Domestic building contracts act 1995 pdf

Lecture Two

Equity.

Contract law

Email from the library in response that they got the enrolment number for BUIL1252 wrong

First question guide

The key to the assignment question is to decide how much time and effort you want to put into it.

Fundamental-a central or primary rule or principle on which something is based.

It is fundamental that in your text you refer to all relevant acts, sections of acts, case law (both the common law and the of equity) and journal articles. Worth 30% of marks allocated to the text

It is fundamental that you also attach copies of your primary sources.

Statutes

Caselaw

Journal articles

Textbooks

Dictionary definitions

Worth 3.5 marks allocated for presentation ( 28% of the ASSIGNMENT QUEUSTION

AS2124-1992

Standard form commercial building contract

4. Discuss who are the participants referred to in the quote. Please explain by the use of all relevant authority in the text of your answer and you can refer such as attachments (1.5 marks)

The formal part of the contract which is signed by the Principal and the Contractor and which will list all the documents that comprise the contract.

Superintendent (also known as Contract Administrator, Architect, Administration Manager

)

Description

The person generally engaged by the Principal to administer the building Contract. In some instances the Superintendent is referred to as the Contract Administrator (see PC-1). The Superintendent is not a party to the Contract. However, the Contract will define the role of the Superintendent in administering that Contract. The Superintendent may have a dual role: to issue directions to the Contractor on behalf of the Principal and to carry out certification tasks as a party independent to the Principal. This creates a tension between the Superintendent's role as the Principal's agent (and therefore clearly representing the Principal's interests) and as a certifier (which must be undertaken independently).

AS2124-1992

The contract is 41 pages and my reading of the contract I find that the superintendent is referred to on 30 of those pages.

Some of the more important clauses or some of the more relevant clauses to the assignment are_-

The superintendent is defined on page 6 of the contract.

Clause 23 deals with the appointment of the superintendent which lists the obligations of the superintendent and some of the powers of the superintendent.

Clause 8.1 empowers the superintendent to direct the contractor as to the interpretation of “any ambiguity or discrepancy in any document prepared for the purpose of executing the work under the contract.”

Clause 46.2 deals with the mechanism for disputing a direction given by the superintendent.

Superintendent Determination of the Superintendent

definition . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.2

dissatisfaction with ................... 47.1

extension of time .................... 35.5

generally . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

interpretation of discrepancy ............. 8.1

value of Daywork . . . . . . . . . . . . . . . . . . . . . 41

value of variation .................... 40.5

value of work ....................... 42.1

Directions of the Superintendent (see also Determination of the Superintendent

construction program .................. 33.2

covering up of work . . . . . . . . . . . . . . . . . . 31.2

Daywork ........................... 41

defective materials or work ..... 30.3, 30.4, 30.5

definition . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

dissatisfaction with decision ............. 47.2

examination and testing . . . . . . . . . . . . . . . . . 31

generally . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

oral ............................... 23

order of work ....................... 33.1

notice of tests . . . . . . . . . . . . . . . . . . . . . . . 31.4

relating to Contractor's employees . . . . . . . . . 26

relating to Subcontractors . . . . . . . . . . . . . . . 26

service of . . . . . . . . . . . . . . . . . . . . . . . . . 7, 25

suspension of the Work ................ 34.1

time for disputing . . . . . . . . . . . . . . . . . . . 46.2

written . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Superintendent

see also Directions of

Superintendent) . . . . . . . . . . . . . . . . . . 23

defined . . . . . . . . . . . . . . . . 2,

Annexure Part A Notice to in relation to dispute . . . . . . . . . . . 47.1

Superintendent's Representative ............. 24

PC-1 1998 the superintendent is called the contract administrator

In ABIC MW -2008 the superintendent is the architect.

If a party wishes to disputes a direction or certificate or notice of decision or assessment of the architect must do by written notice within 20 working days after.. See clauseA8

Comparative chart of some commercial standard from contracts form Understanding Australian Construction Contracts by Baily and Bell

3.Discuss the meaning of “controls and regulates their activities”. Please explain by the use of all relevant authority in the text of your answer and you can refer such as attachments (2.5 marks)

3.Discuss the meaning of “controls and regulates their activities”. Please explain by the use of all relevant authority in the text of your answer and you can refer such as attachments (2.5 marks)

In the first lecture in my power points and in my power points which I did the voice-over I suggested with regards to the way the law controls and regulates the construction industry you could look at.

1. Relevant common law cases.

Consider the liability of a constructor to a subsequent purchaser of a domestic building in a commercial building. Perhaps discuss the tort of nuisance

2. Relevant equitable cases.

Consider a relevant case in the cause of action of promissory estoppel.

3. A Commonwealth statute.

Considered the ACL

4. A Victorian statute.

Consider the Wrongs Act.

5. Relevant delegated legislation.

Consider the issue of a building permit

5. Any relevant clauses in the standard form building contracts.

ABIC MW-2008 Major Works Contract

R4 Entire contract .1 This contract contains everything the owner or the architect has agreed with the contractor in relation to the matters it deals with. Neither *party may rely on an earlier contract, or on anything else said or done by the other *party (or by an officer, agent or employee of the other *party) before this contract was entered into.

Clause R4 could be relevant if a party sought to rely upon section 18 of the ACL

Other clauses of AS2124-1992 that you can refer to when writing the first assignment question

Some relevant references to general law principles in the this standard form contract are

Negligence ( “ any negligent act or omission of the Principal, the Superintendent or the employees, consultants or agent of the Principal;”)

Nuisance ( “ prevent nuisance and unreasonable noise and disturbance.”)

Proportionate liability (but the Contractor’ liability to indemnify the Principal shall be reduced proportionally to the extent that the act or omission of the Principal or employees or agents of the Principal may have contributed to the loss, damage, death or injury”)

Arbitration ( “ Arbitration shall be affected by a single arbitrator who shall be appointed by the person named in the Annexure…”)

The quotation are from clauses from AS2124-1992

VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL CIVIL DIVISION BUILDING AND PROPERTY LIST VCAT REFERENCE NO. BP 350/2016

“The damages payable by LU Simon to the Owners are to be apportioned between each of the concurrent wrongdoers pursuant to Part IVAA of the Wrongs Act in the following proportions: ‒Gardner Group: 33% ‒Elenberg Fraser: 25% ‒Thomas Nicolas: 39% ‒Mr Gubitta: 3%”

file:///C:/Users/e67224/Downloads/Owners%20Corporation%20No.1%20of%20PS613436T,%20Owners%20Corporation%20No.%202%20of%20PS613436T,%20Owners%20Corporation%20No.%204%20PS613436T%20&%20Ors%20v%20Lu%20Simon%20Builders,%20Stasi%20Galanaos,%20Gardner%20Group%20&%20Ors%20[2019]%20VCAT.pdf

On canvas

The reason for the next two slides

Some of the class, who have conferred, with me do not know the difference between binding and persuasive case law.

Some confuse the principles of case law with statutory law.

Separate Legal Jurisdictions

Legal systems of the world

Civil law-blue

Common law-red all of red is persuasive case law authority

Bijuridical/mixed (civil and common law)

Islamic law (Sharia)-yellow

The three basic systems: civil law, common law, and religious law – or combinations of these. However, the legal system of each country is shaped by its unique history and so incorporates individual variations.

Second question of the first assignment.

“ Discuss how a construction contract is interpenetrated if the is any alleged ambiguity".

Consideration has been given to the construction of contract documents generally. Construction of contracts is the process of legal analysis by which the meaning and effect of contractual terms is determined. Whilst it is used primarily as a means of resolving disputes over ambiguities in the contract, the principles of construction or should also be borne in mind by parties negotiating or drafting contracts as these are the principles upon which will apply in the event of the parties are subsequently unable to agree upon the meaning of the contract

Marking criteria.

1. Discuss aids provided in standard form building contracts.? ( "The contract itself may assist with the process of interpretation by any of all of the following types of provisions") ( 3 marks) Please explain by the use of all relevant authority in the text of your answer and you can refer such as attachments.

2. Discuss the key general principles applicable to construction of contracts .(3 marks) Please explain by the use of all relevant authority in the text of your answer and you can refer such as attachments.

3. What is the role played by the parol evidence rule and the entire contract clause in the construction of contracts? (3 marks) Please explain by the use of all relevant authority in the text of your answer and you can refer such as attachments.

4. Presentation.

Presentation consists of the use of secondary and primary sources as attachments. ( 3.5 marks out of 12.5)

Primary sources consist of

case law reports ( headnotes and judgement extracts)

statutory sections and

reference to clauses in standard form construction contracts.

Secondary sources are textbooks and journal articles.

This questions is worth 12.5 marks of the course assessment.

The first assignment task, is constituted by questions 1, 2, 3 and 4, is due on the 9th April 2019. However, any of the four questions can be submitted before the due date. Any questions submitted early I will mark within 5 working days. I will then be available to confer with students on the 6th working day.

All assignments must be submitted on canvas. If they are not submitted on canvas on or before 23.59, 8th April 2020 pursuant the School rule they cannot be assessed. If you have a basis to make an extension to the submission date you can do so to me up to one day before submission. After that date I have no authority to grant an extension and you will need to apply to RMIT for special consideration.

I only mark hard copy and as a courtesy to me could you please provide me with a hard copy of the assignment that you have lodged on canvas.

1. What documents generally constitute a building contract?

1. Look at domestic and commercial buildings.

2. State the law.

3. If a statute is relevant provide an attachment of the relevant section.

4. When discussing the law relevant to domestic and commercial buildings provide reference to an attachments of relevant parts/clauses of standard form contracts.

5. Discuss the documents that could constitute the contract and what precautions should be put in place to ensure those documents are considered part of the contract. ( Is signature relevant?)

6. Variations can be part of the contract

Effect of “ entire agreement” or merger clauses. See C& F page 418

“ Commercial contracts in writing commonly include a clause stating that document contains the entire agreement [of the] contract of the parties, and that all other terms are excluded.”

If the document is ostensibly complete the merger clause is accepted as excluding or other terms.

However. “It may be that such clauses should be subject to special scrutiny given to terms limiting excluding liability”

Best Supplementary book for Contract

You need to read and refer to the building contracts. ( I have given you four standard form contracts)

Clause or document not included in the contract!

Some reasons why it is essential you review the contract before signing it or entering into it

1. To ensure the documents you were relying upon a part of the contract.

2. To understand how on signature whether you are aware, whether you understand the terms of the contract you are bound by them.

3. Be aware of the weight that may be given to the terms of the contract. Parties are free to ensure any term of the contract is an essential term.

4. Contract may have a contractual dispute resolution regime embedded in.

5. Be aware of what risks you need to ensure against.

6. Be aware of notice requirements.

7. Be aware of what procedures you need to follow for such things as discovery of latent site conditions and contractual variations.

8. If there are any indemnity obligations.

9. What time requirements are imposed by the contract.

10. What quality obligations are imposed by the contract.

11. Other.

\\rmit.internal\USRHome\el4\e67224\Downloads\Thomson Reuters - Legal Online Welcome!_jsp.mht

“Disputes as to the existence of building contracts are comparatively rare. It is a more common occurrence to find parties agreeing upon the existence of a contract but differing as to its terms. A contractor might contend that a principal has breached a particular term of the contract. The conduct alleged to constitute the breach might be clearly established, but a question may nevertheless arise as to whether the statement which the contractor argues is an express term of the contract can properly be given that status.”

Link

Contract law-Sources

1. The common law.

2. The law of equity.

3. Statutory law.

There is not say uniform contract code embodying the principles on contract.

A lot of the statutory law has been driven by the need to protect individuals and provide a level playing field.

( ACL and DBC Acts)

Equity steps in for considerations of fairness

Equity

Developed in 14 century.

Different to the common law in-

Different causes of action to the common law.

Different contract defences to the common law

Different contract remedies to the common law.

Different doctrines.

Different property concepts/doctrines/titles.

Prior to the 1870s

There were 2 different court systems.

One civil court devoted to the common law.

One civil court devoted to the law of equity

After the 1870s

By legislation enacted by Australian parliaments law and equity “were fused” and both the common law and the law of equity were administered in the one court.

What is equity

Equity like the common law developed in a piece meal fashion.

In broad outline

1. There are equitable causes of action.

Such as the cause of action which pleads the principles of promissory estoppel could find the parties have entered into a contract without consideration.

2. There are equitable defences where a party tries to enforce an unfair contract.

Such as the defences of undue influence ,unconscionable behaviour, undue influence ( could also be a cause of action) promissory estoppel can also be a defence and innocent misrepresentation.

3. There are equitable remedies where there has been a breach of contract.

Such as specific performance and an injunction.

4. In the law of property there is common law title and equitable title.

Such as when a contract to purchase land is signed until a transfer of land is registered at the titles office the purchaser has an equitable title and not a common law title.

Equity specifically

Rectification. p 103

Equitable Estoppel. Pp. 122 and 234

Unjust enrichment. P 129

Innocent misrepresentation. P 109

Unconscionable behaviour. P 110.

Undue influence. Pp. 110

Cause of action site

https://legaldictionary.net/cause-of-action/

https://www.hoganlovells.com/~/media/hogan-lovells/pdf/commercial_litigation_causes_of_action_checklist.pdf?la=en

Building contract not in writing

1. The contract

a)Domestic building contract. Was unenforceable under the statute but could be enforced in equity under the equitable remedy of unjust enrichment.

See TB pp. 104-105

b) While most commercial building contracts are in writing, and use standard form contracts there is no legal requirement for them to be in writing to be enforceable.

See p. 237 of the TB

2. Variations which are not in writing or in accordance with the contract procedure

a) Commercial contract again may be an equitable remedy of unjust enrichment. See pp. 253 to 257.

b) Domestic. Probably no way through an unjust enrichment claim but some claims could be made under the Act. See section 37 DBCA and

https://www.consumer.vic.gov.au/housing/building-and-renovating/checklists/changing-a-major-domestic-building-contract

https://boutiquelawyer.com.au/avoiding-disputes-the-essential-guide-for-builders-in-victoria/all

But see the exceptions where in the Act section 37 ( 3) and 38 ( 6) where “the builder is entitled to recover the cost of carrying out the variation plus a reasonable profit.”

Domestic Building contract variations see sections 37 and 38.

DOMESTIC BUILDING CONTRACTS ACT 1995 - SECT 37 Variation of plans or specifications—by builder

DOMESTIC BUILDING CONTRACTS ACT 1995 - SECT 37

Variation of plans or specifications—by builder (1) A builder who wishes to vary the plans or specifications set out in a major domestic building contract must give the building owner a notice that—

(a) describes the variation the builder wishes to make; and

(b) states why the builder wishes to make the variation; and

(c) states what effect the variation will have on the work as a whole being carried out under the contract and whether a variation to any permit will be required; and

(d) if the variation will result in any delays, states the builder's reasonable estimate as to how long those delays will be; and

(e) states the cost of the variation and the effect it will have on the contract price.

(2) A builder must not give effect to any variation unless—

(a) the building owner gives the builder a signed consent to the variation attached to a copy of the notice required by subsection (1); or

(b) the following circumstances apply—

(i) a building surveyor or other authorised person under the Building Act 1993 requires in a buildingnotice or building order under that Act that the variation be made; and

(ii) the requirement arose as a result of circumstances beyond the builder's control; and

(iii) the builder included a copy of the building notice or building order in the notice required by subsection (1); and

(iv) the building owner does not advise the builder in writing within 5 business days of receiving the notice required by subsection (1) that the building owner wishes to dispute the building notice or building order.

(3) A builder is not entitled to recover any money in respect of a variation unless—

(a) the builder—

(i) has complied with this section; and

(ii) can establish that the variation is made necessary by circumstances that could not have been reasonably foreseen by the builder at the time the contract was entered into; or

S. 37(3)(b) amended by No. 15/2016 s. 10(1).

(b) VCAT is satisfied—

(i) that there are exceptional circumstances or that the builder would suffer a significant or exceptional hardship by the operation of paragraph (a); and

(ii) that it would not be unfair to the building owner for the builder to recover the money.

(4) If subsection (3) applies, the builder is entitled to recover the cost of carrying out the variation plus a reasonable profit.

(5) This section does not apply to contractual terms dealing with prime cost items or provisional sums.

D.B.C. Act -variations

(3) A builder is not entitled to recover any money in respect of a variation unless—

(a) the builder—

(i) has complied with this section; and

(ii) can establish that the variation is made necessary by circumstances that could not have been reasonably foreseen by the builder at the time the contract was entered into; or

(b) the Tribunal is satisfied—

(i) that there are exceptional circumstances or that the builder would suffer a significant or exceptional hardship by the operation of paragraph (a); and

(ii) that it would not be unfair to the building owner for the builder to recover the money.

(4) If subsection (3) applies, the builder is entitled to recover the cost of carrying out the variation plus a reasonable profit.

(5) This section does not apply to contractual terms dealing with prime cost items or provisional sums.

The route to success

49

All you need to do is make a start

Do a little bit at a time

Contract.

. An unconditional agreement

between two or more persons

which meets the required legal requirements.

CONTRACT

Starts with an agreement or mutual promises.

Meeting of minds.

Layers of a contract

1. An agreement.

2. Could need more than and agreement.

May need to display sufficient solemnity to make it a legal agreement.

3. One way of providing solemnity is to buy the promised offer.

In law called sufficient consideration.

4. Another way could be the law may require the contract to be in a particular form and have certain additional obligations inserted. Most formal is a deed the least formal is some of the terms to be in writing

Layers of contract continued

6. We have rules to decide what constitutes the agreement.

7. We have rules to decide what the agreement means.

8. We have rules to decide what terms are more important that others.

9. We have rules which allow for compensation if the contract is not performed.

10. Because some of the common law rules are harsh we have a parallel equitable rules to the common law.

Deed is treated exceptionally in contract Law

Inter alia

1. Gratuitous promise is treated as a contract.

2. The term in the Statute of Limitations in which to bring an action for breach of contract is significantly longer ( 15 years cf. 5 years)

Link

THE ELEMENTS OF A DEED

A deed is a mechanism for creating a binding commitment or promise, with particular benefits in cases where the existence or passing of consideration is unclear and also for their obligations to be legally enforceable for an extended period. For example where A promises a gratuitous gift to B.

Deeds must be:

In writing.

Signed.

Witnessed by at least one person who is not a party to the deed.

Expressed to be a deed.

Delivered to the other party/parties.

Supported by evidence that the parties intended to execute the document as a deed and be legally bound by it.

See pp. 92 to 93

Building dispute legal action limitations

1. Contract- 6 years from the date of breach of contract.

2. Negligence- 6 years from the date aware or ought to be aware of the breach of duty of care.

3. 10 year limitation on negligence and contract from the date of final completion.

Link

(See s 134 of the Building Act 1993 (Vic) (Act) for 10 year sunset clause).

See pp. 123 to 124 ( contract) and pp. 156 to 157 ( tort)

See the textbook page 130 where equity will step in where the contract is unenforceable at common law

“ The relevant principles are derived from the law of equity rather than the common law and therefore look primarily as to whether it is unjust for a party to retain money or benefit rather than compensating the other party for breach of contract. The circumstances in which such a claim might arise in construction contracting include where the construction contract has been undertaken and provided to the principal under an unenforceable contract, or without any contract in fact being entered into.”

Particularly see footnote 210.

Pavey’s case

Section 45 of the Builders Licensing Act 1971 (N.S.W.) provided: “A contract … under which the holder of a licence undertakes to carry out, by himself or by others, any building work or to vary any building work or the manner of carrying out any building work, specified in a building contract is not enforceable against the other party to the contract unless the contract is in writing signed by each of the parties or his agent in that behalf and sufficiently describes the building work the subject of the contract”.

Held, by Mason, Wilson, Deane and Dawson JJ., Brennan J. dissenting, that s. 45 did not prevent a licensed builder from bringing an action upon a quantum meruit for the value of work done and materials supplied under an oral building contract.

Per Mason, Wilson and Deane JJ. The right to recover on a quantum meruit does not depend on the existence of an implied contract but on a claim to restitution or one based on unjust enrichment.

Reason for Contract Formalities

1. Some agreements are so important they need to be recorded in a specified way.

2. Some agreements are open to abuse so we added protections. Link

3. Some agreements are difficult to ascertain so we have special rules to see if there is an agreement.

4. History

Source of law for Contract.

Founded principally on the common law.

Some law of equity and legislation.

Types of contract.

Entirely verbal.

Part verbal and part written.

Entirely written.

Conduct only.

Legal Formalities

Deed.

Essential parts written and signed.

All written and signed.

All written ,signed and exchanged.

All written and signed and exchanged and documents need to be provided.

Deed.

Entirely Written.

Usually named a deed.

Signed and witnessed.

Includes the phrase “signed sealed and delivered”.

Narrows the areas of legal dispute.

No need for consideration-gratuitous promises are legally enforceable

Extends the limitation period.

Essential part written

Dealings in land

Dealings in land

PROPERTY LAW ACT 1958 - SECT 53

Instruments required to be in writing (1) Subject to the provisions hereinafter contained with respect to the creation of interest in land by parol—

(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his agent thereunto lawfully authorized in writing, or by will, or by operation of law;

(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will;

(c) a disposition of an equitable interest or trust subsisting at the time of the disposition must be in writing signed by the person disposing of the same, or by his agent thereunto lawfully authorized in writing or by will.

(2) This section shall not affect the creation or operation of resulting, implied or constructive trusts.

No. 3754 s. 54.

All written ,contents specified and other

Domestic building contract. See D.B.C.Act s.31

Some mortgages.

Real estate authority. See Estate Agents Act Ss 49A and 50

Standard Form Commercial Building Contracts

1. AS 2142-1992. See clause 6 and the formal agreement page

2. ABIC MW -2008 See items 1 and schedules thereto.

3. PC-1 1998 See the formal agreement.

Note.

1. Does the formal agreement document provide for other document to be list in the formal page as contractual DOCUMENTS?

2. Does the contract set out an order of precedence of the contract documents ( either in the formal agreement page and or in the clauses of the contract?)

See the Textbook p. 82

“ This is often the case in a building contract with the execution of the formal document does not take place until well after the work is commenced.”

SEE CLAUSE 6 OF AS2124-1992

DOMESTIC BUILDING CONTRACTS ACT 1995 - SECT 31

General contents etc. of a contract (1) A builder must not enter into a major domestic building contract unless the contract—

(a) is in writing; and

(b) sets out in full all the terms of the contract; and

(c) has a detailed description of the work to be carried out under the contract; and

(d) includes the plans and specifications for the work and those plans and specifications contain enough information to enable the obtaining of a building permit; and

(e) states the names and addresses of the parties to the contract; and

(f) states the registration number (as it appears on the registration certificate under the Building Act 1993 ) of—

AND MUCH MORE

ESTATE AGENTS ACT 1980 - SECT 49A

ESTATE AGENTS ACT 1980 - SECT 49A

Offence not to give certain information about commission (1) An estate agent must not obtain, or seek to obtain, any payment from a person in respect of work done by, or on behalf of, the agent or in respect of any outgoings incurred by the agent unless—

(a) the agent holds a written engagement or appointment that is signed by the person (or the person's representative); and

(b) before obtaining the person's signature to the engagement or appointment, the agent (or an agents' representative employed by the agent) informed the person (or the person's agent or representative) that the commission to be paid to the agent under the engagement or appointment and any money to be paid by the person in respect of outgoings were subject to negotiation; and

(c) the engagement or appointment contains—

(i) details of the commission and outgoings that have been agreed; and

(ii) if a fee is to be calculated on a percentage basis, a statement of that fee expressed as both a percentage and as the dollar amount that would be payable on the reserve price or any other relevant amount set out in the engagement or appointment; and

S. 49A(1)(c)(iii) substituted by No. 41/2003 s. 9(1).

(iii) a rebate statement that complies with subsection (4); and

S. 49A(1)(c)(iv) amended by No. 52/1998 s. 92.

(iv) a statement in a form approved by the Director as to where a complaint concerning any commission or outgoings in the engagement or appointment can be made; and

S. 49A(1)(c)(v) amended by No. 52/1998 s. 92.

(v) anything else required by the Director; and

(d) the agent (or an agent's representative employed by the agent) gave the person a copy of the signed engagement or appointment.

Penalty: 100 penalty units.

Also see subsections 2,3 4and 5.

(

Cooling off periods.

Domestic building Contract.

Some mortgages.

Contract sale of land.

Link

Cooling off period

DOMESTIC BUILDING CONTRACTS ACT 1995 - SECT 34

Building owner may end a contract within 5 days without penalty (1) A building owner may withdraw from a major domestic building contract at any time before the expiration of 5 clear business days after the building owner receives a copy of the signed contract.

(2) To do this, the building owner must within that time—

(a) give the builder; or

(b) leave at the address shown as the builder's address in the contract; or

(c) serve on the builder in accordance with any notice or service provision in the contract—

Contract main topics

Formation.

Vitiating factors.

Incorporation of terms.

Interpretation of terms.

What constitutes performance.

Breach .

Remedies

Lecture 4.

Assignment question 2

Discuss how a construction contract is formed and what constitutes the construction contract".

A significant number of construction contracts are about what documents constitute the contract and if parties verbal statements are part of the contract. Construction building contracts are generally domestic or commercial.

My first construction contract question is

Marking criteria.

1. What documents generally constitute a building contract?

2. How are terms incorporated into a contract?

3. What is the role played by the parol evidence rule and the entire contract clause?

4. Presentation.

a) Index.

b) Headings and sub headings.

c) Reference to primary and secondary sources.

Assignment question 3

Contract defences and when can a contract be terminated?

Marking criteria

1.Discuss the vitiating elements that provide a defence to the enforcement of a contract.

2. Look at AS 2124 and discuss what breaches of contract allow party to terminate the contract.

3. Discuss the general law principals that allow a party to terminate a contract.

4. Presentation.

a) Index.

b) Headings and sub headings.

c) Refer to primary and secondary sources.

Questions 1 to 3 are worth 3 marks. Presentation is worth 3.5 marks.

This question is worth 12.5 % of the total assessment.

Let me see if I can help you focus where the marks are.

Of the 12.5 marks 3.5 goes on presentation.

Presentation is mostly

Some headnotes of case law reports.

With some law reports you will go to the judgements and highlight relevant paragraphs or sentences in the judgements.

c) Attachments of relevant statutory sections.

Attachments of journal articles. You may attach summary of the article and perhaps go to the article itself and highlight relevant paragraphs or sentences in the journal article.

2.Of the remaining nine marks three marks are allocated to referring to the relevant authority for propositions or principles you put forward.

Rule of thumb-70/30 % rule.

The legal process is that if you put forward a proposition, the principal statement of law, you need to provide the case or the line of cases, or the statute or scholarly writing on which you base the principal or point of law.

So likewise, in your assignment writing, you will need to cite all relevant case law and statutory law and scholarly writings.

For your text I like to think of the split between the propositions you put forward and your authority for them as the 70/30% rule.. That is I award 70% of the marks for the statement of the law and 30% of the marks for the authorities you provide.

Rule of thumb

The English phrase rule of thumb refers to a principle with broad application that is not intended to be strictly accurate or reliable for every situation. It refers to an easily learned and easily applied procedure or standard, based on practical experience rather than theory

Assessment

1. 30% for the use of case authority in the text of your writing.

Just the same way as the textbook writers use authority.

The same way that judges use authority.

The same way away person putting forward a position uses some authority as support.

Page 96 of the textbook.

In reference to the Previous slide.

Let me say there are 10 lines of text.

The writer has 5 cases cited in the 10 lines

C & F p435. p. 3 of the extract place on canvas.

In the previous slide 1 case and 1 journal article.

C& F p. 440 p 7 of the extract ( say 7 cases below)

Cheshire & Fifoot N Seddon

Law of Contract R Bigwood

Ellinghaus

10TH AUSTRALIAN EDITION

— Cheshire and Fifoot Law of Contract —

However, evidence of post-contractual conduct may be admissible on the issue of implication, 177 or to prove the subject matter of the contract or find the terms of a contract not wholly in writing (even if such conduct is not admissible as an admission of an existing contract), at least where the contract is not wholly in writing. 178 It is uncontroversial that post-contractual evidence is admissible for deciding whether particular writing is or is not a contract. 179

C & F p 438

No comprehensive account of the nature of promise is to be found in the cases.203 A miscellany of criteria has been identified as relevant in determining whether a statement has a promissory character: see 10.22—10.25. Their application may depend 'on niceties of language in conversations recounted, often years afterwards by persons who would not have been conscious of the significance of the particular words used' 204

The Contract can be made up in different forms and in different combinations.

1. Entirely verbal.

2. Part verbal part written.

3. Entirely written but not signed.

4. Entirely written and signed.

If the contract is entirely in writing and signed.

Signing a document party knows to be ought to know it is a contract incorporates all the provisions in the document as contractual terms.

.

It is irrelevant that the party signing has failed to read that document.

It is irrelevant that the party has failed to understand the terms document.

It is irrelevant there has been no notice to the party signing the document as to the nature of what document comprises.

On signature party signing is bound what is written in the contract.

My opinion is that as this provision of the law is so draconian you ought to take two or three terms from AS 2124-1992 and discuss them in your answer. You may be surprised that you sign up to.

For example clauses 8.1, 12, 29.2 , 30.3, and 44.5

I think you should be genuinely surprised and disappointed with some of the terms in standard form commercial building contracts. It is recognised standard form contracts are written in favour of the proprietor and not the builder.

So let me be very clear

In your assignment I expect you to discuss some of the terms in AS 2124-1992 which automatically become contractual terms on signature.

Indeed where ever relevant I expect you to refer to provisions in the standard form contracts I have provided.

For instance clause R 4 in ABIC MW -2008 regarding an entire contract clause.

If the written contract is not signed

The contract is not signed in the party putting forward the contract needs to give the other party notice of the provisions of the contract.

If the contract is part written verbal or entirely verbal

1. If written and part verbal person avoids the parol evidence rule to the extent that verbal terms, can be added to the contract, but that the verbal terms cannot subtract from the written part of the contract or contradict or vary the written part of the contract.

With regards to the verbal part of the contract the tests for incorporation of verbal terms are applicable- see following slides

[2. If the contract is entirely verbal tests for incorporation of verbal terms are applicable.]

Nature of a verbal promise. Is it a contract term or a mere representation

1. The test is an objective approach. The court is required to determine what a reasonable person in their situation would have intended to assume.

( A subjective approach is what a person is thinking not manifesting such thoughts in words, conduct or writing.)

The objective approach is to look at a party’s words conduct or correspondence and determine their intention from that evidence.

What a reasonable person would decide observing conduct, what is said and all correspondence of the contracting parties.

https://www.law.nyu.edu/sites/default/files/upload_documents/The%20Many%20Faces%20of%20the%20Reasonable%20Person.pdf

Some of the considerations that a reasonable person would take into account

1. The nature of the words used.

a) Are they precise or imprecise.

b) Are the words used intended to induce the other party to enter into the contract.

c) Words of a serious nature such as I warrant or guarantee or even say they promise.

2. Does the maker of the statement have more expertise or information on the recipient.

3. Statement of fact or description of the subject matter of the contract such as the house is situated or the track is in good order and capable of specified work held to be contractual promises.

4. Statements of opinion, intention and desire are usually not of a promissory nature. They are considered to tentative big promissory.,

Is the statement contractual promise.

It is a contractual promise into term of the contract.

If it is not a contractual promise is not a term of the contract and is a representation.

The representation may give rise to a cause of action for compensation in

Statutory remedy of misleading and deceptive conduct.

The tortious remedy fraudulent misrepresentation.

The equitable remedy of innocent misrepresentation.

Tortious remedy of negligent misstatement

1. What documents generally constitute a building contract?

I have done this in the last lecture that you need to do is look at both domestic and commercial contracts.

The domestic building contract is found in section 31 of the domestic building contracts act.

There is a discussion in the textbook on page 273 to 278 event what constitutes the contract documents.

Pages 296 301 of the textbook there is a discussion of a brief outline of the standard forms in common use in the industry.

In the third edition at page 274 I think there is a better discussion of other standard forms than in the fourth edition.

The residential building contract (RBC-1) is such a contract.

You also need to look at variations because variations are ALSO contracts.

See pages 250 page 257 of the textbook regarding commercial building contract variations.

In your assignment you can find yourself to the variation clauses in AS 2124

See page 238

For this reason, it is essential that the contractual documents, read as a whole, tell a coherent story (see [5.220]). In any case, it is essential that the agreement states expressly which documents are incorporated (preferably, such documents should be physically bound in with and signed along with the other documents) and their exact contractual status, in order to prevent disagreement in the future as to the exact terms of the contract.

Also see clause 6.2 of AS 2124 regarding the signing of the Formal Instrument of Agreement

It is often necessary to determine precisely what documents and conditions are intended to apply due to a failure or refusal by one party to execute a printed or consolidated form of contract. Here, the court is required to determine from all of the circumstances of dealings between the parties what was their intention and whether a particular set of conditions was to apply, see Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd39 and PRA Electrical Pty Ltd v Perseverance Exploration Pty Ltd and Another.40

2. How are terms incorporated into a contract

He also dealt with this in the last lecture.

1. With regards to the terms implied into a domestic building contract see section 8 of the Domestic Building Contracts Act.

2. In both domestic and commercial building contracts the implied warranties with regards to goods and services will be implied.

3. See page 241 and to you 30 16126 all will of the textbook for” The following is a consideration of some of the specific terms that may be implied in construction contract”

“Materials and workmanship: In the absence of express terms to this effect, terms will be implied into contracts that the works be built in a good and workmanlike manner employing good and proper materials, … .

Also see AS 2will all will will124 clauses 30.1.30.2 and 30.6

DOMESTIC BUILDING CONTRACTS ACT 1995 - SECT 3 Definitions

"defective", in relation to domestic building work, includes—

(a) a breach of any warranty listed in section 8;

(b) a failure to maintain a standard or quality of building work specified in the contract;

Also see

https://www.domain.com.au/news/new-victorian-laws-to-get-tough-on-dodgy-developers-using-sunset-clauses-to-be-introduced-to-parliament-810753/?utm_campaign=strap-masthead&utm_source=the-age&utm_medium=link

https://www.vba.vic.gov.au/__data/assets/pdf_file/0020/29063/Guide-to-Standards-and-Tolerances-2015.pdf

1. See the building code of Australia discussed at page 50 and 51 textbook

See below page 54 the textbook

Consumer transactions – goods and services

[3.180]

Part 3-2 of the ACL deals with consumer transactions. Whilst these are more often likely to involve small business contracts, the statutory guarantees as to the supply of goods and the provision of services will apply to many agreements in the construction industry.

A general limitation occurs surrounding the definition of “consumer” which provides that the provisions only apply where the goods have a value of less than $40,000 or are of a kind usually acquired for personal domestic or household use. The exceptions to these limitations are when the person acquiring the goods does so for the purpose of re-supply or for the purpose of transforming them in trade or commerce.

There will clearly be application of these provisions of the ACL to supply contracts in the construction industry. Similar conditions apply to a consumer of services, and there is a presumption that persons acquiring goods or services are consumers.

Subdivision A of Division 1 of Part 3-2, dealing with the supply of goods, imposes statutory consumer guarantees as to:title of the supplier to the goods (s 51);

undisturbed possession of the goods (s 52);

the acceptable quality of the goods (s 54);

the fitness for purpose of the goods for any disclosed purpose (s 55);

the supply of goods by description (s 56); and

the supply of goods by sample or demonstration model (s 57).

There will be circumstances where contracts for supply of goods under construction contracts will involve issues as to the application of these statutory guarantees.

Subdivision B of Division 1 of Part 3-2, dealing with the supply of services, imposes consumer guarantees as to the:application of due care and skill (s 60);

fitness for purpose of the services (s 61); and

reasonable time for supply of the services (s 62).

The provision as to fitness for purpose of the services does not apply to architects and engineers (s 61(4)).

Formation.

Main Approaches are

1.Traditional approach.

2.Global approach.

3. Equitable estoppel.

The test applied is an objective test not a subjective one

Traditional Approach.

Unconditional offer.

Unconditional acceptance.

Consideration or the contract in deed form.

Intention to enter into a contract.

Global approach.

Objective approach.

Consider all the circumstances.

Parties prior contact and post contract conduct.

“ The man who said ‘ I never sign contracts’ may have been safe in the nineteenth century

But not so now”. ( see Empirnall’s case)

Cheshire and Extract from Fifoot “ Law of Contract” 10 th Ed p 97

Agreement in the absence of offer and acceptance

3.5 Alternative approaches. The rigidity of offer and acceptance is sometimes ill-suited to what people actually do, with the consequence that the law of contract may dictate that no agreement has been reached when the parties themselves would consider that they have entered into a contractual relationship. This is particularly evident with the 'battle of the forms'.25 There are many circumstances of modern commerce that do not easily fit the formal offer-acceptance model, as noted in 3.4 above.

From time to time attempts have been made to escape the strait jacket of offer and acceptance by adopting a 'global'' approach to negotiations between parties. On this approach the court's task is to ask whether, objectively and having regard to the totality of the dealings between the parties, they should be considered to have entered into a contractual relationship without inquiring too closely into the

Cheshire Fifoot “ Law of Contract

Another example of the global approach can be seen in the following passage taken from the judgment of Lord Denning MR in Gibson v Manchester City Council/.34

”To my mind it is a mistake to think that all contracts can be analysed into the form of offer and acceptance. I know in some of the text books it has been the custom to do so: but, as I understand the law, there is no need to look for a strict offer and acceptance. You should look at the correspondence as a whole and at the conduct of the parties and see there from whether the parties have come to an agreement on everything that was material.If by their correspondence and their conduct you can see an agreement on all material terms -which was intended thenceforward to be binding -then there is a . binding contract in law even though all the formalities have not been gone through ...35”

I , •

Ormiston J in Vroon BV v Foster's Brewing Group Ltd36 ( Victoria Supreme Court) was prepared to

conclude that the existence of a contract may'be 'evidenced otherwise than by offer

and acceptance',37 though stressing that offer and acceptance was the' primary mode of ascertaining the existence of agreement. His Honour drew particularly on the American Restatement of Contracts, Second § 22(2) which provides

'·

' “A manifestation of mutual assent may be made even though neither offer nor acceptance can be identified and even though the moment of formation cannot be determined. “

These approaches, as alternatives to the offer-acceptance model, to determining contract formation are well established in Australia. It is a beneficial development in the law, effecting what many commercial people actually do rather than artificially analysing their interactions by reference to the traditional offer and acceptance model.

Also see Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd ( NSW Supreme Court)

“ Law of Contract” 10 th Ed pp. 89 and 99

Equitable estoppel.

One party assumes a legal relationship exists.

Or expects it would come about.

The assumption or expectation was induced by unconscionable conduct.

The inducement was intended.

The innocent party would suffer to their detriment if the assumption or expectation was reversed.

See Walton’s case

Dominant document.

Head of agreement.

Objectively which document have the parties relied upon.

Last document

Offer one document.

Acceptance another.

“ Battle of the forms”

Court usually accepts the last document.

The agreement must be unconditional.

1. Assuming the other elements of contract formation are satisfied ( see p. 196 of the TB-Essential elements of a valid contract) –

2. For the contract to be unconditional is determined by an OBJECTIVE determination of the parties intention at the relevant time.

Subjective determination

The party cannot say what they thought they intended.

See C & F 10 Ed pp. 428 and 429.

“ But it [ the Court] cannot receive evidence form one party as to its intentions …uncommunicated intention, understanding or expectations… and construe the contract by reference to those intentions”

C & F p. 435