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Contract exist?

10 replies [Last post]
Skan Bu
User offline. Last seen 10 years 20 weeks ago. Offline
Joined: 29 May 2006
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Hi,

I know this might sound simple but I always wonder what are the ponts to consider when determining whether a contract exist?

For example:
a situation between a subcontractor and a main contractor.

The MC sent out an enquiry to the subcontractor with a form for entering their quotation, a list of conditions & terms, a BQ, some drawings and all the preliminary details from the main contract.


The SC submitted a quotation in their own letter heading and priced the BQ

A pre order meeting was held.

SC came on site and work

A dispute arise.

Lets assume it is building work, not a civil

1) Is there a sub contract in place?
2) What constitute a sub contract in this case?

3) What implications if there is no contract in place, to
a) SC
b) MC

Replies

Larry Rino
User offline. Last seen 12 weeks 1 day ago. Offline
Joined: 25 Oct 2007
Posts: 62
Scan,

I think a GA’s sample issue was a minor work, thats why it doesnt have any contract conditions & forms of contract. (E.g. maybe its a design & supply of ready mixed concrete only, which Work Order that was signed by both parties, only has SOW, BOQ & Payment terms).

Client & Contractor should have communication first, to discuss the reason then a solution for Client’s payment delay.

Following my assumptions in my para. no.1, since there was Since there was no contract conditions and form of contract agreement between party, I think breach of contract and adjudication is not applicable to this issue. However, your country’s commercial law (in UK) may govern or apply.

Larry
Skan Bu
User offline. Last seen 10 years 20 weeks ago. Offline
Joined: 29 May 2006
Posts: 118
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Hi,

In Gayantha Abeywardena’s case,
"Scope of work, BOQ & payment terms is available

but no conditions & any standard form of contract has not reffered.

now the problem is client is vioalating the payment terms"

In UK, can’t the contractor submit an application and request to follow the HGR Act and be paid at regular interval, once a month in the case of an absent of and conditions or standrad form of contract?

If the client violate the payment terms, then it is a breach of contract and a dispute is form so Adjudication (The Scheme) kick in.

Correct me if my logic is wrong.

What can you do in other part of the world?

Larry Rino
User offline. Last seen 12 weeks 1 day ago. Offline
Joined: 25 Oct 2007
Posts: 62
GA,

I think we should say sorry to Skan (starter) for using his post.

GA, heres my opinion:

- Your company management (from accountant/cost controller advice) must analyze and should know better, if project is really worth doing it. (OH cost, profit, etc. is important to a bussiness).

- If you think you were delayed or idled by you Client, of course you can claim, but this is a matter of Client acceptance (prove it!).

Hope these helps.

Larry
Gayantha Abeywardena
User offline. Last seen 8 years 9 weeks ago. Offline
Joined: 27 Feb 2008
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Dear Gentleman,

Thanks a lot for your inputs it gives me an starting point..
But now the end user want some changes and it still not finalise our Project manager and his team is ideling and we decreasing the profit margin as the project supposed to be extend by three four months From our side my project Manager has not submitted the Program of work and the client is asking to agree Revised BOQ with new changes to release the payment. actully the design going to be change ( this is MEP Work)and my company top management has to decide whether we abond the project or go head with less margin. Are we in a position to claim for our Resource Ideling time cost. we already got our advance payment (first part).....

GA
Abhijit Kale
User offline. Last seen 2 years 24 weeks ago. Offline
Joined: 20 Jul 2007
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Hi,

Refer to work order issued to you by your client.
See the payment terms in that.

Cheers,
Abhi
Larry Rino
User offline. Last seen 12 weeks 1 day ago. Offline
Joined: 25 Oct 2007
Posts: 62
GA

If after all your notices to Client about payment terms was ignored, I suggest:

You should also slow your work progress or probably stop, for sure you will get their attention, then settle amicably; or

By legal solution, your lawyers can apply the governing law or country’s commercial law.

Larry
Gayantha Abeywardena
User offline. Last seen 8 years 9 weeks ago. Offline
Joined: 27 Feb 2008
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Hi gentlemen,

I have to face situation like this

Scope of work, BOQ & payment terms is available

but no conditions & any standard form of contract has not reffered.

now the problem is client is vioalating the payment terms

what we can do....?

GA

Mike Testro
User offline. Last seen 13 weeks 6 days ago. Offline
Joined: 14 Dec 2005
Posts: 4407
Hi

What you have here is what lawyers call a "battle of the forms"

Where you have a series of offers and counter offers leading up to the contract starting then it is the last set of terms that exist before the contract came into being - in this case when the SC started work.

Dom 1 is the standard sub contract attached to the JCT form. If these are both mentioned then it would appear that you have a "back to back" contract agreement and any dispute settlement would be straightforward.

In the UK the common law would be either the Law of England or Scotland.

Also remember that Adjudication under the Housing Grants Act applies for any form of contract evidenced in writing.

To be absolutely sure the terms should include:
1 The scope of work
2 The price
3 The contract period

If any of these are missing then you may need professional help on this problem so if you need any further assistance please get in touch at testro@ukonline.co.uk

Best regards

Mike T.
Skan Bu
User offline. Last seen 10 years 20 weeks ago. Offline
Joined: 29 May 2006
Posts: 118
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Hi

Lets assume that I am charge to administer this SC account by the QS on site.

Q4) How could I determine that there is a subcontract exist?

Q5) It is common that SC’s quotation came in with a list of their terms & conditions and some even mention Dom 1 instead say the (JCT subcontract with contractor design mentioned in the enquiry)Will this change affect the enquiry?

Q6) Would a Dom 1 mentioned differ from the standard subcontract? What are the major implication? Actually what is dom 1?

Q7)"If there is no contract then a dispute is usually settled in accordance with the law of the state where the work is being executed." in this case if it is in UK, what is the common law of the state? Could you elaberate?

Thanks - alot of time none of these are taught in the college and college seems to tell us the law of contract only & no one seems to know the answer either on site.


Mike Testro
User offline. Last seen 13 weeks 6 days ago. Offline
Joined: 14 Dec 2005
Posts: 4407
Hi Skan

The fact that the SC started work indicates that some form contract exists - "agreement by conduct"

What the contract is depends entirely on the documents contained in the invitation to tender and the SC offer plus the pre start meeting.

If there is a standard form of contract mentioned anywhere in the bundle then it is highly probable that will be valid - signed or not.

If there is no contract then a dispute is usually settled in accordance with the law of the state where the work is being executed.

Best regards

Mike Testro