Contract Proposal: Building Contracts Law Assignment

This assignment explores the intricacies of contract law, specifically within the context of building contracts. It begins by defining a valid contract and identifying its essential elements, followed by an examination of different standard building contracts used in Australia, including the ABC MW-1, AS2124-1992, and AS4000. The assignment then delves into various contract types employed by builders in Australia, such as lump sum, lump sum with rising and fall, cost plus a fee, and cost plus a percentage contracts. It also covers the components of a building contract according to the Domestic Building Contracts Act 1995, documents used in contract formation, and provides definitions of key terms like architect, contract price, provisional sum, tribunal, and cooling-off period notice. Furthermore, the assignment addresses circumstances leading to contract termination, ways a contract can be terminated, and situations of contract breach for both builders and owners. Finally, it identifies factors affecting building projects that may necessitate an extension of time, encompassing economic, management, and legal considerations. The assignment offers a comprehensive overview of the legal and practical aspects of building contracts, providing valuable insights for students studying contract law and construction management.

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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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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CONTRACT PROPOSAL 6
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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CONTRACT PROPOSAL 7
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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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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CONTRACT PROPOSAL
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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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