Breaches of contract in construction industry

Abstract

The doctrine of freedom to contract, as the cornerstone of contract law in the common law countries (Malaysia inclusive) has consequently generated an extensive array of contracts of various characteristics and varieties. In Malaysia, there are two basic components in the contract documents used for the contracting of most construction work that is the Contract Conditions and technical specifications and drawings. As a general principle, once a party enters into a contract, he must perform his obligations strictly according to the terms of the contract. However, in the construction industry, breaches of contract are commonplace to the point of routine. Moreover, under the complicated provisions of many construction contracts the possible breaches of contract either by contractor or employer are numerous, and in each case the general principles must be applied in order to determine what, if any, damage is recoverable for the breach. This research therefore set out to illustrate the types of breaches of contract that are currently fashionable in Malaysian construction industry. The research is also to address the legal issues in relation to damages. The approach adopted in this research is documentary analysis of case laws. A total number of 53 cases were studied, where only 11 of them were associated with the breaches of contract. Findings show that there are 7 types of breaches existed in construction industry for the past thirty years. Most of the cases were breached due to the reason of “abandonment of work”. On the other hand, 3 legal issues closely related to damages were addressed in this research. In summary, findings of this research may assist the relevant parties in addressing and overcoming the problems associated to breaches of contract and creates a win-win situation for all parties in the Malaysian construction industry.