Implied Duties of the Employer (2)

How about in PAM, CIDB and PWD?

Implied Duties

PAM

CIDB

PWD

Co-operate

·

·

·

Obtain all necessary permits

·

·

·

Appoint competent consultants

·

·

·

Give possession of site

·

c. 6.1.a

c. 38.2

Issue late certificates

c. 26.1.b

c. 6.1.e

·

Non-hindrance

·

c. 6.1.d

·

Reasonable determination

c. 25.1 & 3

c. 44.1 & 2

c. 51

Note

· ” mark means that there is no such express provision regarding to the employer duties, and therefore it indicates the employer’s implied duties.

PAM 2006

Clause 25 (sub clause 1 and 3) describes the right of the employer to determine the employment of the contractor in such events of contractor’s defaults.

Clause 26.1.b clearly states that if the employer interferes with or obstructs the issue of any certificate by the architect, it will entitle the contractor to determine his own employment due to the employer defaults.

CIDB 2000

Clause 6.1.a expressly states that the employer shall give the contractor right of access to and possession of the site in accordance with clause 17.2.

Clause 6.1.d expressly states that the employer shall not obstruct or interfere with the performance of the contract but the contractor, except where expressly provided in the contract.

Clause 6.1.e expressly states that the employer shall not interfere with or influence or obstruct the issue of any certificate by the Superintending Officer under the contract.

Clause 44 (sub clause 1 and 2) expressly states the events of default by the contractor which entitles the employer the right to determine the employment of the contractor under the contract.

PWD 203 (Rev. 2007)

Clause 38.2 clearly describes the contractor shall be given the possession of site on or before the “date for possession” stated in the Letter of Acceptance.

Clause 51 (sub clause 1 and 2) clearly describes the events of default by the contractor which leads to the right of the government (employer) to reasonably terminate the contract.


 

The Limitations

From the above employer’s implied duties, there are some limitations which need to be considered. First, in order to comprehend our understanding on implied terms, we must come back to see the decision in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council which stated that for a term to be implied, there are some condition which must be satisfied:

(1)  It must be reasonable and equitable

(2)  It must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it

(3)  It must be so obvious that ‘it goes without saying’

(4)  It must be capable of clear expression

(5)  It must not contradict any express term of the contract

 

The limitation to the above employer’s implied duties are as follows.

  1. In Appleby v Myers [1867] LR 23 CP651, it was held that the employer does not impliedly warrant the fitness of the site.
  2. In Porter v Tottenham Urban District Council [1915] 1 KB 776(CA) and LRE Engineering v Otto Simon Carves [1981] 24 BLR 127, it was held that the employer does not impliedly warrant that there will be no wrongful interference by third parties.
  3. In Leslie & Co Ltd v The Mangers of the Metropolitan Asylums District [1901] 68 JP 86 (CA), it was held that the employer (in the absence of fraud or collusion) is not responsible for delay caused by nominated subcontractor.
  4. In Mona Oil Equipment Co v Rhodesia Railways, Devlin J said: “I can think of no term that can properly be implied other than one based on the necessity for co-operation. It is no doubt, true that every business contract depends for its smooth working on co-operation, but in the ordinary business contract, and apart, of course, from express terms, the law can enforce co-operation only in a limited degree to the extent that it is necessary to make the contract workable. For any higher degree of co-operation the parties must rely on the desire that both of them usually have that the business should get done.” It means the employer’s implied duty to co-operate is still leaving a question mark over the extent of the co-operation itself. This is similar with the case of Bernhard’s Rugby Landscapes Ltd v Stockley Park Consortium Ltd (No 2) where Llyod J noted: “The degree of co-operation that is required depends in each case on the obligation undertaken and not on what is reasonable…”.
  5. Although the employer has an implied duty to appoint nominated subcontractor or supplier (if necessary under contract), there is no such liability of the employer for the performance of the nominated subcontractor or supplier. As in the case of Young & Marten Ltd v McManus Childs Ltd [1969] 1 AC 454 (HL), the employer had nominated the supplier of certain materials. In accepting that, the contractor ought to be strictly liable for deficiencies in quality of those materials, and not the employer.

 

Conclusion

From the above description, we can define an implied duty as a duty which is not expressly written or agreed under contract, but is still necessary for business efficacy. Regarding to the above cases, there are at least 7 implied duties of the employer under construction contract. By knowing these employer’s implied duties, it will help both employer and contractor to get a better understanding of their distribution of rights and duties.

Despite the above employer’s implied duties, there are also some limitations for the practice of these duties. It is mainly because the implied duties are also depended on other relevant circumstances. In this paper, I found 5 limitations of the employer’s implied duties practice.

And lastly, I would like to end this paper with a quote taken from Barque Quilpue Ltd v Brown, where the Court said: “There is an implied contract by each party that he will not do anything to prevent the other party from performing a contract or to delay him in performing it. I agree that generally such a term is by law imported into every contract”.

 

References

Statutes referred to:

Contracts Act 1950. s. 2 and 9.

Sale of Goods Act 1957. s. 12.

Books referred to:

Simanjuntak, R., 2011. Hukum Kontrak. Teknik Perancangan Kontrak Bisnis. Jakarta: Kontan Publishing.

Ying, L. Cen, 2007. Principles of Implied Terms in Construction Contracts. M.Sc. Universiti Teknologi Malaysia.

Articles/Presentations referred to:

Steensma, A., 2009. Implied Obligations of Non-hindrance and Co-operation in Construction Contracts.

Yaakob, J., 2012. Implied Duties of Employers and Contractors MBG 1244. Johor Bahru: Universiti Teknologi Malaysia.

Yaakob, J., 2012. Possession of Site MBG 1244. Johor Bahru: Universiti Teknologi Malaysia.

Websites referred to:

http://www.atkinson-law.com/library/article.php?id=147

Books referred to as bibliography:

Murdoch, J. and Hughes, W., 2008. Construction Contracts – Law and Management, 4th Ed. New York: Taylor & Francis. (p. 171-174).

Beatson, J., 2002. Anson’s Law of Contract, 28th Ed. Oxford: Oxford University Press. (p. 145-151).

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