Professional Practice II

Practice
2 Contents

This lecture aims to provide a basic understanding of topics on Prof. Practice.

Paper II - Practice

1. Introduction – Contract Law

2. Types of Construction Contract
3. The Construction Process
4. Certification of Completion and Compliance
3 Contract Law - Introduction

“Contracts Act 1950 (Act 136)” in Section 2 (definition):

A promise and every set of promise, forming the consideration for each other
is an agreement.
An agreement which is enforceable by law is a contract.
Agreement: is when a person (the ‘promisor’) promises to do something in
consideration which another person (the ‘promisee’) agrees to reciprocate
with a promise to do (or not to do) something.

Thank you, in return for

I promise to do your promise, I will do
something for something to reciprocate.
you.

A set of promise, which

forms a consideration
for each other.

An Agreement
4 Contract Law - Introduction

FIVE Key Test to Determining a Contract

1 Offer and Acceptance

2 Considerations

3 Intention to create a legal relationship

4 Legal Capacities

5 Formalities
5 Contract Law - Introduction

Offer and Acceptance

Offer made and offer accepted.

Offer is made if it is sent /received.

Offer is accepted if acceptance sent/received.

Tenderer: Offer is made when tender document is submitted.

Client: Offer is made when tender is received.

Offer can be revoked any time before acceptance.

Offer cannot be revoked once accepted.

6 Contract Law - Introduction

Considerations

Consideration is a price for a promise.

Consideration must be real. Consideration need not be
adequate.

E.g. An agreement to buy a car at RM1.00 is real consideration.

A promisor who promise to make a payment in return for

nothing IS NOT obligated to actually make payment. The
consideration is termed ‘illusory promise’.
7 Contract Law - Introduction

Considerations

Consideration is a price for a promise.

Consideration cannot be in the past.

Example: Eastwood vs Canyon, the guardian of a young girl

obtained a loan to educate the girl to improve her marriage
prospect. After her marriage, her husband promised to pay off the
loan. The judge held that the guardian cannot enforce the
agreement as the loan was taken out in the past before the
husband made the promise.
8 Contract Law - Introduction

Considerations

Consideration is a price for a promise.

Consideration must move from the promisee.

Example: Unless a Contract specifies delivery before payment of a

piano and if no payment is made by the promisee, the contract to
deliver the piano is not enforceable. However if payment is made,
then enforcing the delivery of the piano can be made. Similarly a
supplier may not be able to enforce payments if the piano is not
delivered
9 Contract Law - Introduction

Intention to create legal relationship

There must be clear intention to create a legal relationship!

Example: Balfour vs Balfour; Mr. Balfour agrees to pay his wife £30
a month as maintenance while he was living in Sri Lanka. After
leaving Sri Lanka and separating from his wife, Mr. Balfour stop
payment. Mrs Balfour brought an action to the court to enforce
payment. The court of appeal held that the agreement was not
enforceable as there was insufficient evidence to suggest that they
were intending to create a legal relationship.
10 Contract Law - Introduction

There must be legal capacities

Capacity of a ‘natural’ person (i.e. an individual recognised by the

law) or an ‘artificial’ person (e.g. a company, organisation
recognised by the law) to enter into a Contract. When the law
forbids a person (natural or artificial) from engaging in certain
activities, then any agreement or contract which include such
activities become void by reason of incapacity. A bankrupt or a
person of unsound mind would be barred from entering into
contract by reasons of incapacity
11 Contract Law - Introduction

Formalities in lodging a Contract

Contract must be put in written form and sign. Stamp duties must be paid.

Exceptions – Oral Contract

if can be proven to exist or are admitted by the other parties then such oral
contracts are enforceable and valid. Generally oral contracts may suffer from the
disadvantage of proving its validity and enforceability in court and in the absence
of written terms and conditions a party may not be able to enforce the contract
or may have to settle for less than the original intended consideration.

Statute of Fraud It is mandatory for certain contracts to be in written

form:
1 land/property transaction
2 Contract for debt and duty
3 Contract which requires more than 1 year
4 Contract for sales of goods under the ‘Uniform Commercial Code’
12 Contract Law - Introduction

Doctrine of Privity of Contract

Only parties to an agreement would have the standing to

enforce it. This means that only parties named in an agreement
can sue or take action on the other party in the agreement.

Example: Person A loan money to person B. A third person C cannot sue

person B for recovery of debt even if person C is related to or has interest in
the affairs of person A.
Example: A building owner has a contract to erect with a main builder. The
main builder in turns has a sub-contract with a specialist contractor. The
specialist contractor cannot sue the building owner for non-payment and
consistently the building owner cannot sue the specialist contractor for non-
performance or poor-performance.
13 Contract Law - Introduction

Contract Voidable/Void/Unenforceable Contract

Implies Contract never come

VOID
into existence

Implies one or both parties

VOIDABLE declare contract ineffective.

Implies neither parties can

UNENFORCEABLE
enforce the Contract in court.
14 Contract Law - Introduction

Contract Voidable/Void/Unenforceable Contract

1 Person must be competent Void
2 Consent between parties must be mutual, both agree on the same thing Voidable
in the same senses.
3 Consent must be freely given, i.e. the following elements not present:
a) Coercion Voidable
b) Undue influence Voidable
c) Fraud Voidable
d) Misrepresentation Voidable
e) mistake Void
4 Consideration and objects must be lawful Void
5 Contracts must have consideration, exceptions in case of gift then it must Unenforceable
be expressed in writing etc.
6 Do not restraint any person from marriage except for minor void
7 Do not restraint any person from exercising a profession, trade, etc. Void
8 Do not restraint any parties to refer to a court for relief. Void
15 Contract Law - Introduction

Contract Voidable/Void/Unenforceable Contract

9 Agreement must be certain and capable of being made certain. Void
Example A sells B a ‘hundred tons of oil”. There is nothing to show what kind of oil
intended. The Contract is void for uncertainty.
10 Contract must not be akin to a wager/bet /lottery. Void
11 In a contingent contract Unenforceable
(a) Collateral event in the future is not certain Void
(b) Event becomes impossible
Note: Contingent contract are when a consideration is CONTINGENT on
an event occurring in the future.
Example: Insurance agree to pay A certain sum of money if his house
burnt down.
Example: A agrees to pay B a certain sum if C dies. However B dies before C. The
Contract is void.
16 CONTRACT FORMS
17 CONTRACT FORMS

Contract Forms

1. JKR203 – Kontrak berdasarkan lukisan & spesifikasi;

Lump Sum Contract
2. JKR203A – Kontak berdasarkan senarai kuantiti; BQ
Contract
3. JKR203N – Sub Kontraktor dinamakan; NSC
Edisi 2007

1. PAM 1998 – Pertubuhan Arkitek Malaysia

2. PAM 2006 – Pertubuhan Arkitek Malaysia
3. CIDB – Construction Industry Development Board
4. IEM – Institusi Jurutera Malaysia
5. FIDIC – Federation Internationale Des Conseil Ingenieur
18 CONTRACT FORMS

A L L A G R E E M E N T S F O L LOW A S TA N DA R D F O R M AT :
The Agreement The Conditions Appendix
This contract is made the 1. Definitions The particulars of the
___day of ____ 2011, 2. ipso facto lupsu rex Contract
fortunate, lex extr, xxxx, xxx, 1. XXX xxx ………………….
Between _____________ xxx
_____________________ 3. ipso facto lupsu rex 2. XXX xxx ………………….
(the government) and fortunate, lex extr, xxxx, xxx, 3. XXX xxx ………………….
_____________________ xxx
_____________________ 4. ipso facto lupsu rex 4. XXX xxx ………………….
(the Contractor) fortunate, lex extr, xxxx, xxx, 5. XXX xxx ………………….
xxx
Whereas; ipso facto lupsu rex 5. i
fortunate, lex extr

Agreement Conditions Appendix

The actual agreement Details of how contract is Particular conditions
describing the objectives, to be managed and specific to a contract e.g.
contract price and parties conditions constituting dates of commencement,
breach. completion etc.
19 CONTRACT FORMS

T H E F I N A L C O N T R AC T
Appendix Programme XXXxxx
XXXxxx

Technical Data Dear Sir

The Conditions XXXxxx
Contract for ……
XXXxxx
Schedule of Rates
o facto lupsu rex
The Agreement Dear
XXXxxx
Sir
fortunate,
Contract ……
forlex extr
XXXxxx
This contract is made the
___day of ____ 2011, o facto
Dear Sir lupsu rex
XXXxxx
fortunate,
Contract ……
forlex extr
XXXxxx
Between _____________
_____________________ o facto
Dear Sir lupsu rex
(the government) and fortunate,
Contract ……
forlex extr
_____________________
_____________________ On behalf of the
(the Contractor) Client we are pleased
to inform that …
Whereas; ipso facto lupsu rex
fortunate, lex extr

Agreement Correspondences
Schedules Contract Drawings
20 CONTRACT FORMS
THE FOLLOWING KEY PROVISIONS ARE CONTAINED IN ALL
CONSTRUCTION CONTRACTS:
I Agreement
(a) Parties to Agreement
(b) Contract Price
(c) General description of the Contract Works
II Conditions
(a) Definitions & Interpretation of Terms
(b) Obligations of Client/Employer/Government
(c) Obligations of Contractor/Sub Contractor
(d) General performance of contract (bond, insurances etc)
(e) Commencement/Completion/Delays/Extension of Time
(f) Suspension & Termination
(g) Variations & Payments (interim, final)
(h) Arbitration (timbangtara)
(i) Force Majeure
(j) Giving Notice
21 Construction Flow Process

Overview
of
Project
Flow
22 C.C.C.

Certification of Completion and Compliance:

a) is a procedure which effectively came into force in

April 2007,
b) Certificate of Fitness for Occupation (CFO) previously
issued by the local authority is now issued by the
project’s Principal Submitting Person (PSP).
c) The PSP (depending on the project) can be a
Professional Architect, Professional Engineer or a
Registered Building Draughtsman.
23 C.C.C.

Role of Local Authorities (Pihak Berkuasa Tempatan of PBT)

1. PBT will receive, process and approve planning permissions

and building plans under a more efficient and expeditious
regime of ‘One-Stop-Centre’ (OSC).
2. Under CCC PBT can authorise site inspection on their own
initiative, or act on complaints to check works in progress,
issue notice (in writing and through the OSC) to the PSP not to
issue the C.C.C.
3. take action to rectify any continuous breach or divergence
including reporting to the relevant Professional Boards.
24 C.C.C.

Role of PSP in issuing C.C.C.

1. The P.S.P. is the principal officer under this procedure. He will
therefore have to ensure that all Form Gs (under C.C.C.) must
be duly filled and certified and all conditions fulfilled before
C.C.C. can be issued.
2. It is advisable for the P.S.P. to ensure that all contractors are
properly registered with CIDB and with the relevant licensing
agencies (e.g. electrician with Suruhanjaya Tenaga, plumber
with SPAN etc.) and contractors are duly informed as early as
possible about their respective obligations and early
certification required under C.C.C.
Failure to comply is a serious offence!
25 C.C.C.

Conditions before C.C.C. issued

1. Project completed in accordance with approved drawings.
2. PSP must supervise works or satisfied with supervision.
3. All Form Gs filled & endorsed:
 TNB
Water
JPP (Sewage)
JKKP (F&M)
Bomba

Failure to comply is a serious offence!

26 Other Laws Having Relevance