STUDENT NO.

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UNIVERSITY OF KWAZULU-NATAL

CIVIL ENGINEERING PROGRAMME

ENPD7CL: MANAGEMENT OF CONSTRUCTION CONTRACTS

TEST 26th AUGUST 2019

ENPD7CL - CONTRACTS LAW

EXAMINER: C.M. MAINE

Instructions:

1. This is a closed book test

2. Answer all questions on this question booklet.
3. Write your student number on every page.

FOR PART A:

TIME: 45 MINUTES MARKS: 33

THIS QUESTION PAPER MUST BE HANDED IN

The test mark is 40% of the Contract Law course mark

The exam mark is 60% of the Contract Law course mark

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1. Explain what is meant by ‘judicial precedent’ and how it is applied in the South African
legal system? (2)

Judicial precedent refers to the importation of previous court judgements into law. (1)

Such judgements set a ‘precedent’ for future court judgements (1)

Future court judgements may be based on past judgements.

2. Name the conditions required for valid (legally enforceable) contract to exist between
two or more parties? (4)

True agreement must be reached between the parties (1)

The performance of the contract must be legal and physically possible. (1)

The parties must have capacity to sign. (1)

Any specific legal requirements must be satisfied. (1)

3. What is the difference between ‘expressed terms’ and ‘tacit terms’ in a contact? Are
both equally enforceable? (3)

Expressed terms are explicitly stated in writing in the contact. (1)

Tacit terms are silent terms (no stated) which are taken to be agreed to by the actions

of the parties, or terms which both parties would obviously have agreed to if they had thought to

consider them. (1)

Both are equally enforceable. (1)

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4. What is meant by ‘privity of contract’ (1)

Neither contractual rights or obligations may be imposed on a third party. (1)

5. Define the term ‘variation order’ or ‘VO’. (1)

A change to the terms of the contract agreed to by both contracting parties.

Also referred to as ‘novation’. The varied contract replaces the original contract.

6. Name two of the four forms of contract commonly used in the South African
construction industry. (2)

GCC, FIDIC, JBCC, NEC

7. What is the difference between determinative and negotiated settlements? Provide 2

examples of both determinative and negotiated dispute resolution options. (6)

A determinative settlement is a settlement resulting from the ruling of an external party who

has been appointed to preside over the dispute.

A negotiated settlement is a settlement resulting from the mutual agreement by both

parties to the dispute.

Determinative dispute resolution options: adjudication, arbitration, legislation

Negotiated dispute resolution options: mediation, conciliation, negotiation.

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8. What is meant be being in ‘breach of contract’? (1)

To fail to make a performance in terms of the contract.

9. Where one party to the contract is in breach of contract, what remedies are available to
the other contractor? Name 2. (2)

Enforce the contract and payment of damages.

Cancel the contract

Sue for payment of proven damages in both cases.

CONTRACTUAL SITUATIONS

The Burgundy Municipality required a new steel pipeline to convey potable water from a nearby dam
in order to augment the city’s water supply. The Municipality employed Engcom Consulting Engineers
for the design and construction administration of the pipeline. Engcom completed the design and the
project went out to tender. Jeff’s Pipelines (Pty) Ltd was awarded the contract for the construction of
the new pipeline. The GCC 2015 was chosen as the form of contract.

Jeff’s Pipelines order the pipe materials from Long & Hallmore (Pty) Ltd. Jeff’s Pipelines used a local
contractor, Pete’s Civils, for the construction of all valve chambers.

10. Draw a single organogram showing the contractual relationship between each of the
parties described above. Use the space provided below. (5)

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11. Burgundy Municpality did not want Jeff’s Pipelines to use Long & Hallmore (Pty) Ltd to
supply the pipe materials, but instead use a local supplier whom they preferred.
Can Burgundy Municipality instruct Jeff’s Pipelines to use the local supplier instead?
Why? (2)

No. The Employer has no control over the Contractor’s choice of sub-contractor.

Privity of Contract – the Contractor is free to choose the sub-contractor of his choosing.

12. In terms of the Contract, can Burgundy Municipality give direct instruction to the
contractor? Why / Why not? (2)

No. The Employer cannot give direct instruction to the Contractor.

The employer can only act through his Agent, the Engineer, Engcom.

13. Pete’s Civils was late in the completion of the valve chambers. This in turn delayed the
completion of the pipeline. In terms of the contract, the Employer was entitled to
impose penalties on Jeff’s Pipelines.

Jeff’s Pipelines felt it would be unfair for the Employer to impose penalties on them as
they were not the cause for delay, but rather their sub-contractor Peter’s Civils was.

Does Jeff’s Pipelines have a right to request that the Employer impose penalties on
Pete’s Civils rather than themselves? Why / Why not? (2)

No

The Burgundy Municipality has no contractual relationship with Pete’s Civils.

They only have a contractual relationship with Jeff’s Pipelines.

Penalties will be imposed on Jeff’s Pipelines, who must take appropriate action with

Peter’s Civils in terms of their subcontract relationship.

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