Communication Skills In Building Contracts

Essential Elements of a Valid Contract

1 What is a valid contract?

A valid contract is an agreement expression that exists between two bodies or parties to deliver product or services. It is an agreement where the parties plan on the money promises or any valuable commodities and carry out the whole process as per the law (Hussin, & Memon, 2013).

Identify three (3) essential elements of a valid contract.

A valid contract is made up of the following essential requirements: The need or intention of creating law enforcement relations, Offers that contain all details or documents that entails what is to be provided, the money or anything of interest has to be considered in the contract agreements (Hussin, & Memon, 2013).

Identify three (3) standard building contracts used in Australia

A valid contract is made up of various standards of contract building.in Australia, different standards of building contract are employed which are:

Australian building industry contract-ABC MW-1 major works contract. The standard contract is made to get the use of simple plain language such as English and entails few risks to architects as compared to other standards.

Australian standard general conditions of contract AS2124-1992.It is most preferred as it avails for price or lump sum contract.

Australian standard general conditions of contract AS4000.the standard is employed to bring changes in construction law and practice (Hussin, & Memon, 2013).

Explain the different types of contracts the builders in Australia use.

In Australia, the government choose to apply various types of contracts. These include:

Lump sum contract.it is the most contract that is applied in construction contract in which the involved parties come into agreement on a lump sum price before the contract is initiated. The contractors are given the opportunity to analyse, evaluate or execute the project’s completion for the provided price.it is here where the contractors are allowed to study the contract and come up with the right quotation.in places where the project or work nature are not appropriately stated or where seed is considered, the lump sum contract is inefficiently applied (Hussin, & Memon, 2013).

Lump sum with rising and fall. This is a contract in which there is allowed variation in project cost either in terms of materials, labour and other spending involved in construction. During the agreement between the two parties, legal clauses may be used to prevent price or cost shooting where as in the places where good negotiations or agreements the clause is not mostly applied (Hussin, & Memon, 2013).

Cost plus a fee.it is also referred to as reimbursement cost contract in which payments are made to the contractor to account for all expenses allowed as he or she is also added some amount of money for profit making. This makes the companies generate more product techniques that will economize the market sector. This contract form is divided into cost plus award fee, cost plus fixed fee, cost plus incentive fee and cost plus a percentage of cost (Hussin, & Memon, 2013).

Cost plus a percentage. This is an added amount of money that a client appoints to the contractor which he or she will use to cater for any additional project expenses incurred during construction. The contractor is required to account for how the additional amount was utilized during the construction exercise (Hussin, & Memon, 2013).

Types of Contracts Used in Australia

Do and charge contract. This type of contract is intended to be used by all construction works which does not involve any fixed price.it is a method where the client chooses to pay the contractor for all the building expenses with an additional fee.

According to Section 31 of DOMESTIC BUILDING CONTRACTS ACT 1995, identify five (5) major components of a building contract?

In accordance with the section 31 of domestic building contracts act 1995. a contract has been classified into five main components which are illustrated as follows: The contract should contain the address, name, and signs of the parties involved. This is very important as it makes legalizes the contract.it will be found hard defend the contract in court due to lack of proper data or documentation or absence of relevant signatures. The plan or contract scope involves details that elaborate on the availed services comprising of proper quality, materials, work schedule, grade elaborations and other available specifications that are included in the construction project.

It is most important to consider the cost of the project and the payment terms. This is a very important part of the contract which has a need to be properly stated or agreed. Both the client and the contractor have to discuss about the cost and the means of payments which is important to prevent confusion or disagreements in service provision. This section entails the payment schedules, due amount and payment terms and conditions.in addition to this, the two parties need to consider the contracts working schedule which will ensure proper project working.it is in this part that appropriate starting and project completion time is estimated. From this, both the client and the contractor gain information which helps them differentiate work and calendar dates. This also enables the contractor to evaluate if delays will be incurred in the project due to improper weather, the process of obtaining work permit, work approvals and assessments.it enables the contractor to account on the project expenses such as time additional. Furthermore, the authorities needs to be consulted to avoid complexities. This shows the parties that have the authority to make project construction decisions.it contain bodies that legally make binding decisions before the project begins as it also saves time and confusion reduction during construction (Hussin, & Memon, 2013).

List and describe four (4) documents that can be used in the formation of contract documents

There are various different documents used in the formation of contract document which include:

Work statements. This document consists of important information about the scope of the work and useful binding information that is essential in project construction. A proper working scope puts into arrangements contains proper detailed information on when the project is to start or end and all the expenses.

Contracts and agreement contracts. These are construction documents used by the clients and the contractor or an officer in charge of the contract as is an important component in contract making.it is through this document that other referrals and documents are attached.

Major Components of a Building Contract

General conditions. This is a document that well elaborates on the evaluation of the project as it covers all the rights of the involved parties.it contains all additional costs, things that should be claimed and participants’ titles.

Construction schedule.is an important document as it allows the officer in charge of the construction to go through it and be in a position to know the time that will take the project to complete. Construction work schedule is part of agreed monthly terms that need to be checked and updated with time (Hussin, & Memon, 2013). 

Write a short note on the following terms used in the contract

Architect

An architect is a qualified individual whose responsibility is to design project, make a plan and verify the building or construction of a project. The individual uses the knowledge used in class to apply in designing, analysing and planning how to make building construction. He or she has appropriately qualified certificates and is licensed or is recognized government institutions (Hussin, & Memon, 2013).

Contract price:

A contract price is defined as the price that is used to cater for all the services and goods present in the contract.it is from this that one is capable of knowing whether a contract exists or not. When this is taken to a court, the court may deny the contract as it lacks the contract price.it caters for the expenses or damages that may be incurred in the contract (Hussin, & Memon, 2013).

Provisional Sum:

The provisional sum is an allowed amount or money which a consultant evaluates to cater for those things that may not have been included in the or well evaluated in details in the project contract.it is included in the contract design price.

Tribunal:

Tribunal is any individual or institution who has the responsibility to authorize or identify whether or not if a contract exists or check if there are disputes in the between the parties. This is probably the contract assigned an officer or the court’s judge (Hussin, & Memon, 2013).

Cooling-off period notice:

Cooling-off period notice is the allowed time to the clients which enables them to cancel or stop a contract before it the working begins.in this notice, the client is not charged or penalized for the actions (Hussin, & Memon, 2013).

Which among these circumstances can cause a contract to be terminated?

The CLIENT and the contractor need to brief construction surveyor for the construction within two weeks after agreeing with the constructor to end the contract due to the regulation stipulated (Hussin, & Memon, 2013).

Identify three (3) ways a contract can be terminated.

A contract can be terminated or discharged in the following ways:

Performance impossibility.in this case a client is capable of terminating a contract when the contractor fails to show up. If the due to the agreements the contractor is able to show up and do the assigned job, it is referred to as performance but if he or she fails, it’s known as performance impossibility (Hussin, & Memon, 2013).

Documents Used in Contract Formation

Contract breach. This is where a contract is not accepted by one of the parties and due to this, the contract can easily be stopped or discharged as both parties must be in agreement for a contract to exist. This might be due to one or either party failing to fully meet the needed requirements.

Contract completion. A contract is usually discharged if all the requirements made in the contract during the agreement are completed. Both parties are asked to have well documentations on the starting and end of the contract as it is more important in the cases of disputes arise. The law courts also use this document in the process of solving the cases (Hussin, & Memon, 2013).

Identify two Circumstances in which builder and owner can be accounted for contract breach

A substantial breach by the owner includes clients’ delay which the makes complexities in the project design by the contractor. Subsequent performance is a case which requires the contractor or builder to follow up in court in case the client fails to pay for the delivered services in areas where the project is not completed.

A substantial breach by the Builder includes material breach of a contract and the immaterial breach of contract. A material contract breach is where the contractor finishes the contract work a few days after the agreed time. A material breach is a case where the contractor completes the work weeks or months after the agreed time.

Identify three (3) factors that can affect the building project and require an extension of time.

There are various factors which affect the construction projects which require enough time for proper completion of the project. They are followed;

Economic factors. This is usually compared to the project working budget and is most essential in the resource managements. If the contract budget is lower, it can affect the project in terms of performance, completion time, the function of the intended project, its safety and the quality of the services offered. This can also lower the contractor’s morale to build the project.

Management factors. This will determine the project running as it determines the safety procedures, added time requirements, the working environment, the agreement made between the parties as well as the allocation of the resources.

Legal factors. This contains all the practices, rules and activities required for the completion of the project. Most time is lost in the enactment of the legal laws or requirements as some are complex to understand and apply.

For a client who needs to hire a contractor who will install specialized equipment to different office spaces, every two months needs to employ period trade contract which allows the contractor to perform the given task timely. This will apply each time the client has a task (Hussin, & Memon, 2013).

Why is it important to identify an intention to create a legal bond in a contract?

There are various reasons to identify the intention to create legal relations and considerations. The most important reason is that the legal sequence contains information on the good preparedness of the two parties to enter into the contract agreement. It is through this act that the party’s interests are obtained. Both parties make promises during this period (Hussin, & Memon, 2013).

Describe the following contracts used in construction

Consultancy contract. Is an agreement that enables the evaluation of the project in terms of identifying the weaknesses and strengths and thus use the obtained information to improve the conditions. This helps in the reduction of some errors during the project designing as they are rectified during the agreement.

Supply of goods contract.is a contract form in which a contractor decides to avail or supply all materials or goods and services required by the client within the specified time and at a constant price which is accepted by the client. This saves time and is economic as the client doesn’t need to go out for the services (Hussin, & Memon, 2013).

What type of contract should be used in the given situations? Choose from the following contracts given.

The following table consists of various work situations and appropriate contracts.

Situation	Type of Contract
A contractor was hired to oversee and manage the renovation of his shop.	Minor works contract
A contractor was hired for the development of a design for a shop, as well as to handle the construction of it.	Design and constrict contract
A contractor hired more contractors to perform basic construction tasks for a project for a short duration.	Project management contract

You must:

• Analyse the contract in appendix 1 at the end of this task and respond to all the questions.

Scenario 1
You are a builder tasked to level the ground for the construction of the new house. Upon inspection of the plot, you noticed a few mounds of earth caused by growing tree. You suggested to the owner that you need to uproot the tree to level the ground properly – specialised uprooting equipment will be used and the tree will be replanted properly so that mounds will not appear. But the owner is hesitant and keeps on insisting that the tree should be left alone because of sentimentality issues.
According to the contract, can the action of the owner cause a breach of contract?	ð Yes	ÿ No
Why or why not? (Base your answers on the provisions of the contract provided) Yes, the action of the owner is likely to results into a breach of the contract.  This’s is because according to the clause 7.3 , which clearly states the fundamental breaches of  contact for instance any refusal or failure to fully comply by the warranty that is provided ay lead into  a breach of contract.  The refusal can either be by the owner or the proprietor.
Scenario 2
During the construction of the housing frame, the owner decided that he wants to see how the work is being done and asks for a viewing schedule. As the construction supervisor, you approved his request – granted that he must wear all necessary protective gear during his site visit.
According to the contract, can the action of the supervisor scenario cause a breach of contract?	ð Yes	ÿ No
Why or why not? (Base your answers on the provisions of the contract provided) No The action and not lead to a breach of contract.  This is because according to the specifications and conditions of the construction, the constructor is mandated to allow the owner of works, his agent or any authorised person to  view the project and this should be with respect to the conditions thereof so that the duty becomes legal, contractual and within the boundaries of the contract.  Hence, it will appropriate for the owner of the land to j=access but with respect to the conditions of the contract.
Scenario 3
Following the events in Scenario 2, during the site viewing, the owner accidentally tips over a metal ladder that hits a part of the current housing frame. A builder tried to stop the metal ladder from tipping over but he was unsuccessful. Now, the frame is badly damaged and needs a replacement frame.
Who is liable for the damages to the construction? (Defend your answer by using/citing relevant clauses/sections of the contract provided)  The person who is responsible for any damage in the construction site is the owner. This is in regards to the contract terms 6.4 which elaborates that the builder is not liable to any kind of damage that is causes din the construction site as a result of damages by the owner or any other person who is insured by owner.  Besides, the calluses 6.4 and d 6.21 clarifies that not eleven the agent nor the any other employee of the owner is liable to the damages that are incurred by the owner. Hence, all the costs which are incurred in such a manner are indemnified by the owner and not the builders.
Question 4
According to the contract, on what bases can the owner terminate their contract with the builder? Identify two (2) instances that are applicable.
There are various circumstances that can lead to the termination of contract by the owner.  Some of these circumstances includes.   When the builder does not produce a duplicate of the relevant insurance policy or even when he fails t provide a currency certificate which entails the various details of the insurance that are present in the building act of 1993, as stipulated by the 5th clause.    Besides, in any case that the builder persistently refuses and neglects to put a remedy or remove defective items hence putting the progress o the construction work in jeopardy.  This may be expressed when the builder refuses to work in accordance with the terms of the contract and obey its legal terms.
Question 5
What are the two (2) warranty insurance statements that are part of the legislative requirements of this contract?
In case the contract specifies the roles of the construction needed, or the outcome the client would like to get, such that the client acknowledges the constructors skills and judgement In case the construction entails building a new or renovating the house to satisfies the owners demand and expectation, the constructor will do exactly as required by the owner/client.
Question 6
Whenever progress of construction is delayed due to refusal of a governing body to issue a building permit, what action should the builder do next?
in any such case, the Builder will within a reasonable time advise the Owner of the cause and the reasonable approximated length of the delay and the constructor will be granted sufficient and enough added duration to finish the construction.         AND/OR The Builder may, within fourteen days(two weeks)notification of the planned construction delay,the client should be briefed of the rrason fo such request and outlining the additional period needed by the constructor (Hussin, & Memon, 2013).