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CONTRACT
A contract is an agreement reached between two or more parties which is legally enforceable when
executed in accordance with specific requirements.
Contracts should be project specific and reflect the agreement between the parties.
Contracts are obviously a key part of every business and it is therefore fundamental that all parties to
a contract understand the terms included in a contract and the rights and responsibilities of the
Offer;
Acceptance;
Appendix
Articles of agreement
Bill of quantities
Contact drawings
ARTICLES OF AGREEMENT
A written memorandum of the terms of an agreement. It is a common practice
for persons to enter into articles of agreement.
Preparatory to the execution of a formal deed, whereby it is stipulated that
one of the parties shall convey to the other certain lands, or release his right to
them, or execute some other disposition of them.
An article is a memorandum(register) or minute of an agreement, reduced to
writing to make some future disposition or modification of property; and
This type of contract usually is developed by estimating labor costs, material costs, and adding a specific
amount that will cover contractors overhead and profit margin.
If the actual costs of labor and materials are higher than the estimate, the profit will be reduced. If the
actual costs are lower, the contractor gets more profit. Either way, the cost to the owner is the same.
A lump sum contract is a suitable if the scope and schedule of the project are sufficiently defined to
allow the contractor to fully estimate project costs.
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This type of contract is not suitable for difficult foundations, excavations of uncertain character, and
In a unit price contract, the work to be performed is broken into various parts, usually by
construction trade.
This contract type is based on anticipated quantities of items which are counted in the
project in addition to their unit prices.
The final price of the project depends upon the quantities required to carry out the work.
Unit price contracts are seldom used for an entire major construction project, but they are
frequently used for agreements with subcontractors which involve accurate identification of
different types of items, but not their numbers, in the contract documents.
They are also often used for maintenance and repair work.
government bodies. This type of contract is suitable for works which can be split into various items and
quantities under each item can be estimated with accuracy.
Merits
i.
In this type of contract, there is no need for detailed drawings at the time of allotting contract as in
the case of lumpsum contract. The detailed drawings can be prepared after the contract is awarded.
ii.
Changes in drawings and quantities of individual items can be made as per requirement within agreed
limits.
iii.
The payment to the contractor is made on the actual work done by his at the agreed rates.
Demerits
i.
The total cost of work can only be known upon completion. As such, the owner may incur financial
difficulty if the final cost increases substantially.
ii.
Additional staff is required to take detailed measurements of work done for releasing payments to
the contractor.
iii.
iii. The Scope for additional saving with the use of interior quality materials may prompt the
ARBITRATION
Arbitration is a popular form of alternative dispute
resolution that is used by many individuals and businesses to
resolve disagreements in place of pursuing a lawsuit.
Arbitration is a method of adjudication of dispute(s) / difference(s)
between the parties by non-judicial process wherein
arbitrator(s)/umpire(s) is appointed by the parties themselves
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Advantages Of Arbitration,
The parties are often encouraged to participate in the resolution process.
Negotiating within the framework of a cooperative process may well lead to a mutually beneficial
solution to a disagreement.
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Disadvantages Of Arbitration
The final decision of an arbitrator is difficult to overturn.
It may not even be possible to seek redress in a court of law.
The extensive budget and legal staff of a major corporation may prove to be a significant disadvantage for the
average consumer.
Many consumers are only made aware of a mandatory arbitration provision toward the end of the buying
process.
lack of transparency.
Since arbitration proceedings are private and seldom reviewed in court, the possibility of bias is enhanced.
The cost of arbitration has risen dramatically in recent years.
In particular, the cost of initiating a lawsuit is much less than pursuing an arbitration claim.
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Types of ARBITRATORS
ARBITRATOR TYPES
I.
SOLE ARBITRATOR ,
II.
JOINT ARBITRATORS
/ARBITRAL TRIBUNAL
PARTY - A
III.
1.
PRESIDING ARBITRATOR
SOLE ARBITRATOR
PARTY - B
PARTY - A
2.
PARTY - B
UMPIRE / CHAIRMAN
ARBITRATOR 1
JOINT ARBITRATORS /
ARBITRATOR 2
ARBITRAL TRIBUNAL
.
.
.
PARTY - A
ARBITRATOR - A
3.
PRESIDING ARBITRATOR
PARTY - B
ARBITRATOR - B
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The appointment of Sole Arbitrator Or Three Arbitrators shall be made in the following manner:
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Role Of Umpires
The role of an umpire is usually dictated by the arbitration rules and the need for one is often
precluded by simply providing for an uneven number of arbitrators.
For a time, but rarely in modern times, arbitration would be set up as two arbitrators and an
umpire, the umpire taking no action except where the arbitrators are disagreed.
There are many forms of authority of an umpire but they are generally given the authority to
step in and independently rule on an issue upon which the arbitrators are deadlocked.
The parties are free to agree what are to be and, in particular
(a) whether the umpire is to attend the functions of an umpire the arbitral proceedings; and
(b) when, and the extent to which, the umpire is to replace the arbitrators as the arbitral
tribunal with the power to make orders, directions and awards.
If or to the extent that there is no such agreement of the parties, the arbitrators are free to agree
on the functions of the umpire.
Subsections (4) to (11) apply subject to any agreement of the parties or the arbitrators.
After an umpire is appointed, the umpire must attend the arbitral proceedings.
The umpire must be supplied with the same documents and other materials as are supplied to the
arbitrators.
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Orders, directions and awards are to be made by the arbitrators unless, subject to subsection (9), the arbitrators
cannot agree on a matter relating to the dispute submitted to arbitration.
If the arbitrators cannot agree on a matter relating to the dispute submitted to arbitration, they must forthwith give
notice of that fact in writing to the parties and the umpire, in which case the umpire is to replace the arbitrators as the
arbitral tribunal with the power to make orders, directions and awards, in respect of that matter only, subject to
subsection (9)(b), as if the umpire were the sole arbitrator.
If the arbitrators cannot agree on a matter relating to the dispute submitted to arbitration but
(a) they fail to give notice of that fact; or
(b) any of them fails to join in the giving of notice,
any party may apply to the Court which may decide that the umpire is to replace the arbitrators as the arbitral
tribunal with the power to make orders, directions and awards, in respect of that matter only, as if the umpire
were the sole arbitrator.
Despite the replacement by the umpire as the arbitral tribunal in respect of a matter, on which the arbitrators cannot
agree, relating to the dispute submitted to arbitration, the arbitrators may
(a) still make orders, directions and awards in respect of the other matters relating to the dispute if they consider
that it would save costs by doing so; or
(b) refer the entirety of the dispute to the umpire for arbitration.
For the purposes of this section, the arbitrators cannot agree on a matter relating to the dispute submitted to
arbitration if any one of the arbitrators, in that arbitrators view, disagrees with the other arbitrator or any of the other
arbitrators over that matter.
A decision of the Court under subsection (8) is not subject to appeal
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AN ARBITRATOR reviews testimony and evidence presented by the disputed parties at a hearing and
resolves the dispute by issuing a decision that may include an award of money.
APPOINTMENT OF ARBITRATOR
Any person can be appointed as an arbitrator.
Generally impartial and independent persons .
Parties are free to determine the number of arbitrators
Number shall not be an even number.
C As, engineers, retired judges, advocates and other professionals are preferred
The arbitrator shall disclose in writing to the parties anything that may give rise to justifiable
doubts about his independence or impartiality.
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AN ARBITRATOR'S DUTIES:
1. Interprets and applies the rules and laws applicable to the arbitration.
The rules applicable should be outlined in the arbitration agreement. The parties may also designate a particular
state's law to govern the dispute in the arbitration agreement.
2. Manages the scope of discovery that can be undertaken by both parties.
Discovery is a formal process of investigation to determine facts relevant to the dispute. The investigation can
include taking witness statements and reviewing documents required to be disclosed by the other disputing party.
3. Conducts the arbitration hearing in which both sides of the dispute may submit testimony, other evidence such as
documents, and arguments.
Each side's position may be summarized in a written document often called a statement of the caseand be
submitted to the arbitrator for review as part of the hearing process.
4. Makes a decision resolving the dispute based on the testimony, evidence and arguments submitted by both sides of
the dispute.
A decision may include granting an award of money.
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Section 11 (1) of the act says that a person of any nationality may be an arbitrator, unless
otherwise agreed by the parties. It is the parties who have to determine the qualification of the
arbitrator keeping in mind the nature of the dispute(s)/difference(s) that has arisen or may arise
between them.
Parties may agree upon the qualification at very initial stage when they enter into an arbitration
contract/clause or after dispute(s)/difference(s) arose if earlier has not been agreed.
It will be beneficial for the parties themselves to determine the qualification otherwise decision
of the arbitrator i.e. arbitral award may be set aside where the adjudication of such dispute(s) /
difference(s) requires a person having a technical knowledge.
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TERMINATION OF ARBITRATOR
Circumstances exist that give rise to justifiable doubts as to his independence or impartiality
ARBITRATION AWARD
An arbitration award (or arbitral award) is analogous to a judgment in a court of law
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party
Settlements during arbitration
COST OF ARBITRATION
Fees and expenses of arbitrators and witnesses, legal fees and expenses, administration fees of
the institution supervising the arbitration and other expenses.
Tribunal can decide the cost and share of each party.
If parties refuse to pay the costs, the arbitral tribunal may refuse to deliver its award; thus any
party can approach court.
The court will ask for deposit from the parties and on such deposit, the award will be delivered
by the tribunal. Then court will decide the costs of arbitration and shall pay the same to
arbitrators. Balance, if any, will be refunded to the party.
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Example
Any dispute or difference arising out of or in connection with this contract shall be determined
by the appointment of a single arbitrator to be agreed between the parties, or failing
agreement within fourteen days, after either party has given to the other a written request to
concur in the appointment of an arbitrator, by an arbitrator to be appointed by the president or
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Sometimes the claim will be based on an alleged error or omission of the architect. This will be
the litmus test of the fairness capacity of the architect.
All of the architects decision-making procedures should be in writing.
In the event that either or both of the parties are dissatisfied with the decision, or the
procedure, higher authorities (arbitrators) will undoubtedly review, and possibly overturn, the
architects decision.
In the event the decision is considered fair and is acceptable to the parties, this resolves the
claim and forestalls continuation of the procedure leading to mediation and arbitration.
The parties acceptance of the architects decision is usually the most economical way to end
the controversy.
Continuation through mediation and arbitration will undoubtedly entail considerable additional
time and significant legal expense.
The result, weeks or months later, might be the same as the architects initial decision.
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The architect should seek whatever relevant information is available from the parties, and
should consult with experts if necessary.
It may be necessary for the architect to seek the owners authorization for the expense of
retaining such experts.
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Example:
Let's say you hired a general contractor to renovate your kitchen. You signed a contract, which
includes the expected cost of the renovation and the time for completion. The project is
completed three weeks late, was over-budget by about 11% and you believe the work was shoddy.
Upon review of the contract, you see you agreed to mandatory binding arbitration using an
arbitrator from the Better Business Bureau. You both agree on an arbitrator from a list provided by
the Better Business Bureau. At the hearing, you meet with an arbitrator in a conference room at
the arbitrator's offices. You present the arbitrator a statement of your case, which includes the
facts you believe are relevant and your argument. The arbitrator conducts a hearing where he
permits you to make an opening statement about your side of the dispute. The general contractor
presents his opening statement. You and the general contractor present evidence, such as the
contract, pictures of the finished kitchen and testimony from subcontractors. You make a final
argument and the hearing concludes. Sometime later, the arbitrator issues a written statement
that describes the relevant facts, the law applied, and the decision.
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