International Construction Law Review
THE AVOIDANCE OF DISPUTES BY CONTRACTORS IN DESIGN AND CONSTRUCT CONTRACTS
DR DONALD CHARRETT
BE, LLB, MConstLaw, PhD, FIE Aust, MIAMA Victorian Bar
“Risk and uncertainty is inherent in all construction projects.”1
“Uncertainty in a construction project leads to conflict.”2
“Conflict is … any divergence of interests, objectives or priorities between individuals, groups, or organisations; or nonconformance to requirements of a task, activity or process …”3
“… conflict is pandemic; it exists where there is an incompatibility of interest”.4
“… conflict can be managed, possibly to the point of preventing it from leading to dispute”.5
1. Introduction
Courts uphold the doctrine of freedom of contract, which is the ability to enter into a binding agreement to do anything (other than matters which are contrary to public policy or statute law or are illegal). One important consequence is that the parties will be held to the specific bargain they have made, irrespective of whether it is fair, reasonable or is consistent with common practice or “normal” contracts of that type.
As a general principle, if the terms are clear and unambiguous, the parties will be held to the actual words in the contract. Surrounding circumstances, prior conduct and reference to common practice will be irrelevant.
Furthermore, it should be assumed that the other party to the contract will strictly apply the contract terms in accordance with their plain and ordinary meaning, irrespective of whether that appears unfair, harsh, unjust or not in accordance with the norms of the industry. This applies particularly in the case of a “bespoke” contract which has been specifically
1 J Lewis, D W Cheetham and D J Carter, “Avoiding Conflict by Risk Management—the Role of the Client’s Project Manager”, in P Fenn and R Gameson (Eds), Construction Conflict Management and Resolution (1992), p. 72.
2 D A Langford, P Kennedy and J Sommerville, “Contingency Management of Conflict: Analysis of Contract Interfaces”, in P Fenn and R Gameson, op. cit. n. 1, pp. 64, 67.
3 P D Gardiner and J E L Simmons, “The Relationship between Conflict, Change and Project Management strategy”, in P Fenn and R Gameson, op. cit. n. 1, p. 110.
4 Peter Fenn, David Lowe and Christopher Speck, “Conflict and Dispute in Construction” (1997) 15 Construction Management and Economics 513.
5 Ibid. 514.
[2008
The International Construction Law Review
428