Contract Practice - principles of contract law

Contract Practice - principles of contract law

1. Types of FIDIC forms of contract?

   • Red Book
     • Civils - Architect/ Emp. design
       • Traditional
   • Yellow Book
     • M&E
       • D&B
       • e.g. water treat. plant
   • Silver Book
     • Turn key
     • EPC
     • e.g. pharmaceutical, Oil & Gas etc.
   • Green Book
     • Minor Wks
     • Short Form
   • Pink Book
     • Multilateral Dev. Banks (MDB)
   • Gold Book
     • Design Build Operate (DBO)
   • Orange Book
     • Cond. for D&B & Turnkey
   • White Book
     • Consultancy services agreement
   • Basic principle
     • eng. employed as EA + Representative.
     • Provisions
       • Nom Subbies
       • Settlement of disputes
       • EOT
       • LD's
       • Contract split into 2 parts
         • Part 1
           • General applicability
         • Part 2
           • Optional Clauses specific 2 each project

2. Different types of Stand. form of contract

   • FIDC
     • International Federation of Consulting Engineers
   • JCT
     • Joints Contract Tribunal
   • NEC/ ECC
     • New Engineering Contract/ Engineering & Construction Contract
   • ICE 7
     • Institution of Civil Engineers
   • PPC 2000
     • Project partnering contract
   • DOMI
   • IChemE
     • Institution of Chemical Engineers

3. PPC 2000 & TPC 2005

   • PPC 2000
     • Implemented by Assoc. Consulting Arch (ACA)
     • 1st cont. 2 make partnering a contractual framework.
     • Sets out formal procedures
     • Each member of team becomes party 2 cont.
       • Contract. obligations
       • Multi-party contract
     • Project Partnering Contract
       • Born from Egan report 2000 (construction task force)
     • Used in single projects
   • TPC 2005
     • Term Partnering Contract
     • procurement for term wks & services
   • Differences between PPC & other Stnd form of contracts
     • Team based approach
     • integrated design/ supply & construction process (collaboration)
     • Incentives - pain & gain
     • Non adversarial problem resolution
     • VE & VM - PPC recognises
     • Core Group - operate early warning systems 4 prob & review issues early

4. Legal Requirement of a contract

   • 1. offer & acceptance
     • There must b an offfer and it must be accepted
   • 2. Acceptance by the other party
     • showing acceptance e.g. orally, writing or implied through conduct
   • 3. Consideration of the offer
     • is the feat. that distinguishes a bargain from a gift. it is the price that each party ask of the other in return for entering into an agreement. Contract has to show that a price was paid
   • 4. Intent to form a contract
   • 5. Legality of contract
   • 6. Capacity to make an agreement

5. Assumptions in a building Cont.

   • contract is entire in legal sense
   • contract with a 'break-clause' is not standard.
   • Only one MC
   • Contract price is more important than period.
   • Client is contractually passive during construction

6. Major UK Acts on construction sector

   • Housing, Grants, Construction, Regeneration Act 1996
     • Updated: Local Democracy, Economic Development and Construction Act 2009
   • Scheme for Construction Contracts Regulations 1998
     • if the contrcact between 2 parties does not comply with all req of HGCRA Act/no adj provision agreed = Scheme 4 construction contract default
   • Contracts (right of 3rd party) Act 1999
   • Civil Procedural Rules 1999
   • Arbitration Act 1996
   • The Construction (Design and Management) regulations - CDM 1994
   • The Latent Damage Act 1986
   • Unfair Contract Terms Act 1977
   • Defective premises Act 1972

7. Letter of Intent (LOI)

   • Definition
     • the expression in writing of a party's present intention to enter into contract at a future date.
     • can be binding or non-binding
   • Why is a LOI issued?
     • obtain necessary approvals & permissions
     • Anticipate delay in prep of a contract
     • Need 2 obtain long lead in times for plant & equipment

8. Common contract documents

   • Conditions of Contract + amendments 2 stnd. forms
   • Prelims
   • Contract Sum analysis/ BQ/ Sch of wrks
   • Dwgs, Spec, Sch, reports
   • ext. building info.
   • Any CDP elements

9. ICE Conditions of Contract

   • 7th form published in 1999
     • Maj civils projects
     • re-measure contract
       • paid for actual work done
     • no reference to contract sum
       • rather tender price then contract price
   • there is an ICE Minor Works
     • Less than £100k & 6mths
   • Contract between promoter & contractor
   • Engineer has own contract
     • no obligations/ rights in main contract
     • engineer performs function of CA + QS
       • Known as Engineers representative

10. JCT

    • Widely used and well know
    • Main parts of JCT Contract
      • Recitals
      • Articles
      • Contract Particulars
      • Attestation
      • Conditions - divided into 9 parts
      • Schedules
    • main types of JCT contracts
      • SBC
        • SBC/XQ
          • Traditional
          • Lump sum
        • SBC/Q
          • Traditional
          • Adjustable
        • SBC/AQ
          • Traditional
          • Re-measureable
      • IFC
        • Traditional
        • Adjustable
      • MW
        • Traditional
          • short duration, small , simple
          • up to £150k
          • short & easy
          • Limited claim provisions
            • no fluctuations
          • Dwg/Spec & /or Work Sch
          • When is it not suitable?
            • client wants BQs
            • Wks require named specialists
        • Adjustable
      • D&B
        • D&B
        • Lump Sum
        • use?
          • contractor resp. 4 D&B
          • CDP form basis of project
          • no mention of Architect or QS - EA
      • IFC(D)
        • D&B
        • Lump Sum
      • SBC (D)
      • MW(D)
        • D&B
        • Lump Sum
      • MPC
        • D&B
        • Lump Sum
        • Use?
          • significant in size & complexity
      • Measured term contract
        • use?
          • maintainence/ minor wks undertaken reg basis
          • agreed on sch of rates
          • let on fixed or fluctuating basis
          • break provisions for terminating early
      • Agreement for Named/ Nominated Subbies
      • management contract
      • Construction Management Contract

11. Roles and Responsibilities of parties

    • Client
      • different roles for different procurement routes
      • Generally
        • responsible 4 deciding what he wants as the finished product
        • setting budget limits
        • briefing consultants
        • make sure design meets requirements
      • Traditional Procurement
        • contractually passive as most things rest with CA
      • D&B procurement
        • the client team is placed with the contractor
        • gets advice from a EA
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