Repudiation – a situation where one party may be entitled to regard himself as discharged from further performance of the contract, following a breach of a Condition by the other party. The innocent party has a choice whether to accept the repudiation, and treat the contract as terminated, or reject the repudiation and affirm the contract. Retention – the percentage of the contract sum (usually 5%) retained by the employer from the amounts certified as due to the contractor as a form of security in the event that the contractor fails to remedy defects in the works. Half ( a moiety ) is released at Practical completion , with the other half released after the end of the Rectification period . which provides a set of adjudication provisions which are imported in full into any construction contract which does not comply with s.108 of the Construction Act . The Scheme also includes payment provisions which may be substituted into any construction contract which does not comply, but only to the extent of the specific non-compliance. Set off – when two parties both owe each other money, one party can reduce its liability to the other by ‘setting off’ the amount that the other party owes. Abatement is a form of set off. Other forms include legal set off, which allows a defendant in proceedings to counter claim against a claimant. The debt which is the subject matter of the set off does not have to have a close relationship to the subject matter of the proceedings, provided it is between the same parties. Equitable set off is where it would be unjust to allow a claimwithout taking into account a counterclaim, but will only arise where the claim and cross-claim arise out of the same transaction or closely related transactions. Scheme for Construction Contracts – the Scheme for Construction Contracts (England and Wales) Regulations 1998 (as amended)
Simple contract – a simple contract is one that has not been executed as a Deed ; it requires simply a signature, or can be oral. The limitation period for actions arising under a simple contract is six years from when the cause of action accrued, compared to twelve years for a deed. Strict liability – strict liability arises when a party may be in breach of a duty or obligation without having been negligent and/or having failed to exercise reasonable skill and care. An example of this is a Fitness for purpose obligation. works cost less than the target price, the contractor shares the savings with the employer, whereas if the works exceed the target price the employer will share the cost overrun. This is known as a painshare/gainshare mechanism and is designed to incentivise the contractor to keep control of project costs. A standard form which uses a target cost arrangement is the NEC Option C. TCC – the Technology and Construction Court, a division of the High Court with specialist judges who have experience of construction and/or other ‘technical’ areas of the law. The judges are mainly drawn from the pre-eminent barristers’ chambers which specialise in construction and engineering law. Third party – a party who is not directly involved in a contract or transaction made between two or more other parties, but who nonetheless retains an interest in the outcome of the contract or transaction. An example might be a funder providing finance to a development, or a purchaser interested in acquiring a completed development. Target cost – a contracting arrangement whereby the employer and the contractor agree a target outturn cost for the works. If the
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