sussex 2015 contractual awareness
TRANSCRIPT
Rob Driscoll and Debbie PetfordCommercial & Legal
Contractual awareness
Sussex regional meetingJune 2015
A brief training session
Commercial awareness 2
Introduction
This presentation covers:
Contracts and why they matter
Why have a contract
Should the contract be in writing?
Offer and acceptance
Battle of the forms
Last shot
Letters of intent
Types of construction contract
Putting a contract together
What should a contract contain
Incorporation
Managing your client’s credit risk
Construction Act
Leveraging your ability to be paid
Insolvency
Commercial awareness 3
Contracts and why they matter
“As much as he has deserved” A reasonable sum
Synonym for quantum valebat, which means “as much as it is worth”
Quantum meruit
Commercial awareness 4
Why have a contract?
Reasonable, reasonable, reasonable!!!
Recourse for defects
Counter-claim
Time
Commercial awareness 5
Should the contract be in writing?
Overall certainty
Evidence
Commercial awareness 6
Offer and acceptance
Offer
Consideration
Unconditional acceptance
(may be by performance)
Binding contract
Commercial awareness 7
Invitation to TreatEnquiry / Invitation to Tender
OfferTender / Quote
Counter-offerAcceptance with revisions
Supplement / Revisions to Tender
Acceptance with alternative terms and conditions
8
Battle of the forms
Commercial awareness
Invitation to tender
Quote(offer)
Acceptance with
clarification
Clarification
Revised quote
Acceptance with
clarification
Clarification
Revised quote
Sub-Contract
Order(specifying terms and conditions)
Work begins
Thank you and
acknowledgement
Main Contractor
Sub-Contractor
Commercial awareness 9
Last shot
The battle is won by the last shot!!
Unconditional acceptance by acquiescence, or non-rebuttal conduct
Commercial awareness 10
Letters of intent
Preparatory design, ground or manufacturing works
Non-binding ??? =
No Construction Act
No defects re-dress
Quantum meruit
Reasonable time, variations, sum!!!
Binding ??? =
Mini-contract should contain cap in value and scope of works
“subject to” but authority
Certainty within scope
Statutory protection, including Construction Act
Types of construction contract
Commercial awareness 11
JCT
NEC3
Bespoke
Commercial awareness 12
Putting a contract together
What documents should be included in a contract?
Employer’s requirements
Contractor’s proposals
Pricing document (contract sum analysis / schedule of rates / bills of quantities)
Programme???
Incorporation
Commercial awareness 13
What should a contract contain?
Duty of care
Documents
Time - extension
Variations
LADs
MoneyLoss of expense
Variations
Amount
When
Retentions
Termination
Insurance
Disputes
Design
Conditions precedent
14
Incorporation
By reference
Initialisation
Order of priority
Numbered documents under sub-contracts
Commercial awareness
Commercial awareness 15
Managing your client’s credit risk
Credit checks
Reduced payment cycle
Credit limit clauses
Bonds
Guarantees
Off-site materials agreements and vesting certificates
Commercial awareness 16
The New Construction ActPayment scheme for construction contracts
If the contract does not provide for applications or an application is not made in accordance with the contract
28 days, ie
not every
calendar month
Payment due 7 days after end of valuation
period or on application, whichever is
later
Payment notice stating
how payment has been calculated
(Must be no later than 5 days after
payment due)
If the payment
notice is not served the
party receiving payment
can send a Default
Payment notice
Pay-Less
Notice 7 days
before final
day for paymen
t
Final date for paymen
t
17 days after payment due
Default payment
notice postpones final date
for payment
17
Leveraging your ability to be paid
‘Applications in accordance with the contract’
Suspension O&M and other documents
Final accounts
Main Contractor’s discount
Warranties
Interest Recovery of ‘reasonable costs’
Commercial awareness
Commercial awareness 18
Contracting summary
Introduce internal policies and procedures and police them through performance management of staff with the relevant responsibility: Automate the paper process of notice and application process,
through accounts, Outlook, etc
Risk profile the clients that pay
Use the system which has been put in place for your benefit
Agree the boundaries of your cash-flow relationship by taking policy positions on cash-flow and setting clear procedures for obtaining authority to depart from those policy positions
Commercial awareness 19
C&L – in-house outsourced
Document review (commentary, risk appraisal and drafting)
FREE
Payment app
Conditions of Trading
Sub-Sub-Contract
Maintenance Agreement
Consumer Contract
Collateral Warranty
Performance Bond
Parent Company Guarantee
Disputes
Litigations
Insolvency
Adjudication
Mediation
Arbitration
Settlements
Webinars
Better Business guides /Judge for Yourself
Extended Services - Alliances
B&ES Unique
Thank you for listening
Rob Driscoll Debbie Petford020 7313 4918 020 7313 [email protected] [email protected]