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By Ir. Harbans Singh K.S. 1
Construction
Contracts: An Overview
6T H E I N G E N I E U R
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A n engineering/construction
project in its lifetime from
initial inception to
eventual realization (and
subsequently within the limitation
period 2) touches on a whole spectrum
of legal disciplines ranging fromcontractual, commercial, civil and the
likes. This may be so despite the fact
that in its nascent and active stages,
it may be basically contractual in
essence. Hence, for a proper
appreciation of the encompassing
legalities when addressing the issue
of construction law, it is prudent to
consider all relevant fields of law such
as the law of contract, law of tort,
civil law, commercial law and public
law3
.The law of contract forms the core
of the field of construction law and
in due recognition of its significance,
this article has been penned to
elucidate the basic considerations vis-
à-vis the species of contracts going
under the label of ‘construction
contracts’. The discussion is confined
merely to the essential matters so that
the reader can grasp a ‘macro’ view
of this important subject without
getting bogged down in the intricate
details. With brevity and relevancein mind, the principal considerations
have been addressed and the reader
is encouraged to make reference to
other legal treatises if a deeper
appreciation of the topic is desired.
CONTRACTS GENERALLY
Nature Of Construction Contracts
A construction contract, for thepurposes of this article, is a contract
under which one party 4 (commonly
called the Contractor) agrees for
valuable consideration to undertake
to carry out works for another party
(commonly called the Employer 5)
involving design (where applicable),
fabrication, erection, alteration, repair
or demolition of structures and/or
installations on a site 6 made available
by the latter. It covers a whole range
of contracts i.e. from a simple oral
agreement to repair a house roof to a
mega highway contract. Such contracts
are usually termed ‘building contracts’
1. B.E. (S’pore), P.E., C. Eng., LLB (Hons) London, CLP, DipICArb, Director HSH ConsultSdn. Bhd.
2. As statutorily prescribed e.g. Limitation Act 1953 (Rev. 1981), etc.3. For international contracts, private international law may be also relevant.4. This includes a corporation.5. Also called ‘the client’ or ‘the purchaser’ or ‘the authority’.6. Land or place which may be allotted or used for the purposes of carrying out the
work.7. Such as highways, airports, harbours, etc.8. Inclusive of utilities.
9. Such as mechanical, electrical, telecommunication, heavy engineering, etc.10. In a sub-contract, the main contractor is in effect the employer and the sub-
contractor is in effect the contractor.11. or, Jabatan Kerja Raya (JKR).
undertaken by the contractor and the
means by which those obligationsmay be varied from time to time; the
time for completion and interim
control of the progress of the works;
the machinery for payment of the
contractor; supervision of the works
on behalf of the employer; insurance
against a range of risks; and the
remedies available to the parties in
respect of default.
The Malaysian construction
industry relies essentially on a
number of types of forms of contract;
these being notably the standardforms of contract, modified standard
forms of contract and ‘ad hoc’ or
‘bespoke’ forms of contract. The
principal standard forms in common
use include those published by the
various institutions e.g. the Institution
of Engineers, Malaysia and the
Pertubuhan Akitek Malaysia. For
public sector contracts, the Public
Works Department 11 has drafted and
published an employer’s specific
‘standard’ set of forms of contract.
when they relate to buildings and
‘engineering contracts’ when they relateto infrastructure 7, systems 8 and
equipment installations 9. The
distinction between these terms is of
no legal significance, and indeed
construction contracts as a class are
regarded by Malaysian law, not as a
separate category of contracts but a
part of the general law of contract.
In most cases, the only parties to
a construction contract are the
Employer and the Contractor 10.
However, in actual practice, in all
likelihood, a construction projectfrequently involves a large number
of contributors or participants who
are contractually interlinked by a
matrix of contractual arrangements.
The roles of such contributors are
discussed below.
Forms of Construction Contracts
The main matters for which a
construction contract normally makes
provision are the extent of obligations
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Lately, the Construction Industry
Development Board (CIDB) has issued
a standard form of contract for
building works 12. These forms of
contract may be used as published,
but they are frequently amended. A
true standard form i.e. one which isproduced by a body which is
representative of the industry e.g. the
Construction Industry Development
Board (CIDB), is in principle unlikely
to attract the operation of the ‘contra
proferantum’ principle 13. However,
the position may well be different
where an employer or contractor
repeatedly contracts on the basis of
standard form contract containing his
own amendments 14 or one that is self-
styled as a standard form15
.Other standard forms of contract
in used in the construction industry
include those published by particular
employers e.g. Tenaga Nasional
Berhad, Putrajaya Holdings, Telekom
Malaysia Berhad and the like for their
specific projects and a sprinkling of
foreign forms. The latter include
those standard forms generated by
bodies such as the Joint Contracts
Tribunal (JCT), the Institution of Civil
Engineers (ICE), the International
Federation of Consulting Engineers(FIDIC) and various international
bodies for use in relation to specialist
works 16.
Roles of the parties
In addition to the employer and
the contractor, the operation of a
construction contract commonly
involves a number of other persons
not party to the contract itself 17.
Except where the contractor undertakes to design as well as to
construct the works 18, the employer
will usually either undertake the
design departmentally 19 or
commission the design from a
professionally qualified person e.g.
architect or engineer whose rights
and obligations will be governed by
the contract under which he is
engaged 20.
Most sizeable construction
contracts make provision for the
employer to be represented during the
progress of the works by one or more
contract administrators 21. Such
person or persons may be given
authority to act as the employer’s
agent in supervising the works and
transmitting information and
instructions to the contractor; they
may also be empowered by the
construction contract itself to exercisecertification and other decision-
making powers which are binding
upon both the employer and the
contractor.
The principal contract
administrator has traditionally been
the engineer or architect responsible
for designing the works, although this
is by no means necessarily so. A
recent trend especially in ‘Design and
Build’ and ‘Management’ types of
contracts has been for non-professionals such as project
managers, construction managers and
the like to undertake the said role. In
addition, many contracts provide for
the appointment of a quantity
surveyor to carry out some of the
administrative functions. A sub-
contractor is one who carries out part
of the contract, and who works under
a contract with the main contractor
who is for all intents and purposes of
the sub-contract, the former’s
employer. A sub-contractor whosupplies only materials but undertakes
no work or other services under the
sub-contract is commonly called a
‘supplier’. Sub-contractors and
suppliers are referred to as ‘domestic’
where they are selected by and the
responsibility of the main contractor;
they are often referred to as
‘nominated’ where they are selectedby the employer, who then instructs
the main contractor to enter into the
relevant sub-contract 22.
TYPES OF CONTRACT
PROCUREMENT
I Traditional General Contracts
Appearing under various labels
such as ‘General’ contracts,
‘Employer-design’ contracts and‘Design-bid-build’ contracts, these
contracts are basically characterized
by the separation of the design from
the production or manufacture 23
elements of the contract. Under this
contract procurement route, the
employer causes the design of the
12. Which includes a Main Contract Form and one for the Nominated Sub-Contract.13. Union Workshop (Construction) Co. v Ng Chow Ho Construction Co. Sdn. Bhd.
[1978] 2 MLJ 229.14. Chester Grosvenor Hotel Co Ltd v Alfred McAlpine Management Ltd (1991) 56BLR 115. See also Barnard Pipeline Technology Ltd. v Marston Construction Co Ltd[1992] CILL 743.
15. E.g. the JKR or PWD Standard Forms.16. Notably the Institution of Electrical Engineers, the Institution of Mechanical
Engineers and the Institution of Chemical Engineers to name a few.17. See Ir. Harbans Singh K.S. ‘Engineering and Construction Contracts Management:
Law and Principles’ at P10-19.18. See Design and Build Contracts.19. Example, the Public Works Department by ‘in-house’ designers.20. e.g. BEM Standard Form of Agreement (BEM Form 2000 Edn)21. Called S.O., Engineer, Architect, Employer’s Representative, etc. depending on the
form of contract employed.22. Other common categories of sub-contractors include ‘designated (or named) sub-contractors, ‘selected’ sub-contractors, ‘specified’ sub-contractors, etc.
23. i.e. construction or installation.
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works to be prepared by his
professional designers 24 and then
invites the contractor to tender on
the basis of the completed design 25.
The contractor builds or
manufactures what the designers
have specified. Since the designelement is within the ambit of the
employer’s obligations, he
accordingly assumes all
responsibility for all design work
undertaken. The contractor is only
answerable for the building or
construction aspects of the works i.e.
the quality of materials used and
workmanship involved in the
contract.
Another significant characteristic
of this form of procurement is that asingle main contractor 26 undertakes
total responsibility to the employer
for all the work under the contract.
In so far as parts of the work are in
fact carried out by other
organisations, these operate as sub-
contractors to the main contractor
and do not enter into direct
contractual relations with the
employer 27. However, where sub-
contractors are selected by the
employer 28, the main contractor’s
responsibility is frequently circumscribed and a limited form of
contract is entered between the
employer and the chosen sub-
contractor.
I Design and Build Contracts
A design-and-build contract 29,
also known as a ‘package deal’ or
‘turnkey contract’ 30, is one under
which the contractor undertakes both
designing and constructing thecontract works, which are to be
completed in such a way as to meet
the requirements of the employer 31.
The defining characteristic of this type
of contract is the combination of most
(if not all) of the essential tasks of a
project e.g. design procurement,
manufacture, fabrication, production,
construction and management into a
single package. Taken to the extreme,
the arrangement also places the task
of financing, procuring approvals,
complete fitting out, technology-
transfer and the like on the
contractor.
Acco rd ingly, th e con tr actor
shoulders full responsibility and sole
liability for the design and
construction elements of the works
in so far as these are included within
the ambit of his obligations. In
instances of default or breach by thecontractor, the onus is not on the
employer to distinguish the particular
element involved be this design,
quality of materials or workmanship
or the party actually culpable. His
redress is solely at the contractor’s
expense 32.
Selection of the contractor is
normally based on competitive
tendering or negotiations and
payment effected on either an interim,
milestone or lump sum basis. It iscommon under such an arrangement
to find that the supervisory powers
of the employer’s representative are
more limited than those of a contract
administrator under a traditional
general contract 33. Hence, unlike
traditional general contracting, the
employer’s representative plays a
limited administrative role which may
be confined to conducting
independent checks and auditing the
contractor’s works. The contractor,
his sub-contractors 34 and professionaladvisors are responsible for all aspects
of the works inclusive of managing
the contract up to its final realization.
I Management contracts
A compar at ive ly rec ent
development on large and complex
projects has been the emergence of
the ‘management contractor’, whose
only role is to manage, co-ordinateand supervise the work of numerous
specialists by whom the whole of the
construction work is carried out.
Under a modern management
contract, these specialists are
employed as sub-contractors 35 to the
main or management contractor 36,
but the latter is relieved of any
responsibility to the employer for sub-
contractor defaults 37. The underlying
philosophy of this species of contract
procurement is that the managementof the construction process constitutes
a particular expertise which can be
distinctly identified and accordingly
addressed through the employment of
the management contractor. The
latter is for all intents and purposes
not a builder in the strict sense but
an independent professional
providing essentially a management
service. This common thread runs,
in addition through the construction
management route of contract
procurement 38.Compared to traditional general
contracting or design and build types
of contracts, management contracting
24. either, in-house or external consultants.25. See JKR 203 and 203A Forms PAM ‘98 With Quantities and Without Quantities
Edns etc.26. Sometimes called a ‘General Contractor’ or ‘Contractor’ (in short).27. Hence avoiding any privity of contract between the parties.
28. Where this is so (as frequently in respect of specialist work) the employer maydictate the terms of the sub-contract as well as the sub-contractor’s identity.29. or ‘Design and Construct’ Contract.30. ‘Turnkey Contract’ was defined in High Mark (M) Sdn. Bhd. v Patco Malaysia Sdn.
Bhd. [1984] 28 BLR 12931. Such contracts are normally entered into on a lump sum basis.32. See Greaves (Contractors) Ltd. v Baynham Meikle and Partners [1975] 4 BLR 56;
[1975] 1 WLR 1095, CA.33. See PWD Form DB/T 2002 Edn.34. Who should ideally of the ‘domestic’ type although there is a tendency to include
‘nominated’ ones.35. Popularly called ‘Works Contractors’ or ‘Trade Contractors’.36. The management contractor is normally entitled to be reimbursed for all payments
made to sub-contractors in addition to his own fee for the management servicesprovided.37. See JCT Management Contract - JCT MC 87.38. See below.
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is unfortunately deficient in the
availability of standard forms of
conditions of contract. On the local
level, no particular authority,
institution or body has published any
such form. Hence, there is a tendency
to use either ‘bespoke’ forms or modified foreign forms such as JCT
MC 87 39 or the ICE New Engineering
Contract 40.
I Construction management
As apt ly named, construction
management contracts are a sub-set
of the general corpus of management
type of contracts and as such share
common characteristics with
management contracts. These havemetamorphosed recently into an
alternative to the latter type of
contracts and are being employed
mainly on large and complex projects
having a multiplicity of trades, users
and designers 41. In essence, a
construction management contract is
an arrangement under which the
employer enters into a direct
contractual relationship with each of
the specialist contractors 42, while at
the same time employing a
‘construction manager’ to providemanagerial and supervisory services
for the project.
The obligations undertaken by the
construction manager in such a case
depend upon the terms of the contract
by which he is employed 43.
Owing to the novelty of this
method of contract procurement,
there is a paucity of standard forms
of conditions of contract available for
use by the local construction industry.
The tendency is to either employ a‘bespoke’ form or to use the JCT CM
94 Form 44, albeit in a modified form.
A further alternative is to draw up a
series of contracts i.e. between the
employers and firstly the construction
manager, secondly each member of
the design team and thirdly each
specialist trade contractor.
I Hybrids
In addition to the main types of
contract strategy described above,
there have also developed hybrids
such as 45:
(i) ‘Develop and construct’ contract:
this is similar to a design and
build contract, but a concept
design is prepared by
independent professionals
engaged by the employer before
the design and build contractor is selected 46;
(ii) ‘Design and manage’ contract:
This is similar to a management
contract, but the contractor is
also responsible for detailed
design or for managing the
design process;
(iii) ‘Design and construction
management’ contract: This is
similar to constructionmanagement but the construction
manager is also responsible for
detailed design or for managing
the design process.
There are no published standard
form contracts governing any of the
above hybrids and the practice is to
employ ‘ad hoc’ or ‘bespoke’ forms
customized for the particular project
or application.
I Term contracts
A ‘term contract’ is one by which
an employer seeks to make provision
for the carrying out of certain
categories of work (usually minor
works of alteration or repair and/or
maintenance) during a specified
period of time 47. Depending upon the
terms on which tenders are invited
and accepted, the resulting legal
relationship may be a contract whichbinds the contractor to carry out
whatever work of the specified
description the employer chooses to
order during the period stated 48.
39. JCT Standard Form of Management Contract (1987 Edn).
40. ICE New Engineering Contract Option F - Management Contract.41. See ‘Construction Management Form - Report and Guidance’ the Centre forStrategic Studies in Construction, University of Reading [1991].
42. Also called ‘Trade Contractors’ or ‘Works Contractors’.43. See Rosehaugh Stanhope (Broadgate phase 6) plc v Redpath Dorman Long Ltd.
[1990] 50 BLR 69, CA; Beaufort House Development Ltd v Zimmcor (International)Inc [1990] 50 BLR 91, CA.
44. The JCT Standard Form of Construction Management (1994 Edition).45. See Piyush Joshi ‘Law Relating to Infrastructure Projects’ at P22-25.46. This being basically to avoid the purported shortcomings of the other forms of
‘Package Deal’ types of contracts.47. The period is usually 1 year but there are instances in local practice where a
longer period of up to 5 years has been employed.
48. Percival Ltd. v LCC Asylums and Mental Deficiency Committee (1918) 87 LJKB677. The JCT Measured Term Contract (1989) permits either party to determinethe contract by giving notice, but requires the contractor to carry out all orderswhich can be completed before the expiry of such notice.
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Alternatively, the acceptance of a
tender may result in a ‘standing offer’
by the contractor, which ripens into
a contract on each occasion that an
order is placed but which may be
revoked at any time 49.
At the moment, there is no localstandard form of conditions of
contract for a term contract though
there is a tendency to either modify
the JCT Standard Form of Measured
Term Contract (1989 Edition) or to
generate ‘bespoke’ forms.
I Miscellaneous Contracts
Over and above the common
methods of contract procurement
described above, there exist other types of contracts that are being
utilized by the local construction
industry. These are essentially
va ri at ions of the conventi onal
methods and have been developed
to address specific uses. Such
contracts include, inter alia, the
following:
(i) ‘Build, operate and transfer 50
contract’: This is a type of a
privately financed contract
whereby the contractor financesthe project, designs it,
undertakes the construction,
owns and operates it over the
concession period and on its
expiry transfers the beneficial
ownership of the project back to
the employer 51.
(ii) ‘Serial contract’: This is a contract
resulting from a procedure called
‘serial tendering’. Fundamentally,
a serial tender is a standing offer to carry out work for more than
one project in accordance with
the tender submitted for the
initial project, or based on
hypothetical bills of quantities
representing the average project
of a series 52.
(iii) ‘Continuation contract’: This is an
‘ad hoc’ arrangement to extend
the scope of the initial or original
contract beyond its original
ambit i.e. there is no standing
offer to do more work than that
originally envisaged. The
original and continuation
contracts are dealt with
separately. If and when the latter
arises, the original contract may
be used as a basis for realizing
the continuation contract 53
(iv) ‘Periodic contract’: This is similar
to a term contract, but the
execution of work or supply of
goods is required at intervals,
regularly or on demand rather
than being continuous for a
stated time 54.
(v) ‘Partnering contract’: This
contract is in essence an
extension to the normal serial
contract whereby over a pre-determined period of time, the
contractor automatically receives
all new contracts from the
employer with payment to be
made by reference to an initially
agreed formula 55.
(vi) ‘Independent contract’: This is
essentially a ‘contract for
services’ whereby the party
undertaking a stipulated task for
an agreed consideration is free to
select his own mode of doing it.He is neither under the control
or direction of the other 56.
There are no published local
standard forms of conditions of
contract governing the above
miscellaneous contracts and use is
made of ‘ad hoc’ or ‘bespoke’ forms.
SPECIAL PARTIES
I The Government departments
The extent to which contracts can
be made on behalf of the Federal
Government, and the Governments of
the states is governed by the
Government Contracts Act 1949 57.
For the procedure pertaining to the
enforcement of such contracts and
matters relating to proceedings by and
against the Federal Government andthe Government of the states, the
applicable statutes are the
Government Contracts Act 1949 and
The Government Proceedings Act
1956 58.
In general, a construction contract
entered into on behalf of the
Government 59 is enforceable by and
against the Government.
Accordingly, the Government is
bound by a contract made by a proper
agent acting within the scope of his
authority but not otherwise 60. A Government Officer who enters into
a contract within the scope of his
49. Great Northern Rly Co v Witham [1873] LR 9 CP 16.50. Also called ‘BOT’ Contract. See also Piyush Joshi ‘Law Relating to Infrastructure
Projects’ at P22-25.51. See Ir. Harbans Singh K.S. ‘Engineering and Construction Contracts Management:
Pre-Contract Award Practice’ at P132-138.52. See The Aqua Group ‘Tenders and Contracts for Building’ (2nd Edn.) at P 119.53. See Ir. Harbans Singh K.S ‘Engineering and Construction Contracts Management:
Law and Principles’ at P256.54. See Robinson, Lavers, Tan & Chan ‘Construction Law in Singapore and Malaysia’[2nd Edn.] at P428.
55. See ‘Dispute Avoidance and Resolution Task Force (DART) of the AmericanArbitration Association Report on partnering at P86.
56. E.g. Consultants, Suppliers, etc. See Stevenson Jordan & Harrison v MacDonald &Evans [1952] 1 TLR 101 and Syed Mubarak bin Syed Ahmad v Majlis PeguamNegara [2001] 4 MLJ 167.
57. Rev. 1973 (Act 120)58. Rev. 1988 (Act 359). See generally also the Rules of the High Court 1980 Ord. 73
for proceeding by and against the Government.59. It does not include municipal councils and public corporations.60. Under the Government Contract Act 1949 (Act 120) SS 2 & 3, all contracts made
in Malaysia on behalf of the Government shall, if reduced in writing, be made inthe name of the Government and signed or authorized as provided for under theAct. Any authorization under S 2 or 3 shall be in the form set out in the scheduleto the Government Contracts Act 1949 (Act 120).
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authority is not liable to be sued
personally upon any contract
made in that capaci ty 61 .
Act ions by or against the
Government are instituted or
defended by the Attorney
General 62.
I Local authorities
A local authority 63 may
enter into contracts inclusive of
construct ion contracts
necessary for the discharge of
any of its functions 64. A local
authority must make standing
orders with regard to contracts
for the execution of works or
the supply of goods or materials65. However, a contractor is not
bound to inquire whether the
relevant standing orders have
been complied with, and non-
compliance by itself does not
invalidate any contract 66.
A local authority is bound by
any contract entered into by a
committee to which the necessary
powers have been delegated 67, or
by any officer acting within his
actual or ostensible authority 68.
Protection is afforded to localauthorities or persons acting in the
execution of statutory or other
public duties in respect of any act,
neglect or default done or
committed by the Publ ic
Authorities Protection Act 1948 69.
I Companies, corporations and
partnerships
Companies, corporations and
partnerships may enter intoconstruction contracts like any
other person. In fact the formalities
required for the execution of
contracts by companies ,
corporations and partnerships are
effectively identical to those for
individuals, save for particular
requirements as stipulated in the
respective statutory enactments 70.
A company may choose to make a
contract in writing, under its
common seal or a contract may be
made on behalf of the person by
any person under its express or
implied authority 71.
61. Government Contracts Act 1949 (Act 120) S 8 also provides that a public officershall be personally liable when he expressly pledges his personal credit or wherehe contracts otherwise than as an agent of the Government. According to S 6, no
contracts entered into except in accordance with the Act shall be deemed to havebeen made by the authority of the Government. See also Dunn v Macdonald[1897] 1 QB 401; affd [1897] 1 QB 555, CA; Sim Siok Eng v Government of Malaysia
[1978] 1 MLJ 15.62. For the Federal Government, the Attorney General. For the state of Sabah and
Sarawak, the Attorney General of such state and for all other states, the LegalAdvisor of such state.
63. Defined in Local Government Act 1976 (Act 171) to include any City Council,Municipal Council or District Council. S13 stipulates that every local authorityshall be a body corporate.
64. See Local Government Act 1976 (Act 171) S 36(1).65. See Local Government Act 1976 (Act 171) S 36(2).66. See North West Leicestershire District Council v East Midlands Housing Association
Ltd. [1981] 3 All ER 364, [1981] 1 WLR 1396, CA.67. See Local Government Act 1976 (Act 171) S 36(2).68. As to the ostensible authority of various officers see A Roberts & Co Ltd. v
Leicestershire County Council [1961] Ch 555, [1961] 2 All ER 545; CarltonContractors v Bexley Corpn [1962] 60 LGR 331. Cf North West Leicestershire DistrictCouncil v East Midlands Housing Association Ltd. [1981] 3 All ER 364, [1981] 1WLR 1396, CA.
69. Act 198, See also Local Government Act 1976 (Act 171) S124.70. See e.g. Companies Act 1965 (Act 125), Partnership Act 1961 (Act 135), etc.71. Companies Act 1965 (Act 125) S 35(4).72. For a definition of a partnership see Partnership Act 1961 (Act 135) S 3(1) and
Gulazam v Noorazman and Sobath [1957] 23 MLJ 45; Ratna Ammal & Anor v TanChow Soo [1964] 30 MLJ 399.
73. See Partnership Act 1961 (Act 135) S 7&
8. See also Pembinaan Thin Chai SdnBhd v Citra Muda Sdn Bhd & Anor [2002] 3 MLJ 107.74. See Chan King Yue v Lee @ Wong [1962] MLJ 379; Bannatyne v D&C Mac Iyer
[1906] 1 K.B. 103.
Contracts made by or on
behalf of a corporation which
if made by private persons
would be required to be in
writing, or which would be
valid a lthough made by parole
only, may be similarly made onbehalf of a corporation by any
person acting under its express
or implied authority whether
by seal or not.
For partnerships 72 , when
either party is a member of the
partnership, the partnership
will be liable under the contract
if the contracting party was
acting within the scope of his
authority 73 . In general, a
member of a partnership isregarded as an agent of the
f i rm and b inds the o ther
pa r tner s in making any
contract fa l l ing within the
normal course of business of
the firm 74.
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FORMATION OF CONTRACT
I Negotiated contracts
The formation of construction
contracts is governed by the ordinary
contractual rules of offer andacceptance 75. Where a contractor
quotes a price for works in a document
headed ‘estimate’ this may be treated
as an offer 76. Acceptance must be
absolute and unqualified 77 and in full
conformity with any requirements laid
down in the offer 78.
Any purported acceptance may, if
it alters the terms of the offer or
introduces new terms, be regarded as
a counter-offer and thus a rejection
of the original offer 79
. Where theparties ‘negotiate’ by delivering
inconsistent standard-form documents
to each other, the usual outcome is
that, when work commences or
materials are supplied, this will be
deemed to constitute acceptance of the
last document delivered 80.
Where a contract is concluded after
the contractor has commenced the
works, it may easily be concluded that
the parties intended the contract to
govern all the work, including what
has already been done 81.
I Tenders
In general, an invitation to
contractors to submit tenders to carry
out construction works is not an offer
but merely an invitation to treat 82;
the employer is in consequence under
no obligation to accept the lowest or
any of the tenders received 83.
However, an express undertaking by
the employer to accept the lowesttender will be binding upon the
submission of a tender which conforms
with any conditions laid down 84.
Moreover, the employer may in other
cases be under an implied obligation
to give reasonable consideration to any
tender submitted in accordance with
the published conditions 85.
The unconditional acceptance of a
tender creates a binding contract. Until
such acceptance occurs, the contractor
is free to withdraw his tender 86 by
giving notice of withdrawal to the
employer 87. This will be so
notwithstanding any undertaking by
the contractor to keep his offer open88, unless that undertaking is made by
deed or given for consideration 89.
An unsucces sful tender er is
normally not entitled to recover the
cost of preparing his tender from the
employer 90, except where theinvitation to tender was given
fraudulently and without any intention
of accepting it in any event 91.
However, a promise by the employer
to pay for such services may be implied
where the work involved far exceeds
what would normally be required of
the contractor or where the employer
is able to make profitable use of the
information supplied 92.
Where an employer invites tenders
from contractors to supply such work
75. See Ir. Harbans Singh K.S. ‘Engineering and Construction Contracts Management:Law and Principles’ at P61 to 81.
76. Croshaw v Pritchard and Renwick [1899] 16 TLR 45. An inaccurate estimatewhich is not an offer may give rise to liability in the tort of negligence: see J & J CAbrams Ltd v Ancliffe [1978] 2 NZLR 420.
77. Section 7(a) Contracts Act 1950 (Act 136).78. See Rajeswari Thedshana Murthy v Kin Nam Realty Development Sdn. Bhd. [1993]
1 MLJ 88.79. Hyde v Wrench [1840] 3 Beav. 334, 49 ER 132; Trollope & Colls Ltd. and Holland,
Hannen&
Cubitts Ltd. v Atomic Power Construction Ltd. [1962] 3 All ER 1035.80. Chichester Joinery Ltd. v John Mowlem& Co plc. [1987] 42 BLR 100; Butler MachineTool Co. v Ex-Cell-O-Corp. [1979] 1 All ER 965.
81. Trollope & Colls Ltd and Holland, Hannen & Cubitts Ltd v Atomic PowerConstructions Ltd [1962] 3 All ER 1035 [1963] 1 WLR 333.
82. Defined by Lord Parker as ‘an offer to receive offers’ in Fisher v Bell [1961] QB 394.83. Spencer v Harding [1870] LR 5 CP 561.84. Harvela Investments Ltd v Royal Trust Co of Canada (CI) Ltd [1986] AC
207, [1985] 2 All ER 966, HL.85. Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990] 3
All ER 25, [1990] 1 WLR 1195, CA; cf Fairclough Building Ltd v Port TalbotBorough Council [1992] 62 BLR 82, CA; Hughes Aircraft SystemsInternational v Airservices Australia [1997] 146 ALR 1.
86. Section 5(1) Contracts Act 1950 (Act 136).87. Section 6 Contracts Act 1950 (Act 136). See also Cook Islands ShippingCo Ltd v Colson Builders Ltd [1975] 1 NZLR 422.
88. Routledge v Grant [1828] 4 Bing 653; Dickinson v Dodds [1876] 2 Ch D463.
89. The Canadian courts have upheld such undertakings despite the absenceof consideration: see R v Ron Engineering Ltd [1981] 119 DLR (3d) 267.Most local employers protect themselves against withdrawal by requiringthe contractor to furnish a ‘tender’ or ‘bid’ bond.
90. Harris v Nickerson [1873] LR 8 QB 286; William Lacey (Hounslow) Ltd vDavis [1957] 2 All ER 712 at 715.
91. Richardson v Silvester [1873] LR 9 QB 34.92. William Lacey (Hounslow) Ltd. v Davis [1957] 2 All ER 712, [1957] 1 WLR
132; Marston Construction Co. Ltd. v Kigass Ltd. [1989] 46 BLR 109.93. See Ir. Harbans Singh K.S. ‘Engineering and Construction ContractManagement: Pre-Contract Award Practice’ at P511 to 515.
94. E.g. supply items, repair, renovation, maintenance, etc.
or goods as the employer may require
during a specified period, the legal
relationship which is brought into
existence by the acceptance of a tender
depends upon the terms of the
invitation to tender.
I Purchase Orders
The purchase order system is one
of the methods of contract
procurement based essentially on the
nature of the work and its value
utilized by employers as distinct from
the tender system discussed above 93.
Synonymous with the ‘quotation’
system, the purchase order system is
used principally for minor works 94.
The calling of quotations by the
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employer is in the legal sense
tantamount to an invitation to treat.
The contractor’s submission of a
quotation in response to the
employer’s request will legally
constitute the making of an ‘offer’
or ‘proposal’. The mere labelling of the submission as a quotation is not
conclusive of its legal effect. The
contents will have to be carefully
scrutinized to elicit the intention of
the submitting party 95. The formal
issue of the purchase order by the
employer constitutes an acceptance
of the quotation (or offer) in the
contractual sense and thereby
perfects the contract.
I
Letters of intent
A letter of intent is a document
which expresses an intention to enter
into a contract with the recipient at
some time in the future 96. Its legal
effects, if any, depend upon the true
construction of the words used 97 and
the relevant circumstances between
the parties 98. The document may
have no legal effect at all 99; it may
constitute an offer of payment which
the recipient is free to accept by
performance of specified services 100;
or (exceptionally) it may create an
ancillary or interim contract which
will entitle the recipient to recover his
wasted costs if the intended future
contract does not materialize 101.
Where a letter of intent does not
result in any kind of contractualrelationship, a recipient who carries
out work in accordance with its
terms may nevertheless be entitled
to payments on a restitutionary
basis 102 e.g. on a quantum merit
basis.
I Consideration
To be enforceable at law, a
promise must be supported by
valuable consideration103
. A unilateral declaration is not enough
to make a contract and that no
question of contract under seal
arises unless it falls within one of
the exceptions in Section 26 of the
Contracts Act 1950 10 4. An
undertaking by a contractor to
carry out work where no price is
agreed is generally enforceable,
since consideration exists in the
form of an implied promise by the
employer to pay a reasonable sum.
A promise by an employer to pay
an additional sum in return for the
contractor’s mere carrying out of
existing contractual obligations isgiven without consideration and is
thus unenforceable 105, unless the
court is able to discern sufficient
practical benefit to the employer
from the arrangement 106.
Furthermore, a contractor may file
a claim on an act done prior to a
promise made by the employer
provided the contractor had done
or abstained from doing something
pursuant to the desire of the
employer and not necessarily inpursuance of a promise to be made
by the latter 107.
I Formalities
The general legal position is that
the formation of a construction
contract requires no particular
formalities. Such a contract may
95. Croshaw v Pritchard [1899] 16 TLR 45. See also Zain Azahari bin ZainalAbidin v Wearne Brothers (1983) Sdn Bhd [2002] 1 MLJ 254.
96. Its normal purpose is to reassure the recipient. Cf the ‘letter of comfort’sent by a parent company: Kleinwort Benson Ltd v Malaysia Mining CorpnBhd [1989] 1 All ER 785, CA.
97. British Steel Corpn v Cleveland Bridge and Engineering Co Ltd [1984] 1 AllER 504 at 509-510 per Robert Goff J.
98. Mashaha Navigation Sdn. Bhd. v Palm Oil Products (M) Bhd. & Anor [1989]1 CLJ 393, HC.
99. As in Ayer Hitam Tin Dredging Malaysia Bhd. v YC Chin Enterprises Sdn.Bhd. [1994] 2 MLJ 754, [1994] 2 SCR 90, SC.
100. Turriff Construction Ltd v Regalia Knitting Mills Ltd [1971] 9 BLR 20; cf Monk Construction Ltd v Norwich Union Life Assurance Society [1992] 62BLR 107, CA.
101. Such a contract might also render the recipient liable for defectiveperformance.
102. British Steel Corpn v Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER504, in which the absence of a contract precluded a counter-claim by the employerfor alleged delays in performing the work in question. See also Contracts Act1950 (Act 136) S71 and Siow Weng Fatt v Susur Rotan Mining Ltd. [1967] 2 MLJ118, PC and Wilson Smithelt & Cape (Sugar) Ltd. v Bangladesh Sugar & FoodIndustries Corpn [1986] 1 Lloyd’s Rep 378.
103. See Section 2(d) Contracts Act 1950 (Act 136) for the definition of consideration.104. Per Gill FJ in Guthrie Waugh Bhd. v Malaippan Muthucumani [1972] 2 MLJ 62, FC.105. Stilk v Myrick [1809] 2 Camp 317; Sharpe v San Paulo Rly Co [1873] 8 Ch App
597.106. Williams v Roffey Bros& Nicholls (Contractors) Ltd [1991] 1 QB 1, [1990] 1 All ER
512, CA.107. Per Gunn Chit Tuan SCJ in South East Asia Insurance Bhd. v Nasir Ibrahim [1992]
2 MLJ 362, SC; cf Section 2(d) and 26(b) Contracts Act 1950 (Act 136).
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108. In practice most domestic sub-contracts and minor works are made orally. Theprincipal problem here is merely from the evidential point of view in the event of a dispute.
109. Peter Lind & Co. Ltd. v Mersey Docks & Harbour Board [1972] 2 Lloyd’s Rep. 235;New Zealand Shipping Co. Ltd. v Satterthwaite & Co. Ltd. [1975] A.C. 154 (P.C.).
110. See Section 10(2) Contracts Act 1950 (Act 136).111. As required by a particular statutory enactment.112. Although Section 79 Contracts Act 1950 (Act 136) permits the guarantee to be
also in an oral form.113. The actual contents varies with the type of contract and the requirements of the
particular form of contract used. For further details see Ir. Harbans Singh K.S.
‘Engineering and Construction Contracts Management: Pre-Contract AwardPractice’ at P536 to 574.114. Or an informal equivalent such as an exchange of correspondence indicating offer
and acceptance.115. Sometimes ‘bespoke’ or ‘ad hoc’.116. For contract based on Drawings and Specifications. See JKR Form 203 (Rev. 10/
83).117. And design where this is part of the contractor’s scope.118. Bills of quantities (or B.Q.) may not be required for smaller or less complex projects
where the drawings and specifications themselves provide sufficient informationor in the event the contract is of the ‘package deal’ type.
119. For building works this is currently the ‘Standard Method of Measurement of Building Works’ as published by the Institution of Surveyors, Malaysia and forCivil Engineering is the ‘Civil Engineering Standard Method of Measurement’(CESMM) as published by CIDB, Malaysia.
120. See C Bryant& Son Ltd v Birmingham Hospital Saturday Fund [1938] 1 All ER 503.121. Also called ‘Schedule of Unit Rates’ in some contracts.
be validly made orally 108 , by
conduct or in writing. Contracts by
conduct are difficult to establish
evidentially and are often
encountered where parties have had
a course of dealing before. A further
illustration of the above, occasionswhere an employer makes an offer
to a contractor for the performance
of certain works upon stated terms,
and without making any express
acceptance, or counter-offer, the
contractor carries out the work 109.
The bulk of construction contracts
are either in writing 110 or evidenced
in writing 111. Written evidence is
also required for a contract of
guarantee 112, under which the
contractual performance of one of the parties is guaranteed by a third
party.
SCOPE OF CONTRACT
I Contract documents
There are no part icular
restrictions upon the documents
by which a construction contract
may be formed. It is trite that the
contents of the said documentsmust accurately and completely
record the express terms and
conditions of agreement reached
by the parties inclusive of all
rights, duties, obligations and
liabilities. The following is a brief
descr ip t ion of the types of
documents which constitute the
contract documents 113 :
(i) Agreement or articles of
agreement : This document114
describes in general terms the
parties, the contract works and
the price, and evidences the
intention of the parties to be
bound;
(ii) Conditions of contract : Detailed
conditions, often in standard
form 115 (with or without
amendments), amplify and
explain the basic obligations of
the parties and lay down
administrative procedures to be
followed during the progress of
the works;
(iii) Appendix to the condit ions :
Certain information specific to
a particular contract, such as
dates of commencement or
completion and amounts of
l iquidated damages, is
commonly required to beinserted by the parties in an
Append ix to the cond it ions
before the contract is executed;
(iv) Drawings and plans: Drawings
are prepared by whoever is
responsible to the employer for
the design of all or part of the
proposed works, and are the
major vehicle for conveying the
intentions of the designer to the
contractor. Among other matters , they provide
information as to the shape,
appearance, location and
interaction of the component
parts of the proposed works;
(v) Specifications: This document
amplifies the contract drawings
by providing a verbal
description of such methods as
the scope of work 116, methods
of construction, quality of
finishes and standards of
workmanship 117 to be provided.
It may also specify levels of
performance which individual
items of work are required to
achieve;
(vi) Bill of quantities : This
document itemises in great
detail the contract work as
described in the drawings and
the specifications 118. It may,
but need not constitute an
exhaustive statement of the
work which the contractor
undertakes to perform in return
for the agreed price. Where, as
is common, the bill of quantitiesis required by the contract to
be drawn up in accordance with
a particular standard method of
measurement 119, any deviation
from the prescribed method
may entitle the contractor to
claim payment for additional
work 120;
(vii) Schedule of rates 121: Where
there are no priced bill of
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quantities 12 2, a document
setting out rates applicable to
various categories of contract
work may be required for the
assessment of interim
payments, the valuation of
variations or (in a measure and value contract) the calculation
of the total amount due to the
contractor;
(viii) Programme or method
statement : Although a
contractor is commonly
required to furnish such
documents 12 3, they are
frequently defined by the
contract in such a way that
there is no obligation on either party to comply with the dates
or methods contained in them.
In such cases these documents
are regarded merely as aids in
project planning and
coordination;
(ix) Miscellaneous documents :
Various other documents may
be required for sufficiency,
c lar i ty and completeness
purposes. These include, inter
alia, documents such as thecontractor ’s tender
submissions, any addenda
and/or clarifications, post
tender submiss ion
negot iat ions , documents
amending the offer in any
way and the like; and
(x) Design and build documents:
Certain design and build
contracts replace the documents
listed above with threealternative documents
comprising the ‘Employer’s
Requirements’ issued by the
employer and the ‘Contractor’s
Proposals’ and the ‘Contract
Sum Analysis’ submitted by the
contractor 124.
Incorporation and Priority of
Documents
A formal construction contract
usually contains a number of
documents which are incorporated
by reference into the agreement
executed by the parties. The
conditions of contract may
expressly define the documents
which constitute the contract 125,
and may make provision for the
priority of documents in the case of
discrepancies 126.Standard sets of contract
conditions are sometimes
incorporated by reference into
contracts which are not formally
executed 127. Such cases can lead
to uncertainty as to which particular
set of conditions is intended for
incorporation 128. These problems
are especially acute in relation to
sub-contracts which purport to
incorporate some or a l l the
provisions of the main contract129
.
122. In contracts based on drawings and specifications or design and build contracts.
123. See the effect of a tender submission being incorporated in Yorkshire WaterAuthority v Sir Alfred McAlpine & Sons (Northern) Ltd. [1985] 32 BLR 114 andHavant Borough Council v South Coast Shipping Co. Ltd. [1996] CILL 1146.
124. See PWD Form DB/T 2002 Edn.125. See the second recital and clause 1(a)(i) JKR Form 203A (Rev. 10/83).126. See clause 4.1 CIDB Standard Form of Contract for Building Works (2000 Edn.).127. These may arise from e.g. an exchange of correspondence, or an informal
notification that a tender has been accepted.128. See e.g. Killby & Gayford Ltd v Selincourt Ltd [1973] 3 BLR 104, CA; SP Chua Pte.
Ltd. v Lee Kim Tah (Pte.) Ltd. [1993] 3 SLR 122.129. See e.g. Royden (M) Sdn. Bhd. v Syarikat Pembenaan Yeoh Tiong Lay Sdn. Bhd.
[1992] 1 MLJ 33.130. See Mulpha Pacific Sdn Bhd v Paramount Corp Bhd [2003] 4 MLJ 357; Shore v
Wilson [1842] 9 Cl & F 355, HL; Investors Compensation Scheme v WestBromiwich Building Society [1998] 1 All ER 98, HL.131. See Section 92 Evidence Act 1950 (Act 56); cf Tindok Besar Estate v Tinjar Co.
[1977] 2 MLJ 229.
Construction of Contract
Where a contract is made in
writing, the meaning to be given to
its express terms is a question of law.
The court will seek to give effect to
the intention of the parties asexpressed in the written documents130. It is settled law that a written
document is presumed to have
embodied all material terms and
conditions and no extrinsic evidence
will be permitted to contradict, vary,
add to or subtract from the written
terms save for exceptions permitted
by the law 131.
If a written document contains
an ambigu i ty which cannot
o therwise be sa t i s fac to r i ly
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resolved, it will be construed
adver se ly to the par ty who
proffered it for execution under
the ‘contra proferantum’ rule 132 .
In seeking the meaning of a
cont rac t , wr i t t en words a re
normal ly p resumed to takeprecedence over printed words in
the event of inconsistency 13 3.
However, this presumption can be
reversed by a clear provision in
the contract 134. Furthermore,
c lauses and words are to be
construed not by itself standing
alone, but in the light of other
words appearing in the context in
which it is used and all other
c lauses r e la t ing the reby 13 5 .
Where possible , the grammaticaland ordinary sense of words is to
be adhered to, unless they lead to
some absurd i ty o r to some
repugnance or inconsistency with
the rest of the document, in which
case the words may be modified
so as to avoid that absurdity or
inconsistency 136 .
The construction of a contract
also involves the application of a
host of cannons of construction
and p rocedura l gu ides
137
including the following, namely,
words as interpreted must be
consistent with the spirit and
le t t e r o f the ag reement 13 8 ,
typographical errors may be
corrected to give effect to the
parties’ intention 139, the contract
must be construed as at the date
i t was made 140 and a id s to
interpretation within the contract
document itself be considered in
the construction process. Wherea contract is partly oral or made
by conduct 141, the ascertainment
of the terms of the contract is a
question of fact 142 .
Implied Terms
A construction contract may be
subject to certain terms that are
expressly included in the contract.
In seeking to establish the intention
of the parties to a contract, certainterms need to be implied 143; these
being namely by custom and usage
pertaining to a particular type of
transaction 144, the courts based on
the intention of the parties 145 and
certain provisions contained in
statute, or generally by law 146.
There is a paucity of terms
implied by custom and usage and
by statute or law in construction
contracts. However, in respect of
construction contracts, the courts do
make various implications of which
132. Per Lord Brightman in Kandasami v Mohamed Mustafa [1983] 2 MLJ 85, [1983]4 PCC 183, PC. For a recent application of this rule see MBF Finance Bhd vSim Peng Bee @ Sim Bay Bee & Anor [2003] 5 MLJ 303.
133. Robertson v French [1803] 3 East 130 applied in Bumiputera Malaysia BerhadKuala Trengganu v Mae Perkayuan Sdn. Bhd. [1998] 2 MLJ 76; [1993] 1 SCR385, SC.
134. John Mowlem & Co Ltd v British Insulated Callenders Pension Trust Ltd [1977]
3 Con LR 64, DC.135. Per Salleh Abbas FJ in Trengganu State Economic Development Corporation v
Nade Finco Ltd. [1982] 1 MLJ 365, FC.136. Grey v Pearson [1875] 6 HLC 61 at 106. See also Polygram Records Sdn. Bhd.
v The Search & Anor [1994] 3 MLJ 127, HC.137. See Ir. Harbans Singh K.S. ‘Engineering and Construction Contracts
Management: Law and Principles’ at P292 to 299.138. Lim Yee Teck & Ors v Shell (M) Trading Sdn. Bhd. [1985] 2 MLJ, 265; [1985] 4
PCC 433, PC.139. Ng Siew Wah & Ors v MAA Holdings Sdn. Bhd. & Anor [1985] 2 MLJ 332, SC.140. City Investments Sdn. Bhd. v Koperasi Serbaguna Cuepacs Tanggungan Berhad
[1985] 1 MLJ 285, FC, [1988] 1 SCR 122; 4 PCC 709, PC141. Allen v Pink [1838] 4 M & W 140; J Evans & Sons (Portsmouth) Ltd v Andrea
Merzario Ltd [1976] 2 All ER 930, CA.142. Smith v Hughes [1871] LR 6 QB 597; British Crane Hire Corpn v Ipswich Plant
Hire Ltd [1975] QB 303 1 All ER 1059, CA.143. Hamid Abdul Rashid, Dr. v Jurusan Malaysia Consultants (Sued as a Firm) [1997]
1 AMR 637.144. Hamzah & Yeang Sdn. Bhd. v Lazar Sdn. Bhd. [1985] 1 CLJ 72, FC and Udachin
Development Sdn. Bhd. v Datin Peggy Taylor [1985] 1 MLJ 121, FC.145. Sababumi (Sandakan) Sdn. Bhd. v Datuk Yap Pak Leong [1998] 3 MLJ 151, FC.146. E.g. S14 to 16 Sale of Goods Act 1957 (Act 382), S6 Hire Purchase Act 1967
(Act 212), etc.147. Liverpool City Council v Irwin [1977] AC 239 at 255,257, HL.148. Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board [1973] 2
All ER 260 at 268, HL, per Lord Pearson.
149. Liverpool City Council v Irwin [1977] AC 239 at 263, HL, per Lord Salmon andHamid Abdul Rashid, Dr. v Jurusan Malaysia Consultants (Sued as a Firm) [1997] 1AMR 637.
two broad categories may be
discerned 147. First, there are those
usual terms which the law implies into
all contracts of a certain type unless
the parties have shown an intention
to exclude or modify them. In relation
to construction contracts, such
implied terms include the employer’s
obligations to co-operate with and not
to hinder the contractor and the
contractor’s obligations as to the
standard of work and the time for
completion.
Second, a term may be implied
into an individual contract where the
court finds that the parties must have
intended it to form part of their
contract 148, and where the transaction
would otherwise be inefficacious,
futile and absurd 149. The conditions
for such an implication are that it
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150. ‘The Moorcock’ [1889] PD 64 at P68 applied in Sababumi (Sandakan) Sdn. Bhd. vDatuk Yap Pak Leong [1998] 3 MLJ 151, FC; [1997] 1 MLJ 587, CA.
151. Reigate v Union Manufacturing Co (Rambottom) Ltd. [1918] 1 KB 592; and YapNyo Nyok v Bath Pharmacy Sdn. Bhd. [1993] 2 MLJ 25, HC.
152. BP Refinery (Westernport) Pty Ltd v Hastings Shire Council [1977] 52 ALJR 20 at26, PC.
153. See e.g. Greater London Council v Cleveland Bridge and Engineering Co Ltd [1986]34 BLR 50, CA (no implied term as to regular and diligent progress); KC Lim &
Associates Sdn. v Pembenaan Udarama Sdn. Bhd. [1980] 2 MLJ 26, FC (no impliedterm that developer was able to carry on the project at or reasonably near thearchitect’s estimated costs), etc.
154. See Bruno Zornow (Builders) Ltd v Beechcroft Developments Ltd [1990] 51 BLR 16(implication of fixed date for completion). 143. Hamid Abdul Rashid, Dr. v JurusanMalaysia Consultants (Sued as a Firm) [1997] 1 AMR 637.
knowledge and serve as an
introduction for further study/
updating as it is irrefutable that one
cannot escape the direct or indirect
effects of such contracts in whatever
capacity one is involved in the
engineering/construction industry.
REFERENCES
1. Ir. Harbans Singh K.S.,
‘Engineering and Construction
Contracts Management: Law &
Principles and Pre-Contract
Award’.
2. Ir. Harbans Singh K.S.,
‘Malaysian Precedents and
Forms: Engineering andConstruction Contracts’, MLJ
Sdn. Bhd.
3. Piyush Joshi ‘Law Relating to
Infrastructure Projects’,
Butterworths
4. Robinson, Lavers, Tan & Chan,
‘Construction Law in
Singapore and Malaysia’ [2nd
Edn.], Butterworths.
5. Sir Peter Mallet, ‘The
Encyclopedia of Forms and
Precedents: Building and
Engineering Contracts’ [5th
Edn.], Butterworths.
6. The Aqua Group, ‘Tenders and
Contracts For Building’ [2nd
Edn.]
7. V. Sinnadurai, ‘Law of
Contract’ [3rd Edn.] Lexis-
Nexis-Butterworths.
must be reasonable and equitable; it
must be necessary to give business
efficacy to the contract, so that no
term will be implied if the contract is
effective without it 150; it must be
so obvious that ‘it goes without
saying’ 151; it must be capable of clear
expression and it must not contradict
any express term of the contract 152.
Where the parties have contracted on
the basis of a detailed standard formdocument, the courts are generally
unwilling to imply terms on this basis,
even where to do so would improve
the contract 153; although there are
exceptions 154.
SUMMARY
Construction contracts are as
varied in their form nature, type and
content as there the projects or works
they circumscribe within their ambit.From a mere handshake agreement to
a multi-party, multi-volume express
document, they span the complete
spectrum of contracts that are hitherto
known to mankind. Whatever the
purpose behind their conception and
eventual formalization, the
importance of construction contracts
especially in Malaysia has evolved
over the years as the construction
industry has matured from ad-hoc
arrangements into formal/legalisticrelationships evidenced by express
pronouncements of the parties’
dealings, rights, obligations and
liabilities. It can therefore be inferred
that this metamorphosis has served
as the seed of crystallization of the
species of contracts called
‘construction’ contracts; the topic of
review of this article.
Legal practitioners are well
conversant with the intricacies of the
subject matter at hand. However,
most of the players in the constructionindustry such as engineers, architects,
quantity surveyors, employers, etc.
have at most times a fairly
rudimentary awareness of the
contracts which they are privy to or
have to deal with. For a non-legally
trained practitioner, this can be
intimidating and practically mind
boggling. Perhaps, the essence of the
instant paper will equip such
practitioners with the basic
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