B&ES Sussex Regional Branch meeting June 2015 - General Overview of Contractual issues.

1. Rob Driscoll and Debbie Petford
Commercial & Legal
Contractual awareness
Sussex regional meeting
June 2015
A brief training session

2. Introduction
Commercial awareness 2
 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

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”
Commercial awareness 3

4. Why have a contract?
 Reasonable, reasonable, reasonable!!!
 Recourse for defects
 Counter-claim
 Time
Commercial awareness 4

5. Should the contract be in writing?
 Overall certainty
 Evidence
Commercial awareness 5

6. Offer and acceptance
Offer
Consideration
Unconditional
acceptance
(may be by performance)
Binding
contract
Commercial awareness 6

7. Commercial awareness 7
 Invitation to Treat
 Enquiry / Invitation to Tender
 Offer
 Tender / Quote
 Counter-offer
 Acceptance with revisions
 Supplement / Revisions to Tender
 Acceptance with alternative terms and conditions

8. Battle of the forms
8Commercial 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

9. Last shot
Commercial awareness 9
The battle is won by the
last shot!!
Unconditional acceptance by
acquiescence, or non-rebuttal
conduct

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
Commercial awareness 10

11. Types of construction contract
Commercial awareness 11
 JCT
 NEC3
 Bespoke

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 12

13. What should a contract contain?
 Duty of care
 Documents
 Time - extension
 Variations
 LADs
 Money
 Loss of expense
 Variations
 Amount
 When
 Retentions
Commercial awareness 13
 Termination
 Insurance
 Disputes
 Design
 Conditions precedent

14. Incorporation
 By reference
 Initialisation
 Order of priority
 Numbered documents under sub-contracts
14Commercial 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 15

16. The New Construction Act
Payment 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
payment
Final date
for
payment
Commercial awareness 16
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’
17Commercial 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 18

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
Commercial awareness 19
 Disputes
 Litigations
 Insolvency
 Adjudication
 Mediation
 Arbitration
 Settlements
 Webinars
 Better Business guides /
Judge for Yourself
 Extended Services - Alliances
 B&ES Unique

20. Thank you for listening
Rob Driscoll Debbie Petford
020 7313 4918 020 7313 4922
rob.driscoll@b-es.org debbie.petford@b-es.org