Can A Standard Form Of Contract Be Implied By The Conduct Of The Parties?

Published date30 June 2022
Subject MatterCorporate/Commercial Law, Real Estate and Construction, Contracts and Commercial Law, Construction & Planning
Law FirmBodipalar Ponnudurai De Silva
AuthorMs Brenda Rangithan

Introduction

In most circumstances, parties to a construction project would elect which standard form of contract they wish to apply to their project and thereafter execute the same. In the normal course of things, a Letter of Award is first issued and accepted which makes reference to a particular standard form of contract.

In recent case of Fateh Construction Sdn Bhd v Maharani Specialist Sdn Bhd & Anor [2022] MLJU 771, the Court had to consider if, in the absence of an executed standard form of contract and with only an executed Letter of Award, would parties still be bound by the terms of the standard form of contract?

Background Facts

The 1st Defendant, Maharani Specialist Hospital Sdn Bhd operates a private hospital known as KPJ Seremban Specialist Hospital ("the Hospital"). The 2nd Defendant, KPJ Healthcare Berhad was the holding company of the 1st Defendant ("KPJ"). By way of a letter of acceptance dated 16.1.2018 ("LOA"), the Hospital appointed the Plaintiff, Fateh Construction & Services Sdn Bhd ("Fateh Construction") as the design and build contractor for the upgrading works of the sewerage station ("Station") at the Hospital. The LOA specifically provided that parties were required to executed a formal contract agreement and had made reference to "conditions of contract". It was claimed that the understanding of the parties was that the PWD Design and Build DB (Rev 1/2010) would be used as the standard form of contract which was to be executed between the parties and was the conditions of contract referred to in the LOA ("the Conditions of Contract").

During the course of the work, some variations had to be made and thus Fateh Construction submitted the design for the variations to Indah Water Consortium Negeri Sembilan ("IWKNS") and the same was approved by IWKNS on 2.4.2018. Consequently, Fateh Construction on 20.4.2018 submitted its quotation the Defendants for their approval. Fateh Construction took possession of the site to carry out the upgrading works of the Station on 27.7.2018.

Despite not receiving approval from the Defendants as to the revised quotation, Fateh Construction proceeded with the upgrading works of the Station based on the revised design approved by IWKNS. A revised LOA was issued by the Defendants on 21.4.2019 based on Fateh Construction's quotation ("Revised LOA").

The Plaintiff thereafter proceeded to complete the remaining works that involved the variation required by the IWKNS and finally completed the upgrading of...

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