Effects

A contract is an agreement between two parties. Contract law is the main area which building contracts are administered. The legal aspect of a building contract is contained in written conditions either of a general or special nature. The two parties agree to work within the conditions set down and are obliged to adhere to them or suffer penalties which are either stated within the contract or which are implied by the nature of the contract. Contracts of this nature are legally binding on both parties and a judgment given against either party carries the force of the law under which the contract is enacted. (McLangan, 1991). The law of contract will applies only when either one the of party has breached the contract or do something which is not according to the contract’s requirement for example: where the principal fails or refuses to pay for work certified for payment or where the contractor does not proceed with work with due diligence or in accordance with the agreed time and performance programme. Other than taking legal action under the law of contract, courses of action open to the parties in a contract include determination of the contract, discharge of liabilities, release from obligation and variation by mutual consent. (D Khoury et. al, 1992)

Any breach of contract gives rise to a cause of action; not every breach gives discharge from liability. This will depend whether the term of breached is a condition or a warranty or whether there has been repudiatory breach. Damages are intended to compensate the innocent party for loss that he/her has suffered as a result of the breach of contract. In order to establish am entitlement to substantial damages for breach of contract the injured part must establish that the actual loss has been caused by the breach; and the type of loss is recognized as giving an entitlement to compensation; and the loss is not too remote; and quantification of damages to required level of proof. A breach of contract can be established even if there is no actual loss. In that case there will only be an entitlement to nominal damages.

Negligence is the most important field of tort law as it governs most activities of modern society. There are three elements to establish negligence, first is a duty of care must exist between the person injured and the person responsible for that injury. Secondly, must conduct of the defendant fell short of that duty of care. For the last, it’s the resultant damages (Cooke, 1989). There are three branches of the law of torts: strict liability for the escape of dangerous substances, private nuisance and trespass. All of these are direct relevance to the construction industry. Strict liability, at common law landowners are protected under the principle of Rylands v. Fletcher against damages caused by escape of substances resulting from some ‘ special use bringing with it increased danger to others, not only the ordinary use of the land or such use as is proper for the general benefit to the community. Private nuisance, it is the action that will cause disturbance to other adjacent building or land. For example, encroaching tree roots and walls, and excavation causing subsidence of adjacent land. For the trespass, in English and Australian law trespass is concerned with deliberate entry of another’s land, for example, by building a wall or placing some construction equipment on adjacent land.

In very general terms, a tort is an injury other than a breach of contract, which the law will redress