Analysis of the Flexibility and Restrictions of Public Construction Contract Changes
Date Issued
2015
Date
2015
Author(s)
Lin, Jing-Jhan
Abstract
Changes of work content in public construction contracts are common. Nevertheless, guidelines on how changes should be processed and how relevant rights and obligations after the changes should be handled are nearly non-existent in the Civil Code. Model clauses are the only references; among them, changes clauses are common, which have been used for years in response to the need for changes during construction process. The complicated, uncertain and changeable nature of construction contracts can easily cause disagreement among the parties. As a result, risks are often allocated through standard form contract terms, exception clauses, or contractual pricing methods. In practice, disputes still abound, be it due to the ambiguous language of the aforementioned clauses and regulations, or other factors. The principles of fairness and reasonableness, the principle of change of circumstances, and the principle of good faith are often used to address the disputes, in spite of their abstract and generalized content. Whether more proper solutions are available becomes the main focus of this study. First, the interpretation of contractual scope of work includes solutions to handling different opinions over contractual content and discrepancies in contractual documents between the parties; the owner may define the scope of work as broadly as possible for maximum benefits, while the contractor attempts to save material and labor costs. Additionally, the owner ’s right given by the contract to make unilateral changes permits the owner to modify drawings based on one’s needs without the consent of the contractor. Yet, how extra fees and time should be adjusted to conform to the principle of fairness after the right is exercised, and whether our model clauses have specified this area remain to be an issue. In light of this, the current study attempts to explore whether there are certain restrictions regarding the content of changes clauses. Restrictions of contract changes involve the cardinal change doctrine, which has been widely discussed in Common Law. Relevant cases have also emerged in Taiwan, and one question is whether it is proper to refer to Common Law’s practices and interpretations. Besides, since changes shall be made following certain process, some issues need to be considered when the owner does not follow legal process to order changes. Namely: whether the contractor can claim additional payment and request extra time, whether the constructive change doctrine in Common Law should be introduced to solve this problem, or how else this kind of problem can be properly solved. In sum, the study discusses potential problems that may result from construction contract changes and contemplates on possible proper solutions.
Subjects
public construction contract
changes clause
standard form contract
contractual pricing method
risk allocation
interpretation of contractual scope
the right to order unilateral changes
cardinal change
constructive change
Type
thesis