Unidroit Principles in Construction Law Name of the Student Name

The elements of a contract can be found in the case of LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2001] NSWSC 886, where the case was concerned with the management of a Stadium. On or about 27 June 1997, a written heads of agreement was entered into, and on 1 September 1997, the Docklands Authority announced that the Docklands Stadium Consortium Pty Ltd (“DSC”) won the bid and DSC would be responsible for the management of the stadium (He

Running head: CONSTRUCTION LAW
Construction Law
Name of the Student
Name of the University
Author Note

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Answer 1
In construction cases, contracts are entered into by the parties to provide consultancy
services, design services and also to produces guidelines for entering into agreements. Australian
law while complying with Unidroit principles states the remedies for breach of contract and also
gives the guidelines regarding entering into a contract (Vogenaur and Kleinheisterkamp 2015).
The elements of a contract are that there shall be an offer and a subsequent acceptance to
constitute a valid contract (Bonell 2018). The elements of a contract can be found in the case of
LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2001] NSWSC 886, where the case
was concerned with the management of a Stadium. In 1997, Baulderstone (a construction
company) attempted to bid for the contract to construct and operate the stadium. On or about
27 June 1997, a written heads of agreement was entered into, and on 1 September 1997, the
Docklands Authority announced that the Docklands Stadium Consortium Pty Ltd (“DSC”) won
the bid and DSC would be responsible for the management of the stadium (Hepburn 2015). The
case dealt with a breach of contract and how DSC had failed to take proper precaution (Valdes
2015). The LMIA was appointed as the manager and the applicant claimed that the breach of
the contract also constitut3ed a breach of agreement(Vogenauer 2016). A claim was instituted
against the construction company holding that the heads of the agreement had constituted a
breach of agreement. This was not only a breach contract but also a case of tort dispute. The
breach of tort also induced a subsequent breach of contract (Ramberg 2016).
Codelfa Construction v State Rail Authority of New South Wales dealt with the case of
implied terms and frustration (Burett 2017). In this case the plaintiff, that is, Codelfa was
working for the State Rail Authority and this case applied the parole evidence rule to

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understand the ambiguity surrounding a case (Davies 2016). The same parole evidence rule was
applied in the case of Pagnan SpA v Feed Products Ltd [1987] 2 (Yeen 2015). These cases
discussed the importance of offer and explained when an offer constitutes a valid contract
(Turner 2016). The terms of the contract need to be unambiguous and should explain the rights
of the parties (Scollo et al 2015). There can be an admittance of an extrinsic contract if there is
an ambiguity which needs to be solved (Hunt 2015). The external circumstances should be
important to understand the implications of the terms of the contract. Section 18 of the
Australian Consumer Law states that no one shall engage in any descriptive or misleading
conduct while conducting a trade (Paterson and Brody 2016). In this case, there has been
confusion between both the parties regarding the terms of the contract. Acciona has claimed
that the State has indulged in unfair and descriptive terms thereby misleading Acciona into
believe in terms of the contract that were against the principles of the Australian Consumer
Law. The case in the present scenario is regarding the building of a 12 kilometer light rail line
that was agreed between the parties but the terms of the contract have been deceptive which
go against the said principles of the Australian Consumer Law.
Answer 2
It is important to understand contractual obligations in the light of good faith
obligations. Good faith obligations are an important basis for modern contract law. In the
context of commercial contracts, it is important to understand the implications of the contract
as a good faith obligation (Macaulay 2018). The notions also suggests that the obligations of the
parties need to be voluntary assumed by the parties themselves and that needs to do be done

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more in cases of sophisticated commercial contracts (Adriaanse 2016). The best to understand
the good faith obligations is to attach express contractual terms so that the parties can assume
their responsibilities better. This notion was upheld in the case of Commercial Bank of Australia
v Amadio [1983] HCA 14. Again in the case of BP Refinery (Westernport) Pty Ltd v Shire of
Hastings the Court of Appeals held that the doctrine of good faith should be seen as an
implication of law and the obligation of good faith should be seen as a prerequisite of a
contract in the eye of law (Armstrong 2016). More so, the concept of good faith is seen as an
essential element in commercial contract. This case was concerned with ad hoc implication of
good faith and dealt with the law of implied terms (Campbell 2014). This case laid down five
tests that must be satisfied by the parties to a contract and these five tests are very strict (Klee
2015). The test for implied contractual terms is that the term has to be reasonable and
equitable, the terms should render the contract effective and the terms shall not be such that
the no meaning is attached to the contract if the implied term is done away with (Kelleher
2014). The implied terms shall not be contradictory to any existing express term; the implied
term shall be capable of clear expression and shall not be ambiguous. In the case of Burger King
Corporation v Hungry Jack’s Pty Ltd [2001] 69 NSWLR 558 the New South Wales Court of Appeal
held that there was an implied duty of good faith in law and therefore the parties to a contract
cannot act ultra vires to the conditions of a contract and cannot outside the scope of the terms.
Therefore, from understanding the above cases, it is imperative to follow a duty of good faith in
enforcing a contract (Hughes, Champion and Murdoch 2015). Therefore, in the Victorian Law
perspective other than an ad hoc implication of law, it is important to consider a good faith
doctrine for the construction of a contract (Zeller and Andersen 2016). Pagone J in the

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judgment stressed on the implications of the terms of a good faith provision from the structure
of the contract. If it is not easy to determine contractual obligation, it becomes difficult to
gauge the certainty of the contract. Therefore the parties to a contract are obligated to act in
good faith. Not only implied good faith the courts also check whether there was an express
agreement between the parties which can be equated with good faith (McKendrick 2014). The
court aims to balance the interests between the parties and tries to ascertain their contractual
obligations and duties. In Australian common law, to prove a contract existed the courts can
rely on external evidence from witnesses. This Article, like the common law, is also subject to
other legislation or laws which specifically state that the contract must be in writing (Sadrieh
and Voigt 2017).
Answer 3
The facts point towards an ambiguous contract term which had induced the company to
engage in a misleading contractual term. The company claims that the terms of the contract
were deceptive and therefore had deceptive undertones thereby making the company unsure
of the terms of the contract. To make a strong counter claim and opposition, Transport of NSW
has to prove that the offers were made in clear terms and there were no ambiguities in the
terms of the offer. Transport for NSW has been accused of issuing guidelines that were
completely different from the plan that Acciona had with the company. In that case, the terms
of the contract being in conflict with the already accepted provision can be claimed that latent
conditions can be made enforceable in court. The contractual terms agreed between Acciona
and Transport was discussed between the parties and a proper negotiation was reached.

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Acciona was aware of the terms of the contract and being fully aware of the terms had agreed
to be a part of it. The counterclaim that can be raised by Transport of NSW is that the damages
claim is outrageous and not within the stipulated time and discussed amount. The timeframe
that was discussed between the parties was not respected and the contractors have not given a
proper time within which they would be able to complete the work. The contract has not been
willing to give a “meaningful timeline” for completing the task. As has been held in the case of
Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7, that though formal contracts are not
exchanged, the parties are under and obligation to treat the contract as enforceable and treat
the exchange between the parties as formality and an obligation to honor the terms of the
agreement. Under Australian Law ‘promissory estoppels’ is seen as a sword as well as a shield,
that is, it protects the interests of the parties and also acts as an impediment to their contract.
in cases of promissory estoppels, a party cannot go back on the discussed terms of the contract.
therefore, for a promissory estoppels to apply, the parties have to show that there was a formal
contract which is enforceable and binding on the parties even though there was no
consideration. In cases of promissory estoppels, a party is not allowed to back on the terms of
the contract. The same principle can be applied in the present case, that is, the party is stopped
from going back on the terms of the contract and in doing so he shall be held to be liable for
breach of contract. In such cases, equity acts as an important condition which needs to be
taken into consideration by both the parties to ensure that the terms of the agreement are not
abandoned. As the case Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7 held that the
plaintiff was under an obligation to communicate to the other party a reasonable time within which
the contract would be performed, in this case also Transport can claim that they need to know the

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time by which the contract would be completed. The State Authority had asked Acciona to go slow
and start doing the work and not to stop from continuing. Therefore, Acciona is stopped from
retreating from the implied promise that he is endowed with, that is, the promise to complete the
contract on time. Time is an essence of contract and therefore, the contract needs to be
completed on time. The only exception to the time clause is that the contract could not have
been completed on time due to some urgency or the parties were under a confusion that the
contract was a mere formality and the parties were not bound by the terms of the contract. In
the present case, Acciona had an implied duty to ensure that the contractors complete the
contract within a stipulated time. Acciona has failed to complete the work on time and
therefore had breached the condition of contract. this is a valid counterclaim by Transport that
Acciona has not completed the contract within the framework and has also not given a valid
justification for failing to do so. The conditions of the contract were such that it had to be
treated as a formal expression of contract and therefore the contract was binding on both the
parties.
Question 4
In this present case, a dispute regarding the invoice payment and validity of the contractual
terms in a construction case have been cropped up. Considering the brief of the case, it has
been observed that both the parties have made their claims and counter claims to this effect
and the dispute is required to be resolved as soon as possible. The main claim of the company
named Acciola has been established on the fact that the government has failed to disclose all
the necessary information regarding the contract and for that, the company has to face serious
financial damage. On the other hand, it has been claimed by the government that they had

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done all their duties and there is no faults in their parts. However, government has made the
claim that the alleged company has failed to act diligently and they had failed to make the thing
done within stipulated time. Further, the company has failed to make any justification against
their proposed expenses. In addition to this, the government has made the claim that the
negotiation process has been made to resolve the dispute but the company has failed to
represent them faithfully and could not get the invoice payment by the arbitrator. It has been
contended by the government that the contractor of the company has failed to act prudently to
complete the work within specific time. Therefore, the government is not liable to pay any
additional payment to the company. The company made a plea that the company thought that
ASUGRID had accepted the proposal of the government and in subsequent event, it has been
observed that AUSGRID had not accepted the same and according to the company, government
had misguided them to this effect. Government had to disclose this matter to the company
before the contract has been signed in between them. However, this matter has made a
political satire and it has been observed that labour leader Luke Foley had contended that due
to the laxity on the part of th government, an affordable project became so expensive.
Following documents are required to support each party’s claim before the court of law and are
required to be submitted at the time of the hearing.
The company has to show the contents of the contract agreed in between them and the
government regarding the project. They have to show the provisions of expenses that they had
done and all the calculations should be submitted categorically. Further, the company has to
show certain case laws in their support and they have to prove that AUSGRID had rejected the
facts of the contract.

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The court has to submit the agreement where the company has agreed to submit all the
works within that stipulated times and also required to be submitted the facts that the
contractor had denied or refused to submit their works within that period. The government has
to establish the facts that the payment made by the company is outrageous in nature. Further,
the government should interpret the terms of the contracts. They have to make sure that they
have disclosed all the relevant facts of the project to the company at the time of the contract
and the company had given their consent on that.
The witnesses of the case are the director of the company who had put his signature on
the contract and the government attorney or any member whose signature has been put on the
contract. Further, the director of AUSGRID should come before the court to identify him and his
role in the project.
Answer 5
Considering the facts of the case study, certain problems have come into lights. It has
been observed that the present company has alleged that the NSW government has failed to
disclose the fact that Ausgrid had disallowed the project regarding underground wire system and
the company has encountered financial loss due to it. The company has alleged that the acts of
the government attracted the provision of section 18 of the Australian Consumer Law and failed
to act in accordance with Australian Construction Act. In LMI Australasia Pty Ltd v
Baulderstone Hornibrook Pty Ltd [2001] NSWSC 886, it has been observed that in case of any
breach of provision of Construction Act, the defendant will be held liable under Tort law (Dixon
2017). In such circumstances, the party has to prove that all the elements of contract have been
followed at the time of contract. However, in this case, it has been observed that the government

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has also made certain counter claims where they held the company liable for the estimated cost
and assured that all the works done by the government are following the provisions of the
Construction law. However, all the problems are required to be identified. Further, it should be
decided what legal actions can be taken to avoid future problems cropped up due to this.
Considering the case law, certain problem statements have been come into existence. The
first problem regarding the issue is whether the contract made between the parties is valid or not.
Further, it is to be discussed whether the company could claim to set aside the contract on
unconscionability ground or not. It is also to be decided whether the contract between the parties
have attracted the provision of the Construction law and made with good faith or not (Murray
2014). In this case, the first thing is to interpret the provisions of the construction contract.
According to the law, good faith must exists in between the parties and it is to be find out
whether any imbalance in bargaining power has been considered or not. The problem of this case
has been reflected in the case of Lines MacFarlane Marshall Pty Ltd v Fletcher Construction
Australia Ltd [2000] VSC 358, where it has been claimed and counter claimed by both the
parties that parties to the case has failed to act in due diligence. It has been observed by the court,
“rights under the general law are not to be regarded as excluded unless the contract manifests an
explicit intention of doing so”. Therefore, it can be stated that the parties to the case have to
establish the facts. If any faults have been observed in anyone’s part, the other party could
repudiate the contract.
Part B
This part is dealing with the application provision of Security of Payment Act and
suggests the company how to avoid future problems regarding the same. Building and

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Construction Industry Security of Payment Act 2002 was enacted to deal with the claim made
under building contract. Further, under this Act, certain procedures have been taken in order to
ensure the cash flow under the business. Further, it protects the parties against any expensive
litigation. The company is advised to make an application under the Act and opted for a
negotiation process to retain the cash flow in the construction business. The company can make
an application for invoice payment and in this case, it is not necessary to consider whether the
payment is accurate or not (Bell 2017). However, it is to be kept in mind that the application
should based on section 18 of the Security of Payment Act 2002 and file the application within
time. According to Hickory Developments Pty Ltd v Schiavello (Vic) Pty Ltd & Anor [2009]
VSC 156; 26 VR 112, in case of late application, the same will be rejected. Further, in Dualcorp
v Remo Constructions [2009] NSWCA 69, it has been observed by the court that the decision of
the former adjudicator will be applied on the subsequent adjudicator and if the former
adjudicator has cancelled any entitlement of payment, the parties could not claim for the same in
subsequent event. However, it has been mentioned under Grocon Constructors v Planit
Cocciardi Joint Venture [2009] VSC 339 that if the arbitrator has failed to come into a fruitful
solution, certiorari can be available for the affected parties. Therefore, the company can make
application under the provision of certiorari. To conclude, according to the judgment of Lucas
Stuart Pty Ltd v Hemmes Hermitage Pty Ltd [2010] NSWCA 283, it can state that in case of any
conditional performance security, possible limitations of the calls are to be analyzed by the
principals (Faraz et al 2015).

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