Catli, Shiandel M.
ME Laws, Ethics, Contracts, Codes and Standards
BSME 4-3
Quiz #1
1. Define/Explain.
a. Ethics
The process of examining, discovering, and defending our beliefs, principles, and purpose is
referred to as ethics. It's about discovering who we are and remaining faithful to our identity in
the face of temptations, obstacles, and uncertainty. It's not always simple or fun, but if we
commit to it, we'll be able to make decisions we'll be proud of, creating a life we can call our
own and a future we want to be a part of.
b. Law
Principles and regulations established by some authority in a society and applied to its citizens,
whether in the form of legislation or custom and policies recognized and enforced by judicial
decision.
c. Conduct of engineers
 RELATIONS WITH CLIENTS AND EMPLOYERS
 The mechanical engineer shall observe punctuality in his appointments, perform
honestly and in good faith his contractual obligation and his duties and obligations
to his client or employer, and observe fair dealing in his relations with his clients
and employers.
 He shall treat with confidentiality any information obtained by him as to the
business affairs and technical methods or processes of a client or employer.
 He shall inform his client or employer of his business connections, interests, or
affiliations which may influence his judgment, or impair the quality or character
of his services.
 The mechanical engineer is entitled to a just and fair compensation for his services.
In the computation of such compensation, the period of time consumed, his
knowledge, skill, experience, and reputation, and the depreciation of instruments
and materials used, shall be considered and accorded such weight as is just and
reasonable.
 He shall accept compensation, financial or otherwise, for his services from his
client or employer only. He may agree to, or receive compensation from any other
source only with the full knowledge and consent of all parties concerned.
 The mechanical engineer shall be completely above suspicion or reproach in his
relation with his clients or employers, avoiding the remotest reference or relation
to any secret or questionable agreement on commissions or other financial
considerations promised by or received from any person or entity other than his
client or employer.
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RELATIONS WITH COLLEAGUES AND ASSOCIATES
 To thane own self be true and thou cannot be false to any man - expresses the duty
which a mechanical engineer owes to himself and to others.
 The mechanical engineer shall use only fair means to gain professional
advancement. In the pursuit thereof he shall not injure the work or employment
opportunities of others or use any improper or questionable method of soliciting
employment or clientele.
 He shall refrain from association with, or allowing the use of his name by, any
person or entity of questionable reputation.
 He shall provide the opportunity and the means to improve and advance the
knowledge, skills, and experience of his colleagues and associates.
 He shall define clearly the line of authority and scope of responsibility of his
associates and assistants. Orders, or the recall thereof, shall be issued through
proper channels.
 He shall be receptive to new ideas and suggestions from others, and ready to
recognize, encourage, and accredit the authors thereof. Suggestions from
colleagues and associates shall be given more careful attention.
 He shall use tact and discretion in dealing with his colleagues and associates, but
not at the sacrifice of firmness. He shall work out difficult problems with courage
and serenity.
 Careful selection of understudies shall be a guiding principle, and preference shall
be given to those with adequate engineering education.
 He shall not expect others to face danger that he himself will not face. He shall
observe at all times safety requirements for the protection of all concerned.
 The mechanical engineer shall actively support the duly accredited association
with the end in view of enhancing the practice of the profession and discharging
his public responsibilities as professional.
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RELATIONS WITH THE COMMUNITY
 The mechanical engineer shall be well-informed of the latest technological
progress in his own line of work. He shall encourage and require the use, or
application of standard mechanical equipment, machinery, or processes for safety,
economy and efficiency.
 Whenever he designs a mechanical equipment, machinery or process, or prepares
the layout of a project, he must apply an adequate factor of safety, and provide for
the necessary leeway for proper operating and maintenance conditions.
 When he discovers faulty or unsafe devices, equipment, or machinery in any place,
work or plant, he shall without delay, give notice thereof to the proper authority,
public or private, for the immediate and effective correction, regardless of whether
or not he is responsible for said place, work or plant.
d. Contract
A contract is similar to a commitment made between two people. It is an agreement between
two or more people or organizations to perform particular tasks. A party is a person or
organization who agrees to do something in a contract.
e. Obligation
A duty to do or not do something is referred to as an obligation. Obligation is a civil law notion
in its legal sense. An obligation, such as one arising from a contract, quasi-contract, or unilateral
promise, can be created voluntarily. Involuntary obligations, such as those deriving from torts
or statutes, can also be created.
f. Sub-contract
A contract made entirely or substantially for the purpose of completing the whole or any part
of this Agreement between two or more suppliers at whatever stage of distance from the British
Council in a subcontracting chain.
g. Mutual agreement
A mutual agreement is a legally enforceable contract that can cover any eventuality between
two or more parties. The operative phrases, "mutually agrees" or "settles," indicate the
distinction between a mutual agreement and a settlement that does not create a trust.
h. Cause or consideration in contract
The primary motivation for the parties to enter into a contract is the cause or consideration.
This is the "why of the contract," which determines the deal's nature.
2. Enumerate and discuss the source of ethics
 Religion: Religion is the most important source of ethics, as religious teachings
often prescribe what is right and wrong and society subscribes to such norms.
 Traditions: Practices that are handed over from generation to generation become
part of societal standards.
 Family: Family is the fundamental unit of the society and they establish certain
standards for a functioning society. A child is first educated about ethical norms in
family.
 Human conscience: Conscience helps a man to differentiate between good and bad,
and certain standards for society are acceptable for all conscientious men.
 Government laws: Sometimes, certain standards are imposed on the society
through laws, which over time are accepted by society and forms part of its ethical
system
 Role Models and Philosophers: They inspire people and help in societies
discovering or assimilating new virtues.
3. Give the (6) six classification of contract. Explain each.
 Express Contract
If the terms of a contract are specifically agreed upon by the parties (either by words said
or written) at the moment of contract formation, it is said to be an express contract. The
effect of an express promise is an express contract. When the offer or acceptance of any
commitment is expressed in words, it is considered to be an express promise.
 Implied Contract
An implied contract is one in which the offer or acceptance is not made in writing. The
promise is known as implicit promise when the proposition or acceptance of any pledge is
made without using words. The parties' behaviour and the facts of the case are used to infer
implied contracts.
 Quasi – Contract
A quasi-contract is one that is based on the law. There is no intention on either side to make
a contract in the quasi-contract. In a quasicontract, rights and duties are created via legal
activities rather than by consent.
 Unilateral Contract
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One-sided contract is another name for it. In a unilateral contract, only one party must
fulfill his or her responsibility at the moment the contract is formed, with the other party
fulfilling his or her obligation at the time the contract is formed or before the contract is
formed.
Bilateral Contract
A bilateral contract is one in which both parties' duties are pending at the moment the
contract is formed. A promise on one side is traded for a promise on the other in this form
of contract.
Contingent Contract
A contingent contract is one in which the obligation to do or not do anything is contingent
on the occurrence of a specific event. For example, A offers to sell a specific piece of land
to B if he wins his legal battle over that land.
4. What are the essential elements of contract? Explain each.
 Contractual Offer
All contracts begin with a sense of desire and accountability. Someone wishes something,
and someone has the ability to fulfill (take responsibility for) that desire. This first
important element, known as "the offer," includes each party's duties and responsibilities
while also demonstrating a value exchange. That value could be monetary or related to a
desired action or result.
 Contract Acceptance
The offeree has the option to accept or reject the proposal once it has been delivered.
Acceptance can be expressed verbally or in writing by the offeree.
 Signatory Awareness
To be legally binding, both parties must be aware that they are engaging into a contract.
Both parties to a contract must be active participants, which is often referred to as "a
meeting of the minds." They must acknowledge the contract's existence and willingly agree
to be bound by its obligations.
 Contractual Consideration
Ultimately the purpose of the contract relates to what it provides: the consideration. For
contractual purposes, consideration refers to the agreed-upon value, which might be an
action or an item. Contractual considerations include property, services, and even
protection against harm.
 Contractual Capacity
In the most basic terms, a person cannot sign away their rights. The truth, of course, is a
little more difficult, which is why contract law demands that all signatories demonstrate
that they understand the contract's obligations, conditions, and implications before signing.
 Contract Legality
All contracts are governed by the laws of the jurisdiction in which they are carried out, as
well as any applicable federal, state, and local laws and ordinances. Even if the parties were
initially unaware that their arrangement violated local laws, their ignorance is insufficient
to overcome the legality burden. It goes without saying that any transaction involving
illegal activity is void.
5. Enumerate and discuss the sources of obligation.
 Law. Obligations arise when imposed by the law itself and cannot be presumed.
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Contracts. Obligations arise from the stipulation of the parties; it has the force of law and
should be complied with in good faith.
Quasi-Contracts. Certain lawful, voluntary and unilateral acts give rise to the juridical
relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at
the expense of another.
Acts or Omissions Punishable by Law. Responsibility for fault or negligence under a quasidelict is entirely separate and distinct from the civil liability arising from negligence under
the penal code. But the plaintiff cannot recover damages twice for the same act or omission
of the defendant.
Quasi-Delicts. Obligations arise from damages caused to another through an act or
omission, there being fault or negligence but no contractual relations exist between the
parties.
Catli, Shiandel M.
ME Laws, Ethics, Contracts, Codes and Standards
BSME 4-3
Mid Term Exams
1. Define/explain.
a. Lump sum contract
A construction contract in which the contractor undertakes to perform the project for a specific
amount. Instead of bidding on each individual item, the contractor submits a complete project
price under a lump sum agreement.
b. Cost plus contract
A cost-plus contract is an agreement in which a corporation is reimbursed for expenses incurred
plus a certain amount of profit, commonly expressed as a percentage of the contract's total
price.
c. Breach of contract
When two or more people enter into a contract, at least one party fails to execute their portion
of the deal by failing to meet the contract terms without a legal excuse. Once all parties have
reached an agreement, each is bound by the contract, making it legally enforceable.
d. Substantial performance
Substantial performance is a doctrine by which one party to a contract can still claim damages
if he or she substantially executed his or her duties under the contract, even if the contract was
broken in some way.
e. Specification
A specification is a set of recorded requirements that a material, design, product, or service
must meet. A specification is a form of technical standard that is frequently used.
f. Mutual agreement
A mutual agreement is a legally enforceable contract that can cover any eventuality between
two or more parties. The operative words, i.e. "mutually agrees" or "settles," determine the
difference between a mutual agreement and a settlement that does not create a trust.
g. Brevity
Brevity is shortness in duration and/or conciseness of expression in a speech or a written text.
Contrast with verbosity.
h. Liquidated damages
Liquidated damages are an estimate of otherwise intangible or difficult-to-define losses to one
of the parties in certain legal contracts. It is a clause that allows for the payment of a certain
amount if one of the parties breaches the contract.
i. Liability of contractor
The Owner shall be liable for and maintain such insurance as will protect him from liability for
bodily injury, disease, and death of personnel assigned to the project who are under his employ
or service, whether temporary or permanent in status.
j. Condonation
Implied pardon of an offense by treating the offender as if it had not been committed.
2. Enumerate and discuss the general types of specification.
 Requirement Specifications
A business need is documented. High-level requirements, such as user stories, may be
provided by business units. These are refined through a business analysis process to the
point where they may be deemed specifications. The information needed to design a
product, service, tool, infrastructure component, process, or procedure is contained in
requirement specifications.
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Design Specifications
Descriptions of how requirements will be realized. A design provides everything required
to implement requirements.
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Material Specifications
Specifications of physical, mechanical, electrical and chemical properties and tolerances.
Included in the design of physical things such as products.
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Standard Specifications
Descriptions of industry or internal standards.
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Interface Specifications
Detailing how things will work together such as a software API for system integration.

Test Specifications
Testing a product, service, process, infrastructure component, tool, machine, or
environment. This comprises requirements for functional, non-functional, user acceptance,
and quality control testing.
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Performance Specifications
Specifications of target operating characteristics such as the availability of a service.

Quality Specifications
Quality definitions that are used in design, testing, and quality control. Quality can refer to
both tangible and intangible aspects of an apple, such as its size and flavor.
3. Give and explain the kinds of cost-plus contracts.
 Cost-Plus-Percentage of Cost Contracts
Cost-plus percentage of cost (CPPC) contracts require the client to cover all contractor’s
project costs, plus a profit margin. This type of contract is appropriate when transferring
risk from the contractor to the client and for research & development and construction
contracts .
 Cost-Plus-Fixed-Fee Contracts
Cost-plus-fixed-fee (CPFF) contracts are cost-reimbursement agreements in which
contractors receive a fixed rate. Although fixed rates don’t vary with expenses, you can
adjust them if the scope of work changes through a change order . This contract type also
provides for otherwise risky activities for contractors to handle while still providing them
with a compelling incentive to control costs.
 Cost -Plus-Fixed-Fee with Guaranteed Maximum Price Contracts
Cost-plus-fixed fee with guaranteed maximum price agreements are a hybrid of project
reimbursement and lump-sum payments. The contractor receives reimbursement for costs
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incurred on an as-needed basis, which helps with cash flow. However, the contractor must
limit these costs to the guaranteed maximum price (GMP) defined in the agreement.
Cost Plus Award Fee (CPAF) Contracts
Cost-plus-award fee (CPAF) contracts are agreements where the contractor receives
reimbursement for work completed plus compensation for exceptional performance. The
contract’s particulars determine the fee amount and are typically non-negotiable.
Contractors bear slightly more risk under the agreement since total profit hinges upon
performance and unknown variables.
Cost Plus Incentive Fee (CPIF) Contracts
Cost-plus incentive fee (CPIF) contracts permit negotiating initial fees based on the
relationship between total allowable and target costs. The client reimburses the seller for
actual expenses and then pays a predetermined fee for meeting established objectives.
Among all the cost-reimbursable agreements, this one involves the most significant risk
transfer for both parties.
4. Enumerate and discuss the extinguishments of obligations.
 By payment or performance
Payment is the fulfillment of a monetary commitment. A person who is subject to such an obligation
is known as a debtor, and the person to whom the obligation is owed is known as a creditor. The
obligation might originate in a variety of ways, but it is usually the consequence of a business
transaction or contract between the parties.
 By the loss of the thing due
An obligation consisting in the delivery of a specific object shall be cancelled if it is lost or
destroyed without the debtor's fault and before he has suffered in delay.
 By the condonation or remission of the debt
Condonation or remission is an act of generosity in which the creditor gives up his right against the
debtor, in whole or in part, resulting in the debtor's obligation being discharged.
 By the confusion or merger of the rights of creditor and debtor
Confusion or merger is the meeting in one person of the qualities of creditor and debtor with respect
to the same obligation
 By compensation
Compensation is defined as a mode of extinguishing obligations whereby two persons in their
capacity as principals are mutual debtors and creditors of each other with respect to equally
liquidated and demandable obligations to which no retention or controversy has been timely
commenced and communicated by third parties
 By Novation
The extinguishment of an obligation is described as the substitution or alteration of the obligation
by a subsequent one that ends the first, either by changing the object or primary circumstances,
substituting the person of the debtor, or subrogating a third person in the rights of the creditor.
5. In the question of legal competency of contracting parties, give the conditions that could be
raised if one of the parties fall into which qualifications? Explain each.
 The basic elements required for the agreement to be a legally enforceable contract are:
mutual assent, expressed by a valid offer and acceptance; adequate consideration; capacity;
and legality. In some states, element of consideration can be satisfied by a valid substitute.
Possible remedies for breach of contract include general damages, consequential damages,
reliance damages, and specific performance.
Catli, Shiandel M.
ME Laws, Ethics, Contracts, Codes and Standards
BSME 4-3
Quiz No. 2
1. Define/Explain
a. Bidding Documents
A bidding document is a document supplied to bidders by a procuring organization that
specifies the manner in which their bids must be submitted and the information they must
include in their bids.
b. Procurement Process
The drafting and processing of a demand, as well as the final receipt and approval of payment,
are all part of the procurement process. Purchase planning, standards, specifications
determination, supplier research, selection, financing, pricing negotiation, and inventory
control are all examples of this.
c. Security Bond
A security bond is a legally binding promise to pay the government if you or your employee
violates the law, Work Permit terms, or security bond terms. A banker's or insurer's guarantee
is used to create the bond.
d. Bid Bonds
A bid bond is a sort of construction bond that safeguards the owner or developer during the
bidding process for a construction project. It is a guarantee that you, as the bidder, make to the
project owner to ensure that the owner will be reimbursed if you fail to honor the terms of the
bid.
e. Performance Bonds
A performance bond is a guarantee offered by one party to a contract to the other party against
the issuing party's failure to meet their contractual obligations or to deliver on the agreed-upon
level of performance. A financial institution, such as a bank or an insurance company, generally
provides performance bonds. The party supplying the agreed-upon services would be
responsible for the bond.
f. Payment Bond
A payment bond is a sort of surety bond offered to contractors that guarantees payment to all
parties engaged in the project. A payment surety bond is a form of bond that ensures that
specific employees, subcontractors, and suppliers are covered from nonpayment.
g. R.A 8495
“Philippine Mechanical Engineering Act of 1998" to carry out the provisions of the said Act.
An Act Regulating the Practice of Mechanical Engineering in the Philippines
h. Negotiating Contraction Contracts
The concept of bargaining gives the client more freedom to choose a contractor based on
criteria other than the lowest quote. Negotiated contracts are usually reached between a
contractor and a client who have previously worked together and have a trusting connection.
i. Information to bidders
In circumstances where possible vendors or service providers differ primarily on price, an
invitation for bid (IFB), also known as an invitation to bid, is employed. An IFB allows a
corporation to offer complete written specifications for work on a specific project it intends to
contract out, including all terms and conditions. Companies might issue bid invitations orally
or in writing.
2. Enumerate and discuss the 8 phases of development of construction project.
a. Initial contact
This is where you will first discuss your dream home and meet the builders. Plans and designs of
the homes will be discussed along with the estimation of costs to complete the project.
b. Preliminary works stage
Once all of the details have been discussed, a preliminary contract will be drawn up. Additionally,
if you didn’t bring your own designs then Lindon Homes will begin drawing up the house plans.
The lot for the house will be examined , soil tests and slab designs will be ordered and a formal
quote will be provided.
c. Contract stage
All contracts will be formally signed. Additional deposits will be required.
d. Approvals stage
Permits will be required to build your home and to make sure everything meets all building/housing
codes. Any other paperwork will be taken care of in this stage as well.
e. Selections stage
This is probably the most fun stage of the construction process. You get to sit down with
experienced interior designers and start picking out how you want the interior of your new home
to look. You can choose what colours the walls will be painted, any textiles or types of flooring,
cabinetry and so much more. Additionally, you will need to select plumbing and electrical items
that are required for your home. And if you are unsure of what to choose, Lindon Homes has
experienced professionals that will help you through this process.
f. Construction stage
Once all permits have been approved, construction will begin. This typically starts within 10 days
of permit clearance. You can watch your house being built every step of the construction.
Additionally, you can discuss any changes or concerns that might arise during the construction
phase.
g. Completion & handover stage
After the home is completed, it will be thoroughly cleaned inside and out. The lot will be
professionally cleared of all non-essential items. You will get the keys to your new home and all
permits, certificates and operating manuals for your home.
h. Maintenance stage
And just so you don’t feel like you’re all on your own, Lindon Homes encourages you to keep in
touch and report any problems from big to small. Lindon Homes cares about your happiness and
strive to ensure a long-lasting relationship.
3. Give and explain the essential of bid proposal.
When people or businesses are hired to carry out a project for a client, they employ bid proposals.
As a result, they can be applied regardless of the industry whenever one party is rendering a good
or service to another party. Bid proposals are frequently used by freelancers, marketing and
advertising organizations, and construction enterprises.
4. Give at least 10 Rules in the code of Mechanical Engineering and explain each.
Rule 1. The mechanical engineer shall, in the practice of his profession, be governed by the Golden
Rule, the ideals of service to man and his environment, and the indispensability of unwavering
public confidence in his professional competence, integrity and humanity.
Rule 2. The mechanical engineer shall maintain the proper pride for his profession, observe the
standards of professional practice, safeguard the dignity, welfare, and reputation of his colleagues
in the professions, and fulfill his duties and obligations as a citizen of the Republic of the
Philippines.
Rule 3. The mechanical engineer shall update and enhance constantly his professional knowledge
and skills through assiduous research and study, and meaningful participation in continuing
education programs and seminars conducted or authorized by the Philippine Society of Mechanical
Engineers or educational institutions supervised by the State.
Rule 4. The ethical principle governing the mechanical engineer applies equally to partnerships,
firms and entities organized and existing for the practice of mechanical engineering.
Rule 5. The mechanical engineer shall honor and respect the supreme authority of the State, the
Rule of Law, the primacy of the general welfare, the fundamental rights of persons, and the
obligations and privileges of citizens recognized and guaranteed by the Constitution of the
Philippines.
Rule 6. He shall cooperate fully with the State in the pursuit of national development plans and
programs, the inviolability of national security, the promotion of peace, and the prevention and/or
prosecution of unjust, criminal or unlawful acts and omissions.
Rule 7. He shall be ready to render the services needed for the adequate and orderly development
of the resources of the country, and to offer his mechanical devices and inventions essential or
necessary for national defense.
Rule 8. In a national emergency, he shall offer his professional knowledge, skill and experience in
the service of the State.
Rule 9. The mechanical engineer shall be well-informed of the latest technological progress in his
own line of work. He shall encourage and require the use, or application of standard mechanical
equipment, machinery, or processes for safety, economy and efficiency.
Rule 10. Whenever he designs a mechanical equipment, machinery or process, or prepares the
layout of a project, he must apply an adequate factor of safety, and provide for the necessary leeway
for proper operating and maintenance conditions.
5. An Engineer/Contractor under took to construct for a municipality, the BIOGAS facility and agreed
to furnish with both labor and materials in consideration of the amount of PHP 50,000,000.00. One
month after completion of delivery, and after the amount of 50 million was paid, two hardware's
(A/B) approach the municipality administrator and demanded payment of Php 2.5 million each
from which their claim represent the amount of materials still unpaid by the engineer/contractor.
(a). will the hardware's (A/B) prosper? (b) why?
6. An Engineer / Contractor agrees to construct a Water Treatment Plant under the Lump Sum
Contract. The amount agreed upon is Php 35,000.000.00 million Pesos and was promised to turn
over or complete the project on March 12, 2018. While the project is nearing completion it was
destroyed by fire. Who suffers the loss, Explain why?
In the lump sum contract, the owner has essentially assigned all the risk to the contractor. Since the
contractor is asigned to finish the contrcution in a set date and price, the contractor must finish the
task of the contract.
Catli, Shiandel M.
ME Laws, Ethics, Contracts, Codes and Standards
BSME 4-3
Assignment. 30 words and definition.
1. Law
The principles and regulations established in a community by some authority and applicable to
its people, whether in the form of legislation or of custom and policies recognized and enforced
by judicial decision.
2. Ethics
Ethics is the process of questioning, discovering and defending our values, principles and
purpose.
3. Bidding Documents
Bidding Document means a document provided by a procuring entity to bidders and indicating
the form in which they are to submit their bids and the information they are to provide in their
bids.
4. Procurement Process
The procurement process includes the preparation and processing of a demand as well as the
end receipt and approval of payment. Comprehensively, this can involve purchase planning,
standards, specifications determination, supplier research, selection, financing, price
negotiation, and inventory control.
5. Security Bond
A security bond is a binding pledge to pay the government if either you or your worker breaks
the law, Work Permit conditions or security bond conditions. The bond is in the form of a
banker's or insurer's guarantee.
6. Bid Bonds
A bid bond is a type of construction bond that protects the owner or developer in a construction
bidding process. It is a guarantee that you, as the bidder, provide to the project owner to ensure
that if you fail to honor the terms of the bid, the owner will be compensated.
7. Performance Bonds
A performance bond is issued by one party to contract to the other party as a guarantee against
the issuing party's failure to meet their obligations under the contract, or to delivery on the level
of performance specified in the agreement. Performance bonds are typically provided by a
financial institution such as a bank or an insurance company. The bond would be paid for by
the party providing the services under the agreement.
8. Payment Bond
A payment bond is a type of surety bond issued to contractors which guarantee that all entities
involved with the project will be paid. A payment surety bond is a legal contract, a type of
bond, that guarantees certain employees, subcontractors, and suppliers are protected against
non-payment.
9. Contract
A contract is like a promise between people. It is an understanding, a deal between two or more
people or organisations to do certain things. Each person or organisation who agrees to do
something in a contract is called a party.
10. Obligation
11.
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is a duty to do or not to do something. In its legal sense, obligation is a civil law concept. An
obligation can be created voluntarily, such as obligation arising from a contract, quasi-contract,
unilateral promise. An obligation can also be created involuntarily, such as an obligation arising
from torts or a statute.
Sub-contract
A contract between two or more suppliers, at any stage of remoteness from the British Council
in a subcontracting chain, made wholly or substantially for the purpose of performing (or
contributing to the performance of) the whole or any part of this Agreement.
Mutual agreement
A mutual agreement is a binding contract between two or more parties and can cover any
contingency. The difference between a mutual agreement and a settlement not creating a trust,
is determined by the operative words, ie "mutually agrees" or "settles".
Lump sum contract
A construction agreement in which the contractor agrees to complete the project for a
predetermined, set price. Under a lump sum agreement, the contractor submits a total project
price instead of bidding on each individual item.
Cost plus contract
A cost-plus contract is an agreement to reimburse a company for expenses incurred plus a
specific amount of profit, usually stated as a percentage of the contract’s full price.
Breach of contract
A breach of contract occurs when two or more people enter into an agreement, and at least one
party does not fulfill their part of the contract by failing to meet the contract terms without a
legal excuse. Once all parties reach an agreement, each one is under a contractual obligation,
making the contract legally enforceable.
Substantial performance
Substantial performance is a doctrine, whereby one party under a contract can still recover for
damages if he substantially performed his duties under the contract even though that individual
failed to comply with the contract in some way.
Specification
A specification often refers to a set of documented requirements to be satisfied by a material,
design, product, or service. A specification is often a type of technical standard.
Brevity
Brevity is shortness in duration and/or conciseness of expression in a speech or a written text.
Contrast with verbosity.
Liquidated damages
Liquidated damages are presented in certain legal contracts as an estimate of otherwise
intangible or hard-to-define losses to one of the parties. It is a provision that allows for the
payment of a specified sum should one of the parties be in breach of contract.
Liability of contractor
It means payable on demand. The Owner shall be responsible for and shall maintain such
insurance as will protect him from liability for personal injury including disease and death of
persons under his employ or service whether as temporary or permanent in status that are
assigned to the project.
Condonation
Implied pardon of an offense by treating the offender as if it had not been committed.
Design Specifications
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Descriptions of how requirements will be realized. A design provides everything required
to implement requirements.
Material Specifications
Specifications of physical, mechanical, electrical and chemical properties and tolerances.
Included in the design of physical things such as products.
Standard Specifications
Descriptions of industry or internal standards.
Interface Specifications
Detailing how things will work together such as a software API for system integration.
Test Specifications
Describing how to test a product, service, process, infrastructure component, tool, machine
or environment. This includes specifications for functional testing, non-functional testing,
user acceptance testing and quality control.
Performance Specifications
Specifications of target operating characteristics such as the availability of a service.
Quality Specifications
Definitions of quality that are used for purposes such as design, testing and quality control.
Quality can include both tangible elements such as the size of an apple and intangible
elements such as its taste.
Cost-Plus-Percentage of Cost Contracts
Cost-plus percentage of cost (CPPC) contracts require the client to cover all contractor’s
project costs, plus a profit margin. This type of contract is appropriate when transferring
risk from the contractor to the client and for research & development and construction
contracts .
Cost-Plus-Fixed-Fee Contracts
Cost-plus-fixed-fee (CPFF) contracts are cost-reimbursement agreements in which
contractors receive a fixed rate. Although fixed rates don’t vary with expenses, you can
adjust them if the scope of work changes through a change order . This contract type also
provides for otherwise risky activities for contractors to handle while still providing them
with a compelling incentive to control costs.