Features of a construction contract

An entire contract is an indivisible contract.

For example: - The contractor has to complete the entire performance of his obligations before the
a and a q contractor demand the Employer to pay.
- If the contractor abandons the project before he completes it, the contractor cannot
claim a corresponding percentage of the contract price or recover on a quantum
meruit for the portion of work which the contractor has completed.

Hoenig V Isaacs (1952)

A contract indicates where a specified sum shall be paid on the completion of specified work which
will deny the contractor of any payment because there are some defects or omissions.
Provision for Progress Payment

- The contractor is paid at regular intervals in accordance with the value of works he has
completed.

- However, it is different from stage payment where payments do not relate to value of works
done by contractor.

- Each interim payment will usually preceded by a formal valuation of work completed to a
particular point in time by the QS.

- On the basis of QS valuation, the Architect issues a progress payment certificate for the
amount valued subject to the deduction of a retention sum.
Provision for Variation of Works

Variation Clause 11.0 Pam Contract 2006

- Architect to order changes is called variation works which can make addition, omission or
substitution of any work in the drawings and specifications at the time of tender

- Contractor must comply with the variation orders and if he incurs additional cost or expense,
he can claim compensation in accordance with the provisions in the contract

- Contractor may identify potential claim situations during tender or pre-contract negotiation
and price his tender accordingly to show a very attractive price, when in fact he has targeted a
higher sum when recovered through price adjustment mechanism in respect of anticipated
varied work
Provision for Certification

Certificates and payment Clause 30.0 Pam Contract 2006

- Function of certifier is to record the satisfaction of completed works and to ensure no defects

- Final certificate = Architect concludes that the works have been carried out and complete

First category: Interim certificate. If correctly issued, client have to make payments to the
contractor before the works are complete

Second category: Final certificate. Issued after completion of work and certifies approval of work
and final payable sum to the contractor.

Third category: Certificate to record events for purpose of contract condition. Example: CPC,
CMGD, CNC
If the certificate is a condition precedent to payment, then contractor may recover without a
certificate if he can prove that the certifier or employer has acted improperly.

In this case, Contractor has to prove:

1. if the is fraud or collusion by the certifier and employer, or;

2. if the certifier has acted improperly in some way

3. if the certifier has used his personal interest or other factors which may influenced the
certificate.
Question 3.

What are the differences of progress payment and stage payment?

Question 4.

What are the three categories of certificate?