Ice Examiners Report 2009

ICE Civil Engineering Law and Contract Management Examination
Examiners Report 2009
Monday 8th and Monday 22nd June 2009
Registered charity number 210252 Charity registered in Scotland number SC03862
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Examination in Law and Contract Management Contents Title Moderators Report Examiners Report: Module 1 Module 2 NEC Module 2 ICE Module 3 Module 1 Question Paper Module 1 Points for Answer Module 2 ICE Question Paper Module 2 ICE Points for Answer Module 2 NEC Question Paper Module 2 NEC Points for Answer Module 3 Question Paper Module 3 Points for Answer 7 11 16 18 22 29 37 45 55 61 69 77 Page 3
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Moderators Report General The Report last year commented on the importance for Engineers to have a good knowledge of Law and Contract in order to maintain control of construction projects. In present economic circumstances this becomes more not less important. There continue to be more candidates opting for Modules based on the NEC conditions rather than the ICE. Some answers for Module 2 and certainly some for Module 3 showed a lack of understanding of the different principles underlying these conditions. Those more familiar with the one or the other apply the principles they are familiar with, rather than the proper contract terms and consequently reach the wrong conclusions. This difficulty reinforces the importance for candidates in their professional life to ensure that they understand and apply the correct contract whether standard or bespoke. It is one reason why the committee considers it important, especially at Module 3 level, to include both forms of contract. For candidates whose main objective is to improve their professional skills as Engineers, it is important that, whether they have opted for NEC or ICE and passed, they do not let their success result in complacency when applying different forms of contract. For candidates who aspire to join one of the dispute resolution lists maintained by the ICE, it is especially important that they can distinguish between the terms and principles of different contracts. Module 1 The overall standard this year was pleasing. The syllabus covers a broad spectrum of law relevant to Engineers. It is clear that a lot of hard work was put into assimilating it. However, some answers lacked structure and clarity. Engineers are good at logical and structured thought, and should strive to apply this to the law. In particular, candidates should avoid jumping to conclusions, as the reasons are an essential part of the answer. Module 2 The Examiners for Module 2 NEC noted a tendency for candidates to list every clause in the contract that could possibly relate to the question. This may be an aide memoir for preparing an answer. However, it is not a substitute for understanding the Contract and presenting a logical answer. There were insufficient candidates for Module 2 ICE to reach any general conclusions. It is hoped that the Examiners comments are of assistance to future candidates. Module 3 There were insufficient candidates for Module 3 to reach any general conclusions. This is a demanding examination but it should be within the grasp of good professional Engineers who wish to demonstrate their competence in contract management. Again, it is hoped that the Examiners comments are of assistance and that more candidates take up the challenge next year.
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Examiners Report
Modules 1 and 2 The pass mark was set at 40% for Module 1 and 50% for Module 2.
Total Number of Candidates and % Passing each Module With ICE Conditions of Contract Year Module 1 Nr 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 0 2 1 21 15 40 41 30 36 14 28 42 44 47 85 50 84 % 0 100 0 67 87 98 82 87 82 23 57 69 56 81 53 61 48 Module 2 Nr 2 2 1 21 14 40 32 30 24 23 28 28 54 47 85 50 85 % 100 100 0 100 86 70 65 63 55 37 56 46 71 73 62 60 61 Modules 1 & 2 Nr 0 2 1 21 13 40 30 30 24 22 23 25 38 47 85 43 84 % 0 100 0 67 77 70 63 63 55 24 47 41 47 68 47 52 42
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Total Number of Candidates and % Passing each Module With NEC Contracts Year Module 1 Nr 2009 2008 2007 2006 2005 2004 2003 2002 46 43 25 25 38 9 7 7 % 83 83 72 76 71 89 85 100 Module 2 Nr 44 42 25 25 37 9 7 7 % 80 86 52 76 73 78 85 71 Modules 1 & 2 Nr 39 42 25 25 37 9 7 7 % 70 86 52 64 62 78 85 71
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Modules 1 and 3 The pass marks were set at 40% for Module 1 and 65% for Module 3. Total Number of Candidates and % Passing each Module Year Module 1 Nr. 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 0 0 2 1 3 2 2 4 4 3 6 6 2 15 13 11 10 % 0 0 100 100 100 100 100 100 100 25 50 40 33 80 85 79 60 Module 3 Nr 2 2 2 3 5 3 0 4 1 2 1 3 2 15 13 5 10 % 0 0 0 33 0 33 0 50 25 18 8 20 33 33 54 36 60 Modules 1 & 3 Nr 0 0 2 1 3 2 2 4 1 2 0 3 1 15 13 4 10 % 0 0 0 100 0 50 0 50 25 18 0 20 17 38 54 40 50 Module 3 Only Nr 2 2 3 2 2 1 7 6 4 2 1 0 2 8 6 10 6 40 50 33 91 17 % 0 0 33 0 0 0 86 17 50 17 12
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A certificate is issued to a candidate who passes Module 1, 2, or 3 Copies of the current curriculum, the two case lists and a revised reading list are all available on the ICE website www.ice.org.uk/law or contact the Management Procurement and Law Department, Institution of Civil Engineers, One Great George Street, London SW1P 3AA t +44 (0)20 7665 2243, f +44 (0)20 7222 1403 or e contractsanddisputes@ice.org.uk
Module 1, Section 1
General comments Generally, the overall standard of the answers to this section was slightly improved from last year. Although there was again a wide range in the marks awarded, the majority of this years candidates again demonstrated a sufficient knowledge and understanding of the basic principles of contract law to pass. It was evident that many of the candidates had difficulties with managing their time during the exam, spending too long on one question and not leaving enough to complete all the parts of the second. This obviously meant that they lost marks on the second question. As with the previous couple of years, the other common failings were that there was a tendency to be too quick to give an answer without explanation or analysis of the factual events in the question and without setting out the relevant legal principles involved, and many candidates failed to read the whole of the question properly and either discussed points that were unnecessary, did not answer what the question asked or did not take into account the number of marks allocated to the question in considering the detail of answer required. These can possibly partly be explained by pressures of time but may also indicate not adopting good basic exam technique. However, there were also some very good, well-reasoned answers backed up with a clear explanation of the relevant legal principles and case law. Question 1 This was the second most popular question, attempted by approximately three-quarters of the candidates. On the whole it was answered relatively well, with a wide spread of marks although there were proportionately more poor answers for this question than for the others. 1(a) Most of the candidates correctly analysed the status of the DFCs tender as an invitation to treat and not an offer but then failed to follow this up with an explanation as to this meant that DFC did not have a claim against Andrew. There was also a general lack of proper analysis of the situation if Andrew had stated that he would be bound by the lowest offer. While many candidates stated that DFC would have a claim against Andrew in this situation, they did not explain the basis of this claim (i.e. that there was a contract of which Andrew was in breach) or advise on DFCs entitlement to recover damages for loss of profit. 1(b) The marks awarded for this question ranged from very low to very high. Almost all the candidates correctly recognised that this question concerned contractual damages for breach of contract. However,
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very few candidates identified the various breaches of contract present in the question or set out the legal principles behind contractual damages. Instead they simply went straight into giving figures of damages. Overall, the candidates showed a reasonable understanding that liquidated damages may be unenforceable if a penalty but did not then consider Andrews entitlement to general damages. 1(c) As with part (a), most candidates correctly addressed the first part of this question but then did not consider the second part. It was not clear whether this was due to lack of time or lack of understanding of the effect of termination has on FCLs entitlement to payment and the entire contracts rule. Question 2 This was the most popular question and attracted the highest average mark. 2(a) The marks awarded for this question ranged from low to very high. Most candidates correctly identified when a contract was formed but some failed to set out an adequate analysis of how they reached this conclusion. Marks were lost by a few candidates who did not answer the question and set out the terms of the contract. Very few candidates considered whether the exclusion/limitation clauses had been incorporated. 2(b) There was a great divergence in the quality of answers for this question. Most candidates identified that Clauses 10 and 20 were exclusion/limitation clauses to which special considerations apply and expressed an opinion as to whether they were effective, but failed to set out their analysis or reasoning for reaching this conclusion. Many candidates also unnecessarily considered whether these clauses were incorporated in the contract (which is stated in the question). There also seemed to be some confusion between the Unfair Contract Terms Act and the Sale of Goods Act. 2(c) This was the best answered question in the paper. The majority of the candidates demonstrated a good understanding of the principles relating to consideration and provided well-reasoned answers backed up by case law. Many candidates also discussed estoppel, thus gaining higher marks. Question 3 This was the least popular question and answered the least well in terms of average marks. 3(a) The range of marks for this question indicates that the candidates either answered it well or poorly with little middle ground. The good candidates analysed each of the losses within the context of relevant contractual principles, although generally did not set out these principles in any particular detail. In particular, while many candidates considered that Swift Motors would have had knowledge of Jamess antique business, they did not explain why it was relevant. The poorer answers contained little analysis. One common error was to confuse the test of remoteness in tort with that in contract. 3(b) This question was generally answered poorly with very few candidates properly identifying that it involved both intention to create legal relations and certainty of terms. However, there were also some very good and complete answers. 3(c) This question was also not answered at all well, with a general lack of analysis or explanation as when a person is entitled to terminate a contract at common law. Most candidates considered that James would be entitled to terminate the contract on the basis of SCL failing to deliver the van at the end of the 7-
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day period with no consideration as to the importance of time being of the essence in these circumstances. In addition, very few candidates considered Jamess liability to SCL if he was not entitled to terminate the contract.
Module 1, Section 2
Question 4 This question was answered by a majority of candidates, and produced a wide variety of answers. These ranged from impressive to disappointing. Part (a) was generally well done, with all candidates identifying Lord Sinks potential negligence. However, too many failed to identify why he was negligent, or indeed the elements of the tort. Part(b) was also generally well done in the main, with most candidates identifying that Kate was contributorily negligent. However, very few examined why this defence would apply, i.e. very few considered whether and if so how Kate caused the accident, preferring instead to baldly state her negligence. Parts (c) and (d) were often confused by candidates, and the examiner therefore accepted relevant points made in either section as generating marks. However, many candidates failed to get to grips with the salient points in either part of the question. Very few applied Wagon Mound principles to consider whether the wheel falling off the car was foreseeable. Most candidates identified Dr Sloths potential liability, but too many were unable to articulate why he could so be held liable. The defence of novus actus interveniens was rarely mentioned by name. The Bolam test was also missed by a surprising number of candidates. Those that did consider the effect of the article in Bad Doctors Monthly generally did so fairly well, although a surprising number thought that the article would be enough to exonerate Dr Sloth from liability, without having analysed the effect of the article being discredited elsewhere. However, a significant number of candidates did answer this question well, and overall the standard was more than acceptable. Question 5 This was also a popular question, again attempted by the majority of candidates. Once more, the standard of answers was wildly variable. Most candidates correctly identified the appropriate statutes, although a number either got them mixed up or gave them the wrong dates. Most candidates also correctly identified that Gomez and Morticia are occupiers, with a number providing reasoning for this. Part (a) of the question was on the whole well done. Most candidates correctly identified Annabel as a visitor, although by no means all identified the purposes for her visit, nor that this might be important. Many candidates wrote out large parts of the applicable statute, but did not go on to apply this correctly. Some very good candidates considered whether Annabel had exceeded the limits of her permission, reaching differing answers but which were on the whole well-argued. Many also identified the possibility of contributory negligence on the part of Annabel. A small number thought that Gomez should claim against Morticia a surprising response to the question.
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Part (b) caused a few more difficulties for the candidates. The question of whether Steve could be a visitor or a trespasser caused a few headaches, with a few taking the view that a child could never be a trespasser. Most however correctly identified the differential treatment of children by the legislation. Very few candidates appreciated that property damage cannot be claimed for under the 1984 Act; those that did were rewarded appropriately. Generally, candidates were able to cite the appropriate sections of the Act, but often did not reach a conclusion as to any liability and potential defences. However, overall this was the question which of the three in this section attracted the highest quality responses. Question 6 This question was attempted by very few candidates, and was on the whole very poorly done. A couple of candidates provided excellent answers, dealing with difficult aspects of the Rylands v Fletcher rule, and were rewarded accordingly. A surprising number of candidates attempting this question made either no or only a very cursory reference to the Rylands rule, making it very difficult to award points to such candidates. Those who did identify the rule often failed to apply all of its elements, simply assuming it applied. Very few discussed whether the water or the earth had caused the damage, and whether anything turned on this. Most identified the thin skull rule, but some did not, holding that Tony himself was at fault for going to look at the damage with a bad back. Very few dealt with the different types of damage and whether they were recoverable, with almost no mention of remoteness and foreseeability. Overall, this was a disappointing response to the question; however this should not detract from the couple of excellent answers which were provided.
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Module 2, Section 1 NEC General comments Many candidates seemed to adopt an approach based on finding, and then often copying out, as many clauses in the ECC as they could that included what they thought were the important words in the question. This does not impress, and it usually does not answer the question; candidates should realise that the Examiners are likely to have a pretty good idea of what the contract says. The questions are intended to encourage candidates to work out the contractual solution to a problem, which requires them to explain which clauses are relevant, why they are relevant, and how they lead to the answer. I want candidates to think themselves into the position of the Project Manager or the Contractor; what would they really do? This contract is for managers, not for a forensic examination after the event! In some questions the information provided is not complete; this is deliberate, because it reflects reality. I would hope that candidates recognise this; they should not be afraid of pointing it out, and then stating the assumptions on which will base their answer. Question 1 This question was intended to allow candidates to show their broad understanding of the differences between the Main Options and the variety of Secondary Options, and the circumstances in which their use might be appropriate. Only 8 of the 44 candidates attempted the question, and sadly most of those did so rather badly; scores ranged between 7 and 17, with an average of 11.8. Two contracts were being considered one for road and footway improvements, with design by the Employer, and the other for the design and construction of a stadium. For most road contracts, unless they are in green-field sites, Option B is probably the best Main Option; all roadworks contracts will suffer many changes, mostly minor, because of what you find as soon as you start work, so you need a contract that can deal smoothly with such changes. As these are generally of the amount of work rather than of the type of work, a bill of quantities payment method is generally the simplest and probably allocates risks most sensibly. However, bills of quantities are not appropriate for design and build contracts; the risk of changes of quantities must lie with the Contractor, not the Employer, if the Contractor is responsible for the design of the works. So Option A or C is the appropriate choice. Choosing between them depends on the Employers attitude to risk; Option A gives the most obvious cost certainty, although by fixing the Contractors share carefully an Option C contract can be given a guaranteed maximum price. Although these are considered to be the better options, what was important was the candidates ability to decide what was in the Employers best interests in each case and to argue their case. Generally this was lacking! Part (b) asked how the Employer could ensure that his favoured subcontractor for part of the work on the stadium was used by the Contractor. Nobody gave the correct and quite simple answer make it a requirement of the Works Information, when it becomes a restraint on how the Contractor Provides the Works.
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Question 2 This was the most popular question in Part 1; 36 candidates answered it. It was also the question with highest scores (maximum, minimum and average). Almost all the answers to part (a) were good. This concerned late issue of design information by the Employer, which the Contractor appeared not to have noticed until a few weeks after he should have done. Most candidates pointed out that had notice been given a Risk Reduction meeting could have been held with the designers present, and it would probably have been possible to find a way of eliminating, or at least reducing, the delay. Answers to part (b), about assessing the delay to the Completion Date, varied widely. Some candidates clearly do not understand the difference between planned completion and the Completion Date in this regard. Several thought that the assessment method of Clause 63.5 should apply whether or not the Project Manager had given notice under Clause 61.5. Most of the answers to part (c), about delayed access, were reasonable, though some candidates appeared not to have read the question. Several missed the important point that although the Employer originally promised access to the western end of the site after 30 weeks, the Accepted Programme showed work starting there in week 52. Nobody suggested relaxing the only work on one third of the length at a time rule as a means of possible reprogramming the work. Some referred to possible acceleration under Clause 36, but not all those who did so understood it. Question 3 35 of the 44 candidates answered this question, and there was a wide range in the quality of the answers; the best scored 23, the poorest only 5. One or two candidates showed an alarming failure to understand fairly basic principles of the ECC (e.g. the basis of payments to the Contractor under Option C, and that the Contractor has no right or obligation to correct any Defects listed in the Defects Certificate). Many answers lacked clarity and over-complicated the issues. In dealing with part (a), about an out of tolerance floor screed, some debated about whether this was a Defect or whether the Supervisor should instruct the Contractor to search. A few realised that the design might be at fault rather than it being a construction error. Most candidates correctly pointed out in answering part (b) that the costs of remedying the Defect would be Disallowed Cost under Clause 11.2 (25). Part (c) was about the time for the correction of Defects. The most common error was a failure to realise the effect of Clause 43.4. The Employer will have taken over the building after Completion, and so the Project Manager will have to make arrangements with him for the Contractor to have access to correct Defects; the defect correction period starts when access is given. Part (d) the question of what happens about Defects after the issue of the Defects Certificate seemed to induce some kind of panic in many candidates, and as a result the quality of the answers varied widely.
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Three candidates scored the maximum 5 points for full and accurate answers, but nineteen scored either 0 or 1. Many grasped the overall principle (that the Contractor should pay the Employer) but failed to differentiate between the rules in Clauses 45.1 and 45.2; others seemed to think that Clause 44 was the only clause that could be applied, or that the defect correction period actually started when the Defects Certificate was issued. Question 4 This was a question intended to test the candidates understanding of two issues the provisions about subcontracting and the design of Equipment with a third point about programmes. It was not a complicated question, and I was surprised that only 9 candidates answered it. The first part, about the approval of Subcontractors, provoked a greater than average flood of contractual quotations. I would have preferred to have a simple statement that answered the question; Clause 26 is neither long nor complicated, and anyone understanding it could answer almost all of part (a) of the question. The one small trick question element is that one of those listed as potential Subcontractors the ready mixed concrete man is a supplier rather than a Subcontractor. Part (b), which concerns the Project Managers suspicions about the performance of a proposed Subcontractor, produced some good clear thoughtful answers and some rather vague ones. The Project Manager probably should not go straight to non-approval in these circumstances; he should discuss the issue with the Contractor. Part (c) was intended to make sure that candidates realised that an ECC programme includes method statements. Sadly only one candidate made this connection; others thought that the answer lay in the Activity Schedule, and several simply did not give a coherent answer. If the Project Manager wants to check the design of a temporary cofferdam he needs to instruct the Contractor accordingly; a temporary cofferdam is Equipment, and Clause 23 applies. Several candidates missed this simple but basic point in their answers to part (d), many failing to realise the distinction between the Contractors design of the works (covered by Clause 21) and his design of Equipment. Part (e) asked who is responsible for obtaining the approval of the Environmental Agency before work starts in the river (a requirement set out in the Works Information). The answer is simple; it is the Contractor, as stated in Clause 27.1. Almost all candidates realised this.
Module 2, Section 2 NEC

General comments There were 44 candidates sitting this module, up slightly from 42 last year. The average mark went down from 15.3 last year to 13.8 this year, which was disappointing. It was again noticeable how many candidates scored fairly similar marks for both questions ie they answered both questions good, bad or average.
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Candidates as always do need to carefully read the question in front of them and answer accordingly. If candidates slowed down a little, understood fully what was being asked, where the marks were concentrated, made a few notes of matters to be addressed, quickly read the applicable parts of the contract, they would be halfway there. There was a fairly even distribution of candidates across the 3 centres, which is good. Question 5 Only 6 candidates attempted Question 5. which was disappointing as I considered this to be probably the easiest of Questions 5 to 8. The average mark of the 8 candidates for this question was the equal highest of this section at 60%. The first part of the question was simply asking what the purpose of retention is, which as you would expect was well answered. The second part of the question really just asked for an explanation of how secondary Option X16 operates, looking for a description of what does the retention free amount is for and where it is detailed; how the retention is calculated above the retention free amount; that there are no releases of retention for sectional completion; when retention is actually released. This was well answered generally. The next part of the question was not well answered the money has already been paid so address this along with interest in the next certificate. Some candidates said stop the payment and correct it, but it had already been paid! Most candidates scored poorly in the fourth part of the question. The issues that needed to be drawn out were that interest was due on the late payment (whenever made), that the Contractor may exercise his right under statute to initiate suspending of performance, and if he does so it will be a compensation event and finally the Contractor may terminate if the amount was subsequently not paid within the stipulated period. Question 6 This was a bit more of a tricky question but this didnt stop 35 of the candidates attempting it! Very wide ranging marks occurred on this question. Of the 4 questions in this section the equal highest average mark of 60% was recorded. The first part of the question was just asking the candidates to recognise there was an inconsistency within the Works Information and issue an instruction to remove the inconsistency. The next part of the question was generally well answered. The change to the Works Information is a compensation event and the Contractor gets the benefit of the doubt in terms of what he is deemed to have allowed for, as the contract states. The assessment would be made using forecast/actual Defined Cost plus the Fee, as is the default basis for assessing compensation events regardless of main Option used. The third part of the question was generally answered on a moral basis rather than what the contract actually says, many candidates did not pick up many marks here.
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The fourth part of the question was either answered well or poorly! This time the benefit of the doubt goes to the Employer and there is no additional Defined Cost as a result. Question 7 All candidates had to do to secure good marks in this question was to demonstrate they had a good knowledge of how Completion is determined and what the contract provides in terms of take over. A few minutes reading these provisions in the contract first would have been far more beneficial. Some candidates talked about payment provisions, which had nothing to do with this question at all. 20 candidates attempted this question and the average mark was 55%. The first part of the question was simply about Completion is a core clause, a defined term, that this definition has a default position if the Works Information is silent on what needs to be done in order to get Completion and that it is for the Project Manager to determine when completion occurs and certify accordingly. The role of the Activity Schedule was wrongly threaded into a number of candidates answers. The second part of the question was generally not answered well, a varied collection of answers were written. The roundabout was simply a part of the parts, not a section nor the whole, the notification was not valid and Completion has not occurred. A possible argument for take over of that part of the works could be made but this was unlikely. The answers were quite disappointing here. The next part of the question tested candidates knowledge of the take over provisions of the contract and again this was not generally well answered. Take over is detailed in the contract; the Employer has the right to use and therefore take over any part of the works before Completion has occurred but this will generally lead to a compensation event occurring; the Project Manager should certify the date of take over. Again, a quick read of the provisions in the contract would have greatly helped. The final part of the question was searching for candidates to constructively think about solving the problem, notifying an early warning, calling a risk reduction meeting and making sure that part of the works could be safely and properly taken over with minimal impact on the Contractor. The Project Manager certifies the take over date and a compensation event arises; the responsibilities of subsequent loss of or wear or damage to such parts taken over could then be discussed. Most candidates did just enough to answer this question. Question 8 27 candidates attempted this question and again some fairly easy marks were available if the candidates could demonstrate a good knowledge of the search for a Defect and early warning provisions. Again, most disappointing therefore that this question had the lowest average mark in this section of some 48%. The first part of the question was looking for candidates to note the supervisor had powers to instruct the Contractor to search for a Defect and explain the various routes the contract takes you depending upon what is found during the search. This was not generally well answered with candidates missing many of the search, obey, correct principles the contract spells out.
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The next part of this question was testing knowledge of the communications provisions, the timescales etc and as one would expect, was generally well answered. The third part of the question was looking for general knowledge of the early warning process and using this in a practical way to solve the particular problem presented here. The theory and practical application surprisingly did not seem to be present in all cases. The final part of the question dealt with the question of payment for correcting a Defect in a cost reimbursable contract. Candidates needed to know the list of Disallowed Costs and implications where the work was subcontracted and this was not well answered at all. Module 2, Section 1 ICE General comments Only two candidates sat Module 2 ICE. Question 1 Detailed information on method related charges was provided in the question to allow candidates to demonstrate their knowledge of the valuation of variation orders. The question was split into four parts, and required an understanding of the various mechanisms available under clauses 51(1), 51(2), 52(3)(a), 52(4), and of Method Related Charges both Fixed Charges and Time Related Charges. Part a Candidates were required to provide a correct analysis of the basis for payment of a variation order. Higher marks were given if a Candidate provided information on the impact of the Engineers instruction on the Method Related Charges. Part b Candidates were required to consider the impact of the change in quantities and applied the correct contractual clauses. Higher marks were given if a Candidate applied the information provided in the question to the impact of the change in quantities to the anticipated programme. Part c Candidates were required to identify exceptional adverse weather as a reason to entitle the contractor to an extension of time. Part d Candidates were required to explain that the Adjustment Item is fixed and not subject to change (see CESMM note 6.4). The Contractor benefits in this case, as he does not credit the saving on the increased quantity. Question 2 The question is about the CDM Regulations 2007, and their application in the ICE Conditions of Contract. The question was divided into three parts. Candidates were expected to be aware of the CDM Regulations 2007 and their difference from the earlier 1994 Regulations, including the replacement of the Planning Supervisor with the CDM Co-ordinator and the necessary amendments to Clause 71 in the ICE Conditions of Contract including the contractual analysis for seeking payment. Equally Candidates needed to demonstrate an understanding of Clause 38 and the entitlement of the Contractor to extra payment.
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Question 3 No candidate answered this question. Question 4 This question was answered reasonably well by those who attempted it. The question was split into two parts. Part a Candidates provided a correct analysis of design responsibility under the contract and where design responsibility lies if the Engineer accepts a proposal from the Contractor to amend the design. Part b Candidates provided an analysis of the action of the contractor under clause 12, however some candidates lost marks by failing to explain the responsibilities of the Engineer under this clause. Module 2, Section 2 ICE General Comments The answers were very pedestrian. Question 5 The question was designed to elicit candidates' understanding of method statements under Clause 14 and the responsibilities of Contractor, Employer and Engineer when method statements transpire to be inadequate, wrong, or both. The question required the candidate to draft an Engineers letter to the contractor. There was no attempt to draft the sought for Engineer's letter to the Contractor rejecting the clauses relied upon by the Contractor.. Question 6 The question called for an understanding of method statements and a basic understanding of insurances called for under the Contract. The question sought to distinguish between insurances in respect of the Works, and insurances in respect of damage caused to the Employer's property which is not part of the Works. The candidates found the question difficult, as was reflected in the marks awarded. Question 7 No candidate answered this question. Question 8 This question required a grasp of the Contractor's obligations to construct (and design when required under the Contract); the duties of the Engineer in respect of quality of work and materials, and in certifying payment and completion; and how an Engineer can become exposed to professional negligence claims. This was found to be a difficult question. The issues of the Engineer's certifications and his failure to oversee the Contractor's workmanship and materials were not mentioned in the answer.
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Module 3, Section 1
General comments Two candidates sat Module 3. This paper requires a high level of preparation in order to obtain a pass mark. The Examination Module indicates the allocated marks out of 25 for each part answer. Candidates do not appear to take this into account and fail to include a proportionate amount of text and detail in their answers. Question 1 No candidate reached the required standard. This question dealt with the potential conflict sometimes faced by the Engineer when exercising his obligation of impartiality towards both parties in the Contract given that he is acting as the agent of the Employer and employed and paid by him. The question was in four parts. The candidates misunderstood the question or took the wrong approach when answering the first part and so their answers to the remaining parts were incomplete or mistaken. One candidate suggested the Engineer should revisit the agreement he had reached with the Contractor about the errors in the Bill of Quantity that had been identified and agreed. The other candidate omitted to discuss how to overcome the problems caused by the Employers refusal to act on the Engineers impartial decision and instead suggested that the Contract should either be abandoned or revised to a reduced scope of work to match the available funding. Question 2 No candidate attempted this question. Question 3 No candidate attempted this question. Question 4 Both candidates attempted this question. Marks were readily available for a good discussion of the five parts. The first part of the question related to the contractual effect of a letter of intent and whether or not the Contractor was either entitled to payment based on the retrospective effect of the Contract terms and Conditions or on a quantum meruit basis. The question was closely based on the Trollope & Colls Ltd v Atomic Power Constructions Ltd [1963] case where it was found that, irrespective of when the contract between the parties was signed, it did relate back so as to apply to what had been performed. In that case the court found that at the date a formal contract came into existence, there had been an intention to make a contract, there was agreement on all essential terms and a sufficiently clear acceptance of the offer, and that, therefore, a term should be implied to give business efficacy to the agreement to the effect that the terms applied retrospectively. Instead both candidates referred to the British Steel Corporation v Cleveland Bridge and Engineering Co Ltd [1984] case where the Judge said that it was clear that the parties never agreed the precise and necessary terms of the contract. The court therefore concluded that
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there was no binding contract between the parties (either an "if" contract as the work was being done pending a contract being concluded or, an "executory" contract as material terms remained to be concluded). The result was that there was simply a legal obligation upon Cleveland to pay to British Steel a reasonable sum (i.e. quantum meruit) for the work they had carried out. The second part of the question related to the meaning of liquidated damages, penalties and the expression time at large. The answers to the meanings of liquidated damages as a genuine pre-estimate of loss, penalties and time at large were disappointing. The third part of the question concerned the Employers right to deduct liquidated damages and the Contractors entitlements to extensions of time when a variation order is issued with the Contractor in culpable delay. Although one candidate had correctly referred to the relevant case law [Balfour Beatty Building Ltd. v- Chestermount Properties Ltd. (1993)] he failed to answer correctly and the other candidate offered no explanation. The fourth part of the question was to assess the candidates knowledge of court decisions related to entitlement to extensions of time for weather delays and strikes even when a Contractor is in culpable delay. The answers were disappointing. The answers to the fifth part of the question were also extremely disappointing. One candidate referred to payment on a quantum meruit basis with no reference to the fact that there was no contract in place and therefore (i) no extension of time could be awarded or (ii) liquidated damages levied.
Module 3, Section 2
General comments It appears candidates answered the NEC section last and under time pressure. The general grasp demonstrated of the NEC contractual mechanisms was not great. There was a tendency to concentrate on the risk management process or the concepts behind the contract rather than the sometimes, onerous NEC procedural requirements. The questions invited clear and methodical answers on the contractual obligations of the PM and Contractor. The answers did not demonstrate this approach. Question 5 The aim of Question 5 was to identify the Project Managers responsibility concerning design and responding to the Contractors design and delay; delay damages; and issues to do with the Contractors programming and early warnings. The candidates had a grasp of the withholding procedure for Delay Damages but not the period for reply and associated contractual obligations of the PM, and their relationship with the Accepted Programme; especially the contractors control over it. The answers to this compulsory question appeared to suffer due to a lack of time. In 5a.1, neither candidate identified that the PM must respond to the design within the period for reply, or issue a compensation event, although they did identify that the Contractor and PM should have used the early warning system to resolve the matter sooner.
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In 5a.2, the candidates identified the need for the PM to control the completion date but did not look at the implications of failure to notify a compensation event and the restrictions on the Contractor once the Clause 61.3 notification period has been missed. In 5a.3, both candidates identified the lack of discretion of the PM in levying delay damages, although there was some confusion between the system for this and the early warning system. 5b sought an review of how the Contractor should have reacted including maintenance of his accepted programme, early warning for obvious delays, notification of Compensation Events and his difficulties in failing to do so. Both candidates correctly identified that the contractors position was difficult. In 5c the candidates ignored the fact that the Employers role is restricted to not interfering with the PM. They also missed the important role of the Employer in correctly assessing what liquidated damages are as a pre-estimate of his loss at the pre-contract stage. Question 6 Question 6 examined the risk reduction process, defects, disallowed costs and subcontracting in a target cost contract. One candidate answered this question and did so relatively well. The PM is obliged to attend the early warning meeting although whether or not the subcontractor can be forced upon him is a moot point and should be subject to agreement rather than an obligation. The Project Manager is obliged to co-operate and a better answer would explore the difficulties of opposing rather than attending a meeting and the PMs obligation to provide reasons for a rejection in accordance with Clause 13. Question 6 (b) looked at all the various issues which may arise. In addition to the purely contractual aspects a good answer should consider the possible compensation event arising from changed physical conditions under Clause 60.1(12) and the necessary precursors under Clause 60.1(12) and 60.3. The use of an Option B subcontract would result in limited impact on the cost plus arrangement under the Option D contract, unless it was a CE. The implications of carrying out repairs in the defects correction period are significant for the contractor as the correction of defects after that date is disallowed costs. If it is not a compensation event then it would be a defect and he would not receive any additional money for it. Question 7 This question considers insurance, delay damages and set-off including Y(UK)2. It was answered by only one candidate. The first part of the question required the candidate to identify that the Contractor is responsible for Subcontractors actions and that the events were not compensation events but Contractors risk events which did not affect the Price for Work Done to Date. The question also required consideration of the Employers role in properly identifying his losses, the sequence for withholding payment and the possibility of damages being too remote. Question 7b concerned the implication of an adjudicators decision. It changes the completion date whether or not the contractors accepted programme indicates he will improve on it. The question as a whole was answered well. Question 8 This question was not attempted
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Institution of Civil Engineers Examination in Civil Engineering Law and Contract Management 2009 Paper 1 (England and Scotland) Monday 8 June 2009 Time permitted: 14:00 to 17:20 (3 hours 20 minutes) There are three questions in Section 1 and three questions in Section 2. Answer any two questions from each section; a total of four questions. Please answer questions from Section 1 in an answer book provided (Yellow book) and answer Section 2 questions in a separate answer book provided (Yellow book). All questions carry equal marks Only un-annotated copies of statutes and Statutory Instruments may be taken in to the Examination References to Cases and Acts should be quoted where possible. Please indicate on the outside of the Answer Booklets whether your answers will be in respect of Scots Law.
Section 1 Question 1 Andrew has recently bought an old house, which he intends to convert into two flats. He invites two local contractors, D. Fective Contractors Ltd (DFC) and Franklin Construction Ltd (FCL) to tender for the work. The tender includes the following conditions: 2. 14. Each of the flats shall have 3 bedrooms. The work shall be completed such that the flats are ready for occupation by 31 July 2009. 5,000 shall be payable for each weeks delay thereafter until all the flats are ready for occupation. Payment on completion. The carpets are to be Agate Blue from the supplier named in the attached annex.
15. 23.
DFC submit a tender price of 80,000. However, Andrew prefers FCL because he knows that they are a reputable company. FCLs tender price was 100,000. DFC, knowing that they submitted the lowest bid, are very disgruntled to find out that the contract has been awarded to FCL and instruct their lawyers to write to Mr Andrews claiming their full tender price.
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Andrew and FCL sign a contract containing the conditions that were included in the tender. On 28 August 2009, four weeks late, FCL inform Andrew that they have completed the work. The work has in fact not been finished and will take another week. On inspection, Andrew also notices that in one of the flats FCL have not used the specified carpet but have used a cheaper alternative which is a slightly different colour. In the other flat, FCL have built only 2 bedrooms. FCL refuse to change the carpet or to add the extra bedroom because this would require the work on that flat to be started all over. Andrew is furious. He obtains a quote from Charles, a local decorator, to replace the carpet with that specified at a cost of 5,000. However, Andrew is slightly cheered up by the fact that the market rate for rent on each of the flats has rocketed since FCL started work. At the time of the tender, he could only have expected to receive 500 per flat per week, now he can get 2,500 per flat per week. Andrew is not sure what to do. a. Advise DFC on their claim against Andrew. Would it make any difference [6 marks] if Andrew had stated in the tender documents that he would be bound by the lowest bid? If Andrew allows FCL to complete the further weeks work and engages [10 marks] Charles to replace the carpet, advise FCL as to their liability to Andrew. Is Andrew entitled to terminate his contract with FCL? Andrew as to whether FCL are entitled to any payment. If so, advise [9 marks]
b.
c.
Question 2 Pride Beer Ltd (PBL) approach the Big Tank Company (BTC) for a quotation to supply and install a new tank and associated pipework in their brewery. BTC send a fax to PBL offering to do the work within four weeks for 20,000. This quotation is stated to be subject to BTCs standard terms, which contain the following clauses: Clause 9 BTC agree that the goods provided and any associated work carried out under this contract shall be of satisfactory quality. BTCs liability for defects in goods supplied and for defective workmanship shall be limited to 500. BTC shall have no liability whatsoever for any losses caused by negligence of its employees.
Clause 10
Clause 20
However, BTC do not provide a copy of their standard terms with the quotation. PBL respond saying that they would like the tank to be installed as soon as possible and ask whether BTC would be prepared to do the work in a period of 3 weeks for 25,000. BTC then send PBL an Order Confirmation which states the work will be completed in three weeks for 30,000. Again, this is stated to be subject to BTCs standard terms, a copy of which is, this time, enclosed but is illegible. PBL fax back a copy of the Order Confirmation, with a handwritten note that amends
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the price to 25,000, signs it in acceptance and states Subject to this change, we are happy for you go ahead. Please start as soon as possible. However, BTC do not read this fax and simply assume that PBL are happy with their previous terms. The next day, BTC arrive at the brewery and start to install the new tank and pipework. After two weeks, it appears to PBL that BTC will not complete the work within the three-week period. As a result, PBL agrees to pay BTC an additional 5,000 if they complete the work on time. BTC duly complete the work on time. However, on the final day, one of BTCs employees crashes the boom of a crane through one of the walls of the brewery, causing the roof to fall in and injuring two of PBLs employees. The following day, the new tank and pipework suffer irreparable damage due a build-up in pressure caused by a defect in a valve installed by BTC. BTC agree to give PBL 500 in compensation but deny any further liability, pointing to Clauses 10 and 20 of their standard terms. In addition, BTC demand payment of the additional 5,000. a. b. Was a contract formed between PBL and BTC and, if so, on what terms? On the basis that BTCs standard terms were incorporated in a contract between PBL and BTC, are they effective to limit and/or exclude BTCs liability as they contend? Are BTC entitled to payment of the additional 5,000?
[10 marks]
[8 marks]
c.
[7 marks]
Question 3 James Careful has a small delivery business and owns a van which he uses for this purpose. On the side of his van is painted: James Careful Deliveries careful by name, careful by nature. He also occasionally deals in antiques. James normally uses Swift Motors to service his van. It is always a term of his agreements with Swift Motors that they will exercise reasonable care and skill when carrying out this work. While James is out on deliveries, one of the front wheels comes off his van due to faulty workmanship by Swift Motors. This causes 5,000 worth of damage to the van. An antique sideboard, worth 50,000, that was in the back of the van is also destroyed. James is distraught, not only because of the damage to the sideboard, but also because he had a particularly lucrative contract to deliver some spare parts. If he had delivered them that day he would have been paid 5,000. He usually makes only 250 profit a day. That day, James decides to buy a replacement van from Slow Coach Ltd (SCL) for 20,000. SCL agree to deliver the new van within seven days. James has a full order book for the foreseeable future and so contacts a local hire company to see if he can hire a replacement van until the new one is delivered. They quote him 250 per day. James decides it is not worth it because he would not make any money.
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As it happens, Jamess brother, Michael, owns a van which he is not using for the next two days. He therefore agrees to let James borrow it for half the going rate. Seven days later, SCL contact James to say that the new replacement van is still not available. James informs them that he must have it within the next two days or else he will buy the van from somewhere else. Three days later, SCL deliver the new van to James but he tells them that he does not want it because he has just bought another van for the same price elsewhere. SCL demand 20,000 from James. a. Advise James as to his entitlement to recover damages from Swift [13 marks] Motors, with specific reference to the following:
(i) (ii) (iii) (iv) (v)

b. c.
Cost of repairs to the van. Loss of the antique sideboard. Loss of profit on the delivery of the spare parts. Loss of profit on deliveries until he has bought a replacement van. Cost of the replacement van.
Michael demands 200 for hiring the van. Advise James as to his [5 marks] obligation to pay. Advise James as to his liability to SCL. [7 marks]
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Section 2 Question 4 Lord Sink is driving on a quiet country road in his vintage car, within the speed limit. Lord Sink reaches for a sweet, but drops it and takes his eyes off the road to search for it. Kate and Ben are waiting to cross the road. Ben sees Lord Sinks car and tells Kate to wait for it to pass. However, Kate ignores this advice, saying she can get across the road in time. Unfortunately, Kate misjudges the speed of Lord Sinks car. Lord Sink looks up just in time to see Kate, but not in time to swerve. Kate is struck by the car, hitting her head and hurting her leg. The collision causes a wheel to fall off the car, which rolls to the side of the road where Ben is still standing, and knocks him over causing a large gash in his lower right leg. Both Kate and Ben are taken to hospital. Kate is treated by Doctor Wright, a senior surgeon, who concludes that Kate has got concussion and a broken leg. He sets the leg in plaster and washes out the head wound before stitching it up. Ben is treated by a different doctor, Doctor Sloth, who concludes that Bens leg wound is superficial, although some grit from the road has become embedded in the wound. Doctor Sloth however fails to wash the wound before stitching it, with the result that it becomes infected, leading to the amputation of the bottom half of Bens leg. Doctor Sloth has recently read an article in the Bad Doctors Monthly which states that washing a wound can introduce chemicals into the blood stream and so should be avoided. This view has however been widely discredited by other medical journals as extremely dangerous. a. b. Advise Kate as to who may be liable for her injuries. Advise Kate as to any defences which may operate to limit or extinguish her claims. Advise Ben as to who may be liable for his injuries. Advise Ben as to any defence which may operate to limit or extinguish his claims. [7 marks] [4 marks]
c. d.
[8 marks] [6 marks]
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Question 5 Gomez and Morticia are the freehold owners of a large estate in Yorkshire, Haunted Hills. Haunted Hills has become somewhat run down, and although the boundaries of the estate are fenced off, there are some large gaps in the fencing through which it is possible to access the estate. There are signs at regular intervals around the boundaries of the estate which say Private Property, Keep Out. Haunted Hills consists of a main house and some outbuildings, with a drive leading from the main road, and extensive gardens. The gardens are overgrown, although the drive is in good condition. Morticia is hosting a meeting of the local Womens Institute (the WI) in the main house at Haunted Hills. On her way up the drive to the main house, Annabel, the president of the WI, sees a plant which she likes the look of. Annabel strays from the driveway to go and examine the plant, and in doing so, falls over a spade which had been left lying in the long grass, hurting her leg and breaking her arm. Annabels fall causes a lot of commotion. Steve, a child from the local village, uses the opportunity to sneak through one of the gaps in the fences in order to try to steal some apples from the garden. However, in his haste, he fails to notice a loose plank of wood which has fallen from the broken fence. Steve treads on one end of the plank, which flips up and hits him in the face, breaking his nose. A large splinter from the plank also rips Steves jacket. Gomez has previously caught Steve attempting to steal apples from the garden. a. Advise Gomez and Morticia as to their liability for the injuries to Annabel; and as to any defences which might be open to them. Advise Gomez and Morticia as to their liability for the injuries to Steve; and as to any defences which might be open to them. [15 marks]
b.
[10 marks]
Question 6 Richard is redesigning his large garden to incorporate a Japanese water feature. This involves digging out large amounts of earth. However, Richard wants to build up another part of his garden into a fake hill, and so instead of disposing of the earth, he simply piles it up into a mound. Due to the large extent of the redevelopment works, the only place he can put the earth where it will not interfere with his plans is right at the edge of his property, where it adjoins the garden of his neighbour, Tony. Over the course of the works, the pile of earth becomes larger and larger. On a couple of occasions, Tony asks Richard to consider either moving it, or disposing of the earth entirely, as
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he is worried it may collapse onto his land. Richard says he will think about it, but takes no action. One night, there is a particularly heavy rainstorm, causing a pool of water to collect behind the bank of earth. Richard does nothing to get rid of this water. A week later, the weight of the water causes the earth to collapse onto Tonys property. The earth falls into Tonys pond, killing his expensive koi fish. When Tony goes to survey the damage, he slips on the wet earth and aggravates an existing back problem. In addition, Tony later discovers that the water had been seeping through the earth, and into an outbuilding which Tony had been using to store his art collection. Many paintings have been damaged by the water. Advise Tony as to any claims he may have against Richard for the damage he [25 marks] has suffered; and as to any defences which Richard may raise against him.
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Points for answer Question 1
(a) As to the first part, DFC do not have a binding contract with Andrew and so have no claim
against him. An invitation to tender is normally an invitation to treat and not an offer to contract with a party submitting the most favourable tender (Spencer v Harding (1870)). DFCs tender is an offer which Andrew is free to reject, as he did. However, these general principles will not apply if specific conditions are attached to the invitation, e.g. that the tenderer will accept the lowest bid. In this situation, the tender can amount to a unilateral contract to award the work to the lowest bidder (see Harvela Investments Ltd v Royal Trust Co. of Canada [1986]). If Andrew had stated in the tender documents if he had been bound by the lowest bid, he would be bound to accept DFCs tender and thus be in breach by awarding the contract to FCL. Higher marks will be awarded to candidates who identify that DFCs losses are loss of profit on the contract for the work and not the contract sum and also that a this situation would give rise to two separate contracts, a tender contract (to accept the lowest bid) and a contract for the work.
(b) FCL are in breach of their contract: (i) (ii) (iii)

by not using the specified carpet in one of the flats; by only building two bedrooms in the other flat. by failing to complete the work by 31 July 2009;
This question concerns Andrews entitlement to damages. Generally, contractual damages compensate the innocent party for the loss which he has suffered as a result of the breach of contract, so long as they are not too remote. The injured party is also under a duty to mitigate his losses (British Westinghouse Co. v Underground Electric Railways Corp. of London [1912]) In respect of the carpet, this could be described as defective work, the usual measure of damages for which is the cost of reinstatement but only if appropriate (Ruxley Electronics Ltd v Forsyth [1995]). The candidates should consider whether it is appropriate to award damages in the cost of reinstatement (as opposed to diminution in value). One factor in favour of an award for the cost of reinstatement is that Andrew intends to have the carpet changed (Radford v De Froberville [1978]). The candidates should also discuss whether Andrew has taken reasonable steps to mitigate his loss by only apparently obtaining one quotation for the work. Similar issues should be considered in respect of the missing bedroom. From the question, it seems that Andrew has not suffered any loss in respect of rental income but will probably have suffered loss in actual value of the flat. It will also probably be quite expensive for Andrew to have the work redone to include the extra bedroom. The candidates should analyse the situation and reach their own conclusion.
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In respect of the 5 weeks delay, the candidates should consider whether Andrew is entitled to the liquidated damages set out in the contract, or whether this clause is unenforceable for being a penalty. On the facts, the level of liquidated damages appears to be excessive and not a genuine pre-estimate of the loss the injured party would suffer from the specified breach and thus this clause may be unenforceable (Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd [1915]). The critical issue is whether this was a genuine preestimate of loss that was made at the time that the contract was concluded and so the increase in market rate may not be relevant, unless Andrew was aware that there was likely to be a sharp increase in market rate. Higher marks will be awarded to candidates who discuss the consequences of the liquidated damages clause being unenforceable. Higher marks will also be awarded to candidates who consider whether Andrew would be able to obtain an order for specific performance for FCL to carry out the necessary work so that there are three bedrooms (Ryan v Mutual Tontine Association (1893)).
(c) This question has two parts: (i) is Andrew entitled to terminate the contract with FCL? and (ii)
if so, what are the consequences in terms of payment and damages? Andrew will be entitled to terminate the contract if FCL are in breach of a condition, as opposed to a warranty. The candidates should therefore analyse each of the terms in the question and decide whether they are conditions or warranties. Given the inclusion of a liquidated damages clause for delay, time is likely not to be of the essence and thus the time for completion not a condition. The specification for the carpet is also unlikely to be a condition but a warranty. On the other hand, it could certainly be argued that the requirement for three bedrooms in each flat is a condition, breach of which entitles Andrew to terminate. Andrew must communicate his decision to terminate the contract for it to be effective. On the basis that Andrew is entitled to terminate, the candidates should consider whether the entire contracts rule might apply (Cutter v Powell (1795)) because payment is stated to be due on completion and, if so, whether any the exceptions to this rule might apply such that the obligations are severable, substantial performance is sufficient or there has been acceptance of part of the works (Ritchie v Atkinson (1808); Hoenig v Isaacs [1952]; Sumpter v Hedges [1898])). Candidates should consider the application of these rules and the different options available to Andrew. It is certainly arguable that the entire contracts rule applies such that FCL would not be entitled to any payment. On the other hand, Andrew might accept performance, pay the full amount and set-off against this sum his losses. Higher marks will be awarded to candidates who comment on the potential relevance of the payment provisions of the Housing Grants, Regeneration and Construction Act 1996. Question 2
(a) This question concerns offer and acceptance and the incorporation of terms. This situation
can be described as a battle of the forms where the last shot doctrine applies (Butler Machine Tool Co. Ltd v Ex-Cell-O Corporation (England) Ltd [1979]). The parties exchange several responses which amount to counter-offers, which have the effect of destroying previous offers (Jones v Daniel (1894); Hyde v Wrench (1840)). Even though BTCs
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standard terms were illegible, they were probably incorporated into the contract through PBLs signature even though this was related to a counter-offer (LEstrange v Graucob [1934]). The test for agreement is an objective one. By starting work, BTC have probably accepted PBLs offer through conduct (Brogden v Metropolitan Railway (1877)). Candidates also however need to consider whether the exemption and limitation clauses were actually incorporated given their special nature. This depends on the extent of notice that PBL had of them (Thornton v Shoe Lane Parking Ltd [1971]; Chapelton v Barry UDC [1940]). Here it is relevant whether PBL were previously aware of BTCs standard terms and whether these terms were unusually wide or onerous (as they are). Candidates should reach a conclusion as to the express terms, and identify the terms in relation to price and time.
(b) Exclusion, and to a lesser extent, limitation clauses are regulated by common law and by the
Unfair Contract Terms Act 1977 (UCTA). Firstly, they will be interpreted contra proferentem (Baldry v Marshall [1925]). The courts adopt a more strict approach when interpreting exclusion clauses than limitation clauses, particularly when it purports to defeat the purpose of the contract (Photo Production Ltd v Securicor Transport Ltd [1980]). The terms are probably sufficiently clear to cover the damages incurred. It is then necessary to consider the application of UCTA. In this case, UCTA will render unenforceable the attempt to exclude liability for negligence which causes personal injury (s. 2(1)). The attempt to exclude liability for negligence causing other loss or damages will be subject to the test of reasonableness (s. 2(2)). As the parties have contracted on BTCs standard terms, section 3 will also apply in respect of the attempted limitation of liability for breach of contract and, again, will apply a test of reasonableness. Higher marks will be awarded to candidates who discuss the test of reasonableness in more detail. The candidates should reach their own conclusion as to whether these clauses are enforceable.
(c) BTCs entitlement to the additional 5,000 will depend on whether PBLs agreement to pay
this sum is supported by fresh consideration. Performance of an existing contractual obligation is not new consideration (Stilck v Myrick (1809)) unless the exception in Williams v Roffey Bros & Nicholls (Contractors) [1991] applies. This depends on whether PBL has obtained any additional practical benefit from this agreement. Higher marks will be awarded to candidates who also consider whether the doctrine of promissory estoppel could apply here or whether there is a collateral contract. Question 3
(a) This question concerns the principles of contractual damages to determine Jamess
entitlement for Swift Motors clear breach of the term to use reasonable care and skill. The objective of contractual damages is to place the injured party in the position that he would have been in had the contract been properly performed, so long as the damage is not too remote Hadley v Baxendale [1854]) and the injured party has taken all reasonable steps to mitigate his loss (British Westinghouse Co. v Underground Electric Railways Corp. of London [1912]).
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Under the principles laid down in Hadley v Baxendale an innocent party can recover damages for its losses:
1. arising naturally from the breach; and 2. which were in the reasonable contemplation of the parties at the time of the
contract as the probable result of the breach. Damages falling with the second limb require special knowledge of both parties. The candidates should apply these principles to each of the losses identified in the question. Issues of particular relevance are whether carrying an expensive antique in the van and Jamess particularly lucrative contract were within the reasonable contemplation of the parties; whether by deciding not to hire a van James has failed in his duty to mitigate his losses; and whether the cost of purchasing a new van amounts to a loss flowing from the breach.
(b) There are two issues in this question relating to whether a legally binding contract been
formed between James and his brother. Intention to create legal relations is an essential element of a contract. This is normally assessed objectively but can be proved by evidence of clear intention. There is a legal presumption that it exists in a commercial context (Rose and Frank Co v Crompton Bros Ltd [1915], but in a social or domestic situations there is a presumption that it does not exist (Balfour v Balfour [1919]). Therefore, it could be argued that there was an absence of intention to create a contract. The second issue relates to certainty of terms, and in particular the meaning of half the going rate. This statement relates to a fundamental term of the potential contract, namely price, and thus the contract may be void for uncertainty (Scammell v Ouston [1941]).
(c) James has decided to buy the van from another company and so can avoid paying SCL if he
was entitled to terminate his agreement with them. This depends on whether time was of the essence. The facts are comparable to those in Rickards (Charles) Ltd v Oppenhaim [1950] and James is probably entitled to refuse delivery. The candidates should nevertheless consider SCLs entitlement to damages if James is not entitled to refuse delivery. The key point here is the extent of SCLs losses: are they the full asking price, the profit on this sale or have they suffered no loss? This will depend on the demand for the van and whether they are able to sell it to another vendor (W.L. Thompson Ltd v Robinson Gunmakers Ltd [1955]). Section 2 Question 4
(a) Advise Kate as to who may be liable for her injuries:

This question is concerned with negligence causing personal injury; and issues as to causation. Lord Sink is prima facie negligent here, as he was not paying enough attention to the road when driving.
(b) Advise Kate as to any defences which may limit or extinguish her claims:
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However, Lord Sink may be able to claim that Kate was at least partly to blame for the accident, by raising contributory negligence: the Law Reform (Contributory Negligence) Act 1945. Candidates should consider how much to blame Kate was for the accident. This will involve considering whether Kates actions were a cause of the accident, and suggesting an appropriate reduction in damages accordingly.
(c) Advise Ben as to who may be liable for his injuries:

This question is concerned with negligence causing personal injury; and issues as to causation. Lord Sink is prima facie negligent here, as he was not paying enough attention to the road when driving. As regards Ben, candidates should first consider the foreseeability of the way in which his injuries were caused i.e. was it a foreseeable result of the collision that a wheel would fall off the car and injure a bystander; or is that consequence too remote? This involves an application of the Wagon Mound (No 2) (1967) principles. It is not beyond the realms of contemplation that a motor accident would cause wreckage from the vehicle to spread over the surrounding area, and so Bens injury is probably not too remote, and so Lord Sink may in principle be liable for his injuries.
(d) Advise Ben as to any defences which may limit or extinguish his claims:
However, the next question to consider is whether the actions of Dr Sloth constitute a novus actus interveniens such as to break the chain in causation and thus excuse Lord Sink from liability. It seems that Bens initial injury was not too serious, and that had it been treated properly, there would have been no lasting problems. The courts are reluctant to find a defendant liable for wrongdoing committed by others, and so may well find that Dr Sloths actions constitute a break in the chain of causation. As for Dr Sloths own possible negligence, health professionals must act as the reasonable health professional would act in that situation. However, the test is whether a significant number of fellow professionals would judge Dr Sloths conduct as adequate, even if most competent professionals would disapprove: the Bolam test (1957). Candidates should therefore consider whether Dr Sloths actions, and his justification for them (i.e. the article in Bad Doctors Monthly) fall within the Bolam test, and thus whether Dr Sloth could be held to be negligent. The points required to be identified to obtain a pass on this question are: o o Recognising that Lord Sinks behaviour is prima facie negligent; Recognising that Kate may have been contributorily negligent (candidates putting a figure on the reduction in her damages would be rewarded with a higher mark);
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Discussing whether Lord Sink could be liable for Bens injuries (better candidates will canvass more fully the foreseeability and remoteness test); Recognising that Dr Sloth may have broken the chain of causation (better candidates would go on to discuss the effect that this would have on Lord Sinks liability); Recognising that Dr Sloth may himself have been negligent (candidates engaging in a fuller discussion of the application of the Bolam test would receive a higher mark).
All other points as outlined above would go to award a candidate a higher mark.
Question 5 (a) Any liability of Gomez and Morticia towards Annabel; and any defences: This question concerns occupiers liability. Gomez and Morticia are clearly occupiers, as they own and live at Haunted Hills. The first question is whether either Annabel or Steve is a visitor for the purposes of the 1957 Occupiers Liability Act. It seems clear that Annabel is a visitor, as Morticia has invited her to Haunted Hills for the purposes of a WI meeting. The duty owed under the 1957 Act is a general duty of care to ensure that visitors are reasonably safe for the purposes for which they have been invited: s 2(2). The burden of proof is on the claimant (i.e. Annabel) to show that this duty has been broken. The visitor is also expected to take care: s 2(3). There could therefore be a defence of contributory negligence, if Annabel should have seen the spade and avoided it. Here, Gomez and Morticia could argue in their defence that Annabel was using the land in a way different from that for which permission was granted: i.e. in wandering off the driveway. We are told that Morticia invited the WI for a meeting in the main house; and also that the driveway was well-kept whereas the garden was overgrown. It could be argued that Gomez and Morticia did not grant Annabel permission to enter the garden, but to stay on the driveway.
(b) Any liability of Gomez and Morticia towards Steve; and any defences: Steve is classed as a trespasser he has no permission to be on the Haunted Hills estate and is not a lawful visitor. Any liability owed to him by Gomez and Morticia will therefore be governed by the 1984 Occupiers Liability Act. This duty is a duty of common humanity. The duty is owed to a trespasser only if three conditions are satisfied (s1(3)): o The occupier knows of the danger, or has reasonable grounds to know it exists;
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The occupier knows the trespasser is, or may in the future, come into the vicinity of the danger, or has reasonable grounds to know it; and It is reasonable to expect the occupier to offer some protection to the trespasser against the risk.
The question then becomes how much Gomez and Morticia knew. We are told that Gomez had previously caught Steve stealing apples, and that the fencing has fallen into disrepair. A judgment needs to be made as to whether this justifies the imposition of liability upon Gomez and Morticia for Steves injuries. It seems that a restrictive scope will be given to this duty: however, it seems that as under the 1957 Act, an occupier must be prepared for children to be less careful than adults (s 2(3)(a) of the 1957 Act): Ratcliff v McConnell [1999] 1 WLR 670. Steves age has not been specified in this question: the older he is, the more care he could be expected to have taken. A defence of contributory negligence may therefore be available here. There is case-law that attractive or tempting items on the land may tempt children to enter; although the mere fact of apples being in a garden may not be enough to qualify for this purpose: British Railways Board v Harrington (1972). We are also told that Steves clothing is ripped by a splinter from the plank. Section 1(8) of the 1984 Act provides that the duty does not extend to cover damage to the trespassers property. As for the notice, it now seems to be accepted that a general notice disclaiming all responsibility, as in this case, will not be effective to protect the occupiers from liability. The position would be different if the notice had warned against either of the specific dangers to which the claimants fell victim. In order to obtain a pass, I would expect candidates to make the following points: o o o o Identify whether the two injured parties are visitors or not; Identify the correct statute to govern each case; Identify the correct duty to be applied under each statute; Identify the possibility of a defence of contributory negligence.
The remaining points outlined above are those necessary to obtain a higher mark. Better candidates would consider whether Annabel had exceeded the limits of her permission to enter the premises; whether Steves age will affect the duty to be owed to him; and whether Gomezs knowledge that Steve had previously tried to enter the grounds to steal apples affects liability.
Question 6: This question is concerned with private nuisance and the rule in Rylands v Fletcher (1868).
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Tony has an interest in the land (as owner) and so has standing to bring an action. The first point to note is that this may be a simple case of private nuisance, as the facts are very similar to those in Leakey v National Trust (1980): Richard knew of the danger and unreasonably did nothing about it, despite warnings and requests from Tony. Private nuisance is moving more towards a negligence (as opposed to a strict) liability basis, and so on this basis, Tony is likely to have to prove that it was unreasonable for Richard to have acted in the way he did. It would therefore benefit Tony to show that Richard is liable under the strict liability rule in Rylands v Fletcher. This involves discussion of the following: o o o o What has caused the damage? Was it dangerous? Was there an escape onto Tonys land? Are there any defences open to Richard?
The damage has been caused by both the earth and the water, in different ways. Better candidates will therefore consider whether Richards liability may differ depending on whether the earth or the water is characterised as having caused the damage. It is clear that there has been an escape of the earth and water onto Tonys land; and also clear that there had been an accumulation of the earth and water on Richards land. As for whether the things were dangerous, the test is generally whether the thing in question was likely to cause danger if it escaped this would seem to be satisfied here as regards both the earth and the water. However, the House of Lords now seems to have held that a thing cannot be dangerous if its escape was not foreseeable at all: Given that Richard had been warned of the danger, and that it was foreseeable that damage to Tonys land would be caused were the earth to collapse, this would not seem to be a problem here. Richard may try to argue that the damage was actually caused by an Act of God i.e. that the earth would not have collapsed were it not for the heavy rainfall. However, this will only apply if the rainfall was unforeseeably heavy: Nichols v Marsland (1876). Candidates should note that the result, although not the principle, of Nichols has been questioned in later cases, in that the possibility of heavy rain should have occurred to reasonable people considering the matter. Candidates should discuss the time of the year (which is deliberately unspecified) i.e. heavy rainfall is to be expected more in Winter than in Summer, and so will be more foreseeable at that time of year. A further defence may be if Tony consented to the dangerous accumulation however here, Tony made repeated requests to Richard to move the earth, and warned him of the dangers.
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If the type of damage caused was not foreseeable, there can be no recovery: Candidates should therefore consider whether the types of damage claimed by Tony, and the way in which they were caused, were foreseeable. Particular attention should be paid here to the water damage to the pictures being stored in the outhouse. We are told that Tony has a pre-existing back complaint which is aggravated by his fall. This is an application of the thin skull rule, that a defendant must take his victim as he finds him: Smith v Leech Brain & Co (1962). In order to obtain a pass mark, I would expect candidates to make the following points: o o o o The possibility of a private nuisance claim; The possibility of a Rylands v Fletcher claim; Tony needing an interest in the land to bring a claim; Some discussion as to the elements of Rylands i.e. dangerous, escape, accumulation; The foreseeability of the damage suffered by Tony; Some consideration of possible defences.
o o
All other points as listed above would go towards the candidate being awarded a higher mark: in particular a more detailed treatment of Tonys chances of recovery for the different types of damage; and detailed consideration of the possible defences, especially the difficulties with the Act of God defence.
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Institution of Civil Engineers Examination in Civil Engineering Law and Contract Management 2009 Paper 2 ICE (England and Scotland) Monday 22 June 2009 Time permitted: 14:00 to 17.20 (3 hours 20 minutes) There are four questions in Section 1 and four questions in Section 2. Answer any two questions from each section; a total of four questions. Please answer questions from Section 1 in an answer book provided (Pink book) and answer Section 2 questions in a separate answer book provided (Pink book). All questions carry equal marks You may consult un-marked copies of the ICE Conditions of Contract Measurement Version 7th Edition and Term Version 1st Edition; the CECA/FCEC form of Sub-Contract, Statutes, CDM Regulations, CESMM3 and ICE Design and Construct Conditions 2nd Edition. Questions must be answered using the versions of Contracts stated above as amended up to August 2008. Please indicate on the outside of the Answer Booklets whether your answers will be in respect of Scots Law.
Question 1 A Contractor is repairing a masonry arch bridge under an ICE Measurement Version 7th Edition Contract. The rubble fill to the arches is to be excavated and disposed off site; mass concrete fill placed, waterproofed and surfaced. The Contract provides for repairs to five of the seven arches. Road closures are only permitted overnight Saturday to Sunday and the time for Completion is 10 weeks. Liquidated Damages are set at 35,000.00 per week. The Contractor proposes to provide a temporary bridge to span a single arch and move it overnight every two weeks. The CESMM Bill of Quantities is priced as follows. Method Related Items Set up Site
Supervision
Amount / Fixed TR Fixed 71,000.00 30,000.00 36,000.00
Traffic Measures
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Measure Excavate and dispose Supply and mass concrete Waterproofing Surfacing Adjustment Item Tender total 1,100m3
Rate 20.00 100.00
Amount / 22,000.00 100,000.00
place 1,000m3
500m2 500m2
40.00 120.00
20,000.00 60,000.00 (39,000.00) 300,000.00
The Contractor believes the Bill of Quantities is overmeasured so he has moved money from the Measure items to the fixed Method Related Item for Set up Site. This item includes the temporary bridge, excavators and small plant. The Adjustment Item is savings resulting from late quotations for the surfacing and concrete. Disputes arise and the Employer asks you to advise on the proper basis of payment regarding the following events during construction. a. b. The Engineer instructs the Contractor to treat all seven arches. The excavation and concrete quantities increase by 10%. These are the critical items and on the first two arches the Contractor misses the two weekly cycle causing a full week of delay in each case. The Contractor subsequently introduces a night shift to overcome these delays. Nevertheless, heavy snow prevents the Contractor surfacing and he misses a further move. The Engineer increases the Adjustment Item pro-rata the increased value of Works. [10 marks] [8 marks]
c.
[5 marks]
[2 marks]
Question 2 A Contractor is carrying out a Contract for the removal of asbestos waste, carcinogenic materials and low level radioactive waste from hospitals which had been illegally dumped; and the construction of access roads, road drainage and services for proposed Social housing. The Contract is an ICE 7th Edition Measurement Version. You are the Contractor's Site Agent. The CDM Co-ordinator visits Site and demands to see you. He says a whistle-blower has reported that you have been burying waste in deep excavations rather than removing it to licensed tips. He says that this is unacceptable and dangerous. He says that houses could not possibly be
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constructed on the Site when the Contract is complete. He insists that you open up a particular part of the Site so that he can investigate. You have never instructed your own work-force to do anything so irresponsible but you are not entirely certain about the performance of a sub-contractor who was employed on this work on a daily-rate basis. You cannot remember whether it was your own work people or the subcontractor who treated the part of the Site identified by the CDM Co-ordinator. The Engineer cannot be contacted and the Engineers Representative is on holiday, somewhere in Australia. He has never once complained about your compliance with the Specification. You spend the whole day digging where the CDM Co-ordinator alleges there is a problem but the Site is found to be clean. a. b. On what basis could you make a successful claim for payment? Would your answer change if the Engineers Representative had instructed the investigation and, if so, why? Assuming the Engineers Representative had instructed the investigation, what are the main heads of claim that you could make? [9 marks] [10 marks]
c.
[6 marks]
Question 3 You are a Consultant advising a Client on the design and construction of a concrete apron to an airfield. a. How would you manage tender queries? [6 marks]
On receipt of the tenders Contractor A has stated that he is unable to complete the work within the stated contract period of 20 weeks and proposes a contract period of 25 weeks. His price is the lowest. b. What relevant procedures would you have put in place and how would you deal with this proposal? [5 marks]
On examination of all the returned tenders you discover that that Contractor B has failed to price one section of the bill of quantities but has signed the Form of Tender confirming his price. c. What advice would you give your client? [2 marks]
During the preparation of his tender Contractor C inserts 500,000 as a Method Related Charge for the set-up of a concrete batching plant but does not provide a Time Related Charge. d. What is the purpose of Method Related Charges? [6 marks]
Contractor C is successful. Once awarded the contract he is able to negotiate with a ready mix concrete supplier for his concrete and does not set up the batching plant.
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e.
Should the Engineer still pay the Method Related Charge?
[3 marks]
The Engineer issues a Variation Order to Contractor C which doubles the amount of concrete required. f. Under which clause of the contract will this be valued and how should the Method Related Charge be treated? [3 marks]
Question 4 You are the Engineer for a project and have designed the works. The Contractor has been appointed and has not been given any design responsibility. When work commences the Contractor proposes an alternative design for the piles, which form part of your design. a. What actions is it necessary for you to take in order to formally accept the Contractor's proposal, and discuss the implications that accepting such a design has on the design responsibilities set out in the contract. [12 marks]
Whilst carrying out the piling works the Contractor experiences difficulty in installing the piles in the timescales he originally anticipated due to the ground conditions being experienced. b. Set out the steps which the Contractor and the Engineer must take, in accordance with the contract in order to resolve this issue and address the financial and time consequences which have arisen. [13 marks]
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Section 2 Question 5 An architect sketched a stunning bridge to carry the Wallington By-pass over the River Ere. He gave no consideration at all to the required foundations. You have been appointed as the Consulting Engineer to design the Wallington By-pass. Your scope of service includes the structural and civil designs of the architect's sketched bridge, and the role of the Engineer under an ICE 7th Edition Contract. Your initial work indicates a need for very high foundation loads to be resisted at each abutment. The first of the results from the site investigation reveals very difficult and poor ground conditions for the bridge's foundations. You varied the scope of the site investigation and instructed soil sampling and testing to accommodate a foundation solution with piles to a depth of 35m below the existing ground levels. You explain to the Employer the difficulties of the high foundation loads, and express your view that the structural form of the bridge was incorrect for the site selected by the architect. You advise the Employer that your estimate for the architect's sketch of the bridge at this site was 10 million, double the approved budget for the bridge. Nevertheless, Rothorpe Council accepted the tender of Brevon Ltd to construct the By-pass. Brevon submitted a method statement for the piling works. They proposed the use of a Stenoco 7 piling rig to prepare a 1050 diameter hole to 35m. You gave consent to the use of the Stenoco rig, but noted that you had reservations about the Stenoco 7's ability to get through the large boulders and to achieve the production rate required by Brevon's programme. Brevon dismissed your concerns and were confident of the Stenoco 7's abilities. As matters unfolded, it was clear that the Stenoco 7 simply did not have the torque to cope with the ground conditions and could not reach 35m; nor could it match the production rate required. Brevon brought a Ketonata rig to the site and finished the piling programme on time, but at an additional cost of 1.5m, for which it has made a claim.
a. b.
List the clauses which Brevon cited in their letter of claim Draft your response to each of the claimed clauses
[13 marks] [12 marks]
Question 6 Tolnan County Council invited Tenders for strengthening works of old harbour walls at Kilnain. Tenders were returned on the due date. Nolan Construction's tender envelope contained the following: (a) the ICE 7th Form of Tender
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(b) insurance details Tolnan County Council accepted Nolan's tender, and in their letter of acceptance explained that you, the Engineer, would issue a date for commencement. Nolan issued a method statement to the Engineer and set to work. The method statement stated that works would involve the dewatering of the harbour to get access in the dry to carry out the strengthening works. In trying to de-water, the existing harbour walls settled badly when the foundations were washed out, and the Harbour Master's office at the shore side of the harbour had to be demolished because of severe settlement cracks. Nolan's position was that they were not responsible in any way for the damage to the walls; they maintained that they were carrying out the work just as they had stated in their method statement. Nolan's insurers denied any liability for the Harbour Master's office, alleging that they had no liability because the damage was an unavoidable consequence of carrying out the work. Tolnan County Council Councillors have requested that you, the Engineer, attend a Council meeting with answers to the following questions: a. Are Nolan correct when they say they have no responsibility for damage to[5 marks] the Council's harbour walls, and if so, why? Tolnan Council looked at the insurance details in Nolan's submission documents at Tender receipt and they all appeared in order. How can the insurers say they have no liability for the damage to the Harbour Master's office; and are they correct? Why did you allow Nolan to de-water; did you not see that damage would occur to the walls? If you did not foresee that damage would occur, how could Nolan be expected to foresee damage? What are you going to do to see that the Council's walls are repaired and the Harbour Master's office re-built at no cost to the Council? [5 marks]
b.
c.
[5 marks]
d.
[5 marks]
e.
[5 marks]
Question 7 A Contractor had allowed in his Tender for the cost of importing drainage medium from a local quarry. The Contract was for the construction of a large road project and 20,000m of drainage medium was required for which the Contract rate was 30/m. During the formation of a large cutting, the Contractor encountered a requirement to remove a large quantity of rock to achieve formation level. The presence of the rock had not been disclosed by the site investigation and was accepted as an unforeseen condition by the
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Engineer. It soon became very clear that the rock in the cutting was the same geological rock as was being won from the local quarry. The Site Agent calculated that, as he had to remove the rock in any event, he could excavate it and move it to his crushing plant for 10/m and could crush it to the specified grading for drainage medium for 5/m. He was confident of the Engineer valuing the unforeseen rock excavation at no less than 15/m. He could, therefore, see that he could supply drainage medium at a cost to his company of 15/m instead of paying 25/m to the local quarry, for which he would receive the Contract rate of 30/m from the Employer. He was confident of the Engineer valuing the unforeseen rock excavation at no less than 15m. The Specification for drainage medium identified the geologies of rock classifications which were not permitted, the permitted gradings and crushing strengths. Whatever rock was used, the Specification required that it be durable, but no test for durability was specified. When the Contractor proposed the use of the site-won drainage medium, the Engineer ordered a magnesium sulphate test to gauge its durability. That test disclosed that the site-won rock was not durable. Further testing disclosed that the rock from the Contractor's intended local source was not durable. The Engineer refused to permit the use of either sources of rock. The Contractor sourced rock from further a field at a purchase price of 28/m, which he sought for payment under the Contract at a rate of 33.60/m, slightly increasing his tendered margin. The Engineer refused to certify anything in excess of the Contract rate of 30/m, although he did certify a rate of 25/m for the unforeseen rock excavation.
a.
List the contractual reasons for the Contractor's claim of 33.60/m for the [12 marks] drainage medium. List the responses the Engineer made to each of the ICE 7th Edition clauses [13 marks] which the Contractor relied upon in his letter of claim.
b.
Question 8 A Contractor constructed a road tunnel from the City Airport to the City Centre under an ICE 7th Edition Contact. The Contract provided the Engineers design for the tunnel but the Contractor was to design and install the tunnel linings and their fixings. The Work was completed in 2005 and the defect correction period was 12 months. The Contractor was required to submit a design with his Tender. It provided for pre-cast concrete curved tunnel linings panels, each fixed to tunnel sides and roof with 6 N 16mm diameter stainless steel rock bolts of 1.6m length, drilled into rock for a depth of 1.4m with 200mm to the face of the pre-cast panel. Each rock bolt was to be set in an epoxy mortar for the
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full depth of 1.4m. The Employer was content with that design and it was incorporated in the Contract. In 2008, a panel fell off the roof on to the road. Fortunately there were no injuries, although a car was irreparably damaged. The tunnel was closed, and after extensive investigation it became clear that none of the rock bolts was of the Contract length of 1.6m. Most rock bolts were 800mm long. Consequently no bolt had an embedded length of 1.4m. Of the 600mm length of the bolts used available for fixing in an epoxy mortar, pull-out tests showed that the length of the bolt embedded in epoxy mortar varied between 200mm and 400mm. The Contractor stated to the Employer that his method submitted with his Tender was far too conservative and he had switched to a shorter length of bolt. He stated that the Engineer knew all about the change and had approved it. The Engineer denied that he had approved the change although he was aware of it, and he thought the change had been agreed between Employer and Contractor. The Employer engaged another engineer and employed another contractor to effect remedial works at a cost of 2m. The tunnel was closed for a year. Advise the Employer of the contractual responsibility of the Contractor and Engineer for the cost of repairs, give your opinion of the weight that might be attached to each contractual issue:
a. b.
the original Contractor. the original Engineer.
[10 marks] [15 marks]
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Points for answer Section 1 [Points for Higher Marks in brackets] Question 1 (a) Variation The variation is subject to a quotation under Clause 51(1) or valuation under Clause 51(2). The rates and prices may be adjusted in accordance with Clause 52(4), There do not seem to be any differences in the character or conditions under which the Measured work is done and so Bill rates will apply, Clause 52(3)(a). The Method Related Items may be adjusted as a result of the Variation. Set up Site is a fixed item and there is no reason to adjust it. The Contractor has elected not to include a time-related item. [The Contractor suffers the loss of additional payment for the concrete pump and excavator; and the transfer of money from the excavation and concrete rates to the set up item, made in anticipation of an over-measure.] Supervision is time related and an appropriate adjustment is to increase it by 2/5ths. Traffic Measures is a Fixed Charge. It would be relatively simple matter to adjust a Time Related Charge. However, this does not mean that a Fixed Charge is not subject to adjustment if its description indicates that the price is rendered unreasonable by reason of the variation. The item covers the risks and obligations of the original work only. In this case, a break down of the rate will in all probability include fixed and time related elements and a reasonable increase should made for the additional period of Traffic Measures' by reason of the variation. [10 marks] (b) Increase by 10% of Excavation and Concrete It may be questioned whether the Contractor could have achieved the output necessary for the Bill quantities in any event. The following assumes he could.] An increase in quantities compared to the original BoQ, which does not arise from a Variation Clause 51(4) possibly justifies an extension of time, Clause 44(1)(b). The Contractor must observe notice requirements, which he may have in this instance, although the Engineer may take the initiative, Clause 44(2), in any event. The Employer does not accept any liability arising from the Contractor's chosen method, in this case two weekly cycles. However, the assessment of 'the delay that has been suffered', Clause 44(2), which 'fairly entitles the Contractor to an extension of time', Clause 44(3) cannot ignore the practicalities of the situation. It is submitted that the Engineer could only reasonably award full week extensions. [8 marks] (c) Increased Resources
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The Contractor is not obliged to increase resources to avoid requiring an extension of time for which he is entitled. In the event that the Engineer does not extend the due date for completion so that the Contractor cannot finish within the extended contract period, it seems that the Contractor is obliged to work with due expedition, Clause 41(2) and finish within the time for completion, Clause 43. However, it is not clear that the Contractor is entitled to any payment, except possibly in damages for the failure of the Engineer to properly operate the Contract. The intervention of weather is again a reason for an extension of time for completion by Clause 44(1)(d), but there will be no entitlement to costs. [5 marks] (d) Adjustment Item The Adjustment Item is fixed and not subject to any change; CESMM note 6.4. The Contractor benefits in this case, as he does not credit the saving on the increased quantity. [2 marks] Question 2 (a) Claim under CDM The Contractor is obliged under CDM Regulations to co-operate with the CDM Co-ordinator. Clause 71(3)(a) provides that an action taken by the CDM Co-ordinator under the CDM Regulations is deemed to be an Engineers instruction under Clause 13. It seems that the Contractor was obliged to co-operate by digging investigation holes as insisted upon by the CDM Co-ordinator. By Clause 71(3)(a) the Contractor is entitled to additional payment and/or an extension of time provided the action of the CDM Co-ordinator did not result from any action or lack of action by the Contractor. [On the facts, it is at least arguable that the Contractor did not have sufficient knowledge or records of the Work carried out to allay the concerns of the CDM Co-ordinator.] By Clause 71(3)(b) the Contractor must give notice that he considers that he could not have anticipated the action by the Co-ordinator. On balance, subject to notice and records, the Contractor has a valid claim for time and money. The claim is deemed to be an instruction under Clause 13(1). Under Clause 13(3) the Contractor is entitled to the extra cost of the Works [to include profit] and, potentially, an extension of time under Clause 44(1)(c). (b) Instruction by Engineers Representative An instruction by the Engineers Representative to uncover suspected defective Work is given under Clause 38(2).
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Liability for payment depends upon whether the Contractor gave the Engineer an opportunity to inspect before covering up as provided by Clause 38(1) and whether the Works were in compliance with the Contract as provided by Clause 38(2). If the Works were correct and the Engineer had been given the opportunity to inspect, then the Employer would pay. In this case, no defect was found but it is not clear whether the Works were covered up prematurely. [The absence of records by the Contractor may make proof difficult.] On balance, subject to notice and records, the Contractor has a valid claim for time and money. Clause 38(2) expressly states that the cost of uncovering reinstating and making good shall be borne by the Employer . [Cost is defined in Clause 1(5) to exclude profit.] Clause 38(2) does not expressly refer to delay. An entitlement to an extension would probably be under Clause 44(1)(e) any delay impediment by the Employer or Clause 44(1)(f) other special circumstances [or by applying Clause 13] (c) Heads of Claim Under Clause 38(2), the Cost of the additional Work comprising excavation and reinstatement; Cost being in accordance with Clause 1(5) including All direct expenditure for on Site resources All expenditure for on Site overheads; supervision, offices and so on All expenditure off Site related to the additional Work for overheads, financing and other charges Extension of time for completion under Clause 44 subject to demonstrating that a delay was caused by the additional Work that fairly entitles the Contractor to such extension. [Discuss critical path and obligation to mitigate]. Question 3 (a) Tender Queries The Instructions to Tenderers should state (Employer includes Employers Consultant) All queries by Tenderers are to be put in writing to the Employer The Employer will allocate a number to each query, answer it in writing and circulate the query and answer to every Tenderer without identifying the Tenderer raising the query. [There may be a provision concerning whether such queries and answers will be incorporated into the Contract.] Should a query give rise to a Tender Amendment, it shall be separately identified and issued by the Employer. (b) Time for Completion amended
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The Instructions to Tenderers may state (Employer includes Employers Consultant) A Tenderer proposing to submit a qualified Tender must advise the Employer of his proposed qualification at least one week prior to the Tender Date. Qualified Tenders will not be considered unless the Tenderer also submits an unqualified Tender. This will ensure that if there is a general view amongst Tenderers, for instance that the period is too short, that the Employer has the opportunity to issue a Tender Amendment. An unqualified Tender in which the Tenderer allows for delay damages provides better information to the Employer as to the cost of the qualification. The Employer can make his own assessment as to the cost / benefit of the longer programme. [The Employer may consider seeking revised prices for the longer period from other, say the lowest three, Tenderers.] (c) Section not Priced The Tenderer should be advised of his omission and invited to stand by his total tender sum or withdraw his Tender. [The Employer may be unwise to accept a low tender or any tender with such an omission. It may indicate an unsuitable Contractor and it can give rise to difficulties and anomalies in the valuation of variations and so on]. (d) Method Related Charges Method Related Charges provide a means of pricing items for which the cost does not vary in proportion to quantity. Tenderers may enter as many or as few Method Related Charges as they wish. They may be fixed or time related. The Tenderer should provide as mush detail as necessary for the charge to be administered fairly. Method Related Charges are not subject to admeasurement or adjustment if the risk covered does not materialise or changes; but may be adjusted if a variation renders them unreasonable. (e) Ready Mix Concrete The Method Related Charge for the concrete batching plant covered the cost that did not vary in proportion to quantity. The Contractor is entitled to payment in proportion to the Work completed Clause 60(2)(a) whatever method he uses. In this case the only Method related Charge is a fixed charge for setting up the batching plant. If no plant is erected, the Contractor is still entitled to the full sum. It would seem reasonable to pay in proportion to the quantity of concrete placed, up to the full Charge. (f) Variation to Quantity of Concrete
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A Variation may render a Method Related Charge unreasonable and subject to an increase or decrease in accordance with clause 56(2). If there had been a Time Related Charge for operating the batching plant, it would have seemed appropriate to increase it pro rata the increased quantity of concrete on the assumption that the quantity was generally time related. In this case the Contractor elected to insert a Fixed Charge related to erecting the batching plant. This remains the same whatever the quantity of concrete required. It follows that there is no justification for an increase as a result of the Variation to the quantity of concrete. Question 4 (a) Accept design The Engineer must check the design and satisfy himself that it is technically acceptable both in terms of the piles themselves and interface with other elements of the design. The Engineer must consider the relative merits of the change in design and the potential for cost savings or benefits to programme and so on. The Engineer must change his design and issue the appropriate instructions to the Contractor, Clause 51(1)(b) would be most appropriate, and should request the Contractor's quotation before proceeding to ensure that the anticipated benefits can be transferred to the Employer, Clause 52(1). Under ICE 7th the Engineer is responsible for the design unless responsibility for elements is expressly allocated within the contract to the Contractor, Clause 8(2). [The exception is temporary works.] By issuing the instruction the Engineer retains the design responsibility and the Employer carries the cost implications or benefits from any savings. [12 marks] (b) Difficulty installing Piles The Contractor must notify the Engineer in writing of the circumstances in accordance with Clause 12(1) Any such notice should, if possible, also notify any intention to claim additional sums and any extension of time in accordance with Clause 12(2). Reference should be made to Clauses 44(1) and Clause 53(2). As soon as possible after notifying the Engineer of the circumstances, the Contractor should advise the Engineer of the effects of the conditions, how he intends to overcome them and the likely cost and delay implications of his proposals Clause 12(3) The Contractor should maintain records of the works being carried out in accordance with Clause 53(2).
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On receipt of any notice the Engineer should review the same and if appropriate deal with the Contractor's submission in accordance with Clause 12(4), i.e. instruct investigations, consent to measures, instruct how to deal with the conditions or suspend the works. As soon as the Engineer has decided whether the conditions could have been foreseen he shall take action in accordance with Clause 12(5) or 12 (6) dependant upon the outcome of his deliberations. [13 marks] Section 2 Question 5 For a Pass (a) Clauses to be cited by Brevon: 12(1): Contractor gives notice to the Engineer. 12(2): The Contractor gives notice of claim pursuant to 12(1). 14(6): The Contractor submitted his methods of construction using the Stenoco as had been requested by the Engineer. 14(7): The Engineer gave his consent to the Stenoco rig. 53(2): The Contractor gives notice of claim for additional payments under 12(2) (b) Responses by the Engineer: 12(1): The Engineer's first receipt of notice was when the work was completed, contrary to the requirement of as early as practicable. The notice is not valid. The Engineer also quotes 12(5) that physical conditions or artificial obstructions were reasonably foreseeable as rasied by the Engineer when the Contractor proposed to use the Stenoco rig. 12(2): The Contractor submitted no evidence to demonstrate adverse physical conditions and artificial obstructions. 14(6): The Engineer confirmed consent of the proposed use of the Stenoco. 14(7): The Engineer confirmed his giving of consent, but drew the Contractor's attention to 14(9) which does not relieve the Contractor of any of his duties under the Contract. 53(2): The Engineer confirmed receipt of the notice, but refers to 53(5) and states no payment due as the Contractor did not comply with either as soon as may be reasonable, or within 28 days after the happening of events giving rise to the claims. For Higher Marks The Contractor gives notice of claim for extension of time under 44(1)(c) and 44(1)(f) relying
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upon Clause 12(1) for Cl 44(1)(c) and relying upon the fact that they had to bring a more powerful machine to site. The Engineer refutes a claim under clauses 12(2) and 44(1)(f) as there is no evidence provided of a physical condition; and refutes under 44(1)(c) because under Cl 14, the choice of plant is that of the Contractor. Question 6 For a Pass (a) Nolan are not correct. The method statement and method of working remains their responsibility. (b) The insurers are not correct. The Harbour Master's Office is not part of the Permanent Works, but Clause 21(2)(a) requires insurance for Employer and Contractor against all loss or damage from whatsoever cause arising other than Excepted Risks, but this is for insurance arising under Clauses 21(1) and 20 which concern the Works. Clause 22(1)(b) requires insurance for loss of or damage to any property (other than the works). (c) Nolan are not relieved of any of their duties or responsibilities under the Contract despite any consent of the Engineer to the Contractor's proposed methods of construction (Clause 14(9)). The Engineer may or may not have foreseen that damage would occur. It depends to some extent on what the foundation soils comprised. (d) Nolan are considered to be an experienced Contractor. Clauses 11(1), 11(2) and 11(3) are relevant. Whereas it is the Contractor's mandatory obligation to comply with Clause 14(1)(b), the choice of method of construction rests entirely with the Contractor in the absence of any contractual provision to the contrary. There was no such contractual provision in the Contract. (e) The Engineer will write to the Contractor recording that i. the method of working is the Contractors responsibility
ii. Clause 14(9) does not relieve the Contractor of any of his duties or responsibilities under the Contract iii. the Contractor has full responsibility for the care of the Works (20(1)) and none of the Excepted Risks is present (20(2)). This applies to the Council's Walls. iv. the Contractor is required to indemnify the Employer under Clause 22(1). The exception under Clause 22(2)(d) does not apply because the method statement was not part of the Parties' Contract. For Higher Marks
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Nolan may argue for a Clause 12 claim. Nolan may have cover under Contractors all risk insurance policy.
Question 7 For a Pass (a) Contractor's reasons: 1. Clause 8(1)(b) requires the Contractor to provide materials, so far as the necessity for providing the same is specified in or reasonably to be inferred from the Contract. The local quarry source met the Specification. requirement expressed in the Contract. There was no durability test
2.
3.
The Contractor could not foresee that the Engineer would insist upon magnesium sulphate tests, therefore the risk was not priced in the Contract. The Contractor intended to supply material in accordance with Clause 36(1). Clause 36(1) permits testing at the place of manufacture or fabrication or on the Site or at such other place or places as may be specified in the Contract. The magnesium sulphate testing was not carried out at any of the places mentioned and there was no other place specified in the Contract. The Contract rate had a mark-up of 20% on the cost of supply of drainage medium i.e. 25/m + 20% = 30/m. The source of supplied material actually used cost the Contractor 28/m. The claimed rate was submitted as 28/m + 25% = 33.60/m. The Contractor issued notice of claim under Clause 53(2).
4.
5.
6.
(b) Engineer's response: 1. Agreed that the local quarry met the Specification in terms of geology and grading. However, the stone from the quarry did not meet the Specification's durability requirement. Agreed there was no durability test expressed but Clause 13(2) requires all of the materials to be of a kind acceptable to the Engineer. It could be foreseen that the Engineer would insist upon materials in accordance with the Contract. The Specification required durable rock. Agreed. 36(1) catalogues where tests may be carried out. The test location was not specified in the Contract. As there is no contractual entitlement to a revised rate for the drainage medium, the Engineer declined to involve himself with revised rates. The Engineer did not consider any payment due under Clause 53(6) and rejected the claim.
2.
4.
5.
6.
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For Higher Marks Materials supplied are required to be fit for purpose under the Sale of Goods Act Even although a durability test was not specified, Clause 36(1) allows the Engineer to direct testing and Clause 8(1)(b) requires materials as specified in the Contract. The Contractor is due to be paid for the cost of samples by the Employer, Clause 36(2); and to be paid for the cost of the test 36(4).
Question 8 For a Pass (a) 1. Responsibility of Contractor: The Contractor is responsible for the design of the tunnel linings, as expressly provided by Clause 8(2). The Contractor did not install the rock bolts in accordance with the Contract; the bolts were too short; the embedded length was too short; the length of bolt/epoxy mortar bond was too short. The Contractor is in breach of Clause 8(1)(b). The Contractor failed to carry out the Works strictly in accordance with the Contract and, apparently, took instructions from someone other than the Engineer; all in breach of Clause 13(1). Responsibility of the Engineer 1. 2. 3. 4. 5. 6. The Engineer did not ensure the Contractor complied with Clause (8)(1) The Engineer did not ensure the Contractor complied with Clause 13(1), 13(2). The Engineer failed to act under Clause 14(6). The Engineer failed to examine materials under Clause 38(1). The Engineer failed to act under Clause 39(1). The Engineer's certifications under Clauses 60(2) and 60(4) were incorrect.
2.
3.
(b)
For Higher Marks The Contractor is not relieved of any of his duties or responsibilities under the Contract by the consent of the Engineer under Clause 14(9) The Contractor failed to comply with Clause 36(1). The Engineer failed to reject the methods of construction under 14(9). The Engineer failed to act under 17(1) and 17(3). The Engineer failed to carry out tests under Clause 36(1)
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The Engineer failed to enquire of the Employer if it approved the changed length The Engineer incorrectly issued a Certificate of Substantial Completion under Clause 48(2)(a). The Engineer incorrectly issued a Defects Correction Certificate under Clause 61(1).
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Institution of Civil Engineers Examination in Civil Engineering Law and Contract Management 2009 Paper 2 NEC (England and Scotland) Monday 22 June 2009 Time permitted: 14:00 to 17.20 (3 hours 20 minutes) There are four questions in Section 1 and four questions in Section 2. Answer any two questions from each section; a total of four questions. Please answer questions from Section 1 in an answer book provided (Green book) and answer Section 2 questions in a separate answer book provided (Green book). All questions carry equal marks You may consult un-marked copies of the NEC3 Engineering and Construction Contract, NEC3 Engineering and Construction Subcontract, Statutes, CDM Regulations and CESMM3. All questions must be answered using NEC3 Contracts. Please indicate on the outside of the Answer Booklets whether your answers will be in respect of Scots Law.
Section 1 Question 1 You are acting as adviser to an Employer who is planning to construct a new football stadium. As part of the statutory planning process he has agreed to carry out some road improvement works and new footways. The site for the new stadium is immediately available, and the Employer needs the new stadium to be ready for use at the start of the football season in approximately 2 years time; he has an agreement with a developer who will demolish the old stadium and build houses on the land. You are experienced in road design and construction, and the Employer agrees with your suggestion that you design the road improvements and footways and let this as a first contract. However, you are not experienced in stadium design, so agree with the Employer that he should use a design and build form of contract and let this as a second contract. The Employers business case for the new stadium is based on a maximum construction cost of 45 million.
a.
Advise the Employer which Main Option and which Secondary Options to [20 marks] use in the two ECC contracts that will follow. The Employer has little
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experience of the NEC, so you should include the reasons for your recommendations.
b.
The Employer has used a specialist contractor on previous jobs and is [5 marks] keen to use them again for the seating and the hospitality suites. How can this requirement be put into the Contract?
Question 2 The Contractor and the Employer have entered into a contract under the ECC, using Option A, for the construction of a new sea wall and promenade. The Employer is responsible for the design of the works. The Employer has stated in the Contract Data that he will provide access to the whole site except 150m of existing sea wall and promenade at the western end of the site at the Contract Date; access to the western 150m will be provided after 30 weeks. The Completion Date is 78 weeks after the Contract Date. The Works Information states that, in order to minimise the disruption to holiday makers, the Contractor can only work on one third of the length of the sea wall at any one time, and that pedestrian access must be maintained along the promenade throughout the construction period. The drawings show the reinforcement required in the sea wall and the concrete deck to the promenade, but bending schedules are not included in the Works Information. During the tender period one of the tenderers questioned this, and the Employer undertook to make the bending schedules available to the Contractor at least 4 weeks before the programme shows the relevant concrete work starting. This statement is included in the contract documents (as an amendment to the Works Information) The Contractors tender programme, which becomes the first Accepted Programme, shows works starting at the western end of the site in week 52. The first concrete to be placed in the sea wall is shown in week 11. The Employers designer is dilatory in producing bending schedules, and only sends them to the Employer in week 9; the Employers internal systems are not perfect, and it is another week before they are received on site by the Project Manager, who immediately issues them to the Contractor. The Contractor realises that this is three weeks later than he could have expected, and gives notice of a compensation event to the Project Manager. The Project Manager accepts that the event is a compensation event and instructs the Contractor to submit a quotation.
a.
Have both the Contractor and the Project Manager done what the contract [10 marks] requires of them?
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The Contractor sends the bending schedules to his supplier and the reinforcement is delivered to site in week 12, causing a delay to planned Completion of one week.
b.
Is the delay to the Completion Date resulting from the compensation [5 marks] event assessed on the basis of how late the information was (3 weeks), as the Contractor claims in his quotation, or on the some other basis? Give reasons for your answer.
The reason for the later access to the western end of the site was that the Employer was experiencing legal difficulties with the company operating a small caf in the area. Arguments are protracted and no agreement is reached until week 36, when the Employer agrees that no work will be permitted in that area until week 60. He immediately informs the Project Manager.
c.
What should the Project Manager do?
[10 marks]
Question 3 In a contract for the construction of a new office block, using the ECC, the defects correction period is 4 weeks and the defects date is 52 weeks after Completion. During the construction, some of the floor screeding is found (by the Supervisor) to be out of tolerance on level.
a.
What actions does the Contract require the Supervisor and the Contractor [6 marks] to take?
The Works Information requires the Contractor to obtain the acceptance of the local Fire Officer before purchasing and installing special fire doors at loading bays. The Contractor submits details of the proposed doors to the Fire Officer but places an order for the doors before the Fire Officer has had time to respond. The doors are later rejected as being inadequate.
b.
If the Contract is using Option C, is the Contractor paid for purchasing [8 marks] and installing the inadequate doors?
Later the building is completed, with a few outstanding Defects that do not prevent the Employer from using the building.
c.
When must the Contractor remedy these defects?
[6 marks]
There are still a few outstanding Defects when the Supervisor issues the Defects Certificate.
d.
What happens now under the Contract?
[5 marks]
Question 4
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Under an ECC Option A contract the Contractor submits the names of potential Subcontractors to the Project Manager for his acceptance. He states that he intends to use his companys standard terms and conditions for the award of these subcontracts. The parts of the works for which the Contractor proposes Subcontractors are:
a.
earthworks fencing supply of ready mixed concrete supply and placing of precast concrete beams bridge deck waterproofing
[12 marks]
How should the Project Manager respond?
The Project Manager makes enquiries of his colleagues and they tell him that they have had problems with the proposed waterproofing Subcontractor on other jobs; he often failed to turn up when he had agreed to, and the quality of his work was inconsistent.
b.
How can the Project Manager make use of this information?
[4 marks]
The contract includes the construction of a bridge pier within a river. The Contractors programme indicates that he will be installing a temporary sheet piled cofferdam for the construction of the pier base and stem. There is a requirement in the Works Information that the approval of the Environment Agency is obtained before any works in the river are started.
c.
How can a programme show that there will be a sheet piled cofferdam in [3 marks] the river? What should the Project Manager do if he wants to check the design of [3 marks] the cofferdam? Whose responsibility is it to seek approval from the Environment [3 marks] Agency?
d.
e.
Section 2 Question 5 On a highways contract under the ECC using Option C, the Project Manager assesses the amount due at the latest assessment date. Option X16 retention is included in Contract Data part one at an amount of 3%, the retention free amount is 500,000. Y(UK)2 and Option W2 are also included. a. What is the purpose in the ECC of deducting retention from amounts due [3 marks] to the Contractor? Explain how the ECC retention provisions operate; how retention amounts are calculated and when there are releases of retention? [7 marks]
b.
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The Project Manager realises he has made a mistake in calculating the amount of retention to be held but the Employer has only yesterday paid the change in amount due to the Contractor. c. What can the Project Manager do in this situation? [7 marks]
In the subsequent assessment the Contractor realises the final date for payment has passed 2 days ago but no monies have been paid to the Contractor. d. What action can the Contractor take? [8 marks]
Question 6 A Contractor has an ECC Option B contract for the construction of a large building. The Employer is responsible for the design of the works. There is 2000 cubic metres of concrete required in the building. The drawings in the Works Information state that the concrete is to be grade 35, which costs the Contractor 65.00 per cubic metre. The specification, also in the Works Information, on the other hand states that the concrete is to be grade 40, which costs the Contractor 70.00 per cubic metre. The Contractor points out this inconsistency to the Project Manager. The Project Manager checks with the Employers designers who inform him that that the drawings are wrong and that the concrete should be grade 40. a. b. c. What actions should the Project Manager take? Is this a compensation event, and if so how should it be valued? What would your answers be if the Contractor had admitted that they had allowed for the higher grade concrete in their tendered total of the Prices? What would your answers be if the Contractor was responsible for the design of the concrete works and the discrepancy was in the Works Information he provided for that design? [7 marks] [8 marks] [5 marks]
d.
[5 marks]
Question 7 You are the Project Manager on the construction of a bypass under ECC Option A. At the intersection with the existing road there is a new roundabout the Contractor has built. The Contractor builds the new roundabout early in his programme and then diverts the traffic onto the new roundabout from a temporary diversion he built. The Contractor considers this part of the works is complete and is asking for a Completion certificate for that part of the works, from the Project Manager. There are no sections of the works stated in the Contract Data. a. What is the test of Completion in the ECC? [8 marks]
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b.
What action do you take upon receipt of notification from the Contractor?
[6 marks]
Some minor accommodation works tracks have been built by the Contractor but there are some minor outstanding landscaping works to be done. The Project Manager has however been instructed by the Employer to issue a take over certificate for those parts of the works due to pressures from third parties. c. d. What is the process for taking over parts of the works? What action do you take as Project Manager? [6 marks] [5 marks]
Question 8 You are the Supervisor on a bridge refurbishment project using ECC Option E. You are concerned that some of the concrete used in the construction of part of a new parapet is not of the required quality standards stated in the Works Information. a. b. What procedures are available to you in the ECC? Describe the communication procedure the Supervisor must observe in any actions he takes. [8 marks] [5 marks]
Before the Supervisor acts the Contractor notifies an early warning to the Project Manager as he considers that the concrete may well indeed be not in accordance with the Works Information. The Contractor considers this matter may delay Completion or impair the performance of the works in use. c. Describe the early warning procedure and what you would expect the sort of discussions may take place at the risk reduction meeting. [5 marks]
It turns out that the Contractor did not carry out the required testing for the concrete when it arrived on Site. The works are agreed by all to be a Defect under 11.2(5). d. Is the Contractor paid to break out the defective concrete and replace with the correct grade of concrete? Would your answer change if the work had been carried out by a Subcontractor? [7 marks]
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Module 2 NEC Points for Answer Question 1 (a) The idea is to ensure that candidates have a broad understanding of the differences between the Main Options, and realise that you can pick different secondary options to suit the priorities of each project or client. For a pass candidates should demonstrate that they realise the differences between the most commonly used Main Options A, B and C. There is no correct answer, but candidates should recognise most of the following: Road improvements are the kind of works that can be defined relatively easily in terms of the type of work to be done, but often change in the amount of that work. Option B is therefore probably the most suitable Main Option for this contract. Design and Build contracts should be either Option A or Option C. In Option A the Contractor will carry the risk that quantities of work change. Choosing Option C automatically means that the Employer and the Contractor share the financial risks involved in carrying out the works, because the Contractor is paid on the basis of the resources he uses. Option A would give more certainty of outturn cost than Option C, but might result in a higher tender price (but see next point!) Outturn cost on an Option C contract can be capped by fixing the Contractors share at 100% for the highest share range, but the candidate should explain the problems this may cause (higher marks for covering this)
In selecting Secondary Options candidates should discuss what is important to the client. Finishing on time is clearly vital; finishing early has no particular value. Retention, guarantees, sectional completions, inflation adjustments are all questions that can be discussed to demonstrate that the candidate is aware of the purposes of the secondary options (b) The Employer can put a clause into the Works Information requiring the use of the chosen subcontractor. Higher marks for any candidate who points out that this may conflict with procurement rules in some circumstances. Question 2 (a) The Contractor does not seem to have realised that the bending schedules were late until he received them. This is long after he apparently needed them, so he should have been aware and thus in a position to issue an early warning notice under Clause 16.1. Had he done so it is likely that the Project Manager would have been able to get hold of the bending schedules more quickly. The Contractor has not done everything he should have done. The Project Manager has correctly accepted that this is a compensation event. However, he has failed to notify the Contractor that he believes that the Contractor could have given an early warning of the event under Clause 61.5 (b) Delay to the Completion Date is assessed as the length of time that, due to the compensation event, planned completion is later than planned Completion as shown on the Accepted Programme. So the Contractor has to demonstrate the actual delay he has
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suffered, by the submission of a revised programme or part of a programme. The delay will not automatically be 3 weeks. Higher marks will be given to candidates who go on to refer to Clause 63.5, which in this case does not apply because the Project Manager failed to notify the Contractor under Clause 61.5 (c) The Project Manager should give an early warning to the Contractor, and call a risk reduction meeting. It may be sensible to invite the caf owner to the meeting, because he may hold the key to minimising any delay perhaps it will be possible to work near the caf provided access is maintained and noise/dust etc. kept to a minimum; some people enjoy watching work on a construction site! Otherwise the Project Manager and the Contractor should concentrate on how to minimise the effects of the late access. There may be alternative ways to deal with the problem, which will probably (in broad terms) minimise delay but cost more, or minimise additional cost but delay Completion. Perhaps the only work on one third of the wall at a time rule can be relaxed? (d) This is a compensation event (Clause 60.1(2)), so the Project Manager should notify the Contractor accordingly and instruct him to provide quotations for the different potential solutions to the problem (Clause 62.1). Higher marks for pointing out that the Project Manager should also keep the Employer informed of his discussions with the Contractor. Question 3 (a) A floor that is out of tolerance is presumably not in accordance with the Works Information; it is therefore a Defect. The Supervisor is required to notify any Defects that he finds to the Contractor (Clause 42.2). The Contractor is required to correct the Defect even if he is not notified of it (Clause 43.1) so there is no need for the Supervisor to instruct him to do so. (b) Under Option C the Contractor is paid on the basis of Defined Cost + Fee, and will no doubt argue that his costs should be part of the next assessment made by the Project Manager. However, the Project Manager should realise that the costs related to these doors are Disallowed Costs, they were incurred only because the Contractor did not follow and acceptance or procurement procedure stated in the Works Information.. (c) The Contractor must remedy the Defects within the defect correction period, which for these defects normally starts at Completion (Clause 43.2). However, it is the responsibility of the Project Manager to arrange access to the works for the Contractor; after Completion the Employer will have taken the works over, and the Contractor no longer controls access. So the defect correction period actually starts when access has been arranged. (d) The Supervisor should list in his Defects Certificate those Defects which the Contractor has not corrected (11.2(6)). The Contractor no longer has any obligation to correct the Defects.
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(Higher marks for pointing out that he no longer has any right to correct them either). The Project Manager then assesses what it will cost the Employer to have the listed Defects corrected by others and deducts that from the Contractors final payment (45.1). Higher marks will be awarded to candidates who point out that if the Defects were not corrected because the Employer failed to provide access for the work then the assessment as to the costs to be deducted from the Contractor will be assessed using a method that will be more favourable to the Contractor (45.2). . Question 4 The intention is to make sure that candidates understand the subcontract provisions who is a Subcontractor, and what are the processes to be followed for appointing Subcontractors? and the question of the design of Equipment. (a) For a pass, candidates should point out that one of the proposals relates to a supplier and not to a Subcontractor, and that the PM should ask to see the standard terms and conditions referred to. Extra marks will go to candidates who refer to the period for reply. (b) The PM should draw these criticisms to the attention of the Contractor. Additional marks will be awarded to those candidates who suggest that he can do so by issuing an early warning because, with past performance, the use of this Subcontractor could delay Completion and/or impair the performance of the works in use (16.1). A risk reduction meeting could then be arranged which the proposed Subcontractor should attend. The Project Manager could refuse to accept the Subcontractor, but if he does he must give reasons, which will be their past poor performance. Candidates should discuss whether this would lead to a compensation event. Additional marks will be awarded to those candidates who conclude that it probably would. (c) The programme should include a statement for each operation of how the Contractor plans to do the work identifying the principal Equipment and resources (31.2) . 2 marks for this; an extra mark for pointing out that there may also be a related activity in the Activity Schedule. (d) A coffer dam is Equipment. The Project Manager may instruct the Contractor to submit the design of Equipment for acceptance. (e) The Environment Agency is one of Others; Clause 27.1 requires the Contractor to obtain approval of his design from Others, but not approval of design of Equipment. So it is the Works Information requirement that makes it clear the Contractor is responsible. Section 2 Question 5 Pass mark points
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(a) Retention is a traditional construction industry security for complete performance of the Contractors obligations and to cover any Defects that arise before the defects date and remain uncorrected by the Contractor.
Question 5b Pass mark points Retention applies in an ECC contract is Option X16 is stated in the Contract Data part one. If there is a retention free amount stated then 3% is retained from the Price for Work Done to Date above the retention free amount, clause X16.1. This calculation continues until the earlier of Completion of the whole of the works and the date on which the Employer takes over the whole of the works. The amount retained is halved in the assessment made at Completion of the whole of the works or in the next assessment after the Employer has taken over the whole of the works if this is before Completion of the whole of the works. This is as clause X16.2. The amount retained then remains at this amount until the Defects Certificate is issued, X16.2.
Higher mark points It is for the Project Manager to make this adjustment as part of the assessment of the amount due, clause 50.2.
Question 5c Pass mark points Clause 50.5 states that the Project Manager corrects any wrongly assessed amount due in a later payment certificate. There is nothing the Project Manager can therefore immediately do. Clause 51.3 states that if an amount due is corrected by the Project Manager in relation to a mistake then interest on the correcting amount is paid. Additional marks will be awarded to candidates who explain that either Party may be required to pay interest. If the correction increases the payment to the Contractor then the Employer will pay interest, but if it decreases the payment the Contractor will pay interest. Interest is assessed from the date when the incorrect amount was certified until the date when the correcting amount is certified and included in the assessment which includes the correcting amount. Higher mark points This is not a matter which requires an early warning to be notified under clause 16.1, it is an amount just paid to the Contractor as part of clause 50.2 other amounts to be paid to the Contractor.
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Question 5d Pass mark points Clause 51.2 provides for interest to be paid on the late payment. Interest is assessed from the date by which the late payment should have been made until the date when the late payment is made, and is included in the first assessment after the late payment is made. If the Contractor exercises his right under the Housing Grants, Construction and Regeneration Act 1996 to suspend performance, then this will be a compensation event, Y2.4.
Higher mark points The Contractor may terminate if the Employer has not paid an amount certified by the Project Manager within thirteen weeks of the date of the certificate (R16), clause 91.4.
Question 6a Pass mark points This is an inconsistency within the Works Information. The Project Manager is required to give an instruction resolving this inconsistency (17.1). In this case it is clear that the design requires the use of Grade 40 concrete. The Project Manager should therefore issue an instruction changing the Employers Works Information on the drawings to show the use of Grade 40 concrete. Question 6b Pass mark points The instruction to change the Works Information to deal with this inconsistency would be a compensation event (60.1(1)). The valuation of this event is assessed as if the Prices and Completion date were for the interpretation most favourable to the party that did not provide the Works information (63.8). In this case that would be the Contractor. Therefore the assessment is made assuming that the Contractor had allowed for the cheaper, Grade 35, concrete. The assessment therefore would be the increase in the Defined Cost of using Grade 40 concrete instead of Grade 35, i.e. 5 per cubic metre, plus the Fee. Question 6c Pass mark points The answer therefore would be the same.
Question 6d Pass mark points Such an assumption will mean that the instruction to use Grade 40 concrete will have no effect upon the Defined Cost of the works. Therefore the Project Manager should notify the Contractor that the Prices will not be changed (61.4)
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Question 7a Pass mark points Completion is a core clause and is defined in clause 11.2(2). For Completion to take place, the Contractor must have done all the work which the Works Information states he is to do by the Completion Date. The Contractor must also have corrected notified Defects which would have prevented the Employer from using the works and Others from doing their work. The Contractor does not need to notify the Project Manager that he considers Completion has been achieved, instead it is up to the Project Manager in clause 30.2 to decide the date of Completion.
Higher mark points If the Works Information does not state what works the Contractor is to do by the Completion Date then Completion is when the Contractor has done all the work necessary for the Employer to use the works and for Others to do their work. This is stated in clause 11.2(2).
Question 7b Pass mark points This is not a valid notification under the contract. Clause 30.2 required the Project Manager to decide the date of Completion. The roundabout is not a section of the works, nor is it the whole of the works, it is just a part of the works. Completion does not therefore apply to this scenario.
Higher mark points It may be argued that there has been a clause 35 take over of a part of the works by the Employer. It seems unlikely that this is the case as it suits the Contractors method of working and is not something that the Employer has requested or provided for in the Works Information.
Question 7c Pass mark points Take over is detailed in clause 35. The Employer may use any part of the works before Completion has been certified. This will result in take over of that part occurring unless there is such a reason stated in the Works Information or it suits the Contractors method of working. This is stated in clause 35.2.
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It is for the Project Manager in clause 35.3 to certify the date upon which the Employer takes over any part of the works and its extent.
Higher mark points If the Project Manager certifies take over of a part of the works before both Completion and the Completion Date then this will be a compensation event under clause 60.1(15).
Question 7d Pass mark points This does clearly seem that take over of these parts of the works is required by the Employer and that the sensible approach would be for the Project Manager to notify an early warning under clause 16.1, hold a risk reduction meeting and ensure this can be safely and properly achieved without too much of an impact upon the Contractor. Assuming the take over goes ahead, the Project Manager certifies the date upon which the Employer takes over those parts of the works and its extent within 1 week of that date. This will result in a compensation event arising under 60.1(14).
Higher mark points Any loss of or wear or damage to the parts of the works taken over by the Employer (with a few stated exceptions) will be an Employers risk under clause 80.1.
Question 8a Pass mark points At this time the Supervisor cannot demonstrate that there is a Defect in the works. Under clause 42.1 the Supervisor has the power to instruct the Contractor to search for a Defect. This could include doing tests which the Works Information does not require. Clause 27.3 requires the Contractor to obey an instruction given by the Supervisor which is in accordance with the contract. If a Defect is found during the search, the Contractor corrects under clause 43.1. Clause 60.1(10) states there is a compensation event where the Supervisor instructs the Contractor to search for a Defect and no Defect is shown.
Higher mark points The only other route is to advise the Project Manager of the problem and ask the Project Manager to notify an early warning under clause 16.1. Perhaps the matter would be that due to this potential problem Completion could be delayed.
Question 8b
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Pass mark points Communications are dealt with under clause 13. Each communication, which includes instructions, is communicated in a form that can be read, copied and recorded. This is stated in clause 13.1. The Supervisor must follow this requirement and cannot give verbal instructions. The Supervisor replies to a communication from the Contractor within the times stated in the contract and if none are stated, within the period for reply. This is stated in clause 13.3. Any notifications which the contract requires are communicated separately from other communications, clause 13.7.
Question 8c Pass mark points The early warning process is detailed in clause 16. Clause 16.1 covers the matters that give rise to early warnings that must be notified by Project Manager and Contractor as opposed to those only notified by the Contractor if he so chooses. It is for the Project Manager to enter each early warning in the Risk Register. Either the Project Manager or the Contractor may instruct the other to attend a risk reduction meeting, under clause 16.2. There are 4 stated actions in clause 16.3, the most important being making and considering proposals for how the effect of the registered risks can be avoided or reduced and seeking solutions that will bring advantage to all those who will be affected. In 16.4 the Project Manager revises the Risk Register to record the decisions made at each risk reduction meeting. The sort of discussions would most likely concentrate on the technical aspects of this problem. How far out of specification is the concrete? What is the likely impact on the design life? Can tests be undertaken to ascertain exactly what the problem is? As a result of answering these questions, what can be done to solve the problem that will bring advantage to all those who will be affected?
Question 8d Pass mark points Option E is a cost reimbursable contract. The Contractor in clause 50.2 is paid the amount due which includes the Price for Work Done to Date. In clause 11.2(29) this refers to total Defined Cost which will have been paid by the Contractor before the next assessment date plus the Fee. Defined Cost in 11.2(23) covers amounts of payments due to Subcontractors any other work (ie not subcontracted) less Disallowed Cost. The first question is whether the work was carried out by a Subcontractor, if it was then what does the terms of the subcontract state regarding payment for defective work? If it was not carried out by a Subcontractor, then this is costed in accordance with the Schedule of Cost Components. The only other question is whether the particular matter is stated as a Disallowed Cost. If it was carried out by a Subcontractor and the subcontract placed this risk with the
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Subcontractor, then the Contractor should seek to recover the costs from the Subcontractor. If he fails to do so then he has overpaid the Subcontractor and this will be a Disallowed Cost in accordance with the 2nd bullet of 11.2(25). If the work was not subcontracted, the question will be whether or not they fall within the definition of Disallowed Cost in clause 11.2(25). Additional marls for candidates who explain that they may do because they were probably incurred only because the Contractor did not follow and acceptance procedure (for the concrete) stated in the Works Information.
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Institution of Civil Engineers Examination in Civil Engineering Law and Contract Management 2009 Paper 3 (England and Scotland) Monday 22 June 2009 Time permitted: 14:00 to 17.20 (3 hours 20 minutes) There are four questions in Section 1 based on ICE Conditions of Contract and four questions in Section 2 based on NEC3 Contracts. Answer Question 1 and one other from section 1 in the answer book provided (Blue book) and answer Question 5 and one other from Section 2 in a separate answer book provided (Blue book). All questions carry equal marks You may consult un-marked copies of the ICE Conditions of Contract Measurement version 7th Edition, and the CECA/FCEC form of Sub-Contract, NEC3 Engineering and Construction Contract, NEC3 Engineering and Construction Subcontract Statutes, CDM Regulations, CESMM3, ICE Conditions of Contract for Design and Construct 2nd Edition and ICE Conditions of Contract Target Cost Version 1st Edition. All questions involving the ICE Conditions of Contract must be answered using the 7th Edition unless otherwise stated and all questions involving NEC3 Contracts must be answered using the NEC3 Engineering and Construction Contract. References to Cases and Acts should be quoted where possible. Please indicate on the outside of the Answer Booklets whether your answers will be in respect of Scots Law.
Section 1
Question 1 - Compulsory
A. Fairmann & Partners are appointed by the Employer to act as the Engineer under an ICE 7th Edition Contract for the reconstruction and partial rehabilitation of a 45 Km length of carriageway. Under the terms of his appointment the Engineer is required to obtain the specific approval of the Employer before exercising authority in regard to certain actions and obligations. Accordingly, the following particulars are set out in the Appendix to the Form of Tender: Requirements for prior approval by the Employer before the Engineer can act in accordance with Clause 2 (1) (b) are in respect of:-
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A determination of an extension of time for completion pursuant to Clause 44 The giving and Valuation of Ordered Variations under Clauses 51 & 52, except in an emergency situation, as reasonably determined by the Engineer or if such variation would vary the Contract Price by less than 50,000.00.
During the early stages of the Contract it became clear to the Contractor that were significant errors in the estimated quantities within the Bill of Quantities; some quantities were greatly understated and others completely omitted. Following further detailed investigation and examination it was agreed by the Engineer that there were major discrepancies in the Bill of Quantities chiefly because they had been prepared from survey and inspection data obtained some 3 years prior to the preparation of the Tender documents. The Contractor had to revise his programme and resources extensively in order to carry out the additional increase in the scope of his Works. In addition, the Contractor submitted detailed claims for new rates and prices for the varied work together with a detailed claim for an extension of time of 9 months. The Engineer reached agreement with the Contractor as regards the amendment of the Contract Price and the award of an extension of time and sought the approval from the Employer in accordance with the requirements of Clause 2 (1) (b). The Employer wrote to the Engineer informing him that he would not be approving the additional payment, or any award of extension of time, because he had insufficient funds available. The Employer was reliant for 75% of his total funding for the project from the Funding Banks and that he had been unequivocally informed by the Banks that no additional money could be allocated. a. Discuss the situation that the Engineer now finds himself in and suggest [9 marks] what, if anything, the Engineer should do about it. What initial action do you suggest the Contractor should take and what [10 marks] are the remedies under the contract if there remains a dispute? Discuss the difficulties associated with the obligation to act impartially that may still arise for the Engineer when exercising his authority even without the existence of the supplementary requirement for prior approval from the Employer pursuant to Clause 2 (1) (b). [3 marks
b.
c.
d.
The Contract does not permit the Engineer to delegate all of his duties [3 marks] and authorities to others. Comment on this restriction and whether or not you consider this restriction to be sensible.
Question 2 The Employer, Tebon Water Plc, has need of a project that includes a new Waste Water Treatment Plant, estimated to cost 100M on a green field site adjacent to an existing Waste Water Treatment Plant. In addition the Employer requires a comprehensive refurbishment and upgrading of the existing Waste Water Treatment Plant, estimated to cost 60M, but this is not to be commenced until the new works have been completed and commissioned. The overall
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estimated programme is 42 months, with the new works to be completed within the first 24 months. The Employer has a relatively limited budget with some contingency built in. The Employer has engaged a project management company, Prime Control (PC), to administer the project and to organise all the necessary Contracts with the service and contracting companies. PC engage external advisors to propose and recommend which type of ICE Contract should be adopted, and in addition to seek opinions from the Employer. Two alternatives are proposed as follows: Option 1: The total project should be undertaken using the ICE Design & Construct, 2nd Edition, form of contract with a single Contractor responsible for all the Works. The Employer would use PC as the Employers Representative to administer the Contract and his own employees for any technical inputs. Option 2 The project should be split up into two Contracts. The first Contract would adopt the ICE Design & Construct, 2nd Edition, form of contract for the new works and the second Contract would use the ICE Conditions of Contract, Measurement Version 7th Edition with the design being undertaken by the Employers designer, Invention Ltd. The Employer would use PC to act as Employers Representative in the first Contract but use Invention Ltd as the Engineer for the second Contract. a. Advise on the relative advantages and disadvantages of each option and [15 marks] the differences between the roles of the Employers Representative and the Engineer. Which option (or other alternative(s)) would you recommend and why? [5 marks]
b. c.
The Employer has been made aware by a colleague that the ICE [5 marks] Conditions of Contract Target Cost Version might be appropriate for use in the second contract in place of the ICE Conditions of Contract, Measurement Version 7th Edition. Advise the Employer as to the principal differences.
Question 3 Under an ICE Conditions of Contract, Measurement Version, 7th Edition Form a Contractor drives 15 piles for the foundations of the bank seat abutment of a bridge. The design of the piles was the responsibility of the Engineer. Three weeks later four of the piles are found to be 250mm off-line. The Engineer condemns the four piles. The Contractor maintains that the piles have moved because of a design error - they are too short to withstand ground pressures.
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In the interests of mitigating costs and delay the Contractor produced expert evidence which indicated a requirement for the driving of an additional two longer piles and the tying in of all the piles. He said he was prepared to do this and to guarantee the design. What actions can the Engineer take and what are the implications of each for him? [25 marks]
Question 4 A Contractor submits a tender relating to the part construction of a new Sewage Treatment Plant. The tender documents were based upon the ICE Conditions of Contract, Measurement Version, 7th Edition. He receives a letter from the Employer which states, as soon as matters outstanding between us are settled we will enter into a contract agreement with you and in the meantime please accept this letter as an instruction to proceed with the work necessary to permit you to meet the agreed programme. It was not until 9 months later that outstanding matters were settled and the formal Contract signed. A substantial part of the Works had been carried out during the 9 months though the greater part still remained to be done. The Contractor then argues that there was no contract in respect of the 9 months work and that it was free to terminate work at any time and was entitled to be paid on a quantum meruit basis for the 9 months work. The Employer argues that there was a concluded contract from the outset. a. Analyse the contractual situation including the Contractors entitlement to payment. [5 marks]
During the execution of the Works, it rains a lot over 3 weeks; there is frost over 7 days and a period of exceptionally adverse weather of 1 week during the 9-month period and 2 weeks in the remaining time prior to the Completion Date. The Contract overruns with Contractor being in culpable delay of 26 weeks and the Employer deducts liquidated damages. During the period of culpable delay there is adverse weather of 3 days and a strike of 1 week by the Contractors workforce. Furthermore, the Engineers Representative issues a variation when the Works are almost complete resulting in a further delay of 2 weeks. The Contractor argues that the effect of the late variation puts time at large and the Employer has no right to liquidated damages. Assuming the signed Contract is effective b. Briefly, describe what liquidated damages are and what a penalty is. What is time at large and what is its effect? [5 marks]
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Alternatively the Contractor claims the late variation discharges the contract mechanism for liquidated damages and he is entitled to an extension of time from the Completion Date up to and including the time to carry out the work associated with the variation. c. Is this correct? [3 marks]
The Contractor also claims to be entitled to extensions of time for all of the delay periods described above over the course of the Works. The Employer says to the Engineer that the Contractor would not have sustained the 3 days weather delay or the strike if he had carried out the Works on time. d. e. Advise the Engineer as to the Contractors entitlement. Assuming that the signed Contract is not effective, what would be the effect on your advice to the Engineer? [5 marks] [7 marks]
Section 2 Question 5 - Compulsory Ballygobackwards District Council promotes itself as a centre of excellence for water sports and has entered into an NEC3 Option A contract with Big Dig Construction for the construction of a state of the art watersports facility including sailing lake, canoeing course and water-ski jump circuit. The Works Information includes a requirement for the Contractor to design the impermeable bed for the facility to limit water loss to under 20,000 litres a day. The duration for the Works is 24 months in total. The Contract includes Option X5: Sectional Completion and Option X7: Delay Damages. The Contract Data Part one includes: Delay damages for each section are: Description Sailing Lake Canoeing Course Rest of the Works Amount per day 5,000 5,000 5,000
Section 1 2 3
The rate of damages has been calculated by the Council with consideration given to the increased revenue it will receive once the facilities are open, but also because of the opportunity of a substantial grant to train the British Watersports teams for the 2012 Olympics. Big Dig starts work and submits a programme which is accepted. The programme includes submitting the design for the impermeable layer at the end of month 5 and that it will require acceptance of the design by the end of month 7 (even though the period for reply is stated in the contact as 2 weeks). Installation of the impermeable layer is a critical item for completion of the Works.
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Unfortunately, Big Dig fails to get the design to the Project Manager in accordance with the Accepted Programme and doesnt submit it until the end of month 6. The Project Manager and the Contractor discuss this at the monthly progress meeting and the Project Manager explains that he will need 6 weeks to go round the houses with the design before it can be accepted but the Contractor should go a head and start the works in the meantime. The Contractor refuses. He wants the design accepted before he will sign up his subcontractor. The work on the impermeable layer begins 2 weeks after the Project Manager accepts the design at the end of month 8. No compensation notice is issued. The Contractor misses section 1 completion by 4 weeks and the section 2 completion by 2 weeks. He manages to complete the whole of Works 1 week late. The Employer is furious. a. What should the Project Manager do: 1. concerning the acceptance of the design 2. the completion date of the sections 3. the Delay Damages b. c. What should the Contractor have done and should he now do? What can the Council do? [8 marks] [4 marks] [3 marks] [5 marks] [5 marks]
Question 6 You are the Project Manager on the Muffborough to Tuffborough water main. The Contact is an NEC3 Option D contract. The Contractor is using Ducts-r-us for supplying and placing the main line of the water main using its proprietary water main extrusion system. Ducts-r-us is appointed under an NEC3 Option B subcontract. On commissioning it is discovered that the main line is unable to hold the correct pressure test and the Contractor is asked to investigate. The cause seems to be a failure in the chemical welding compound used to join the 5m lengths of the pipe. Many tiny holes are present which leak under pressure. Ducts-r-us investigate and say the tiny perforations are as a result of a peculiar reaction between the mild alkaline nature of the ground water and the adhesive jointing material they use. They support this with a specialist report from their laboratory division. The Contractor calls a risk reduction meeting with the Subcontractor. You have misgivings about attending with Ducts-r-us. a. b. Describe your obligations to attend? [5 marks]
You decide to attend. Prepare your notes for the meeting by examining [15 marks] the contractual obligations and the possible options available to resolve
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the matter, including the likely cost effect on your client, the Employer. c. How would your consideration be different if the commissioning was taking place after Completion had been certified? [5 marks]
Question 7 Devilish Developments have procured a 100m shopping development using an NEC Option A contract. The contract includes Option X7 and Y(UK)2 and the delay damages are set at 1,000,000 a day. During the construction the Contractors piling subcontractor incompetently allows a delivery of precast concrete piles to roll out of the site, down a steep bank and crashing into Devlishs sales offices adjacent to the site. The incident happened at night and no one was hurt. However, the offices are destroyed and Devilish reckon the offices cost 50,000 and they have lost 100,000 of lost sales because a particularly interested potential buyer was visiting the next day from Dubai. a. Describe what actions the Contractor, Project Manager and Employer should take. [15 marks]
During construction the Contractor claims it to have suffered weather conditions which delayed it by 2 months. It notifies a compensation event under clause 60.1(13). The Project Manager notifies the Contractor that he disagrees. The Contractor calls in an adjudicator. The Adjudicator decides that there were extreme weather conditions and decides that the Contractor is due 6 weeks extension of the Completion Date. However, the Contractor manages to progress the works faster than expected and submits a programme some months after the adjudication indicating that it will finish on the original completion date. Unfortunately shortly after this the Contractor suffers a series of mishaps on site including the shock insolvency of its key building subcontractor that delays the works. Eventually he finishes 8 weeks later than the original contract completion. b. Describe the process for withholding delay damages and identify the sum [10 marks] to which Devilish Developments is entitled to.
Question 8 a. Describe the steps an Employer can take in preparing NEC contract documents to properly ensure that he and the Contractor comply with the CDM Regulations 2007. [12 marks]
b.
[13 marks] Describe the steps available under an NEC contract for the Project Manager who has formed the view that a course of action described in a programme for acceptance by the contractor is not safe. Describe how the main option chosen may influence this.
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Module 3 Points for Answer Question 1a Reference to Clause 2(7) of the Conditions should be made and the need for the Engineer to act impartially and have an awareness of the duty for the Engineers Representative or other delegated person to also act impartially. Discuss in general terms the reasons for such impartiality. Identify the specific duties placed on the Engineer to act impartially. Offer opinion upon the benefits of the Engineer complying with the obligation to act impartially. The Engineer should remind the Employer of his obligations to act impartially. The Engineer should inform the Employer that it has an obligation to fund the Works and if it does not pay the Contractor it will be in breach of its obligations to the Contractor. The Employer should urgently investigate the possibility of funding from other sources. Comment that the Employers approval requirement may be subject to an implied term that the Employer would not unreasonably withhold approval.
Question 1b Firstly, possibly discuss the matter with the Engineer and the Employer to ascertain if mutual agreement could be reached on how the situation might be mutually resolved (e.g. Perhaps deferred payments might be arranged, etc. Award of an extension of time now with the promise of deferred payments via a third party Bond or Guarantee. Consider reaching an agreement to suspend the Works whilst new funding is sought). The Contractor should continue to comply with its obligations under the Contract, construct the Works and apply for payments in the usual way. To protect its position, the Contractor should keep a regular dialogue as to the effects on the Works and submit to the Engineer at regular intervals. Pursuant to Clause 66 of the Conditions of Contract the Contractor could first refer the matter of dissatisfaction to the Engineer and then if the decision is unacceptable or not implemented he could refer the dispute to adjudication. In addition, under Part 2 of the Housing Grants, Construction and Regeneration Act 1996, the Contractor would have the right to suspend performance for non-payment. If the Contract cannot continue then the Contractor would have a claim for loss of profit, overheads and other costs of termination. If the Works were suspended under Clause 40(1) then the Contractor could treat the Works as determined after 3 months.
Question 1c Discuss the difficulties the obligation to be impartial brings in real life (e.g. design error by the Engineers company gives rise to a claim by the Contractor for additional money and time, the Engineer is paid for his services by the Employer, etc.).
Question 1d Clause 2(4)(c) refers. The ICE Form regards it as important that the Engineer should make most of the important contractual decisions rather than be left to lower-ranking personnel
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on Site. The restriction is placed in order to ensure that the Engineer, who will usually not be resident on Site, keeps up to date with progress etc. so that when the important decisions are required he can make those decisions impartially and fairly.
Question 2a An appreciation that the success of the ICE Design and Construct Conditions of Contract largely depends upon clear, unambiguous Employers Requirements with little risk of changes being required during the currency of the Contract. Because of the limited budgetary constraints tenderers need to be supplied with sufficient information from the Employer to allow them to price with a high degree of certainty. E.g. utilities, scheme design, ground conditions and other site information. Understanding that under the ICE Design and Construct Conditions of Contract the Contractor is responsible for checking any design supplied by the Employer and for taking the responsibility for the design thereafter (including any errors subsequently found). Understanding the different roles of the Engineer and the Employers Representative particularly in that the Engineer acts in an impartial capacity rather than as agent of the Employer. The Contractor, under ICE Design and Construct Conditions of Contract, is required to check his own design, setting out and for testing all materials and workmanship and subject to Clause 8 (3) may also be required to adopt a QA system and that any Employers Representatives inspections are solely to verify that the works being constructed are in accordance with the Contract. Understanding that with Option 1, the Employer will have less time to complete any scheme design for the refurbishment works and will therefore be at risk financially for changes that he may require later. Alternatively he will expect very detailed Contractors proposals for the refurbishment works which will almost certainly give rise to higher initial costs because the Contractor will have to allow for the worst case scenario by pricing risks which may never eventuate. Also with Option 1 there will be no opportunity for the Employer to take advantage of new technology which may become available in the first two years of the Contract other than by issuing Variations which could give rise to both direct and indirect costs. With Option 2 the Employer will have more time to hone his design. The overall aggregate costs for the Project should be less for the two-Contract option (Option 2) as the combination of two competitively priced Contracts. However, Option 1 has the obvious advantage of the single point of contact with no interface problems as might occur as between the two contracts (Option 2) which could give rise to delay and extra cost if not managed efficiently. Understanding that with the second Contract in Option 2, the Employer only pays for what is done on the basis that the Contractor is expected to price for all risks reasonably foreseeable but will be reimbursed for events that could not reasonably have been foreseen by an experienced contractor.
Question 2b Choice depends on Employers requirements (e.g. time and budgetary constraints) but as a precondition that he must first be made fully aware by PC of the advantages and disadvantages of each Option. It would be usual to carry out a risk assessment of all Options before making a recommendation to the Employer. It is probable that Option 2
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would be preferred but for other reasons the Employer may well prefer the one-stop approach. If the Employer requires more control for budgetary purposes, he might opt for ICE7 throughout (either one Contract or two). In this way he can control the financial aspects of the work by asking the Engineer to issue variations omitting certain items of work and/or reducing the scope of work (Clause 51) more readily, and more cost-effectively, than with the ICE Design & Construct Form.
Question 2c The Target Cost Form is a cost reimbursement contract and therefore requires a higher level of administration from both the Engineer and the Contractor in order to check all invoices, actual costs, etc. for payment to the Contractor. The Parties are required to collaborate closely in order to gain the maximum benefit from this Form of Contract. The Employer pays the Contractor his actual costs, less any disallowed costs. The success of this Form depends largely on (i) a realistic Target Cost (which is then adjusted throughout the currency of the Contract to allow for variations, admissible claims from the Contractor, etc. and (ii) a realistic painshare/gainshare mechanism which acts as an incentive for both Parties to drive down outturn costs.
Question 3 The Engineer may: o o o o Order the piles to be removed and re-installed. (Clause 39) Order further pile tests to be carried out under Clause 36 or Clause 50. Agree with the Employer that the Contractors offer should be accepted. Propose alternative means of overcoming the problem.
The Employer is responsible for the piles designed by the Engineer, and the Contractor for the workmanship. The Engineer is entitled under Clause 39(1)(a) to have the piles removed and the work reexecuted if in his opinion the work is not in accordance with the Contract. The Contractor may challenge any opinion of the Engineer under Clause 66 and an adjudicator, or arbitrator, may open up, review and revise all such opinions. If the Engineer is found to be wrong then the order to remove would have been given under Clause 13(1) and would be deemed to be a variation under Clause 13(3). The Employer would pay for the removal and re-installation of the piles in accordance with Clauses 52 or 53. The Contractor would also be entitled to an extension of time pursuant to Clause 44. The Engineer would be liable to the Employer in damages under his professional services contract with the Employer. The Engineer may order tests to be carried out but under both Clauses 36 and 50 the Employer will pay the costs of such tests unless a defect is found. The Engineer has no right to accept the Contractors offer. This is a change to the Contract not a variation and he must obtain the Employers agreement first.
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If the Engineer proposes acceptance of the Contractors offer he must satisfy himself that the Contractor design is satisfactory because he will remain liable under his contract with the Employer. The Engineer must sort out the cost implications with the Contractor. The Contractor has made a design proposal but not accepted liability for the costs. If the Engineer orders a variation then the Employer will be liable for the additional costs (Clause 51(1)) unless it can be demonstrated that the Contractor was in default (Clauses 49 & 50). The Engineer should ensure that the amendment to the Contract is agreed between the Contractor and the Employer. If so satisfied, the Engineer should recommend acceptance as this seems the quickest and least risky solution for all parties. In which case the amendment should be recorded on the as-built drawings.
Additional marks The Engineer may attempt to defend his design error to the Employer by demonstrating that the ground conditions were worse than anticipated.
Question 4 a. Quantum Meruit means the amount he deserves or what is the worth of the job or as much is deserved as is earned. It usually means a reasonable sum in all the circumstances. In this situation the Contractor is expecting the work to be valued on the basis as what it actually cost him and not at Bill of quantity/Schedule or Contract rates (quasi contract). Analysis. The Contract once signed relates back to the time that the Employers letter was sent. Therefore, the Conditions of Contract determine the Contractors remuneration. [Mention of the case Trollope & Colls and Holland Hannen and Cubitts Ltd -v- Atomic Power Constructions Ltd (1962)]. Liquidated damages are a genuine pre-estimate of the loss the Employer will likely suffer in the event that the Contractor overruns (Loss calculated at the time the Contract was made). A penalty is a sum, which is not a genuine pre-estimate of the loss likely to be suffered but is substantially in excess of that loss. [Case of Dunlop Pneumatic Tyre Co. Ltd v- New Garage & Motor Co. Ltd (1915) and/or Campbell Discount Co. Ltd v- Bridge (1962)]. The burden of proving that a sum is a penalty and not liquidated damages rests with the party making the challenge. Time at large, means that the obligation to complete within a specified time for the completion of a contract is lost. Hence, the effect is that the contractual Time for Completion no longer has any application and the Contractors only obligation is to complete the Works within a reasonable time. A reasonable time will be judged according to the facts and circumstances on the particular project. The Employer loses his right to deduct liquidated damages if time becomes at large.
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b. Clause 47 (6) suspends the Employers rights to deduct liquidated damages in respect of the delay caused by the variation until such time as the culpable delay comes to an end. The Contractor is not entitled to an extension of time from the date of Completion up to and including the time to carry out the variation. [Balfour Beatty Building Ltd. v- Chestermount Properties Ltd. (1993). This judgment altered the position of architects/engineers/PMs that have to issue instructions while a contractor is in culpable delay. Prior to this case, contractors could claim new instructions had prevented the completion of the work within the agreed timetable. This removed their liability for liquidated damages. However, the ruling makes it clear that minor alterations issued after a period of delay do not alter the provisions of culpable delay]. c. Reference to Clause 44 as regards extension of time and the principle that entitlement arises for exceptional adverse weather conditions under Clause 44 (1) (d), but not merely because it rains a lot or there is frost lasting 7 days, which is a normal occurrence in UK winters. The Engineer should be advised that as a result of court decisions, the Contractor is entitled to an extension of time for the adverse weather delay of the 3 days, since the effect of the weather is to be assessed at the time when the work was being carried out and not when programmed, even if the Contractor was in culpable delay. [Walter Lawrence-vCommercial Union Properties (1984)] The issue about the time lost due to the strike is less clear but a reasoned analysis should be made. Clause 44 makes no specific reference to strikes so a Contractor would have to argue his case under Clause 44 (1) (f) on the grounds that there were special circumstances which occurred that fairly entitle him to an extension. One possible view is that local strikes would not be admissible whereas national strikes might be. d. There is no Contract. There are no express terms and therefore there can be no breach and no extension of time provisions subsist. Therefore, the Engineer should be advised that no extension of time could be given, no liquidated damages apply and the Works are to be valued on a quantum meruit basis.
SECTION 2 Question 5 This question focuses on sectional completion, application of delay damages and the compensation event process in relation to time. This concerns the notification of compensation events and the requirement to levy delay damages. For (a)1 To pass: Discuss the contractual obligations on the Project Manager to:
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Accept design under clause 21.2 including the Contractors obligation not to start the works until it is accepted; o Comply with the period for reply and the effect of failing to do so; Examine the effect of the Contractor missing the date on the accepted programme (especially if it is an item in float or with an identified time risk allowance) o
To get higher marks: Discuss: o o o The importance of clarity and maintenance of the accepted programme that the programme is not a substitute for notification of CEs (mention cl 13.7) The Project Managers failure to accept the design within the period for reply will be a compensation event under Clause 60.1(6), which the Project Manager will have to assess. Such assessment will include both time and monies. Mention the importance of risk reduction in relation to the delayed design.
For (a)2 Identify the Project Managers duty to decide the date of Completion per clause 30.2. Discuss the obligations on both the Contractor and the Project Manager to notify CEs under clauses 61.1 and 61.3 and especially the effect of failure to notify per clause 61.3 Examine the Project Manager obligations to assess time under clause 64 and 63.3
To get higher marks: Examine the process for changing the completion date and its part in the CE system Discuss the burden on the Contractor to demonstrate delay and so operate the CE system Mention the possibility of waiver if the contractual obligations have been ignored by the parties
For (a)3 Identify the Project Managers duty to assess the amount due especially amounts to be paid by the Contractor (per clause 50.2 3rd bullet) Discuss the lack of discretion on the parties under this and clause X7.1
To get higher marks: Discuss the enforceability of the delay damages provision and the need for genuine preestimate. The answer should conclude: o Per Phillips (Hong Kong) v Attorney General of Hong Kong, that the damages are likely to be enforced; and o The project manager has no discretion in his assessment.
For (b)
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To pass: Identify the obligations on the Contractor to notify Compensaition Events and resubmit his programme. Discuss the implications of his failure to issue Compensation Event notification Discuss the possibility of disputing the Project Manager s Actions
To get higher marks: Conclude that the Contractors position is difficult; Discuss the burden on the Contractor to prove the delay; Discuss the dispute resolution process
For (c) To pass: Identify the limited role the Employer plays once the Delay Damages are set; Note the extent that the Employer may interfere with the Project Managers duties. Discuss the termination of the Contractors obligations under 90.1 and the process for termination under 91.2. To get higher marks: Discuss the importance of the accurate calculation of the level of the damages Conclude that termination will be unlikely given the Contractors over all performance.
Question 6 This question examines risk reduction procedures, defects, disallowed costs and subcontracting in a Target Cost Contract. For (a) To pass: Identify that the Contractor can oblige the Project Manager to attend the meeting. Discuss the clause 16.2 each may instruct other people to attend if the other agrees provision including: o Obligations to give reasons if refusing agreement (as opposed to refusing acceptance) o Whether subcontractors are the Contractor or other people
To get higher marks: Discuss the effect or otherwise of clause 10.1 Discuss the detriment to the overall co-operate to solve aspect of Clause 16 if there is not attendance by the Subcontractor
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For (b) To pass: Identify the responsibility for defects Note any possible implications of the Works Information drafting including stipulation of the materials to be used. Identify the Contractors overall responsibility to provide works which is reasonably fit for purpose. Discuss the implications of clause 60.1(12) compensation event. Identify the cost aspects of this considering the : o PWDD for the Main Contract and o PWDD for the Subcontract and the differences in disallowed cost.
To get higher marks: Identify the risk of accepting a contractors risk through the risk reduction process especially: o the temptation to change the Works Information to be more specific about what is required o the effect of ordering more tests Discuss the relationship between the compensation event and risk reduction process Mention the possibility that the Works Information in the Subcontract is not the same as the Main Contract and how this might arise (e.g. by offer and acceptance of subcontract proposals), including the contractual obligation to have the Subcontracts accepted by the Project Manager.
For (c) To pass: Discuss implications of the 4th main bullet of clause 11.2(25) and the limited difference with the Subcontract being option B. To get higher marks: Discuss the implications of post completion Defects on payment and withholding.
Question 7 This questions considers insurance, Y(UK)2 and X5 delay damages and who sets off what, insurance. For (a) To pass: Identify that, as far as the Employer is concerned, this is a risk that is the Contractors under clause 81.1. . Discuss the Contractors responsibility for its Subcontractor and that defaults of the Subcontractor are contractor risks Discuss that:
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The event is not a Compensation Event and so there is no change to the prices or time o The event is (or should be) covered by the Contractors 3rd Party insurance as set out in the 3rd row of the Insurance Table. o The Contractor indemnifies the Employer for his risks (per Clause 83.1) and therefore has to pay himself any excess in the insurance policy (per Clause 85.4) Mention that the Project Manager should take any action with in the Risk Register and his obligation to consider the matter in assessing the PWDD. The Employer should get proper proof for his losses and can withhold payment only by operation of Clause Y(UK)2.3 o
To get higher marks: Discuss the Employers loss for the lucrative client being beyond the reasonable contemplation of the parties, quoting relevant case law. Discuss the implications of the joint names insurance and identify that the indemnity provisions are designed to avoid failing to recover losses.
For (b) To pass: Note that the Completion Date decided by the Adjudicator changes the Completion Date despite any accepted programme. Identify that the insolvency of a subcontractor is a contractor risk event and delays caused by it are not compensation events. Discuss the obligation on the Project Manager to reduce the PWDD in his assessment for payment by the delay damages per X7.1. Mention the requirement for the delay damages to be a genuine pre-estimate and not a penalty and discuss the law with regards to penalties. Conclude that the amount of delay damages seems very high and that Devilish will probably be unable to recover the full amount of 14m, because it appears to be a penalty.
To get higher marks: Discuss the risk reduction process in respect of contractor defaults and the possible methods of co-operation. There are not likely to be many. Expand on the law with regards to what damages, if any, may be recovered if the delay damages are found to be a penalty Conclude that the Project Manager has no discretion and should deduct the amount stated in the contract. It is therefore for the Employer to assess whether these are a penalty or not.
Question 8 CDM Regulations and dispute over method of working For (a)
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To pass Candidates should identify at least 2 thirds of the following and for higher marks cover more: Identify the clients responsibility under CDM 2007 including: o To check competences and resources o To ensure suitable management and welfare arrangements o To allow sufficient time and resources at all stages o To provide pre-construction information to designers and contractors Note that elements in the NEC which incorporate aspects of the NEC: o Clause 27.4 o 3rd sub bullet of 6th bullet of clause 31.2 o Works Information o Site information o Clause 12.2 Discuss the aspects of the CDM Regulations 2007 which do not sit within the frame of the NEC, including: o The role of the CDM-C o Employers duty to ensure design and construction is carried out by competent people. o The regulatory requirement to provide certain information in a certain format Describe the essential information to be included in the site information and (especially) the works information including the requirement for wide provision of information related to safety in the site information and detailed requirement of information for the health and safety file to come from the Contractor.
To get higher marks: Discuss the role of the Risk Register during construction. Discuss the possibility of using Z Clauses to incorporate wider provisions within the contract.
For (b) To pass Candidates should identify: Note the difficulty for the project manager in enforcing health and safety without issuing instructions which change the works information and so become compensation events Identify the role of the Health and Safety Executive in enforcing safety. Note the contractors responsibility for safe construction and the employers obligation to take reasonable steps. Discuss the possibility of the project manager issuing instructions to the contractor to do something because in his opinion it does not comply with health and safety requirement. Identity that Options A and B will place all the cost of enhanced compliance of H&S on the contractor where under C and D it will be split.
To get higher marks: Note that this is subject to the adjudication provisions of the contract Observe that burden of proof is unclear but it likely to rest on the employer to show the contractor is not competent if the Contractor is competent.
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ICE Civil Engineering Law and Contract Management Examination

Examiners Report 2009

Monday 8th and Monday 22nd June 2009

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Module 2, Section 2 NEC

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

(i) (ii) (iii) (iv) (v)

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Points for answer Question 1

(b) FCL are in breach of their contract: (i) (ii) (iii)

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

(a) Advise Kate as to who may be liable for her injuries:

Registered charity number 210252 Charity registered in Scotland number SC03862

(c) Advise Ben as to who may be liable for his injuries:

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Amount / Fixed TR Fixed 71,000.00 30,000.00 36,000.00

Registered charity number 210252 Charity registered in Scotland number SC03862

Rate 20.00 100.00

Amount / 22,000.00 100,000.00

20,000.00 60,000.00 (39,000.00) 300,000.00

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Should the Engineer still pay the Method Related Charge?

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[13 marks] [12 marks]

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

the original Contractor. the original Engineer.

[10 marks] [15 marks]

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862

Registered charity number 210252 Charity registered in Scotland number SC03862