1
Q
What is a contract?
A
A contract is a legally binding document that outlines the terms and conditions between the parties involved.
2
Q
What is required to form a contract?
A
There must be Offer, which must mean there is intention, also consideration which leads to acceptance, then both parties must have capacity and there must also be legality
3
Q
How can you execute a contract? (what is attestation?)
A
By deed or underhand
4
Q
What is the difference between a deed or underhand?
A
- A deed is a formal legal document that must meet specific requirements, such as:
- It must be written.
- It must be signed by the party or parties.
- It must be witnessed by an independent witness who also signs.
- It must explicitly state that it is a deed (e.g., using the words “executed as a deed”).
- Delivered (expressed or implied intention to be binding immediately).
- Signing a document underhand does not require a witness, can be oral or implied and does not need to be delivered.
5
Q
What is the difference between signing as a deed or underhand contractually?
A
Liability period
6
Q
What are 3rd party rights?
A
3rd party rights are the legal rights or interests of someone who is not a direct party to a contract or agreement
7
Q
What is a collateral warranty?
A
A collateral warranty is a legal agreement that provides a 3rd party with direct contractual rights even though they were not part of the original contract or agreement.
8
Q
What are the differences between 3rd party rights and collateral warranties?
A
- Scope 3rd party rights are limited to the terms in the original contract where a collateral warranty can be tailored to cover specifics
- Legal basis 3rd party rights are governed by statutory law where collateral warranties are based on contract law.
9
Q
What is the purpose of collateral warranties?
A
- Collateral warranties allow third parties to:
- Make a claim for damages if the work is defective or delayed.
- Enforce obligations directly against parties responsible for design or construction.
- Example: A building tenant may want the right to sue the architect if a design flaw causes operational issues, even though the tenant didn’t directly hire the architect.
10
Q
What are the differences between JCT and NEC?
A
- Loss and expense - For loss and expense, JCT has relevant matters and events. NEC has compensation events.
- Contract administration - done by a contract administrator or employer’s agent under JCT. NEC this role is undertaken by the Project Manager.
- Risk allocation - JCT allocates all risks between Client and Contractor. NEC promotes sharing risks between the two.
- Flexibility - JCT is seen as more robust due to it being based around UK Construction Law. NEC is seen as more flexible with a number of ‘core clauses’, followed by optional clauses to allow the parties to adapt the contract to suit the project.
- Early Warning – NEC has an early warning system, JCT does not.
- Preferred when: JCT is used for traditional build projects, NEC is used for civil engineering/ infrastructure projects ie public sector jobs
11
Q
What are the differences between JCT and FIDIC?
A
- Location – JCT is commonly used on UK projects. FIDIC is commonly used internationally.
- Contract administration - done by a contract administrator or employer’s agent under JCT. FIDIC this role is undertaken by the Engineer.
- Loss and expense - For loss and expense, JCT has relevant matters and events. FIDIC does not have this provision, and this is completed through parties agreement or Engineers determination.
- Condition Precedent – FIDIC allows for a condition precedent, whereas JCT does not.
12
Q
What are the differences between NEC and FIDIC?
A
- Contract administration - NEC this role is undertaken by the Project Manager. FIDIC this role is undertaken by the Engineer.
- Early Warning – NEC has an early warning system, FIDIC has a formal claim process (DABs)
- Programme – NEC programme is central to the contract, FIDIC it is less so
13
Q
Can you tell me some UK legislation that effects contracts? (Read around all the different Act’s)
A
- Housing Grants, Construction and Regeneration Act 1996: The Act provides a legal framework for construction contracts in the UK and aims to promote fairness. Some key features are rights to interim payments and rights to adjudication
- Health and safety Act: it is the key legislation for covering health, safety and welfare at work in the UK.
- CDM regulations: CDM 2015 are the key health and safety regulations for managing construction projects in the UK.
- Bribery Act 2010 is the UK’s primary legislation on anti corruption
14
Q
Why would you use a collateral warranty if you have some rights under the contract?
A
You may use a collateral warranty still if you had rights under the contract because you can tailor your rights under a collateral warranty.
15
Q
What would happen if the contract would stay silent on payment terms?
A
If the contract would remain silent on payment terms then the terms would default to the construction act 1996 which sets interim payments at 28 days
16
Q
What does NEC stand for?
A
New Engineering Contract
17
Q
What does JCT stand for?
A
Joint Contracts Tribunal
18
Q
What does FIDIC stand for?
A
International Federation of Consulting Engineers
19
Q
What is the difference between compensation events in the JCT and NEC?
A
- Definition: In the JCT, compensation events are referred to as “Relevant Events,” while in the NEC, they are called “Compensation Events”.
- Scope: The NEC allows for claims for both time and costs, whereas the JCT typically deals with time and price separately.
- Notification Timing: The NEC has a time bar for notifying compensation events, while the JCT does not have a specific time frame for relevant events.
- Risk Allocation: In the JCT, risks are allocated based on the control of the event, while in the NEC, risks are allocated based on the likelihood of occurrence.
20
Q
What if the contract stays silent on LD’s/ Liquidated damages?
A
If the contract remains silent then the contractor may still be liable for LD’s under the general law of contract
21
Q
What are the different types of bonds? And why would they be used?
A
- Retention bond
- Insurance bond
- Payment bond
- Maintenance bond
- Tender Bond
- Offsite materials
- Bonds are used for a number of reasons, some examples are financial protection, risk transfer and performance assurance
- Another reason could be it protects against insolvency and potentially a better option than retention.
22
Q
How would you check a contractors financial health?
A
- Dunn and Bradstreet
- Experian
23
Q
Who would a collateral warranty be issued to?
A
- Parties responsible for design or construction.
24
Q
What would you advise a client if they wanted to amend the standard JCT contract?
A
Don’t amend unless absolutely necessary and on terms in their favour, ie payment terms
25
What is the standard timeline for payments?
- JCT, interim valuation date is 7 days before the due date, payment notice is 5 days post due date, final date for payment is 14 days post due date. Pay less notice can be issued no later than 5 days prior to final date for payment.
- NEC, certificate issued 7 days after contractor application and 7 days prior to due date for payment. Contractors invoice due on due date. Final date for payment 7 days after due date.
26
What certificates can be issued under a contract?
- Payment Cert
- PC Cert
- Certificate of making good defects
- Final Certificate
- Certificate of termination
27
What are the implications of issuing a PC cert?
- Release of retention
- Start of defects period
- Start of final account agreement
- Client has to insure the works from that point on their own
28
What is the difference between an EA and a contract administrator?
- An EA is mainly post contract, a CA is pre and post contract
- An EA works directly for the client, a CA is an impartial party
- Some duties differ such as the EA defines scope
29
What is the time scale to agree the final account?
3 months
30
What's the difference between relevant events and relevant matters? How do you define each?
- Relevant matters allow for damages, relevant events allow for an extension of time
- Examples of relevant events or relevant matters
- Adverse weather or client delays
31
What are the different categories of relevant events
- Variations
- Employer’s instructions
- Discrepancies in ER’s
- Late possession of site
- Suspension by contractor
- Employer impediment or prevention
- Utility works
- Force majeure
- Adverse weather
- Loss or damage due to specified perils
- Civil commotion
- Compliance with legal changes
- Delay by novation’s
- Relevant authority delay
32
What is a contractor entitled to for a relevant matter
- Loss and Expense
- Examples of relevant matters: Failure to give contractor access to site, delays in receiving instructions, client variations.
33
What is a contractor entitled to for a relevant event?
- Extension of time
- Examples of relevant events - Adverse weather conditions, civil war, political unrest.
34
Can you tell me the difference between types of claims under JCT contract?
- Relevant events and relevant matters
- Relevant events a contractor is entitled to additional time, relevant matters a contractor is entitled to loss and expense
35
What are standard amendments for contracts?
- Payment Terms
- Retention terms
- LD’s
36
Can you tell me what the heads of claim are for loss and expense?
- Prolongation costs
- Wasted management time
- Finance Charges
- Loss of profit
- General disruption
37
What contracts are included in the JCT suite of contracts?
- Standard
- D&B
- Major
- Minor
- Intermediate
- Management
- Construction Management
38
What Contracts are included in the FIDIC suite?
- Green – Straight forward, quick, or cheap projects
- Red – Employer Design (Traditional)
- Yellow – Contractor Design (Traditional)
- Silver – EPC and Turnkey Projects
- Gold – Design, Build and operate projects.
39
What is the difference between FIDIC Red and Yellow?
- Red is when the design is done by the client, Yellow is where the design is done by the contractor.
- Payment for red is based on measurement of works complete whereas yellow are based on instalments specified in the schedule of payments.
40
What is the role of a QS under FIDIC?
Similar to JCT, the Engineer plays the role of the CA.
41
What Contracts are included in the NEC?
Options A to F
42
Can you tell me some changes included in the JCT 2024 suite?
- New relevant events to cover epidemics.
- Gender neutral language
- Client team time to assess extension of time will reduce from 12 weeks to 8 weeks.
- Due date for final payment after termination will be added
43
What are the differences between standard forms and bespoke contracts?
- The main differences are the levels of customization and specific provisions included.
- Standard forms offer more rigidity and are better for larger more complex projects, bespoke can be tailored to fit specific needs
44
What should be priced in a loss and expense claim?
Labour costs, prelims, overhead and profit
45
What are variations?
Variations are a change to the signed contract
46
Why might variations arise?
- Change in design, Client requests, Unknown site conditions
- Supply chain disruptions
- Scope Gaps
47
What works insurance options are there in JCT?
The insurance options in JCT are Options A,B & C within clause 6.7 or schedule 3
48
What is insurance option A,B,C – replacement schedule
-Option A – New build construction, contractor responsibility
- Option B – New Build construction, employer responsibility
- Option C – Loss or damage to the existing structure or works
49
Payment under the different JCT contracts?
- Mostly the same other than minor works and management building contracts
- Minor works is payment 14 days after due date like the rest but other dates are as agreed rather than a set timeline
- Management contracting is the same other than the due date, that is as agreed
50
What are LD’s?
Liquidated damages are a predetermined sum in the contract that one party agrees to pay the other as compensation for potential losses.
51
What’s the difference between an LOI and PCSA?
- An LOI and PCSA have different purpose and scope
- An LOI is for when a contractor wants to enter into contract with a subbie but doesn’t yet have an order to enter into contract.
- A PCSA is when a input is required from the contractor on design and buildability
52
What is the difference between exclusions and clarifications?
- Exclusions are terms that limit the liability of one party under the contract, often to prevent them from being held responsible for certain types of loss or damage. - Clarifications are additional details or definitions that help to clarify the scope of work, responsibilities, or terms of the contract. They are not necessarily related to liability but are important for ensuring that all parties understand the terms and conditions of the contract
53
Can you give an example of each you have previously used?
On several projects liability for unforeseen below ground on obstructions has been excluded.
54
In which three ways can you transfer benefits under a building contract?
- Collateral Warranties
- 3rd party rights
- Assignment
55
When is a project considered large under the JCT in relation to the joint fire code?
When project value is in excess of 2.5m
56
When is a project notifiable under CDM regs?
- When the project is scheduled to last longer than 30 days AND have 20 workers working on the job at any one time
- The project involves more than 500 person days of construction
57
What is the layout of a standard JCT contract? What section are payment terms in?
- 1 Definitions and Interpretations
- 2 Carrying out the works
- 3 Control of the works
- 4 Payment
- 5 Variations
- 6 Injury, Damage and Insurances
- 7 Assignment, novation and sub contracting
- 8 Termination
- 9 Dispute Resolution
58
What's included within the contract particulars of a JCT contract?
- Employer and Employee details
- Start Date & Finish Date of works
- Base date of contract
- Payment Due date
- Description of works
59
What is a PCG?
- A Parent Company Guarantee (PCG) is a contract where a parent company promises to be responsible for its subsidiary's or affiliate's contractual obligations, ensuring the other contracting party that their performance is secured.
60
What is the difference between a PCG and a bond?
- A Parent Company Guarantee (PCG) is a contractual promise from a parent company to a client, guaranteeing its subsidiary's obligations, while a Performance Bond is a third-party financial instrument from a surety company guaranteeing a contractor's completion of a project and providing financial recourse for the client in case of default.
61
What is assignment?
- Assignment is the transfer of a contractual benefit (a right or interest) from one party (the assignor) to another (the assignee), such as an employer transferring their rights under a building contract to a bank. The key point is that only the benefit, not the burden (the obligations), is transferred by assignment, so the original party remains responsible for their duties.
62
What is novation?
- Novation is the substitution of a new party into a contract, replacing an existing party and effectively extinguishing the original contract. This involves transferring both the rights and the obligations of the original party (the "outgoing party") to a new third party (the "incoming party"). For a valid novation, all three parties—the outgoing party, the continuing party (e.g., the client), and the incoming party—must consent to the new agreement.
63
What is the difference between novation and assignment?
- Novation is the transfer of parties within a contract, assignment is the transfer of benefits of a contract to a 3rd party.
64
What are the different relevant matters under JCT?
- Changes/ Variations
- Employers Instructions
- Compliance with clause 3.15.1 and 3.15.2
-Delay in permission or approval
- Any impediment
65
What is clause 3.15 under JCT
It refers to antiquities
66
What is a bond?
A Bond is a financial guarantee that ensures the contractor will fulfill their obligations and protects the project owner from potential losses.
67
What is sectional completion?
It is a provision within the contract that allows for handover of various sections of the project on different dates.
68
What is partial completion?
It is when part of the project has been completed and can be utilized and handed over if agreed.
69
The extension of time claim on FRA03, please give details on this?
- What is an extension of time claim? It is a formal adjustment to the completion date
- What form of contract was used? JCT D&B
- How is an EoT treated under such a contract? This is defined under clause 2.24 which states a contractor must give notice, particulars and identify which relevant event the EoT falls under.
- What constitutes a valid EoT? If it falls within one of the relevant event categories.
70
What are the grounds for termination?
- Failure to comply with CDM regs
- Sub-contracting or assigning without consent
- Failure to comply with a notice or instruction
- Failure to proceed with works regularly or diligently
- Unreasonably suspending the works
71
What takes precedence under a D&B contract, ER's or Contractors Proposals?
CP's
72
What happens if there are discrepancies within the ER's?
It is the contractors right to choose which option at no cost to them
73
What is the structure of a contract pack?
Contract, Drawings & Specs, Pricing Document (D&B Contract + ER's/ CP's)
RICS Q&A
flashcards
Decks in class (19)
# Cards
-
Ethics85
-
Comms & Negotiation12
-
Health & Safety32
-
Accounting Principles39
-
Data Management22
-
Sustainability30
-
Commercial Management39
-
Contract Practice73
-
Procurement & Tendering60
-
Design Economics & Cost Planning59
-
Quantification and Costing38
-
Client Care15
-
Business Planning15
-
Conflict Avoidance19
-
Diversity8
-
Inclusive Environments12
-
Design Technology34
-
Project Finance22
-
Project Feasibility Analysis19
