Construction Contracts Overview

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What must each party do according to the Standard of Conduct?

Act with justice and honesty (correct)

Ignore the duties of the other party

Act with impatience and greed

Focus solely on their own interests

Written dimensions should be considered lower in authority than measured dimensions.

False

In case of a conflict between a Contract Document and the Agreement, which rules must be followed?

Rules 1 to 4 must be followed.

The provisions of the Civil Code of the Philippines on the interpretation of contracts shall be applied in case of ______.

conflict Signup and view all the answers

Match the following rules with their descriptions:

Rule 1 = Various provisions interpreted together Rule 2 = Civil Code interpretation guidelines Rule 3 = Specific priorities in conflicts Rule 4 = Preference based on document priority Signup and view all the answers

Which of the following is classified as an act of God or force majeure?

Acts of terrorism Signup and view all the answers

Conflicts arising from a contract must always be resolved by arbitration.

False Signup and view all the answers

What is the purpose of defining terms in a contract?

To ensure clarity and mutual understanding between parties Signup and view all the answers

Acts of __________ include war, terrorism, and natural disasters, which are beyond the control of the involved parties.

God Signup and view all the answers

Match the following terms with their definitions:

Force Majeure = Unforeseeable circumstances preventing contract fulfillment Contractor = The party responsible for executing the work Owner = The party who commissions the construction project Indemnity = A duty to compensate for loss or damage Signup and view all the answers

What is the highest priority document in the order of precedence outlined for construction contracts?

Agreement as modified by Notice of Award of Contract Signup and view all the answers

The mere listing of Contract Documents establishes an order of precedence among them.

False Signup and view all the answers

What should be followed when there is a discrepancy in Contract Documents?

The Contract Documents shall be interpreted as complementary to each other. Signup and view all the answers

In the presence of a conflict, the ____ is responsible for interpreting discrepancies in the Contract Documents.

Owner Signup and view all the answers

Which rule states that good and accepted construction practice shall be followed when details are silent?

Rule 6 Signup and view all the answers

Special Conditions of Contract take precedence over General Conditions of Contract as per the outlined order.

True Signup and view all the answers

What is meant by 'order of precedence' in Contract Documents?

It refers to the priority in which the documents should be interpreted or followed. Signup and view all the answers

Study Notes

Scope and Definitions

This document outlines general contract conditions between a private owner and contractor for construction projects.
It references Republic Act No. 4566, also known as the Contractor's License Law.
The document defines key terms for the purposes of the contract.

Act of God or Force Majeure

This term covers events outside the reasonable control of either the owner or contractor.
It includes unavoidable events, even with due care.
Examples listed include: war, hostilities, revolution, insurrection, mutiny, acts of foreign enemies, natural disasters (earthquakes, floods, etc.), strikes, and epidemics.

Advance Payment/Down Payment

This is money provided by the owner to help the contractor with initial startup or procurement costs before construction begins.

Agreement

Refers to the agreement signed by the owner and contractor.
The attached contract documents are excluded.

As-Built Drawings

Drawings that depict the actual construction, including locations of installations, fixtures, and services.

Bid

A tender, proposal, or quotation from a bidder to perform the work.
The bid must be in a form that complies with instructions to bidders.

Bid Bond

A guarantee that the bidder will enter into contract if the bid is successful.
This is a financial guarantee.

Bid Bulletin

Additional information about the bid documents.
It is provided before the bidding date.

Bid Documents

A collection of documents, including Invitation to Bid, drawings, and technical specifications.
A copy of the contract is included for prospective bidders.

Breakdown of Work and Corresponding Value

Listing of project work parts and their corresponding values.

Change Order

A written instruction from the owner to the contractor to adjust the work or contract price after the contract execution.
A change in the contract time could also be included.

Completion Time Limit

The period allowed for completing a project or parts of a project.

Contract

The agreement itself and all attached documents.
Integral parts include special provisions, general conditions, specifications, drawings, and performance/payment bonds.

Contractor

The person or company who is properly registered and licensed by the Philippine Contractors Accreditation Board.
Who has been awarded the contract.

Contract Documents

All documents attached, additions, deletions or modifications to the contract.
Integral parts of the agreement.

Contract Price

Money or other consideration paid by the owner to the contractor for the work.

Cost

Money spent on the project.
Overhead and other related charges are included.
Profit allowances are excluded.

Drawings

Graphical presentations used to detail the work and its supplementary details.
This can include shop drawings.

Final Payment

Payment of the final progress billing.
It includes variations, price adjustments, escalation, and acceleration of work.
Does not include retention money.

Guarantee Bond

Security furnished by the contractor with their surety company.
This guarantees the quality of materials, workmanship, and contractor's performance and fulfills the contract obligations.

Instructions to Bidders

List of bid preparation guidelines and contract award conditions.

Invitation to Bid

Notice provided to prospective bidders.
It includes information about the project and bidding procedures.

Last Known Address of a Party

Contact information for those involved in the contract.

Laws

Applicable laws, ordinances, and government rules and regulations.

Owner

The individual or entity commissioning the project.

Owner's Representative

Person or entity authorized to act on behalf of the owner.

Payment Bond

Security to ensure faithful contract compliance for the work.

Performance Bond

Contractor's guarantee to the owner that the work will be correctly completed.

Retention

A portion of progress payments kept by the owner to manage future costs or defects.

Schedule of Materials and Finishes

Outline of materials and types required for the project.

Special Provisions or Conditions

Instructions modifying drawings, specifications, or general conditions.

Specifications

Description of work requirements, quality of materials, and construction methods.

Sub-Contractor

A contractor who works under the main contractor.
Their license must be registered.

Supplementary Specifications

Specific information clarifying/changing main specifications or requirements.

Surety

The person, firm, or corporation that issues the bond.

Work

This includes labor, materials, equipment, and transport that are required for project completion.

Execution, Correlation, Meaning of Terms and Intent of Documents

Includes intent of the contract for all work and materials.
Details a standard of conduct for each party.
Outlines how to handle conflicts in the agreement's provisions.

Rules

Detailed rules for interpreting conflicts in the contract and documents.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz covers essential aspects of construction contracts, including general conditions between private owners and contractors. It explores key definitions related to contract terms and references relevant legislation such as the Contractor's License Law. Participants will gain insights into critical concepts like force majeure and advance payments.