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Describe about the Key elements to determine contract  and recommendations for completing the annexure of the contract?


Key elements to determine contract

There are different views of different individuals for attaching the conditions in a particular contract. Some of the conditions could be very useful as per the business requirements where as sometimes it is seen that there are some of the conditions, which makes the contract totally invalid. The contract is constructed when the offers and the deals are accepted between two of the parties singeing the desired contract. Therefore, in according to the contract, i would suggest a contract in which there should be some of the key elements to determine the conditions of the particular contract (Goldfayl, 2004). As a building contractor, i would recommend a contract in which all the necessary details should be clearly mentioned regarding the business between the two companies. The elements are acceptance of the offer, intention as well as motivations to create lawful relations, consideration and capacity, and finally illegal or void contacts. There should be intention between the two of the parties for creating the relations according to the law of the country. The signing of the contract between the two parties should be as per the law of Australia. The legal capacity of the contract includes the people who usually had an impairment from the different mental strategies, especially the minors or the bankrupt as well as the prisoners and the people acts on behalf of their company.  The contract should deal with the standards required by the construction companies as per the standard needs of the business. The strategies play a great part in the development of the construction of a business so, the strategies must be included in the contract as it is one of the key elements for building up the contract. One of the leading factors regarding the construction companies of Australia is the issues regarding the values of the construction industry and the accessibility of the standard form without the use of sustainable development. Moving to the next issue is the issue of current perceptions of the construction industry of the Australia (Phillips, 2009).  The values as well as the norms of the two of the companies dealing through the contract should be highlighted clearly. The factors regarding the duration of the contract, values of the key elements within the contract should be mentioned clearly in the contract.  The focus of the contract should be as to suit the commercial building having a contract value of more than $500,000.00.  The contract should have provisions for the clauses of the quality management.

Sections and clauses in the contract

Relating to the size of the project, the amount of $500000 is considered for a small or medium size of the project. The contract law may be distinguish between five broad categories as ;

 Formation: this section deals with all, the requirements that makes the validity of the desired contract.

Scope as well as content: this part deals with the terms included in the contract

Performance and termination: this includes the circumstances in which the contract can end or continues.

For making the clauses and the sections, standards forms should be used.  On an overall survey it is found that there are four main forms as AS4300 (23%), AS4000 (18%), AS2124 (17%) and AS4902 (14%), which represents a total of 70% of all the standard forms. The AS400 standard form of the project was significantly reported to be used for the projects whose values were excess of $500 million (Uher and Davenport, 2009). It was found on an overall survey of all the construction companies that there was more that 84% of the contracts who were using the standard forms for completing their projects. As per the laws of Australia, the standard form of AS400 was made for the general rules for the construction companies. There are certain limitations as well as exclusions in the contract for the construction companies which helps to manage and handle the risks relating to the contractual relationships. There are certain points under which the clauses can affect the contract between the two parties. They are as follows:

  1. i) Resulting in equality of the two parties between which the contract has been signed.
  2. ii) any one of two parties under any of the clauses or the sections should not be protected.

Ways of offers termination



Counter offer

Lapse of time

Disability of parties

Conditional failure

Proposed recommendation


Date of planning, further analysis


Prepared by, last changes made

Detailed drawings

Detailed sketch date, prepared by

Internal drawing specifications

Prepared by, permitted level of regulatory authorities


Overall schedule of the project and further risk identification date and quality assurance approval


Risk Insurance

AU $ 100,00

Physically injury liability

AU $ 150,000

General liabilities

AU $ 200,000

Property Damage Liability

AU $ 450,000

Workers compensation

AU $ 175,000



Difference between the clauses

A difference between the clauses can be easily seen after researching on the data collected by various contracts.  Under the clause of termination, a large amount of difference is seen between different contracts of different construction companies. In any of the contract it is not, Cleary mentioned that an individual can be terminated under certain circumstances (Goldfayl, 2004). In other words, it can be explain as there is non-contractual rights for every individual working in the construction company to terminate the employee working under his or her position. A large amount of frustration due to the final payments or termination can be seen in many of the individuals working under the construction companies. It is evident for the companies to revise their contracts as per the demands of the current situation as well as the demands of the employees working out there with the companies under certain rules of contract. Some of the best cited, examples can be made as when there is refusal in the work by the employees, removal of plant by the contractor and by the many other purposes.

Recommended contract

This is the most crucial part of the study as this part of study will help the researcher to analyse the data on the preparation of a contract with certain useful rules as well as clauses. First of all, in particular opinion the contract should deal with the treaties between the two of the companies, secondly the contract made should be according the laws and regulations of the government of the country. One of the vital points for the construction contract is to maintain the standard forms of contract and the sections as well as clauses should be discussed clearly. The terms and conditions of the contract for each of the employees ashould be clearly mentioned as well as the clauses should be discussed with different sets of rules and values. The points like, between the two who will share the large percentage of share and the period of evaluation as well as the renewable of the contract should be discussed properly within the contract. The clause of termination and the clause of final payments should be made strictly under the rules and regulations of the respective authorities. These two of the clauses are very important from the business perspective of the construction companies.


Recommendations for completing the annexure of the contract

This is one of the crucial part of the study as it will help the researcher to gain a vast amount of knowledge on the improvements that can be made on the contract between the construction companies, prior to signing. The amount of work to be done and the fixed value of the price for that amount should be clearly mentioned in the contract. Sometimes it becomes very difficult to work as per the demands of the different parties, so, the time limits are one of the leading factors managing the potential risk. There should be certain time limit for the completion of the overall project and  there should be certain rules for qualifying for gaining the extra time required for the completion of the project. the standard clauses as well as the governments norms should be incorporated within the contract and it must be clearly understood by the individuals, before signing the contract. One of the interesting feature that must be included in the contract is that there should be some criteria for the individuals involved with the project that they have to pay extra interest rates in case of crossing the time limits for the required project. sometimes it is seen that the contract between the construction companies contains long term agreements which ranges from the cost as well as the description of the materials or the items involved in the project, this long  agreements leads to several disputes between the individuals, so, there should be correct resolutions for solving that particular issues. The clauses under the contract should be according to the rules and regulations of the desired authorities. There should be a section relating to the claims regarding the clauses of the termination as well as the clause of making the final payments from the respective companies.

possible range of documents

 There are certain documents that need to be attached before signing thee contracts. These documents could be the insurance papers respective of the whole business, drawings or the design involved in the construction business for the desired project, and finally it could ne the list of specifications that generally deals with ongoing project regarding the construction business of the company. There should be a maximum of ten documents that should be uploaded prior to the signing of the contract between the companies (Uher and Davenport, 2009). The documents should be verified as per the norms of the respective authorities as well as the norms and rules of the two construction companies. Some of the other important possible ranges of document include the documents relating to the conditions of the contract, documents relating to the overall projects, the documents including and explaining the finance section regarding the project within the contract.  A form of agreement papers are very important for each of the two leading companies involved with the contract. So these are the certain documents in which at least five of them should be uploaded.


justifications for the recommendations

a) Percentages for variations

While submitting the documents as per the norms  of the company there should be variations in accordance with the percentage highlighted in the documents that was uploaded.

b)  Percentages for provisional sums

While selecting or making the desired choices regarding the contract there should be percentage for the denominations as well as for the calculations of the provisional sums strictly relating to the business.

c)  Qualifying causes for Extension of time (EOT)

 Time is one of the important as well as crucial factor as per the contract between the construction companies (Sims and Dancaster, 2000).  Therefore, there should be definite time-period for the project included in the contract within the given time the overall project should be completed. There should be some certain rules for extension of the time limits in which the remaining work can be completed.  The qualifying causes should be included in the project according to which the permissible time limits should be given to the individuals.

d) Process and documentation for submitting a progress claim

 The process of documentation is very important as per the requirements of the overall business (Rowlinson, 2011). Making the claim for the desirable payments should include the following points such as subcontractors against or under the supervisors or the head of all the contractors, the suppliers of the raw materials, the hirers for the equipments of the goods inside the plant and finally the consultants. There should be definite rules according to which the individuals can make the claim. The claim must be time bounded and the overall writing should be addressed to the respondent. The whole of the procedure should proceed under definite clauses as well as under the laws made by the government.

e)  Interest on late

 This is one of the most interesting part of the clause section as it deals with the interest on being late. There should be interest on the late submission of the project according to the different situations (Uher and Davenport, 2009). In case due to some delay from the company perspectives, the interest rates should be negligible or there should be very low interest rates. Clear statements that can be easily understood by each of the individuals should be made under this category of “interest rates”.



Goldfayl, G. (2004). Construction Contract Administration. Sydney: UNSW Press.

Phillips, C. (2009). Construction contract administration. Littleton, CO: Society for Mining, Metallurgy, and Exploration.

Rowlinson, M. (2011). A Practical Guide to the NEC3 Engineering and Construction Contract. Chichester, West Sussex, UK: Wiley-Blackwell.

Shi, J. (2013). Free trade and cultural diversity in international law. Oxford: Hart Publishing.

Sims, J. and Dancaster, C. (2000). Contract Documentation for Contractors. Wiley.

Uher, T. and Davenport, P. (2009). Fundamentals of building contract management. Sydney: UNSW Press.

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