Role of Standard Contracts in Mitigating Disputes in Construction

Abstract

Disputes are described as an epidemic of the construction industry because they slow construction or even stop a project completely for a period of time, leading to a breakdown of business relationships, delayed project times, and inflated costs. The most common kind of disputes are contractual based. The need for contractual clarity is immense when there are many different contracts being drafted by different companies. Most common causes of disputes in construction and to what extent the standard forms assist in mitigating disputes in Australia is not well studied and is addressed in this study. The research method involved review of a sample of legal cases that were caused by construction contractual disputes. Accordingly, 10 cases were analyzed, with some using standard forms of contracts and some using customized contracts. The findings revealed that time and cost overruns were the most common cause of construction disputes. The research further reviewed specific terms and clauses that relate to time and cost in the standard forms and found both local and international contracts assist to mitigate disputes when the contracts are managed as agreed by parties. This research offers useful implications to mitigate contractual disputes in construction and suggest further to consider new technologies such as blockchain and smart contract. Further research can extend to explore more contexts and other forms of contracts.