The term construction contract when used in construction
management is normally defined as being an agreement which
is entered into by 2 parties under the terms of which one of
the party agrees to perform a specific task for which the
other party will pay for. The documents that need to
attached to or stated in an agreement will also form an
integral part of any construction contract.
There are certain things which are essential to a contract
to ensure that it is valid.
1. Each party involved in the contract must be competent as
well as being legally capable of taking part.
2. The subject matter contained within the contract must
also be legal and provided definite information in respect
of certain requirements and duties that each party must
undertake.
As long as the above requirements can be met by both parties
then the proposal and acceptance stages can take place.
Firstly a proper proposal must be made by one of the parties
and then this should be absolutely and without qualification
being accepted by the other party. However what you should
know that this part of the procedure is not binding until
the party receiving the proposal has accepted it. It is also
not binding after its date of validity. Once the proposal
has been accepted then either the estimate for the works can
be produced or the project can commence.
Other terms which you may hear of during the process of a
construction contract being prepared are as follows:-
1. Free Consent of Parties to the Contract
Consent is only said to be free in this respect when it is
not caused either by force, undue influence by one or other
of the parties, or because or fraud or because of
misrepresentation by either party involved.
2. Breach of Contract
This results when either party is unable to perform the
duties that they were assigned in the initial contract.
However what should be noted is that not every failure to
perform an obligation will amount to there being a breach of
contract. Certainly when a construction contract has been
broken without either party providing a decent excuse or
justification for this they will then have to provide
compensation for any loss or damage caused to the other
party because of this breach. Generally such compensation
will be a monetary one.
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