Contracts - Section 8 - Termination Flashcards
What section of the JCT contract refers to termination?
Section 8
What is termination?
Parties are no longer obliged to perform their obligations under the contract
What is the timeline for termination under JCT contract?
Depends on the reason for termination.
If by default of other party, notice to be served.
If default continues after 14 days, termination notice can be issued no later than 21 days from end of 14 days.
In what instances would termination be immediate?
Insolvency, Bribery
What is insolvency?
A financial state where an individual or business cannot pay their debts when they are due
What is liquidation?
The process of bringing a business to an end and distributing its assets to claimants
What is administration?
When a company facing financial difficulties is protected from creditors while an insolvency practitioner is appointed to manage the business
What legislation covers insolvency?
Insolvency Act 1986
When does termination take effect?
On receipt of a relevant notice
On what grounds can the Employer terminate the Contract?
Default by Contractor
Insolvency of the Contractor
Corruption
Can the Employer continue works?
Once Termination notice is served the Employer may employ others to complete the works and take possession of site.
What is the process when Employer terminates contract?
CA to give notice specifying default for termination. If default continues for 14 days, Employer can serve termination notice no later than 21 days from expiry date.
What payment is due to the Contractor after termination?
No further sum due.
Employer to serve pay less notice if amount is due.
Final Account to be prepared
When is Completion when Contract is terminated by Employer?
When the Employer notifies the Contractor
When is the due date for Termination Payment?
2 months after Completion
What would the Contractor’s Design be considered as?
Intellectual property
What is required if the Employer decides to not complete the Works within 6 months?
Notify contractors.
Termination payment to be 2 months after 6 month period.
On what grounds can a Contractor terminate the Contract?
Default by Employer
Insolvency of Employer
On what grounds can either party terminate the Contract?
Force Majeure
Threat of terrorism
Epidemic
Statute affecting the execution of the works
What is expected if a Contractor terminates the Contract?
No further sums to be paid.
Contractor to leave site and remove any temporary buildings, plant and tools.
Contractor to provide copies of all CDP (free of charge)
Termination payment should incl works properly executed, any loss/expense, reasonable cost for removal, cost of materials and goods
What is the payment timeline for termination payment?
No later than 5 days from due date – Employer to give notice to Contractor on sum being paid.
What happens if the payer fails to pay termination payment?
Interest owed in addition to the unpaid amount
What is a pre-termination meeting?
Both parties agree works are to be terminated. Employer requests removal of Contractor plant and temporary buildings.
What is a termination meeting?
QS completes valuation of works completed to date. Contractor hands over agreed documents to Employer.
