SMART CONTRACTS – THE FUTURE OF CONSTRUCTION CONTRACTS, OR MERE HYPE?
contract) and terms held to be implied to give business efficacy to the contract’. 19 An example of this may be the implied duty of good faith. 20 With the potential for court interpretation to go beyond the mere written words on the contract itself, into either secondary documents, or to implications held by the court to exist without requiring articulation, any progress within construction law must ensure that new methods can account for the potential for interpretation to occur beyond the contract itself where ambiguities may exist.
Scope Variations A common concern with construction contracts is the potential for variations to occur after the commencement of works. The standard form contract AS 2124-1992 provides as part of the standard terms, the ability for the superintendent to direct the contractor to vary the work agreed to under the contract itself, with an example of these terms found in the case Wunda Projects Australia Pty Ltd v Kyren Pty Ltd.21 Such variations may go beyond the original scope of the contract, and as such may have time and cost implications on the construction works. Michael Christie SC, in his review of Construction Contract Variations, quoted Building and Construction Contracts in Australia, which states that ‘[t]he ever-present variation is probably the most common ingredient in disputes between parties to building contracts’. 22 From this concept, one can take the variation as a significant source of contention, and therefore something that must be catered for in any modification to the current landscape of construction contracts.
Benefits of Smart Contracts Transparency of Agreement For the smart contract to exist, it must be agreed to by the parties, and exist on the blockchain. 23 Due to the distributed and immutable concept of the blockchain, only a single agreed revision of the mutually agreed contract exists.24 With mutual consent required to initiate the contract, this removes the potential for dispute regarding terms of the agreement and therefore avoid the battle of the forms that may occur when exchanging standard form contracts. 25 Further to the clarity provided by a single instance of the agreement, the implementation of the blockchain may allow for reading by network participants. 26 By providing a single source of truth, the 19
Ibid.
20
Bundanoon Sandstone Pty Ltd v Cenric Group Pty Ltd (2020) 35 BCL 354.
21
Wunda Projects Australia Pty Ltd v Kyren Pty Ltd [2010] SADC [148].
22
Michael Christie SC, ‘Book Reviews’ (2016) 32 Business and Construction Law Journal 68, 70.
23
O’Shields (n 7) 179.
24
Ibid 187.
‘How a Legally Binding Contract Is Formed’, Construction Law Made Easy <http://www.constructionlawmadeeasy.com/chapter1>. 25
26
O’Shields (n 7) 180; Christidis and Devetsikiotis (n 2) 2297.
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