Skip to main content
SpringerLink
Log in
Book cover

Global Claims in Construction pp 51–83Cite as

Construction Contracts: Obligations, Vitiations and Remedies

  • Chapter
  • First Online:

Abstract

Contracts, even when formalised, are subject to further scrutinise by the parties especially when they are unfair or in case of special doctrines that can apply subsequently and alter the fundamentals of the contract. Unsurprisingly, a frequent area of dispute in the construction industry stems from disagreements and differing opinions by the parties as to the true interpretation of a particular contract term such as its precise wording and context in the overall contract ambiguity, poor drafting or representation. Contracts, then, can be repudiated, declared void, voidable or rescinded. The parties’ obligations towards implied duties, performance and their contractual rights and relationships are illustrated in this chapter. The doctrines of misrepresentation, frustration, undue influence, mistake and duress among others are also discussed and the courts approach to these doctrines is described to show how law generally can ease hardship, alleviate unfairness and provide the parties to contract remedies. This chapter is of a high importance, as it can aid the parties to a construction contract, understand the possibility to claim outside the provisions of the contracts and to apply vitiating doctrines in law to obtain remedies, rescind, repudiate or terminate the contract.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Notes

  1. 1.

    Leadership in Energy & Environmental Design.

  2. 2.

    (1854) 5 HL Cas 72.

  3. 3.

    (1974) AC 727.

  4. 4.

    (1975) 3 All ER 901.

  5. 5.

    (1978) AC 728. The claimants were tenants in a block of flats. The flats suffered from structural defects due to inadequate foundations which were 2ft 6in deep instead of 3ft deep as required. The defendant Council was responsible for inspecting the foundations during the construction of the flats. The House of Lords held that the defendant did owe a duty of care to ensure the foundations were of the correct depth.

  6. 6.

    (1932) AC 562.

  7. 7.

    (1964) AC 465.

  8. 8.

    (1970) AC 1004.

  9. 9.

    (1985) AC 210. The architects proposed a system of flexible drains for a site, but the contractors persuaded them to accept rigid drains which once laid proved inadequate at considerable cost. The local authority permitted the departure from the plans.

  10. 10.

    Hedley was advertising agent who had provided a substantial amount of advertising on credit for Easipower. Hedley became concerned that Easipower would not be in a financial position to pay the debt and sought assurances from Easipower's bank that Easipower was in a position to pay for the additional advertising which Hedley may give them on credit. The respondents, who were Easipower's bankers, gave a favourable report of Easipowers financial position. On the strength of the report given by the respondents, Hedley placed additional orders on behalf of Easipower which eventually resulted in a loss of £17,000.

  11. 11.

    (1976) 2 All ER 5. Esso Petroleum wanted an outlet for their petrol in Southport. They estimated that the throughput of petrol would reach 200,000 gallons a year by the second year after development. In addition, they would get a substantial rental from a tenant. Esso had thought that they could have the forecourt and pumps fronting on to the busy main street. But the planning authority, insisted that the station should be built 'back to front' and that is what happened.

  12. 12.

    (1956) S.C.R. 936.

  13. 13.

    (1970) 1 BLR 114.

  14. 14.

    (2010) BCSC 483.

  15. 15.

    (1838) 6 Cl & Flyn 232. The claimants purchased Corngreaves estate from the defendant for £600,000. Corngreaves estate consisted of mining land, iron works and various properties including a mansion house. Many of the properties were subject to leasehold and generated income. The mines were to be worked by and profit to go to the claimant.

  16. 16.

    (1889) All ER 1. The plaintiff purchased shares in the railway company based on the information contained in the prospectus. The railway company then failed to obtain the necessary government approval for steam power and the company dissolved. The plaintiff then brought an action in deceit against the railway company for fraudulent misrepresentation.

  17. 17.

    Bradford Third Equitable Benefit Building Society v Borders (1941) 2 ALL ER 205. This was a case in which a building society financier was not held liable for a false statement, that the house purchased had been well built, made by a group of builder-developers with whom the society had signed a contract to finance purchases of the land and houses.

  18. 18.

    (1990) 36 EG 114. In a sale by auction of three properties the particulars wrongly represented the rents from the properties as being open to negotiation. The statements in the auction particulars and made later by the auctioneer misrepresented the position with regard to rent reviews. In fact, on two of the three properties rent reviews had been triggered and new rents agreed. The plaintiff company successfully bidded for the three properties and discovered the true situation.

  19. 19.

    (1880) 15Ch D 215.

  20. 20.

    Bell v Lever Brothers Ltd (1932) AC 161. Lever had terminated the employment of Bell, who was chairman of their operation in Nigeria, and had agreed to make him a payment as compensation. Bell had agreed the payment and payment had been made to him. Lever then discovered that he had been involved in corrupt activities which would have entitled them to dismiss him summarily without payment, and they brought an action for rescission of the agreement and to recover the payment.

  21. 21.

    (1951) 84 CLR 77.

  22. 22.

    William Sindall Plc v Cambridgeshire County Council (1994) 3 All ER 932. William Sindall agreed to buy land from Cambridgeshire County Council after they were told the council was aware of no easements. However, a private sewer from 20 years before was found after completion. In that case, the claim was to set aside a contract for the sale of land on the grounds of mistake. The existence of a sewer succeeded at first instance, but was rejected by the Court of Appeal.

  23. 23.

    Great Peace Shipping Ltd. v Tsavliris Salvage (International) Ltd. (The Great Peace) (2002) 4 All ER 689. The defendant agreed to provide salvage services for a stricken vessel. The brokers were informed that a vessel, owned by the claimant should be able to reach the stricken vessel within about 12 h. In fact, unbeknown to either party, the two vessels were some 410 miles apart, and it would have taken the claimant’s vessel 39 h to reach the stricken vessel.

  24. 24.

    Unlike English law, the United States law has abandoned the word ‘impossible' and used the term ‘impracticable'. The impracticability of performance of contract includes situations of extra and unreasonable difficulty, expenses, injury or loss to one of the parties.

  25. 25.

    (1863) 3 B & S 826.

  26. 26.

    Davis Contractors Ltd. v Fareham Urban District Council (1956) AC 696. On July 9 1946. The contractors entered into a building contract to build 78 houses for a local authority for £92,425 within a period of eight months. Without the fault of either party, adequate supplies of labour were not available and the work took 22 months to complete.

  27. 27.

    Pioneer Shipping Ltd. v BTP Tioxide Ltd. (The Nema) (1982) AC 724. After one round voyage the Nema arrived back at Sorel on June 20, 1979. She gave notice of readiness but was unable to load owing to a strike

  28. 28.

    J Lauritzen AS v Wijsmuller BV (The Super Servant Two) (1990) 1 Lloyds Rep 1. The defendants, Wijsmuller, agreed to carry Lauritzen's drilling rig (the Dan King) from a shipyard in Japan to a delivery location off the coast of the Netherlands. The rig was to be delivered using either the Super Servant One or the Super Servant Two. Super Servant Two sank. The defendants informed the plaintiffs that they could no longer carry out the Dan King contract, claiming that they were permitted to cancel the contract under clause 17 and that, in any event, the contract had been frustrated by the sinking of Super Servant Two.

  29. 29.

    Clause 17: ‘Wijsmuller has the right to cancel its performance under this Contract whether the loading has been completed or not, in the event of force majeure(sic), Acts of God, perils or danger and accidents of the sea, acts of war, warlike-operations, acts of public enemies, restraint of princes, rulers or people or seizure under legal process, quarantine restrictions, civil commotions, blockade, strikes, lockout, closure of the Suez or Panama Canal, congestion of harbours or any other circumstances whatsoever, causing extra-ordinary periods of delay and similar events and/or circumstances, abnormal increases in prices and wages, scarcity of fuel and similar events, which reasonably may impede, prevent or delay the performance of this contract.'.

  30. 30.

    (1992) 58 BLR 1.

  31. 31.

    North Ocean Shipping Co. Ltd v Hyundai Construction Co Ltd (1979) QB 705. The defendants agreed to build a tanker for the plaintiffs at a price fixed in U.S. dollars to be paid by instalments. After the first instalment the U.S. dollar was devalued by 10 per cent and the defendants insisted on further instalments being increased by 10 per cent. The plaintiffs refused and suggested arbitration, but it became apparent that the defendants would not continue their work without this agreement.

  32. 32.

    (1980) AC 614. This case relates an indemnity that Pao On would be indemnified if the shares were worth less than $2.50 each. The share price fell below, and the Lau's refused to indemnify.

  33. 33.

    Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) (1991) 4 All ER 871. The plaintiff shipowners had been induced by industrial action against a vessel in Sweden. One of the documents signed provided that the undertaking was to be governed by English law. The plaintiffs purported to avoid the agreements for duress and to recover the monies that they had paid under them.

  34. 34.

    (1854) 9 Exch 341.

  35. 35.

    (1952) AC 166.

  36. 36.

    548 F. Supp. 1018, 1022 (E.D.N.Y. 1982). Bende contends that it had a contract to supply the Government of Ghana with 10,000 pairs of boots; the Kiffe, which is a division of the defendant Crown Recreation, Inc., agreed to manufacture the boots in Korea and to deliver them in Ghana; the Kiffe failed to deliver the boots on the agreed date; and that as a result of this failure Bende suffered $44,685 in damages when the Government of Ghana cancelled its resale contract.

  37. 37.

    (1921) 121 NE 889. The plaintiff built a house for defendant for a price of $77,000, and sued to recover the balance due of $3,483.46. Defendant specified that all pipes in the house must be Reading pipe, but inadvertently, plaintiff installed pipes that was not Reading pipes. When defendant discovered this defect, he demanded that the work be redone, which would have required the demolition and reconstruction of substantial parts of the house. Kent refused to pay and Jacob & Youngs initiated this action.

  38. 38.

    (1977) 1 WLR 1262. A contract was made for the sale of a plot of land adjoining a house belonging to the plaintiff (the vendor) but occupied by his tenants, under which the defendant (the purchaser) undertook to build a house on the plot and also to erect a wall to a certain specification on the plot so as to separate it from the plaintiff's land. The plaintiff obtained judgment against the defendant for damages for breach of contract by reason of failure to erect the dividing wall, but an issue arose as to the measure of the damages.

  39. 39.

    (1996) AC 344. The plaintiff builders had entered into a contract with the defendant, Mr Forsyth, to construct a swimming pool in the grounds of his house for the sum of £17,800. The tender had originally been for a pool with a depth of 6ft 9ins at the deep end, but Mr Forsyth had negotiated with the builders that the depth would be increased to 7ft 6ins at no extra cost. The pool was built, but disagreement arose. Mr Forsyth refused to pay the balance of the price, so the builders sued.

  40. 40.

    (1923) AC 773.

  41. 41.

    (1933) 48 CLR 457.

  42. 42.

    (1987) 2 SCR 440.

  43. 43.

    (1980) 1 All ER 571. In Woodar v Wimpey, in which the House of Lords found a rescission to be wrongful but held there had been no repudiatory breach because the conduct of the contract breaker did not of itself manifest an intent to breach the contract, instead termination was purportedly effected under the agreement itself.

  44. 44.

    Photo Production Ltd v Securicor Transport Ltd (1980) AC 827. Securicor Transport agreed to provide a night patrol service for Photo Production's factory to protect from theft and fire etc. An employee of Securicor Transport, while supposed to be patrolling the premises, lit a fire (to keep warm) and ended up burning the factory down.

  45. 45.

    (2010) EWCA Civ 1168. Eminence agreed to sell thirteen flats to Heaney. Thirteen contracts were exchanged in identical terms, each contract providing for the contractual completion date to be fixed by reference to the date on which the relevant flat under construction was ready for occupation. However Eminence's solicitors mistakenly calculated the final date for completion under the notice.

References

Case Law

Books

  • Adams J, Brownsword R (1995) Key issues in contract. Butterworths, London

    Google Scholar 

  • Allen R, Martin S (2010) Construction law handbook. Aspen Publishers, Maryland

    Google Scholar 

  • Beatson J, Burrows A, Cartwright A (2010) Anson’s law of contract. Oxford University Press, Oxford

    Google Scholar 

  • Beale H (2010) Chitty on contract. Sweet & Maxwell Ltd, UK

    Google Scholar 

  • Beale H, Bishop W, Furmston M (2008) Contract: cases and materials. Oxford University Press, Oxford

    Google Scholar 

  • Burrows (2005) Remedies for torts and breach of contract. Oxford University Press, Oxford

    Google Scholar 

  • Furmston M, Cheshire GF, Fifoot CHS (2006) Cheshire, Fifoot and Furmston’s law of contract. Oxford University Press, Oxford

    Google Scholar 

  • Harris D, Campbell D, Halson R (2005) Remedies in contract and tort. Cambridge University Press, Cambridge

    Google Scholar 

  • Hart H, Honore T (1985) Causation in the law. Oxford University Press, Oxford

    Google Scholar 

  • Jones J (2009) Goff & Jones: the law of restitution. Sweet & Maxwell, UK

    Google Scholar 

  • Poole J (2010a) Textbook on contract law. Oxford University Press, Oxford

    Google Scholar 

  • Poole J (2010b) Casebook on contract law. Oxford University Press, Oxford

    Google Scholar 

  • Ramsey V, Furst S (2008) Keating on building contracts. Sweet & Maxwell, UK

    Google Scholar 

  • Samuel G (2001) Law of obligations and legal remedies. Cavendish Publications, London

    Google Scholar 

  • White N (2008) Construction law for managers, architects, and engineers. Delmar Cengage Learning, USA

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Dar Al Riyadh, P.O. Box 271055, Riyadh, 11352, Saudi Arabia

    Ali D. Haidar

Authors
  1. Ali D. Haidar
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Ali D. Haidar .

Rights and permissions

Reprints and permissions

Copyright information

© 2011 Springer-Verlag London Limited

About this chapter

Cite this chapter

Haidar, A.D. (2011). Construction Contracts: Obligations, Vitiations and Remedies. In: Global Claims in Construction. Springer, London. https://doi.org/10.1007/978-0-85729-730-3_3

Download citation

  • DOI: https://doi.org/10.1007/978-0-85729-730-3_3

  • Published:

  • Publisher Name: Springer, London

  • Print ISBN: 978-0-85729-729-7

  • Online ISBN: 978-0-85729-730-3

  • eBook Packages: EngineeringEngineering (R0)

Publish with us

Policies and ethics

Search

Navigation