Main Menu

Streetwise Wiki

The aim of Streetwise Wiki is to enable you to get a quick definition of the most common words, terms and phrases used in the construction and engineering industry and business generally.

If you can't find what you need please use the Ask Streetwise and/or Streetwise Confidential facilities to ask any question you like relating to your business and get an answer from our Virtual Team of Experts.

Acceptance

Acceptance of an offer can be express or implied e.g. by conduct. When an offer is received, it can either be accepted unconditionally or effectively, a counter offer is made. Accepting an offer (or a counter offer) creates a binding contract. Sometimes, the term 'subject to contract' is used in offers or acceptances to indicate that the parties intend to be bound only under a formal contract when it is prepared and signed (executed).

Accord and Satisfaction

Agreement between two parties to a contract in which one party releases the other party from its obligations in return for some form of compensation. The agreement is the 'accord,' and the compensation is the 'satisfaction.'

Adjudication

Please visit our Adjudication page for more information.

Advance Payment

Some contracts provide for advance payments. Similarly, some manufacturers require payment in advance. In cases where advance payments are made it is not uncommon for the party making the payment to require some sort of advance payment guarantee or bond. In much the same way as Specialist Sub-Contractors need to check any contractual document they sign up to you need to check the provisions carefully. If you are being asked for any advance payments from a manufacturer for instance, you need to be sure that you will be able to recover the money if there is a problem.

Agreement

Meeting of minds (or an evidence of mutual accord or understanding) between two or more legally competent parties, about their relative duties and rights regarding current or future performance. Although a binding contract can (and often does) result from an agreement, the word is often used to mean a contract.

Architect

Qualified professional who designs and supervises the construction of buildings or other structures.

Attestation

Quite literally “attest” means to bear witness to an act or event as by signature or oath. The place to sign the contract is usually referred to as the “attestation clause”. The Contractor/Client may have already drawn your attention to it by a post-it note that says “sign here”. Contracts can be “executed” (which simply means signed) in one of two ways: Under hand, which means it is signed by a single, authorised representative of the company or organisation. The parties are liable to each other for 6 years. Executed as a deed, which requires compliance with a number of formalities, and the parties liabilities to each other exist for 12 years. Deeds need to be in writing, and for registered companies they can either clearly state that the contract is executed as a deed, or they can be executed using a company seal – usually impressed on a red sticker. The use of a seal is now much less commonplace since there is (except in Northern Ireland) no longer a legal requirement for a seal to be used.A document can be executed by a company as a deed, without sealing, if it is signed by two directors or a director and the company secretary. Different formalities apply for individuals, partnerships, limited liability partnerships, overseas companies, liquidators and administrators. Before signing any contract be sure you understand it. If you are in any doubt Ask Streetwise or use Streetwise Confidential.

Breach of Contract

A contracting party's actual failure or refusal to perform (or a clear indication of its intentions to not perform) its obligations under the contract. Breach of a major term (condition) of the contract (called 'fundamental breach') entitles the aggrieved party to (1) treat the contract as discharged, (2) consider itself free from its own obligations under the contract, and (3) take legal action against the offending party for damages arising from the breach. Breach of a minor term (warranty) allows a party to take legal action against the offending party for damages arising from the breach, but does not allow any party to treat the contract as discharged except where terms of the contract override this implied legal-provision.

Collateral Warranty

A second, or side contract usually made between the Specialist Sub-Contractor and the Employer at the same time, or soon after the first or main contract is made. A collateral warranty is usually required when the Specialist Sub-Contractor has undertaken design. A collateral warranty runs parallel to the main contract and may override or supplant one or more of the provisions of the Sub-Contract. Some collateral warranties are onerous. If in doubt use the Ask Streetwise facility to obtain more information.

Common Law

One of the two major legal systems of the modern Western world (the other is civil law), it originated in the UK and is now followed in most English speaking countries. Initially, common law was founded on common sense as reflected in the social customs. Over the centuries, it was supplanted by statute law (rules enacted by a legislative body such as a Parliament) and clarified by the judgments of the higher courts (that set a precedent for all courts to follow in similar cases). These precedents are recognized, affirmed, and enforced by subsequent court decisions, thus continually expanding the common law. In contrast to civil law (which is based on a rigid code of rules), common law is based on broad principles.

Construction Contract

Please visit our Adjudication page for more information on Construction Contract.

Damages

Compensation for causing loss or injury through negligence or a deliberate act, or a court's estimate or award of a sum as a result of breach contract or of a statutory duty. Types of damages include:
(1) General: damages that are presumed in law and follow indirectly from a wrong. They are applicable where the court has to decide the sum to be paid as compensation in case of a breach of contract, what constitutes a breach, and whether a breach actually occurred.
(2) Special (or specific): damages that are not presumed in law and are a direct result of an action or injury, such as loss of earnings, medical expenses, and repair bills, that can be assessed with fair accuracy. Such damages must be expressly claimed and proved.
(3) Nominal: trifling sum awarded where a legal injury has occurred but has not resulted in a significant loss.
(4) Substantial: where the aim of a court award is to restore a plaintiff to his or her economic position prior to the injury or loss.
(5) Punitive (or exemplary): additional and heavy damages awarded where a court believes a defendant acted in a fraudulent, malicious, reckless, or violent manner, and therefore must be made an example of.
(6) Liquidated: damages awarded where a contract provides for an exact sum to paid as compensation in case of a breach of contract, and describes conditions that constitute a breach.

Economic Duress

Unlawful use of economic pressure and/or threats intended to overcome the free will of a person or organisation, in order to force them into an involuntary agreement or to do something that they would not otherwise do. It is often the case that Specialist Sub-Contractors are forced to agree a reduced entitlement under pressure of non-payment. For more information use the Ask Streetwise or Streetwise Confidential features on this site.

Express Term

A provision in a contract that is clearly, directly, and unmistakably communicated in written or spoken words. See also implied term.

Force Majeure

Standard clause found in most construction and supply contracts, it exempts the contracting parties from fulfilling their contractual obligations for certain defined causes that could not be anticipated and/or are beyond their control. Not all contracts are the same and “force majeure” is defined very differently as between one contract and another.

Garnishee Order

An Order of the Court issued against a third-party who whilst not involved in a court case between a debtor and a creditor or a defendant and a plaintiff, is required to seize, in part or in full, the money (account balance, payment, wages) belonging to the debtor or defendant, and transfer it to the creditor or plaintiff until a debt or claim is satisfied.

Guaranteed Maximum Price (GMP)

Amount, beyond which, the Employer or Client is not obligated to compensate the Contractor. Specialist Sub-Contractors need to be very careful about becoming involved in such contracts. For more information use the Ask Streetwise or Streetwise Confidential features on this site.

Housing Grants Construction and Regeneration Act 1996

Please visit our Adjudication page for more information on the Housing Grants Construction and Regeneration Act 1996.

Implied Term

Provision in a contract that is not directly stated in written words but is introduced into the contract (1) by the courts as necessary to give effect to the obvious intentions of the contracting parties, or (2) by a statute such as sale of goods acts. Implied terms bind the parties with just as much force as express terms.

Indemnity Clause

Provision in a contract under which one party (usually the Specialist Sub-Contractor) commits to compensate the other (usually the Contractor) for any harm, liability, or loss arising out of the contract. They are to be avoided if possible as one of their unpleasant side effects is to extend the period of liability well beyond that which it would otherwise be.

How Can We Help?