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Questions and Answers
Which of the following is NOT one of the four basic elements required for a legally binding contract?
Which of the following is NOT one of the four basic elements required for a legally binding contract?
A legal objective in a contract means that the purpose of the contract must be lawful.
A legal objective in a contract means that the purpose of the contract must be lawful.
True
What is meant by 'Mutual Agreement' in the context of contract law?
What is meant by 'Mutual Agreement' in the context of contract law?
A meeting of the minds showing an offer and acceptance.
A contract is an agreement between two or more persons that creates, varies, or extinguishes obligations of a __________ nature.
A contract is an agreement between two or more persons that creates, varies, or extinguishes obligations of a __________ nature.
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Match the following elements of a contract with their descriptions:
Match the following elements of a contract with their descriptions:
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Which element of a contract involves both an offer and an acceptance?
Which element of a contract involves both an offer and an acceptance?
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The legal capacity of the parties involved in a contract is irrelevant to its enforceability.
The legal capacity of the parties involved in a contract is irrelevant to its enforceability.
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What is a 'counteroffer' in the context of contract law?
What is a 'counteroffer' in the context of contract law?
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What type of construction contract combines features of both lump sum and scheduled contracts?
What type of construction contract combines features of both lump sum and scheduled contracts?
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A cost plus percentage of cost contract typically discourages the contractor from increasing costs.
A cost plus percentage of cost contract typically discourages the contractor from increasing costs.
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What type of contract is desirable when the scope and nature of work can be broadly defined?
What type of contract is desirable when the scope and nature of work can be broadly defined?
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The _____ of a cost plus fixed fee contract is determined as a lump sum considering various factors.
The _____ of a cost plus fixed fee contract is determined as a lump sum considering various factors.
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Match the following contract types with their descriptions:
Match the following contract types with their descriptions:
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What is a potential issue with cost plus contracts?
What is a potential issue with cost plus contracts?
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Cost plus contracts are mainly used when the costs can be easily predicted.
Cost plus contracts are mainly used when the costs can be easily predicted.
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Name one factor that can lead to the use of a cost plus contract.
Name one factor that can lead to the use of a cost plus contract.
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Which of the following can be considered as valid consideration in a contract?
Which of the following can be considered as valid consideration in a contract?
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A contract can be enforced even if it lacks valid consideration.
A contract can be enforced even if it lacks valid consideration.
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What is meant by 'legal capacity' in a contract?
What is meant by 'legal capacity' in a contract?
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A __________ contract is typically used for building projects and is not suitable for unpredictable conditions.
A __________ contract is typically used for building projects and is not suitable for unpredictable conditions.
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Which of the following types of contracts is commonly used for heavy or highway work?
Which of the following types of contracts is commonly used for heavy or highway work?
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Match the following types of contracts with their descriptions:
Match the following types of contracts with their descriptions:
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A party must possess the proper license to have legal capacity in construction contracts.
A party must possess the proper license to have legal capacity in construction contracts.
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What adjustments may occur in unit-price contracts if actual quantities vary significantly?
What adjustments may occur in unit-price contracts if actual quantities vary significantly?
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Which of the following is used for measurement of works?
Which of the following is used for measurement of works?
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Site potentials are recorded only after the completion of the project.
Site potentials are recorded only after the completion of the project.
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What are the main issues looked into during the closing of a contract?
What are the main issues looked into during the closing of a contract?
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A claim is mostly concerned with __________ arising under a legally valid contract.
A claim is mostly concerned with __________ arising under a legally valid contract.
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Which of the following statements about claims is TRUE?
Which of the following statements about claims is TRUE?
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Match the following types of claims with their descriptions:
Match the following types of claims with their descriptions:
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All claims are considered a form of blackmail.
All claims are considered a form of blackmail.
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What is the primary purpose of dispute management in construction?
What is the primary purpose of dispute management in construction?
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What is the primary focus of the Model Law adopted by the United Nations Commission on International Trade Law?
What is the primary focus of the Model Law adopted by the United Nations Commission on International Trade Law?
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The Model Law's definition of 'commercial' applies exclusively to contractual relationships.
The Model Law's definition of 'commercial' applies exclusively to contractual relationships.
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What is the name of the important source of legislation for arbitration in Ethiopia?
What is the name of the important source of legislation for arbitration in Ethiopia?
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The Model Law was adopted on ________ by the United Nations Commission on International Trade Law.
The Model Law was adopted on ________ by the United Nations Commission on International Trade Law.
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Match the following countries with their arbitration sources:
Match the following countries with their arbitration sources:
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Which of the following is a time-related claim category?
Which of the following is a time-related claim category?
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Cost-related claims exclusively focus on delays in project completion.
Cost-related claims exclusively focus on delays in project completion.
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What are the main categories of claim causes identified by Wideman in 2001?
What are the main categories of claim causes identified by Wideman in 2001?
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The alternative dispute resolution method that includes negotiation and mediation is known as __________.
The alternative dispute resolution method that includes negotiation and mediation is known as __________.
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Which of the following is NOT listed as a reason for claims according to Levy, 2000?
Which of the following is NOT listed as a reason for claims according to Levy, 2000?
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Liquidated Damages are one of the entitlements in time-related claims.
Liquidated Damages are one of the entitlements in time-related claims.
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What is the process of relieving of obligation in claims administration?
What is the process of relieving of obligation in claims administration?
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Study Notes
Course Content
- Architectural Practice II (ARCH 4135), Construction Contract
- Course content covers Principles of Contract Law, Types of Construction Contract, Contract Documents, Contract Management (Administration and Closing, Claims and Dispute Management)
Principles of Contract Law
- A contract is an agreement that creates, varies, or extinguishes obligations of a proprietary nature. It affects the legal relationship between parties.
- Contracts need elements:
- Mutual agreement (offer, acceptance, legal objective, valid consideration, legal capacity of parties)
- Legal Objective (the contracted thing itself must be legal)
- Valid Consideration (value exchange – e.g. money, services)
- Without valid consideration or legal capacity, a contract is invalid and unenforceable.
Parties to a Construction Contract
- Simplest form: Two parties (Owner & Architect/Engineer) or (Owner & Contractor) or (Owner & Contract Manager).
- More complex: Multiple parties (e.g. Owner & multiple contractors simultaneously, by trade or task).
Why Use Contracts in Construction?
- Describe scope of work
- Establish timeframe
- Establish cost & payment provisions
- Set forth obligations & relationships
- Manage multiple risks
- Establish control mechanisms
- Minimize disputes
- Improve economic return on investment
Types of Construction Contracts
-
Fixed-Price (Lump Sum):
- Lump Sum
- Unit Price
-
Cost-Plus:
- Cost + Fixed Fee
- Cost + Incentive Fee
- Cost + Award Fee
- Cost + % of Cost
-
Hybrid Examples:
- Time & Materials
- Guaranteed Max Price (GMP) with Split Savings
- Early Completion Bonus
- Contracts used for civil engineering works include Lump sum, Unit rate, Lump sum and schedule, Cost plus fixed fee, and Cost plus percentage of cost contract.
Contract Documents
- Main contract documents include: Invitation to tender, Instructions to tender, Form of tender, The Agreement, Condition of contract (General + Particular), Specification, Bill of Quantities, Drawings, Addenda and Appendix to Tender.
- Standard Bid Documents: include MLDOS (WB, ADB, EC/U, etc.), Donors' Interest, Business Asson's Contractors and Consultants, Business Interest, Professional Assons' Civil Engineers, Architects, Construction Management, Professional Interest, Public Authorities, Public Works Bodies, Public Financiers, and Public and/or Government Interest.
- FIDIC (1987) - Condition of Contract.
- PPA, Standard Bid Document.
- MoWUD, Standard Condition of Contract (1994).
- BaTCODA, Condition of Contract.
- There are FIDIC conditions of contracts (red book, yellow book, orange book, green book, silver book, old FIDIC) and Ethiopian Construction Industry standards.
Contract Management:
-
Management Process:
- Negotiations (contract agreement)
- Contract Formulation
- Contract Administration
- Contract Implementation (changes management, claims and disputes management)
- Contract Closing (closing of accounts, contract evaluations)
- Contract Identification: Identifying contractual responsibilities, Reviewing contract documents, extracting monitoring responsibilities, preparing summary sheet.
- Component Determination: Determining and understanding the project, Reviewing contract drawings and technical specifications, Extracting construction methods and sequences, Preparing breakdown sheets, operations, resources, organizational sheets, time scheduling.
- Progress Monitoring: Record, monitor, and evaluate progress of mobilizations, works, and completion.
- Reporting project status, Certifying materials, samples, workmanships and works.
- Measuring works, recording site potentials, Certifying payments and completions.
Claims and Dispute Management
- Dispute definition: a difference in opinion or thought in a legally valid contract.
- Claims: Demand for additional payment, adjusting obligations, extending time,compensating for delay damages.
-
Dispute management process:
- Informal stages (face-to-face discussions).
- Formal stages (using independent mediators/conciliators, or arbitrator, court).
- Time-related claims: Time extension, liquidated damages, time extension + cost compensation, concurrent compensation, bonus, relieving obligation.
- Cost-related Claims: Additions needing rate adjustments, price changes, provisional sum adjustments.
- Default by contracting parties: Delay in Payment Certificates, suspensions, and terminations.
- Claim Admin Process: Claim Notification, Claim Preparation, Claim Submittals, Claim Handling, Dispute Resolution, Claim Approval, Claim Enforcement, Claim Closure.
Alternative Dispute Resolution (ADR)
- Preventive ADR: Partnering, dispute resolution advisors, facilitators, project partnering, strategic partnering.
-
Amicable ADR: Negotiation, mediation, conciliation, use of mini-trials.
- Mediation: neutral third party assists parties.
- Conciliation: impartial third party to suggest resolutions
-
Judgmental ADR: Adjudication (dispute review board), arbitration, litigation.
- Arbitration: private process using an expert, enforceable decisions.
- Litigation: court process with a jury, time-consuming and costly.
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Description
Test your knowledge on the fundamental elements of contract law with this quiz. Explore concepts such as mutual agreement, legal capacity, and the different types of contracts. Perfect for law students or anyone interested in understanding the basics of legal agreements.
