Your answers should explain your reasoning and refer to any relevant supporting law (e.g. contract clauses, sections in legislation and/or court decisions).

CASE STUDY SCENARIO 1

Ashworth Developers Pty Ltd (the Principal) is developing a $25 million shopping centre in Norwood, South Australia. The shopping centre will be constructed with a structural steel superstructure. As the lead-in time for the supply of structural steel components is long due to high industry demand, to avoid delays to the project, Ashworth enters into a $2.8 million lump sum contract with Jones Steel Pty Ltd for the supply, fabrication and installation of the structural steel prior to awarding the head construction contract. Subsequently, Ashworth invites tenders for the head construction contract based on the AS 4000 General Conditions of Contract (unamended).

PART B CASE STUDY ANALYSIS

Question 1

Explain what provisions Ashworth should make in the tender documents so that it may require the winning head contractor to take over the steelwork contract that Ashworth entered into with Jones Steel.

Your answer should:

1. Name and explain the legal process by which the winning head contractor may take over the contract with Jones steel;

2. Identify, and explain the requirements of, the relevant subclause in the contract which obligates the winning head contractor to take over the contract with Jones Steel; and

3. Explain how the $2.8 million cost of the steelwork can be incorporated into the head construction contract documents, and how allowance can be made in the contract for the winning head contractor to earn overhead and profit with respect to the work carried out by Jones Steel.

CASE STUDY SCENARIO 2

Judd Pty Ltd is a nominated subcontractor who has been appointed to carry out the electrical works at a commercial development in the Adelaide CBD for a lump sum of $1.3 million by 31st May 2018.

Judd ran five weeks behind schedule with their works and, as such, the head contractor, Luckless Pty Ltd, terminated the subcontract with Judd on 15th May 2018.

The date for practical completion agreed in the AS 2124 (unamended) head construction contract between Luckless and the principal was 28 August 2018. A 9% mark-up for profit & attendance on nominated subcontractors work was agreed by Luckless and their principal under the AS 2124 head contract. At the time of termination, Judd had been paid $850,000 by the principal for works carried out and no

further moneys were due.

Luckless immediately notifies the superintendent in writing about Judd's termination, and the superintendent instructs Luckless to appoint another nominated electrical subcontractor, AC/DC Pty Ltd. AC/DC is appointed to complete the remainder of the electrical works for a lump sum of $650,000 and by a subcontract date for practical completion of 5 July 2018. The delay in the completion of the electrical works from that originally scheduled causes a 4-week delay to the critical path of Luckless' head contract construction program.

Question 2

1. Advise as to which party is liable for the 4-week delay to the head contract practical completion date.

2. How much extra will the electrical works now cost to carry out than if Judd had carried out their subcontract without default? Who will be liable to pay this extra cost?