April 28, 2014
Circular CIPAA 03 KLRCA’s Guideline on the meaning of “Construction Contract Made In Writing”
The Construction Industry Payment and Adjudication Act 2012 (“CIPAA”) came into operation on 15 April 2014. Section 2 of the Act provides that statutory adjudication regime shall apply to construction contracts made in writing.
However, no definition or further elaboration is provided in the Act as to what ‘construction contract made in writing’ means.
Given the fact that there are various means by which a construction contract may be made, a clear guideline on the meaning of a ‘construction contract made in writing’ will ensure that parties to a construction contract are guided as to whether or not payment disputes arising under their contract can be referred to adjudication under the Act. Further, it will eliminate the need for the adjudicator who may not be legally trained to grapple with the complexity of the issue of whether a construction contract is in writing.
As such the KLRCA is of the view that it would be expedient and/or necessary to provide clear guidance and definition as to what the phrase ‘construction contract made in writing’ mean, for giving full effect and the better carrying out of the provisions of the Act.
The KLRCA adopts the following definition of a ‘construction contract in writing’:-
‘Construction Contract In Writing’
(I) There is a contract in writing:-
(a) if the contract is made in writing (whether or not it is signed by the parties);
(b) if the contract is made by exchange of communications in writing; or
(c) if the contract is evidenced in writing.
(2) Where parties agree otherwise than in writing by reference to terms which are in writing, they make a contract in writing.
(3) A contract is evidenced in writing if a contract made otherwise than in writing is recorded by one of the parties, or by a third party, with the authority of the parties to the contract.
The KLRCA Guideline on Construction Contract in Writing shall apply to all adjudication cases commenced under CIPAA. A copy of the KLRCA Guideline can be found at: www.klrca.org.my
Dated 28th day of April, 2014.
Professor Datuk Sundra Rajoo
Director of KLRCA