What is a
Contract?
It is an agreement between two or more
parties where the law recognises the rights and
obligations arising from such agreement. They can
be “Simple Contracts” or
“Speciality Contracts”.
“Simple Contracts” have 3 fundamental
elements:
Agreement - to accept an offer
Intention - to enter into a legally binding
relationship
Consideration - the movement of an advantage from
one party to another such as payment
Liability period - 6 years
“Speciality Contracts” the main
differences are:
They must be executed under Seal or as a Deed
They must be signed by an individual, or
individuals, acting on behalf of a corporate
body
No consideration is required
Liability period is 12 years
What liabilities could you be exposed
to for delay?
Damages at Large
Unliquidated damages such as:
General Damages – these are
losses that arise naturally from a breach, be it
for delay or otherwise
Loss and Expense – these
are incurred as a consequence of delay
Consequential Loss – these
are the more remote and indirect losses arising
from any delay and are usually the highest in
amount
Collateral Contract
What is a Collateral Warranty and why
are they required?
It is a separate contract usually between the
Employer/Beneficiary/Funder and the Sub Contractor
that runs alongside the Sub Contract between the
Contractor and the Sub Contractor
Its purpose is to provide the
Employer/Beneficiary/Funder a contractual route to
the Sub Contractor because they are not a party to
the Sub Contract and therefore cannot take action
against the Sub Contractor under the Sub
Contract
What is a Vesting Agreement and why are
they required?
This is an agreement with another party, often the
Main Contractor, which provides them with the
security for any payments made for materials off
site. The goods are marked up as belonging to the
Main Contractor and therefore in the unlikely
event that the Sub Contractor becomes insolvent,
the goods that have been paid for will pass to the
Main Contractor.
Download a Contract Review Form for your
use. This will give you focus on your contractual
responsibilities and liabilities.
