ARBE1301 Construction Law And Legislation

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Question:

Agro Builders Inc contracts with Supersafe Prisons Inc for the construction of a new prison.

Ego Architects are hired by Agro Builders to prepare architectural drawings.

The contract covered payment of drawings on a three-stage basis.

Agro reviews the drawings and approves them.

Agro then refuses to pay Agro for the Architectural services, claiming that the drawings are a variation on the contract and that they were not adequate.

Parties are invited to meet at the site.

They discuss the requirements, and then verbally agree to amend the contract so that the drawings can be completed as they are presented.

Based on this agreement, the building proceeded.

A few weeks later, the builder refused to pay the architect. The builder claimed that the drawings were not complete and did not follow the terms of the written contract.

Part A

Is there a contract and how does it work?

In such a case, can the verbal contract be modified to alter the terms of the written agreement?

A) Explain the Legal Principles that apply and the structure of contracts

B) What legal consequences would it have for the specifications to be “approved” in a future contractual position?

Discuss the relevant legal principle and give your explanation.

C) Given the issues encountered in this instance, what procedures would you suggest to cover amendments and technical disputes resolution?

1 through 3 require the identification of relevant legal principles for Contract and their application in the context of the fact situation to indicate an outcome.

Answer:

Construction contracts are not a rare thing.

They are common even in modern commercial law.

These contracts may be between the owner or the engineer, a build administrator and a subcontractor, as well as between contractors and engineers.

Construction contracts are just like any other contract. They can be either written or oral, depending on the difficulty of the task.

The law does not encourage people to make ambiguous contracts.

However, any construction contract, whether for small buildings or ad hoc, must comply with the general rules of contract.

This paper would examine a dispute between an engineer or architect and determine if their contracts are legally binding.

This question is about two things. The first is about the rescission or modification of an existing contract.

Contract law does not have the purpose of forcing parties to create contracts. It is meant to enforce existing contracts.

This means that a contractual agreement is “forced by law” made by the parties. However, the court can intervene when one of the parties files a petition to court. In order for a contract to become enforceable in law, it must meet certain standards.

These standards include acceptance, consideration, and offer.

According to law, a contract is formed when an offeror makes it.

The offer must have been made by an offeror with a deliberate intention.

A valid offer must also include terms and conditions.

The terms and conditions should also be applied to the offeree’s performance.

Once the offer has been accepted by the offeree, a valid agreement should be created. According to a ruling, “A contract does not become binding upon an offeror until it is accepted by the acceptee”.

According to law, a valid acceptance must be made with willful intent and it should contain no conditions.

This explanation should suffice to show that there was an agreement between Agro Builders and Ego architects.

Ego architects were required to present exact drawings. Agro Builders was to pay Ego in three installments.

If one party does not perform according to the agreed terms, the innocent can revoke the contract.

It doesn’t really matter whether Agro first approved the specifications, it only matters whether Ego furnished the drawings according to the contract.

As stated above, the law on contract doesn’t require parties to create a contract. However, it does enforce their promises.

The construction law permits the parties to a construction agreement to alter the work for different purposes.

Variation can also be described as:

“Work performed by a contract administrator or omitted from its scope, usually at their express direction (acting on behalf the owner), pursuant to a contract power. The instructed work may be different from the original scope of work or represent an omission of work the contractor was otherwise required.

According to the above explanation, Agro was contract administrator. It was also the one that invited Ego through its power to modify the contract.

Ego accepted the variation, and they created a legally binding contract.

In other words, when parties modify a contract, their future conducts will be governed according to the new terms.

This section was explained as follows:

While neither party can unilaterally modify the terms or conditions of a contract after it is made, agreements between the parties can still modify a contract.

Modifications are a separate contract from the original contract they modify.

Because it is an independent contract, it is subjected to the majority of the contract law requirements for its formation and validity.

Ego accepted an invitation to change the contract. In simpler terms, it was an offer.

Agro was to act in good-faith that it had modified the contract. Therefore, it was expected to follow the new agreement.

Construction work can change because of different circumstances.

The contract administrator or engineer can make changes to the contract in order to better suit the situation.

Agro and Ego’s case is complicated by the fact that they made oral changes to an already written contract.

Now the big question: Can oral modifications affect an existing written contract?

It is normal for construction to change during the construction process. Subcontractors are often able to demand their payment if owners deny modification.

Udevco was ordered to pay Wagner by the court because Wagner relied on an express oral waiver that the developer had made while performing extra work.

Udevcor had asked Wagner orally to alter the frame of the cabinet and doors in this case because they did not match the original design and could not be fitted with prefabricated roof trusses.

Udevcor refused the request of Wegner and said that it could not dispute an oral agreement.

It is also possible for the conduct of the parties to show that they did not intend to be bound by a written agreement, but instead the oral modification.

A judge denied the request of the respondent to waive the “no oral modification clause” and stated that the evidence was not sufficient to support an inference of behavior inconsistent with the oral agreement.

Angro can’t go back to the terms of the contract because it invited Ego.

“In cases where a party has incited another’s significant, substantial reliance upon misrepresentation, the initial party may be prevented from benefiting from such misrepresentation.”

Steyn LI recommended that expectations be protected.

Agro was thus obligated to respect Ego’s trust.

Part A (3A), Legal Principles that Apply to The Hierarchy In Contract Documentation

Construction usually involves a number of papers.

These documents include important information and provisions that will affect the entire construction process.

It is obvious that the more documents there are, the greater the chance of contradicting information.

Sometimes, however, these documents show how to resolve opposing provisions from different documents.

The most common method is for the contract to rule all documents.

A contract may state, for instance, that the only provisions that will overrule any conflicting document provisions are those of the contract.

The contract may also contain a clause that allows for the referral to the contract administrator of any discrepancies or ambiguities in the documents.

This is known as the “orders and precedence.”

The parties can refer to the contract wording if the contract doesn’t contain any express clauses for conflicts resolution on documents or ambiguities.

Part A (3B), Legal Impact of Stamping Specifications “Approved” On Any Future Contractual Situation

Specifications for constructions require approval from either the architect/engineer, or the owner.

Approval may be required for any proposed material or deviation from the original plan.

The approval process allows the owner to exercise some control or power over the project.

These controls and measures can also come with liabilities.

An engineer could be held responsible for interpreting the figures incorrectly if it leads to defective construction.

It is the responsibility of engineers to assess the structural integrity of a building.

Failure to exercise ordinary care will result in a breach of contract.

Accepting responsibility is also part of stamping specification.

The responsibility of the architect is to disapprove of or correct errors in the specifications. It’s a form of an obligation.

The court said the same thing, “The responsibility of an architect may be comparable to that of a lawyer and a doctor: the law requires you to exercise ordinary skill.

Not only does the owner have the responsibility, but so does the architect.

As an independent contractor, an architectural supervisor or planner of construction work is responsible for exercising ordinary care to protect any person who could be affected by his incompetence.

The court will not permit the architect/engineer, or any other person to place additional work on the contractor or delegate more of it’s duties.

It shouldn’t increase the burden on the owner by adding or changing materials to the contract that are not in the contract.

In such cases, the court will hold the engineer/architect accountable for the breach.

Part A (3C). Formulated Procedures to Avoid Amendment Problems in the Course of Construction

Variation Management

Variation in a construction project is often inevitable.

Variation may be due to omissions or negligence by construction professionals.

Variation can lead to “scope of work” disputes.

Most common causes of variation are errors in drawings and missing data.

To avoid variation, a construction manager has several options.

A budget that is sufficient for the project is one example.

Managers and engineers can also use well-prepared, coordinated front end documents to limit variations.

An engineer can also request another qualified engineer for a review of the specifications.

Another way to limit variations is to not mark up multiple projects’ specifications simultaneously.

Another way to reduce variations is to ensure that engineers keep updating the master specification in accordance with current industrial standards, procedures, laws and construction laws.

The engineers can also prevent variation by making sure they don’t delegate front-end editing duties to anyone else and making sure they edit such documents.

Experts

Expert determination refers to a process where a third person assists the disputing party in settling an agreement.

Although an expert should be independent, the court rejected the notion that it should be required.

Although expert agreements are usually considered binding, they can sometimes be challenged.

Expert determinations can be used to assist parties in determining the completion of a construction project and assessing its quality if there are any issues.

You can also call an expert to address specific matters.

He/she could be called to resolve payments due to contractors if there was an extension of time.

Another example is when parties enter into a construction contract and include a clause that says, above all else, the parties will use an expert to resolve disputes.

Part B (4A), Supporting the Claim Over Incomplete Specifications

A party who plans to file a lawsuit for breach of contract must submit a substitute claim.

Court applications depend on evidence. Without it, the court may have difficulty providing a remedy to the wronged party.

Acceptance of evidence depends on the conditions.

First, it must be written during normal working hours.

Agro should therefore have the project diary that was used during working hours.

Another rule is to make the document on-site or during construction.

A third requirement is that the person who created such document give testimony.

The court would also expect that the information contained in the document was credible.

Agro may bring the contract document, which will allow the judge to understand the terms.

It would also be a good idea to provide a daily report on the work progress.

A telephone recording is another important detail that engineers often forget.

It is always a good idea keep track of any telephone calls received or made about the project.

You should also include a summary that identifies the individuals and provides key details about the construction.

Keep a record of materials tested at the site where the project was being carried out.

You should include information about the tests and the structures where they were performed.

Engineers must also keep a log of submissions.

Engineers should keep a record of any materials that are brought to them for approval or consideration.

Expert Witness: To accept expert evidence, the court must verify two aspects.

It must first agree or demonstrate that there is a specific field of “specialized know”; it must be identified in that field where the witness has demonstrated that he or she is an expert through specified training, study, experience or other means. Second, “The opinion that is given must be wholly or substantially based” on the witness’s expert knowledge.

There are risks and problems with using expert witnesses:

Expert witnesses are involved in many different issues.

There are many issues that expert witnesses can have divergent opinions.

This could be problematic if one theory is considered standard and the other is completely different from the current technical view.

Expert witnesses could also have the tendency to limit an opponent’s view by arguing for their case, despite the facts.

Sometimes this is due to personal bias or belief.

Expert witnesses are expensive.

Part B (4B),: Bringing A Cl claim A Claim within The Scheme Of Building Industry Security Of Payment Act. (Victoria).

The ‘Building and Construction Industry Security of Payment Act’ (SOP) helps people to protect their payments for construction jobs and those who supply goods and/or services to a building competition.

Phillip and Tom said that they were;

“The Victorian Building and Construction Industry Security of Payment Act, 2002, applies to construction contracts relating to construction work in Victoria.

It was created to guarantee that any person who undertakes construction work or… supplies related goods and/or services under a contractual arrangement is entitled to receive and is able recover progress payments in relation (NSW Department of Commerce 2004).

For a claim to be successful, it is essential that the claim follow the rules set forth in the act.

For example, the law stipulates that all persons claiming their payments must make the claim to the respondent.

The law also allows for different dates to be claimed.

Therefore, every claim must have an earliest date. This is when the claimant first made the claim.

Other than the reference date, the claim should also include the most recent date on which the claim can become effective.

This law allows the claimant to only recover the amount not paid or the money owed.

It is important that the contract states that only the money due can be claimed.

If the money is not stated in the contract, the claimant may calculate the money due based on the work performed.

The act provides for a number of different dates.

There are three main types of dates: periodic progress payments, final payment, single or one-off payments, and the final payment.

Parties to a contract can choose the reference date and the most recent date.

For periodic progress payments, the parties should wait at least three months from the reference date.

Periodic progress payments can only be made for a maximum of three months. The claimant must also serve the payment claim within one day.

After the final payment is requested, there should not be any further claims.

It is important that the claimant acknowledges that periodic progress claims do not apply to contracts that provide for only one or two-time payments.

These contracts cover short jobs that require instant pay, short periods of time for offering goods or services with instant payments.

Periodic progress pay is also possible under contracts with a longer term, such as for big projects.

There are contracts that specify when progress claims should be filed.

If such a provision exists, the claimant has 20 business days to wait before filing a progress claim.

The Act permits the construction contract to set the dates for a final payment claim.

If the contract doesn’t specify any date but does provide for a final certification, the claimant is allowed to count the earliest possible date as the date that follows the final claim.

Every aspect of a construction project should be covered by a contract.

This paper examined the process of creating a contract for construction and also the effects on oral modification.

This paper also examines the effects on stamping specifications, as well as the variation of construction contracts.

The paper also covered the subject of the expert witness, and how to make a successful claim.

It is important that the parties to a contract keep in mind their terms, to avoid any future liability.

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United States.

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Revised July 2010,

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Cases

Aslani V. Country Creek Homes, Inc., No.

CJP Builders Ltd. V. William Verry Ltd (2008) BLR 555.

Cordon Investments Pty Ltd and Lesdor Properties Pty Ltd (2010) NSWSC 1073.

Dance With Mr D Ltd V Dirty Dancing Investments Pty Ltd [2009] NSWSC 332.

Interchase Corporation Ltd. (in Liq) v Commissioner of Stamp Duties (1993), QCA485; 27 ATR154

Makita (Australia), Pty Ltd. V Sprowles [2001] NSWCA305, 52 NSWLR 705

Nicholas Richard Whitlam against Insurance Australia Group Limited (2005) NSWSC83; 52 ACSR470

Smith v. Universal Scheduling Co. (736 So.

Tomlinson against Ashland County (1919), 173 N. 300, 170 Wis.

Building and Construction Industry Security of Payment Act 2002

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