What is a collateral warranty?
A legal document that creates a contractual link between a third party and a party in a construction contract
What are collateral warranties used for?
To bridge the gap between parties and allow a third party to make a claim if something goes wrong
What is meant by the privity of contracts?
Only the parties that have entered into a contract can enforce or are bound to it
What are the JCT Valuation rules
- Contract rates
- Adjusted contract rates
- Fair and reasonable
- Dayworks
What is a relevant event?
An event that is not the contractors fault that causes a delay to the works
What is a relevant matter?
Something that causes the contractor additional costs such as a client driven change
What are LDs?
A genuine pre-estimate of the likely cost to the employer when the practical completion date is not met.
What do you need before deducting LDs?
- A non-completion certificate
- A withholding notice
What needs to be in place to pay for materials on site?
- materials should be purchased for the works
- vesting cert
- insurance
- EA can inspect
What needs to be in place for materials off site?
- Vesting certificate
- Insurance until materials arrive on site
- Materials are clearly labelled for the site
- Materials off site bond if required
What is a materials off site bond?
It is a bond to ensure that if the materials cant be delivered then the full amount paid is returned to the employer
What is a retention of title clause?
Sub-contractor or supplier retains ownership of materials until they are paid.
What is the typical retention % for a SBC?
3%
What is the typical retention % for D&B?
5%
What are the different certificates you’re aware of under JCT?
- Interim certificates
- Practical completion or sectional completion
- Non completion
- Certificate of making good
- Final certificate
What are the three ways benefits can be transferred under JCT contracts?
- Collateral warranties
- Third party rights
- Assignment
What is assignment?
Where the rights and benefits of one contractual party are transferred to a third party
What is novation?
Where a new contract transfers the rights and obligations of one contractual party to a new third party
How does novation differ to assignment?
Assignments only transfer contractual rights or benefits not burdens.
What is a letter of intent (LOI)?
An letter issued to commence works with the agreement to enter into contract at a later date
What are the key differences between JCT and NEC?
- Programme is a contractual document in NEC
- NEC uses compensation events rather than variations
- NEC is project manager led
- JCT uses valuations whereas NEC uses a priced activity schedule or defined costs
What relevant events allow for additional time and money?
- Variations
- Late information
- Employer delay (deferment)
- Employer instruction to suspend works
- Discrepancies in contract documents
- Employer prevention of the works ongoing
What is insurance?
Transfer of a defined risk to a company for a premium
What is indemnity?
It is to protect against legal responsibility or to compensate
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