Real Estate Calendar

March 2008
M T W T F S S
« Feb   Apr »
 12
3456789
10111213141516
17181920212223
24252627282930
31  

Real Estate Categories

Recent Properties

Real Estate Archives


« Using Standard Building Contracts part 2 | Main | Sole Selling Mandates Part 1 »

Using Standard Building Contracts part 3

By arlene | March 2, 2008

4.6 Extension of construction period

When a contractor submits a tender, the employer will usually stipulate a date by which the work should be completed; this is termed the practical completion date. This intended practical completion date is written into the contract document and it becomes a term of the agreement.

It will be noted that the “intended” date of practical completion is agreed upon. The reason for using this somewhat vague term, is that a building agreement is not executed under ideal conditions where the contractor is completely in control of his own destiny. His progress depends on the co-operation of the architect who must issue instructions and drawings to the contractor from time to time. Progress also depends on external factors such as the weather and strikes. In practice, it is very seldom that the intended date of practical completion and the actual practical completion date coincide.

Real Estate AwareThe actual practical completion date is determined by the architect who will issue a certificate of practical completion. It is based on the opinion that work is substantially complete and can effectively be used for the purpose intended.

To provide for unforeseen circumstances which may delay the practical completion of the works, the JBCC Principal Agreement makes provision for the architect to extend the construction period. The procedure is that the contractor must inform the architect that an event has occurred which could cause a possible delay. Within

30 days of the occurrence of the event, the contractor must notify the architect that he requests an extension of the construction period. The contractor must provide the architect with full details of cause and effect to substantiate the request. The architect has 30 days in which to grant or refuse an extension of the construction period. In the event of a refusal, the architect is obligated to give reasons for the decision.

An interesting feature of the JBCC Principal Agreement is that it distinguishes between events where the contractor is entitled to an extension of the construction period without compensation and where the contractor is entitled to an extension of the construction period with compensation.

4.7 Penalty

If the contractor does not complete the works on the agreed date, the employer is entitled to penalise the contractor. Note that where the architect has granted an extension of the construction period, such extension must be taken into account before the penalty is imposed.

The penalty is written into the schedule as an agreed daily amount. It may be imposed on the day after the contractor surpasses the agreed date and is terminated by the issuing of the certificate of practical completion.

4.8 Final completion

The JBCC Principal Agreement provides for practical completion which has already been discussed under the extension of the construction period.

It also provides for final completion which is defined as the state of completion of the works where in the opinion of the architect the work is completed and free of all patent defects. It is thus the duty of the architect to inspect the works and to ensure that final completion has been reached. To assist the architect the agreement makes provision for a 90-day period which is termed the patent defects liability period. The period is invoked by the issuing of the practical completion certificate. At the end of the period, the architect must inspect the works for patent defects and depending on outcome will decide whether or not final completion has been achieved. If it has, a certificate of final completion will be issued.

Another important feature of the certificate of final completion is that it determines the period in terms whereof the contractor is responsible for latent defects. This period, which the agreement refers to as the latent defects liability period, terminates 5 years after the issue of the certificate of final completion. Once the 5-year period has expired, the contractor has no further responsibility for defects.

5. Features

This is but a brief overview of the model building agreement most commonly used. The features of this agreement are unique to the JBCC Principal Agreement and should not be construed as features common to all model building agreements.

Furthermore, under no circumstances should anyone consider the features discussed herein as legal or other advice. This should only be regarded as an introduction to the JBCC Principal Agreement. The golden rule is to be conversant with the terms and conditions of the agreement concluded, whether it is a model agreement, an in-house agreement or any other agreement.

Topics: Broker, Contract, Development, Property, Residential, Sale |

One Response to “Using Standard Building Contracts part 3”

  1. Urban Development Says:
    August 1st, 2008 at 3:43 am

    You should give the network a ring and reduce your tariff to the minimum amount (usually 20 per month). … Urban Development

Comments