Agreement Contractor Meaning

In the fixed-price contract, all the work is carried out by the contractor according to the plan and the specifications for a certain fixed amount, in accordance with the agreement. The owner provides the necessary information and the contractor calculates a certain amount. This contract is appropriate when the number of items is limited or if it is possible to develop precise quantities of the work to be performed. Detailed specifications of all work, detailed plans and drawings, bond, penalty, progress and other contract terms are included in the agreement. Although it is a lump sum and a planned contract, the contractor is paid at regular intervals of 2 to 3 months depending on the progress of the work on the basis of a certificate issued by the competent engineer. A pricing plan is included in the agreement for payment for additional items. Under a flat-rate contract, a “fixed price” is agreed between the client and the contractor before the start of the work. This contract can also apply to both house construction contracts and commercial contracts. It may represent a lower risk for the contractor, as there are fewer mechanisms that allow it to vary its price.

The precise provisions depend on the specific form of the contract that is adopted. For example, in the design and construction contract of the Joint Contracts Tribunal (JCT), the base date determines the allocation of risks with respect to changes in legislation, changes in VAT exemptions and changes in the definitions of day work. According to the PvT Standard Building Contract, 2011 edition, if the “legal requirements” change after the base date of the contract, the contractor must change the scope of work to meet them. The modification is considered to be a modification for which the holder is entitled to payment, even if no formal instructions have been given. [23] Under a lump sum contract, an owner undertakes to pay a certain lump sum to a contractor once the work is completed, without a breakdown of costs. [8] [9] No detailed measures are required at the end of the work. In costs plus a fixed fee, the owner pays the contractor an agreed amount that goes beyond the documented labour costs. [10] An agreement may simply consist of one party accepting another party`s offer. As this scenario does not involve consideration, it is not a contract.

Other common examples of agreements that are not contracts are gentlemen`s agreements and unauthorized betting pools. The key element of all non-contractual agreements is that they are legally unenforceable. Practical completion is available when the contractor returns ownership of the land to the owner, usually at the time the work has been completed and accepted by the client. A certificate of practical conclusion usually confirms this hypothesis. As a rule, half of the sums withheld are released, the contractor`s possible liability for lump sum damages is released and the period for correcting defects begins. [24] The difference between this type of contract, which is a cost-based contract with a fixed-price contract, is that, in the case of the maximum guaranteed price (GMP), where savings result from on-time costs, it would be an agreed price contract, and the contractors keep the cost savings for themselves on time and there is no obligation for them to: return them to the owners….