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.
ontract
Contentsofthechapter
2.1Principlesofcontract
2.2Types
of
construction
contract
2.3Contractdocuments
2.4ContractManagement
. .
2.4.2Claimsanddisputemanagement
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. Construction contact basically follow the basic
contact
In the area of construction activities it defines the
relationship of the parties involved with regards to
their obligations, responsibilities and privileges in the
work and it is part of the common law
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Mutualagreement
Legalobjectives
Legalcapacityoftheparties
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Musthave
evidence
that
there
was
ameeting
of
Offer clear&unambiguous
Acceptanceclearly
accepting
deal
offered
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What is a le al ob ective ?
The thing being contracted for must be legal in andof itself
Most construction contracts are legal
Assumes correct party issues the contract ut some contract mo cat ons may e ega
thus, unenforceable
Modifications beyond scope of the partys authority
Cardinal changes
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Insimplest
form,
parties
must
be
Mentallycompetent
Legalauthoritytoissuesandexecutecontracts
Mayhavetobeproperlylicensedtohavelegalcapacity
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In exchange for the offer to perform, the recipient
Money (most typical)
Without consideration a contract is not valid &
unenforceable
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Generally,no
circumstance
inwrittenformtobeenforceable
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Identityof
parties
Scopeofthework
r cean paymen erms
Commercialtermsandconditions
ro ect
execut on
p ans
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Provisionof
Ethiopian
law
of
contract(thecivilcode)
According to George Krzeczunowicz, the
summarized as,
orma ons o con rac
Effects of contract
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Ever contractisana reement butnotever
agreementis
acontract
Theintroductoryarticlesofthecivilcodeenumeratestherequisitesforavalidcontract,
Definitionofcontract AccordingtotheEthiopianlawofcontract(Article
1675ofthecivilcode)
morepersonsasbetweenthemselves,create,vary,orextinguishobligationofproprietarynature
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,
1.The parties are capable of contracting and
give t eir consent sustaina e at aw
2.The object of the contract is sufficientlydefined and is possible & lawful
.
prescribed by law if any.
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1.Performance
.
3.Non
performance
of
contract
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The due effects of a contract whether lain or
ascertained by interpretation under are fulfilled byperformance
following
Whoshall
pay
(Art
1740)
Towhomheshallpay(Art174144)
Objectofpayment(Art174554)
y
Timeofpayment(Art174554)
Transferofrisk Art174554)
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The due effects of a contract whether plain orascertained by interpretation under are fulfilled byperformance, unless varied by the principles art1731(1),which provides that lawfully formed bind theparties
Nonperformance ,
party may, according to circumstances request theenforcement of the contract or on the contrary
contract
He may also require that damage caused him by the
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2.2Typesofconstructioncontract
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In a unit price contract the owner and the contractoragree as to the price that will be charged per unit for the
major elements of the project. The owner/designer will typically provide estimated quantities
for the project, then ask contractors to "bid" the job bycalculating unit prices for these items and calculating a final
price , ,included within the unit prices that are provided
The owner then compares the final prices and selects the low
that in many projects (heavy engineering projects being aperfect example), it is difficult to quantify accurately the worknecessary.
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Unit Price contract: Example
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In a cost lus contract arran ement also called a
reimbursable or a time and materials contract, thecontractor works on the project and is reimbursed by the
owner or ts costs, p us s pa e t er an a t ona
agreedupon fee or is paid a fee that is a percentage of
It is important for the owner to spell out clearly in
advance what costs will be reimbursed and which costs
are to be covered by the fee. By using this type of contract the contractor can start
wor w t out a c ear y e ne pro ect scope, s nce a
costs will be reimbursed and a profit guaranteed
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.
2. Cost+fixed
cost
3. Cost+ ixe ee+pro its aring
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Cost Plus Fee Type Combinations
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2.3Contractdocuments
ConstructionDocuments
Includebothbidre uirementsandthecontractdocuments
Bidding
requirements
NoticetoBidders
ProposalForm
ContractDocuments
ConditionsoftheContract
Specifications(Divisions01through16)
Drawings
Addenda ChangeOrders
Agreement
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NOTICETOBIDDERS/INVITATIONTO
BID
that design documents are available and job isadvertised to contractors who documents who are
are capable of completing the work at reasonable
price.
The purposes of an Invitation to Bid are to attract
bidders in sufficient numbers to ensure fair
parties who might be interested in submitting
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Itshouldconsistofthefollowingelements:
1. Project Title.
State the name of the project, its location,.
2. Identification of Principals.
State the name and address of the architect orssu ng agency, toget er w t t e ate oissue.
3. Time and Place for Receipt of Bids.
State the time and place where bids will bereceived and whether they will be publiclyo ened or not.
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4.ProjectDescription.Provide a brief but adequate description of the project, and any
unusual features so that the bidder will be the be in a in position todetermine whether he or she has the financial and technical ability toundertake the construction of the project.
5.TypeofContract.
State whether bids are being solicited for a single or
segregated contract and on what basis.7.BidSecurity.
State whether a Bid Bond or other type of bid guarantee will berequired to ensure the execution of the contract.
8.
Guarantee
Bonds.
State whether Performance Bonds and Labor and MaterialsPayment Bonds will be required to ensure the completion of
.
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The Proposal Form establish the intent of thecontractor to enter into a contract to complete thework specified at the cost indicated in theproposal.
on proposal, an acceptance of offers results and acontractual relationship is established.
Award of notice is communicated to thecontractors proposal with a notice to proceed.
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Contract documents ra hic and written describe
the proposed construction (the Work) that resultsfrom performing services, furnishing labor, and
equipment into the construction,
A. Contract FormsB.Conditions of the Contract
C. Specifications (Divisions 01 through 16)
D. DrawingsE. Addenda
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A. CONTRACTFORMS
Agreement
PerformanceBond
PaymentBond
Certificates
The written document signed by the owner and thecontractor that is the legal instrument binding the partiesto t e contract.
Defines the relationship and obligations between ownerand contractor
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PERFORMANCE BOND
Provides a guarantee that if the contractor defaults of fails
to perform, the surety will either complete the contract in
the penal amount for such completion
PAYMENT BOND
rov e a guarantee t at su contractor, mater a supp ers,and others providing labor, material goods, and services tothe project will be paid
CERTIFICATE Includes certificates of insurance, certificates of
com liance with a licable laws and re ulations
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CONTRACTDOCUMENTS(Cont)
B.CONDITIONSOFCONTRACT
thepartiesinvolvedintheconstructionproject.
2types:GeneralandSupplementaryconditions
GENERALCONDITIONSGeneral clauses that establish how the project is to be
.
Contain basic expressions of rights, duties, and limitations
of the entities involved.
Usually in the form of published standard documents thatinclude principles common to most construction
. . ,
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SUPPLEMENTARY CONDITIONS
Modify or supplement general conditions as need to
provide for requirements specific to a project. They are not
s an ar ze ocumen s an are prepare or spec c
project needs.
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Define the qualitative requirements for products,materials, and workmanship upon which the contract is
based and it is organized into 16
Dictionary Definition: "Specifications are written or Printed
,contract and describing qualities of material and mode of
construction, and also giving dimensions and other
n orma on no s own n e raw ngs.
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D) ADDENDA
Written or graphic documents issued to clarify, revise, add
to, or delete information in the original bidding documents.
addenda to be issued anytime prior to execution of thecontract.
E) CHANGE ORDER:
After the construction agreement has been signed,
to be done are accomplished by change orders.These can be issued any time during the contract period
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