Select and Prepare a Construction Contract

Good analysis and detailed response to both parts of this question. This is quite a problematic question, it would be something you would most likely do with the assistance of a solicitor, however you do need to be aware that changes to a contract is a difficult task and in my opinion always stick with the tried and tested standard contacts.

Contracts provided by industry association have been tried and tested in the courts over many years and therefore should provide adequate protection for you the contractor. Part 2 – Home Warranty Insurance

Below is clause 39.2 from AS 4000 Provide a written explanation identifying how you as the contractor can ensure that they do not default on the contract addressing each point from A to E. Provide no more than half a page on each point.

39.2Contractor’s default If the Contractor commits a substantial breach of the Contract, the Principal may, by hand or by certified post, give the Contractor a written notice to show cause. Substantial breaches include, but are not limited to:

a)failing to: i)provide security

Excellent response The contractor may be required to obtain a guarantee of the company’s liquidity to complete the project this is done by providing security to the principal Security could be in the form of a) cash; b) retention monies; c) bonds or inscribed stock or their equivalent issued by a national, state or territory government; d) interest bearing deposit in a bank e) an approved unconditional undertaking or an approved performance undertaking given by an approved financial institution or insurance company; or f) other form approved by the party having the benefit of security;

The most common form of security would be through a bank guarantee failing to do this would be a breach of contract.

ii)provide evidence of insurance;

Again well answered A contractor must effect and maintain insurances as stipulated in the contract and present copies of these to the client on commencement of the work and provide the customer a copy of the policy and a certificate of currency at any time requested by the client.

iii)comply with a direction of the Superintendent pursuant to subclause 29.3; Subclause 29.3 addresses any defective workmanship and materials provided by the subcontractor under this clause if the superintendent becomes aware of any defective workmanship the superintendent shall as soon as practicable give the contractor written details thereof. If the defective workmanship or materials are not rectified the superintendent may direct the contractor to either a) remove the material from the site

b) demolish the work c) reconstruct, replace or correct the work and d) not deliver it to site If a) the contractor fails to comply with such a direction; and b) that failure has not been made good within 8 days after the contractor receives written notice from the superintendent that the principal intends to have the subject work rectified by others at the cost of the contractor The superintendent may also direct the contractor that the principal is willing to accept the subject work, whereupon there shall be a deemed variation.

iv) use the materials or standards of work required by the Contract; Again well answered.

b) wrongful suspension of work; Again well answered.

c) substantial departure from a construction program without reasonable cause or the Superintendent’s approval; Again well answered.

d) where there is no construction program, failing to proceed with due expedition and without delay; and Well answered, the contract would have a date for practical completion, therefore this is a timeframe that the has to meet, so even if there is an absence of a construction program the contractor still needs to progress the job in a reasonable time line. This time line would judge as what a reasonable time frame for carrying out a job would be.

This would be judged on a job by job basis and things like the detail, materials, ease of access and size of the work would all need to be taken into account. The contractor was seen to be progressing the job at a reasonable rate in respect to his resources (eg. size of the company) throughout the construction process, failure to do so would be consider to be a substantial breach of contract.

e) in respect of clause **, knowingly providing documentary evidence containing an untrue statement. Well answered. Part 3 1) Recommend two (2) different types of contracts for the following types of projects 2) Two well selected contracts, for each project. 3) Using your recommendations above propose what contract would you use and give reasons why for the following projects also identify statutory and legislative requirements of using these contracts.

Excellent choice and discussion again with very good explanations on why you have chosen each contract and details of statutory and legislative requirements included to further justify your decisions 4) Describe the process of creating a contractual situation from the point of submitting a Tender to signing a contract and identify each step using construction terminology. For each step also identify using the legal terminology. Well stepped through with good details on legal terminology.

An alternate description of the tender process:-

Broadly the Tender process after submission of the tender by the contractor, involves the following: Meeting with the principal to clarify aspects of a tender. The Tenderer making a presentation to help promote a tender. Note that the submission of the tender can be construed as a contractual offer which is capable of acceptance by the principal as part of creating binding legal relations. Sometimes the Principal will provide a Letter of Intent to a tenderer telling the tenderer that they are the preferred tenderer and that a contract will be awarded.

Whether this Letter of Intent is legally binding depends on the wording of the Letter – in some instances it could be construed as an early works contract. Generally where a Tender process is involved, there is no negotiation with respect to the terms of the proposed contract.

Once a tender is accepted by the Principal, a Letter of Acceptance is sent to the tenderer – or a written contract is signed by the Principal and tenderer (Contractor) which forms the basis of the legal relationship between the principal and the tenderer. The contract generally incorporates plans and specifications. An offer and acceptable of the offer are necessary ingredients in creating a legally binding contract. There must also be consideration, which is generally the tender price, and an intention to create legal relations. Generally the latter can be inferred from the tender process.

The above feedback is not provided to contradict your interpretations but to provide response based on my understanding of contracts relating to this assignment. I hope the comments are useful.

I found that you have well analysed the question throughout this assignment and provide well constructed responses to the questions.

Please note:- With future assignments you could include a cover page, a contents page and number pages. I also think that it is a good idea to include a footer on each page which includes your name, page number and the date etc.as appropriate (please refer to the link on the OLS under “Course Information” – “Overview” – “Assessment Presentation Guidelines”).

If you need to contact me regarding this assignment please email the building section at OTEN and I will get back to you during the week.

90% Regards Cliff Cliff McSorley Building teacher, OTEN 51 Wentworth Rd Strathfield 2135 NSW AUSTRALIA Ph 61 2 9715 8557 | Fax 61 2 9715 8491 [email protected] Tuesday, 9 April 2013