Construction sector

Construction contracts are important which can provide certainty to a construction project as
well as mechanisms reduce risks. They also define the relationship between the parties involved
in the project. The parties to a construction contract can be, for example, a client, consultant,
main contractor, and subcontractor.
In construction projects there may create misunderstandings and false expectations, resulting in
potential disputes between the parties in the future. Delays in building or construction work
• Poor communication or miscommunication
• Neglect in building work
• Poor quality of the work
• Bad contracts and poorly drafted plans
• Council approvals
• Trespassing
• Payments (Short payment, late payment, and non-payment)
• Variations (Builders performing variations without the owner’s approval)
• Builder’s license (Builder’s name is different from the name on their license; Unlicensed)
In the terms of payment in a construction project can not only assist in avoiding delays in
payment and with the project, but it can also assist in ensuring cash flow throughout the project.
Therefore, in the agreement, it needs to define the dates as to when payments are to be made, the
method of payment as well as interest, penalties, and remedies, should payment be late. And the
lack of clarity as to the project price can lead to a significant dispute between the parties.
Construction disputes are most commonly related to the price and cost of the project.
A construction contract should specify whether it is a fixed-price contract or a cost-plus contract.
A fixed-price contract is the most common type of contract which provides that the contractor
will perform the specified scope of work at a fixed price. Such a contract can provide certainty to
an owner as to the cost of the project if finances are limited. A cost-plus contract provides that an
Owner will pay the actual costs paid for labor and materials on the project.

Service sector
A contract for services serves is very essential. It establishes the legal rights and obligations of
each party to the contract, sets out the expectations for each party, and addresses how issues that
may arise will be handled.
In obligations and duties of each party to the contract is one of the most important contract terms
to include in an entire contract. If the nature of the contract is an exchange of money for services
the contract should have a clear term explaining how much the contractor will receive and when
the contractor will receive the payment. Further, a service contract often results in a contractor
providing some sort of work product for the company or bringing some sort of work product to
the company.
Standard Forms of Contract
Standard Forms of Contract are used especially in Construction, which means that one party
chooses the terms and conditions that they favour or best suits their purpose and invites
tender/bids from contracting parties.
1. Commercial Agreements
Normally the Parties want to maintain legal relationships, i.e., the other Parties shall have right to
prevail in the legal procedures to enforce the agreement if one Parties violates the agreement.
2. Memorandum of Understanding
This document describes the roles of the two (or more) parties and provides a general
explanation of their duties, which sets forth the basic rules and guidelines by which the parties
work together to fulfil their objectives.
3. Letter of Intent
A Letter of Intent or LOI is a document that defines a deal before the agreement is finalised
between two or more parties.
Question 03

There are several essentials for a valid acceptance. They are Acceptance must be Absolute and
Unqualified, Acceptance must be Communicated to the offeror, Acceptance must be in the
prescribed manner, an acceptance must be by the offeree, and Acceptance must be Express or
Implied.

As an example, when considering the Powell v Lee case, facts of this case is the P applied for a
job as headmaster and the school managers decided to appoint him. One of them, acting without
authority, told the P he had been accepted. Later the managers decided to appoint someone else.
The P brought an action alleging that by breach of a contract to employ him he had suffered
damages in loss of salary.

When considering the Held of this case, there was no contract as there had been no authorized
communication of intention to contract on the part of the body, that is, the managers, alleged to
be a party to the contract.
Question 5
Consideration has an economic value – the money value passed. • A valuable consideration in
the eye of the law may be where each party has bought the other’s promise either by doing some
act in return for it or by offering a counter promise. • Consideration need not be adequate but
must be of value. • Examples of consideration – the act of giving, act of performance, to abstain
from doing an act, to suffer detriment or loss, to assume a liability or responsibility which did not
bind one before. • Moral obligation is not consideration. • Mutual benefit of parties. • Our
common law requires causa not consideration. • Causa denotes the ground, reason or object of a
promise giving such promise a binding effect in law. Causa comprises the motive or reason for a
promise and also purely moral consideration.

Question
An offer means the expression of willingness to contract on certain terms made with the
intension that when the person whom it is addressed shall become binding as soon as it is
accepted. Therefore, there is a deal between two parties when it comes to the offer. One party
offer a reasonable price for a particular item, good, or service and if the other party agree for that
offer; that legal binding is called as offer.

But in “invitation to treatment” there isn’t any deal between two parties. It is only an action
which is used to make some statement or give some information with a view of inviting others to
make offers on that basis. Therefore, there isn’t any legal binding in “invitation to treatment”.