Contract Practice - principles of contract law

Types of FIDIC forms of contract?
1. Red Book
  1. Civils - Architect/ Emp. design
    1. Traditional
2. Yellow Book
  1. M&E
    1. D&B
    2. e.g. water treat. plant
3. Silver Book
  1. Turn key
  2. EPC
  3. e.g. pharmaceutical, Oil & Gas etc.
4. Green Book
  1. Minor Wks
  2. Short Form
5. Pink Book
  1. Multilateral Dev. Banks (MDB)
6. Gold Book
  1. Design Build Operate (DBO)
7. Orange Book
  1. Cond. for D&B & Turnkey
8. White Book
  1. Consultancy services agreement
9. Basic principle
  1. eng. employed as EA + Representative.
  2. Provisions
    1. Nom Subbies
    2. Settlement of disputes
    3. EOT
    4. LD's
    5. Contract split into 2 parts
      1. Part 1
        General applicability
      2. Part 2
        Optional Clauses specific 2 each project
Different types of Stand. form of contract
1. FIDC
  1. International Federation of Consulting Engineers
2. JCT
  1. Joints Contract Tribunal
3. NEC/ ECC
  1. New Engineering Contract/ Engineering & Construction Contract
4. ICE 7
  1. Institution of Civil Engineers
5. PPC 2000
  1. Project partnering contract
6. DOMI
7. IChemE
  1. Institution of Chemical Engineers
PPC 2000 & TPC 2005
1. PPC 2000
  1. Implemented by Assoc. Consulting Arch (ACA)
  2. 1st cont. 2 make partnering a contractual framework.
  3. Sets out formal procedures
  4. Each member of team becomes party 2 cont.
    1. Contract. obligations
    2. Multi-party contract
  5. Project Partnering Contract
    1. Born from Egan report 2000 (construction task force)
  6. Used in single projects
2. TPC 2005
  1. Term Partnering Contract
  2. procurement for term wks & services
3. Differences between PPC & other Stnd form of contracts
  1. Team based approach
  2. integrated design/ supply & construction process (collaboration)
  3. Incentives - pain & gain
  4. Non adversarial problem resolution
  5. VE & VM - PPC recognises
  6. Core Group - operate early warning systems 4 prob & review issues early
Legal Requirement of a contract
1. 1. offer & acceptance
  1. There must b an offfer and it must be accepted
2. 2. Acceptance by the other party
  1. showing acceptance e.g. orally, writing or implied through conduct
3. 3. Consideration of the offer
  1. 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. 4. Intent to form a contract
5. 5. Legality of contract
6. 6. Capacity to make an agreement
Assumptions in a building Cont.
1. contract is entire in legal sense
2. contract with a 'break-clause' is not standard.
3. Only one MC
4. Contract price is more important than period.
5. Client is contractually passive during construction
Major UK Acts on construction sector
1. Housing, Grants, Construction, Regeneration Act 1996
  1. Updated: Local Democracy, Economic Development and Construction Act 2009
2. Scheme for Construction Contracts Regulations 1998
  1. if the contrcact between 2 parties does not comply with all req of HGCRA Act/no adj provision agreed = Scheme 4 construction contract default
3. Contracts (right of 3rd party) Act 1999
4. Civil Procedural Rules 1999
5. Arbitration Act 1996
6. The Construction (Design and Management) regulations - CDM 1994
7. The Latent Damage Act 1986
8. Unfair Contract Terms Act 1977
9. Defective premises Act 1972
Letter of Intent (LOI)
1. Definition
  1. the expression in writing of a party's present intention to enter into contract at a future date.
  2. can be binding or non-binding
2. Why is a LOI issued?
  1. obtain necessary approvals & permissions
  2. Anticipate delay in prep of a contract
  3. Need 2 obtain long lead in times for plant & equipment
Common contract documents
1. Conditions of Contract + amendments 2 stnd. forms
2. Prelims
3. Contract Sum analysis/ BQ/ Sch of wrks
4. Dwgs, Spec, Sch, reports
5. ext. building info.
6. Any CDP elements
ICE Conditions of Contract
1. 7th form published in 1999
  1. Maj civils projects
  2. re-measure contract
    1. paid for actual work done
  3. no reference to contract sum
    1. rather tender price then contract price
2. there is an ICE Minor Works
  1. Less than £100k & 6mths
3. Contract between promoter & contractor
4. Engineer has own contract
  1. no obligations/ rights in main contract
  2. engineer performs function of CA + QS
    1. Known as Engineers representative
JCT
1. Widely used and well know
2. Main parts of JCT Contract
  1. Recitals
  2. Articles
  3. Contract Particulars
  4. Attestation
  5. Conditions - divided into 9 parts
  6. Schedules
3. main types of JCT contracts
  1. SBC
    1. SBC/XQ
      1. Traditional
      2. Lump sum
    2. SBC/Q
      1. Traditional
      2. Adjustable
    3. SBC/AQ
      1. Traditional
      2. Re-measureable
  2. IFC
    1. Traditional
    2. Adjustable
  3. MW
    1. Traditional
      1. short duration, small , simple
      2. up to £150k
      3. short & easy
      4. Limited claim provisions
        no fluctuations
      5. Dwg/Spec & /or Work Sch
      6. When is it not suitable?
        client wants BQs
        Wks require named specialists
    2. Adjustable
  4. D&B
    1. D&B
    2. Lump Sum
    3. use?
      1. contractor resp. 4 D&B
      2. CDP form basis of project
      3. no mention of Architect or QS - EA
  5. IFC(D)
    1. D&B
    2. Lump Sum
  6. SBC (D)
  7. MW(D)
    1. D&B
    2. Lump Sum
  8. MPC
    1. D&B
    2. Lump Sum
    3. Use?
      1. significant in size & complexity
  9. Measured term contract
    1. use?
      1. maintainence/ minor wks undertaken reg basis
      2. agreed on sch of rates
      3. let on fixed or fluctuating basis
      4. break provisions for terminating early
  10. Agreement for Named/ Nominated Subbies
  11. management contract
  12. Construction Management Contract
Roles and Responsibilities of parties
1. Client
  1. different roles for different procurement routes
  2. Generally
    1. responsible 4 deciding what he wants as the finished product
    2. setting budget limits
    3. briefing consultants
    4. make sure design meets requirements
  3. Traditional Procurement
    1. contractually passive as most things rest with CA
  4. D&B procurement
    1. the client team is placed with the contractor
    2. gets advice from a EA
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