LLENA, FERDINAND ll A.
CIE 126 | Module 3 4BSCE-04
● Reflection Points
1. Why should construction contracts be
clear, complete, and fair? How can a
well-written contract help protect
workers, clients, and public funds in
national projects?
2. Which contract protected both sides
better—and why? What changes
would you make to ensure the contract
aligns with ethical standards and legal
requirements?
● Spotlight on Practice
1. You are reviewing a contract that
allows payment delays without
penalties . How would you revise this
to protect both the contractor and
client fairly?
2. How can careful contract planning
help avoid waste of public funds or
materials in government infrastructure
projects?
3. How does fair communication and
dispute resolution promote trust and
long-term partnerships in construction
project?
● Skill Building Activity
In this activity, you will take on the role of a contractor or project manager analyzing construction
contracts. You will receive two sample contracts—one that follows ethical and legal standards and another
with problematic clauses. Your task is to carefully review both contracts, identify any ethical issues,
compliance violations, or unfair terms, and suggest improvements to ensure fairness, accountability, and
transparency. This will help you understand the importance of ethical contract management in the
construction industry.
Your goal is to propose clear and logical revisions that align with industry regulations, client relations
best practices, and responsible resource management. Write a short but detailed analysis explaining why
certain clauses are problematic and how they should be corrected. Think like a professional in the field—
how would you ensure a contract is fair for all parties while still being legally sound? Your analysis and
recommendations will prepare you to handle real-world contracts in your future career.
Contract No. 1
Construction Agreement:
This Construction Agreement (“Agreement”) is made and entered into on June 28, 2020, by and between:
Client: Josephine Dangal, with a registered address at Quezon City (“Owner”)
Contractor: AAA Construction, with a registered address at Makati City (“Contractor”)
1. Scope of Work
The Contractor agrees to complete the construction of 2-Storey Residential House as per
the plans provided by the Owner. The Owner reserves the right to make modifications
without prior approval from the Contractor.
2. Payment Terms
The total contract price is Php 2,000,000.00, payable at the Owner’s discretion. The Owner
reserves the right to delay or withhold payments if the Owner determines that work is
unsatisfactory.
3. Compliance with Laws and Safety Standards
The Contractor is responsible for obtaining any necessary permits and ensuring compliance
with safety standards. However, failure to obtain permits shall not be grounds for delay in the
construction timeline.
4. Change Orders
The Owner may request changes to the project without additional compensation to the
Contractor. The Contractor is required to implement these changes within the original
budget.
5. Dispute Resolution
Any disputes shall be resolved solely by the Owner, whose decision will be final and binding.
The Contractor waives the right to legal action.
6. Warrties
The Contractor provides a limited warranty but assumes no responsibility for defects arising
from material quality or unforeseen circumstances.
7. Termination Clause
The owner may terminate the contract at any time without prior notice. In such cases, the
Contractor forfeits the right to claim compensation for completed work.
Signed:
Client:
Contractor:
Observation:
Contract No. 2
CONSTRUCTION AGREEMENT
Client: Josephine Dangal, with a registered address at Quezon City (“Owner”)
Contractor: AAA Construction, with a registered address at Makati City (“Contractor”)
1. Scope of Work
The Contractor agrees to complete the construction of 2-Storey Residential House at
Quezon City, as per the approved plans, specifications, and schedule attached as Appendix
A.
2. Payment Terms
The Owner agrees to pay the Contractor a total contract price of P2,000,000.00, payable as
follows:
20% upon contract signing
40% upon 50% completion of the project
30% upon substantial completion and final inspection
10% upon final acceptance of the project
Payments will be made within 15 days of receiving an invoice.
3. Compliance with Laws and Safety Standards
The Contractor shall comply with all national and local building codes, environmental
regulations, and labor laws, including worker safety standards.
4. Change Orders
Any changes to the scope, schedule, or budget must be agreed upon in writing by both
parties.
5. Dispute Resolution
Any disputes will first be resolved through mediation. If mediation fails, arbitration will be
conducted under Arbitration Rules:
I. Late project submissions incur a 3% penalty per day, but only if the client remembers
to request it.
II. All disputes must be resolved via rock-paper-scissors before escalating to mediation.
III. Any party wishing to terminate the contract must provide a written notice exactly 37
days in advance.
IV. Invoices must be submitted in blue ink, otherwise, they will be considered void.
V. Contractors must complete a project within the agreed timeline—unless it rains on a
Wednesday, in which case they get a one-week extension.
6. Warranties
The Contractor guarantees that all work will be performed according to industry standards
and provides a one-year warranty on workmanship and materials
7. Termination Clause
Either party may terminate this contract with 30 days’ written notice if the other party
breaches the agreement. If terminated, the Contractor shall be compensated for completed
work.
Signed:
Client:
Contractor:
Observation:
● Check for Understanding
What is the difference between contract and agreement?
[INSERT YOUR ANSWERS HERE]
