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51 Cards in this Set
- Front
- Back
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ACCELERATION COST— |
cost incurred by a contractor when the project is interfered with by theowner in such a way that the contractor must employ more manpower or work more hours in order tocomplete the project on time. If the contractor contributes to the cause of its own delays, accelerationcost may not be granted. |
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ACCEPTANCE |
act of a person to whom a thing is offered by another whereby he receives the thingwith the intention of retaining it, such intention being evidenced by a sufficient act. |
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ACTIVE INTERFERENCE |
action by a party to a contract which causes the other party of thecontract to not complete the work of the project on time or in the manner established by the contractwriting. Positive action must be per-formed on the part of the interfering party as opposed to passivenegligence, which is inactive, permissive, or sub-missive. |
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ACTUAL DAMAGES |
damages resulting from real and substantial loss, asopposed to those which are merely theoretical, estimated, or anticipated. Actual damages representthe real and true value of the total loss suffered, as opposed to liquidated damages, which representan estimated amount calculated as anticipated loss at a future time. |
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ADDENDA |
modifications to the contract documents issued during the bid period. Addenda becomeofficial parts of the contract documents and are legally binding to the signatories of the contract. |
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ADVERSARY |
two parties to a contract are in an adversary or arms-length relationship to oneanother as a result of the commitment they have made to each other in the contract terms andconditions. This relationship is recognized by the courts and binds the two parties together in thatrelationship. In layman's language, it can be considered a relationship of mistrust. |
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AGENT |
a person authorized by another to act for him or her; one who is employed to representanother in business and legal dealings with third persons. In a typical agency relationship, threeparties are involved: a principal, an agent, and a third party. The agent represents the principal indealing with the third party or parties. In the construction industry, a typical misunderstanding is thatthe architect is the agent to the owner in dealing with the third-party con-tractor. The architect, in atypical contract, is the representative of the owner and not of the agent. In some contracts, theconstruction manager is an agent of the owner. An agency relationship is established in writing(express agency) with all three parties acknowledging the relationship. An agency relationship mayalso be established by acts and/or omissions of the parties (implied or apparent agency) which willbind the parties legally in the same manner as an expressed agency relationship. |
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ALLOWANCE |
a sum of money set aside by the owner to remove a particular portion of work fromcompetitive bidding. This is typical of government-subsidized institutions with work that must becompetitively bid and with projects in which certain portions of the work are proprietary and, therefore,must be removed from competitive bidding. |
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ALTERNATE |
a material or method used in place of the base material or method specified for theproject. In a typical construction contract, the owner chooses the alternate or remains with the baserequirement, giving it control over the total cost of the project. An alternate differs from an option inthat cost is a factor in the selection of an alternate by the owner, whereas an option does not havecost as a factor and the choice is made by the contractor. (See OPTION) |
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AMBIGUITY |
doubtfulness of meaning, duplicity, indistinctness, or uncertainty ofmeaning of an expression used in a written instrument. The courts, interpreting a writing, will permitparol evidence to clarify the writing if the writing is in fact ambiguous. However, the courts will notpermit parol evidence if the writing is clear, even though it may be in error. |
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ANTICIPATORY BREACH (REPUDIATION) |
established when a contractormakes a positive and unequivocal statement that it will not or cannot substantially perform thecontract or when a contractor, by any voluntary affirmative act, renders substantial performance of itscontract apparently impossible. Based on these two conditions, the owner may terminate the contractimmediately or upon completion of a waiting period to determine the contractor's performanceaccording to the contract writing. In either case, the owner must establish that the con-tractor'sstatement is positive and unequivocal. If the owner terminates the contractor for default after a state-ment which is ambiguous, the owner will be held to have wrongfully defaulted the contractor. |
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ANTITRUST LAWS |
federal and state statutes to protect trade and commerce from unlawfulrestraints and monopolies. In the construction industry, bid rigging is considered a violation ofantitrust laws. Those found guilty of bid rigging are assessed treble damages. |
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APPARENT AGENCY |
an agency relationship created by an act of the parties and deduced fromproof of other facts. |
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ARBITRATION |
the submission of a dispute to a third party (individual or panel), known asarbitrator(s), whose judgment is final and binding. Decisions at arbitration hearings, unlike those injudicial cases, do not establish precedents. |
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ARBITRATOR |
one who resolves disputes between two par-ties. In a typical construction contract,the architect is designated as an arbitrator in resolving the disputes between the owner and thecontractor. Unlike formal arbitration (as established by the American Arbitration Association), anarchitect acting as arbitrator in the construction process is the first level for resolving disputes, and itsdecision is not final and binding. |
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ARCHITECT |
the person or organization hired by the owner to design the project. The architect'sduties consist primarily of the production of the plans and specifications from which the building willbe constructed. The architect may also preside at the bid opening, monitor the construction processto assure that the owner's interests are protected, and approve payments to the contractor. Itsrelationship to the owner is that of an independent contractor. All architects must be licensed by thestates in which they practice. In addition to the contract with the owner, the architect also will enterinto contracts with consultants (structural, mechanical, electrical engineers,etc.) but will not execute acontract with the contractor. |
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ASSIGNMENT |
a legal action which allows a person who is not party to a contract to obtain thecontract rights of a party who is. A contractor, for example, may assign the rights contained in itscontract with the owner to a subcontractor. In a similar manner, the architect can assign portions ofthe design of the project to its consulting engineers, primarily in the areas of structural, mechanical,and electrical design. |
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ATTACHMENT |
act or process of taking, apprehending, or seizing person or property by virtue ofa writ, summons, or other judicial order and bringing the same into the custody of the law; a remedyancillary to an action by which the plaintiff is enabled to acquire a lien upon the property or effects ofthe defendant for satisfaction of judgment which the plaintiff may have obtained. |
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BETTERMENT |
an improvement brought upon an estate (land and/or buildings) which enhances its value more that mere repairs. The improvement may either be temporary or permanent. This termalso applies to denote the additional value which an estate acquires in consequence of some publicimprovement, such as the widening of a street, etc. |
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BID |
an offer to perform a contract for work and labor or for supplying materials at a specified price.In the construction industry, a bid is considered an offer by the contractor to the owner. A bid, as anoffer, becomes a contract once the owner accepts the bidder's offer with all other contractualrequirements in order |
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BID DEPOSITORY |
a clearing house for subcontractors to submit their bids for a particular projectand for prime contractors to receive bids from the various subcontractors. In California, a biddepository was found in violation of antitrust laws based on its rules for membership imposing fine,suspension, or expulsion to members not abiding by the rules |
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BID REJECTION |
The act of not allowing a bid to stand because of an impropriety in the process ofsubmission or as a result of the owner's arbitrary decision to reject the bid. The owner, in a typicalcontract, reserves the right to reject any and all bids. However, in rejecting a bid, an owner and itsarchitect run the risk of interfering with the bidder's right to do work or of defamation of character onthe part of the bidder. |
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BOARD OF CONTRACT APPEALS |
an independent administration quasi-judicial board to decide allpublic con-tract disputes. Various states have created these boards to relieve the courts from thebacklog of cases related to public contracts. Note that these boards hear only disputes related topublic contracts and not to private contracts. |
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BOILER PLATE |
a term used to represent standard legal conditions inserted at the "front end" of aconstruction contract. These conditions are typically titled "General Conditions," "SupplementalConditions," and/or "Special Conditions" and are inserted at the front end of the project manual. |
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BOND |
an instrument with a clause, with a sum fined as a penalty, binding the parties to pay thesame, and with the condition that the payment of the penalty may be avoided by the performance ofcertain acts by some, one, or more of the parties; a certificate or evidence of a debt; a mere promiseto perform or pay; a written obligation. In the construction industry, there are several types of bonds,including bid bonds, performance bonds, and payment bonds. A bid bond is a form of security toinsure that the bidder will enter into the contract if the award is made to it. A performance bondinsures completion of the project by the con-tractor, guaranteeing that if the contractor defaults, thebonding company will step in and finish the work. A performance bond also is applicable between aprime contractor and its subcontractor, assuring the prime that the subcontractor will perform or pay.A payment bond (sometimes known as a labor and material payment bond) provides a source ofpayment for the contractors' or subcontractors' labor and material men. |
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BUILDER |
one whose occupation is the building or erection of structures, the controlling anddirecting of construction, or the remodeling and adapting to particular uses of buildings and otherstructures. The term "builder" is sometimes used interchangeably with the word "contractor." (SeeCONTRACTOR) |
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BUILDING CODE |
there are several model codes, including Southern Standard Building Code(SSDSC), Uniform Building Code (UBC), Building Officials and Code Administrators (BOCA), and theNational Building Code (NBC), one of which is enacted in most jurisdictions. A code is not applicablein a certain jurisdiction or locality until it is enacted (legislated) into local law. |
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CAPACITY |
the attribute of persons which enables them to perform civil or juristic acts; necessaryfor parties entering into a contract. |
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CASE LAW |
the aggregate of reported cases forming a body of jurisprudence or the law of aparticular subject as evidenced or formed by the adjudged cases; distinct from statutes and othersources of written law. |
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CAVEAT |
a caution; literally, "let him beware." |
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CERTIFICATE |
a written assurance, or official representation, that some act has or has not beendone, that some event occurred, or that some legal formality is being complied with; a written andsigned document establishing that a fact is true. |
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CERTIFICATE OF OCCUPANCY |
a document issued by the building inspector certifying that thestructure con-forms to all relevant code sections and is, therefore, safe for use. An owner must obtaina certificate of occupancy before he or she can use a building. A new building cannot be consideredcomplete until a certificate of occupancy has been issued. In some instances, a partial certificate ofoccupancy will be issued for portions of the building to be occupied. |
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CERTIFICATE OF PAYMENT |
a document issued by the architect in which the architect certifiesthat the contractor has adequately performed. The certificate is then presented to the owner forpayment to the contractor. |
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CERTIFICATE OF SUBSTANTIAL COMPLETION |
the document issued by the architect when thebuilding, or a portion thereof, is complete to the degree that the owner can use the building, or aportion thereof, for its intended purpose. |
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CHANGE |
a revision to the original contract documents. A change differs from a modification in thatthe modification is agreed to by both parties of the contract; however, a change may be madeunilaterally by the owner in spite of the contractor's lack of agreement. |
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CHANGE ORDER |
a document issued by the architect directing the contractor to erect some portionof the building in a manner different than described in the original plans and specifications. Thischange must have an effect on the price and/or time of the contract in order to constitute a changeorder. If the price and/or time is not affected, then the change is a field order or minor change orderand not a change order. The change may be requested by the architect, owner, or contractor. |
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CLAIM |
a demand, an assertion, a pretense, a right or title to. An action initiated by one of theparties of a contract against the other party. This action may be in the form of a written letter, a legaldocument, or some instrument establishing the difference between the two parties. (NOTE: A letter issufficient, in the eyes of some courts, to establish a claim.) |
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CLOAK OF IMMUNITY |
legal status granted to an architect in the quasi-judicial role as arbitrator insettling a dispute between the owner and the contractor. This cloak protects the architect from liabilityby either party (owner or con-tractor) as a result of the decision rendered in resolving the dispute. |
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COLLUSION |
an agreement between two or more persons to defraud a person of his or her right bythe forms of law or to obtain an object forbidden by law; a secret combination, conspiracy, or concertof action between two or more per-sons for fraudulent or deceitful purposes. |
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COMPETITIVE BIDDING |
a process whereby sealed proposals are submitted to the owner for consideration. Competitive bidding is mandatory on public works projects. A private owner maychoose to use competitive bidding in securing the most economical contractor for the construction ofthe project. However, a private owner is not legally bound to the competitive bidding process. |
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CONSIDERATION |
the inducement to a contract; the cause, motive, price, or impelling influencewhich induces a contracting party to enter into a contract; the reason or material cause of a contract. |
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CONSTITUTION |
the written instrument agreed upon by the people of the United States, or of aparticular state, as the absolute rule of action and decisions for all departments and officers of thegovernment in respect to all the points covered by it. This instrument must control until it is changedby the authorities which established it. Any act or ordinance of any government department or officeopposed to it is null and void. Several states have enacted statutes which have affected theconstruction industry and have been found unconstitutional or null and void in their application. Onesuch statute is the statute of limitations which is applied for the protection of the owner and architectbut not for the contractor. |
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CONSTRUCTION MANAGEMENT |
a process of profession-al management applied to aconstruction program from conception to completion for the purpose of controlling time, cost, andquality. Ideally, the construction management organization links itself to the owner as an agent andthereby places itself in a fiduciary relationship with the owner. In this relationship, the constructionmanager can properly represent the owner to both the design profession-al and the contractorswithout concern regarding conflict of interest on his part. |
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CONSTRUCTIVE |
that which has the character assigned to it in its own essential nature butacquires such character as a consequence of the way in which it is regarded by a rule or policy oflaw; hence, inferred, implied, or made out by legal interpretation. The term "constructive" typically isused with other legal terms such as "acceleration," indicating that in the absence of an accelerationclause, it is the actions of party that determine the validity of acceleration costs. Another application isin the use of the term "constructive change," indicating that although a change may not have beendirected, it is implied by the act or omission of the parties involved. |
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CONTINUOUS TREATMENT |
an uninterrupted, unbroken series of activities or events. This theoryis sometimes employed in the determination of statute of limitation claims regarding thecommencement of the time for the claim. The statute of limitation typically starts to run uponcompletion of the project. However, if the contractor is required to repair defects in the work and, as aresult, renders "continuous treatment" to the work, the contractor may extend the time forcommencement of the statute. |
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CONTRACT |
a promissory agreement between two or more persons that creates, modifies, ordestroys a legal relation-ship. Several essential elements must be present in order to render acontract valid. These elements include an offer, acceptance, and consideration on the part of bothparties, the capacity of both parties to contract, a state of mind (mutuality of assent), and the "meetingof minds." In the construction industry, especially in public bidding, the bid proposal is considered anoffer and the owner's selection of the bid is the acceptance. Consideration is the giving up ofsomething on the part of both parties (the owner gives money while the contractor gives labor,material, etc., in the construction process). The capacity of both parties rep-resents their legalstanding in relation to one another, namely as legally recognized principals of the organizationsentering into the contract. The state of mind (mutuality of assent) of the individuals must be such thatthey are free to enter into the contract or not to enter into the contract. If coercion is present, then thecontract could be rendered null and void. The meeting of the minds represents that which wasintended by both parties at the time of the signing of the contract and that both parties were in harmony with each other's intentions. |
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CONTRACTOR |
anyone who contracts to provide the labor and services necessary to complete aproject. A contractor may be hired by the owner or by another contractor. When the contractor is hireddirectly by the owner, the contractor is classified as a prime contractor. When a contractor is hired byanother contractor, the contractor is classified as a subcontractor in relation to the project |
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CONTRACTUAL DUTY |
the obligation which arises from acontract or agreement. In a typical contract agreement, the parties are required to fulfill the dutiesenumerated in the contract writing between the two parties, but also from the contract agreed to byother parties. An example of this is the duty owed by the architect to the contractor as a result of therequirements called out in the contract between the owner and the contractor. |
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CONTRIBUTION |
the sharing of a loss or payment among several debtors. The act of any one orseveral of a number of co-debtors in reimbursing one of their number which has paid the whole debtor suffered the whole liability, each to the extent of its proportionate share; The right of one who hasdischarged a common liability to recover from another, who is also liable, the portion which he or sheought to pay or bear. In many jurisdictions, the damages will be assessed to the parties held liablebased on their contribution to the negligence. |
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CUSTOM |
a usage or practice of the people which, by common adoption and acquiescence and bylong and unvarying habit, has become compulsory and has acquired the force of a law with respect tothe place or subject matter to which it relates. On the technical side of the construction industry, thisterm can apply to techniques and methods of construction, such as the finishing of a concrete slabwith a trowel. Administratively, it is the custom of an architect to monitor the construction phase of thework, unless the writing contains a clause deleting that requirement. |
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DAMAGES |
compensation for a loss or injury suffered; compensation which may be recovered in thecourts by any person who has suffered loss, detriment, or injury, whether to his or her person,property, or rights, through the unlawful act, omission, or negligence of another. In the courts thereare many divisions pertaining to damages which can-not be covered here. |
