Wed 17 June 2020 3:00pm (GMT +8) mwka.com/talks Speaker Guest Speaker Moderator CHRISTINE TOH Ed Mun HANNAH Partner Founder of S.U.A PATRICK Interior Senior Associate MWKA ONLINE TALKS Contract Law for Construction Consultancy Agreements
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Wed 17 June 2020 3:00pm (GMT +8) mwka.com/talks Speaker Guest Speaker Moderator CHRISTINE TOH Ed Mun HANNAH Partner Founder of S.U.A PATRICK Interior Senior Associate MWKA ONLINE TALKS Contract Law for Construction Consultancy Agreements
About Us ● Welcome to MahWengKwai & Associates! ● Trusted by small medium enterprises (SMEs), family businesses and individuals. ● Established in 1985 by Dato’ Mah Weng Kwai, now a consultant with the firm. ● Medium-sized law firm with 22 lawyers and 19 staff. 5
Our Services ● Full-service law firm with 4 Departments: ○ Corporate ○ Dispute Resolution ○ Employment ○ Individuals & Families 6
Our Practice Groups ● 5 Practice Groups: ○ ASEAN-China Desk ○ Construction ○ Foreign Direct Investment ○ Real Estate ○ Sports & eSports
MWKA Online Talks ● To share knowledge, raise awareness, encourage networking ● For clients, potential clients, in-house counsel ● Recent MWKA Online Talk: ○ 1.6.2020: Corporate Liability Provision under Section 17A of the Malaysian Anti-Corruption Act 2009 ● Upcoming MWKA Online Talk: ○ 3.7.2020: Employee Misconduct and Domestic Inquiry 8
Christine Toh ● Partner in the Dispute Resolution department in MahWengKwai & Associates ● Bachelor of Commerce/Bachelor of Business System (Monash University) ● Bachelor of Law (University of London) (Honours Second Class Upper Division) ● Called to the Malaysian Bar in 2014 9
Ed Mun ● 37 years as an Interior Designer ● Founded the Longest-Standing, Proudly Malaysian, Independent Interior Design Firm - S.U.A Interior , in 1989 ● Widely recognised designer by internationally renowned organisations such as Samsung, Hong Leong Bank, and Mary Kay. 10
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Talk Points ● Key elements of a legally binding contract ● CIPAA and Construction Consultancy Contracts ● Common issues in Design & Build construction contracts ● Tips on Managing a Design and Build Contract 12
Key Elements of a Legally Binding Contract
What is a Contract? ● Contracts in Malaysia are governed by the Contracts Act 1950 (“ CA 1950 ”) ● A contract is an agreement between two or more parties that is legally binding between them ● Section 2(h) CA 1950: ○ “An agreement enforceable by law is a contract” 14
How is a Contract formed? ● A contract can be formed: ○ Orally ○ By writing ○ By conduct ○ A combination of the above 15
Key Elements ● Offer & Acceptance ● Consideration ● Intention to Create Legal Relations ● Certainty ● Legal Capacity 16
Offer & Acceptance
What is an Offer? ● Section 2(a) CA 1950: ○ “An offer is when one person signifies to another his willingness to do or abstain from doing anything , with a view to obtaining the assent of that other to the act or abstinence” ● An offer can be made: ○ Orally ○ In writing ○ By conduct 18
Requirements of an Offer ● Must be specific, clear and unambiguous ● Section 4(1) CA 1950: ○ “The communication of a proposal/offer is complete when it comes to the knowledge of the person whom it is made ” ● Preliminary negotiations, options and display of goods, advertisements and auctions are NOT offers ● Counter-offers does not amount to a contract, there must be acceptance 19
Termination of Offer ● Lapse of Time ● Revocation under Section 5 CA 1950: ○ “A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards” ● Rejection ● Failure to fulfill a condition precedent ● Death/Mental Disorder 20
What is Acceptance? ● Section 2(b) CA 1950: ○ “When the person to whom the proposal/offer is made signifies his assent … the proposal is said to be accepted” ● Acceptance can be signified: ○ Orally ○ In writing ○ By conduct 21
Requirements for Acceptance ● It must be communicated and/or signified ● Absolute and unqualified ● Accepted within reasonable time ● Counter offers does NOT amount to an acceptance, it is a rejection 22
Consideration
Consideration ● Section 2(d) CA 1950: ○ “When at the desire of the promisor, the promisee has done or abstained from doing something … such act is called a consideration for the promise” 24
Requirements of Consideration? ● Consideration need not be adequate, as long as it has some monetary value ● Can come from a third party, not necessarily the offeree ● Consideration can be: ○ Executory (performed in the future) ○ Past (performed before the promise); ○ Executed (performed after the promise) 25
General Rules of Consideration ● Section 26 CA 1950: ○ “Agreement without consideration is VOID , unless: (a) Made on account of natural love & affection between parties standing in near relation to each other; (b) To compensate for something done; (c) To pay a statute barred debt ” 26
Intention to Create Legal Relations
What is an Intent? ● Subjective, depends on the parties’ state of mind ● CA 1950 silent on this element, principles derive from English common law ● As a general rule, there is presumed to be intention commercial agreements, but not in domestic agreements (a rebuttable presumption) 28
Certainty of Contract
What is Certainty? ● Section 30 CA 1950: ○ “Agreements, the meaning of which is not certain, or capable of being made certain , are void” ● Items such as price, time, language and subject matter must all be certain and complete 30
What is Legal Capacity
What is Legal Capacity? ● A party’s ability to enter into a contract ● Section 10 CA 1950: ○ “All agreement is contract if there made by f ree consent of the parties competent to contract” ● Section 11 CA 1950: ○ “Every person is competent to contract who is age of majority , sound mind and not disqualified from contracting ” ○ The age of majority in Malaysia is 18 32
CIPAA 2012 and Construction Consultancy Contracts
CIPAA 2012 ● Construction Industry Payment and Adjudication Act 2012 ● This Act came into effect on 15.4.2014 ● To facilitate regular and timely payment by providing a mechanism for speedy dispute resolution ● Adjudication under CIPAA only for disputes relating to payment for work done, services rendered and/or materials supplied under the contract terms 34
CIPAA 2012: Application and Non-Application ● CIPAA 2012 applies to: ○ Every construction contract made in writing relating to construction work carried out wholly or partly within the territory of Malaysia including a construction contract entered into by the Government ● CIPAA 2012 does not apply to: ○ Construction contracts by a natural person for any construction works for a building which is less than 4 storeys high and is wholly intended for his occupation 35
Construction Contract - Section 4 ● “construction contract” means a construction work contract or construction consultancy contract ● “construction consultancy contract” mean a contract to carry out consultancy services in relation to construction work and includes planning and feasibility study, architectural work, engineering, surveying, exterior and interior decoration, landscaping and project management services ” 36
Construction Works ● This means the construction, extension, installation, repair, maintenance, renewal, removal, renovation, alteration, dismantling or demolition of: ○ Any building, erection, edifice, structure, wall, fence or chimney, whether constructed wholly or partly above or below ground level; ○ Any road, harbour, railway, cableway, canal or aerodrome; ○ Any electrical, mechanical, water, gas, oil, petrochemical or telecommunication work; or ○ Any bridge, viaduct, dam, reservoir, earthworks, pipeline, sewer, aqueduct, tunnel; 37
Construction Works ● Construction works include (cont’d): ○ Any work which forms an integral part of, or are preparatory to or temporary for the works described above, including site clearance, soil investigation, improvement, earth moving, excavation, laying of foundation, site restoration and landscaping; and ○ Procurement of construction materials, equipment or works, as necessarily required for any of the works described above. 38
Construction Consultancy Contracts ● Letter of Award ● Letter of Acceptance ● Agreed Purchase Orders ● Agreed Quotations 39
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