2-DAY NATIONAL WORKSHOP ON ESSENTIALS OF BUILDING AND ENGINEERING CONTRACT DOCUMENTATION AND ADMINISTRATION Date: 22nd 23rd MARCH, 2017 VENUE: KOLA NUT EVENT CENTRE, BARRACK ROAD, CALABAR TOPIC: COMPARATIVE EVALUATION OF DIFFERENT FORRMS OF CONTRACT & DISCHARGE OF CONTRACTS By EKKANEM, SCHOLASTICA FIDELIS (MNIQS, RQS) Department of Quantity Surveying School of Environmental Studies, Akwa Ibom State Polytechnic, Ikot Osurua, Ikot Ekpene, Akwa Ibom State COMMON FEATURES IN ALL THE FORMS OF CONTRACT
QUALITY CONTROL VARIATION TIME AND MONEY PRACTICAL COMPLETION AND SNAGING COST SCRUTINY THE PROGRAMME
PROVISION SUMS PAYMENT MATURITY AND CASE PRECEDENCE ADMINISTRATIVE REQUIREMENT EXTENSION OF TIME/ LOSS AND EXPENSE TERMINOLOGY CLAUSES NATURE PRICING OPTIONS DISPUTE RESOLUTION RISK MANAGEMENT CONTRACT ADMINISTRATION COMPARISON EVALUATION (FIDIC, NEC3 AND JCT 2011) JCT Contract NEC Project Manager FIDIC Engineer Administrator Quality Control Acts as gatekeeper to contractors Issues instructions, modified drawings
Issues timely design and programme (conditions as necessary for the execution of the information relating to 21.23), works and the remedying of any defects set out any other pre(clause 3.3) agreed information as Replies within the period for reply to any communication submitted to and when required May attend management meetings with it by the contractor Issues certificates to the employer the contractor and contractor JCT Contract Administrator
NEC Project Manager FIDIC Engineer Variations Issues instruction relating to Issues instructions to deal with Issues instruction to instances of delay and overcome discrepancies changes in scope and disruption, remedying of defects and/or changes in scope completion date and instructing any variation. of works Issues notices in respect Actively monitors by means of Requests measurement of the any early warning mechanism works, if required (clause 2.1) of remedying for any change to scope in
discrepancies between price, timings or impairment of Issues variations (clause 13.1) contract documents performance and payment certificates (clauses (clauses 2, 13-2.18) 14.6, 14.11 and 14.13) JCT Contract Administrator Time and Money Certifies sum due Issues extensions of time which it considers fair and reasonable and reaches a decision as soon as reasonably practical (clause 2,28.2) Considers with the QS, if employed, all interim valuations, claims for variations and loss/expense resulting and issue payment certificates as
appropriate NEC Project Manager FIDIC Engineer Certifies sums due Certifies sums due Decides the date of completion and certifying completion (condition 30) Notifies the contractor of the outcome for any claim and requests quotations for any proposed instruction or changed decision
Agrees to commencement date, and ensure the programme for the works is adhered to (clause 8.1), Considers compensation events, their value and instructing their implementation (conditions 6065) Approved variations for payment after scrutiny (clause 13.1). determine extension of time for the contractor (clause 8.4), JCT Contract Administrator NEC Project Manager
FIDIC Engineer Practical completion and snagging Determines when practical completion Determines when practical completion achieved achieved and issues notices of noncompletion, defects and can allow early possession. Issues practical completion certificate Assesses defects and their value (conditions 40-45) or sectional completion certificates (clause 2.30-2.32) or a non-completion certificate (clause 2.31) Responsible for the taking over process for completion of the works or sections of it. Assesses the time for, and issues a taking over certificate upon
application from the contractor (clause 10.1) JCT Contract Administrator Cost Scrutiny In JCT contract there may be some cost scrutiny via the contract sum analysis and tender negotiations The Programme The JCT contract does not have a programme as a contractual document. Peripheral importance NEC Project Manager FIDIC Engineer
NEC contract has an open book In FIDIC contract there may be some procedure with the key concepts of cost scrutiny via the contract sum defined cost and disallowed cost analysis and tender negotiations The programme is at the heart of the NEC ethos. It is a contractual document and to be regularly updated. Key to the function of contract mechanisms The FIDIC contract does not have a programme as a contractual document. Peripheral importance
JCT Contract NEC Project Manager FIDIC Engineer Administrator Provisional Sums NEC contract does not FIDIC Contract contains The JCT Contract Provisional sums contains Provisional sums Payment In relation to FIDIC In relation to payment, In relation to NEC contract, it is located in 3 contract, contract price and the JCT contract payment is in one section payment section is clear, different location in clause 5, Y(UK) and
(clause 14). is all in one section contract Data part 1 (clause 4) and easy to follow JCT Contract Administrator NEC Project Manager Maturity & Case Precedence FIDIC Engineer Very matured, over 100 Very matured, over 80 years Over 20 years in use, with many precedence cases limited cases precedence years with many in law precedence cases in law in law Administrative Requirement Minimum
High, requires parties to Minimum document extensive amount of written communication JCT Contract Administrator NEC Project Manager FIDIC Engineer The NEC contract has the compensation event and it deals with both time and money. Driven: The compensation events also have a condition procedure nature,
and failure to notify the compensation event within the 8 weeks period can have dire consequences FIDIC contract has relevant matters and time and money are dealt with as separate concepts. (Clauses 8.4 and 20.1) Extension of Time/loss and expense the JCT contract has relevant matters and time and money are dealt with as separate concepts (Clauses 2.29 and 4.24) JCT Contract Administrator
Terminology Legal Clauses Nature Adversarial NEC Project Manager FIDIC Engineer Simple wording Legal collaborative Adversarial Pricing Options Limited to traditional norms 6 options, can be used together
Limited to traditional norms Dispute resolution Arbitration Adjudication Dispute adjudication boards High awareness of risk, requires parties to register risks officially Limited Risk Management Limited SUMMARY
NEC has probably may advantage our FIDIC and JCT particularly in clarity, flexibility, explicit project management procedures, partnering and teamwork, risk management, objective measurements of weather and ground condition risks and variations. Key NEC drafty features centre on flexibility, clarity and simplicity; and a stimulus to good management; no such aims exist within FIDIC and JCT. DISCHARGE OF CONTRACTS A contract may be discharged by the following methods: Performance, Agreement, Breach Frustration PRFORMANCE The normal method of discharge mean that the performance of
his obligations by a contracting party discharges that party from his obligations under the contract. Modification of the General Rule under performance discharges (a) Divisible Contracts: A contract may be entire, where the agreement provides that complete performance by one party is a condition precedent to contractual liability on the part of the other party; or, partial, where the contract provides for performance by instalments, with separate payment for each of them. (b) Acceptance of Partial Performance Where the party to whom the promise of performance was made, B, accepts partial performance of the contract by A, he must pay A for the goods he has accepted or the benefit of which he has received. However, B must have voluntarily accepted As partial performance (example the case of Sumpter v Hedges  1 QB 673, where the owner of halfbuilt stables was held not to have had any
choice but to finish the building work). (C)Completion of Performance Prevented by the Promisee Where full and complete performance of the contract is prevented through the other partys actions, the party unable to complete performance may claim for partial or substantial performance. In a case of Planch v Colburn (1831) 8 Bing 14, an author succeeded in recovering half his commission on a book he had half completed, after the publisher prematurely terminated the contract. AGREEMENT Where a contract is formed by agreement, it may also be discharged or terminated through agreement, subject to the conditions of the contract. The agreement to extinguish or terminate the contract itself becomes a
binding contract if supported by consideration or made under seal. Contract by agreement can be discharges through the following ways: Bilateral Discharge The contract will be mutually discharged where the parties agree to release one another from any further obligations existing from the original contract. Also the contract is discharged despite the parties failing to fully or partially discharge all their obligations. Accord and Satisfaction Accord and satisfaction occurs where one party accords the release of another party, who is in breach of the original agreement, from its obligations in return for the satisfaction for the performance of another obligation. Unilateral Discharge Unilateral discharge occurs where one party has completed its part of the bargain and agrees to release the other party from its outstanding obligations under the contract. The agreement is only binding if supported by consideration or made under seal.
DISCHARGE BY BREACH Discharge By Breach: Any breach of contract entitles the injured party to claim damages. The degree of breach and the consequences vary according to the type and nature of the term concerned. There are two types of breach: actual and anticipatory. Actual Breach One party may breach one or more of the terms of the contract in such a way that it amounts to a breach of the contract. Anticipatory Breach An anticipatory breach occurs where a contracting party indicates by express words or by implication through conduct before performance that he will not honour his contractual obligations. FRUSTRATION FRUSTRATION : A contract is said to be frustrated where the conditions of the contract can no longer be performed, due to a change in circumstances not provided for in the contract, which occurs after the contract was
concluded, and which was beyond the fault of the parties to the contract. EXAMPLE ARE: Destruction of the Specific Object Essential for Performance of the Contract. Personal Incapacity to Perform a Contract of Personal Service. The Non-occurrence of a Specified Event. Interruption which Prevents Performance of the Contract in the form Intended by the Parties. FORCE MAJEURE FORCE MAJEURE:Force majeure is a concept that originated in French, not English, law, and is not a doctrine under common law. However, force majeure does have legal effect where provided for in English law-governed contracts (and no effect without the existence of such a clause in the contract). Force majeure literally translates as superior forces and refers to the arising of unforeseen conditions or events beyond the control of both parties, which unavoidably disrupts performance of the contract. Force majeure clauses are used in contracts due to the limited
application of the doctrine of frustration. CONCLUSION Discharge of contract depend on the forms of contract of your choice and the documentation format, therefore having known various forms of contract and methods of documentation it is therefore proper to choose the one that fit your contract for effective delivering. THANK YOU
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