The agreement which occurs between two particular individuals that the contractor and an employer with the aim of constructing, repairing, modifying and renovating any particular structure for a period of time for a price and based on set standards is referred to as the construction contract. It is a requirement that both the employer and contractor signs the contract and later the terms of the particular contract should be complied with by all the parties.
The contracts which relate to the construction projects often come with a certain level of risks. Such risks are typically distributed among different during the construction process. However, the different construction professionals who comprehend some of the standard terms of a construction contract have got less related to the signing of certain contracts which are poorly written.
Law, Currency and Language
According to the clause, the New Zealand law shall be used to govern the contracts
The contacts shall be payable in New Zealand currency and this will also include the prices of the particular contract. Such rates and prices will include the goods and services tax.
The English language will be used for all the communications between the engineer, contractor, and principal
The contract will be done in English as gvoern3d by the New Zealand laws. Also, the prices will be done in New Zealand currency.
According to the clause, under certain special conditions, the contract will be considered as a lump sum contract.
All the obligations as contained in the contract will be fulfilled by the contractor.
The contractor will carry out all the obligations in the contract.
Lump sum Contract
The sum indicated in the contract which is subject to the certain adjustments made in the contract will be considered as a lump sum contract price.
In the event that there is a discrepancy identified in the schedule of prices, there will be notification by either by the contractor or the engineer.
A variation may be considered in the event that a more important discrepancy has been identified.
Lump sum contract is the price stated in the contract without taking into account the adjustments.
Measure and Value Contract
The price of the contract will be estimated on the basis of measured quantity and this is according to the value and measure of contract.
An intention to measure the contract work shall be given in notice to the contractor by the engineer. A representative will act on behalf of the contractor when necessary.
In the event that there are errors contained in the tendered schedule, there shall be an adjustment in the tendered sum by the engineer.
The value of the contract work shall be measured by the engineer through a notification of the contractor.
Documents Prepared by the Engineer or Principal
On the request of the copies of the contract including the specifications and drawings, the contractor will provide them to the engineer.
Documents Prepared by the Contractor
The contractor will issue certain specifications and drawings to the engineer when applicable.
A copy of the specifications and drawings will be maintained by the contractor especially that relating to the on-site.
The contractor will issue certain documents at the request of the engineer.
The principal will be provided with a security and this will be in the form of a contractor’s bond by the contractor in two months of the date of tender acceptance.
Before the surety and the contractor have been executed, there will be no payment made.
In the event that the contractor fails to carry out the obligations in the contract, there will be an estimation of the cost of remedy by the engineer to compensate for loss or damage caused to the principal.
The contractor shall bear all the costs relating to the contractors bond.
There will be no subcontract entered into by the contract without the consent of the principal.
A section of the contract can be subcontracted by the contractor especially to the subcontractors indicated in the tender for the contract.
There are subcontracts which are allowed but only with the consent of the principal.
General Obligations
The key responsibilities of the contractor will entail providing services, labor transport, temporary works and all that which is required to complete a contract work.
In the event that the contractor is charged with the design of the contract work, he or she shall conduct certain design work with diligence, skill, and care.
The key general responsibilities of the contract work should be done with care, skill, and diligence.
Contractor’s Representative
According to this clause, all the necessary supervisions shall be done by the contractor of the contract work.
Based on the clause, there can be certain arrangements made by the contractor for a contract work which has not been set on site. Such a work can be done by an individual appointed by the contractor under certain special conditions.
All the contract works shall be made cared for by the contractor and this shall be from the time the contractor will gain possession of the site.
All the loss and damage at the construction site will be paid for by the contractor especially those arising out of his or her obligations.
The contractor has to care for contract works and site.
According to the clause, the contractor is in charge of the contract works and hence he or she will maintain order with the aim of ensuring that property and persons are protected.
The contractor will protect the site through erection and maintenance of the site. However, when such structures will no longer be needed they will all be removed.
The contractor shall provide protection to the property and persons in the construction site.
The setting out of the contract work shall be done on the basis of the instructions, information issued by the engineer and the contract by the contractor.
The engineer will have access to the setting out of the contract work. The responsibility of the contractor will not be interfered with when the engineer checks the position set out made by the contractor.
The contractor will set out the contract work.
According to the clause, all the materials to be used during the contract work will be provided by the contractor and this will also entail all the minor items which have not been indicated in the contract. Such materials will all be used for the completion and performance of the contract work.
Based on the clause, the provisions of the particular contract work shall be complied with by all the workmanship and materials. Also, the materials to be used in the temporary contract work shall all be new.
According to the clause, in the event that all the payments are done in the form of advances by the principal and this is especially for the materials which have not been integrated into the contract works, the possession of such materials shall only be due to payments made by the principal. Where repayments are done as advances by the principal, the possession of such materials shall be returned to the contractor of the contract work.
According to the clause the contractor prepares the programs for contract work and submits it to the engineer and this is usually done within 10 working days after the acceptance of a tender. Such a programme has to indicate that the due date of completion of the contract.
The programme developed by the contractor will be used provide reports on the progress of the particular contract and this will be done against the planned dates including the forecast dates for completion of the contract works. Also, the separable portions shall be included.
According to the clause, payments shall only be done upon the submission of the programme to the engineer by the contractor.
There are certain special conditions which may compel the development of a comprehensive programme. Such a programme shall entail a number of items such as a sequence of dates and works for the contract work, dates for access of certain sites and critical path network analysis to display the key activity duration estimates.
Based on the above clause, an engineer has to be there for any particular contract work and this has to be ensured by the principal. Also, the key roles have to be done by the particular engineer in a good faith and reasonably.
There are certain special conditions which are used in setting the key professional qualifications and name of the engineer.
According to the clause, in the event that there is an engineer, he or she shall be made available by the principal by; appointment of a qualified individual to act on his behalf and provision of a notice to the contractor on the appointment of a new engineer.
There has to be an engineer for a contract work to be completed fully and reasonably.
Role of Engineer
According to the clause, an engineer has two specific roles in the contract work which entails, providing expertise advice and representing the principal. The engineer also has a role in working independently among the contracting parties so as to make fair and impartial decisions.
According to the clause, all the powers bestowed upon the engineer shall be exercised by him or her without any delay.
All the directions and instructions will be provided by the engineer according to the clause. However such directions must all be appropriate.
Any failure by the engineer which will result in a delay in the completion of the contract work and incurring of certain additional costs will be considered as a variation.
The above clauses indicate that an engineer shall provide instructions and directions on completion of contract work.
According to the clause, the engineer has the powers to appoint an engineer’s representative through a notice to the contractor.
The continuance of a particular engineer representative can be objected by a contractor at any given time and this shall be on the basis of incompetency of such a representative.
There are certain powers which can be exercised by the engineer’s representative, however, such powers can be limited in the contract on a number of occasions such as review of issues in dispute and the valuation of variations.
According to the clause the engineer’s representative decision is binding to both the principal and contractor. Such decisions are only binding in the event that the engineer proves that contractor is dissatisfied with the instructions provided and also that the representative has failed to inspect any of the contract works.
Another individual can be appointed by the engineer to help the representative to carry out some of the key duties.
An engineer’s representative can be appointed by the engineer to help in carrying out some of the duties on his or her behalf.
Inspection, Recording, Measuring and Testing
According to the clause, all the materials to be used in contract work will undergo an inspection by the engineer and this is prior to the expiration of the defects notification paid. Also, the materials which will require sampling and testing will be done by the contractor.
According to the clause, the reports on the tests and samples as directed by the engineer shall be considered as a variation.
An access to the sites and other places of the contract work will be made available to the engineer at all times. The contractor will also have the same opportunity.
When the contract work is ready for testing, measuring, inspection and recording, the engineer will be notified by the contractor. The work will then be measured and examined by the engineer.
All the work to be inspected, recorded and measured will not be covered up without notifying the engineer.
In the event that the engineer is notified of inspection, measuring and recording of the work when it is not ready, the principal will incur certain additional costs which will be deducted from the contract price.
All the contract should be inspected, measured, recorded and tested by the engineer.
Removal and Making Good
According to the clause, the contractor can be directed by the engineer to remove and re-do a work related to materials which have not been done in accordance with the contract work.
The contractor has to conduct the work as indicated in the previous clause and this should be done within the stated time.
The principal will recover all the costs of work as indicated in clause 6.5.2 from the contractor.
The contractor shall not be relieved of his or her duties on the basis of action taken by the engineer in the previous clause.
A contractor shall re-do all the work not done in accordance with the contract work.
The practical completion certificate, payment schedules, and final completion certificate shall be provided by the engineer.
The contractor and principal shall not be relieved of their duties by the certificate or payment schedule.
The amount in the payment schedule can be corrected by the engineer and this has to be done in writing to the contractor of the contract work.
There are various certificates which will be issued by the engineer such as payment schedule and final completion certificate.
Suspension of Work
In the event that it is necessary to suspend the work, the contractor will be directed by the engineer to suspend all the work.
The contract work will be secured form damages during the suspension by the contractor.
When the suspension remains for a period of more than 3 months, the engineer will be requested by the contractor to allow for the continuation of the contract work.
A contract work can be suspended by the engineer when necessary.
An engineer may instruct for Urgent Work
An engineer can direct for urgent work in the event that there is an accident, emergency, and failure. It could also be as a result of some outstanding work.
According to the clause, in the event that the contractor is unwilling to take certain reasonable action on the contract work, the engineer will take certain action aimed at directing for an urgent work to be done.
The cost of not undertaking the work by the contractor as indicated in the previous clause will be recovered by the principal.
The engineer can request for an urgent work if the contractor is unwilling to do the work at the stipulated time.
According to the clause, the principal shall be indemnified by the contractor against liability incurred, loss or damage and any othe
The principal shall not be indemnified in certain circumstances such as risks indicated in clause 5.6.6, permanent use of land for contract work and omission of the principal.
The principal will be indemnified in events such liability incurred and loss or damage caused to him or her.
The special conditions set out the insurance for the contract including the parties to effect the insurance and value of insurance.
No material alteration shall be made to the insurance by the principal and contractor and that only such alterations shall be done through the approval of the other insurance parties.
The contractor shall be liable for more than one deductible amount in the event that there are two insurance policies covering the loss or damage and liability.
There has to be an insurance to help cover for the loss, damage or any liability covered in the contract work.
Contractor Arranged Insurances
According to the clause, the insurers which have been accepted by the principal and therefore approved will be the insurances responsible for contract work under certain special conditions.
According to proceeding clauses, the insurance will be required to be in joint names with both the principal and contractor.
A replacement insurance information shall not be provided by the contractor at a period which is less than 15 working days before the expiration of the date of any particular policy.
According to the above policy, the contractor will be required by the principal to provide the policies and other receipts relating to the existing premiums.
Only the insurers accepted by the principal shall offer insurance services to the contract work.
In the special conditions where it has been established that the particular contractors are a party of the construction insurance, he or she will, therefore, effect the construction insurance of the contract works including the material under his or her care.
The insurance policy must note the interests of any other particular individual and this should be noted under special conditions and this will be ensured by the contractor.
According to the clause, the sum insured will not be any lesser compared to the total contract price and this is in relation to professional fees, cost of demolition and allowance for an increase of the price of the contract.
The property incurred will exclude certain aspects such as loss or damage not liable to the contractor under 7.1.2, liability relating to liquidated damages on the contractor and cost incurred to remedy loss or damage.
The contractor can also initiate for a private insurance arrangement.
The contractor can initiate for a public liability insurance when it has been identified that he or she is a party to the insurance and this is under special conditions.
According to the clause the contractor has the powers to effect for an insurance of a motor vehicle third party insurance due to the use of the vehicle the custody of the contractor
The insurance on clauses in section 8.5 will not entail insurance of damage or loss for a contractor not under 7.1.2, the liability of liquidated damages and excepted risk in 5.6.6.
According to the clause, there will an effect of professional indemnity insurance by the contractor under certain special conditions.
The above mentioned insurance shall also include the covering for certain liability for loss due to non-meeting of the obligations by the contractor.
A contractor can also initiate for professional indemnity insurance.
Principal Arranged Insurances
According to the clause, there is a certain element which will not be covered by insurance under section 8.8 and 8.9. Such include, the liability of liquidated damages and the remedy cost due to loss caused by certain material which is defective.
The contractor will provide information to indicate that all the insurance required are all available before the beginning of a contract work.
All the policies pertaining to a particular contract work will be made available to the principal by the contractor when requested.
According to the clause, the contractor can arrange for insurance policies which have not been provided by the principal.
Based on the above clauses, it can be concluded that the principal can also arrange for private insurance policies for the particular contract work.
According to the clause, the principal can initiate the construction insurance when it has been established that the principal is a party to the construction insurance.
The principal will also effect insurance policies when it has been established that the contract works are in the nature of repairs, maintenance, and alterations and this shall be done under 8.8.1. The insurance shall cover structures existing and other structures within the vicinity.
According to the clause, the principal can also initiate another separate insurance policy and this shall be done in compliance with the obligations in 8.8.1 and 8.8.2.
The principal will also effect a public liability insurance under special conditions for an amount which should not be lesser than that indicated in the special conditions. Such an action will only be taken when it is established that the principal is a party to the public liability insurance
According to the clause, the above mentioned insurance will entail cover for liability in the forest and rural fires act and legal liability of the contractor due to the performance of contract work.
Before the issue of final completion certificate, the principal will be required to maintain its insurance after the beginning of the contract works.
From the above clause, the principal can initiate for a public liability insurance of the contract work.
Variations Permitted
According to the clause, variations to the contract work will be ordered by the engineer on certain reasons such as the omission of work, change in the quantity of work, need for certain additional work and change in the positions and dimensions of the contract works.
At times, there could be directions to change a particular part of the contract work by the engineer and this may be considered as a variation.
There is no variation which will be ordered by the engineer without consulting the contractor.
An engineer may order for variations in the contract work when necessary.
A contractor cannot order for variation in the contract work without informing the engineer.
A contractor shall give notice to the engineer when any particular issue not found in section 9.1 to be a variation and this will be done in a one month’s time.
The contractor can also make variations to the contract work, however, the engineer must be informed on the issue.
According to the clause, there is a limit set for the compensation of costs which are related to time. It can, therefore, be concluded that the valuation of variations is calculated based on the time of completion of a particular construction contract.
The above clause typically limits the utilization of daywork based on the situations where there is the provision of an effective technique of valuation. Under the circumstances in which there are daywork rates, the charges for the construction contract is estimated based on the net cost and a given percentage. Such a percentage enables both determination of the offsite and on-site overheads. From the above mentioned clause, it can be concluded that the value of a particular construction contract can be calculated based on the use of Daywork.
The clause is primarily concerned with certain circumstances in which there is a failure by the contractor to provide timely and sufficient notice for an extension of time, the particular engineer will therefore not be given an extension of time. The sufficient and timely notice by the engineer for an extension of time is of significance in ensuring that reasons for request of an extension can be investigated and a decision made thereafter.
Based on the above clause, it can be concluded that no particular extension of time can be given unless there is timely and adequate notice by the concerned engineer about the extension.
According to the above clause, there will be no extension of time to the contractor in relation to the costs of the particular contract. However the extension of time is due to default by the particular principal, it will be easy to recover the time related costs and this will be in terms of damages.
The extension of time for a particular contract does not allow the contractor to pay for the time related cost, however, he or she can only be entitled to the extension when there is default by the principal resulting in damage.
The clause stipulates that the contractor can be only be notified by the Engineer on the defects at a period which is not less than five working days and this is usually at the end of the Defects Notification Period. From the clause, it can be concluded that the defects can only be remedied a period of five working days upon the receipt of the defects notice by the engineer.
According to the above clause, the contract work can be arranged by the engineer in the event that the defects are not remedied by the contractor within the specified time. Such a work is however done at the cost of the contractor and it can also be recovered by the principal. Therefore in the following payment schedules, the cost is typically deducted from the contractor’s payments.
Based on the clauses, it can be concluded that the defects in the particular contract work must be remedied within the set time frame.
Based on the clause, the contractor may be directed by the engineer to look for defects which are suspected to have happened and this is usually at the defects notification period. Such a remedy has to be done at the cost of the particular contractor.
The clause can be used to seek for suspected defects which might have occurred at the time of the defects notification period.
The clause stipulates that the remedial work entails a number of elements such as minor defects and omissions, damage caused to the contractor and outstanding such as maintenance manuals and built drawings.
The remedial work is made up of three elements as indicated above in the paper. Such aspects include minor omissions and defects and the damage caused to the particular contractor.
According to the clause, there are a variety of conditions which must be approved by the engineer for an issue of a final completion certificate upon the expiry of defects notification period. Such conditions include submission of all the producer statements by the contractor, submission of the final form of the as built and operations and maintenance manuals by the contractor and remedy of all the particular defects by the contractor as notified by the engineer.
The contractor of a particular contract work has to satisfy certain conditions set by the engineer before the issue of a final completion certificate upon the expiration of the defects notification period.
According to the above clause, the liability of the contractor is typically not affected by the issue of the final completion certificate and this is especially in relation to the contract work not conducted based on the contract work. There are also warranties and guarantees provided by the third parties.
From the above clause, the issue of final completion certificate has no impact on the liability of a particular contractor in relation to the contract work.
The above clause usually provides details relating to payment claims by the contractor as per the requirements in the contract work. The specific information it provides relates to certain special conditions such as advance payments for various materials which could be on the construction site and those not at the site already.
There is certain information which must be made available for payment of claims by the contractor in the contract work.
The clause stipulates the specific time needed to be used to provide a progress payment schedule and this is typically for the application in section 22(b)(i) of the construction contract act.
According to the clause, there are certain deductions which should be made by the engineer during the amendment of the payment claims of the particular contractor. Such deductions are usually done in relations to the contract’s terms. Some of the deductions include retentions and the liquidated damages.
Based on the above mentioned clause, it can be concluded that during the amendment of the payment claims of the contractor, there are certain deductions which must be made by the engineer.
According to the above clauses, the date of the service of the particular claims on both the contractor and engineer contains the deadlines ad timeframes to be used in response to the claims of payment of the contractor. The time frame usually determines the date of payment of the particular claims by the contractor. There are a variety of time frames such as 10,12 and 17 among others.
There has to be a specific time frame and deadlines to determine the date for payment of claims of the particular contractor.
The clauses take into account the retentions as one of the principal’s deductions which must be done on the amount which has been certified for payment. The estimations of the retention are used based on a particular formula. It could also be determined under certain special conditions.
A bond in lieu of retentions can be provided by the contractor to the principal in the event of certain special conditions. The bond is usually in the full amount of the retentions and this is based on the whole of the contract work. When the final completion certificate is issued, the bond is typically released.
Based on the above clause, there is a certain bond called the bond of lieu of retentions which is only released after the issue of final completion certificate.
In the event that a final payment schedule has not been provided by the engineer on time, the various concerned parties will be all notified through certain details. A progress payment schedule will also be given and this will be done until that time when there shall be the provision of final payment schedule
An engineer must provide relevant reasons on why he or she may have delayed to provide a final payment schedule on time.
The clause stipulates that the engineer can issue a certificate of final payment schedule when the contractor has failed to provide a final claim. The specific days to notify for the deductions by the principal is 10 working days. The contractor at times may not accept the scheduled amount and this is especially when the final payment schedule is issued by the engineer in his or her absence.
A certificate in relation to the final payment schedule is issued by the engineer when the contractor fails to provide a final claim.
According to the clause, the Reserve Bank of New Zealand’s website is used to publish the both the historical data and the monthly interest rate, especially for a past 12 months. The base rates for interest is usually based on that which has been stated in the Reserve Bank websites especially for the small medium sized enterprises.
The base interest rates stated in the Reserve Bank websites are used to provide loans by the banks in New Zealand.
According to the above clause, there are certain general conditions which have been approved by the commissioner of Inland Revenue for a particular contract work. One of the conditions includes AZN 3910:2013 and this enables the creation of invoices of the recipients. The payment schedule, for example, has to include a tax invoice under an act and has to undergo an endorsement by the buyer using the words buyer created tax invoice.
The general conditions approved by Commissioner of Inland Revenue must be complied with under the contract work.
According to the above clauses, there are typically certain issues which would not be challenged and hence are considered during dispute proceedings. Such matters relate to a final payment schedule, claims by the contractor and valuation of an engineer.
There are a variety of issues which cannot be challenged and hence not considered during dispute proceedings.
According to the clause, the dispute resolution cannot be either be suspended or delayed according to section 13 and this is based on the proceedings of adjudication. In a contract work, the dispute resolution and adjudication proceedings are done at the same time.
The clause states that a particular dispute is only be referred to the particular engineer at a time which is not later than a month. Such a dispute is done after the final payment schedule has been provided.
A meeting aimed at resolving a dispute can be requested by either the engineer or a party to the contract work.
According to the clause, certain issues surrounding a particular dispute as agreed by an expert is submitted. Such issues relate to those not accepted by the expert’s decision.
A formal decision may be provided by the engineer within 20 working days by the engineer. Such a decision cannot be modified and corrected by any particular individual and it binds all the parties.
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