Contract Administration

Question 1

What is nomination?

Answer 1

Selection of a particular subcontractor to carry out the works. Gives the client greater control over a particular section of work.

Question 2

What is included in a contractors valuation?

Answer 2

Prelims, measured works, materials on site, variations, retention, any previous payments

Question 3

What is required for a contract to be formed?

Answer 3

Offer - consideration - acceptance - intention to create legal relations

Question 4

What are the main differences between the JCT contract suite and the NEC contract suite?

Answer 4

• NEC contracts are generally used for building and civil engineering projects. JCT is just for building projects.
• NEC refers to a project manager, JCT a contract administrator.
• Early warning system and collaboration are a key part of NEC. JCT apportions risk and has standard clauses.

Question 5

What is frustration?

Answer 5

Where an event beyond the control of either party makes it impossible or illegal to fulfil their contractual obligations.

Question 6

What’s the difference between latent and patent defects?

Answer 6

Latent defects are not identifiable on inspection and only become apparent later down the line.

Patent defects are obvious and should be identified during a routine inspection.

Question 7

What are the main sections of a JCT contract?

Answer 7

Recitals, articles, contract particulars, attestation, conditions, schedules.

Question 8

What are the different forms of JCT contract?

Answer 8

Minor works
Intermediate
Standard Building Contract (with/without/approximate quantities)
Design & Build
Construction management
Major Projects
Prime Cost Building Contract

Question 9

What are the main changes to the 2024 suite of JCT contracts?

Answer 9

• Relevant events updated to include epidemics and discovery of asbestos.
• Collaborative working now a positive obligation and not a supplemental provision.
• Modernised with gender neutral language and allowing the service of notices electronically.

Question 10

What is an extension of time?

Answer 10

A contract provision for amendment of the practical completion date due to unforeseen circumstances.

Question 11

What is loss and expense?

Answer 11

Additional costs incurred by the contractor as a result of the works progress being affected by a matter for which the client is responsible.

Question 12

How are liquidated and ascertained damages calculated?

Answer 12

Calculated at the start of the project and inserted into the contract.

Should be based on what the likely genuine financial loss would be to the client if the project is not completed on time.

Question 13

What must be in place before LADs can be deducted?

Answer 13

• A non completion certificate
• A pay less notice

Question 14

What is the timings process after receiving a contractors valuation?

Answer 14

The due date is 7 days after the valuation date. A payment notice must be issued within 5 days of the due date. The client must make payment to the contractor within 14 days of the due date.

Question 15

What is meant by ‘time at large’?

Answer 15

There is no set completion date and the contractor only has an obligation to complete the works within a ‘reasonable time’.

Question 16

What is a vesting certificate?

Answer 16

A legal document confirming the ownership of assets that have not been delivered to site.

Question 17

What is a retention of title clause?

Answer 17

Where the sub contractor maintains ownership of materials until they are paid by the main contractor.

Question 18

How do you evaluate a contractors valuation?

Answer 18

• Go to site and inspect the works to review the percentage of works completed.
• Check for materials on site
• Value prelims, variations and any claims
• Valuation presented as a gross valuation less any previous payments and retention.

Question 19

What is a collateral warranty?

Answer 19

A contract between the client and a third party (I.e. a subcontractor).

Question 20

What is a retention bond?

Answer 20

A bond provided by the contractor in lieu of taking retention from interim payments.

Question 21

What happens at practical completion?

Answer 21

• Half of the retention is released
• Triggers the start of the defects liability period
• Employer surrenders the right to apply LADs
• Contractor no longer has liability for insuring the works

Question 22

What is the difference between partial possession and sectional completion?

Answer 22

Sectional completion is a contractual obligation for the contractor to hand over the section at the stated date. Partial possession relies on the contractors consent.

Question 23

What is a performance bond?

Answer 23

Typically provided by banks or insurance companies and give the employer a guarantee of payment up to a certain amount should they suffer financial loss if the contractors breaches their obligations.

Taken out by the contractor and the premium for taking out the bond is added onto the contract sum.

Question 24

What is the base date?

Answer 24

The date from which the conditions the tender was prepared under are considered to be known to the contractor so are reflected in their price.