APC Project Management > Level 3 Contract Practice > Flashcards

Level 3 Contract Practice Flashcards

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1
Q

What is a contract?

A

Legally binding agreement between two parties to provide goods and service within a specified timeframe.

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2
Q

What is necessary to form a contract?

A

Offer, Acceptance, Consideration, Intention, Capacity & Legailty

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3
Q

How is a contract executed?

A

Under hand: signed by both parties with a 6 year limitation period. (Simple Contracts)
Under seal as a deed: signed and witness, 12 year limitation period. (Complex)

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4
Q

Common contract documents?

A
  • The contract
  • Preliminaries
  • Contract Sum
  • Drawings
  • Specification
  • Planning agreements
  • ERs
  • Contractors Proposals
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5
Q

JCT

A

Joints Contract Tribunal
Contracts Administrator (Traditional)
Employer’s Agent (Design & Build)
- Oversees the project checking progress, payment, pc certs and notices of making good.

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6
Q

NEC Contract

A

New Engineering Contracts
Aimed at engineering projects but are easily adapted to building works.

  • Includes a process of early warning
  • PM overriding duty
  • Compensation rather than Relevant events
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7
Q

What are the standard forms of JCT?

A

Design & Build
Minor Works
Intermediate Building
Major Projects
Construction Management

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8
Q

Design & Build

A

Used by all types of clients, create a single point of responsibility for design and construction.

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9
Q

Minor Works

A

Not used for complex projects

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10
Q

What is a collateral warranty?

A

A way of forming a direct contractual link between two parties which otherwise wouldn’t have - i.e contractor and client.

  • use of quality and carrying out works in a professional manner
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11
Q

What is a letter of intent?

A

Outlining an agreement between two parties before a formal contract is created.
Not legally binding!

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12
Q

Advantages of LOI

A
  • Establishment of good faith
  • A summary of terms and structure of business transaction
  • Identifys significant concerns that are a deal breaker.
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13
Q

Disadvantages of LOI

A

If not worded properly, it may be considered as binding on the parties, resulting in unforeseen obligation.

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14
Q

Performance Bond

A

Form of financial security used to cover the client against the contractor failing to fulfil their contractual obligations.
Client pays for this, provided by the bank, up to 10% of contract value.

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15
Q

Retention Bond

A

Used instead of taking retention from interim valuations, used to improve contractor cash flow.

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16
Q

PII

A

Professional indemnity insurance
- Covers professional negligence

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17
Q

Employer’s liability insurance

A

Covers the injury and death arising from business activities for employees.

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18
Q

Types of payment methods

A
  • Stage
  • Milestone
  • Third party certification
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19
Q

Housing, Grants, Regeneration and Construction Act introduced what?

A

Right to fair payment and statutory right to adjudication.
- Right to supension upon non payment.
- Right to interim payment
- Pay less notices

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20
Q

Pay less notice?

A
  • Issued 5 days before the final date for payment if the notice is unsound.
  • The notice must specify the sum that the party with calculations.
  • Used to deduct LADS
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21
Q

Elements in place for a contract?

A

Capacity - those must be of sound mind.
Intent - clear intention for both parties to do business.
Consideration - allows anyone reading the contract to see something of value be exhanchged.
Lawfulness - must be legal
Offer- must explain the nature of the offer and explain the nature of the change, reponsibilities and costs. & what happens if someone doens’t oblige.
Acceptance - signature
Clarity of terms - to avoid a breach of terms, certainty must be provided.

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22
Q

How is a contract under hand different from under deed?

A

A deed is signed by the parties as well as a witness. Traditionally authenticated by a seal.
Whereas under hand in only signed by the parties of the contract.
Under hand = 6 years
Deed = 12.

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23
Q

LADS

A

A Genuine pre-estimate of the likley loss of the employer should the completion date not be met.
Need to be substantiated if applied.

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24
Q

What in place before LDs to be deducted?

A

Non-completion notice
Payless notice / witholding notice.

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25
What if the employer actually suffered no loss or damage?
It doesn't matter. The damages can still be deducted at the value stated in the contract.
26
What is the defects liability period?
Duration at the end of the contract, where the contractor undertakes any defects at their own expense.
27
If there is a discrepancy between the ER's and CP which one takes precedence?
The Contractor's Proposals. Later agreement prior to contract signed.
28
What is a bespoke contract?
Contract conditions are drafter specifically for a project.
29
Advantages of standard forms over bespoke contract?
Written by legal experts Rights and obligation clearly set out Risks should have been allocated Parties should be familiar Case law has built up over time. Disadvantages: Risks is rarely questions and becomes implicit. May not be appropriate to the needs of a particular project.
30
When would you use a bespoke over standard form?
Used for major project with novel
31
Main parts of JCT contracts?
- Recitals (Intro, summary) - Articles (Contract sum, EA, Roles, Adjudication) - Contract Particulars ( Base Date, L&E, Possession, Retention) - Attestations (Execution, formal closing section) - Conditions (T&C, definitions & and interpreation) - Schedule of appendices (Surveys, CWs, Contract amendments, PCG, PCI)
32
JCT Forms of Contracts?
- Minor works - Intermedite - SBC - Major Projects - Design & Build
33
9 Sections
- Definitions and interpretations - Carrying out the works - Control of the works - Payment - Variations - Injury, damage and insurance - Assignment, third party rights and collateral warranties - Termination - Settlement of disputes
34
When would you use JCT minor works?
- Simple in nature - Project shorter in duration -JCT guidance up to £200,000 - Lump sum
35
JCT Intermediate contract
- Projects that don't exceed one year duration - Simple in content and require only basic skills
36
JCT Standard contract
- Where the works have already been designed
37
What Are Relevant Events?
Events that entitle to EOT. - 13 in total - Vairations/ instructions - Deferment of posession of site - Suspesnsion by the contractor for non-payment - Exeptionally adverse weather conditions - Strike or lock out - Civil commotion or terrorism - Force Majeuore
38
EOT without a L&E claim?
Yes an EOT does not automatically mean entitlement to L&E
39
Certificates under JCT?
Interim Payment certs PC, PP or SC Non Completion Certs Cert of making good
40
Partial Posession?
Relies on the contractor's consent.
41
Section Completion?
Contractual obligation to hand over the section at the stated date
42
What is PC
Is a vague concept, not defined in the JCT, common pracitce where works are substantially complete and works dont prevent beneficial occupancy.
43
NEC
New Engineering Contract
44
Disadvantages of the NEC
They are often only considered to be used for civil engineering project and partnerships.
45
NEC
The role of the qs is not included in the contract. The QS can adopt a supporting role
46
Specified Perils?
Significant events that would cause significant damage - fire, explosions, earthquakes, flooding etc.
47
What's in a Letter of Intent?
- Key terms & Conditions - Scope of Works - Timelines specific requirements - Level of assurance - Non binding - Takes time for a contract to be negotiated and executed
48
JCT Design & Build Payment Provisions
Assess based on % of works complete, creating columns to show variance. Agree with contractor QS. Works completed on site (materials on & off site) up to IVD.
49
Due Date
7 days after IVD
50
IVD Interim Valuation Date
Included within the contract Triggers the payment process A day which works is completed up to.
51
Payment Notice Date
5 days after due date
52
Final Date for Payment
21 days after the Due Date
53
Appropriate Contract Selection following RICS Guidance JCLI Landscaping
Minor Works Traditional procurement Employer had designs Smaller and lower works value JCLI Landscpaing The contractor was familiar No maximum value Design was procured Specific to landscaping
54
Hatcham Gardens JCLI Landscaping Contract Documents
- Schedule of docs - JCLI Landscaping Contract - Specification of works - Pricing document - Contract Appendices (drwgs, CW form, survey info, CDM policy, Hoarding, O&M) Retention : 3% PCG Insurances: PII, Employer's Liability, PL
55
56
What stage of the RIBA framework was involved in advising the client on Partial Posession Vs Section Completion (Sheldon Street)
Pre-contract stage (RIBA Stage 4) ## Footnote This stage involves detailed design and preparation for the construction process.
57
What did the project at Sheldon Street, Croydon incorporate?
Section completion of a commercial area and 22 mixed tenure residential units ## Footnote Mixed tenure refers to housing that includes a variety of ownership and rental options.
58
What is a benefit of section completion in the project?
Early access of the commercial area and triggered retention release and rectification period ## Footnote Retention release is the return of a portion of the contract sum withheld until project completion.
59
What were included for both commercial and residential sections in the contract?
Liquidated damages ## Footnote Liquidated damages are pre-agreed sums to be paid in case of contract breach or delay.
60
What action was taken to trigger the process for liquidated damages?
I issued a notice of Non-Completion. Further notice: the Employer may require payment of liquidated damages prior to issuing a notice demanding payment Final Notice: demandning payment of withold of LADS. ## Footnote This notice informs the contractor that the project is not completed as per the contract terms.
61
Who was obliged to pay the liquidated damages?
The contractor ## Footnote The obligation arises from the terms specified in the contract.
62
Section Completion
Included within the contract with defined completion dates per section.
63
Partial Posession
Requires all parties agreements, usually throughout the process of the works. Requires consideration for access.
64
What's the difference between NEC3 & NEC4?
Introduction of new contracts (Design, Build, Operate) Improve guidance and language Allocation of risk with the client
65
Advantages of Bespoke contracts?
- Written by legal experts - Right and obligations are clearly set out - Risks should be allocated equally - Parties should be familir with the provisions included
66
Why are valuation timescale schedule important?
- Clarity & consistency for all parties - In line with regular payment under Construction Act
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