Performance bond – this bond is used to secure the performance of the contractor’s obligations under the contract. If, for example, the contractor fails to progress the works and the project is late, the employer may suffer a financial loss. The performance bond will reimburse the employer for its loss, up to a stated maximum, usually expressed as a percentage of the contract price. On domestic projects it usually takes the form of a default bond i.e. the employer has to prove the contractor’s default (breach) before he can call on the bond, whereas on international projects it may be in the form of an On demand bond . Performance security – methods by which the employer obtains some security in the event that the contractor does not perform the contract eg a Parent company guarantee or a Performance bond . Practical completion – a state of completion of the works, referred to in the JCT standard form building contracts, but not defined. There is no standard definition, but it has been held to mean that the works are complete for all practical purposes (such that occupation is possible), but subject to minor defects (which can be remedied without inconveniencing the occupier). Practical completion cannot occur if there are any patent non-minor defects ( Jarvis & Sons Ltd v Westminster Corp {1970] 1 WLR 637). Prevention principle – the principle that a party cannot insist on performance of a contractual obligation if it has itself prevented the performance of that obligation. It is an Implied term of every construction contract that the employer will not do anything to hinder or prevent the contractor from performing the contract.
Quantum meruit – a means of recovering a reasonable price for goods or services supplied under a contract where there has been no agreement as to price or where no contract has been entered into.
Reasonable endeavours – the meaning of this is relatively unclear but such an obligation requires a party to adopt a reasonable course
of action in relation to achieving a result, but it does not have to adopt more than one. Once it has taken reasonable steps to achieve a result, it does not have to continue to try. To be contrasted with Best endeavours . Reasonable skill and care – in relation to design teammembers, there is an Implied term in their appointments that they will exercise reasonable skill and care when performing their design obligations. The standard they are to be judged against is the standard of the “ ordinary skilled man exercising and professing to have that special skill ” ( Bolam v Friern Hospital Management Committee [1957] 1 WLR 582 ). If their work falls below this standard it will be judged to be negligent. However, an express termmay be introduced to impose a higher standard of care, such as that requiring special experience (eg of designing projects similar in complexity and scope) or Fitness for purpose . Rectification period – the period following Practical completion when a contractor is generally obliged to rectify defects in the works at his own expense. Relevant events – events identified in the JCT standard forms of contract which entitle the contractor to claim an Extension of time . Relevant matters – matters identified in the JCT standard forms of contract which entitle the contractor to claim Loss and expense .
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