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ARTICLE · 15 FEBRUARY 2015

Good faith in construction contracts: A bridge too far?

Corrs Chambers Westgarth
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Standards Australia is proposing to change its standard contract to introduce an express obligation of good faith.

AustraliaReal Estate and Construction
Andrew Chew
Andrew Chew
David Starkoff (Formerly With Corrs Chambers Westgarth)
David Starkoff (Formerly With Corrs Chambers Westgarth)
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Standards Australia is proposing to change its standard contract to introduce an express obligation of good faith on the parties. But imposing such an obligation in 'hard dollar' construction contracts carries risks for parties and will potentially lead to more disputes.

A PROPOSAL FOR GOOD FAITH TO BE FRONT AND CENTRE

Standards Australia has released a draft of its proposed new standard general conditions of contract, DR AS 11000:2015.

AS 11000 is intended to replace AS 2124:1992 and AS 4000:1997. Both these standards are widely used in construction and any change to the terms in AS 11000 is likely to be influential.

One significant proposed change is the introduction of an express obligation of good faith on the parties. The contract provides that the parties agree 'to act reasonably in a spirit of mutual trust and cooperation, and generally in good faith towards the other'.

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