvantages; leaves client exposed as contractor could walk off site once works are completed, contractor is disincetivised to sign the contract, if there is no clear cap on the work the contractor could be due more monies on a quantum meruit basis
105
What types of letter of intent are there?
Comfort letter
Letter outlining scope and cap
Mini contract
106
What different suites of contract are available?
```
JCT
NEC
ICE - for civil engineering works
GC Works - Government forms of contract
FIDIC - International Federation of Consulting Engineers
```
107
What are the key differences between JCT and NEC contracts?
JCT uses contractual working, NEC used layman terms
JCT is a suite of contracts, NEC has separate options
JCT has Relevant Matters and Relevant Events, NEC has Compensation Events
JCT bill rates are binding on variations, NEC fair and reasonable
(Most) JCT contracts mention a QS, NEC does not
Programme is a contract document in NEC
108
What are the advantages and disadvantages of bespoke contracts?
Advantages; Contracts can be made simpler to administer, contractor may have input, risk should be allocated equitably between parties, incentives for contractor to reduce costs can be included
Disadvantages; costly, timely, untested in court, Contra Prefferendum - vague or ambiguous clauses will be construed against those who wrote them in court.
109
What are the effects of the Housing Grants Construction and Regeneration Act?
Intended to make sure payments are made promptly and to improve cashflow throughout the supply chain. Also intends to make sure disputes are resolved quickly.
Provisions of the act include;
The right to be paid interim, periodic or stage payments
The right to be informed of the amount due or any amounts withheld
The right to suspend performance for non-payment
The right to adjudication
Disallowing pay when paid clauses
110
What are the effects of the Local Democracy Economic Development and Construction Act?
The act now applies to contracts that are not in writing
It is no longer allowable to define within a contract who will bear the cost of adjudication + adjudicator can correct clerical error
Closed loophole in pay when paid clauses
111
What are liquidated damages?
A contract clause which stipulates a specific sum to be payable if a party breaches a specified term.
This is usually used for completion date however in engineering works it is sometimes used where the works are to meet specified performance criteria.
112
What is retention?
A sum generally deducted at each monthly payment notice, to give the client some surety that the contractor will return to correct any defects.
Generally - 50% released at certification of practical completion, remaining 50% released after certification of making good
113
What is contractor's design portion?
An agreement for the contractor to design specific parts of the work.
Included in JCT contracts.
114
How do you carry out valuations for interim payments?
Review and comp check application
Visit site to review progress
Seek input from Engineering Services
Use your company's's standard valuation template
Ask EA / CA to confirm if there's any work not in accordance with the contract
Make sure any variations being claimed for have had instructions issued
Does payment for materials off site meet the requirements of the contract?
Has the amount stated as previously certified been checked against the last payment notice?
Has the employer been notified of any right to deduct liquidated damages?
Have the reasons for any deductions in the valuation been communicated in accordance with the contract?
Has the valuation be arithmetically checked?
Has the valuation been signed off by a director?
115
What is required for materials off site to be included in a valuation?
Must be applied for in accordance with the contract.
Vesting certificate must be in place.
Must be stored safely and separately, marked as for delivery to site and with the client's name.
Must be insured.
116
What is included in a final account?
Contract sum
Provisional sum expenditure
Contract administrator's instructions
117
In a D&B conotract, is novation the only contractual mechanism to transfer the rights and obligations of the archtect the the contrator?
No. You could also use a 'consultancy switch'
118
What is the difference between novation and consultancy switch?
In novation the designer(s) rights and obligations are transferred to the contractor. Therefore they are engaged under the same terms as they were by the client.
In novation the contractor becomes liable for the design carried out by the designer(s) before the novation occures. The architect will have no liability to the employer unless collateral warranties are used.
In consultancy switch, the designer(s) orignal employment by the client is ended and they enter a new contract with the contractor.
In consultancy switch, the designer(s) remain liable for the design work carried out while under the client's employment. Therefore the client loses their single point of repsponsibility but the contractor will not charge for taking on that risk.
119
What duty of care does a designer have to a client?
A designer usually has a duty to act with resonable skill and care expected of a competent member of their profession. Therefore employer must prove they were negligent in order to sue.
120
What duty of care does a D&B contractor have to a client?
The Sale of Goods Act 1979 and the subsequent Sale and Supply of Goods Act 1994 stipulate that all goods sales contain implied terms that the goods are of satifactory quality.
Therefore a contractor is normally liable to provide materials 'fit for purpose'
However when employer/architect specifies particular materials/products (traditional) contractor would be releived of this more onerous duty
So, under D&B contracts, the contractor had a 'fitness for purpose' obligation to the client.
However, Clause 2.17 of JCT DB16 states that contractor liability is limited to that of a designer - some clients will seek to amend this clause!
121
If there is a discrepancy between employer's requirements and contrctor's proposals, which takes precedence?
JCT DB16 does not state which
| Although employer is stated to be satisfied that CPs appear to meet ERs, it is likely that Ers will prevail
122
Is a Contract Administrator obliged to act impartially?
Yes.
123
Is an Employer's Agent obliged to act impartially?
No.
124
What heppens if there is a discrepancy in the Contractor's Proposals?
The contractor must inform the emplyer
The contractor is the onbliged to implement the employer's decision as to which one takes precedence, at no extra cost to the employer
However if the emplyer creates a delay in reaching this decision, this would be grounds for an EoT
125
What happens if there is a discrepancy in the Employer's Requirements?
If the CPs deal with the discrepancy, the CPs prevail
If the CPs don't deal with the discrepancy, the contractor is required to inform the employer of their proposal for dealing with it
The emplyer must then agree/disagree in writing, this is then grounds for EoT & L&E!
126
What are the timeframes for a Schedule 2 Variation & Acceleration Quotation?
Contractor has 21 days to provide
| Emplyer has 7 days to accept or reject
127
In JCT DB16, if a contractor finished work early, is the employer obliged to accept the building?
Yes
128
What insuracnes would a contractor take out under a design and build contract?
```
Employer's Liability Policy
Public Liability Policy
Insurance of the Works (Depends if option A, B or C)
Terrorism Cover AKA Pool Re Cover
Professional Indemnity Insurance
```
129
What is the difference between LOI & PCSA
LOI - Letter of Intent - designed to offer commitment that order is imminemt (usually issued whilst contract is being finalised) - states all main contract T&Cs. Not designed to be used instead of a buildign contract.
PCSA - Pre construction services agreement - a standard form in JCT suite of contracts - design to cover a pre-construction phase of surveys and design prior to a contract being issued for construction works.
130
What are the different types of LOI?
Comfort Letter
Consent to Spend
Recognition of Contract
131
How do variation requests work?
Need to be in line with relevant contract - JCT RM & RE and NE EWNs & Ces
Must be in writing
132
What are the JCT suite of contract options?
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JCT SBC with / without quantities
JCT with design
JCT Minor Works
JCT Intermediate
JCT Major
JCT Target Cost
JCT Mangagement
JCT Construction Management
JCT Framework
JCT Partnering
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133
• NEC alternatives?
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NEC Options:
A - Lump sum
B - BoQ
C - Target cost wtth activity sch
D - Target cost with BoQ
E - Cost Plus
F - Management
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134
• How do the two suites of contracts differ?
RE & RM / Ces - Time & cost dealt with together
CA / EA vs PM
NEC plain english - more collab but more admin
135
• How does a standardised form benefit a project?
Improves efficiency
Common understanding
Consistency
136
• What typical amendments have you encountered?
Payment terms
Amended durations for responses - in EWNs & CEs
May be specific client requirements that need to be stepped down - KPIs, additional RE & RMs
Covid recovery excluded from FM clause
Passing on design responsibility
137
• Do you agree with them?
If working on the s/c side - payment terms & responses can be difficult however understand why done in some instances to build in response time upline and assist MC's cashflow.
138
• What are the parties’ responsibilities and duties under a contract?
CA - JCT Trad - advising client and administering contract - payments, claims, progress, design team, completion
EA - JCT D&B - acting as impartial party and advising client on design progress of contractor
PM - Under NEC on behalf of client to administer contract
139
What changes did it bring to the construction industry?
Paid when paid clause removed to imporve cashflow in supply chain
Right to adjudicate even if contract not in writing
140
How is it recognised in standard forms of construction contracts?
Interim payments throughout construction & rectification
141
What are the essential components of a valid contract?
Offer
Acceptance
Consideration
Intent
142
What is the principal difference between a parent company guarantee and a performance bond?
PCG - If a parent company owns company - commitment from them they will guarentee contractual obligations if company disappears.
Performance Bond - Issued to one party from another as a guaretee against failure to meet obligationsof contract - often insuance compnay or bank and is a cost associated with them.
Retention Bond - A way of avoiding issues associated with retention recovery, retentions that would usually be held are paid and retention bond is held to secure that amount - if needed can be called upon by client. It is a type of performance bond but specifically if they fail to perform obligations to remedy defects
Benefits -
Assists cashflow for contractor
Offers client financial protection if needed
No need for pursuit of retention monies post contract
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Can you name 2 types of performance bond?
On demand - Payment made by bank when demanded
| Conditional - Usually insurance company - conditional i.e. requires employer to proofamount of loss suffered.
144
What current challenges is Covid and/or Brexit bringing to Contract Practice?
How Covid is dealt with in a contract
Managing the risks - delays and costs associated with increasing costs & lead ins
Managing finiancial risk for contractors to avoid companies going under - i.e. addtitional consideration to cashflow & colloborative working
145
What is Tort?
Is a Civil Wrong - the responsibility owed to people under common law, typically one of the following:
Negligence.
Nuisance.
Trespass.
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What is the difference between contract law and Tort?
Contract:
1. A promise or set of promises which the law will enforce.
2. In contract, the rights and obligations are created by the acts of agreement between the parties to the contractual arrangement.
Tort:
1. More generic in nature
2. It is a collection of civil law remedies entitling a person to recover damages for loss and injury which have been caused by the actions, omissions or statements of another person in such circumstances that the latter was in breach of a duty or obligation imposed at law.
3. In tort, the rights and obligations are created by the courts applying common law, which has, on the basis of previous authority fallen into three distinct categories:
Negligence.
Nuisance.
Trespass.
147
Where would you detail if a contract is to be D&B within a NEC contract
Within the works information
148
What are 5 contract strategies?
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Lump Sum
Re-measureable
Cost Plus
Target
Management
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149
23. Difference between sectional completion, partial completion & beneficial use
a. Sectional completion – detailed in contract
b. Partial completion – planned if can achieve (contractual nice to have) – Agreement with contractor.
c. Beneficial use – Partly not responsibly – use of client lift / moving furniture / fitting out
150
34. How much can post contract change cost compared to being included in design from beginning?
(Suggested up to 40% more)
151
39. What are the two types of BOQs?
a. Firm & Approx
152
1. Do Provisional sums exist under D&B
Doesn’t exist – must be client or contractors risk
153
When would you recommend an option A contract?
- High degree of certainty
- Low degree of complexity
- Familiarity with the work
154
You state your contractor did not provide a programme, what did you do?
I reminded them that under the framework agreement, they were required to provide a Programme each month.
This is a contractual document, so they were not adhering to the Contract.
I held a workshop with the Contractor to identify what was causing the issues.
155
What are some X clauses?
X1 = inflation
X2 = changes in law
X20 = incentives
X7 = Delay Damages
156
Period for reply - NEC
Clause 13.3 - contract data specifies period for reply.
However, there is a requirement of waiting 1 week to notify a CE. This does not relate to 13.3.
157
What methods of incentivisation are there under the NEC?
X20 - key performance indicators
Early completion clause (check which x clause!)
