Contracting out of the duty to act in good faith

Construction contracts can be very one-sided.
Two recent NSW cases discuss the concept of good faith in contracts.
In the recent decision of Growthbuilt v Modern Touch Marble, the New South Wales Supreme Court ordered liquidated damages to be paid by a subcontractor (Modern) to a builder (Growthbuilt).

Key Points:

• The Project was delayed;
• The Subcontractor may have been entitled to (but failed to) issue extension of time notices;
• Based on the contract wording, the Builder was not required to extend the Date for Practical Completion;
• Therefore, the Date for Practical Completion was not extended;
• The Subcontractor became liable for liquidated damages in the amount of $873,000.00 across 3 projects.

Take-Away Points

Negotiate your contracts! We are in a trading environment where subcontractors and contractors must negotiate their contracts:

• Delays are prevalent
• Supply chain issues continue
• Labour shortages are likely to continue into at least the near future

Issue extension of time notices. If you are unsure, seek advice and we can assist you with templates!

What we can do for you

At Level Playing Field, we deal with litigation on a daily basis.
We use our vast experience and industry knowledge to help you draft terms & conditions that are commercially appropriate as well as protect you from legal risk

While it is tempting to rely on a template or copy the terms & conditions of other companies, unsuitable contract documents = a weak legal position

For enquiries about legal issues affecting the construction and property development industry, call us on (03) 9041 4674.