Standards Australia has issued a new draft General Conditions of Contract AS 11000:2015 to supersede AS 2124-1992 and AS 4000-1997.
A number of substantive changes are proposed which warrant careful review. We have set out the more significant ones below.
Standards Australia is seeking comments on the draft AS 11000 by Friday, 27 March 2015.
- Good faith: a new obligation which requires each party to “act reasonably in a spirit of mutual trust and cooperation, and generally in good faith towards the other” is proposed. The content of the obligation is not defined and there are no express limits on the application of the obligation. This may make it difficult for the parties to precisely identify the scope of not only this obligation, but their other rights and obligations under the Contract. For example, it would appear that the discretion of a party to exercise its rights under the Contract, such as a right to have recourse to security or suspend or terminate the Contract, may be fettered by the requirement to comply with this new obligation.
- Role of the Superintendent:
- Changes are proposed to clarify the role of the Superintendent. Under the changes it is proposed that the Superintendent will be expressly required to act impartially where it is required to certify, assess, price, measure or value work, quantities or time, or to otherwise act reasonably, under the Contract. In all other circumstances, the Superintendent will be expressed to act as the agent of the Principal.
- The general requirement for the Superintendent to act reasonably is proposed to be removed and replaced by a requirement to act reasonably in the exercise of specific functions or powers under the Contract, including the power to direct separable portions, the power to direct the rectification of damage caused by Principal’s risks, the power to suspend work and the power to unilaterally extend time. There is no guidance as to what is meant by “reasonable” in this context and, in most instances, no express provision that this does not require the Superintendent to exercise its power for the benefit of the Contractor. As such, it is likely that this requirement will continue to provide fertile ground for disputes.
- Early warning procedure: a new early warning procedure intended to promote the early identification and resolution of disputes is proposed. Each party must immediately notify the other of any event or circumstance which “may impact upon time, cost, scope or quality” and “become an issue” under the Contract. The parties are then required to hold a conference with the Superintendent to resolve the issue, failing which the party who raised the issue must notify the Superintendent whether it intends to make a claim, issue a dispute notice or not pursue the issue. If the party raising the issue notifies the Superintendent that it does not intend to pursue the issue, it does not appear that it will be subsequently barred from doing so.
- Time and progress: substantial changes are proposed to the provisions relating to progress, programming, extensions of time, liability for liquidated damages and bonuses and delay costs. More detail is provided in the table below.
- Payment terms: substantial changes are proposed to the payment terms, mostly in an attempt to align them with the security of payment legislation in all Australian jurisdictions. More detail is provided in the table below.
- Dispute resolution: new dispute resolution alternatives, including the potential use of contract facilitation and dispute resolution boards, are proposed. More detail is provided in the table below.
- Other: other significant changes proposed are detailed in the table below.
Click here to view the table.