Commercial Law Of Australia:Marine Construction Limited

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Commercial Law Of Australia:Marine Construction Limited

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Commercial Law Of Australia:Marine Construction Limited

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Discuss about the Commercial Law of Australia for Marine Construction Limited.


The instant case is regarding construction of a hotel which is later to be converted to a hostel. The effort is taken by a regional university of Western Australia and for that to happen, they have approached Marine Construction Limited (MCU) for carrying out the work. The terms of the contract have ambiguous content where only time of completion and price of the project is put into perspective.
For deriving the issues of the case, facts of the case needs to be deeply looked into. A contract was entered into between the university from Western Australia and Marine Construction Limited (MCU) where the main objective was to build a hotel to be converted into a hostel to accommodate students. The expenditure incurred was $ 200,000. In the initial month MCU ran into deep waters. There were several structural glitches including rotten beams, studs and other timber to be replaced. It was realised by MCU that with the present predicament it was impossible to complete the project within 1st March, 2016. Moreover the university Vice Chancellor had declared 150 overseas students were due to move into the hostel premises very soon. When this information was given to the authorities of the University they were appalled and seeked for a remedy. The company told them to increase the project budget by $500,000 due to which additional labourers could be employed who would work day and night to ensure the work is done within the given deadline. The university was compelled to accept the unjust offer as the deadline was near and shifting of the students would be jeopardised by the fiasco[1]. The work was completed within the time frame. However the council of the university brooded over the extra expenses and contemplated for legal recourse[2]. Hence the following questions arise from the above discussed scenarios:

Did the company made unjust enrichment by asking for an extra $500,000 from the university?
Did the company cause breach of contract by not completing the construction by the given deadline?
What remedies does the University have towards the defaulting construction company?

Law and Its Application
In the instant case MCU has caused breach of contract by not completing the project within the stipulated period. In any commercial contract, term of a contract is of primordial importance. When a time period is fixed it is imperative for the parties to the contract to go by it else resulting into a major breach issue. However due to time crunch, they took unfair advantage of the situation and elicited additional $ 500,000 for completing the project. There is a statutory provision under the Competition and Consumer Act of 2010 which speaks of the statutory prohibition of misleading and deceptive conduct. Section 18 of the Australian Consumer Law speaks that no person in trade or commerce should engage in conduct which misleading or deceptive in nature.  This change of object was excluded from the ambits of the contract and can be termed as illegitimate monetary gain. They had already breached the contract by not completing the said work within the stipulated time frame. They further misappropriated the situation to their own advantage and made unfair benefits of the extra funds provided by the university. In a way an act of misrepresentation was committed by them for which they can be penalised[3]. They did not show genuine effort in their work and unnecessarily made the project costly. These extra funding could be curbed had they finished their work in time. The commencement of the second contract was completely based on the insufficiency of the past consideration. The second contract was result of economic duress which means that the construction company forced them to deviate from the original contract by citing frivolous economic reasons[4].
The university has an option of legally warn the construction company of the implications of not fulfilling the work within the time frame provided. They can file cases of fraud and economic duress in Australian Courts and ask for monetary compensation[5]. Moreover the company was bound by the concept of promissory estoppel. They have flouted the rule by wavering from the stipulated time frame. The University had to spend more for the said work which resulted in monetary losses. Hence liquidated damages can be claimed from the construction company for the loss caused to the university due to their careless acts.
Hence it is noticed from the instant case that a breach of contract is caused by the construction company when they did not finish their work within stipulated work. This caused monetary loss to the University and moreover they were made to spend an unnecessary extra amount of money to complete the same work in the same time frame. The construction company had misled the university for their own economic benefit.
Fletcher, K. L and K. L Fletcher, The Law Of Partnership In Australia (Lawbook Co, 2007)
Gillies, Peter and Niloufer Selvadurai, Law Of Contract (Federation Press, 2009)
Monahan, Geoff and Susan Carr-Gregg, Essential Contract Law (Routledge-Cavendish, 2007)
Turner, C. F, Australian Commercial Law (LBC Information Services, 2001)
Willmott, Lindy, Sharon Christensen and D. A Butler, Contract Law (Oxford University Press, 2005) 

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