The significance of small contracts in construction business environment: a review of case laws

Abstract

A construction project is a complex process that involves many stakeholders, long project durations and complex contractual relationships. The aim of this paper is to examine the principle of two-contract in construction projects in order to understand the significance of small contracts in achieving business excellence. The study is carried out via a literature review and utilises case law examples from different countries to illustrate what constitute small contracts in construction projects. The case law examples show that there is an implied contractual relationship between the client and tenderers in tendering stage which satisfied the contractual principles of offer and acceptance, consideration and falls within common law jurisdictions. The implied contract enables review process and gives rise to contractual obligations apart from the obligations associated with the construction contract. The paper will enable project stakeholders to be more transparent in construction business. Most importantly, enable supply chain members to know their legal and contractual rights in tendering stage.