Australian building Industry Assignment PDF

CONTRACT PROPOSAL 1
Name of the institution
Course
Instructor
Time of submission
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CONTRACT PROPOSAL 2
1 What is a valid contract?
A valid contract is an agreement expression that exists between two bodies or parties to deliver
product or services. It is an agreement where the parties plan on the money promises or any
valuable commodities and carry out the whole process as per the law (Hussin, & Memon, 2013).
Identify three (3) essential elements of a valid contract.
A valid contract is made up of the following essential requirements: The need or intention of
creating law enforcement relations, Offers that contain all details or documents that entails what
is to be provided, the money or anything of interest has to be considered in the contract
agreements (Hussin, & Memon, 2013).
Identify three (3) standard building contracts used in Australia
A valid contract is made up of various standards of contract building.in Australia, different
standards of building contract are employed which are:
Australian building industry contract-ABC MW-1 major works contract. The standard contract is
made to get the use of simple plain language such as English and entails few risks to architects as
compared to other standards.
Australian standard general conditions of contract AS2124-1992.It is most preferred as it avails
for price or lump sum contract.
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Australian standard general conditions of contract AS4000.the standard is employed to bring
changes in construction law and practice (Hussin, & Memon, 2013).
Explain the different types of contracts the builders in Australia use.
In Australia, the government choose to apply various types of contracts. These include:
Lump sum contract.it is the most contract that is applied in construction contract in which the
involved parties come into agreement on a lump sum price before the contract is initiated. The
contractors are given the opportunity to analyse, evaluate or execute the project’s completion for
the provided price.it is here where the contractors are allowed to study the contract and come up
with the right quotation.in places where the project or work nature are not appropriately stated or
where seed is considered, the lump sum contract is inefficiently applied (Hussin, & Memon,
2013).
Lump sum with rising and fall. This is a contract in which there is allowed variation in project
cost either in terms of materials, labour and other spending involved in construction. During the
agreement between the two parties, legal clauses may be used to prevent price or cost shooting
where as in the places where good negotiations or agreements the clause is not mostly applied
(Hussin, & Memon, 2013).
Cost plus a fee.it is also referred to as reimbursement cost contract in which payments are made
to the contractor to account for all expenses allowed as he or she is also added some amount of
money for profit making. This makes the companies generate more product techniques that will
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CONTRACT PROPOSAL 4
economize the market sector. This contract form is divided into cost plus award fee, cost plus
fixed fee, cost plus incentive fee and cost plus a percentage of cost (Hussin, & Memon, 2013).
Cost plus a percentage. This is an added amount of money that a client appoints to the contractor
which he or she will use to cater for any additional project expenses incurred during
construction. The contractor is required to account for how the additional amount was utilized
during the construction exercise (Hussin, & Memon, 2013).
Do and charge contract. This type of contract is intended to be used by all construction works
which does not involve any fixed price.it is a method where the client chooses to pay the
contractor for all the building expenses with an additional fee.
According to Section 31 of DOMESTIC BUILDING CONTRACTS ACT 1995, identify five
(5) major components of a building contract?
In accordance with the section 31 of domestic building contracts act 1995. a contract has been
classified into five main components which are illustrated as follows: The contract should
contain the address, name, and signs of the parties involved. This is very important as it makes
legalizes the contract.it will be found hard defend the contract in court due to lack of proper data
or documentation or absence of relevant signatures. The plan or contract scope involves details
that elaborate on the availed services comprising of proper quality, materials, work schedule,
grade elaborations and other available specifications that are included in the construction project.
It is most important to consider the cost of the project and the payment terms. This is a very
important part of the contract which has a need to be properly stated or agreed. Both the client
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and the contractor have to discuss about the cost and the means of payments which is important
to prevent confusion or disagreements in service provision. This section entails the payment
schedules, due amount and payment terms and conditions.in addition to this, the two parties need
to consider the contracts working schedule which will ensure proper project working.it is in this
part that appropriate starting and project completion time is estimated. From this, both the client
and the contractor gain information which helps them differentiate work and calendar dates. This
also enables the contractor to evaluate if delays will be incurred in the project due to improper
weather, the process of obtaining work permit, work approvals and assessments.it enables the
contractor to account on the project expenses such as time additional. Furthermore, the
authorities needs to be consulted to avoid complexities. This shows the parties that have the
authority to make project construction decisions.it contain bodies that legally make binding
decisions before the project begins as it also saves time and confusion reduction during
construction (Hussin, & Memon, 2013).
List and describe four (4) documents that can be used in the formation of contract
documents
There are various different documents used in the formation of contract document which include:
Work statements. This document consists of important information about the scope of the work
and useful binding information that is essential in project construction. A proper working scope
puts into arrangements contains proper detailed information on when the project is to start or end
and all the expenses.
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Contracts and agreement contracts. These are construction documents used by the clients and the
contractor or an officer in charge of the contract as is an important component in contract
making.it is through this document that other referrals and documents are attached.
General conditions. This is a document that well elaborates on the evaluation of the project as it
covers all the rights of the involved parties.it contains all additional costs, things that should be
claimed and participants’ titles.
Construction schedule.is an important document as it allows the officer in charge of the
construction to go through it and be in a position to know the time that will take the project to
complete. Construction work schedule is part of agreed monthly terms that need to be checked
and updated with time (Hussin, & Memon, 2013).
Write a short note on the following terms used in the contract
Architect
An architect is a qualified individual whose responsibility is to design project, make a plan and
verify the building or construction of a project. The individual uses the knowledge used in class
to apply in designing, analysing and planning how to make building construction. He or she has
appropriately qualified certificates and is licensed or is recognized government institutions
(Hussin, & Memon, 2013).
Contract price:
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A contract price is defined as the price that is used to cater for all the services and goods present
in the contract.it is from this that one is capable of knowing whether a contract exists or not.
When this is taken to a court, the court may deny the contract as it lacks the contract price.it
caters for the expenses or damages that may be incurred in the contract (Hussin, & Memon,
2013).
Provisional Sum:
The provisional sum is an allowed amount or money which a consultant evaluates to cater for
those things that may not have been included in the or well evaluated in details in the project
contract.it is included in the contract design price.
Tribunal:
Tribunal is any individual or institution who has the responsibility to authorize or identify
whether or not if a contract exists or check if there are disputes in the between the parties. This is
probably the contract assigned an officer or the court's judge (Hussin, & Memon, 2013).
Cooling-off period notice:
Cooling-off period notice is the allowed time to the clients which enables them to cancel or stop
a contract before it the working begins.in this notice, the client is not charged or penalized for the
actions (Hussin, & Memon, 2013).
Which among these circumstances can cause a contract to be terminated?
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The CLIENT and the contractor need to brief construction surveyor for the construction within
two weeks after agreeing with the constructor to end the contract due to the regulation stipulated
(Hussin, & Memon, 2013).
Identify three (3) ways a contract can be terminated.
A contract can be terminated or discharged in the following ways:
Performance impossibility.in this case a client is capable of terminating a contract when the
contractor fails to show up. If the due to the agreements the contractor is able to show up and do
the assigned job, it is referred to as performance but if he or she fails, it’s known as performance
impossibility (Hussin, & Memon, 2013).
Contract breach. This is where a contract is not accepted by one of the parties and due to this, the
contract can easily be stopped or discharged as both parties must be in agreement for a contract
to exist. This might be due to one or either party failing to fully meet the needed requirements.
Contract completion. A contract is usually discharged if all the requirements made in the contract
during the agreement are completed. Both parties are asked to have well documentations on the
starting and end of the contract as it is more important in the cases of disputes arise. The law
courts also use this document in the process of solving the cases (Hussin, & Memon, 2013).
Identify two Circumstances in which builder and owner can be accounted for contract
breach
A substantial breach by the owner includes clients’ delay which the makes complexities in the
project design by the contractor. Subsequent performance is a case which requires the contractor
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CONTRACT PROPOSAL 9
or builder to follow up in court in case the client fails to pay for the delivered services in areas
where the project is not completed.
A substantial breach by the Builder includes material breach of a contract and the immaterial
breach of contract. A material contract breach is where the contractor finishes the contract work
a few days after the agreed time. A material breach is a case where the contractor completes the
work weeks or months after the agreed time.
Identify three (3) factors that can affect the building project and require an extension of
time.
There are various factors which affect the construction projects which require enough time for
proper completion of the project. They are followed;
Economic factors. This is usually compared to the project working budget and is most essential
in the resource managements. If the contract budget is lower, it can affect the project in terms of
performance, completion time, the function of the intended project, its safety and the quality of
the services offered. This can also lower the contractor’s morale to build the project.
Management factors. This will determine the project running as it determines the safety
procedures, added time requirements, the working environment, the agreement made between the
parties as well as the allocation of the resources.
Legal factors. This contains all the practices, rules and activities required for the completion of
the project. Most time is lost in the enactment of the legal laws or requirements as some are
complex to understand and apply.
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For a client who needs to hire a contractor who will install specialized equipment to different
office spaces, every two months needs to employ period trade contract which allows the
contractor to perform the given task timely. This will apply each time the client has a task
(Hussin, & Memon, 2013).
Why is it important to identify an intention to create a legal bond in a contract?
There are various reasons to identify the intention to create legal relations and considerations.
The most important reason is that the legal sequence contains information on the good
preparedness of the two parties to enter into the contract agreement. It is through this act that the
party’s interests are obtained. Both parties make promises during this period (Hussin, & Memon,
2013).
Describe the following contracts used in construction
Consultancy contract. Is an agreement that enables the evaluation of the project in terms of
identifying the weaknesses and strengths and thus use the obtained information to improve the
conditions. This helps in the reduction of some errors during the project designing as they are
rectified during the agreement.
Supply of goods contract.is a contract form in which a contractor decides to avail or supply all
materials or goods and services required by the client within the specified time and at a constant
price which is accepted by the client. This saves time and is economic as the client doesn’t need
to go out for the services (Hussin, & Memon, 2013).
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What type of contract should be used in the given situations? Choose from the following
contracts given.
The following table consists of various work situations and appropriate contracts.
Situation Type of Contract
A contractor was hired to oversee
and manage the renovation of his
shop.
Minor works contract
A contractor was hired for the
development of a design for a
shop, as well as to handle the
construction of it.
Design and constrict contract
A contractor hired more
contractors to perform basic
construction tasks for a project for
a short duration.
Project management contract
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Assessment Task 2 – Unit Project (UP) - Contract Analysis
Assessment Task Instructions
You must:
 Analyse the contract in appendix 1 at the end of this task and respond to all the questions.
Assessment task Procedures
Scenario 1
You are a builder tasked to level the ground for the construction of the new house. Upon
inspection of the plot, you noticed a few mounds of earth caused by growing tree. You suggested
to the owner that you need to uproot the tree to level the ground properly – specialised uprooting
equipment will be used and the tree will be replanted properly so that mounds will not appear.
But the owner is hesitant and keeps on insisting that the tree should be left alone because of
sentimentality issues.
According to the contract, can the action of
the owner cause a breach of contract?  Yes  No
Why or why not? (Base your answers on the provisions of the contract provided)
Yes, the action of the owner is likely to results into a breach of the contract. This’s is because
according to the clause 7.3 , which clearly states the fundamental breaches of contact for
instance any refusal or failure to fully comply by the warranty that is provided ay lead into a
breach of contract. The refusal can either be by the owner or the proprietor.
Scenario 2
During the construction of the housing frame, the owner decided that he wants to see how the
work is being done and asks for a viewing schedule. As the construction supervisor, you
approved his request - granted that he must wear all necessary protective gear during his site
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visit.
According to the contract, can the action of the
supervisor scenario cause a breach of contract?  Yes  No
Why or why not? (Base your answers on the provisions of the contract provided)
No
The action and not lead to a breach of contract. This is because according to the specifications
and conditions of the construction, the constructor is mandated to allow the owner of works, his
agent or any authorised person to view the project and this should be with respect to the
conditions thereof so that the duty becomes legal, contractual and within the boundaries of the
contract. Hence, it will appropriate for the owner of the land to j=access but with respect to the
conditions of the contract.
Scenario 3
Following the events in Scenario 2, during the site viewing, the owner accidentally tips over a
metal ladder that hits a part of the current housing frame. A builder tried to stop the metal ladder
from tipping over but he was unsuccessful. Now, the frame is badly damaged and needs a
replacement frame.
Who is liable for the damages to the construction? (Defend your answer by using/citing relevant
clauses/sections of the contract provided)
The person who is responsible for any damage in the construction site is the owner. This is in
regards to the contract terms 6.4 which elaborates that the builder is not liable to any kind of
damage that is causes din the construction site as a result of damages by the owner or any other
person who is insured by owner. Besides, the calluses 6.4 and d 6.21 clarifies that not eleven the
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agent nor the any other employee of the owner is liable to the damages that are incurred by the
owner. Hence, all the costs which are incurred in such a manner are indemnified by the owner
and not the builders.
Question 4
According to the contract, on what bases can the owner terminate their contract with the builder?
Identify two (2) instances that are applicable.
There are various circumstances that can lead to the termination of contract by the owner.
Some of these circumstances includes.
When the builder does not produce a duplicate of the relevant insurance policy or even when
he fails t provide a currency certificate which entails the various details of the insurance
that are present in the building act of 1993, as stipulated by the 5th clause.
Besides, in any case that the builder persistently refuses and neglects to put a remedy or
remove defective items hence putting the progress o the construction work in jeopardy.
This may be expressed when the builder refuses to work in accordance with the terms of
the contract and obey its legal terms.
Question 5
What are the two (2) warranty insurance statements that are part of the legislative requirements
of this contract?
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In case the contract specifies the roles of the construction needed, or the outcome the client
would like to get, such that the client acknowledges the constructors skills and judgement
In case the construction entails building a new or renovating the house to satisfies the owners
demand and expectation, the constructor will do exactly as required by the owner/client.
Question 6
Whenever progress of construction is delayed due to refusal of a governing body to issue a
building permit, what action should the builder do next?
in any such case, the Builder will within a reasonable time advise the Owner of the cause and
the reasonable approximated length of the delay and the constructor will be granted sufficient
and enough added duration to finish the construction.
AND/OR
The Builder may, within fourteen days(two weeks)notification of the planned construction
delay,the client should be briefed of the rrason fo such request and outlining the additional period
needed by the constructor (Hussin, & Memon, 2013).
COPY OF CONTRACT
Between
THE CLIENT AND THE CONTRACTOR
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FOR
THE ERRECTION OF A RESIDENTIAL HOME
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Copy of contract between the client and the constructor
for
THE ERRECTION OF A RESIDENTIAL HOME
Draft made by
(Student name)
For
Meetings with the constructor and the client
held in Edgar road, Praham 2018
Sponsored by
The Downingtown Construction Company Limited
Financed by
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the (clients name)
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CONTRACT PROPOSAL 1
Copy of contract between the client and the constructor
Table of Contents
Part 1 Articles of Agreement
Part 2 General Information
Part 3 Standard Conditions of Contract
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CONTRACT PROPOSAL 2
PART 1
DRAFT ARTICLES OF AGREEMENT
ARTICLES OF AGREEMENT MADE on ………. Day of ……….20…
BETWEEN ………………………………………..
( “The Owner”) of the one part and ………………………….
of (or whose office is situated at) …………………..( “The constructor”) of the other part.
WHEREAS the Client is desirous of owning a house and its compound built in liaison with the drawings and specifications approved
by the Board and in liaison with the General data at Section 2 and the General Conditions of Contract at Section 3.
AND WHEREAS the constructor has forwarded his offer dated ……….day of …20….,
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Committing to finish and maintain the construction upon the agreed terms and conditions accordance to the Drawings and
Specifications.
AND WHEREAS the client has agreed with the constructors offer documented in the referred tender.
NOW IT IS HEREBY AGREED AS FOLLOWS:
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(1) Whenever grounds hereinafter pointed, the constructor shall finish and maintain the
construction subjected to the agreed terms and specification of Contract and in liaison
with the Drawings and Specifications.
(2) The client shall pay the constructor the price (Aust. POUNDS) ……………….
Or payments as will be considered payable in line with the documents terms and
specification of Contract for the erecting, finishing, and maintenance of the house.
IN WITNESS hereof the parties have signed in the presence of the supporting witness,
Signed for & on behalf of the client by:
…………………………………………………….
SIGNATURE OF CLIENT OR AGENT (where necessary)
In the presence of: ……………………………………………
Witness
…………………………………………………….
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SIGNATURE OF CONSTRUCTOR
In the presence of:
………………………………………………
Witness
…………………………………………........
Date
PART 2
GENERAL INFORMATION
This is a copy of a legal binding agreement amongst CLIENT and the CONSTRUCTOR
is intended to be used for the building of a domestic building in one of the peak suburbs of
Melbourne within the specification of the construction guidelines.
A standard contract for building of a home that encompasses the terms and conditions
as agreed with by the Board, which are the general guidelines for the execution of the
construction that encompasses the house itself and the exterior works
This draft surmises that:
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A person who desires to build a house and has to buy or owns piece of land fit for building of a
house.
A designer has been contracted by the client to designs a plans for the house.
The plans designed are in liaison with the specifications of the Board and the relevant
Regulations.
The plans contain enough specifications on the materials requires for the construction so
that the responsible person to buy them for building of the house. This specifications, can either
be written on the plans or in another different document.
The plans have been accepted by the client.
The Boars has been satisfied with the plans and approved it.
The designer, the client or the clients’ agent will be needed to inspect the building so as to
ascertain that the contractor continues with the work as outlined in the plans approved by the
Board.
The constructor is required by the client to value the work as per the approved plans and the cost
will include all material tools and other related external work expenditures.
The contract amongst the client and the contactor will not be valid until the Board has approved
the plans for building of a home.
PART 3
STANDARD CONDITIONS OF CONTRACT
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Beginning of the construction activities
Signing date of the contract: ………………………..
Reporting date of the constructor to the site: ………………………..
Time the work is expected to be done to completion: ………………………….
Lower limit number of labourers’ expected on the site: ………………………….
Changes and alterations
The client has an obligation and right to request the constructor for changes he would wish to be made as long as those changes are
within the plans specification and are approved by the board.
The constructor will value these changes within good duration of the receipt of the demands from the client to do so. Work on these
variation shall only commence after an agreement has been reaches between the client and the constructor.
The constructor will outline the effect these alteration has caused on the previous completion time and shall give an estimation of
projected extra time required to the client (Hussin, & Memon, 2013).
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Extension of time
In case the constructor recognizes that the set timeline will not be enough he/ she is at liberty to inform the client and give reason for
the request for the extension of time.
The client is obligated to decide whether to grant the request considering the stated reasons by the constructor.
Maintenance period
The constructor is expected to repair any defects noticed in the construction for a period of up to six months after the finishing of the
construction and the granting of a Certificate of Occupancy by the Board. (Fugar, & Agyakwah-Baah, 2010).
Relations between the constructor and the client
The contractor is obligated to carry out the construction as per the specifications of the plans and any other reasonable instructions by
the client or his/her agent.
As soon as the contact is made and legalized; the client should introduce his/ her agent or representative who will represent him /her at
the site to the constructor (Fugar, & Agyakwah-Baah, 2010).
As soon as the contract is signed, the constructor shall inform the client through writing the name of the person who shall be allows to
stand in for the constructor for the construction site.
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The client and the constructor shall notify each other in case there is changes of their representative in form of writing.
All instructions from the client or his/her agent shall be given to the contractor or his/her representative in form of writing (Fugar, &
Agyakwah-Baah, 2010).
Payment schedule.
The client will pay to the contractor the following percentages of the total cost of the contract for the construction as agreed upon
between them:
Upon signing of the contract a sum enough to bring the payments up to not greater than 5%.
Upon finishing of the foundations a sum equivalent to bring the payments up to not greater than a total of 10%
On finishing of the walls up to and inclusive of the ring beams an equivalent sum to make payments up to not greater than 20%
(Fugar, & Agyakwah-Baah, 2010).
Upon completion of the roofs including the roof sheeting and guttering; installation of hurricane clips a sum not exceeding 30% is
paid
Upon finishing of the interior and exterior plastering including installation of doors and window frames together with painting a sum
not exceeding 40% is paid
Upon completion of the interior works; ceiling, plumbing and plumbing fixtures, electrical wiring, all carpentry counter tops and
cupboards, and tiling, a sum equivalent but not exceeding than 60% is paid
On finishing of building of water cistern or tank, the septic tank and soak away or tile field, permanent water supply services and all
other plumbing works a payments up to not greater than 70% is made.
On finishing of the construction, payment equivalent to and not exceeding 90% is made,
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The tatal amount of 10 percent is made on the time lapse of the maintenance duration. (Fugar, & Agyakwah-Baah, 2010).
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Report on the contract proposal
Overview of the contract
A valid contract is an agreement expression that exists among two bodies or parties
to deliver product or services. It is an agreement where the parties plan on the money
promises or any valuable commodities and carry out the whole process as per the law. For the
residential contract, the Domestic building contracts act was considered while formulating the
draft of the contract between the client ( the owner of the house who was the one funding this
contract fully and as well the one who was responsible for looking for the plan designer) and
the builder ( the contractor who was in charge of the construction).
Findings
A contract can be terminated in the following ways:
Performance impossibility.in this case a client is capable of terminating a contract when the
contractor fails to show up. If the due to the agreements the contractor is able to show up and
do the assigned job, it is referred to as performance but if he or she fails, it’s known as
performance impossibility. (Fugar, & Agyakwah-Baah, 2010).
Contract breach. This is where a contract is not accepted by one of the parties and due to this,
the contract can easily be stopped or discharged as both parties must be in agreement for a
contract to exist. This might be due to one or either party failing to fully meet the needed
requirements. (Fugar, & Agyakwah-Baah, 2010).
Contract completion. A contract is usually discharged if all the requirements made in the
contract during the agreement are completed. Both parties are asked to have well
documentations on the starting and end of the contract as it is more important in the cases of
disputes arise. The law courts also use this document in the process of solving the cases.
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A substantial breach by the owner includes clients’ delay which the makes complexities in
the project design by the contractor. Subsequent performance is a case which requires the
contractor or builder to follow up in court in case the client fails to pay for the delivered
services in areas where the project is not completed (Fugar, & Agyakwah-Baah, 2010).
A substantial breach by the Builder includes material breach of a contract and the immaterial
breach of contract. A material contract breach is where the contractor finishes the contract
work a few days after the agreed time. A material breach is a case where the contractor
completes the work weeks or months after the agreed time.
There are various factors which affect the construction projects which require
enough time for proper completion of the project. They are followed; (Fugar, & Agyakwah-
Baah, 2010).
Economic factors. This is usually compared to the project working budget and is most
essential in the resource managements. If the contract budget is lower, it can affect the project
in terms of performance, completion time, the function of the intended project, its safety and
the quality of the services offered. This can also lower the contractor’s morale to build the
project.
Management factors. This will determine the project running as it determines the safety
procedures, added time requirements, the working environment, the agreement made between
the parties as well as the allocation of the resources.
Legal factors. This contains all the practices, rules and activities required for the completion
of the project. Most time is lost in the enactment of the legal laws or requirements as some
are complex to understand and apply.
For a client who needs to hire a contractor who will install specialized equipment
to different office spaces, every two months needs to employ period trade contract which
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allows the contractor to perform the given task timely. This will apply each time the client
has a task.
The main requirement for offer is the consent and it must be between individual within the
legal capacity for it to be a legal contract.
A contract can be breached if one party is entitled to do so by the other involved party or if
one party fails to comply with terms and conditions of the contract or if it was illegally
binding therefore it can be pronounced null and void by a court of a competent jurisdiction
(Fugar, & Agyakwah-Baah, 2010).
The legislative and regulatory requirements considered in the residential contract
proposed include;
The Australian building industry contract suite passed in conjunction with a joint
development committee a joint venture of Master Builders Australia Ltd and the Australian
Institute of Architects that contains all the building specifications. For domestic construction,
the Domestic building contracts act are considered.
The timeline for construction contract depends on the nature and size of the works as
well as the availability of the materials though the builder can request for an extension of the
construction time by providing a reliable reason to the owner of the house in writing by
him/herself or through his/her representative. The owner is therefore obligated to make a
consideration on whether to grant the extension of time or not depending on the reason given
to him/her by the builder (Fugar, & Agyakwah-Baah, 2010).
Lump sum is the most contract that is applied in construction contract in which
the involved parties come into agreement on a lump sum price before the contract is initiated.
The contractors are given the opportunity to analyse, evaluate or execute the project’s
completion for the provided price.it is here where the contractors are allowed to study the
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contract and come up with the right quotation.in places where the project or work nature are
not appropriately stated or where seed is considered, the lump sum contract is inefficiently
applied. A contract is said to have rise-and-fall prize if there is allowed variation
in project cost either in terms of materials, labour and other spending involved in
construction. During the agreement between the two parties, legal clauses may be used to
prevent price or cost shooting where as in the places where good negotiations or agreements
the clause is not mostly applied (Fugar, & Agyakwah-Baah, 2010).
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