Term
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Definition
| A common procedure in which the owner of a project contracts with a single firm, often called a prime contractor, for its construction. This firm may contract with specialty contractors for portions of the work. * The only method that gives a firm price prior to construction phase. Hinze p. 528 |
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Term
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Definition
| A situation where the general contractor subcontracts all the work on a project. *Many owners place a contractual limit on the amount of work that may be subcontracted or require the general contractor to perform a minimum amount of work. Hinze p.19 |
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Term
| Separate contracts method |
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Definition
| An arrangement by which the owner let contracts directly to specialty contractors for various portions of the work. |
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Term
| Self Performance Method/Force Account |
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Definition
| A mechanism by which no contracts are awarded for a construction project. The owner's own workers or employees are solely responsible for the construction effort. |
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Term
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Definition
| An arrangement by which the owner lets a single contract for both the design and the construction of a project; also know as design-construct or turnkey construction. |
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Term
| Professional Construction Mgmt Method |
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Definition
| A method in which the owner hires a construction mgmt firm to perform professional svcs and represent the owner during the design and construction phases. |
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Term
Construction Management at Risk |
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Definition
CM is established as an independent contractor, the CM is "at risk".
The CM is responsible to the owner to complete the project by the established substantial completion date and within the agreed budget. ***The CM must compensate the owner when the construction does not satisfy the established standards of performance for a project. |
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Term
| List the 6 types of contract methods |
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Definition
1. General Contract Method
2. Separate contracts method
3. Self performance method
4. Design-Build Method
5. Professional Construction Mgmt Method
6. Construction Mgmt at Risk |
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Term
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Definition
| an agreement, usually between two parties, that is enforceable by law and reached on the basis of fact. It can be executed or executory. |
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Term
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Definition
| A means of resolving disputes in the judicial system in which a formal claim is filed and the disputing parties typically obtain the services of lawyers. |
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Term
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Definition
| Common law based largely on tradition or accepted practice over an extended period of time. i.e. past court decisions. |
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Term
| When is a contract executed? |
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Definition
| When both parties to the agreement have fully performed in accordance with the contracts terms. A construction contract is only executed after completion of work and total payment by owner. |
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Term
| When is a contract 'executory'? |
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Definition
| when some portion of the agreement remains to be done. may be executory on one or both parties. (i.e. on one party if the owner has not paid for completed work). |
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Term
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Definition
| an agreement created by mutual promises made by the contracting parties. Each party is the promisor and promisee. (most construction contracts) |
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Term
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Definition
| A contract in which one of the parties makes a promise, while the other party exchanges something other than a promise, usually a stated performance. (not common in construction) |
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Term
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Definition
| one in which the terms of the agreement, whether verbal or written, are clear, concise, explicit and definite. (almost all written agreements are express.) |
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Term
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Definition
| one in which the terms of the agreement are not clearly stated, but are established through inference and deduction. The terms of the contract must be implied from the actions of the parties. Not in written form. |
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Term
| What is a joint arrangement? |
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Definition
| one in which the individuals are ‘joined’, in a legal and liability sense, as one party in the action. They will be treated as united and undivided. If one is released from the obligation, they are all released. |
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Term
| What is a several, separate or severed agreement? |
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Definition
| each party has a liability that is separate from that of any of the other parties. |
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Term
| What elements are required to make a valid contract? |
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Definition
offer
acceptance
meeting of the minds
consideration
lawful subject matter
competent parties |
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Term
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Definition
| an offer is considered to be made when one parson signifies to another person a willingness to enter into a binding contract on certain specified terms. May be express or implied, just like acceptance. Once made is is revocable as long as not accepted. This the bid submitted to the owner. |
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Term
| What constitutes acceptance? |
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Definition
| Acceptance creates the contract, provided that it is made in the manner and at the time specified in the offer. it must be definite unqualified and unconditional. |
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Term
| Define Meeting of the minds |
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Definition
| The contracting parties agree on the basic meaning and legal implications of the contract. |
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Term
| Define 'Unreality of consent' |
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Definition
| when it is not known until after the contract is made that there was not a meeting of minds. Provides cause for nullifying a contract. |
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Term
| What are the categories of mistakes of fact? |
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Definition
| unilateral mistake or mutual error (unintentional); the parties do not have the same perception of the identity of the subject of the agreement; the subject of the agreement does not exist as a result of death, destruction by fire, etc.; misrepresentation (innocent misrepresentation of fact); Fraud )false representation of fact with intention to deceive); Fraud (deliberate failure to provide relevant information that is vital to an agreement); Duress (threats forcing to consent an agreement). |
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Term
| What is an 'Adhesion contract'? |
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Definition
| a contract where one party has an obvious advantage over the other. e.g. when a subcontractor is forced to accept the terms of the general contractor. Generally binding. |
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Term
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Definition
| Something of value received by one of the parties in exchange for another item of action that is of value; must be regarded as consideration by both parties and both parties must receive consideration. Value of each parties consideration does not have to be equal. |
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Term
| Define lawful subject matter |
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Definition
| The subject matter cannot violate any fundamental dictates of common law, and cannot be contrary to public policy.Contracts on public works projects cannot constitute a restraint of competition (e.g., collusion in bidding) |
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Term
| What are examples of non-competent parties? |
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Definition
| minors, persons deemed insane and drunken persons. infants or those not mentally competent. |
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Term
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Definition
| A principle by which a contract becomes binding in spite of the fact that no formal agreement was made between the parties concerned. Ref: promissory estoppel |
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Term
| What types of agreements MUST be in writing to be binding? |
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Definition
| Those related to real estate. |
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Term
| What is contract assignment? |
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Definition
| Assignment occurs when one party to an agreement transfers the rights or obligations of the agreement to another party who was not originally involved in the agreement, but became involved only after the assignment was made. May be prohibited by terms of agreement. General rule: the 2nd party to the contract cannot be placed in a worse position than would have been the case if the assignment had not been made. |
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Term
| What is Sovereign Immunity? |
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Definition
| A government entity cannot be sued without its consent (both federal and state). Some states have abolished sovereign immunity. Courts are reluctant to permit its use. |
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Term
| What general rule is followed when one party to a contract wants to cancel the contract, even though the 2nd party has already performed a portion of or all the obligations under a contract? |
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Definition
| If the parties cannot amicably resolve the dispute, a lawsuit may be filed against the other party. This begins formal litigation in which a court decision will legally bind both parties to the outcome. |
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Term
| Give a construction example of a unilateral contract. |
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Definition
| A landscaping subcontractor might offer to sell 100 railroad ties for $6 each to a GC. If the GC sends the SC a check for $600 for those ties, a contract was formed unilaterally. The GC was in sole control over whether a contract would be formed. |
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Term
| Give a construction example of a bilateral or mutual contract. |
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Definition
| most construction contracts are bilateral. The GC promises to perform the construction work as specified, and the owner promises to pay a stated amount for this work. |
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Term
| Give an example of a contract in which the parties to the contract are bound jointly. |
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Definition
| Suppose several landowner join to hire a land agent to sell their properties as one parcel. If a dispute over payment to the agent arises, the individuals would be sued jointly, as all mutually benefited from the agents efforts. |
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Term
| Give an example where the parties of a contract are bound severally. |
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Definition
| Several property owners hire a GC to to make improvements along their properties facing the street. Each property owner was contracting severally, pays the GC a predetermined prorated amount. This had the same effect as if each land owner had signed a separate contract. |
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Term
| What types of projects are most suitable for the General contract approach? |
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Definition
| Projects in which the GC has unique skills that should reduce the cost of construction to the owner. The rest of the work would be subcontracted out, a price is known to the owner before construction begins and the owner's contractual liability is limited. |
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Term
| What are some advantages of the General contract method? |
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Definition
| The owner know the price before construction begins, contractual liability is limited for the owner, the GC should have a skill that reduces overall cost. |
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Term
| What are disadvantages of the General Contract method? |
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Definition
Design-bid-build often extends project duration.
The owner does not have an agent or friendly party involved in the contractual arrangements. The inflexibility may lead to more claims against owner and the reln's become adversarial in order to cut costs. |
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Term
| Give an example of a project for which separate contracts might be successfully used. |
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Definition
| (owner as a general contractor). best used when the owner has a CM in house or has experience in CM and there are limited types of construction involved. In house improvements? |
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Term
| What conditions must exist for separate contracts to be viable? |
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Definition
| The owner must an in house CM or construction engineer to administer the contracts or else contract the CA out to a third party for oversight (not recommended). |
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Term
| Discuss the criticisms that have been made of public agencies performing construction services by the self-performance or force account method. |
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Definition
| These agencies are generally criticized because they can undervalue the cost of their equipment and services and put in lower bids than private firms required to pay taxes and other fees and which also have higher overheads. |
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Term
| What type of project might be ideally suited for the design-build or design-construct method? |
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Definition
| This approach is very popular when constructing large industrial type projects or where construction expertise is required from the very beginning stages of design. |
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Term
| What type of work is particularly well suited for force account? |
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Definition
| Maintenance work. Work should be small in scope, on going in nature and simple in character. |
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Term
| What are the advantages of using the professional construction mgmt approach? |
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Definition
| The owner has someone overseeing budget and design of the project, essentially acting as an advocate to come in on time and under budget, possibly with an incentive in pay. Construction expertise can be involved right from the beginning. |
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Term
| Which types of contractual arrangements lend themselves to fast tracking? |
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Definition
| CM at risk, Professional CM method, design-build method and self-performance (NOT the General Contract Method). |
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Term
| Describe how the different contracting approaches differ in terms of allocating risk. |
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Definition
General: GC has most of risk
Separate: Owner assumes more risk (No GC involved)
Self-performance: Owner assumes risk
Design-build:GC/designer assumes most risk, owner assumes less control.
Professional CM: GC assumes risk, owner has CM to oversee work.
CM at Risk: owner has CM and CM assuming most risk and CM is under contract to oversee construction and outcome. |
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Term
| Discuss bilateral and unilateral contracts in relation to express and implied contracts. |
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Definition
| both types of contracts can be express or implied. Express contracts are best used in situations where detail and clarity are of the utmost importance, as in construction contracts with definite scope and performance requirements. Unilateral contracts put the power of forming the contract to one party and may be either express or implied. |
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Term
| Give an example of an implied contract in which estoppel will prevent one party from canceling the contract. |
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Definition
| If the GC relies on a SC quoted price to submit a bid for a job. Promissory estoppel prevents the SC from removing or modifying his bid at a later date. |
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Term
| Discuss the significance of a bid being an offer rather than an acceptance. |
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Definition
| A bid confers on the offering party the power to create a binding contract. the bid itself shows a willingness to enter into a contract, but does not constitute acceptance. An offeror could negotiate with a bidder to modify the bid, thus creating a counter offer. |
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Term
| What type of contracts are typically governed by common law? |
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Definition
| Intangible personal property sales (copyrights and goodwill), the sale of real property or a contract for services. |
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Term
| What contracts are governed by Article 2 of the UCC? |
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Definition
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