Entire Contract Principle in Construction Industry

Topics: Contract, Contractual term, Contract law Pages: 14 (5715 words) Published: December 15, 2011
Entire Contract Principle in Construction Industry

Entire contract principle is an understanding and agreement that has always been a concern of many parties in the construction world. Construction activity is activities that constitute a complete unity and hard to be done partially. A variety of factors make a construction contract different from most other types of contracts. These include the length of the project, its complexity, its size and the fact that the price agreed and the amount of work done may change as it proceeds. In Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689 at 717 Lord Diplock described a building contract as an entire contract for the sale of goods and work and labor for a lump sum price payable by installments as the goods are delivered and the work is done. Entire contract principle will involve all phases of construction in its implementation. Based on the case ever appears that the dispute that occurred within the entire contract principle much caused by the owner the dissatisfaction for work performed by contractors. Most cases that occur in the end won the owner as the party who feel aggrieved, but on the other side of the contractors also experienced the loss in no small amount. Hudson’s Building & Engineering Contracts (Sweet & Maxwell 1995, 11th Edition at p 475, 4.006, p 476, 4.008) elaborates upon this proposition stating that “ the essence of a building contract is a promise by the contractor to carry out work and supply materials in consideration of a promise by the building owner to pay for it the great majority of building contracts in the traditional form consist of an undertaking to complete the work for a contract price either ascertained (in the case of a specification form of contract without quantities) or ascertainable (in the case of a measurement contract with quantities or schedules of rates) and are therefore ‘lump sum’ or entire contracts, in the legal sense”. We said ‘entire contract’ is a label to a committed and continuing relationship between solicitor and client, but not one where breach should mean the loss of all profit costs. We said the circumstances were like Taylor v Laird (1856) 1 H&N 266, where a captain employed to explore and trade on the River Niger had refused to go further than a particular trading post, but succeeded in claiming his fees on the basis that these were payable on a monthly basis. And similarly, we argued that our fees accrued as we spent time, as is normal with litigation retainers. Embarking on High Court litigation does indeed bear close parallels in other ways with the hazards of exploring Africa in the 19th century. In my opinion case in entire contract principle was not much happening in the construction world today because most of the payments made by the owner to the contractor has been done on the basis of a progress payment where payment is not made just once. Payments made by the owner currently has been done based on the physical progress that has been carried out by the contractor at any stage of the stipulated time, and in general, payments made ​​as much as 4 times in its execution. Payment is made ​​mostly at the time contractor has achieved physical progress of 25%, 50%, 75% and 100% while requiring the retention fund amounting to 5% in the last stage payment. This is different in some cases that I found earlier, in which payments are made at the end where the contractors are expected to have been carrying out its work 100% and then suppose that at the time of the new physical progress achieved is 70% of contractors who instructed him to leave work and demanding payment in full of the items work that has been implemented. A construction contract is best described as a complex web of competing interests. A particular problem in construction contracts is that there is little interest in building long-term relationships. Among the issues that often arise in construction...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • construction contract Essay
  • Construction Contract Essay
  • Essay about Contracts
  • Construction Contract Essay
  • Construction Contracts Essay
  • nature of construction contracts Essay
  • contract Essay
  • construction industry Essay

Become a StudyMode Member

Sign Up - It's Free