The CCDC 2 Stipulated Price Contract is the "go to" document for construction contracts. Learn the basic components and roles of eth parties to the contract.

1. Construction Contracts:
Basics of Contracts and Contract
Administration
Gerald R. Genge,
P.Eng., C.Eng., BDS, BSSO, C.Arb. Q.Med.
Principal – Arbitech ADR

2. Topics
• Contracts
• What forms a Contract?
• Forms of Contract
• CCDC Contract
• Constituent Parts
GRG Building Consultants Inc.
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3. What is a Contract?
• Five elements:
1. An offer capable of acceptance
2. Communicated acceptance
3. Consideration
4. Capacity to “contract”
5. Compliance with statutory requirements
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4. Offers
• An offer must be able to be accepted
• Must be defined in sufficient terms to result in an
agreement (contract)
• The offeror must actually intend to enter into a
contract.
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5. Bid Requests
• A Bid Call
• A Request for quotations
• A Request for Tender
……is a Bid Offer as soon as there is a compliant bid.
…..It forms a “Contract” (Contract A)
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6. Contract A
• A bid offer that can be accepted is a Contract.
• The importance is that if the person who made the
bid offer fails to enter into a Contract with compliant
bid, they are in breach of Contract “A”.
• Bidders can sue for losses if a compliant bid (that
“should” be accepted) is not accepted.
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7. Acceptance
• To form a contract there must be “acceptance”
• Contract “A” is formed when the bidder accepts the
specifications, terms and conditions in the bid offer.
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8. Counter Offer
• If the “bidder” receiving the bid offer does not accept the
specifications, terms and conditions but submits a
variance to the bid offer. It is a Counter Offer.
• Contract “A” is formed only if the bidder accepts the
terms and conditions in the bid offer.
• A “counter offer” [alternative, amended, bid proposal, etc.
] does not constitute Contract A.
• …..Remember….
• [Other] bidders can sue for losses if a compliant bid (that
“should” be accepted) is not accepted.
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9. Capacity to Contract
• Each “Person” who is a party to a Contract must be
legally able to enter into a Contract.
• i.e. Legal age, sound mind, not forced
• Corporations are “Persons” in the eyes of the law.
• Corporations are able to contract within their individual
articles of incorporation.
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10. Compliance with Statutory
Requirements
• Whether oral or in writing, a Contract is not
enforceable if to comply with the terms, etc. a law
must be broke or circumvented.
• Basically, you can not contract out of the law.
…But the law that was allegedly broken is typically
dealt with on a case-by-case basis…
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11. Forms of Contracts
• Written
• Oral
• Purchase Orders
• Sign back offers
• Standard Construction Documents
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12. Required Provisions
• Some Contracts must include certain provisions to be
legal.
• Consumer Protect Act 2000, for example.
• Protects consumers against unscrupulous
contractors and agreements.
• Includes “cooling off period”
• Personal services agreements (dieting, fitness, etc.)
• Direct selling agreements
• Internet agreements, etc.
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13. Construction and Repair
Contracts
• Typically involve a written bid offer and acceptance with
specific deliverables, terms, and conditions.
• Often standard forms of agreement are employed.
• CCDC / CCA Documents
• Corporate Agreements
• Professional Association’s Agreements (PEO, OAA).
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14. Written and Oral Contracts
• Contracts (except transfer of real estate) need not be in
writing.
• Contracts require a “meeting of the minds” to be
enforceable
• Obviously oral contracts are much more difficult to
enforce.
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15. Contract Interpretation
• Often if there is a dispute as to the fulfillment of a
Contract the courts will usually try to interpret the
expressed intention of the terms.
• If the terms are vague, the court will likely look at the
overall intent of the Contract to interpret the matter.
• If the Contract is too one-sided or unfair, the court
may interpret against the party that drafted the
Contract.
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16. Good Faith
• Persons making bid offers, reviewing bid submissions, and
choosing must do so in good faith of the process.
• Tends to apply in terms of the bid process and selection
of a bid.
• Not supposed to “rig” a bid offer or treat any bidder
unfairly
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17. CCDC Contracts
• CCDC 2 - 2008 Stipulated Price Contract
• CCDC 3 – 1998 Cost Plus (Guaranteed Maximum Price)
• CCDC 4 - 2011 Unit Price Contract
• CCDC 5A - Construction Management Contract for
Services
• CCDC 5B - Construction Management Contract for
Services and Construction
• CCDC 14 – 2000 Design Build Stipulated Price Contract
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18. CCDC Other Documents
• CCA 11 - 2006 Contractors Qualification Statement
• CCA 1 – Stipulated Price Subcontract
• CCDC 20 - 2008 A Guide to the use of the CCDC 2
Contract
• CCDC 9A -2001 Statutory Declaration of Progress
Payment Distribution by a Contractor
• CCDC 9B - 2001 Statutory Declaration of Progress
Payment Distribution by a Subcontractor
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19. CCDC Contracts
• CCDC 2 – Stipulated Price
• Most common if the scope is well defined
• For unknown scope
• include unit prices
• include cash allowances
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20. CCDC Contracts
• CCDC 3 – Cost Plus
• Not commonly used
• Uses fixed mark-up on given rates
• No real incentive / motivation
• To cut corners or
• Accelerate the work.
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21. CCDC Contracts
• CCDC 4 – Unit Price
• (Was) very commonly used
• Uses established rates based on estimated
quantities
• Allows price adjustment for significant increase
or reduction in quantity
• No real incentive / motivation
• To cut corners or
• Accelerate the work.
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22. CCDC Contracts
• CCDC 5A/B – Construction management
• A - Makes the Owner the head contractor
• B – Makes the Construction Manager the head
contractor
• A - makes owner responsible for safety
• B - makes the CM responsible for safety
• Sometimes useful if the project has multiple
facets and OH/P costs for a GC would be too
high.
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23. CCDC Contracts
• CCDC 14 – Design-Build Stipulated Price
• Sole source warranty
• Usually includes large cash allowances for
undefined items and allows the D-B Contractor
to be innovative.
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24. CCDC 2
• CCDC Contract
Documents are
Copyright protected.
• TCA Members can
order pdf copies but
the copies are only
valid if they have a
seal.
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25. CCDC 2
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26. CCDC 2
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27. CCDC 2 – Stipulate Price
Contract
• Articles of the agreement ….A-1 to A-8
• Definitions (important to assign responsibilities)
• General Conditions …12 Parts
• CGs typically amended or deleted by Supplementary
General Conditions (SGCs) to suit specific project or
client requirements. (read carefully!)
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28. CCDC 2 – Articles
• A-1 Defines the “Work”, its start and completion
(Substantial Performance).
• A-2 States this agreement supersedes all previous
negotiations or agreements unless included in A-3
• A-3 Lists all contract documents, specifications,
drawings, letters, conditions, etc. in the agreement.
• If it is not listed in A3… it is not part of the Contract
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29. CCDC 2 – Articles (Cont’)
• A-4 Defines the Contract price both in words and digits).
• A-5 Sets out:
• Holdback percentage
(superseded by Construction Lien Act in Ontario) and
• Interest on overdue accounts per annum
• A-6 Lists the Owner, Contractor and Consultant & the
addresses for service.
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30. CCDC 2 – Articles (Cont’)
• A-7 Language of the Contract (important for legal
interpretation)
• A-8 States that all items in A-3 are in the Contract.
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31. CCDC 2 – Definitions
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• 1. Change Directive
• 2. Change Order
• 3. Construction
Equipment
• 4. Consultant
• 5. Contract
• 6. Contract Documents
• 7. Contract Price
• 8. Contract Time
• 9. Contractor
• 10. Drawings
• 11. Notice in Writing
• 12. Owner
• 13. Place of the Work
• 14. Product
• 15. Project
• 16. Provide

32. CCDC 2 – General Conditions
• Part 1 - General Provisions (1.1.9 deals with
order of priority of the documents in case of
conflict)
• Agreement
• Definitions
• SGC
• GC
• Division 1 (Usually the General Requirements)
• Divisions 2 to ? (Technical Specifications)
• Material and Finish Schedules
• Drawings ArbiTECH

33. CCDC 2 – GCs (Cont’d)
• Part 2 - Administration
• Describes the Consultants Authority and Role to
interpret documents and act on behalf of the Owner .
• Requires Consultant to review Work and the
Contractor to remove/correct defective Work
• GC 2.2.6 and 2.2.7 deal with Consultants obligation to
make a an interpretation and finding in respect to
conflicts.
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34. CCDC 2 – GCs (Cont’d)
• Part 3 - Execution of the Work
• States Contract has control over the Work and
requires the Contractor to incorporate the Work as
set out into the Contract documents.
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35. CCDC 2 – GCs (Cont’d)
• Part 4 - Allowances
• States that the Owner directs use of Cash
allowances.
• The Contractor can not add overhead and profit to
Cash Allowances.
• Approved use of Allowances beyond the stated
allowance is to be by Change Order.
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36. CCDC 2 – GCs (Cont’d)
• Part 5 - Payment
• …..often amended by SGCs to accommodate the
owner’s and consultant’s payment process and
schedule.
• Except, Holdback and Substantial Performance
Provisions (which are governed by the CLA)
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37. CCDC 2 – GCs (Cont’d)
• Part 6 – Changes in the Work
• Changes made by the Owner/Consultant do not
invalidate the Contract
• Contractors are not to implement a change without a
signed Change Order.
Exception is a Change Directive by the Owner
• Contact must do the work promptly
• Cost increase/decrease to be accounted for in detail
– often results in disputes
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38. CCDC 2 – GCs (Cont’d)
• Part 7 – Default Notice
• Owner may stop Work, Terminate the Contract or
Perform Work under certain circumstances – e.g. if
the Contractor
• Defaults, is bankrupt, or neglects the Contract.
• Fails to correct defects
• Provides unacceptable schedule amendments or schedule to
correct defects.
• Contractor may stop work if delayed by court or by
Owner or is not paid.
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39. CCDC 2 – GCs (Cont’d)
• Part 8 – Dispute Resolution
• Consultant to give “interpretation”
• Provides Negotiation, Mediation and Arbitration
process.
….More later
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40. CCDC 2 – GCs (Cont’d)
• Part 9 – Protection of Persons and Property
• Contractor responsible unless damage is due to an
error by another party not a Party bound by the
Contract.
• Owner to identify and remove toxic substances
(unless such is part of the Work)
…..frequent cause of delay claims … More on that later.
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41. CCDC 2 – GCs (Cont’d)
• Part 10 – Governing Regulations
• Permit costs are to be paid for by the Owner.
• The Contractor must comply with the governing
Regulations, by-laws, and codes but is not
responsible to check the compliance of the Contract
documents.
• If the Contactor knowingly violates a law – must pay
for correction
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42. CCDC 2 – GCs (Cont’d)
• Part 11 – Insurance & Bonds
• Often amended for individual project scope and cost.
• Bonds bind the full contract including warranty
periods
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43. CCDC 2 – GCs (Cont’d)
• Part 12 – Indemnification and Warranty
• Mutual Indemnification for / against claims by third
parties arising form work of the other.
• Warranty is minimum one year – amended often for
specific items of Work.
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44. CCDC Contract Summary
• Currently the most widely adopted form of
Contract
• Generally acknowledged as balanced and
reasonable
• Included provisions that define responsibilities
and duties incumbent on all parties to the
Contract and administering the Contract
• Provides (almost) all necessary resolution
vehicles
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45. Construction Contracts– Basics of
Contracts and Contract Administration
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