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Contract Practice Flashcards

Contract practice (66 cards)

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1
Q
  1. Are you aware of the updates to JCT?
A

a. 2024 updates recently published.
b. More gender-neutral language
c. Captures updates to the – Building Regulations & Building Safety Act
d. Target cost contract (TCC)

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2
Q

12. What Acts are there relating to construction?

A

a. Building Safety Act 2022
b. Corporate Insolvency and Governance Act 2020
c. Housing Grants, Construction and Regeneration Act 1996
d. The Procurement Act 2024
e. Construction (Design and Management) Regulations 2015
f. Health and Safety at Work etc Act 1974

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3
Q
  1. What is the construction act (housing grants construction and regen)?
A

a. Ensure payments are made promptly throughout the supply chain, and easier dispute resolution.

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4
Q
  1. Do clients have to use the new suite?
A

a. No, it will take time to implement and for client legal teams to assess.

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5
Q
  1. How would you deal with ordering materials upfront?
A

a. Off-site materials bond
b. Vesting

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6
Q
  1. What other bond are there?
A

a. Retention bond, advance payment bond

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7
Q
  1. When might you or might not use a performance bond?
A

a. Technically shouldn’t be needed, as the tender has proved the contractor to be capable, and it adds additional cost. However it is good when the contractor is new to the client, or where there is a potential risk.

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8
Q
  1. What contracts are you aware of and when would you use them?
A

a. I am aware of JCT D&B which would be used where the client wanted the contractor to be responsible for design maybe where the design had not yet been completed, and there was more urgency to get to site.
b. I am aware of JCT SBC and IC which are used where the client wants to retain control of the design and handle that risk and where the design is needed to be completed to RIBA 4 prior to entering the contract.
c. I am aware of JCT MW, which is a simpler contract used on smaller scale projects, or those of relatively simple work

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9
Q
  1. What are the types of contract sums you can get (basis of cost)?
A

a. Lump sum - only adjusted by variations
b. Reimbursable (Prime Sum) - don’t know what the final account will be, paid actual.
c. Re-measurable - approximate quants are remeasured fully on site

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10
Q
  1. What are some typical contract amendments?
A

a. The contract can be amended in many ways, one is amending the payment terms in the JCT D&B contract for example from the standard 14 days payment to 21 days for example. This is often to give the client more time to organise payment, as 14 days may not be enough time to deal with internal paperwork.
b. Another example is amending the defects rectification period from the standard 6 months in the JCT D&B to 12 months, this gives more time for any defective workmanship to show, across all seasons and weather, as the 6 months doesn’t do this.
c. Retention, from 3 to 5 percent

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11
Q
  1. What is the limitation period for a contract signed as a deed?
A

a. 12 years

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12
Q
  1. What is the limitation period for a contract signed under hand?
A

a. 6 years

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13
Q
  1. What does it mean if the LAD’s section in the contract is written as ‘nil’
A

a. there are no LAD’s to apply

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14
Q
  1. What if the LAD’s section is left blank with no rate?
A

a. This technically means they are unlimited and the client can apply any amount, this would likely lead to disputes.

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15
Q
  1. What is an example of novation and assignment?
A

a. Assignment of rights under collateral warranty to a different tenant
b. Novation of design team under D&B contract

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16
Q
  1. What are the sections of the JCT?
A

a. Agreement (Companies)
b. Recitals (Summary)
c. Articles (Contract Sum, QS, CA, Architect, PD, adjudication)
d. Contract Particulars
e. Attestation (Signing)
f. Conditions (9 Clauses)

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17
Q
  1. What is subrogation?
A

a. This is when an insurance company steps into the shoes of the insurer and pursues a claim against a third party.

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18
Q
  1. Other than works insurance (the options), what other insurances are required?
A

a. Contractors public liability – injury to persons or property
b. Liability of Employer
c. Works insurance (Option A B C)

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19
Q
  1. What is opening up of works/testing/work not in accordance?
A

a. CA/EA/Architect can open up works if not in accordance, allowing instruction to repair defective work

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20
Q
  1. When would you use JCT Intermediate Contract?
A

a. Projects that don’t exceed 1 year, simple in content, and where works are already designed.

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21
Q
  1. When would you use JCT SBC?
A

a. Works are already designed, if it is a lump sum form.

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22
Q
  1. On the Teaching and learning centre refurb you drafted the JCT D&B 2016, why was this the Contract that was chosen?
A

a. The design was at stage 3 and there was a deadline to have the works completed in the summer period prior to students coming back, therefore I advised my client to go down a D&B route, as this is what they were familiar with, and it suited the project and programme needs best, and the key project requirements were already achieved in the current design.

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23
Q
  1. If the Client asked for advice on which Clauses to amend within a Contract, which Clauses would you advise on?
A

a. I have previously advised clients that typical amendments are the retention percent (from 3-5 in JCT). The rectification period from 6 – 12 months in JCT D&B/SBC. And the payment dates changed from 14 – 21 days or other to allow the client additional time to make payments

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24
Q
  1. Your client is having an airport refurb carried out, how do you advise on whether sectional possession or partial possession should be selected?
A

a. Either can be selected, as they both achieve the same thing, however sectional completion is pre agreed and put in the contract. If the sections are not yet fully known or decided then partial possession can be used and agreed post contract, however sectional completion is more contractual and all parties are aware of it and so can plan around the sections, therefore it depends on the works.

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25
35. What is your understanding of Employer’s Requirements and why are they important?
a.    It is what the client wants for the project
26
36. What are the insurance options in JCT, and when have you advised on them?
a. Insurance A – New Builds – Contractor b. Insurance B – New Builds – Employer c. Insurance C – Existing Builds – Employer d. Advised on Innovation Centre 7 to use option A as the client wanted the contractor to hold the policy due to lack of experience. Also the contractor had rolling offers with insurance providers so was able to provide a better price on the policy.
27
37. What’s the difference between partial possession and Practical Completion?
a.    Partial possession is not pre agreed in the contract. Partial possession is just a section of the works whereas Practical Completion is the whole of the works.
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38. When might you use Partial possession?
a.    When during construction a section becomes completed and the client wants to take possession of this part, it may be to move client directs in such as equipment, or start installation of client direct items, such as comms lines of technical equipment, or to start generating profit/revenue from that area.
29
39. A client asks you to come up with a figure for LAD’s, how would you calculate it?
a.    I wouldn’t calculate or advise the client on the cost of LAD’s, however I can offer advice and considerations to the client on what needs to be considered when calculating them, such as loss of operating profit, consequential losses, administration, and all costs which the client would incur if a delay occurred.
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40. On IC7, why did you give this advice? (to use both a PCG and Performance Bond) Were both needed together?
a. A parent company guarantee comes at no cost and protects the client In the event of liquidation of the general contractor. The performance bond however protects against the performance of the contractor in relation to the works being satisfactory and complete. b. The PCG is also free c. The PCG may not work if the parent company was going into administration. d. It was a new contractor to the client so posed a large risk
31
41. What are the disadvantages of a PCG?
a.    If parent company goes under, there is nothing to call upon b.    Can be difficult to manage and pursue administration and negotiation wise, as they have their interests in mind.
31
On IC7 why did you advise the use of performance bond as Insurance A was chosen?
So this is a wording error in my documents. I advised the client to use a performance bond to add protection in the current climate against non performance by the contractor, while also advising to use Insurance Option A, as it was a new build and the client wasn't comfortable on taking our insurance, and didn't have the experience, therefore i advised that the contractor can hold this.
32
42. On Rugby 278 works, what was the outcome of the advice (LAD’s)?
a.    I advised the client to consider how the different sections being complete were dependent on one another, and a delay in completion of one, would effect the others. The client liaised with the legal team, and the result was some wording in the contract to set out the increase in the rate of applied damages should the delay be impacted by other sections.
33
43. If its part of a wider development, what impact will this have?
a.    The LAD’s had to be calculated based on loss of profit from the construction of buildings on the scheme, as the road fed the units, and the tenants were due to move in very soon, so a delay on this road would cause the client to incur damages to the end user not being bale to move in.
34
44. On the Medical Physics Bunker you advised on payment timescales, what were they and how did you advise this?
a. I advised this firstly to the contractors QS to avoid confusion going forward, and as the contract was amended to 21 days from 14. b. The first interim valuation date (IVD) is 1 month after DoP c. Due date is 7 days after this (QS has 7 days to agree with contractor) d. 5 days after due date CA must issue interim certificate e. 14 days after due date is final date for payment f. And the pay less notice is 5 days before the final date for payment
35
1. You mentioned JCT & NEC, are you aware of any other Contracts?
a. I am aware of the FIDIC suite of contracts
36
2. What is required for a Contract to be valid?
a. Offer – acceptance – consideration – intent to form contract – legality – capacity
37
3. What is a collateral warranty?
a. Create contractual relationships between parties where there would otherwise not have been any. They are alongside another agreement. Used between Subcontractors and Employer, so if GC goes insolvent then Employer can sue Subcontractors.
38
4. What are third party rights?
a. Allow third parties to have rights in relation to contracts without the need for additional documentation. I.e. third party can enforce the benefit of the contract
39
5. Why would you use third party rights instead of collateral warranties?
a. Warranties often involve a lot of admin and cost.
40
6. How do you go about deducting LAD’s?
Issue non completion cert Notify intent to charge LAD’s Deduct costs from valuation and payment certificate
41
7. What are heads of claim?
a. Prolongation / disruption / acceleration
42
8. What are the differences between NEC and JCT?
a. QS / PM / CE’s / collaborative / legal jargon
43
9. Do you know any other suite of contracts?
a. I have not used but I am aware of FIDIC
44
10. Do you know when it may be used and what it stands for?
a. Fédération Internationale des Ingénieurs – Conseils b. Used internationally, the engineer acts as CA
45
Are there any contractual mechanisms in standard which you wouldn't get in a Minor Works contract?
Minor works doesn't provide for sectional completion or partial possession. Doesn't have an EOT provision.
46
Do you know any forms in the NEC suite?
I am aware there are various options such as B and C, they range from A-F
47
What is Option B and C?
B is priced contract with BOQ, whereas C is a target contract with an activity schedule.
48
You mentioned you collated the preliminaries for one of your projects, can you tell me what information is included within these?
key project information, main contract particulars and any contract amendments, design team and stakeholder details. Details of the site/access/usage of water etc.
49
How do you assess Loss and Expense?
Assess first that it falls under the relevant matters in the contract, for example, is it a variation or change by the employer, is it deferment of possession.
50
How do you assess an Extension of Time?
See first if it is a listed relevant event in the contract, i.e. deferment of possession, default or obstruction by the employer
51
What are some examples of Relevant Matters?
Variations, Instructions, approximate quantities being inaccurate, impediment by the Employer
52
What are some examples of Relevant Events?
Variations, instructions, deferment of possession, adverse weather, force majeure, impediment by the Employer, civil commotion.
53
What types of insurance are there in JCT?
Contractors Public Liability Insurance (Injury to people or property) Employer's Liability (Default and error by the Employer) Works Insurance (to cover the works, options A, B, C) Terrorism Cover
54
What can you tell me about the NEC?
More collaborative, simpler terminology, has CE's/EW's, has a PM, programme is a contract document
55
Do you know any examples of contracts in NEC?
The ECC, which has different options, A-F. A for example is a priced contract with activity schedule, and F is a target contract with activity schedule.
56
What are the timescales around agreeing a final account?
In JCT - not later than 6 months the contractor shall submit substantiation to the final contract sum, CA then has 3 months after receipt to verify this.
57
What would happen if you missed the payment milestones?
If the contractor fails to submit then there does not have to be a valuation or certificate. If the certificate is missed, then you can rely on a pay less notice, but the contractors valuation will stand.
58
On Havant, what other forms of contract did you review?
I did review the applicability of JCT D&B contract, however client wanted architectural control and it was S4. I reviewed MW, however the project was above the recommended 150k, and was slightly more complex. I reviewed the SBC, however this was for slightly larger more complex schemes.
59
What types of contract sum can you have, and what are the differences and risks of each?
Lump sum, remeasurable and reimbursable. Lump sum is lowest risk as costs are known up front, and any change to this is through variations, however it isn't in an open book scenario necessarily, so could be a premium. Remeasurable is where approximate quantities are used, then measured when on site, this is risky as all items in the sum are up to change, so could be lots of estimating errors. Reimbursable is good as it is open book, so you know the cost is accurate, however this is only realised at the end of construction.
60
What can you tell me about FIDIC?
It has Red, Yellow and Silver books. Terminology is fairly neutral, and is used internationally. The Engineer administers the contract.
61
Why did you advise the use of a performance bond?
The market is currently risky in general
62
Is a PCG always free?
Not always, as it can incur costs from the parent company.
63
If a client pushed for LAD's or advice what would you do?
I would advise that generally the value is between 3-5%, but it shouldn't be a penalty, but a genuine pre-estimate of loss.
64
What are the NEC secondary options?
They are X clauses which can be added in as optional by the Employer
65
How is payment dealt with under NEC?
Depends on pricing doc, but with an activity schedule its done on these activities, or with a BQ.
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