CE7012: Legal Obligations and Conditions of Contract Exam Sample 2023

Section A

Question 1

a.i.

Housing Grants, Construction and Regeneration Act of 1996 (HGCRA) is incorporated to deal with the payment procedure of the labour and the contractor in different industries. This law was introduced to run the supply chain of the organizations more effectively and to resolve work-related disputes. In the provided case study, HGCRA is associated as due to bad health conditions of the project manager, contractors do not get the payments. As mentioned in the study by Todd and Ezeani (2016), this law is going to guide the contractor about the legal rights and possible actions that can be taken. This law states that the project manager or the project sponsor has the right to pay the due in the interim, stage or periodic payments. The terms and conditions of the payments must be written in the form of a contract agreement to use the clauses of this law (Reeves, 2016).

As per HGCRA, the contractor of a project has the right to know about the delayed payment. As discussed in the study by Cock (2019), any delay in the payment has to be informed by the project manager along with the next confirmed payment date. Besides, the project manager has to inform the contractor regarding any payment withheld and the reason for the withheld. This law supports the suspension of work due to payments issues as it states that contractors can stop the work progress in case the payment is not clear. This law gives the right to both the parties of the contract regarding any jurisdiction actions. However, without any agreement or contract between the two parties, legal actions cannot be taken. This law is applicable for all construction operations or works where contract agreement is involved.

This law states regarding the payment date that in the contract all the payment slabs along with the due date of the amount must be mentioned. Clients must issue payment issues within the five days of payment. The contractor also has the right to make an application for the payment which is going to be treated as the payment notice. According to the study by Jackson (2018), in case of any payment withheld, a pay less notice must be sent to the contractor mentioning the next payment date and the reason for the late payment. In case of contractors do not issue any notice for late payment contractors have the right to issue a default payment notice. The final date can be delayed however; the delayed payment date has to be agreed by both the parties. The project manager has to pay the full amount after the default notice in case no less payment notice is issued before.

This law states that the total payable amount has to be paid before the final date of payment. The suspension of work has to be informed to the project manager and contractor should mention the reason for suspension of work (Trushell, 2016). In most of the cases suspension of work happens due to less payment or no payment and thus in the default notice issued by the contractor time period for the suspension of work can be mentioned. The contract agreement must include the specific adjudication clauses which can be implemented in case of any violation of agreement; otherwise, the scheme for construction contract applies.

a.ii

Joint Contract Tribunal Standard Building Contract with Quantities (JCT SBC/Q) is a contract between the project manager and the contractor for the project work procedures. As discussed in the study by Sanni et al. (2020), this contract is signed in case of big complexes or building projects. This contract is suitable where conventional or traditional methods of construction are applied. Housing Grants, Construction and Regeneration Act of 1996 (HGCRA) is applied in this contract and sets all the payment related guidelines for the construction work.

The contractual procedure of this contract states that the design for the construction must be given to the contractor. The architect who will be working for the project manager is responsible for the delivery of the design and there will be no legal attachment between the architect and the contractor. However, the Contractor’s Design Portion can be applied in this contract where the contractor will take responsibility for the design of the building (Lupton, 2019).

Drawing and specifications, work schedule, bills of quantities, bill of quality must be issued by the project manager in the JCT SBC/Q contract. HGCRA guides the actions in case of payment or any other clause violation. As per this law for payment related issues contractors can take legal action against the project manager (Harris, 2020). This law also supports legal action by the project manager in case there is a violation of the agreed quality and quantity between the contractor and the project manager.

Under the guidelines of HGCRA, this contract allows work and payment divisions. This contract states that works can be carried out in several sections, however; have to be agreed by both the parties. The work division along with the work schedule should be mentioned in the contract. Violation of the work schedule may result in the legal notice by the project manager (Sanni et al. 2020). On the other hand, a contractor can take legal action as per this agreement in case of any payment related issues such as payment withheld, payment delay and many more.

b.

The contract for the project has been issued mentioning that the task is going to be completed in five subsections. The payment will be delivered after the completion of the work for every section. The initial payment will be provided as an advance for the initial costs of the contractor. The final payment will be done after the completion of the whole project and after analysing the final payment statements. The contract has been signed based on the following expected payment dates.

Table 1: Payment due dates

(Source: created by author)

Interim certificate is issued after the completion of the final work for every subsection. During a contract, payments are agreed to be paid after the completion of each subsection and for that project manager needs to issue an interim certificate (Davis, 2018). The certificate must be issued within five days of the due date of payment. In the case study due to poor health conditions of the project manager, the due date of payment is violated and went to almost the end of the month without any proper notice. There was no pay less notice from the project manager and thus the contractor is legally allowed to issue default payment notice to the project manager.

c.

As a contractor, there are guidelines in the Housing Grants, Construction and Regeneration Act of 1996 (HGCRA). For example, any delay of payment seeks notice from the project manager mentioning the next payment date and the reason for delay in payment. As per the contract agreement within the five days of due payment date, the project manager has to issue an interim certificate for the payment. In order to minimize any delay of payment as a contractor default payment notice can be issued under the guidelines of HGCRA (Nasir et al. 2018). The default notice is going to be sent by the contractor to the project manager before the less payment notice. In case any less payment notice is issued, the contractor cannot issue a default payment notice. The default payment notice is issued in case there are no interim certificates issued within the five days of default payment.

Question 2

2 a. The contractor administrator needs to provide the bills and drawings of quantities of this construction contract for specifying the quality and quantity of work in the construction project of this Business Park. He needs to build the structure of payment and price of this contract which is going to be based on lump sum with interim payments of the month. The construction administrator needs to appoint subcontractors with the written permissions of contract and architect administrator (ter Haar et al. 2016). The collaborative environment of work, advance payment, sustainability, and bonds are included with site material and retention in the construction contract. A designed portion of a contractor, collateral warranties and rights of the third party is required to be included under the provisions of this construction Act by which roles and responsibilities of contract administrator can be maintained properly.

The service agreements of pre-construction of specialists and general contractors can be used by the construction administrator with the standard building contract. This contract may be used by the administrator with the agreement of framework (FA). This contract can be used for the projects of both the public and private sectors. JCT contract mainly facilitates the process for delivering projects of building (Vogel et al. 2019). The responsibilities are set out by JCT contract for all parties within this process. The role of work is divided within the parties based on the specifications of regulations and rules of JCT contract.

2 b. Few suggestions can be implemented by the contract administrator for the completion of road construction before the time. The administrator needs to minimize the blockers and delays in the process of construction. He needs to address and identify these two factors in its construction project. The administrator needs to run the project of construction according to plan as delay in construction happens due to mismanagement of plan. The administrator must follow the rules and should go according to the plan which will eliminate the rescheduling of the projects. Subcontractors need to act fast for the completion of their work in this aspect. The shipments must be delivered to the site of construction projects as this is going to eliminate the delay in the project which takes place in construction for late deliveries of materials.

The methods of management should be improved for the project and this is going to enhance the efficiency of work among workers and employees. According to Surahyo (2018), the management of incompetent is the other reason for the failure and delay of construction project. The managers and administrators need to set up a proper project plan which must be followed by all the employees. This plan must include the required elements and materials to complete the project of the road before the deadline.

The contract administrator of this construction project in the given case study should assign the responsibilities and roles of their workers for proper coordination in the site of the job. According to Shabbar et al. (2017), this technique of the project administrator is going to get the job done before the estimated time. The administrator needs to follow the schedule of the project for the completion of its project before the time since he is going to manage the work in the sites of the project for completing it before the deadline.

2 c. Benefits of JCT contract

The JCT contract has been introduced as the standard form for the construction of contracts. Being contract document, it provides a proper guideline and other standard notes and documents which is required in the industry of construction projects in the UK. This contract is beneficial for the construction companies as it minimizes the cost of construction for the construction company to enter in a contract.

Benchmark provisions are providence to the contractors in standard forms of the contract. This contract is used in the industry of construction as it saves the times in the project site and helps the contractor to complete its work before the deadline. As cited by Klijn and Koppenjan (2016) the reduction in the transaction process is helpful for the contractors as well since minimization in the cost of the transaction is going to help the damages of liquidity. The risk is allocated in a recognizable and fair form which helps the contractor to mitigate the issues in the site of the construction project.

The standard form of this JCT contract reflects benefits which are accrued by the precedent. These benefits are going to be achieved by describing the benchmark provisions. According to Hodge (2017), such provisions generally reflect an acceptable position in the practice. The contractors, subcontractors, specialists, and consultants are involved in development of this contract. The development of this contract is going to be helpful for the contractors in future for their construction process. These are utilised by the contractors for completing their work on site and to minimize the damage of liquidity. It reduced cost in liquidity damage that assisted in fulfilling the other requirements in the construction project.

Dis-benefits

Few dis-benefits are identified in the contract of JCT. The standard forms of this contract provide less control than the traditional system to the employers over its employees. Lack of the flexibility is provided in a construction project by this contract since any change made by the employer in its requirements appears as a loss. Since the change in requirements appears as a result of extension claim for time in the project, this directs towards losses in return.

The Requirements of employers needs to be specified properly and in an accurate way since bad assembly of the requirement results in a proposal of contract. This result may not satisfy the requirements of the employer. As cited by Hamie and Abdul-Malak (2018), besides, quality of the design of the produced building in this contract cannot be better than the quality of buildings of traditional systems. Few risks have been even produced under this contract such as the risk of management which is determined by the provisions of the JCT contract. These provisions include the variations and collateral warranties in the site of construction projects.

2 d. The damages of liquidity mean those damages whose amount parties for designate and quantify of contracts. This takes place during the negotiation of contract to the party of non-breaching for receiving the amount as the compensations on the specific breach occurs such as inadequate or late performance, non-performance and others. As cited by Gunduz and Elsherbeny (2020), the damages of liquidity concept subjects to present in terms of legality in the contract based on value of estimation cost. This damage is a kind of provision which allows the parties for payment process of specific sum and one of parties needs to be in the breach of the contract. The clause of liquidated damages is useful for providing the remedies for the late and inadequate performance.

This damage can be applied in this situation in order to provide the proper solution for the raised problem in construction projects. According to Faqiri and Rasool (2019), this, in turn, would help in reaching the completion of road thereby eliminating barriers of inadequate and late performance in the projects. Also, advice of liquidated damages are going to be helpful for the employer for reducing the ambiguity in this construction project for the challenges that have been faced due to poor performance.

The agreed amount of liquidated damage is represented as estimation of parties regarding the actual and anticipated damage which is suffered by a non-breaching party. Based on it, the contract may be applied by the contract administrator to overcome the damages which are going to take place in this project regarding delay in completion of road construction of this Business Park.

2. e. If the construction was completed later than the deadline the amount of around £10,000.00 is going to be applied as the liquidated damage in this project by the employer. The employer then needs to apply the few suggestions to complete its construction project (Chiaramonte, 2018). He needs to improve the management methods, reschedule the plan and must execute the plan of project for the completion of project. He should give the responsibilities and roles to its employees such that they follow it properly to complete the construction project.

Section B

Question 5

a)

1. i) As per the tort law, it is simply concerned with the safety and security of the health of the people in a clean environment. In the opinion of Rott (2017), the main agenda of the tort law is to provide compensation in case any harm that occurs to the people due to any injury, negligence, emotional distress. Harm can include damage of property, personal injury and any type of economic loss. In the United Kingdom, tort law (2018) can be divided into three parts like negligence, intentional tort and possible liabilities. As commented by Wright (2017), the main aim of tort law is to compensate for the harm and suffering due to the action of others that is fixed by the law. In this given case study, Dave bought a house which is in poor condition and he also put a board of prominent danger therefore the youth can keep out of this house.

Hence, Ali is a toddler who has no idea about the destruction of the house and he smashed the board and played football on the ground of the house. He got injured from the rusty metal sheet on the floor of the house. As per the views of Bur and Razman, (2017), according to the tort law, if someone’s action is the cause of someone hurt then the person can compensate money in the court. In this scenario, as per the possible liability, Dave has no-fault regarding the injury of Ali because he already put a prevention board in front of the house. However, Ali is not mature enough to deal with this board and made a mistake entering the house. In this regard, a tort is an injury that caused several cuts to Ali and Dave needs to bear all the medical expenses of Ali.

In the case of possible liability, although Dave has taken all the necessary precaution to prevent the damage or injury to Ali, he has to bear all the medical cost of Ali to recover him as soon as possible. The court levied the possible liability on the defendant who is Dave here though it was the fault of Ali, not Dave. According to the author Pastorini et al, (2018), the four elements of tort include the presence of duty where the defendant has to prevent injury. Next is the breach of duty where the defendant had taken no necessary prevention for the occurrence of injury. In this case, Dave has the presence of duty that he put a prominent danger board to the gate of the house. Hence, according to the law of strict liability, he has to compensate Ali for his wounds. A tort is nothing but a civil wrong where that causes injury to another person.

Though Dave has maintained the presence of duty to put the board in front of the gate, he needs to lock the main gate of the house to prevent injury. Hence, Ali cannot enter the house and he would not get injured. If the presence of duty of Dave can be performed in another way for locking the house rather than put the board.  In the views of Ulfbeck and Andrecka (2017), hence, according to tort law, Dave has to compensate Ali for the occurrence of his injury.

1. ii) In the second case, Dave has appointed a contractor to carry out the demolition work and for doing this job, one of the contractors Harry got injured. At the time of dismantling a wooden staircase, he fell and got injured. According to the tort law, here Dave has mistaken and caused a breach of duty which caused wounds to Harry. Before recruiting the contractor, Dave needs to be careful about the poor condition of the houses and enforce possible precaution to the contractor at the time of demolition of the house. In the opinion of Vergallo and Zaami (2018), as per the tort law in case of breach of duty, the defendant needs to take several provisions to maintain the health, safety and security of the individual. In this case, Dave has to compensate for all the medical expenses and other additional expenses of Harry for not guiding him properly at the place of work.

As per the strict liability law, Harry did not have to demonstrate the reason for his injury to the court because Dave has not taken any type of action to prevent the injury. In this case, Dave needs to maintain proper safety protocol before engaging the contractor in the workplace. He needs to mention the danger side of the house to the individual contractor before the demolition work. The contractor needs to apply the safety helmet or safety guard to prevent themselves from necessary injury. Hence, it is the fault of the owner of the house Dave for not taking any kind of initiation which can prevent the contractor from severe cuts and wounds. In the opinion of Faure et al, (2016), according to the law, a tort is nothing but the occurrence of any wrong activities hence, the action taken by Dave is not proper which may hamper the health condition of Harry in a more dangerous way.

As per the rule of court, the defendant that means Dave has to confess his guilt to the court for not taking the safety measure in the workplace. According to the author Wright and Puppe (2016), as per the possible liability law of tort, Dave has all the liabilities of Harry until he gets fit to go back to the work. As per the time being, Dave has to bear all the personal and medical expenses of Harry according to the strict liability law of tort in the United Kingdom.

1. b) In this case, Rob has taken the safety measure for not leaking out of the poison from the barrels which were placed in Jane’s house. In the opinion of Shapiro (2017), according to the tort law, Rob has maintained the presence of duty to take preventive action that the poison could not leak out from the barrels. Though some of the poison gets leaked out and it destroys the valuable plant of Jane’s garden. This is nothing but a misfortune of Rob and he needs to place the barrel in a place where if the poison may leak out, it would not hamper someone’s property. The possible liability law of tort has mentioned that Rob has to compensate Jane for the disruption in his garden. As per the strict liability law, Rob needs to inform Jane before placing the barrel near the land of him. This helps Jane to take possible precaution to protect his garden from the harmful poison.

This also disrupts the nature of Jane’s garden and for this Rob needs to compensate Jane with money or any other necessary help to restore the rare and valuable plants. As commented by Millard et al, (2017), possible liability is the theory of practice of the legal responsibilities for several damages or injuries though Rob has not directly liable to the damages. This may be a case of negligence where Rob needs to inform Jane about the place of the barrel which can help Jane to take several protections. As per the tort law, although Rob has maintained the presence of duty for his negligence behavior, this damage can occur though he takes several protections about the damages.

According to the law of tort, the civil wrong here is the placing of a barrel in the near land of Jane without informing him priory. Hence, in the court, it may be proved that the defendant that means Rob has to pay the compensation without confessing any guilt to Jane. As per the views of Wright and Puppe (2016), this is the case of damage to property which influences Rob to provide necessary compensation for restoring the valuable plant of Jane’s garden.

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