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Why are there separate contracts for construction and FF&E?
Constrction contracts are governed by common law that regulates services.
FF&E contracts are governed by statutory law that regulates the sale of goods.
What are 4 basic provisions common to all contracts?
1. Include a description of the work
2. The time of commencement
3. The time of substantial completion
4. The contract sum
Define liquidated damages.
Moneys paid by the contractor to the owner for every day the project is late.
They represent actual anticipated losses the owner will incur if the project is not completed on time.
What is a bonus provision in a contract?
Says the contractor receives a payment for early completion.
Based on realistic cost savings the owner will realize for early completion.
(Often accompanies a liquidated damages provision).
What is a bonus/penalty clause?
An incentive to complete the project on time.
May have no relationship to actual monetary losses the owner may incure if the project is not completed on time.
AIA Document A251, General Conditions of the Contract for Furniture, Furnishings and Equipment is coordinated with the Uniform Commercial Code. What is the UCC?
Provides consistent rules for commerce in the U.S. Covers sales contracts, product liability, warranties, ownership (title) and risk.
The UCC allows a contract to be valid even if some terms are missing. What does it state for each of the following if they are missing from the contract?:
1. Full description of the item.
2. Purchace price.
3. Payment method.
4. Delivery location.
1. Description - not required.
2. Price - the receiveing party can cancel the offer or set what it thinks is a reasonable price.
3. Payment method - payment is due on delivery to the purchaser.
4. Delivery location - delivery is to the seller's business location.
What does "FOB factory" mean?
Title is transferred at the factory so the buyer pays transportation costs and is responsible for loss or damage during shipping.
What does "FOB desination" mean?
Title is transferred at the buyer's location (the destination) so the seller pays transportation costs and is responsibly for loss or damage during shipping.
What duties are furniture vendors responsible for?
1. Preparing purchase orders based on furniture spec's developed by the designer.
2. Often warehouse goods between the time they are delivered and when they are actually installed.
3. Pay for labor, materials, FF&E and other facilities (and send payment requests to the owner).
4. Prepare a work schedule.
5. Delivery & installation.
6. Final clean up.
Is it the contractor's responsibility to ascertain that the contract documents conform to building codes, ordinances and other regulations?
No but if the contractor notices some variance, they must notify the designer in writing; if they knowingly perform work that's against code, they assume full responsibility and must pay for corrections.
What is an indemnification clause for in a contract?
To protect the owner and designer against situations where a person is injured due to the negligence of the contractor or the contractor's agents.
It does not relieve the designer of their liability for errors in the drawings, specs or administration of the contract.
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