Contracts Forms and
Definitions
Yahya Khatib
Contents
1. Author Biography
2. What is a Contract?
3. Discharge of Contracts
4. Conditions of Contracts
5. Contract Documents
6. Standard Forms of Contracts
7. Parties Responsibilities in Different Standard Forms
2 8. Q&A
Author Biography
Yahya Khatib
o Cost Consultant
o 15 years in Development, Project Management & Construction
o Certified Cost Professional, CCP (AACE)
o Certified Estimating Professional, CEP (AACE)
o Planning & Scheduling Professional, PSP (AACE)
o Charted Arbitrator, MCIArb (CIArb)
o Value Methodology Associate (SAVE)
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o Project Management Professional (PMI)
What is a Contract?
What is a Contract?
A voluntary arrangement
Between two or more parties
Enforceable by law
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What is a Contract?
Elements of a Contract?
Offer
Slightly differs between Civil and Common laws
Acceptance
Counter-offer revokes the original offer
Intention to create legal relation
Conduct of offer might be considered acceptance
Consideration
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What is a Contract?
Civil law: Common law:
Legislative decisions Judicial decisions
Generally codified Generally uncodified
Role of judges: inquisitorial Role of parties: adversarial
Decisions of legislators Significance of precedent
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What is a Contract?
Common Law
Civil Law
Common & Civil Law
Civil and common law jurisdictions (Source CIArb)
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What is a Contract?
Question:
What is the importance of Contract law?
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Discharge of Contracts
How Contracts are discharged
By performance (Majority)
Frustration
Mutual Consent
Unilateral Consent
Fundamental Breach
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Conditions of Contracts
1- General Conditions Dealing with:
General obligations of the contractor and employer
Documents describing the works and priority of documents
Design responsibilities – reasonable skill and care or fitness for purpose
Confidentiality agreements
Collateral warranties to tenants/funders and sub-contractors
Parent company guarantee
Performance bond
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Conditions of Contracts
2- Conditions dealing with possession and completion:
Ability of employer to delay possession
Ability of employer to suspend the works
Damages for delay
Items entitling contractor to an extension of time. Procedure to be followed
Definition of completion
Phased completion
Occupation by employer before completion
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Conditions of Contracts
3- Conditions dealing with the control of the work:
Procedure for issuing instructions changing the works
Procedure for confirming contractor’s proposals for executing the works
Procedure for nominating sub-contractors
Procedure for conducting or witnessing tests and inspections
Ability and procedure for removing unacceptable personnel
Procedure for expending provisional sums
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Conditions of Contracts
4- Conditions dealing with the payment:
Procedure for calculating, invoicing and paying amounts due
Definition of the due date for payment
Right of suspension for non-payment
Retention and how it is accounted
Procedure for calculating additional costs arising out of instructions
Ownership of works and materials/transfer of title
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Conditions of Contracts
5- Conditions dealing with statutory obligations such as:
Health and safety regulations
Changes to statutory obligations after date of tender
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Conditions of Contracts
6- Conditions dealing with Injury, damage and insurance such as:
Insurance of the works
Joint names/project insurance
Cover for employer’s losses
Professional indemnity insurance
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Conditions of Contracts
7- Conditions dealing with the termination such as:
Employer’s rights to terminate
Contractor’s rights to terminate
Compensation
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Conditions of Contracts
8- Conditions dealing with dispute resolution such as:
Adjudication
Mediation
Arbitration
Litigation
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Contract Documents
Pricing Document like a bill of quantities
Drawings
Specifications
Contract (agreement and conditions), amended to incorporate the name of the
parties, the contract sum
Appendices
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Contract Documents
Letter of Intent
Instruct Contractor to proceed in long lead material/design
Legally binding
Contractor to be paid reasonable cost if no contract signed (Quantum
Meruit).
To be drafted carefully.
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Standard Forms of Contracts
E.g. FIDIC, JCT, NEC..
Tailored to fit Engineering and Construction Works
Tried and tested wording aims to reduce both negotiation time and cost
Reduces disputes during execution
Tested on thousands of projects
Most practitioners are familiar with them
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Parties Responsibilities in Standard Forms
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Question & Answers
?
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Yahya Khatib, BEng, MCIArb, CCP, CEP, PSP, PMP, VMA
yahyaalkhatib@hotmail.com
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