Dispute Resolution Under Fidic Construction Projects

In the case between Michael Franz David Willms and Manisha Willms and Macdonald builders (Celtic Homes) Ltd, outlines a “breach of contract and negligent misrepresentation” (Willms v. MacDonald Builders (Celtic Homes) Ltd., 2016), and contains the application of the builder’s lien act. The plaintiffs had come to and agreement with the defendant to renovate their house. However the Plaintiffs argue that the conduct of the defendant led to the creation of many deficiencies, which ultimately led to the project not being completed to the level of satisfaction the plaintiffs desired. This in turn led to legal action.

A basic definition for the procurement is “the way the building is realised” and “involves assembling and organising the skills and services of a team of construction professionals”. (the Construction Round Table, 1995). More precisely, the construction industry describes procurement as “a system that establishes the roles and relationships which make up a project organisation”; hence the overall organisation and communication structure for the management, administration and control of a project is established by the procurement system. (D.C.H Coles, 2010)

Codelfa Construction (Plaintiff) had a contract with State Rail Authority NSW (Defendant) to excavate the tunnels for the railway in New South Wales. The contract agreed to complete the work in assured dates and finish it within 130 weeks, to finish work Codelfa were suppose to work three shifts a day and 7 days a week; initially Codelfa Construction was working accordingly. The work was to dig a tunnel so offcourse it was very noisy and caused some vibrations which were annoying to the surrounding residents which led to application quite a few application of nuisance and after a while Codelfa Construction had an injunction where they were forced to reduce the work hours by two shifts a day and not working on Sundays. The problem started here as the working hours were reduced so Codelfa Constructions was not able to finish the work in the set period of time which was given according to the contract therefore Codelfa Construction’s budget did exceed than mentioned in the contract and they needed more time to finish the work.

After the case of Ron Engineering, many transformations took place in the contracting laws of tendering. The contracts were given a brand new structuring and implementation which brought more transparency and reliability. The court established Contract A, which had be present prior to the construction contract—which was known as Contract B—where all the parties had beforehand thought was the exclusive contract concerned in the tendering process. Whenever an owner calls for bids, it proposes to enter automatically into a bidding contract i.e., Contract A. The contract automatically becomes a lawfully enforceable agreement as soon as the bidder submits its bid. In case the bidder’s offer is acknowledged, the owner and the bidder both then are contractually compelled by the tendering contract to come into the production contract i.e., Contract B.

Clough, Richard H, Glenn A. Sears, S K. Sears, Robert O. Segner, and Jerald L. Rounds. Construction Contracting: A Practical Guide to Company Management. , 2015. Print.

The second problem arises during the time of handover of the project. This is the time where the contractors make the most nuisances and one will surely have to go through some legal hazards during that stage.

In Carr v J.A. Berriman Pty Ltd, the principal entered into a contract with a builder for the construction of a factory. Two breaches by the principal caused the builder to seek to terminate the contract; a failure to deliver the site in the condition specified in the contract and a unilateral decision to remove from the contract the fabrication of steel framing. It was the second breach that was decisive in the view of the High Court in finding that the termination was effective. In its reasons, the Court noted that the loss of the fabrication represented about one quarter of the builder’s estimated profit on the entire project and the removal from the contract of that percentage of the overall value was a substantial breach.

In the paragraphs that follow I will address the issues such as evaluation of the contracts and decide if they will be governed under the common law rules or the Uniform Commercial Codes (UCC). The paper will also analyze the essential elements of an

Contracts are an integral part of business and everyday life, and are fundamental to construction as the industry relies on the formation of contracts for business agreements. “Contracts are based on the idea of a bargain, where each side must put something into the bargain. A contract may be defined as 'an agreement which is binding on the parties’” (Galbraith, 1998, pg78). There are a number of key components which must be present in the formation of such contracts.

In construction projects, mostly the firms (in this case the firms become client) do not have the skills or develop skills inside the firms to undertake the projects due to amount of the projects should be conducted or the complexity of the projects (Reve and Levitt, 1984). Therefore, the economic decision to conduct the projects is to procure them to third parties. However, more commonly the client agonize the final quality of the projects will meet standard requirements. Thus, impacts to involvement of complex contracts of construction procurement.

Within this piece of coursework I will explain and compare various dispute resolution options that are used within the construction industry. The commonly used options that I will be going into further detail are mediation, adjudication, litigation and arbitration. These options will then be evaluated, and then explained of when they should be used. These four options are commonly used within the construction industry to resolve legal arguments that have arisen from various disputes.

“CONTRACT DISPUTES REACH 15-YEAR HIGH”, was the heading of an article published, December 1, 2010 in the Government Executive. The heading in itself tells us that the government is doing more and more business by contract and as a result contractors who are lobbying for government business have become more aware of their rights to file disputes when it involves a loss of potential business. Because of this increase in disputes, the government must have a method of terminating contracts without suffering the financial liabilities that could result in millions and millions of dollars going to incomplete contracts and rebids

Written contracts are useful tools for any business, and construction companies are no exception. In fact, contracts can be both practically useful and strategic in the construction industry. This newsletter will introduce some of the practical benefits of getting contracts for your projects and then discuss some key provisions of construction contracts. Understanding these provisions will help you to manage risk through careful scrutiny of contract terms and knowing when to call on counsel for assistance in negotiating and drafting contract provisions that fairly allocate risk among the parties.

The construction industry has the unenviable reputation of being adversarial and dispute prone. This is attributable to the scope, scale, duration and complexity of projects, which can lead to differences of opinion on complex technical, factual and legal issues. If not resolved quickly, these differences of opinion can lead to expensive and drawn out disputes. The competitive nature of the industry, low profit margins and commercial pressures when progress payments are late, unfair risk allocation, perceived bias of the superintendent and lack of procedural fairness in contract administration, creates a climate that is conducive to adversarial conduct especially when this combination of technical, factual and legal

Eggelston, B (1997). Publisher; Blackwell Publishing, Place of Publish; Oxford, Liquidated damages and extension of time in construction contracts, 2nd ed. p252.