An Analytical Exploration of Construction Contract Terms from Legal Cases

Abstract

Construction disputes are a commonality in the Malaysian construction industry. Previous researchers found that contractual issues are the main problem in construction disputes. It could also cause project delay, bad workmanship, and cost overruns if the construction contracts are not drafted properly. As such, the construction contract acts as the first security for the rights and responsibilities of the contracting parties. The construction contract in this study is based on general construction contracts, including both the main contract and subcontract, which govern the contractor's liabilities in construction. The researcher indicated that 6 sub-salient elements (Terminology, Lengthening and Consistency, Format and Presentation, Risk Allocation, Statutory Compliance, Completeness of Clauses), and a total of 11 salient elements in the construction contract in literature review which are “Certainty in Scope of Works”, “Terms with Industry Conventions and Shared Meaning”, “Unambiguous Words”, “Plain Language”, “Avoid Long Sentences and Redundant Information”, “Avoid Too Many Cross-references”, “Usage of Headings, Signage and Active Voice”, “Clear Illustration of Procedure and Process”, “Fair Risk Allocation”, “Not Contrary to the Statute”, and “Comprehensive with Essential Clauses”. In addition, an analysis of 14 construction contract-related cases within the Malaysian jurisdiction, identified through Lexis Advance, was conducted to examine the judicial recognition of these salient elements. The findings reveal that the inclusion of comprehensive and essential clauses is the most critical element in drafting an effective construction contract, as expressly stated provisions provide the strongest evidentiary basis for enforcing contractual claims.