Abatement:
Abatement is a defence against a claim for payment where it is argued that the amount claimed is incorrect because of defects in the work. If the defect is proved, then the valuation of the amount due may be reduced by the reduction in value of the works resulting from the defect. Abatement only applies to payment for labour and materials. Abatement exists as a common law right.
Acceleration:
An increase in the rate of progress of a contractor above that initially planned by the contract.
Acceleration costs:
The costs incurred by the contractor arising from acceleration. For example, the additional labour or overtime for labour incurred as a result of acceleration.
Acceptance:
In the context of contract formation, acceptance is the final and unqualified expression of assent to the terms of an offer.
Accepted Programme:
This is a term found in NEC contracts, such as the Engineering and Construction Contract (ECC). The Accepted Programme is prepared by the contractor. If it is not identified in the Contract Data, the Contractor submits a first programme to the Project Manager for acceptance within the period stated in the Contract Data, or soon after starting on site. NEC contracts requires the Accepted Programme to be regularly revised, including to show the actual progress achieved on each operation and its effect upon the timing of the remaining work. The time effect of Compensation Events must also be measured against the Accepted Programme.
Activity:
An operation which needs to be done in a construction project, and which is separately identified for the purpose of planning or delay analysis.
Activity Schedule:
Used in some standard form contracts, such as some versions of NEC and JCT contracts. Generally, a priced list of activities the contractor is required to carry out.
Adjudication:
Adjudication is a method of dispute resolution introduced by section 108 of the HGCRA. A party to a construction contract (save a construction contract which principally relates to operations on a dwelling which one of the parties to the contract occupies, or intends to occupy, as his residence ), has the right to refer a dispute arising under the contract for adjudication where the dispute is decided by an independent and impartial Adjudicator. Unless agreed otherwise, an adjudicator’s decision is temporarily binding (binding until the dispute is finally determined by legal proceedings, arbitration or by agreement). The adjudicator is required to his/her decision within 28 days of service of the Referral Notice. This period can be extended by a further 14 days if the Referring Party agrees or can be further extended if both parties agree. In addition to statutory adjudication, a party has a right to refer a dispute to adjudication if the contract expressly provides for such right – this is contractual adjudication.
Adjudicator:
An independent person who resolves disputes under an adjudication procedure.
Adjudicator Nominating Body (ANB):
A body that nominates adjudicators. Examples of ANBs include:
- The Royal Institution of Chartered Surveyors (RICS)
- The Chartered Institute of Building (CIOB)
- Technology and Construction Solicitors Association (TeCSA)
- Royal Institute of British Architects (RIBA)
- Institution of Civil Engineers (ICE)
- Institution of Chemical Engineers (IChemE)
- Centre for Effective Dispute Resolution (CEDR)
- Construction Industry Council (CIC)
- Chartered Institute of Arbitrators (CIArb)
- Technology and Construction Bar Association (TECBAR)
ADR:
Acronym for Alternative Dispute Resolution and refers to ways of resolving disputes between parties that do not involve commencing court proceedings.
Application for Payment:
A document requesting payment for the works carried out. To be compliant, the application for payment must specify the sum claimed, along with details of how it is calculated. It is typically produced by a subcontractor and submitted to the main contractor or produced by a main contractor and submitted to the employer or a specified person under the contract (such as the Architect or Contract Administrator). Standard forms of contract use different names for the Application for Payment. For example, the JCT Design and Build contract 2016 edition (“JCT DB 2016”) refers to the contractor’s “Interim Payment Application”, whereas the related subcontract (i.e. the JCT DB-Sub/C 2016) refers to the subcontractor’s “Payment Application”.
Arbitration:
A form of alternative dispute resolution (ADR) that provides a final solution to a construction dispute. Proceedings before a private tribunal to which the parties agree to submit disputes as an alternative to the courts.
As-built drawings:
As-built drawings are a revised set of drawings submitted by a contractor upon completion of a project. They reflect all changes made in the specifications and working drawings during the construction process, and show the exact dimensions, geometry and location of all elements of the work completed under the contract, including ductwork, plumbing and electrical. The drawings are used by the building owner for future maintenance, operations and alteration of the building or structure.
As-built programme:
The record of the actual sequence and duration of the works. This is often compared with the original / planned programme to identify the reasons for overall delay on a project and the impact of identified delay events.
As-planned v as-built:
A retrospective method of delay analysis. It is used in identifying activities that were not carried out in accordance with the original / planned programme and it involves a simple comparison of a contractor’s original /planned programme against what actually happened.
Assignment:
The transfer by agreement of a right or interest from one party to another.
Battle of the forms:
This arises when two parties are negotiating the terms of a contract, and each party wants to contract on their respective standard contract terms. By way of example, it occurs when Party A offers to undertake works for Party B on its (Party A’s) standard contract terms and Party B purports to accept the offer on the basis of its own standard terms. Generally speaking (although it very much depends on the facts of the case), the battle is won by the party who fired the ‘last shot’. In other words, the last terms sent are deemed to have been accepted and will prevail.
Breach:
The failure to perform a contractual (or other) obligation.
Building Regulations:
A set of legal requirements and minimum standards for design, construction and alterations to virtually every building which aim to ensure the health, safety and welfare of building users.
Burden of proof:
The obligation of a party in dispute to prove his case. The burden can swing from the claimant to the defendant, depending on the allegations being made. The burden of proof is not to be mistaken with the standard of proof, which is the level of proof required to discharge the burden. In civil proceedings such as adjudication and litigation, the standard of proof is the balance of probabilities. To prove something on the balance of probabilities is to prove that it is ‘more likely than not’.
Calderbank Offer:
A written offer of settlement made by one party to the other party in a dispute which is not disclosed to the court except in relation to the question of costs. The offer to settle is often labelled “without prejudice save as to costs”. This was first recognised in the case of Calderbank v Calderbank [1975] 3 All ER 333. CPR Part 36 has largely removed the need for such offers.
Causation:
A principle used in the assessment of damages for breach of contract or tort. Losses will only be recoverable if they were caused by the breach of contract or duty. The claimant must prove on a balance of probabilities that the breach caused the loss. The so-called “but for” test is used as a preliminary filter. If the loss would have happened in any event, then the breach could not be said to have caused the loss.
CDP:
Acronym for Contractor’s Designed Portion. A specified part (or parts) of the works carried out by the contractor in relation to which the contractor has also either carried out the design or has responsibility for the design. It is a term used in JCT contracts.
Certifier:
The person named in a contract as having power to issue certificates which have a contractual effect, such as in respect of interim payments. In the JCT contract the certifier is usually the Architect or Contract Administrator. In NEC contracts the certifier is the Project Manager.
Change:
A variation of the works, namely an alteration to the scope of work originally specified in the contract, whether by way of an addition, omission, or substitution to the works, or through a change to the manner in which the works are to be carried out. A term often used in design and build contracts, such as the JCT Design and Build 2016 edition.
Claim Form:
A document which initiates a civil claim.
Collateral warranty:
A collateral warranty is a contract under which a party involved in the works warrants to a third-party beneficiary that it has fulfilled its obligations under its underlying building contract, subcontract or professional appointment (referred to as underlying contract in this article). For example, the employer often requires a collateral warranty with the contractor’s design consultants and subcontractors.
Common law:
Law embodied in case precedent as developed by the courts.
Compensation event:
A term found in NEC contracts for an event entitling a contractor (/subcontractor) to further payment and/or an extension of time.
Concurrent delay:
The occurrence of two or more delay events at the same time, one an Employer Risk Event, the other a Contractor Risk Event, and the effects of which are felt at the same time. For concurrent delay to exist, each of the Employer Risk Event and the Contractor Risk Event must be an effective cause of delay to the date for completion (i.e. the delays must both affect the critical path). Where Contractor Delay to the date for completion occurs or has an effect concurrently with Employer Delay to the date for completion, the Contractor’s concurrent delay should not reduce any extension of time due.
Condition:
A term of a contract which is of such vital importance that it goes to the ‘root’ or the ‘heart’ of the contract. Breach of a condition gives rise to the claimant’s right to terminate the contract and claim damages for any loss suffered.
Condition precedent:
A condition or an event that must occur before a right, claim, duty, or interests arises.
Consequential loss:
Loss that occurs as a consequence of a breach of contract, but is not a loss that flows directly from the breach. Consequential loss is a secondary loss to a loss suffered directly as a result of the breach. As per Hadley v Baxendale [1854] EWHC J70, consequential loss will only be recoverable if the defaulting party had special knowledge of the potential for such loss at the time of the contract.
Consideration:
Used to describe the benefit each party to a contract receives. For a construction contract, this is payment in exchange for work undertaken. The law requires consideration to be of some value, but it does not need to be the full or adequate value.
Contract:
An agreement, whether written or oral, between two or more parties that creates mutual obligations that are enforceable by law. There are four elements required for the formation of a contract: (1) offer; (2) acceptance; (3) consideration; and (4) an intention to create legal relations.
Contingency sum:
A fixed sum of money allowed in the project budget, for expenditure on aspects of the project that were unforeseen or unforeseeable at the time of preparing the contract documents.
Contractor’s Proposals:
The document in a design and build contract whereby the contractor sets out how he proposes to meet the Employer’s Requirements.
Counterclaim:
A claim made by the defendant against an existing claim commenced by a claimant.
CPR:
Abbreviation for the Civil Procedure Rules. They govern the conduct of litigation in England and Wales.
Critical delay:
A delay that causes or contributes towards a delay in completion of building works as a whole.
Critical path:
The term critical path represents the sequence of activities that will take the longest time to finish. The length of the critical path is the total of all the activities’ duration along the path. The critical path is, therefore, the longest possible path through the web of construction activities. The entirety of the critical path corresponds to the minimum time needed to complete a project – any delay along the critical path would signify the need for additional time in order to complete the construction project.
Culpable delay:
A delay in the progress of works for which the contractor would not be entitled to an extension of time and consequently is at risk of liability for liquidated damages.
Damages:
The financial remedy (money awarded) to compensate a party for his loss caused by another’s breach of contract or tortious act.
Date for completion:
The contractual date that the contractor is obligated to complete the works.
Date of possession:
The contractual date upon which the contractor is to be given possession of the site and from which the contract period usually runs.
Defect:
Work which is not performed in accordance with the requirements of the contract.
Defective Premises Act 1972:
This statute imposes certain duties on those undertaking work for or in connection with dwellings. Where the project is for the provision of dwellings, the duties under this statute are in addition to those owed under any relevant contract. The Act allows a direct claim against the contractor in respect of work carried not out in a “workmanlike or, as the case may be a professional manner, with proper materials and so that as regards that work the dwelling will be fit for habitation when completed.” A number of criteria to be considered in considering whether either a dwelling was "fit for habitation" including: (i) was the dwelling on completion capable of occupation for a reasonable time without risk to health or safety (reasonable time is a question of fact); (ii) was the dwelling also capable of occupation for a reasonable time without undue inconvenience or discomfort; (iii) is the dwelling fit for habitation by all the classes of people who might reasonably be expected to occupy including pregnant women, babies, children and those suffering from common ailments and allergies such as asthma; (iv) where there are a number of defects, one should consider them altogether, and their cumulative effect; (v) fitness for habitation should be judged at the time the dwelling is constructed; (vi) merely cosmetic defects cannot give rise to liability; (vii) the presence of mould or damp, if persistent and more than minor, renders an apartment unfit for habitation; (viii) poor subsequent maintenance by a third party is not sufficient to render an apartment unfit for habitation when completed but if the defect is so bad as to make maintenance a waste of time or ineffective, then the duty will be broken; (ix) serious inconvenience which is more than transient can itself making the dwelling unfit for habitation (e.g. a lift which repeatedly breaks down could make dwellings on the upper floors of an apartment block unfit for habitation); and (x) a latent risk of failure within the design life of the building can constitute a breach.
Defects certificate:
Term used in the NEC form to describe a list of defects notified by the Supervisor.
Defence:
The formal response to the claim form and particulars of claim in which a defendant in litigation sets out a summary of its response to the claim.
Deleterious materials:
Materials, products or building techniques which are dangerous to health, or which are the causes of failures in buildings.
Design and build:
A procurement method in which the main contractor is appointed to both design and then construct the works described in the contract.
Direct loss and/or expense:
Loss and damage flowing naturally in the usual course of things within the first limb of the rule in the case of Hadley v Baxendale [1854] EWHC J70. The expression is used in JCT forms of contract to describe loss recoverable by the contractor as a result of the regular progress of the works being materially affected by ‘Relevant Matters’, including inter alia variations and acts of prevention by the employer.
Disruption:
Disruption occurs where there is disturbance of the contractor’s regular and economical progress and/or delay to a non-critical activity even though, on occasion, there is no or only a small ultimate delay in completion. At the heart of any disruption claim lies a loss of production, that is, where work is being undertaken less efficiently than was anticipated and allowed for at the time the contract was executed. Examples of disruption include work being undertaken in a piecemeal manner, manpower/plant being retained over a longer period to execute the same amount of work and idling time resulting from rescheduled/out of sequence working. Disruption is demonstrated by applying analytical methods and techniques to establish the loss of productivity arising out of the disruption events and the resulting financial loss
Due Date:
Section 110(6) of the HGCRA defines the “payment due date” as “the date provided for by the contract as the date on which the payment is due”. The ‘due date’ is not, however, the date when the actual payment is due to be received. The date that the payment should be received (the ‘final date for payment’) is usually measured from the ‘due date’.
Duty of care:
A legal duty arising in tort, independently of any contract, not to cause damage to others. In the absence of any written terms to the contrary, a professional designer will have a duty to act with reasonable skill and care.
Early warning:
A term used in NEC that requires each party to issue written as soon as a party becomes aware of ‘any matter’ which could affect the total of the prices, could delay completion or a key date, or impair the performance of the works in use. It is a proactive mechanism for both parties to identify potential problems to the project and try to avoid or minimise their impact before they happen. Early warning matters should be entered on the risk register.
Emden’s formula:
A formula for calculating loss of head office overheads and profit for a construction contract, a category of loss which can be included in a contractor’s loss and expense claims.
Employer’s Agent:
An agent acting on behalf of the employer as the contract administrator for Design and Build Contracts.
Employer’s Requirements:
The documents whereby the requirements of the employer in a design and build contract are defined. The employer’s requirements can be a simple written statement of what the employer expects the building to achieve, or a bundle of drawings and specifications etc. It usually contains details such as quality, design, and performance criteria.
Estoppel:
An equitable doctrine that where a person (A) has caused another (B) to act on the basis of a particular state of affairs, A is prevented from going back on the words or conduct which led B to act on that basis, if certain conditions are satisfied. In such cases, A is estopped (ie 'stopped') from resiling from, or denying, the existence of that particular state of affairs. There are a number of types of estoppel including promissory estoppel, estoppel by representation and estoppel by convention.
Exceptionally adverse weather conditions:
A Relevant Event under the JCT standard forms of contract, which can entitle the contractor to an extension of time for completion of the works.
Exclusion / exemption clause:
A contractual provision purporting to exclude or limit liability, wholly or in part. For an exclusion / exemption clause to be operable, it must (1) be incorporated into the contract as a term; (2) pass the test of construction; and (3) not be rendered unenforceable by the statutory provisions in the Unfair Contract Terms Act 1977 or the Consumer Rights Act 2015.
Expert determination:
A process by which parties agree to refer their dispute to an independent expert for determination. Whether or not the findings of the expert are binding will depend on what the parties have agreed to.
Extension of time (EOT):
This is a term found in contracts such as those published by the JCT. Where the contractor is delayed in performing works by a specified event of delay (‘Relevant Events’ in JCT contracts), the contractor may be entitled to an extension equivalent to that delay, to the date for completion. Usually, the contractor must comply with a prescribed process to claim the extension and the extension may be reduced where there is a concurrent delay.
The Final Date for Payment:
This is the latest date that the payee should receive payment from the payer. For example, the JCT Design and Build contract (2016 edition) provides that: “The final date for payment of each Interim Payment and the final payment shall be 14 days from its due date” (clause 4.9.1). In the event of a non-compliant contract, the ‘Scheme’ stipulates that payment should be made “17 days from the date that payment becomes due”. Final dates for payment cannot be linked to the provision of VAT invoices.
Force Majeure:
This generally refers to a clause included in contracts that removes liability for natural, unforeseeable and unavoidable catastrophes that prevent a party from performing its obligations under the contract, such as war or an act of god.
Frustration:
This takes place when an unforeseen event occurs after a contract is entered into, which is outside the control of the parties, and makes the contract either physically, legally or commercially impossible to perform, or changes performance of the contract into something so fundamentally and radically different from the intended purpose at the moment of entry into the contract, that it would be unfair to hold the parties to their obligations, and on these grounds the contract is discharged.
General Damages:
A form of damages for a breach of contract claim, including delayed completion. The amount of damages is determined after delay occurs based on actual losses and must be foreseeable and not too remote. A party claiming general damages is required to prove its actual losses caused by the delay.
Global claim:
A claim where a contractor has suffered loss caused by two or more different events which are employer-risk events but is unable to identify the loss caused by each individual event. For a global claim to be successful, it must include inter alia the following: (1) be proved as a matter of fact; (2) exclude events which are not the defendant's liability; (3) the losses claimed must be shown not to have been capable of being incurred in any event; and (4) the claimant must attempt to plead causal links as far as is possible and substantiate them with evidence.
Hearsay:
Testimony by a witness as to a matter not within his personal knowledge.
Hudson formula:
A formula for calculating loss of head office overheads and profit for a construction contract, a category of loss which can be included in a contractor’s loss and expense claims.
Housing Grants, Construction and Regeneration Act (HGCRA):
The HGCRA as amended by the Local Democracy, Economic Development and Construction Act 2009 (LDEDCA), commonly referred to as the “Construction Act”, applies to ‘construction contracts’ entered into on or after 1 October 2011 in England and Wales. Section 104 of the HGCRA defines what is a ‘construction contract’. The HGCRA provides: (1) a right for a party to a ‘construction contract’ to refer a dispute to adjudication for determination of the issue; and (2) a mechanism for payments within the course of the ‘construction contract’.
Implied term:
A term which is imported into a contract either by common law or by statute in addition to those expressly agreed by the parties.
Invitation to tender:
A document that is issued inviting contractors or suppliers to submit a bid for a project or service. It allows the contractor / supplier to make an offer. The invitation to tender does not itself constitute an offer.
JCT:
Abbreviation for the Joint Contracts Tribunal.
Jurisdiction:
If an adjudicator does not jurisdiction to decide the dispute referred, an adjudicator’s decision will not be enforced by the courts. Jurisdiction for the purposes of adjudication can be divided into two stages. The first of these is threshold jurisdiction i.e. can an adjudication be set in train at all. There are strict criteria which must be complied with in order to achieve threshold jurisdiction. The second of these is internal jurisdiction i.e. what is the scope of the dispute to be decided which the adjudicator has jurisdiction to decide.
Latent defect:
A defect that cannot be discovered by reasonable inspection such as problems with foundations which may not become apparent for many years after completion.
Letter of intent:
The term ‘letter of intent’ does not have a technical legal meaning and is used to describe all sorts of contracts. It is typically used to describe a letter from an employer to a contractor (or from a main contractor to a subcontractor) indicating the employer's intention to enter into a formal written contract for works described in the letter, and asking the contractor to begin those works before the formal contract is finalised and agreed. While a letter of intent may come in many forms, it is essentially a communication expressing an intention to enter into a contract at a future date. Typically a letter of intent will operate in one of three ways: (1) as a non-binding statement of the future intention of both parties, sometimes called a 'comfort letter'; (2) as an interim contract on its own terms, which will govern the relationship between the parties unless and until a formal written contract is executed; or (3) as a final contract which, despite there having been no formal execution, is deemed to have incorporated the terms and conditions of the formal written contract that the parties intended.
Limitation Period:
The period of time within which a party to a contract must bring a claim.
Liquidated Damages:
This refers to a fixed or determined sum agreed by the parties to a contract that is payable for a specified breach of contract by one of the parties. If a liquidated damages payment constitutes a penalty, it will be unenforceable. If the innocent party has a legitimate interest in requiring the defaulting party to pay a sum in excess of the loss the innocent party has actually suffered and the charge is not out of all proportion to the legitimate interest then the liquidated damages provision will not be a penalty clause.
Litigation:
Court proceedings to resolve a dispute between parties.
Mediation:
A flexible, voluntary and confidential form of ADR whereby an independent third party (the mediator), attempts to facilitate a settlement between the parties. Unless agreed otherwise by the parties, the costs and expenses of the mediation are to be shared equally.
Milestone:
A date which is prescribed for the doing of an act or completion of part of Works, usually specified in the contract. Progress payments are often linked to the achievement of milestones.
Mitigation:
The principle that a party who has suffered loss has to take reasonable action to minimise the amount of its loss suffered.
NEC:
Acronym for New Engineering Contract.
Negligence:
The tort of negligence is concerned with a breach of a duty of care. To be successful in a claim for negligence, one must prove: (1) the defendant owed the claimant a legal duty of care; (2) the defendant was in breach of that duty; and (3) the claimant has suffered damage as a result of that breach.
Offer:
In the context of contract formation, an offer is an expression of willingness to contract on specific terms, made with the intention that it is to be binding once accepted by the party to whom it is addressed.
Overheads:
Costs incurred by a party in running a business that are generally not attributable to any particular part of a project or product.
Parol evidence rule:
A rule of evidence that excludes the use of extrinsic evidence (e.g. prior correspondence) in determining the meaning and legal effect of words in a written contract. There are, however, exceptions to the rule.
Part 36 offer:
An offer to settle made under Part 36 of the CPR. Part 36 is a provision which aims to encourage parties to try to settle their disputes by setting out the costs consequences of offers to settle if they are made in accordance with Part 36. In short, if a party fails to accept a realistic offer made by the other side, it is at risk of being penalised in costs and interest at the end of the case. Making such an offer is therefore a legitimate means of putting the other side under pressure to settle, and should not generally be seen as a sign of weakness. A Part 36 Offer has to be made in a prescribed way and must satisfy certain requirements.
Patent defect:
A defect that can be discovered by reasonable inspection.
Pay Less Notice:
A Pay Less Notice must be issued when a paying party wishes to change its mind on the amount included in a Payment Notice, allowing it to alter the amount due to the payee near to the end of the payment cycle. Unless the payer issues a valid Pay Less Notice on time, it must pay the notified sum on or before the final date for payment. Under JCT contracts, the payer must issue any Pay Less Notice “not later than 5 days before the final date for payment”. However, in the event of a non-compliant contract, the ‘Scheme’ stipulates that it should be issued “not later than seven days before the final date for payment”.
Payment Notice:
This is the document the payer issues to the payee, providing details of the sum payable and how it has been calculated. The sum payable is known as the ‘notified sum’, which should be paid by the ‘final date for payment’ in the absence of a valid Pay Less Notice issued on time. In JCT contracts, a Payment Notice must be issued no later than five days after the due date. In the event of a non-compliant contract, the ‘Scheme’ also stipulates that payment notices should be issue “not later than five days after the payment due date”.
Performance bond:
A written guarantee or pledge to guarantee the performance obligation(s) of another (e.g. to complete a construction project). If there is a failure to perform then the bonding party will make good up to the amount of the bond.
Practical completion:
There is no standard definition of practical completion. Generally, it is the point at which a building project is complete, except for minor defects that can be put right without undue interference or disturbance to an occupier. Some describe this point as when the building project is "capable of beneficial occupation and use". This phrase can also refer to the point at which an architect or a contract administrator confirms that the building contractor has achieved "practical completion" under the building contract. Many standard form building contracts do not define practical completion, leaving this to the professional judgement of the architect or the contract administrator. At practical completion, a certificate is issued to that effect and the employer takes back possession of the site.
Prevention Principle:
A party cannot benefit from his own act of prevention. It follows, by way of example, that an employer cannot hold the contractor to a specified completion date and levy liquidated damages against the contractor, if the employer has by act or omission prevented the contractor from completing by that date.
Prolongation:
An increase in the time taken to complete the project.
Provisional sum:
Provisional sums are generally an allowance or estimate (often described as a “best guess”) included within the contract price of a construction contract for works that are: not sufficiently defined, designed or detailed to allow an accurate determination of its cost at the time the contract is entered; and/or work that the employer may or may not wish to be carried out. It is included mathematically in the original contract price but the parties do not expect the initial round figure to be paid without adjustment. The contract usually provides expressly how it is to be dealt with. A common clause in substance provides for the provisional sum to be omitted and an appropriate valuation of the work actually carried out to be substituted for it. A provisional sum can be categorised as ‘defined’ or ‘undefined’. For a provisional sum to be regarded as “defined”, certain information has to be given – it must state: (a) the nature and construction of the work; (b) quantities indicating the scope and extent of the work; (c) where the work is to be fixed and what is to be fixed to it; and (d) “any specific limitations”. If information so stated, the contractor deemed to have allowed for it in the planning/programming and pricing of preliminaries. If the information falls short of the above then the provisional sum is treated as “undefined”. If “undefined”, the contractor does not allow for planning, programming and preliminaries implications.
Purchase Orders:
A purchase order is a document from the buyer that indicates their intent to purchase goods and/or services from the seller / supplier.
Quantum Meruit:
This is a phrase meaning “as much as one has earned“. It denotes a claim for the recovery of a reasonable sum of money for work done or services rendered at the request of and accepted by the defendant. An action in quantum meruit is only available where the claimant is not recompensed by performing its obligations. Such an action cannot arise if the parties already have a contract to pay an agreed sum.
Referral Notice:
In adjudication proceedings, within seven days of issuing the Notice of Adjudication, the Referring Party must issue its ‘Referral Notice’ (i.e., statement of claim), to both the other party and the Adjudicator.
Reply:
In the case of litigation, a pleading from a claimant in answer to the defendant’s defence. In adjudication it is the term used to describe the Referring Party’s answer to the Responding Party’s ‘Response’.
Repudiatory breach:
A breach of contract that gives the innocent party the right to choose either to terminate the contract or to affirm it. A breach of condition is normally repudiatory, as is a breach of a term under a contract that deprives the other party of substantially the whole benefit of the contract. Examples of events that may amount to a repudiatory breach include: (1) failure by an employer to allow access to the site; (2) refusal by the contractor to carry out the work; (3) the contractor abandoning the site; (4) a contractor contracting with another subcontractor to carry out the same work; and (5) where time is of the essence then a delay can amount to repudiation. There is generally a high evidential bar to overcome in establishing a repudiatory breach and hence caution should be exercised before terminating the contract on grounds that you consider that the other party has committed a repudiatory breach. If a party terminates the contract where they do not have a right to terminate, then the termination itself will amount to a repudiatory breach.
Request for Information (RFI):
A request by one party to a contract (usually the contractor) to another party (usually the employer) for information in relation to a matter (e.g., design information) arising out of or in connection with a contract.
Response:
In adjudication proceedings, the Responding Party is given the opportunity to issue a ‘Response’ (i.e., a defence) to the Referral Notice, together with providing all evidence and documents on which it relies.
Scheme:
The Scheme for Construction Contracts (England and Wales) Regulations 1998 as amended by the Scheme for Construction Contracts (England and Wales) Regulations 1998 (Amendment) (England) Regulations 2011 is a statutory instrument which implies certain provisions relating to adjudication and payment into all ‘construction contracts’ that are subject to the HGCRA but which do not comply with its requirements.
Scott Schedule:
A schedule (usually in the form of a table) that identifies the differences that are in dispute between the parties.
Set-Off (/Contra charge):
Diminution or extinction of a claimant’s claim in an action by deducting a counterclaim. Where a right of set off arises, it can act as a defence to part or the whole of a claim.
Simple contract:
A written or oral contract that has been executed under hand (i.e. has just been signed by the parties). On the other hand, a contract is executed under seal where it is signed by the parties, witnessed and most importantly made clear that it is executed as a deed. There are two important differences between simple contracts, and contracts that are executed under seal: (1) Simple contracts and contracts under seal have different limitation periods. An action founded on a simple contract cannot be brought after 6 years from the date on which the cause of the action accrued. The limitation period for a contract under seal is 12 years. (2) Unlike a simple contract, a contract under seal does not have to be supported by valuable consideration.
Specifications:
The specifications provide detailed descriptions regarding the materials and work quality required for a construction project.
Subcontract:
An agreement made between a contractor and subcontractor, for the subcontractor to provide a specified part of the work required in the main contract.
Suspension:
The temporary cessation of work on a project. Section 112 of the HGCRA provides that a party may suspend performance of its obligations under the contract provided: (1) the payer has failed to pay a notified sum by the final date for payment (or in the case of the payee issuing a valid Pay Less Notice, the payer has failed to pay a sum stated as due in the Pay Less Notice by the final date for payment); (2) such failure continues for 7 days after the payee has given the payer a written notice of its intention to suspend performance; (3) the written notice has been properly served; and (4) the written notice states the grounds upon which the payee is intending to suspend performance. If any of the above 4 conditions have not been satisfied, then the suspension will be unlawful and amount to a breach of the contract.
Technology and Construction Court (TCC):
A specialist court with specialist judges who deal with all types of construction, engineering and technology disputes both from within the UK and which arise internationally.
Tender:
A quotation submitted by a prospective contractor supplier in response to an invitation to tender.
Termination of contract:
This is the ending of the contract. At common law there are rights to terminate a contract. These include in respect of ‘frustration’ and ‘repudiation’. In addition, most standard forms of construction contract include express provisions that allow termination, setting out the circumstances under which the contract may be terminated and the procedure to be followed. Insolvency is an example of a circumstance that usually allows the contract to be terminated.
Time at large:
Time at large is the consequence of the prevention principle (as defined above), whereby a contractor has been prevented from completing the works by the contractual completion date, for which delay the contract does not entitle him to an extension of time. In these circumstances, time is at large, which means that the obligation to complete by the specified date is replaced by an implied obligation to complete within a reasonable time. It also follows that the employer is unable to enforce liquidated damages.
Time of the essence:
The effect of a contractual term that makes timely performance an essential obligation under the contract. In such circumstances, the failure to perform the obligation by the time specified by the clause will put the defaulting party in material breach of contract giving rise to the innocent’s party right to exercise its remedies for breach, which includes a right to terminate the contract and claim damages.
Tort:
A civil wrong (act or omission) other than a breach of contact which causes a claimant to suffer loss resulting inn legal liability for the party who commits the tortious act.
Unfair Contract Terms Act 1977:
A statute that regulates contracts by restricting the operation and legality of some contract terms, especially in respect of terms which limit/exclude liability or are otherwise unreasonable.
