preparatory work and/or procurement of materials, often up to a maximum indicated value, pending formal conclusion of a contract. Letters of intent should be used with caution as frequently they may result in unintentional commitments without the benefit of properly negotiated terms. Limitation – under English law the relevant periods of limitation i.e. the periods in which you must bring a claim, are six years from the date of damage for a negligence claim, or (if later) three years after the claimant could have known of the damage; and six years from a breach of contract where the contract is a simple contract, and 12 years from the breach where the contract is a deed. Liquidated damages – a pre-determined sum included in the contract as an agreed amount to be paid in respect of certain breaches. Most usually, liquidated damages are included as a remedy for delay to the works, but may also be used as a remedy for performance below the specified standard in projects for process or power plants. The sum applied to delays is usually calculated on a daily or weekly basis. Care must be taken to use a sum that either represents a genuine pre-estimate of loss, or where such an estimate is not possible, a commercially justifiable amount ( El Makdessi v Cavendish Square Holdings BV and another [2013] ) otherwise it may be unenforceable as a penalty. Local Democracy, Economic Development and Construction Act 2009 – a piece of legislation amending the Housing Grants, Construction and Regeneration Act 1996 . In particular, it extends the right to adjudicate to oral, as well as written, contracts and provides for a contractor’s application for payment to constitute a payment notice where the employer fails to serve such a notice. Loss and expense – additional payment which is claimed by a contractor when he has suffered delay during the course of the contract works.
Misrepresentation – where a party makes an inaccurate statement either
(1) knowingly or recklessly or (2) negligently. If acted upon or relied upon by another party it may give rise to a claim if that party suffers a loss as a result. Mitigation – a rule requiring a claimant to take reasonable steps to minimise its loss, alternatively not to take any unreasonable steps which would increase its loss. A party will not be able to claim for a loss which he could reasonably have avoided. The burden will be on the defendant to show that the claimant did not mitigate its loss.
Named subcontractor – a subcontractor who is named in the
main contract document and whom the main contractor will appoint to undertake particular works. Once appointed, the subcontractor becomes a domestic subcontractor for whom the main contractor is responsible. To be contrasted with the now seldom used Nominated subcontractor . NEC – the New Engineering Contract, first introduced in 1995, and now in its third edition. It is designed to be more flexible than more traditional standard forms such as JCT , but has a very strong emphasis on project management. Negligence – a failure to exercise Reasonable skill and care , by breaching either a contract term or a duty of care in tort. In order to bring a claim in tort for negligence a claimant will need to demonstrate (1) it was owed a duty of care by the negligent party, (2) that the duty was breached, and (3) that it suffered loss as a result of that breach. Net contribution clause – a clause which design team members commonly seek to insert in their appointment documents in order to reverse the effects of the common law doctrine of Joint and several liability . Employers resist its insertion
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