The legal and commercial frameworks
| Author | Julian Bailey |
| Pages | 1-44 |
1
CHAPTER 1
THE LEGAL AND COMMERCIAL FRAMEWORKS
Introduction 2
Frameworks for analysis 4
e legal framework 6
(i) Introduction 6
(ii) Statute law 7
(iii) Judge-made law 12
(iv) e Crown 20
(v) Customary law 20
(vi) Application of the law 21
Protagonists 22
(i) Owner 22
(ii) Contractor 22
(iii) Contract administrator 23
(iv) Subcontractor 23
(v) Consultant 24
(vi) Supplier 24
(vii) Government 24
(viii) Funder 25
(ix) Others 26
Procurement routes 26
(i) Forms of project delivery 26
(ii) “Traditional” building projects 27
(iii) Design and build 28
(iv) Construction management 29
(v) Direct contracting 31
(vi) Management contracting 31
(vii) Private Finance Initiatives (“PFIs”) and Public/Private Partnerships
(“PPPs”) 33
(viii) Build Operate Transfer (“BOT”)/Build Own Operate Transfer
(“BOOT”) 36
(ix) Partnering/alliance contracting 36
(x) Facilities management contracts 38
(xi) Framework agreement 39
(xii) Development and sale agreements 40
(xiii) Turnkey contracts 41
(xiv) Supply contracts 42
(xv) Building information modelling 44
(xvi) Less formal arrangements 44
THE LEGAL AND COMMERCIAL FRAMEWORKS
2
Introduction
1.01 e term “construction law” admits of no easy denition. At least until the latter part
of the twentieth century, there was not a branch of the law (or legal practice) that identied
itself by that name. Lawyers and judges may have had involvement with cases concerning
construction or engineering1 projects, but by their reckoning they were not dealing with a
discrete area of law. A dispute between a property owner and a builder over the adequacy
of building work may have been regarded as a “contract” case, albeit one that happened to
concern a building. A case about money owed to a builder was perhaps regarded as little
dierent to a case about money owed to an unpaid merchant, or the commission due to a
sales agent. Where a construction worker sued his employer for injuries suered on a site
due to his employer’s negligence, the case may have been thought of as one of “negligence”
or “workmen’s compensation”. e fact that the worker was injured on a construction site,
as opposed to, say, in a factory or a shop, was unimportant. For the purposes of legal taxon-
omy, the eld of commerce from which the dispute arose was by the by.2
1.02 O ver time, legal matters concerning the construction and engineering world
became more developed, and – it is fair to say – more complicated. Starting with the
age of the railways in the nineteenth century,3 construction and engineering contracts
grew into elaborate documents, containing dozens of often lengthy and intricate clauses
about matters such as time, price, scope of works, contract administration and dispute
resolution. Navigating through the maze of provisions, and readily grasping the meaning
and import of this clause or that, increasingly became a matter for the specialist, as did
the negotiation and drafting of contracts. Drafting itself became more standardised,
and major industry bodies began to produce their own forms of contract, which slowly
acquired currency and by the end of the twentieth century had become hegemonic.
Coming with this was a slow but steady accumulation of reported case law concerning
construction and engineering disputes. e judges deciding these cases would often be
specialists who, in their previous working lives, may have based a large part or even the
entirety of their legal practices around construction and engineering arbitration and
litigation. Upon appointment to the bench, their allocation as a judge of a court or a list
dedicated to construction and engineering cases would perpetuate their specialisation
of choice (or acceptance). On top of all this came the introduction of statutes targeted
specically at the construction industry, including recently and most notably legislation
such as Part II of the Housing Grants, Construction and Regeneration Act 1996 (UK),
and its counterpart legislation in Australia and Singapore (among other countries), which
aims to improve the cash ow of those who perform construction work. Understanding
1 is book does not attempt to delineate the precise boundary between “construction” and “engineering”. However,
as a working concept “construction” may be thought of as work that is undertaken in the construction of buildings,
houses and similar structures, whereas “engineering” refers to a variety of work that includes the construction of
roads, bridges, dams, power stations and other assets. e law that applies to construction and engineering projects
could be referred to as “construction and engineering law”. However, “construction law” is a convenient shorthand
expression.
2 See also Wilmot-Smith, (2017) 133 LQR 340 at 340.
3 e rise of the railways in the nineteenth century also fomented other legal developments, including the modern-
isation of laws concerning liability for fatal accidents (many of the early railways companies having little concern
for human safety, or making reparation following accidents): see, eg, Handford, “Lord Campbell and the Fatal
Accidents Act” (2013) 129 LQR 420.
THE LEGAL AND COMMERCIAL FRAMEWORKS
3
– let alone mastering – this legislation, as explained through great volumes of case law,
takes a considerable amount of time, and is therefore a matter perhaps more suited to a
specialist than a generalist.
1.03 Two features emerge from the above. First, the law as it now applies to con-
struction and engineering projects is both highly developed and highly specialised.4
is, to a large extent, is a product of the practices that have evolved in the construc-
tion and engineering industries of England, Australia, Hong Kong5 and Singapore.6
As industry practices have developed, there have been concomitant developments
in legal practice and the law itself to reect or accommodate the changes in the
construction and engineering industries. Secondly, what people habitually refer to
as “construction law” is an area of legal specialisation based upon its subject matter.
e subject matter is construction and engineering projects, whether they be large
or small, domestic or commercial, public or private. e law that applies to those
projects comes from a number of legal sources. Although there are specic statutes
and regulations targeted at construction and engineering projects, the common law of
England, Australia, Hong Kong and Singapore applies generally to construction and
engineering projects. It may therefore be inaccurate to speak of “construction law”
as a discrete body of jurisprudence, in the same way as one may refer to “contract”,
“tort” or “restitution” as groupings of legal principles. Contract, tort and restitution
(and indeed other areas of law) are all of application to construction and engineering
projects, but there is not a specic subset of any of those laws that applies just to
construction and engineering projects.7 Nor is there any grand, overarching theory
that guides legal developments in this area of commerce.8
1.04 W hat, then, is “construction law”? Recognising the desirability for a legal textbook
to attempt to dene or at least describe its subject matter, and that one could debate
(possibly endlessly) the precise nature and boundaries of that subject matter,9 may it
suce if the following denition is proered:
4 One of the consequences of this is the necessity for specialist teaching programmes at universities on construction
law and cognate subjects: see Bell, Gerber and Evans, “Building bridges in the classroom: a view from the academy”
(2014) 30 BCL 24.
5 “e construction law and practice, as applicable to a project in Hong Kong, is an area in which we have over the
years built up a considerable amount of expertise”: Re Eady [1990] HKCFI 212 at [7], per Yang CJ.
6 e laws of developing countries in relation to construction and engineering projects are, unsurprisingly, not
always as developed. For an interesting lament of the backwardness of the East German construction industry,
written soon after the bringing down of the Berlin Wall, see Wiegand, “GDR Construction Industry in Transition”
[1990] ICLR 402.
7 Hence, in many respects “there has never been anything special” about construction cases: Mottram Consultants
Ltd v Bernard Sunley & Sons Ltd [1975] 2 Lloyd’s Rep 197 at 214, per Lord Salmon. See also Gilbert-Ash (Northern
Ltd) v Modern Engineering (Bristol) Ltd [1974] AC 689 at 699, per Lord Morris; Coca-Cola Financial Corp v Finsat
International Ltd [1998] QB 43 at 52–53, per Neill LJ; WMC Resources Ltd v Leighton Contractors Pty Ltd (1999)
20 WAR 489 at [42], per Ipp J (Sup Ct WA, Full Ct); Transeld Shipping Inc v Mercator Shipping Inc [2009] 1 AC
61 at 83–84 [70], per Lord Walker; Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184 at [186], per
Leeming JA. It has been said, perhaps not without justication, that construction law is something of a “dry area”:
Discain Project Services Ltd v Opecprime Development Ltd [2001] BLR 285 at 291 [36], per HHJ Bowsher QC.
8 See also Bell, “Contract theorists: what did they ever do for us in construction law?” (2017) 33 Const LJ 3.
9 Part of the diculty of identifying “construction law” as a subject is that it does not have any neat, precise bound-
aries, and indeed any legal taxonomy of case and statute law in this regard may well involve subjective matters:
see Sharkey, “Australian rules: a survey of the High Court of Australia on construction law 1965–2016” (2017) 91
Australian Law Journal 986 at 986 fn 1.
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