Free Description of The Purpose of Contract Terms Essay Sample

ABANDONMENT

When either of the party fails to perform the agreement in the contract, this may cause to claim for any damages that would result from it.

ARBITRATION

The principle behind this is for the arbitrator, which is selected or nominated by the parties or the court, to address or settle conflict/issues/problems that may arise from either party regarding the contract.

BANK GUARANTEE

The purpose of this section is to assure the Builder that the company or owner who contracted him/her is able to pay the contract by allocating a certain amount of fund duly certified by a banking institution. This fund will only be only be available to the owner if the Builder permits it or the Builder once the contract is finished or has meet the required specifications.   

BREACH OF CONTRACT

This is used to demand payment for damages in case one of the parties violates the contract’s terms and conditions, provided that there are actual damages and these are assessed as losses due to contract infringement.

CONCILIATION

If in case there will be conflicts arising from the execution of the contract, the importance of this section is for the mediator to discuss the dispute between the two parties involve and, if possible, achieve an agreement or decision, however, this should not be imposed by the mediator.

CONTINGENCY SUM

This is an amount allocated and permitted in the contract to be utilized on circumstances that there are unpredicted expenses resulting from the performance of the contract and will be modified in the closing balance.

DEFECTS LIABILITY PERIOD

It is necessary to put this in the contract so that during instances within the set period that there are defects that will occur, the owner can call the attention of the Builder to fix them without paying any additional expenses.

DETERMINATION

This is to indicate the claim of each party in the contract that when a violation of contract agreements comes, this can be a reason when a decision is made which may include cessation of the contract.

ESCALATION

This stipulation for adjustments is necessary to avoid losses as cost or price of labour and materials may change during the performance of the project under certain financial circumstances. 

EVIDENCE OF SATISFACTION

This is a concrete proof usually issued by the Superintendent to the owner to prove that certain sections of the project has already been completed following the arrangements and designs.  

EXTENSION OF TIME

The aim of this is to change contract’s conclusion date for a justifiable cause due to project conditions where the Builder has no control over and where there are stipulations that either of the party is responsible for such as payment for damages or compensation or payment for additional materials to be used.  

GENERAL CONDITIONS OF THE CONTRACT

This stipulates the terms of the contract comprising all items needed to provide for some certain conditions of a specific project.

HEAD CONTRACT

This stipulates that this is the main contract binding for the owner and the contractor even if the labours will be led by an Architect and where the owner will be repaid for any rights the Sub-contractor will create against the owner.

IMPLIED TERMS

These are the provisions that are not stipulated in writing but are considered to be “implied” as these results from the public regulations that both parties are deemed to be aware of to ensure accountability and compliance to such laws.

LATENT CONDITIONS

This shall be stipulated in the contract for both parties to be aware and responsible of the expected changes, to include its cost, necessary due to the physical state of the site that existed on or before the contracting that might affect the design and construction of the structure to be built.

LIEN

This section is needed by the creditor as a form of guarantee to keep the ownership of the property until the proprietor who loaned the money can give the total amount of the debt.

LIQUIDATED DAMAGES

This is being put in the contract to show and ensure monetary compensation from the Builder if in case agreements in the contract were not followed.

LUMP SUM

The reason for putting this in the contract is to illustrate and be clear with both parties whether the amount to be paid considers increases for work or materials or if the amount is already set with no indication of any additional pay.

NOMINATED SUB-CONTRACTOR

This is written in the contract to specify with the Contractor that a certain part of the project will be done by a sub-contractor chosen by the proprietor.

PERIOD CONTRACT

This is a contract entered by the proprietor with the contractor that needs to be done in a fixed timeframe and fixed cost.   

PRACTICAL COMPLETION

This is stated in the contract to declare that the work has already been completed and is usually done through writing by the Builder to the owner but allows the owner to check and /or list down any comments or defects within 5 days to reach practical conclusion. However, if the owner did not submit, the project is considered complete.

PRIME COST ITEM

This is necessary in order for the proprietor to estimate the fund required to execute the project which is quite crucial for inclusion in the contract. 

PRINCIPAL

This word is used instead of a proprietor or customer to state the name of the person or organization to which the project is being worked for and the one that shall pay all the works needed to complete the project.

PROVISIONAL QUANTITIES

This fund allocation is necessary as there are some portions of the work where the precise numbers needed cannot still be specified at the time of contracting but will be modified in a later date during or after the execution of the works.

PROVISIONAL SUM

This is to apportion a fund in which the Client did not determine  and included in the contract aggregate by the Contractor through which the Client can follow-up how the amount was used by the Contractor .

REPUDIATION

This is a refusal of the party to perform the contract but the refusal should happen prior to the execution so that the refusing party will have no obligations to pay any claims for damages.

SCHEDULE OF RATES

This is normally performed to determine the specific tasks that were undertaken by the Builder with associated or accompanied rates every tasks or group of tasks completed or executed.

SECURITY/RETENTION

A security or retention rate is usually enforced by the Proprietor to make sure that a necessary and appropriate attention and execution of the contract is provided by the Builder.

SPECIAL CONDITIONS OF CONTRACT

These are particular inclusions in the contract issued by Some Organizations which are necessary in order to perform and/or coordinate some work contents to complete the project.

SPECIFICATION

The reason for this is for both parties to know and agree on the written explanation of the tasks for the structure to be built complemented with the drawings and for the Builder to follow such.

SUPERINTENDENT

The purpose why there is a Superintendent in every building contract is to justly and truthfully act, monitor, evaluate and confirm in behalf of the Proprietor the execution of the project according to the contract, agreements or specifications made in paper.

SUSPENSION

This happens when either of the party is making a contract breach leading to a solution of deferring the works to safeguard their status and avoid additional expenses or losses with no termination of contract.

TORT

This is for both parties to be aware and be responsible for personal injuries that may arise from the execution of the project.

VARIATION

When there is a relevant work to be performed which are not included in the contract but needs to be done (this usually comes from the Builder), this is needed so that both parties are aware and have agreed to do so in a written form.